LPI second-quarter earnings slip to RM65.74mil

PETALING JAYA: LPI Capital Bhd has posted a net profit of RM65.74mil in the second quarter ended June 30, 3.4% less than the RM68.06mil recorded in the preceding year’s quarter on the back of a flattish revenue of RM353.05mil.

The group’s second-quarter profit before tax slipped to RM86.9mil from RM89.2mil in the year-ago quarter due to non-recurring gains of RM1.5mil from the sale of equity investment in 2017.

For the first half of 2018, the insurer’s net profit came to RM138.24mil, just slightly under the RM138.63mil posted in the previous corresponding period.

LPI said in a statement that the insurance industry continues to see stiff competition in the market, with Phase 2 of the market liberalisation in full force.

“The new competitive environment has caused profit margins to compress and the LPI Group has worked to compensate the lower margin with a bigger market share,” it said.

Net return on equity came in at 6.8% for the first half of 2018, lower than 7.6% previously due to an enlarged equity base. Earnings per share was 34.70, compared to 34.80 previously.

The group’s insurance unit, Lonpac Insurance, posted a 2.1% growth in profit before tax from RM159.8mil in the year-ago period to RM163.1mil.

Gross premium income grew 8.9% to RM787mil from RM722.9mil.

Underwriting profit for the period under review was RM130.2mil. slightly higher than RM129mil previously.

The claims incurred ratio climbed to 44% from 39.8%, while the combined ratio of Lonpac grew to 70.6% from 67.1% previously.

“In view of the satisfactory performance of the group, the board has declared a first interim dividend of 26 sen per share,” said founder and group chairman Tan Sri Teh Hong Piow.