LPI posts better Q4 results, declares 43 sen dividend

Improved performance due to contribution from general insurance segment, which increased its profit by 4.6% to RM115m

PETALING JAYA: LPI Capital Bhd posted a net profit of RM86.6 million for its fourth quarter ended Dec 31, a 3.1% increase from RM84 million in the previous corresponding quarter, contributed by profit from the general insurance segment, which increased 4.6% to RM115.4 million from RM110.3 million.

In a Bursa filing, the group said underwriting profit for the current quarter rose 6.4% to RM96.9 million from RM91.1 million previously, mainly underpinned a growth in net earned premium by 4.5% to RM265.5 million from RM254.1 million a year ago.

Revenue for the quarter grew 2.6% to RM399.3 million, from RM389 million previously.

In light of the group’s improved performance, LPI Capital declared a second interim dividend of 43 sen per share. Together with the first interim dividend of 27 sen per share, the total payout for FY19 is RM278.86 million representing 86.5% of the group’s net profit.

LPI Capital founder and chairman Tan Sri Teh Hong Piow said the group’s fourth quarter performance was very encouraging.

“Lonpac Insurance Bhd (Lonpac), the wholly owned insurance subsidiary of the group, continued to grow its business by recording a 4.1% increase in its gross premium income from RM304.3 million reported in the previous corresponding quarter to RM316.8 million.”

He noted that Lonpac’s claims incurred ratio remained relatively stable at 40.3% with management expense ratio lower at 16.2% from 17.5% and commission ratio reduced to 7% from 7.6%.

Its combined ratio for the quarter under review improved to 63.5% from 64.2% and Lonpac reported a better underwriting profit of RM96.9 million, an improvement of 6.4% from

RM91.1 million registered in the previous corresponding quarter.

For the full year, LPI Capital’s net profit increased 2.6% to RM322.4 million, from RM314 million while revenue was up 5.9% to RM1.6 billion from RM1.5 billion.

In FY19, Lonpac continued to increase its premium base despite a slower demand experienced in the general insurance industry, expanding its gross premium income by 3.7% from RM1.47 billion reported in the previous financial year to RM1.52 billion while its net earned premium income for the 12-month period expanded 8.7% to RM1.01 billion from RM930.8 million.

It posted a marginal improvement in its underwriting profit to RM305.1 million from RM303.5 million.

Looking ahead, Teh said 2020 will remain challenging for the general insurance industry as market sentiments remain weak, underpinned by ongoing market volatilities and rising macro uncertainties.

“Amid the volatile environment, LPI Group will continue to strengthen its distribution channels, maintain sound underwriting practices and exercise prudential risk management with the aim to achieve a sustainable profit growth,” he said.