LPI Capital’s 1Q19 profit up 6.4% on higher investment income


LPI Capital Bhd’s net profit for the first quarter ended March 31, 2019 (1Q19) increased by 6.43% year-on-year (YoY) to RM77.16 million, contributed by profit from the general insurance segment.

In an exchange filing yesterday, the insurance company said the segment’s profit up by 3.2% to RM79.9 million from RM77.4 million in 1Q18 as a result of higher investment income.

Its quarterly revenue also improved by 3.07% YoY to RM392.7 million from RM381 million in the same quarter last year, mainly driven by growth in gross earned premium of 2.4% or RM8.5 million, from its general insurance segment.

The company posted a higher earnings per share of 19.37 sen for the three-month period, against 18.2 sen in 1Q18.

LPI founder and chairman Tan Sri Dr Teh Hong Piow (picture) said the group managed to improve its performance in the quarter despite the challenging operating environment.

“Revenue for the period under review increased by 3.1% from RM381 million in the corresponding quarter of 2018 to RM392.7 million, while its profit before tax (PBT) registered an improvement of 4.1% to RM95.4 million from RM91.6 million previously.

“Net profit came in higher at RM77.2 million, having grown by 6.5% from RM72.5 million. LPI’s net return on equity for the quarter increased to 3.9% from 3.7% previously,” he said in a statement.

He added that LPI’s wholly owned subsidiary, Lonpac Insurance Bhd, reported a marginal improvement in its performance for 1Q19.

Its PBT for the period under review increased by 3.5% to RM79.1 million from RM76.4 million in the previous corresponding period.

However, its gross written premium for the quarter was 4.6% lower at RM460.9 million compared to RM483.2 million in 1Q18, partly due to the absence of government infrastructure projects and compressed premium pricing.

Lonpac’s net earned premium income registered a stronger growth of 8.9% to RM235.6 million from RM216.4 million in 1Q18 due to a lower reinsurance ratio.

The claims incurred ratio increased slightly to 47.4% from 47.1% with management expense ratio at 22.%, and the commission ratio at a higher 5.2%. The combined ratio was recorded higher at 74.6% YoY.

Teh said with the higher combined ratio and improved net earned premium written, Lonpac was able to register an underwriting profit of RM59.6 million.

He added that continued uncertainties in the global economy and stiff competition in the local insurance market in light of a liberalising market will remain the main challenges for the group.

“However, the government’s plan to proceed with the implementation of some infrastructure projects that were suspended earlier will spur the demand for insurance coverage especially in project insurances where Lonpac is an active player.

“We will continue to innovate new products to meet the insurance needs of the customers and further strengthen our market position,” Teh said.