by FARA AISYAH/ pic by TMR FILE
LPI Capital Bhd’s net profit for the second quarter ended June 30, 2020 (2Q20), increased 9.4% to RM77.4 million from RM70.78 million a year ago, supported by an RM11.5 million fair value gain on investments versus a RM1 million gain on investments in 2Q19.
Quarterly revenue climbed 3.3% to RM399.55 million from RM386.9 million registered last year, mainly driven by a 3.7% or RM13.6 million expansion in gross earned premiums from the firm’s general insurance segment.
However, LPI’s wholly owned insurance subsidiary, Lonpac Insurance Bhd, saw gross premium income decline 7% to RM340.9 million from RM366.6 million recorded in 2Q19, as demand for insurance slowed on the impact of the Covid-19 pandemic.
“Gross premium income for the quarter was particularly affected by the lower premium written for motor, marine, oil and gas, and miscellaneous classes of insurance,” LPI chairman and founder Tan Sri Dr Teh Hong Piow (picture) said in a statement yesterday.
The group was affected by the lockdown imposed during the various phases of the Movement Control Order (MCO) and the disruption of business activities, Teh added.
Lonpac’s net earned premium income slipped 0.2% to RM251.4 million in 2Q20 from RM252 million previously, as a result of lower technical reserve provision.
With slower economic activities during the MCO, claims reported were relatively lower during the months of April and May, but picked up again in June to register a 45.6% claims incurred ratio for 2Q20, up from 44.9% posted last year.
Underwriting profit for Lonpac in 2Q20 was 2.1% lower at RM71.5 million from RM73 million achieved the year prior.
The insurance group declared a first interim dividend of 28 sen to be paid on Sept 11, 2020.
Teh said although Malaysia is currently making good progress in its fight against Covid-19, there is still a high degree of uncertainty over global recovery as long as a vaccine is not available and fear of a second wave of infections remains.
“LPI is poised to pursue growth and business opportunities when the business environment improves. Meanwhile, we will focus on sustainable revenue streams, further strengthening our risk management capabilities and intensifying prudent cost management measures,” he added.