Public Bank founder and chairman Tan Sri Teh Hong Piow said for the first nine months ended Sept 30, 2015, the group reported 9.3% on-year growth in the net profit attributable to shareholders to achieve RM3.57 billion.
KUALA LUMPUR: LPI Capital Bhd
posted a 14.3% gain in net profit to RM65.4mil for the first quarter ended March 31, 2016, against RM57.2mil recorded a year ago.
Revenue for the quarter was 9.9% higher to RM320.6mil from RM291.7mil reported in the first quarter of 2015, despite the slowdown in the Malaysian economy and the general insurance industry.
Founder and chairman Tan Sri Teh Hong Piow said in a statement on Thursday that the strong performance was mainly contributed by the better results of its insurance unit, Lonpac Insurance Bhd (Lonpac).
For the period under review, Lonpac registered an impressive 21.8% jump in pre-tax profit to RM64.9mil from RM53.3mil, largely due to higher underwriting profit, which came in at RM50mil, a 18.8% increase from RM42.1mil reported in the first quarter of 2015.
This was on the back of an improvement in its combined ratio from 70.7% to 67.8%, which in turn was attributed to the reduction in its claims incurred ratio from 49.1% to 43.1%.
“Despite facing stiff competition, Lonpac managed to grow its gross premium income by 7.9% to RM401.7mil during the first quarter of 2016, from RM372.4mil in the first quarter of 2015. This was the result of our efforts in strengthening sales force as well as expanding agency network and global partnerships,” said Teh.
Lonpac’s better performance translated into higher net return on equity for LPI at 4% as at March 31, 2016 compared with 3.5% a year ago, while its EPS increased to 19.7 sen from 17.2 sen.
Teh expects the slower growth in premium income for the Malaysian insurance industry to continue in 2016.
Industry players are competing for market share with the impending liberalisation, resulting in margin compression.
The first phase of the tariff liberalisation effective from July 1, 2016, will allow insurers to introduce new products at market rates, while the second phase which will commence the following year, will see the removal of tariff rates for motor comprehensive and motor third party fire and theft policies.
There will also be gradual adjustments to fire tariff rates in the second phase of the liberalisation.
“We expect to see fierce competition for motor business, particularly, with the removal of tariff rates in the second phase of liberalisation. However, as Lonpac’s motor business contributes approximately 25% of its total portfolio currently, the impact on its profitability will not be as significant,” he said.
Lonpac has already invested in technology to develop parameters-based premium rating models as well as to improve its process and delivery channels.
