LPI founder and chairman Tan Sri Teh Hong Piow said the general insurance industry was affected by the slowdown in economic activities.
KUALA LUMPUR: Insurer LPI Capital Bhd
’s earnings for FY2016 jumped 36.2% to RM437.2mil mainly due to higher realised gains on disposal of investment in equities.
The increase in earnings for the full-year was despite a 20.3% decline in net profit for the fourth quarter to RM81.5mil.
In its filing to the stock exchange on Monday, the insurer reported 7.3% higher revenue for the year at RM1.38bil.
It said the increase was largely contributed by the general insurance segment, which saw an increase of 7.4% year-on-year.
Revenue from the investment holding segment increased marginally to RM36.3mil from RM34.3mil previously.
The higher earnings for the year, it said, was partly from the investment holding segment, which recorded a higher profit before tax of RM179.7mil froma year ago, mainly due to higher realised gain on disposal of investment in quoted equities.
The company said the general insurance segment had also performed well, growing its profit by 17.3% to RM339.2mil a year ago.
“This was attributed to its better claims experience, as reflected in the lowering of its net claims
incurred ratio from 41.0% to 38.3%,” it noted.
For the fourth quarter, the company said the lower net profit was mainly due to the absence of a one-off significant gain of RM36.9mil on disposal of investment in quoted equities during the same period a year ago from the investment holding segment.
Revenue for the quarter was 5% higher at RM355.6mil, largely contributed by revenue from the general insurance segment, which increased by 4.5% to RM352.9mil.
This in turn was attributed to higher gross earned premium for the quarter which came in at RM339.4mil, a 4.2% growth from a year ago.
In a statement, LPI founder and chairman, Tan Sri Dr Teh Hong Piow said insurance subsidiary, Lonpac Insurance Bhd (Lonpac) had performed well for the year, as reflected in its 17.4% growth in profit before tax to RM336.7mil.
“Despite operating in a difficult environment, Lonpac continued to exercise strong underwriting discipline and prudent claims management thereby reducing its claim incurred ratio from 41.0% to 38.3% and boost its underwriting profit by 17.9% to RM278.5mil from RM236.3mil in FY15,” he said.
On its prospects for the year ahead, the company said 2017 will be another challenging year.
With the detariffication of motor insurance, it expects to see keener competition in motor business, which may have a detrimental impact on the company’s underwriting performance.
“However, with our robust capital position and strong distribution capability, we are prepared to face these challenges with cautious optimism,” it said.
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