Tan Sri Teh Hong Piow said the group was confident that its strong fundamentals will enable it to stay resilient and flexible.
KUALA LUMPUR: LPI Capital Bhd
kicked off the third quarter results season on Wednesday, with net profit dipping by 0.4% to RM91.81mil due to a challenging year for the insurance sector.
It announced on Wednesday in the quarter ended Sept 30, 2018 the net profit was a slight decline from RM92.17mil a year ago
However, its profit before tax rose 1.4% to RM116.63mil from RM115.03mil due to the investment holding segment, which recorded an increase of 11.5%,” it said.
The general insurance segment recorded a marginally higher profit of RM103.0mil as compared to RM102.8mil a year ago.
LPI's revenue fell 3.9% to RM390.59mil from RM406.78mil. Earnings per share were 23.04 sen compared with 23.14 sen.
“The decrease was mainly driven by decline in gross earned premium of 5.5% or RM20.9 million from its general insurance segment.
“The decline in gross earned premium was mainly due to there was an one-off released of unearned premium reserves of RM54.5mil recorded in the previous year arising from change in accounting estimate for provision of unearned premium.
“Investment holding segment recorded higher revenue of RM15.2mil as compared to RM13.3mil in the corresponding quarter in 2017 due to higher dividend income received,” it said.
For the nine-month period, its net profit fell 0.3% to RM230.04mil compared with RM230.80mil in the previous corresponding period. However, its revenue rose by 1.6% to RM1.124bil from RM1.107bil.
Commenting on the third quarter results, the founder and chairman of LPI, Tan Sri Teh Hong Piow said: “2018 continues to be a challenging year for the Malaysian general insurance industry as the global economic condition remains volatile affecting the economic prospects of the emerging markets.
“On the domestic front, the property market has not recovered from its oversupply and weak demand position while major infrastructure projects have been under review, affecting the demand for general insurance.
“As a result, the Malaysian general insurance industry reported a mere 0.7% growth in its gross premium written for the first 6 months of 2018.”
LPI's unit Lonpac Insurance Bhd (Lonpac) was similarly affected by the slower growth of the industry as it registered a lower gross premium income for the third quarter under review at RM378.1mil as compared to RM416.6mil a year ago.
“As an active player in the insurance of infrastructure projects, we were also affected by the slowdown in the implementation of such projects,” Teh said.
Lonpac’s net earned premium income for the quarter under review, however, increased by 1.6% from RM231.5mil to RM235.2mil due to higher retention and lower reinsurance outward.
Underwriting profit for the third quarter of 2018 was lower at RM82.2mil from RM83.6mil a year ago mainly due to higher provision of technical reserve, higher management expense ratio at 20.2% and higher net commission ratio at 7.7%.
“Higher net commission reported for the quarter was due to lower reinsurance commission received. Consequently, Lonpac’s combined ratio increased to 65.1% from 63.9% registered in the previous corresponding quarter,” Teh said.
Limited time offer:
Just RM5 per month.
