LPI founder and chairman Tan Sri Teh Hong Piow said the general insurance industry was affected by the slowdown in economic activities.
KUALA LUMPUR: LPI Capital Bhd
recorded net profit growth of 7.8% year-on-year (y-o-y) to RM70.78mil in the second quarter ended June 30, 2019, on the back of improved contributions from the group's subsidiary, Lonpac Insurance Bhd.
Group revenue for the quarter under review rose 9.6% to RM353.mil as compared to RM386.9mil in the previous corresponding quarter, LPI said in a statement issued on Monday.
The board declared a first interim dividend of 27 sen a share, higher than the 26 sen a share paid for the previous comparative quarter.
For Q2, Lonpac reported 20.7% growth in its gross written premium income to RM366.6mil while net earned premium income rose 12% to RM252mil.
Over the six months to June 30, Lonpac's gross written premium rose 5.1% to RM827.5mil from RM787mil in the first half of 2018.
The improved performance was owing to Lonpac's efforts to strengthen its distribution channels, said LPI founder and chairman Tan Sri Teh Hong Piow.
"Increasing the market share when the whole general insurance industry’s premium written was contracting required much strategic business planning and I am pleased to note that Lonpac’s business development team had executed the plan well," he added.
The insurance firm's combined ratio rose to 71% from 68.7% due to higher claims incurred and commission ratios, mainly in the msicellaneous accident and medical classes of insurance.
However, Lonpac managed to register a 3.4% y-o-y increase in underwriting profit for the quarter to RM73mil.
Teh expects a challenging year for the Malaysian general insurance industry due to the liberalisation process and inert economic environment.
"We expect that the claims ratio may continue to deteriorate in the light of keen competition in pricing and the fight for market share.
"Lonpac will, however, continue to exercise prudency in risk selection and claims management in its quest to be the premier player in the market," he said.
LPI's net profit for the six months to June 30 showed a 7% y-o-y jump to RM147.9mil, underpinned by revenue growth of 6.2% to RM779.6mil over the previous corresponding period.
Net return on equity improved to 7.2% from 6.8% in the previous corresponding period while earnings per share for the half year period increased to 37.14 sen from 34.70 sen previously.
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