Insurer LPI's net profit at RM314m for FY18

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 reported a marginal 0.1% increase in its net profit to RM314.05mil in the financial year ended Dec 31, 2018 (FY18) from RM313.80mil in FY17.

Its founder and chairman Tan Sri Teh Hong Piow said on Tuesday FY18 revenue increased by 2.9% to RM1.51bil from RM1.47bil. Profit before tax increased marginally to RM405.96mil from RM403.75mil

It rewarded shareholders with a proposed dividend of 42 sen a share for the fourth quarter FY18 and for the financial year, the total dividend was 68 sen.

In Q4 FY18, LPI's revenue increased by 7% to RM389.02mil from RM363.50mil a year ago. 

“The increase in revenue was mainly contributed by higher premium written by its wholly-owned insurance subsidiary, Lonpac Insurance Bhd (Lonpac),” Teh said.

Profit before tax rose marginally to RM110.87mil from RM110.70mil partly due to increase in claim costs, especially in medical and motor insurance classes. 

Earnings per share of LPI improved to 21.09 sen from 20.83 sen a year ago while net return on equity reduced to 3.9% from 4.3% due to larger equity base. 

Teh said Lonpac continued to expand its business portfolio as it believed that with the highly competitive environment under the liberalisation framework, it needs to compensate compressed underwriting margin with a larger market share. 

In Q4 FY18, Lonpac increased its gross premium income by 8% to RM304.3mil from RM281.80mil. 

Its net earned premium income rose by11.9% from RM227.1mil to RM254.1mil partly due to higher retention ratio. 

However, its claims incurred ratio rose to 39.1% from 34.6% previously resulting in a higher combined ratio of 64.2%, having increased from 58.9% a year ago.

Underwriting profit for Q4 FY18 dipped to RM91.10mil versus RM93.20mil a year ago.

In FY18, Lonpac improved its market position despite the highly competitive market conditions and slower demand for insurance. 

“Its gross premium income for the year increased by 3.4% to RM1.469bil from RM1.421bil written in the previous year. 

“It continued to strengthen its position as the market leader in the preferred fire portfolio with its written premium for fire insurance registering a growth of 11.1% over the previous year. Fire insurance remains the core portfolio of business contributing 42.4% of its total written premium,” Teh said. 

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