KUALA LUMPUR: LPI Capital Bhd said it will remain focused on business growth to offset an expected compression in margins following the implementation of Phase 2A of the market liberalisation plan.
Presenting its outlook for 2023, the insurer said it remains confident of its ability to adapt and innovate despite the insurance industry facing rising claims and reinsurance costs.
It noted also the global political and economic uncertainties and rapidly changing operating models.
"The LPI Group’s prudent underwriting approach and diversified business development channels will facilitate it to weather the numerous challenges in FY2023," it added in a statement.
In the fourth quarter of FY22 ended Dec 31, 2022, LPI said net profit was RM83.57mil, 14.47% improved from RM73.07mil in the previous corresponding quarter.
This came on the back of revenue of RM433.17mil in 4QFY22, up from RM429.04mil in 4QFY21.
According to the group, the improved quarterly performance was mainly contributed by an increase in investment income and a lower provision for fair value losses on investment.
For the full year, LPI's net profit came to RM276.61mil, down from RM344.68mil a year earlier.
The company's earnings per share dropped to 69.43 sen FY22 as compared with 86.52 sen in FY21.
The company reported revenue of RM1.66bil for the year under review, 3.5% lower from RM1.72bil in FY21.
The group announced a second interim dividend of 35 sen per share amounting to RM139.4mil despite the lower profitability in FY22.
This brings LPI's total dividend payout in FY22 to 60 sen a share or RM239mil, representing 86.4% of the group's net profit attributable to shareholders.
"In FY2022, the group’s performance was affected by significant changes to the operating environment as the domestic economy reopened following two years of pandemic-related restrictions under the Movement Control Order (MCO).
"While the resumption of business and social activities catalysed a return to growth, it also gave rise to insurance claims returning to pre-pandemic level following a significant decline over the past two years," said LPI.
It said its wholly owned subsidiary Lonpac Insurance Bhd continued to see an increase in claims frequency and value with its claims incurred ratio deteriorating to 40.5% from 37.7% in the previous corresponding quarter.
"With management expense ratio at 18% and commission ratio at 7.6%, Lonpac’s combined ratio for the 4th quarter of FY22 rose to 66.1% against 62.8% reported in the previous corresponding Quarter.
"With the higher claims experience, the Underwriting Profit of Lonpac was 4.5% lower at RM91mil against RM95.3mil achieved in FY2021," said LPI.