CIMB Research said it foresees a higher level of cross-selling to PBB’s commercial and small and medium enterprise customers.
PETALING JAYA: Analysts remain upbeat on LPI Capital Bhd
’s prospects, given its ambitious growth targets and sustainable dividend profile.
CIMB Research said in a report that a recent meeting with the general insurance firm’s management team – led by group chief executive officer Tan Kok Guan and chief financial officer Ng Seng Khin – reinforced its confidence in the group’s synergy creation with its parent company, Public Bank Bhd (PBB).
“Key drivers include new key performance indicators (KPIs) set for bank branches; a constructive fire/project engineering class cycle driven by data centres (DCs); ongoing multiyear projects; and selective expansion across motor, digital and regional markets.
“Although the bancassurance channel currently only contributes over 20% of LPI’s total gross written premiums (GWPs), we expect this share to rise following the establishment of a joint working committee with PBB, which should enable a more coordinated branch-level marketing approach under the revised KPIs.”
CIMB Research said it foresees a higher level of cross-selling to PBB’s commercial and small and medium enterprise customers, which may generate higher premium values for LPI beyond the regular residential property fire policies under its existing bancassurance arrangement with PBB.
“Notwithstanding this growth trajectory, the agency channel (around 45%) remains the dominant distribution mode for LPI.”
CIMB Research expects GWP growth in the general insurance industry to accelerate in 2026, continuing the robust 10% year-on-year (y-o-y) pace seen in 2025.
“LPI is well placed to ride the cycle, with its GWP projected to sustain strong growth of 10% y-o-y, underpinned by the proliferation of DCs (which are estimated to contribute several billion ringgit in sum insured to the industry); new foreign and domestic direct investments; and ongoing infrastructure projects (Pan-Borneo Highway and the tail-end of the East Coast Rail Link) and mass rapid transit projects.
“Nonetheless, as LPI’s retention ratio remains very low, the company cedes a large portion of underwriting risks (which are usually high), leaving only commission income from reinsurance.”
The research house said this aligns with LPI’s prudent underwriting strategy, as its limited available capital is better deployed in smaller, lower-risk domestic fire and motor segments.
Separately, CIMB Research said LPI will return 70% of the proceeds from its sale of 220.29mil PBB shares to shareholders via a special dividend (equivalent to about RM1.70 per share). “The remaining 30% of proceeds will be retained as investment income (to be reinvested in equities or fixed-income securities).”
CIMB Research said the timing of the sale of the PBB shares (by June 2026) will affect LPI’s full-year dividend income.
“On an annual basis, PBB’s regular dividends (assuming an 85% payout ratio) provide RM45mil to LPI, making up approximately 9.4% of LPI’s annual pre-tax profit.”
The research house noted that while the special dividend has been supportive of LPI’s share price, future investment returns are likely to be lower and more bond-like, implying lower net profits – unless compensated by underwriting profit growth.
“Post the special dividend’s ex-date, LPI’s share price may lose some of its premium, reflecting investors’ reassessment of the higher risk associated with a pure-play general insurer.”
