LPI Capital’s Q1 profit rises 14.3%

PETALING JAYA: LPI Capital Bhd reported a 14.32% gain in net profit to RM65.39 million for the first quarter ended March 31, 2016 against RM57.2 million in the previous corresponding period, underpinned by its gross premium income growth.
Revenue for the quarter under review jumped 9.88% to RM320.56 million from RM291.73 million.
In a filing with the stock exchange, the group said its gross premium income grew 7.9% to RM401.7 million compared with RM372.4 million in the same period a year ago despite facing stiff competition.
Its underwriting profit expanded 18.8% to RM50 million, contributed by the growth in both of the gross and net earned premium and the lower net claims incurred ratio of 43.1% as compared with 49.1% in the corresponding quarter in 2015.
LPI Capital founder and chairman Tan Sri Teh Hong Piow expects the slower growth in premium income for the Malaysian insurance industry to continue in 2016.
With the impending liberalisation, he said the industry players are competing to build their market shares, resulting in margin compression.
“The group will continue to prioritise its shareholder return by ensuring that its profits will not be compromised while growing its business,” he noted.
Teh also foresees fierce competition for the motor business, particularly, with the removal of tariff rates in the second phase of liberalisation. However, the impact on the group’s profitability will not be significant as the motor business contributes about 25% of total portfolio currently
“In addition, the group has been well prepared for liberalisation, having invested in technology to develop parameters-based premium rating models as well as to improve its process and delivery channels.
Teh is confident that LPI Capital is well geared for market liberalisation and will emerge stronger despite the stiffer competition.