LPI Capital fourth quarter earnings lower on absence of one-off gains

PETALING JAYA: LPI Capital Bhd’s net profit for the fourth quarter ended Dec 31, 2016 (Q416) fell 20.3% to RM81.45 million from RM102.21 million, mainly due to the absence of a one-off gains of RM36.9 million on disposal of investment in quoted equities in the same period last year.
However, its revenue rose 5% to RM355.55 million from RM338.62 million in the previous year’s corresponding quarter.
LPI has proposed to declare a second interim dividend of 55 sen per share amounting to RM182.6 million. Together with the first interim dividend of 25 sen per share, the total dividend payment for FY16 of RM265.6 million is 14.3% higher than the RM232.4 million in FY15.
For the 12 months period, LPI’s net profit jumped 36.2% to RM437.22 million from RM320.99 million a year ago, contributed by LPI’s higher gain from realisation of equity investment as well as the solid underwriting performance of its wholly-owned insurance subsidiary Lonpac Insurance Bhd.
LPI’s revenue grew 7.3% to RM1.38 billion in FY16 compared with RM1.28 billion in FY15.
In a statement yesterday, LPI founder and chairman Tan Sri Dr Teh Hong Piow (pix) said Lonpac saw improved underwriting results for Q416 despite the slowdown in the Malaysian economy and the implementation of the Framework on Phased Liberalisation of Motor and Fire Tariffs, which came into effect on July 1, 2016.
Underwriting profit for Q416 rose 19.9% to RM91.1 million from RM76.0 million, on the back of a 5.7% increase in earned premium to RM210.3 million from RM198.9 million in Q415.
Despite operating in a difficult environment, Lonpac continued to exercise strong underwriting discipline and saw a drop in its claim incurred ratio from 41.0% to 38.3% and therefore boosted its underwriting profit by 17.9% to RM278.5 million in FY16 from RM236.3 million in FY15.
“On the local front, 2017 will be another challenging year and with the detariffication of motor insurance, we expect to see keener competition in motor business, which may have a detrimental impact on our underwriting performance. However, with our robust capital position and strong distribution capability, we are prepared to face these challenges with cautious optimism,” said Teh.