PETALING JAYA: LPI Capital Bhd reported a 7.7% increase in net profit to RM70.78 million for the second quarter (Q2) ended June 30, 2019 against RM65.74 million in the previous corresponding period, thanks to higher contribution from premium income.
Its revenue also expanded 9.6% to RM386.9 million from RM353.05 million.
The group has proposed to declare an interim dividend of 27 sen per share for the quarter under review.
For the first half of the year, LPI’s net profit increased 7% to RM147.94 million from RM138.24 million on the back of a 6.2% rise in revenue to RM779.6 million from RM734.05 million.
LPI said in a statement that its wholly-owned insurance subsidiary Lonpac Insurance Bhd’s (Lonpac) gross written premium income grew 20.7% to RM366.6 million in Q2, while net earned premium income increased 12% to RM252 million.
However, its combined ratio rose to 71% from 68.7% due to higher claims incurred and commission ratios. The poorer claims experience was mainly in miscellaneous accident and medical classes of insurance.
Despite the deteriorating underwriting results of the two classes of insurance, Lonpac registered a 3.4% increase in underwriting profit to RM73.0 million in Q2.
LPI founder and chairman Tan Sri Teh Hong Piow (pix) is of the view that 2019 continues to be a challenging year for the Malaysian general insurance industry amid the liberalisation process and the inert economic environment.
“We expect that the claims ratio may continue to deteriorate in the light of keen competition in pricing and the fight for market share. Lonpac will, however, continue to exercise prudency in risk selection and claims management in its quest to be the premier player in the market.”
He noted that more innovative products will be launched for the preferred portfolio while under-performing portfolio will be subjected to tightened underwriting review.
“Lonpac will ensure that its underwriting performance will not be compromised by its business expansion strategy.”
After a gloomy period of stagnation, Teh said the insurance industry may benefit from the recent easing of tensions in global trade disputes, the intensified efforts by the government to attract foreign direct investments and stimulate domestic investments as well as the resumption of some government infrastructure works.
“We are confident that LPI Group is ready to reap any benefits from the improved economic activities in the second half year of 2019.”