Pacific & Orient on cautious mode: CEO

KUALA LUMPUR: Motor insurer Pacific & Orient Bhd (P&O) is cautious on its business outlook for the financial year ending Sept 30, 2015 in view of the uncertainties in the global economy.
"I'm cautious because I don't think the overall economy worldwide is going to be good, Malaysia is dependent on the others. In terms of what happening now, you think the Malaysian economy getting more robust?" its managing director and CEO Chan Thye Seng told reporters after the company's AGM here yesterday.
He however, noted, that the group's motor insurance business has always been resilient.
"It's a compulsory insurance, you have no choice, it's only a matter of more or less," he said.
Chan acknowledged that it's very difficult for the group to expand its market share given the number of players in the motor insurance industry. There are 28 general insurers in the country.
"We're fairly small, probably 3% to 5% (market share), somewhere around there," he said, adding that the group's strength is its position as a niche industry player.
According to Chan, P&O claims ratio stands at around 70%, which is in line with the industry average. Net claims incurred ratio for motor insurance improved to 71.5% in 2014, compared with 72.7% in 2013.
When asked if there are any mergers and acquisitions in the pipeline, Chan declined to comment, except to say that "everything is for sale provided the price is right".
P&O had in 2013 sold its 49% stake in insurance subsidiary Pacific & Orient Insurance Co Bhd to Sanlem Group's Sanlem Markets Proprietary Ltd for RM270 million.
For the financial year ended Sept 30, 2014, P&O reported a 2.88% drop in net profit to RM48.68 million compared with the RM50.12 million it made a year before.
On the Goods and Services Tax implementation starting April 1, Chan believes the group's business will not be adversely affected as the tax regime is to be implemented across the board.
Meanwhile, he said the group is ready for the abolishment of statutory tariffs for the motor and fire insurance segments.
Under the New Motor Cover Framework introduced in 2012, there will be a gradual hike in motor tariff over a period of four years, to pave the way for the de-tariffication in 2016.
De-tariffication allows insurance premiums to be priced according to risk.