KUCHING: LPI Capital Bhd’s (LPI Capital) earnings for the first quarter of 2015 (1Q15) grew 13 per cent year-on-year (y-o-y) to RM57.19 million.
The company in a filing to Bursa Malaysia yesterday said its turnover for 1Q15 also registered growth with an increase of five per cent y-o-y to RM291.73 million.
Meanwhile, LPI Capital in a press statement yesterday said the company’s profit before tax (PBT) for 1Q15 registered an improvement of 12.8 per cent y-o-y to RM70.7 million from RM62.7 million recorded in the previous corresponding period despite weaker global economic outlook and slower growth projection of the domestic economy.
The company explained that the impressive financial performance of LPI Capital was contributed by better results of its wholly-owned insurance subsidiary, Lonpac Insurance Bhd (Lonpac).
For 1Q15, LPI Capital pointed out that Lonpac reported PBT of RM53.3 million, an improvement of 13.6 per cent over RM46.9 million registered in the first quarter of 2014.
The company added that its gross premium income increased by five per cent to RM372.4 million from RM354.6 million registered in the previous corresponding quarter while its net earned premium income also increased in tandem by 5.9 per cent from RM135.9 million to RM143.9 million.
Commenting on the group’s financial performance for 1Q15, LPI Capital’s chairman Tan Sri Dr Teh Hong Piow said, “In view of the volatile economic environment and competitive market, it is imperative for Lonpac to further strengthen its marketing force and distribution channels in order to improve its market position.
“The slower growth projection of the domestic economy has a direct impact on the growth in industry premium which leads to the erosion of premium rating.
“Despite facing these challenges, Lonpac registered a lower claims incurred ratio of 49.1 per cent, reduced from 50.8 per cent reported in the previous corresponding period.
“Its combined ratio improved to 70.7 per cent for the quarter under review as compared to 75.8 per cent reported previously.
“Consequently, the underwriting profit of Lonpac increased by 28 per cent from RM32.9 million recorded in the previous corresponding quarter to RM42.1 million.
“Notwithstanding the compressed margin and slower market growth, we will continue to prioritise shareholder return over premium growth.
“Prudent underwriting risk assessment and selection as well as sound claims management will continue to be our key business strategies towards our market share expansion plan,” he said.
Teh added LPI Capital’s net return on equity for 1Q15 increased to 3.5 per cent from 3.3 per cent reported previously while the earnings per share improved to 17.23 sen from 15.28 sen.
Teh further observed, “Globally, most countries are facing tough and unfavourable economic circumstances.
“In Malaysia, the challenging issues such as implementation of Goods and Services Tax (GST), low petroleum prices and lacklustre property market are expected to be temporary and we believe that Malaysian economy will achieve the targeted 4.5 per cent to 5.5 per cent gross domestic product (GDP) growth by year end.
“Facing these external economic weaknesses and intense competition, the group will continue to implement business innovation and improve its productivity and operational efficiency.
“We are optimistic that the group will see satisfactory growth in its overall operation and will enhance its shareholder value,” he concluded.