PETALING JAYA: LPI Capital Bhd’s net profit for second quarter ended June 30, 2022 (Q2) was 32.3% lower at RM56.77 million compared with RM83.92 million a year ago due to lower profit from the general insurance segment.
Revenue decreased 5.5% to RM397.05 million from RM419.99 million in the same quarter last year due to lower gross earned premium from its general insurance segment. Investment holding segment also recorded lower revenue due to lower interest income received.
For the six months period, LPI’s net profit was 28.8% lower at RM118.30 million compared with RM166.23 million last year; while revenue decreased 7.7% to RM794.78 million from RM860.78 million a year ago mainly due to the general insurance segment, which registered a decrease of 6.5%. The investment holding segment also recorded lower revenue due to lower dividend income received during the current financial period.
Chairman and founder Tan Sri Teh Hong Piow (pix) said the performance of the Malaysian general insurance industry has been affected by the volatility of returns on investment instruments and the normalisation of claims experience, as the country transitions to endemicity. Hence, the performance of Lonpac Insurance Bhd, the group’s wholly owned insurance subsidiary, had been impacted by a surge in claims and the poor results of its investment portfolio. Lonpac’s underwriting performance in FY2022 weakened as claims begin to normalise upwards, especially from the motor and miscellaneous accident insurance segments.
“Despite the lower profit reported by the group in the H1’22 as compared to the corresponding period in FY2021, the board of directors has declared a first interim dividend of 25.0 sen per share (29.0 sen per share in FY2021). This first interim dividend payment which amounts to RM99.6 million and this first interim dividend payment represents 84.2% of the group’s net profit,“ said Teh.
Amid the heightened uncertainty and volatility of the operating environment, the group will continue to strengthen its distribution channels and tighten its underwriting policy to facilitate continued growth and improved underwriting performance. The second phase of liberalisation of the insurance industry expected to commence in the H2’22 will put further pressures on premium pricing and underwriting margin.
Nevertheless, with its emphasis on prudency in underwriting and continued product innovation, the LPI group is confident that it will remain competitive and resilient to sustain its profitability in the liberalised environment.