LPI Capital Bhd is targeting a 10% increase in gross premium to RM1bil this year, to be driven by property insurance for infrastructure projects under the Economic Transformation Programme(ETP). The general insurer reported RM907.9 million in gross premiums last year, a 20 per cent increase, compared to RM755.9 million made in 2010.
To boost its property segment, LPI Capital chief executive Tee Choon Yeow said the group's wholly-owned subsidiary, Lonpac Insurance Bhd, would try to insure all the large infrastructure projects, such as the My Rapid Transit project, provided insurance rates and returns were attractive.
“We certainly do not want to be participating in an insurance consortium where the rates are not adequate. We will work our way to participate in most of the large projects so long as most of the terms and conditions are favourable to the insurer,” he told a press conference after LPI Capital's AGM.
"Our property business should do better this year and contribute between 37 per cent and 38 per cent to our overall gross premiums," said Tee, who is also Lonpac's adviser.
LPI also expects strong growth in its marine, aviation and transit (MAT) segment, which it expects will make a larger contribution to its overall gross premium portfolio.
For the motor business, Lonpac chief executive officer Tan Kok Guan said the target is to reduce its motor loss ratio to 75 per cent from 81.1 per cent last year. Its motor portfolio makes up almost 30% of the group's total premium. Lonpac's motor ratio took a hit last year when it suffered huge losses incurred by the Malaysian Motor Insurance Pool (MMIP), which was formed to cater the unplaced motor risk. Tan does not anticipate MMIP to lose more money this year and expects the recent motor insurance premium increases to mitigate any impact on its bottom line.
To help expand its business market, Lonpac plans to drive up its "Global Partnership" business as well as agency business and expand its branch network. The "Global Partnership" was established with foreign insurers and reinsurers to tap into their network of worldwide clients, who are conducting businesses in Malaysia. The network is expected to contribute RM60 million to Lonpac's gross premiums this year, compared to RM50 million made last year.
It now has 21 branches, with four opened last year and another three to be opened this year in peninsular Malaysia.
On the mergers and acquisitions that are said to spur the insurance sector, Lonpac Tan said the market consolidation would be an opportunity for Lonpac to expand. “When some of the companies merge with other companies, we can find opportunities to tap into their business through their client base or agents,” he said.
Tee added that despite unrelenting economic uncertainties, Lonpac was expected to sustain profitability and recurring income as “the Government has taken initiatives to make sure there will be 5.5% gross domestic product growth by way of the ETP, MyRapid Transit project and some highway projects to boost local economy.”
