LPI CAPITAL BHD ACHIEVES ONE BILLION IN REVENUE AND HIGHER PRE-TAX PROFIT FOR THE YEAR 2012
LPI Capital Bhd (Group) registered another strong set of results for the year 2012 with a record pre-tax profit of RM214.0 million on the back of an expanded revenue of 15%. Revenue for the Group grew substantially from RM902.7 million in 2011 to RM1,039.3 million crossing the RM1.0 Billion mark in 50 years. Likewise, the Group’s wholly-owned subsidiary Lonpac Insurance Bhd (Lonpac) also recorded more than a billion Ringgit in gross premium income reaching RM1,033.9 million which represents a 14.0% growth over the previous corresponding year.
Commenting on the Group’s performance, Tan Sri Dato’ Sri Dr. Teh Hong Piow, Founder and Chairman of the Group said, “2012 has been a challenging year, dominated by the continuing Euro zone crisis and the looming threat of the US fiscal cliff as well as the exceptionally high frequency of fire losses and the unprecedented rise in motor claims, particularly theft losses and escalating court awards for accident fatalities and bodily injury claims.”
Tan Sri Teh continued, “Despite these exceptional events, Lonpac still managed to chalk up an impressive underwriting profit of RM151.9 million as compared to RM137.9 million recorded last year, showing a commendable increase of 10.0%”. This has contributed positively to the Group’s profit before tax of RM214.0 million for the year under review.”
“The growth in underwriting profits generated by Lonpac has been the key driver to the Group’s pre-tax profit,” noted Tan Sri Teh.
"Despite operating in a highly competitive market, the Group still achieved an impressive growth rate of 15.0% and 14.0% in both revenue and gross premium income respectively," said the Chairman. He continued, “The current low interest rate and the listless equity market have no significant adverse effects on our investments. Our investment in the equity market has instead appreciated by 21.6% from RM773.1 million to RM939.8 million.”
The Chairman said, "The resilience of Lonpac’s business model is a testament of the robustness of the company's business diversity and justifies our controlled appetite for risk acceptance. Lonpac continues to exercise and enjoy a culture that is driven by a strong commitment and a narrowed focus on underwriting discipline and good risk management. Our prudent underwriting policy has consistently produced improved underwriting results for all classes of business over the past years.”
HIGHLIGHTS OF THE GROUP’S PERFORMANCE FOR THE FOURTH QUARTER AND THE YEAR :
Quarter Ended
|
Year Ended
| |||
31/12/2012
|
31/12/2011
|
31/12/2012
|
31/12/2011
| |
Revenue
(RM’000)
|
271,929
|
239,323
|
1,039,326
|
902,729
|
Gross Premium Income
(RM’000)
|
214,654
|
197,086
|
1,033,860
|
907,912
|
Earned Premium Income
(RM’000)
|
152,596
|
144,130
|
584,522
|
526,681
|
Underwriting Profit
(RM’000)
|
51,143
|
40,388
|
151,869
|
137,928
|
Profit Before Tax
(RM’000)
|
62,622
|
51,999
|
214,036
|
200,053
|
Net Profit Attributable
To Shareholders
(RM’000)
|
47,385
|
39,334
|
166,925
|
154,494
|
Net Return
On Equity (%)
|
3
|
3
|
12
|
13
|
Earnings Per Share
|
21.51 sen
|
17.85 sen
|
75.77 sen
|
70.13 sen
|
Claims Incurred Ratio
(%)
|
40
|
50
|
48
|
49
|
Management Expense Ratio (%)
|
18
|
16
|
19
|
18
|
Commission Ratio (%)
|
9
|
6
|
8
|
7
|
Combined Ratio (%)
|
67
|
72
|
75
|
74
|
Strong Profit Performance
Tan Sri Teh highlighted, “The improved performance for the 4th quarter saw an increase of 20% in pre-tax profit of RM62.6 million and consequently a better pre-tax profit of RM214.0 million for the whole year of 2012. Net profit attributable to shareholders rose by 8.0% from RM154.5 million to RM166.9 million bringing the Group’s earnings per share to 75.8 sen as compared to 70.1 sen achieved last year.”
Strong Momentum in Revenue and Premium Growth
The Group created a new milestone with revenue and gross premium income crossing the ONE BILLION RINGGIT mark. This achievement is more evocative as the increased premium income translated into better underwriting results.
“It is inspiring to note that the strong growth in premium income was achieved without compromising on the quality of our risk selection. The Group will continue to expand in profitable lines of business,” commented Tan Sri Teh.
Tan Sri Teh said, “The Group’s strong balance sheet and effective capital allocation process provide us with the necessary flexibility to appropriately direct and deploy resources to business lines that are profitable. Our attention to quality risk selection and risk management remained undiminished. The Group will continue to enhance its delivery system to be more cost effective.”
Strong Balance Sheet
Tan Sri Teh continued, “The Group’s balance sheet is strong and healthy with total assets standing at RM2,749.3 million, 14.0% higher than that of the corresponding year.
“The Group’s shareholders’ funds also increased to RM1,372.7 million from RM1,181.6 million with an encouraging return on equity of 12.0%. The Group’s total investment portfolio remains stable and returns on its investments are not anticipated to change significantly.”
Dividend Payment
Tan Sri Teh announced that, “In view of the Group’s encouraging performance, a second interim single tier dividend of 50 sen has been declared by the Board”.
“The second interim dividend payment which amounted to RM110.2 million is part of the Group’s endeavour to reward its shareholders. The total net dividend paid and payable for the year is RM143.2 million,” emphasised Tan Sri Teh.
Future Prospects
“Although there are considerable uncertainties in the global economy with the Euro zone crisis as the greatest threat to the world economy at present, the outlook for the Malaysian economy remains stable, supported by continued strong domestic consumption and investment. The ongoing implementation of the Economic Transformation Programme will continue to drive both public and private investments,” said Tan Sri Teh.
Tan Sri Teh cautioned, "The Risk Base Capital (RBC) requirement introduced by Bank Negara Malaysia in 2009 and the pending liberalisation of the insurance sector have intensified competition and saw a few consolidations during the year. The Group’s strategy is to continue focusing on organic growth to increase market share and maintain an overall favorable operating performance. On the upside, however, the Group’s robust business plan and strong balance sheet, which are built on a broad foundation, have positioned us to respond innovatively even in a persistently challenging market. We will continue to assess all business opportunities with the objective of maximising long term shareholder value.”
