LPI Capital Bhd Group 4th Quarter results came in below expectation as Chairman, Tan Sri Dato’ Sri Dr Teh Hong Piow pointed to the lackluster performance as “Businesses are still trying to survive and rebuild following the impact of the unprecedented pandemic amid an uneven state of recovery” adding that the supply chain bottlenecks combined with the impact of inflation could potentially disrupt the momentum of economic recovery.
The holding company was affected by the normalisation of claims ratios with the easing of the lockdowns and the re-opening of the economy, the year-end flooding disaster, and lackluster performance of the Fixed Income Unit Trusts had also contributed to the lower profit of the Group.
For the 4th Quarter ended December 2021, LPI reported a 20.6% lower Profit Before Tax of RM97.9 million as compared to RM123.3 million registered in the previous corresponding quarter. Its Net Profit Attributable to Shareholders fell 23.2% to RM73.1 million from RM95.2 million reported in FY2020. Net Return on Equity lowered to 3.4% from 4.6% while Earnings Per Share was registered at 18.34 sen.
Its wholly-owned insurance subsidiary, Lonpac Insurance Bhd, reported an increase in its Claims Incurred Ratio to 37.7% from 34.4% in the corresponding quarter in FY2020. Generally, all major classes of insurance reported an increase in their Claims Incurred Ratio as economic activities resumed and movement restrictions eased in the last Quarter of the year. The floods in December also contributed partly to the increase with Lonpac receiving more than 1,300 flood claims. However, during this period, the insurance arm managed to increase its market share with Gross Premium Income having improved by 5.8% to RM363.0 million from RM343.1 million.”
Tan Sri Teh added “Despite the various challenges encountered, triggered mainly by the prolonged pandemic, the LPI Group remained resilient and continued to report satisfactory performance in FY2021. For the 12 months ended 31 December 2021, LPI registered a 5.9% increase in its Revenue to RM1,717.7 million from RM1,621.6 million achieved in FY2020, mainly due to higher Gross Earned Premium which contributed 93.8% to the total operating revenue in FY2021. The Group managed to report a marginal 0.9% improvement in its Profit Before Tax to RM437.3 million from RM433.6 million registered in the previous corresponding period.
For the 2021 financial year, Lonpac reported a 4.9% lower Profit Before Tax of RM397.0 million as compared against RM417.6 million achieved in FY2020. The lower profitability was partly due to the poor performance of its Fixed Income Unit Trusts Investment as the increase in bond yields during the year had lowered the valuation of the unit trust investment. In FY2021, Lonpac booked in Net Fair Value Loss of RM46.1 million for its investment as compared to Net Fair Value Gain of RM1.5 million reported in FY2020. However, it registered a strong underwriting performance, especially in the first three quarters of the year.
Despite facing operational challenges during the year arising from movement restrictions under various stages of MCOs, Lonpac had sustained its business portfolio and registered a marginal 0.7% increase in its Gross Premium Income to RM1.56 billion from RM1.55 billion reported in FY2020.
