Reviewing the performance of LPI Capital Bhd (LPI) for the 3rd Quarter ofFY2022, Tan Sri Dato’ Sri Dr Teh Hong Piow, Chairman and Founder, commented, “Malaysia will not be spared if a global economic slowdown happens, given that it is an open economy and relies heavily on exports.
For Q3, Lonpac reported its Profit Before Tax at RM87.8 million, 24.3% lower than RM116.0 million achieved in 2021. With lower profit contribution from Lonpac, LPI’s Profit Before Tax was 21.3% lower at RM103.3 million as compared to RM131.3 million achieved in the previous corresponding Quarter, while its Net Profit Attributable to Shareholders declined by 29.1% to RM74.7 million. The lower Net Profit was partly due to the increase in taxation rate arising from the implementation of the Prosperity Tax. Net Return on Equity of LPI came in at 3.6% for the Quarter under review against 5.1% previously with Earnings Per Share reported at 18.77 sen, down from 26.45 sen achieved in the 3rd Quarter of FY2021.”
For the 9 months period ended 30 Sep 2022, LPI reported a 25.6% lower Profit Before Tax at RM252.5 million as compared to RM339.4 million in FY2021 while its Net Profit Attributable to Shareholders stood at RM193.0 million, 28.9% lower as compared to RM271.6 million achieved in FY2021. LPI’s Net Return on Equity registered at 9.3% for the 9 months’ period and Earnings Per Share came in at 48.46 sen.
For the 3rd Quarter, Lonpac’s Claims Incurred Ratio surged to 42.5% from 33.6% reported in the previous corresponding Quarter. Motor insurance had contributed to the deterioration in claims experience with its Claims Incurred Ratio surging to 66.9% from 55.8% in FY2021. Both Motor claims frequency and claims reserves reported significant increases during the Quarter. Miscellaneous Accident insurance similarly reported deteriorating claims experience with its Claims Incurred Ratio registering higher at 50.5% from 38.4% reported in the previous corresponding Quarter. With a higher Management Expense Ratio at 22.2% and Commission Ratio at 6.5%, Lonpac’s Combined Ratio increased to 71.1% as compared to the low 59.4% achieved in 3rd Quarter of FY2021.
With the higher Combined Ratio, Lonpac’s Underwriting Profit for the Quarter under review dropped by 30.5% to RM72.2 million from RM103.9 million recorded in the previous corresponding Quarter. The lower underwriting performance was also due to higher Unearned Premium Reserve recorded which resulted in a lower Net Earned Premium Income for the 3rd Quarter of FY2022 at RM250.1 million, despite the Gross Premium Income for the Quarter under review registering a strong 14.3% growth at RM409.2 million as compared to RM357.9 million in FY2021. Both Fire and Miscellaneous Accident classes of insurance registered double-digit growth in Gross Premium Income.
Tan Sri Teh added, “For the 9 months ended 30 Sep 2022, Lonpac’s Motor Claims Incurred Ratio had climbed to 77.3% from 59.3% registered in the previous corresponding period. Increase in repair costs and higher thirdparty bodily injury claims quantum contributed to the deterioration in motor claims experience. While Lonpac’s Gross Premium Income for the 9 months period was 5.0% higher at RM1,257.8 million, in line with the country’s strong economic performance, its Net Earned Premium Income was 4.6% lower at RM720.7 million from RM755.6 million recorded in previous corresponding period due to higher Unearned Premium Reserve provided. With higher Claims Incurred Ratio and lower Net Earned Premium Income, Lonpac reported Underwriting Profit of RM194.2 million, 31.7% lower than RM284.4 million recorded in the corresponding period of FY2021. Lonpac’s Profit Before Tax came in 24.8% lower at RM223.9 million for the first 9 months of FY2022 as compared to RM297.9 million achieved in FY2021.
