KUALA LUMPUR (July 9): Competition in the Malaysian general insurance industry has resulted in a lower profit margin for LPI Capital Bhd, which saw its net profit decrease by 3.4% to RM65.74 million for the second financial quarter ended June 30, 2018 (2QFY18) from RM68.06 million in 2QFY17.

This resulted in lower earnings per share for the current quarter under review of 16.5 sen compared with 17.09 sen in 2QFY17.

In a filing with Bursa Malaysia today, LPI recorded revenue of RM353.05 million in 2QFY18, which was marginally higher than its 2QFY17 revenue of RM352.71 million.

The group declared a first interim dividend of 26 sen per share, payable on Aug 1.

For the first half of its financial year ended June 30, 2018 (1HFY18), LPI reported a slightly lower net profit of RM138.24 million compared with RM138.63 million a year ago. Revenue for 1HFY18 grew by 4.8% to RM734.05 million from RM700.35 million in 1HFY17.

In a separate statement, LPI said the Malaysian general insurance industry continues to see stiff competition with Phase 2 of market liberalisation in full force as players are taking advantage of the liberalised environment to build their respective market share.

It added that the new competitive environment has caused the group's profit margin to compress and LPI has worked to compensate the lower margin with a bigger market share

LPI founder and group chairman Tan Sri Dr Teh Hong Piow said its wholly-owned insurance subsidiary Lonpac Insurance managed to continue to grow its market share for 1HFY18 despite the competitive market conditions, with gross premium income growing by 8.9% to RM787 million from RM722.9 million a year ago.

"Lonpac's net earned premium income similarly registered an impressive increase of 12.7% to RM441.5 million [in 1HFY18] from RM391.6 million a year ago. Underwriting profit was reported at RM130.2 million compared with RM129 million previously.

"However, the claims incurred ratio had climbed to 44% from 39.8% previously resulting from an increase in the claim frequency and quantum of motor and miscellaneous accident classes," said Teh.

On prospects, Teh said the group is confident it will sustain its performance in the second half of the year.

"LPI Group will continue to implement its prudent business strategies to further strengthen its market position and improve its performance," he added.

LPI shares were down 2 sen or 0.12% to RM16.98 at noon market close today, for a market capitalisation of RM6.75 billion.