KUALA LUMPUR (July 15): LPI Capital Bhd's net profit rose 7.7% to RM70.78 million in the second quarter ended June 30, 2019 (2QFY19) from RM65.73 million a year ago, mainly driven by the general insurance segment, whose pre-tax profit increased by 7.7% year on year (y-o-y).

This resulted in higher earnings per share of 17.77 sen for 2QFY19 versus 16.5 sen for 2QFY18.

Operating revenue for the quarter rose 9.6% to RM386.9 million from RM353.05 million a year ago.

LPI declared a first interim dividend of 27 sen per share totalling RM107.6 million for the financial year ending Dec 31, 2019, payable on Aug 8.

Net profit grew 7% to RM147.94 million in the cumulative six months ended June 30, 2019 (1HFY19) from RM138.24 million a year ago, while operating revenue increased 6.2% to RM779.6 million from RM734.05 million in 1HFY18.

In a separate statement, LPI founder and chairman Tan Sri Teh Hong Piow said its wholly-owned insurance subsidiary Lonpac Insurance Bhd reported a strong growth in its gross written premium income in 2QFY19 — up 20.7% y-o-y to RM366.6 million.

He said 2019 continues to be a challenging year for the Malaysian general insurance industry amid the liberalisation process and the inert economic environment. "We expect that the claims ratio may continue to deteriorate in light of keen competition in pricing and the fight for market share."

Teh said Lonpac will, however, continue to exercise prudence in risk selection and claims management in its quest to be the premier player in the market.

"More innovative products will be launched for the preferred portfolio while under-performing portfolio will be subjected to tightened underwriting review.

"Lonpac will ensure that its underwriting performance will not be compromised by its business expansion strategy," he added.

Teh also pointed to the recent easing of tensions in global trade disputes, the intensified efforts by the government to attract foreign direct investments and stimulate domestic investments and the resumption of some government infrastructure works may prove to be good news to the insurance industry after a gloomy period of stagnation.

"We are confident that LPI Group is ready to reap any benefits from the improved economic activities in the second half year of 2019.”

At the midday break, LPI Capital's share price was unchanged at RM16 for a market capitalisation of RM6.37 billion.