KUALA LUMPUR (Feb 3): LPI Capital Bhd’s net profit for the fourth quarter ended Dec 31, 2020 (4QFY20) rose 9.97% to RM95.23 million from RM86.6 million a year earlier, thanks to an improved claims ratio and higher gross premium income by its insurance unit Lonpac Insurance Bhd.

In a filing with Bursa Malaysia today, its revenue grew 5.79% to RM422.38 million from RM399.26 million in the corresponding quarter, mainly driven by a 6.7% growth in gross earned premium of RM25.4 million from its general insurance segment which offset a decrease in its investment holdings to RM500,000 from RM1.3 million prior.

Earnings per share increased to 23.9 sen for 4QFY20 versus 21.74 sen for 4QFY19.

In a separate statement, LPI Capital said the combined ratio of Lonpac dropped to 58.7% from 63.5% registered previously, thanks to the moderation of its claims ratio to 34.4% from 40.3%, which cushioned the slight increase in its its management expense ratio (17.1% from 16.2%) and commission ratio (7.1% from 7%).

"As a result, its underwriting profit surged by 16.3% to RM112.7 million from RM96.9 million. The profit before tax of Lonpac for the quarter under review improved by 7.4% to RM124.1 million from RM115.5 million reported in the previous corresponding period," it said.

Meanwhile, its gross premium income rose 8.3% to RM343.1 million from RM316.8 million, while its net earned premium rose 2.8% to RM273 million.

LPI declared a second interim dividend of 44 sen per share for 4QFY20 amounting to RM175.3 million, payable on March 1. This brought its total dividends per share declared for the year ended Dec 31, 2020 (FY20) to 72 sen compared with 70 sen a year ago.

“Together with the first interim dividend of 28 sen per share (FY2019: 27 sen) amounting to RM111.5 million which was paid in August 2020, the proposed total dividend pay-out for the financial year 2020 is RM286.8 million representing 85.2% (FY2019: 86.5%) of the group’s net profit attributable to shareholders and a 2.8% increase from the total payout of RM278.9 million made in the financial year 2019,” said LPI Capital in the statement.

For the full year of FY20 ended Dec 31, net profit rose 4.46% to RM336.73 million compared with RM322.36 million previously, while revenue inched up 1.18% to RM1.62 billion from RM1.6 billion a year ago.

LPI Capital chairman Tan Sri Teh Hong Piow said 2021 will continue to be dominated by the Covid-19 pandemic and the global efforts to contain the spread.

“Our hope is that the rolling out of several vaccines against the virus will prove fruitful and set us on the path to recovery. The global economy is expected to recover upon the successful containment of the virus which will be a positive catalyst spurring greater economic activities in Malaysia which in turn will increase the demand for insurance products,” he said.

During this challenging period, he added, the LPI Capital has taken all necessary precautions to ensure operational continuity and safeguarding the health and safety of its staff and customers.

“The need for digital transformation was further emphasized by the events of the year under review and we have accelerated our digital solutions to cope with the restrictions imposed by the MCOs [Movement Control Orders]. The Group believes that we will emerge stronger from these challenges and be more resilient to future shocks,” said Teh.

Shares of LPI Capital closed 28 sen or 2.12% higher at RM13.46 today, translating into a market capitalisation of RM5.36 billion.