KUALA LUMPUR: Insurance provider LPI Capital Bhd has allocated a capital expenditure of RM20 million to upgrade its IT system, and aims to expand organically in its existing markets of Cambodia, Singapore and Malaysia.

Speaking to reporters after its annual and extraordinary general meetings here yesterday, its chief executive officer Tan Kok Guan said the amount set aside for its IT system is mainly to improve connectivity between its insurance agents and clients.

Going forward, Tan said the insurance industry is expected to grow in tandem with the Malaysian economy.

LPI Capital operates in Malaysia and Singapore through its wholly-owned unit, Lonpac Insurance Bhd.

The company is also targeting to achieve double-digit premium growth for its businesses in Singapore and Cambodia this year. LPI Capital (fundamental score: 2.10; valuation score: 1.95) would continue to strengthen its distribution channels by recruiting more agents in Cambodia. “It’s a small but growing market,” Tan said.

LPI Capital has a 45% stake in its Cambodia associate (Campu Lonpac Insurance Ltd), with the remaining 55% owned by Public Bank group.

Revenue from outside Malaysia constituted less than 8% of the group’s revenue in financial year ended Dec 31, 2014 (FY14).

Tan explained that the decline was mainly due to a restructuring of its Singapore portfolio.

LPI Capital is assessing the feasibility of venturing into new markets in Asean, he said.

To increase its market share, LPI Capital aims to increase its agency force by 10% annually. The agency force is Lonpac’s largest distribution channel, contributing about 40% of its total premium income.

As at Dec 31, 2014, LPI had a total of 1,793 agents in Malaysia, compared with 1,665 in 2013.

As for the upcoming implementation of the goods and services tax (GST), Tan said, “There is no material impact on insurance companies. We don’t foresee any slowdown despite the implementation of GST.”

The company on Jan 28 this year announced a proposed bonus issue of 110.6 million new shares on the basis of one bonus share for every two existing shares.

For FY14, LPI Capital’s net profit jumped 40.5% year-on-year to RM283 million from RM201.44 million. Revenue increased 4.53% to RM1.17 billion from RM1.12 billion.

LPI Capital shares rose 35.77% from RM16.22 a year ago to close at  RM22.02 yesterday, translating into a market capitalisation of RM4.8 billion.

This article first appeared in The Edge Financial Daily, on March 10, 2015.