KUALA LUMPUR: LPI Capital Bhd posted a stronger net profit of RM83.57 million for the fourth quarter ended Dec 31, 2022 (4QFY2022), up 14.4% from RM73.07 million for the previous year's corresponding quarter, mainly contributed by an increase in investment income and a lower provision for fair value losses on investment.
Revenue for the quarter rose a marginal 0.96% to RM433.17 million from RM429.04 million previously, on higher tax-exempt dividend income received from its equity investment, its bourse filing showed. Earnings per share rose to 20.97 sen from 18.34 sen.
In particular, the group's wholly owned insurance subsidiary Lonpac Insurance Bhd's profit before tax (PBT) grew 15.1% to RM114.1 million from RM99.1 million, due mainly to lower fair value loss provision on investment and higher interest income. Lonpac registered a 2.2% increase in gross premium income to RM371.1 million, while net earned premium income rose 4.6% to RM268.2 million. The group's investment holding segment also recorded a higher PBT of RM6.9 million — as compared to a loss of RM1.5 million previously — on higher dividend income received.
The group declared a second interim dividend of 35 sen per share — down from 45 sen for FY2021 — which amounts to a payout of RM139.4 million. Together with the first interim dividend of 25 sen per share amounting to RM99.6 million that was paid in August 2022, the group's total dividend payment for FY2022 is RM239 million, representing 86.4% of the group's net profit — as opposed to its previous payout of 85.5% of group profit for FY2021.
For the full FY2022, LPI Capital's net profit dropped 19.75% to RM276.61 million from RM344.68 million for FY2021, mainly dragged by the general insurance segment, which saw a 15.2% drop in income to RM338.9 million from RM399.7 million.
“The underwriting surplus decreased by 24.9% or RM94.6 million to RM285.1 million from RM379.7 million reported for the previous financial year, mainly due to lower net earned premium income and higher net claims incurred as well as higher management expenses.
“The investment holding segment recorded a lower profit before tax of RM34.6 million, as compared to RM37.6 million reported for FY2021, mainly due to lower tax-exempt dividend income received from its equity investment,” it said.
Revenue for the year fell 3.5% to RM1.66 billion from RM1.71 billion, due to lower revenue from the general insurance segment and lower dividend income received from its investment holding segment.
Looking ahead, LPI Capital said the Malaysian economy is expected to moderate in 2023, amid challenging external conditions and slowing domestic demand.
However, it noted there may be downside risks to the outlook for 2023 due to rising claims and reinsurance costs, global political and economic uncertainties, and rapidly changing operating models.
“We will continue to drive our digital transformation to improve customer experience and enhance operational efficiency. The LPI group's prudent underwriting approach and diversified business development channels will facilitate it to weather the numerous challenges in FY2023,” the company said.
At Tuesday's (Feb 7) lunch break, LPI shares were unchanged at RM12.90 sen each, giving the group a market value of RM5.14 billion.
Source : The Edge Markets