CEO: This will be driven by property insurance for ETP projects
KUALA LUMPUR: LPI Capital Bhd is targeting a 10% increase in gross premium to RM1bil this year, to be driven by property insurance for infrastructure projects under the Economic Transformation Programme (ETP).
To boost its property segment, LPI Capital chief executive Tee Choon Yeow said the group’s wholly-owned subsidiary, Lonpac Insurance Bhd, would try to insure all the large infrastructure projects provided insurance rates and returns were attractive.
“We certainly do not want to be participating in an insurance consortium where the rates are not adequate. We will work our way to participate in most of the large projects so long as most of the terms and conditions are favourable to the insurer,” he told a press conference after LPI Capital’s AGM.
Lonpac’s main business is property insurance, which enjoyed 15% growth last year, contributing 35% of the group’s total premium. This year, it is expected to contribute 38%.
Tee added that despite unrelenting economic uncertainties, Lonpac was expected to sustain profitability and recurring income as “the Government has taken initiatives to make sure there will be 5.5% gross domestic product growth by way of the ETP, MyRapid Transit project and some highway projects to boost local economy.”
In addition, Lonpac’s partnerships with foreign insurers have also boosted the company’s gross premium. Last year, Lonpac’s global partnerships contributed RM50mil to the group.
Lonpac expects its global partnership to contribute 20% to the group’s premium income this year.
On the mergers and acquisitions that are said to spur the insurance sector, Lonpac chief executive Tan Kok Guan said the market consolidation would be an opportunity for Lonpac to expand. “When some of the companies merge with other companies, we can find opportunities to tap into their business through their client base or agents,” he said.
He said Lonpac was currently expanding its agent base, global partnerships and branches.
It now has 21 branches, with four opened last year and another three to be opened this year in Peninsular Malaysia.
In the financial year ended Dec 31, 2011 (FY11), LPI Capital posted 12% net profit to RM154.5mil from RM137.9mil in FY10. The group achieved 20% growth in gross premium at RM907mil.
Lonpac managed an underwriting profit of RM137.9mil, an increase of 18.2% from RM116.7mil previously. Based on its encouraging performance, the group declared a second interim single tier dividend of 50 sen on Feb 2 this year.
As for the higher motor loss ratio at 81.1% denting LPI Capital’s results, Tee explained that it was due to a one-time adjustment by the Malaysian Motor Insurance Pool (MMIP) which had adopted a risk-based capital framework.