PETALING JAYA: LPI Capital Bhd
expects the year ahead to remain challenging, amid uncertainties both domestically and internationally.
Chairman Tee Choon Yeow said advanced economies are still at risk of falling into recession, while political strife worsened further in the last months of 2023.
“Although there were initial signs of a global economic recovery, these prospects have been dampened by the ongoing strife in Eastern Europe and in the Middle East.
“In such circumstances, operating conditions may change at a moment’s notice and thus, the group remains keenly focused on international and local developments that may affect our prospects,” he said in the company’s annual report.
LPI provides general insurance coverage through its subsidiary, Lonpac Insurance Bhd.
Tee said the group’s underwriting performance for the coming year will be largely influenced by external developments.
“Although the number of claims will further normalise in the coming year, external factors such as inflation, the value of the ringgit and trade disruption will continue to weigh on performance.
“For instance, inflationary pressure will affect the value of claims, while trade disruptions will continue to affect our maritime business.
“Meanwhile, we can also expect to see continued margin compression from the ongoing liberalisation of the fire and motor segments of the general insurance industry.”
Tee said the move away from tariffs to risk-based assessments is both a risk and an opportunity for the group.
“We will continue to make the necessary adjustments to manage the risks and make the most of new opportunities,” he said.
Tee said the competitive insurance industry has also brought about greater competition for talent, specifically for experienced agents and employees.
“As our agents represent our single largest distribution network, we must continue to recruit and grow our agency force.
“The evolving landscape of insurance, characterised by increasing digitalisation and growing demand for diverse skills, has heightened the complexities of recruitment and retention.”
Additionally, Tee said the post-pandemic era has brought about a transformation in the nature of work, which has similarly prompted the need for innovative management approaches.
“It is therefore imperative that the group enhances the attractiveness of our employee propositions to effectively compete for top talent in the industry.”
Tee also said LPI will continue to further digitalise its operations as part of the group’s long-term sustainability strategy.
“This includes enhancements to the back-end supporting our technical operations and also on the customer-facing side, to provide them with greater flexibility and options to purchase and manage their insurance policies.
“We believe that this will make insurance more widely available and thus help address the issue of Malaysians being underinsured.”
For the first quarter ended March 31, 2024 (1Q24) LPI’s net profit rose to RM101.29mil from RM73.83mil in the previous corresponding period, driven by higher profit from its general insurance segment.
Revenue improved to RM469.76mil from RM463.3mil a year earlier, mainly due to contribution from its investment holding segment that increased by RM10.8mil to RM21.9mil, as compared to RM11.1mil in the previous corresponding quarter in 2023, attributed to the higher dividend income.
The company’s general insurance segment recorded lower revenue of RM447.9mil as compared to RM452.2mil in the previous corresponding quarter in 2023, due to lower recognition of insurance revenue.
