KUALA LUMPUR (Feb 26): LPI Capital Bhd's net profit for the fourth quarter ended Dec 31, 2023 (4QFY2023) jumped 44% year-on-year (y-o-y) to RM78.6 million from RM54.6 million, primarily due to the absence of the one-off Cukai Makmur or prosperity tax that was imposed in FY2022.

The insurer group's earnings per share improved to 19.72 sen from 13.71 sen, its stock exchange filing on Monday showed. Revenue rose 26.5% to RM481.4 million from RM380.5 million in 4QFY2022, boosted mainly by its general insurance segment.

The group declared a second interim dividend of 40 sen per share, up from 35 sen per share in FY2022 payable on March 20. This brings its total FY2023 payout to 66 sen — up from 60 sen in FY2022 — representing 83.8% of the group’s net profit.

The group's profit before tax (PBT) in 4QFY2023 grew 24.8% to RM103.2 million from RM82.7 million in 4Q2022, attributable to higher profit from its general insurance segment, which rose 38% to RM104.5 million from RM75.7 million. The stronger insurance business offset the losses at its investment holding segment, which recorded a loss before tax of RM1.3 million versus a profit of RM7 million previously due to lower dividend income.

Its wholly-owned Lonpac Insurance Bhd (Lonpac) recorded a PBT of RM104 million in 4QFY2023, up 37% RM75.9 million in 4QFY2022 due to a 34% y-o-y growth in the insurance service result, which rose to RM81.2 million from RM60.6 million.

For the full FY2023, the group's net profit came in 24.4% higher at RM313.7 million compared with RM252.2 million in FY2022 as revenue rose 16.5% to RM1.91 billion from RM1.63 billion on higher insurance revenue as well as increased interest and dividend income. Insurance revenue accounted for 93.5% of the group's total operating revenue in FY2023.

The group's PBT grew 15.6% to RM394.9 million in FY2023 from FY2022's RM341.7 million, mainly due to higher investment return, which increased by 62.5% or RM57.4 million to RM149.3 million from RM91.9 million in FY2022 driven by higher investment income and net fair value gains.

Looking ahead, LPI said the phased liberalisation of the general insurance industry has led to increased price competition, putting pressure on underwriting margins. Additionally, extreme weather events such as floods have pushed up the cost of reinsurance, affecting insurers’ profitability.

The group affirmed its commitment to appropriate pricing policies for certain flood-related products and prudent underwriting practices to mitigate risks.

It also said it will continue focusing on strengthening and expanding its distribution channels especially agency and bancassurance to build larger market shares in its portfolio.

Shares in LPI traded eight sen or 0.64% lower at RM12.36 on Monday, valuing the group at RM4.92 billion.