KUALA LUMPUR (April 29): Shares in LPI Capital Bhd snapped a three-day losing streak on Monday, after the general insurer reported a 37% net profit surge in the first quarter, thanks largely to sharply lower net expenses from reinsurance contracts held and higher investment income.

LPI had turned positive following the results announcement, and rose nearly 3% to as high as RM12.12. The stock closed at RM11.92 at 5pm, valuing the company founded by the late Tan Sri Dr Teh Hong Piow of Public Bank Bhd at RM4.75 billion. Trading volume stood at 251,900 shares at the closing bell. 

Net profit for the three months ended March 31, 2024 (1QFY2024) was RM101.29 million compared to RM73.83 million over the same period last year, LPI said in an exchange filing. Revenue for the quarter edged up 1.4% year-on-year to RM469.8 million from RM463.3 million as gross written premiums rose.

“The Malaysian insurance industry will continue to face greater competition and underwriting margins compression owing to the phased liberalisation process,” LPI said. The company said it will focus on “strategic sectors that can provide steady and sustainable profits”.

For 1QFY2024, the company’s general insurance segment — which mainly provides motor and fire insurance — reported a 30% year-on-year increase in its profit before tax to RM107.45 million from RM82.4 million, on a lower net claims incurred ratio of 40.1% in 1QFY2024, from 51.8% a year earlier.

Meanwhile, the pre-tax profit of the investment holding segment more than doubled to RM19.9 million from RM9 million, contributed by higher tax-exempt dividend income received from its equity investment.

The company “will continue to strengthen its distribution channels by forming partnerships and enhancing its collaboration with agents and bancassurance partners, to grow the desired portfolios”, LPI added.

Shares of LPI closed at RM11.92 on Monday, up 12 sen from last Friday’s close. The stock have dipped two sen or 0.17% this year, amid caution among analysts.

There are three “hold” calls out of five research houses covering the stock and two “buy” ratings. The consensus 12-month target price is RM13.13.