Tuesday, Nov 02, 2004
Lonpac Insurance Bhd’s (Lonpac) general insurance strength rating has been affirmed at AA based on the Company’s well-diversified insurance book; stewardship; strong distribution channels in particular, through the closely affiliated Public Bank group; relatively conservative investment policy; solid liquidity profile and adequate capitalization. These strengths, however, continued to be moderated by the unfavourable claims experience in the motor business, average investment performance and high reinsurance usage.
Lonpac was ranked tenth in the country in terms of gross premiums and sixteenth in terms of net premiums with a market share of 2.7% and 2.0% respectively in 2002/2003. The Company seeks to enlarge its share of the growing general insurance market by improving its operational efficiency and service quality.
In FY2003, Lonpac enjoyed a 17.2% growth in gross premium income (FY2002: +35.7%), outperforming the industry average of 8.5%. During the year, Public Bank Group contributed 28.5% towards the total gross premiums of RM321.2 million.
Although Lonpac maintains a relatively well spread book, the Company continues to focus on motor, fire as well as workers’ compensation and employers’ liability (WC&EL) as its core business lines. Despite being a relatively small player in the market, the motor business remained the Company’s main net premiums contributor. In 2002/2003, Lonpac maintained its position as the fourth largest fire insurer in the country with a 3.6% share of the total net premiums. Contributing underwriting profits of RM30.2 million in FY2003 (FY2002: RM23.8 million), the fire business continued to be the Company’s key profit driver.
Owing to its tight and selective underwriting practice, Lonpac registered a 26.3% increase in overall underwriting profits to RM21.2 million. Expense ratio was higher at 28.8% (FY2002: 27.7%) whilst claims ratio declined marginally to 55.3% in FY2003 (FY2002: 55.4%). The latter resulted in a slight improvement in underwriting margin to 13.8% (FY2002: 13.6%), which was superior to the industry’s 8.6% (2001/2002: 4.1%). The strong underwriting surplus and non underwriting income during the year contributed to the 17.1% growth in pre-tax profit to RM37.1 million.
In FY2003, liquid assets and equities declined marginally to account for 69.5% (FY2002: 69.9%) and 15.0% (FY2002: 16.0%) of total investments respectively. The composition of private debt securities (PDS), however, increased to 12.0% (FY2002: 10.9%). As a result of the lower investment leverage of 31.9% (FY2002: 33.2%), investment yield declined slightly to 3.9% (FY2002: 4.1%).
Lonpac’s underwriting cash flow ratio remained relatively strong at 131.5% (FY2002: 147.7%). Despite the 6.5% increase in liquid assets to RM246.5 million, liquid assets coverage of both liabilities and technical reserves were lower at 56.9% (FY2002: 55.5%) and 121.0% (FY2002: 129.6%) respectively, due to the higher growth of liabilities and technical reserves.
Lonpac was ranked tenth in the country in terms of gross premiums and sixteenth in terms of net premiums with a market share of 2.7% and 2.0% respectively in 2002/2003. The Company seeks to enlarge its share of the growing general insurance market by improving its operational efficiency and service quality.
In FY2003, Lonpac enjoyed a 17.2% growth in gross premium income (FY2002: +35.7%), outperforming the industry average of 8.5%. During the year, Public Bank Group contributed 28.5% towards the total gross premiums of RM321.2 million.
Although Lonpac maintains a relatively well spread book, the Company continues to focus on motor, fire as well as workers’ compensation and employers’ liability (WC&EL) as its core business lines. Despite being a relatively small player in the market, the motor business remained the Company’s main net premiums contributor. In 2002/2003, Lonpac maintained its position as the fourth largest fire insurer in the country with a 3.6% share of the total net premiums. Contributing underwriting profits of RM30.2 million in FY2003 (FY2002: RM23.8 million), the fire business continued to be the Company’s key profit driver.
Owing to its tight and selective underwriting practice, Lonpac registered a 26.3% increase in overall underwriting profits to RM21.2 million. Expense ratio was higher at 28.8% (FY2002: 27.7%) whilst claims ratio declined marginally to 55.3% in FY2003 (FY2002: 55.4%). The latter resulted in a slight improvement in underwriting margin to 13.8% (FY2002: 13.6%), which was superior to the industry’s 8.6% (2001/2002: 4.1%). The strong underwriting surplus and non underwriting income during the year contributed to the 17.1% growth in pre-tax profit to RM37.1 million.
In FY2003, liquid assets and equities declined marginally to account for 69.5% (FY2002: 69.9%) and 15.0% (FY2002: 16.0%) of total investments respectively. The composition of private debt securities (PDS), however, increased to 12.0% (FY2002: 10.9%). As a result of the lower investment leverage of 31.9% (FY2002: 33.2%), investment yield declined slightly to 3.9% (FY2002: 4.1%).
Lonpac’s underwriting cash flow ratio remained relatively strong at 131.5% (FY2002: 147.7%). Despite the 6.5% increase in liquid assets to RM246.5 million, liquid assets coverage of both liabilities and technical reserves were lower at 56.9% (FY2002: 55.5%) and 121.0% (FY2002: 129.6%) respectively, due to the higher growth of liabilities and technical reserves.