Kurnia Group
Kurnia Asia Berhad Announced Its First Quarter 2006/07 Unaudited Results
November 9th, 2006
Petaling Jaya, 9 November 2006 - Kurnia Asia Berhad (KAB) announced its unaudited
financial results for the first quarter (Q1) ended 30 September 2006 at its
Corporate Head Office, Menara Kurnia. KAB, which wholly owns Kurnia Insurans
(M) Berhad (KIMB), is the largest general insurer listed on the Main Board
of Bursa Malaysia under the counter KURASIA 5097.
The Group recorded a net profit of RM 23.761 million for the 3 months ended
30 September 2006, which translated into net earnings per ordinary share (EPS)
of 1.58 sen compared to a net profit of RM 37.187 million or EPS of 2.48 sen
for the corresponding quarter in the preceding year. The lower net profit recorded
was mainly attributed to the lower underwriting surplus recorded during the
current period.
Gross premium income grew by 1.7% year-on-year, from RM 262.025 million to
RM 266.434 million, despite the challenging market environment resulting from
slower vehicle sales and drop in vehicle market price caused by the National
Automotive Policy (NAP), higher fuel prices and rising interest rates. Claims
expense increased by 1.2% year-on-year, from RM 162.008 million to RM 163.987
million. The Group's total assets expanded from RM 1.976 billion at the end
of preceding quarter to RM 2.019 billion at the end of the current quarter.
For the quarter-on-quarter performance, gross premium income dropped 4.7%,
from RM 279.622 million to RM 266.434 million, mainly due to the usually slower
momentum in production after the last financial year end. Claims expense reduced
by 43.5% quarter-on-quarter, and net claims ratio improved from a high of 113.4%
for preceding quarter to 65.2% for current quarter. The exceptionally higher
claims ratio in preceding quarter was mainly due to the additional provision
made for Incurred But Not Reported (IBNR) claims reserves based on the annual
actuarial review by an independent actuary.
This represented further strengthening of the Group's technical reserves,
which did not involve any outflow of funds. With effect from this quarter,
the management has decided to make provision for IBNR claims reserves on a
quarterly basis to even out the fluctuations between the last quarter and earlier
quarters when provisions are made on an annual basis.
Responding to the weaker claims experience registered in FY2005/06, the Group
is determined to strengthen further its overall claims management and underwriting
guidelines to improve its overall claims performance. Among the measures are
continuing efforts to work closely with various authorities to deter fraudulent
claims; strengthening in-house investigation section to intensify theft recovery,
and also managing the panel workshops to prevent leakages.
Investment performance improved by 225.5% quarter-on-quarter, from a net income
of RM 6.707 million to RM 21.828 million. The improvement is in-line with the
stronger performance of Bursa Malaysia, which the KLCI at the end of the quarter
rose by 5.8% to 967.55 points from 914.69 points as at 30/06/2006.
On the corporate front, KAB's shares were included in the Kuala Lumpur Composite
Index (KLCI) with effect from 30 December 2005. Based on its share price of
RM 1.18 as at 7 November 2006, KAB is now ranked number 57 in the widely followed
benchmark index with an index weight of 0.321%. KAB's shares were also included
in the Morgan Stanley Capital International Inc. (MSCI) Malaysia Index since
1 June 2005.
The Kurnia Group is the largest general insurer in Malaysia and Southeast
Asia with gross premiums exceeding RM 1 billion. The Group has a wide network
of 30 branches, more than 1,900 employees, a 7,000 strong agency force and
more than 3.1 million policyholders. It offers a full range of general insurance
products and innovative services such as Kurnia Auto Assist and Kurnia Express.