Kurnia Group
Kurnia Asia Berhad Announced Its Third Quarter 2006/07 Unaudited Results
May 7th, 2007
Petaling Jaya, 7 May 2007 - Kurnia Asia Berhad (KAB) announced its unaudited financial results for the third quarter (Q3) ended 31 March 2007 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 93.398 million for the 9 months period ended 31 March 2007, which translates into net earnings per ordinary share (EPS) of 6.23 sen, compared to the net profit of RM 98.567 million or an EPS of 6.57 sen for the previous corresponding period in the preceding year. The strong investments performance recorded for the period was slightly dampened by the depressed underwriting results thus precipitating in a lower net profit.
Gross premium income declined by 1.5% year-on-year, from RM 821.637 million to RM 809.310 million, which was mainly impacted by slower vehicle sales and drop in vehicle market values as a result of the implementation of National Automotive Policy (NAP) in March 2007.
Claims expense increased by 4.3% year-on-year, from RM 481.589 million to RM 502.481 million, whilst claims ratio weaken from 61.5% to 66.0% partly due to the lower earned premium base recorded for the current period. The higher claims expense was mainly contributed by the additional provision of IBNR claims reserves booked in on a quarterly basis, a practice that the Group started since the beginning of the current financial year, in order to even out the impact of annual revision of IBNR claims reserves which in previous years was only done once a year in the last quarter. Excluding the IBNR provision, claims expense remained flat at RM 479.681 million, translating to a claims ratio of 63.0%.
The increased bodily injury claims recorded as a consequence of the Group's efforts in managing bodily injury claims cases through expediting settlement process to save on interest cost and further incidental expenses, and ultimately reducing the overall claims cost. However, additional reserves were topped up (and charged against the current period income statement) for individual claims cases that have been settled while the corresponding release from IBNR reserve can only be effected during the annual IBNR valuation at the end of financial year.
Investment and other income improved by 89.3% year-on-year to RM 112.148 million, from RM 59.256 million recorded in the previous corresponding period. The increase in investment income was mainly a result of better equity market conditions. The Group's efforts to actively manage the investment portfolio also contributed to the stronger performance.
The Group's total assets expanded from RM 2.059 billion at the end of preceding quarter to RM 2.081 billion at the end of the current quarter, while net assets value (NAV) per ordinary share grew from 34.92 sen to 37.07 sen.
For the quarter-on-quarter performance, gross premium income improved by 6.5% quarter-on- quarter, from RM 262.847 million to RM 280.029 million, which mainly resulted from the Group's intensive marketing efforts to increase business volume in term of number of policies to counter the impact of lower premium per policy. The Group posted a profit before tax of RM 46.269 million for the quarter under review, compared to the RM 52.824 million recorded for the preceding quarter. The lower profitability was mainly due to weaker underwriting performance during the quarter.
Recognizing the market challenges ahead, the Group will continue its efforts on the implementation of various existing management initiatives as well as new initiatives to restrategize its business model and control costs. The recent acquisition of PT Asuransi Aegis Indonesia, which marked the beginning of the Group's official entrance to the regional insurance market outside Malaysia, is expected to enhance the value of the Group and contribute to its profitability in the future.
The Kurnia Group is the largest general insurer in Malaysia with gross premiums exceeding RM 1 billion. The Group has a wide network of 30 branches, more than 1,900 employees, a 7,200-strong agency force and 3.5 million policyholders. It offers a full range of general insurance products and innovative services such as Kurnia Auto Assist, which is supported by a large pool of service providers including more than 500 authorized auto panel workshops throughout the country. In the event of a breakdown or an accident, Kurnia's policyholders can call the 24-hour KAA toll-free number 1800-88-3833. Kurnia guarantees that KAA assistance will be available within 1 hour.