Kurnia Group
Kurnia Asia Berhad Announced Its Fourth Quarter 2006/07 Unaudited Results
August 29th, 2007
Petaling Jaya, 29 August 2007 - Kurnia Asia Berhad (KAB) announced its unaudited financial results for the fourth quarter (Q4) ended 30 June 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.
The Group recorded a net profit of RM1.145 million for the 12 months ended 30 June 2007, translating into a net earnings per ordinary share (EPS) of 0.08 sen, a decrease of 96.2% from the net profit of RM29.819 million or an EPS of 1.99 sen recorded for the preceding year. The drop was mainly attributable to the depressed underwriting results, despite a strong investments performance achieved during the year.
Gross premium income grew slightly by 0.6% to RM1.107 billion from RM1.101 billion in the preceding year. The slow growth was mainly impacted by the slower vehicle sales and drop in vehicle market values caused by implementation of National Automotive Policy (NAP).
Claims expense increased by 13.6% or by RM105.068 million year-on-year to RM877.058 million from RM771.990 million, whilst claims ratio weaken from 74.3% to 86.2% partly due to the lower earned premium base recorded for the current year. The higher claims expense was mainly due to the Group's adoption of higher provisioning of total outstanding claims reserves compared to preceding year in preparation for the implementation of Risk-Based Capital Framework ("RBC Framework") for insurers, which will take effect from January 2009.
Investment and other income improved by 175.9% year-on-year to RM 182 million, from RM 65.963 million in preceding year. The increase in investment income was mainly a result of better equity market conditions, as the KLCI during the financial year rose by 48.1% as compared to a 3.0% rise in the preceding year. The Group's efforts to actively manage the investment portfolio also contributed to the stronger performance.
The Group's total assets expanded from RM1.976 billion at the end of preceding year to RM2.222 billion at the end of the current year, while net assets value ("NAV") per ordinary share dropped slightly from 32.20 sen to 30.91 sen.
For the quarter-on-quarter performance gross premium income improved by 6.5% quarter-on-quarter to RM298.288 million from RM280.029 million, mainly due to the Group's intensive marketing efforts to increase business volume in terms of number of policies to counter the impact of lower premium per policy. Accordingly, earned premium income increased by 0.4% quarter-on-quarter to RM256.324 million from RM255.278 million.
Recognising the market challenges ahead, the Group will continue its efforts on the implementation of various existing management initiatives as well as new initiatives to re-strategize its business model and control costs. In response to the challenging market environment, the Group has implemented a new organization structure to enhance and streamline its operation by functions. The new structure is designed to support the corporate transformation program the Group is undertaking currently. The transformation program is having an initial focus on 2 core functions of the business: claims management and agency management. The program which is well supported by a series of projects, which aim at reducing claims leakages, enhancing claims processes and service, improving the production and profitability of agents, etc. is expected to generate substantial savings and boost the Group's bottom line over the near-to-medium term.
The Group is also optimistic of better prospects in the coming financial year with the improving motor vehicle sales and premium loading on third party and high-risk policies. The recent acquisition of P.T. Kurnia Insurance Indonesia (formerly known as PT Asuransi Aegis Indonesia), which marked the beginning of the Group's official access 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 4.0 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.