Kurnia Group
Kurnia Asia Berhad Announced Its Second Quarter 2005/06 Results
February 21st, 2006
Petaling Jaya, 21 February 2006 - Kurnia Asia Berhad ("KAB") announced its
unaudited financial results for the second quarter ended 31 December 2005 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
For the second quarter ended 31 December 2005 ("Q2 FY2005/06"), KAB reported
profit after tax of RM 19.726 million while for the first 6 months ended 31
December 2005, its profit after tax stood at RM 56.913 million. This translates
into an earnings per ordinary share ("EPS") of 1.32 sen and 3.79 sen respectively.
These results are not comparable to the corresponding quarter and period in
the preceding year, which consisted only of post-acquisition results of the
subsidiary, KIMB, which was effected on 5 November 2004. The Group's net assets
value (NAV) per ordinary share grew from 32.70 sen at the end of the preceding
quarter to 34.01 sen at the end of the current quarter, while the group's total
assets remained relatively unchanged at RM 1.906 billion.
The Group's financial results were derived mainly from KIMB, the Group's principal
subsidiary. KIMB recorded a year-to-date net profit of RM 57.973 million for
the First Half ended 31 December 2005, representing a 14.39% drop from RM 67.720
million for the corresponding period in the preceding year. The lower net profit
recorded was attributed to the significant drop in net investment and other
income and a slight drop in underwriting surplus.
KIMB registered a 4.8% decline in gross premium income from RM 565.183 million
for the first 6 months ended 31 December 2004 to RM 538.265 million for the
first 6 months ended 31 December 2005. This is consistent with the conscious
efforts of the company to streamline the underwriting portfolio by reducing
non-profitable business lines to further enhance profitability over the longer
term. Tighter credit control measures taken have also contributed to the drop
in non-motor premium income, with the exception of medical insurance premium,
which almost doubled that of the previous year's corresponding period. The
Group's management indicated that this result was in line with expectations.
KIMB's net investment and other income dropped by 25.7%, from RM 33.856 million
for the first 6 months ended 31 December 2004 to RM 25.155 million for the
first 6 months ended 31 December 2005. This is mainly due to poorer equity
market performance, which improved by only 1.3% (as measured by the Kuala Lumpur
Composite Index "KLCI" performance) for the first 6 months ended 31 December
2005 as compared with a 10.7% gain on the KLCI for the corresponding period
ended 31 December 2004.
Recognizing the market challenges above, the Group has initiated various management
initiatives and strategies with the aim of improving its competitiveness and
long-term profitability. Initial costs of such initiatives are expected to
impact current year earnings before the benefits in the form of lower operating
costs, higher market share and higher investment yield are realized over the
near future. Barring unforeseen circumstances, the Directors expect the Group's
results for the financial year 2006 to be satisfactory.
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 1.32 as at 17
February 2006, KAB is now ranked number 50 in the widely followed benchmark
index with an index weight of 0.401%. 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 South East
Asia 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
more than 3.3 million policyholders. It offers a full range of general insurance
products and innovative services such as Kurnia Auto Assist and Kurnia Express.