Kurnia Group
Kurnia Asia Berhad Announced Its Fourth Quarter 2005/06 And FYE 30 June 2006
Unaudited Results
August 30th, 2006
Petaling Jaya, 30 August 2006 - Kurnia Asia Berhad (KAB) announced its unaudited
financial results for the fourth quarter (Q4) and the year ended 30 June 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.
For the financial year ended 30 June 2006, KAB achieved a net profit of RM
49.856 million, which translates into earnings per share (EPS) of 3.32 sen.
The full year results are not comparable to the net profit of RM 102.318 million
and EPS of 10.31 sen in the preceding financial year, which consisted only
of post-acquisition results of the subsidiary, KIMB, effective on 5 November
2004.
The Group's fourth quarter (Q4 FY2005/06) pre-tax loss stood at RM 70.108
million, compared to the profit before tax of RM 59.379 million recorded in
the previous quarter. The decline was attributable to weak performance in both
underwriting as well as investment activities during the quarter. The Group's
total assets as at 30 June 2006 declined by 0.3% to RM 1.964 billion from RM
1.971 billion at the preceding year-end, due mainly to the payment of interim
dividend of RM97.5 million on 23 September 2005.
The Group's financial results were derived mainly from KIMB, the Group's principal
subsidiary. For the year ended 30 June 2006, KIMB achieved gross premium income
of RM 1.101 billion, a 7.2% drop from RM 1.187 billion in the preceding year.
However, KIMB's earned premium dropped by just 1.5% to RM 1.039 billion from
RM 1.055 billion due to the net release from unearned premium reserve.
The contraction in gross premium income was due in part to streamlining of
business portfolio to enhance long-term profitability. The impact of higher
petrol prices (in 3rd quarter of FY2005/06), rising interest rates and the
implementation of National Automotive Policy (NAP) in March 2006, resulted
in lower motor vehicle sales, both in primary and secondary markets. This inevitably
reduced the market value of motor vehicles, which in turn, lowered the sum
insured and premium written thereof.
Net claims ratio increased from 59.0% to 71.6% for FY2005/06, mainly due to
adverse claims experience and provision made for IBNR claims reserves. The
Group's overall claims performance in FY2005/06 had weakened particularly due
to higher number of theft claims, total losses and 3rd party property damages
cases.
On claims management, various intensive efforts initiated to control claims
expenses have resulted in lower average claims size. However, this was off-set
by a larger number of claims intimated. This is attributable to increase awareness
of faster claims settlement, especially with respect to bodily injury cases.
On a positive note, KIMB's net investment and other income improved by 19.9%
from RM 55.031 million for FY2004/05 to RM 65.964 million for FY2005/06, despite
the challenging investment climate during the year. This is a result of the
Group's effort in re-strategizing its investment portfolio since the beginning
of FY2005/06.
The company has on 23 August 2006 executed a letter of intent with PT. Asuransi
Aegis Indonesia (Aegis) to acquire all the ordinary shares in Aegis permitted
under the laws of the Republic of Indonesia to be held by a foreign party from
the existing shareholders of Aegis. Further details on Aegis and the proposal
will be announced by the company once the parties have entered into the definitive
agreements.
Against the competitive environment in the insurance industry, the Group's
performance for FY2005/06 was well below expectations. Moving forward, the
Group will continue to be selective in underwriting quality business, giving
more focus to the Property & Casualty (P&C) division, improving claims and
management expenses control, as well as further strengthening its investment
function to enhance profitability in the coming financial year.
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 1.20 as at 25 August 2006, KAB is now ranked number 56 in the widely followed
benchmark index with an index weight of 0.347%. 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.