LPI CAPITAL CONFIDENCE
IN TOMORROW
INTEGRATED ANNUAL REPORT 2022
LPI CAPITAL BHD
ABOUT THIS REPORT | OUR BUSINESS | FROM OUR LEADERSHIP | THE WAY WE CREATE VALUE | OUR GOVERNANCE | FINANCIAL REPORT | APPENDICES | ||||||
Vision
To be the preferred premier insurance solutions provider.
Corporate Mission
Our primary focus is to provide innovative
1 insurance products supported by customer- centric service excellence. We aim to provide our insured an easy channel for all their insurance needs.
Our brand is representative of the way we
2 conduct ourselves and the approach to organisational development. We aim to create an environment for our people that is fair, caring and accountable.
Our drive is to create value for our
3 stakeholders, anchored to our vision and corporate mission. We strive for sustainability through financial and technical strength based on recognised and proven standards.
Our Core Values
Represent the way we conduct ourselves and our responsibilities to our insured, our stakeholders, our people and our community.
- Aspire to be the LEADER in the insurance industry in Malaysia and in the region.
Commitment to OPERATIONAL
O EXCELLENCE guided by integrity and professionalism.
- Creating NEW AND INNOVATIVE market- relevant insurance products.
- PROVIDING a fair, caring and merit based working environment.
- ADOPTING a proactive and accountable approach to stakeholders.
CRAFTING a premier insurance brand
C identified for good corporate governance and corporate responsibility.
INSIDE
THIS REPORT
COVER RATIONALE
CONFIDENCE
IN TOMORROW
The cover of our Integrated Annual Report reflects the comprehensive assurance provided by LPI Capital Bhd, with each colour segment representative of our insurance products and services. Our whole-coverage approach ensures that our customers have the peace of mind and confidence necessary to focus on living their lives and building livelihoods. We recognise the importance of continuity and reliability, and have focused our efforts on securing the sustainability of our business, as well as the sustainability of the interests of our customers.
ABOUT THIS REPORT | 2 | ||
OUR BUSINESS | |||
Key Highlights for the Year | 4 | ||
Our Investment Case | 6 | ||
• | Corporate Profile | ||
• | Group Corporate Structure | ||
Our Approach to Sustainability | 10 | ||
FROM OUR LEADERSHIP | |||
Tribute to The Late Tan Sri Dato' Sri Dr. Teh Hong Piow | 16 | ||
Note from Our Chairman | 18 | ||
Management Discussion & Analysis | 22 | ||
THE WAY WE CREATE VALUE | |||
Our Strategic Context | 58 | ||
Our Value Creation Model | 61 | ||
Understanding Our Risks | 64 |
OUR GOVERNANCE | |
Our Board Diversity | 66 |
Who Governs Us | 68 |
Who Leads Us | 72 |
- Key Group Management
- Group Management
Corporate Governance Overview Statement | 75 |
- Leadership and Effectiveness
- Accountability
- Effective Communication with Stakeholders Bursa Malaysia Securities Berhad Listing
Requirements Compliance Information | 96 | |
Statement on Risk Management and Internal Control | 97 | |
FINANCIAL REPORT | ||
Financial Statements | 103 | |
APPENDICES | ||
Corporate Information | 251 | |
Analysis of Shareholdings | 252 | |
Share Capital | 256 | |
Particulars to Property Held by the Group | 260 | |
Group Corporate Directory | 261 | |
Notice of Annual General Meeting | 264 | |
Global Reporting Initiative ("GRI") Content Index | 267 | |
Task Force on Climate-Related Financial Disclosures | ||
("TCFD") | 272 | |
Sustainability Accounting Standards Board ("SASB") | 273 | |
Proxy Form |
INTEGRATED ANNUAL REPORT 2022 | 1 |
LPI CAPITAL BHD
ABOUT THIS REPORT | ||||||||||||
OUR BUSINESS | FROM OUR LEADERSHIP | THE WAY WE CREATE VALUE | OUR GOVERNANCE | FINANCIAL REPORT | APPENDICES | |||||||
ABOUT THIS REPORT
ABOUT THIS REPORT
KEY CONCEPTS AND DEFINITIONS | REPORTING FRAMEWORKS |
The production of this integrated report is guided by several key concepts and definitions, including the following:
Materiality
The principle of materiality relates to the process of identifying and assessing sustainability matters that are of the greatest importance to our organisation and stakeholders.1 These include the legitimate needs and interests of our stakeholders, ranging from our shareholders and employees to our regulators and our customers. The application of this principle ensures that the information included in this report reflects the impact and outcomes of our value creation activities, and the sustainability of those activities. It also ensures a discipline of focus in our reporting activities to ensure that only relevant outcomes are incorporated into our discussions.
The preparation of this report has been guided by the following reporting frameworks:
| • The International Integrated Reporting Framework | |||||
• The Malaysian Code on Corporate Governance | |||||
• | Bursa | Malaysia Securities | Berhad's | Main | Market Listing |
Requirements | |||||
• Bursa Malaysia Securities Berhad's Sustainability Reporting | |||||
Guide (2nd Edition) | |||||
• Malaysian Companies Act 2016 | |||||
• The Malaysian Financial Reporting Standards ("MFRS") | |||||
• The International Financial Reporting Standards ("IFRS") | |||||
• | The | Global Reporting | Initiative | ("GRI") | Sustainability |
In addition to disclosing information such as the financial performance of the company, this report also discloses our efforts to improve our sustainability track record and governance practices. As part of our commitment to the continual improvement of our disclosure standards, we have prepared our 2022 report to better comply with international guidelines and standards in order to facilitate better disclosures and ease benchmarking. The launch of our Sustainability Blueprint in 2022 has also introduced new disclosure standards in our report and is discussed in greater detail in the relevant section.
This document is part of our commitment to provide a more holistic and transparent report that analyses and discloses our value creation role as a leading insurance provider in Malaysia. We aim to give stakeholders greater insight into our processes and the future direction of the Group in relation to our operating context and prospects moving forward.
REPORTING SCOPE AND BOUNDARY
The scope and boundary of this report are guided by the MMLR and the Framework to ensure that this report meets locally- and internationally-determined standards of disclosure in order to give our stakeholders a clear picture of our activities as well as our prospects over the short-, medium- and long-terms. This includes discussions of our value creation process, our performance for the year under review, LPI's business strategy, our impact on Environmental, Social and Governance ("ESG") matters and the Group's future prospects.We aim to harmonise the scope and boundary of our business operations and sustainability activities, and have, for the first time, integrated both sections in our enhanced Management Discussion & Analysis. All terminology and concepts are universally applicable throughout this report.
Sustainable Development
Sustainable development is defined in the Sustainability Reporting Guide as development that meets the needs of the present without compromising the ability of future generations. Specifically, it notes that organisations which embrace sustainability naturally contribute to the wider societal goal of sustainable development and the United Nations Sustainable Development Goals ("UN SDGs"). Our Sustainability Blueprint has adopted four UN SDGs and will work towards achieving these goals through our sustainability practice.
Value Creation
Value creation refers to our processes and activities that create outcomes for our stakeholders. These processes and activities consume and exhaust capital inputs to create value for our stakeholders. Values can be understood within this context as both financial and non-financial. To ensure that our value creation activities remain sustainable, some of the value created by our value creation processes includes the replenishment of consumed capital inputs. For example, some of our value creation activities must replenish the financial resources that were used for other value creation activities, such as the payment of dividends and salaries and the marketing and promotion of our products and services.
Integrated Thinking
Integrated thinking is defined by the IIRC as "the connectivity and interdependencies between the range of factors that affect an organisation's ability to create value over time" through considerations such as:
• | the capitals that the organisation uses or affects, and the critical |
interdependencies, including trade-offs, between them; | |
• the capacity of the organisation to respond to key stakeholders' legitimate | |
needs and interests; | |
• | how the organisation tailors its business model and strategy to respond to |
Standards | |
• | The Sustainable Accounting Standards Board ("SASB") |
• | The AA1000 AccountAbility Principles |
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements in relation to the Group's plans, objectives, expectations, future financial condition, performance, results and estimates of future cash flows and costs. As projections of future conditions, the veracity of forward-looking statements cannot be absolutely guaranteed as they relate to future events and circumstances, including economic and business conditions, market fluctuations such as changing interest rates and exchange rates, the policies and actions of regulatory authorities and the impact of competition, as well as the impact of tax and other legislation and regulations in the jurisdictions in which we operate.
Due to these variables, our actual future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in this integrated report. It is important to note that we undertake no obligation to update the forward-looking statements contained in this document or any other forward-looking statements should conditions change in the future. Nothing in this report shall constitute an offer to sell or the solicitation of an offer to buy securities.
BOARD APPROVAL
The digital version of LPI Capital Bhd's Integrated Annual Report 2022 is available on our website. Please scan the QR code and help us to reduce our carbon footprint.
its external environment and the risks and opportunities it faces; and |
• the organisation's activities, performance (financial and other) and |
outcomes in terms of the capitals - past, present and future.2 |
1 | Definition of materiality from Bursa Malaysia Securities Berhad's Sustainability Reporting |
Guide (2nd Edition). |
2 | INTEGRATED ANNUAL REPORT 2022 | INTEGRATED ANNUAL REPORT 2022 | 3 |
OUR BUSINESS | |||||||
LPI CAPITAL BHD | ABOUT THIS REPORT | FROM OUR LEADERSHIP | |||||
KEY HIGHLIGHTS FOR THE YEAR
FINANCIAL HIGHLIGHTS
Gross Written Premiums | Profit Before Tax |
RM1.6 billion | RM373.5 million |
Return On Equity | Return On Assets | Net Dividend Per Share |
12.7% | 5.4% | 60.0 sen |
NON-FINANCIAL HIGHLIGHTS
Gross Written Premiums Income Per Employee (RM'000)
THE WAY WE CREATE VALUE | OUR GOVERNANCE | FINANCIAL REPORT | APPENDICES | ||||
KEY HIGHLIGHTS FOR THE YEAR
AWARDS AND RECOGNITION
MSWG-ASEAN CORPORATE GOVERNANCE | TOP SERVICE | BEST TAXPAYER |
AWARD 2021 | AWARD 2022 | AWARD 2021 |
Industry Excellence Award for CG Disclosure | Global Excellence | by Inland Revenue Board |
(Financial Services) | by CNA International | |
by the Minority Shareholders Watch Group | Solutions |
2022 | 1,970 | ||
2021 | 1,908 | ||
SUSTAINABILITY HIGHLIGHTS |
2020 | 1,903 | ||||||||
2019 | |||||||||
1,875 | |||||||||
2018 | |||||||||
1,830 | |||||||||
2017 | |||||||||
1,799 | |||||||||
2016 | |||||||||
1,656 | |||||||||
2015 | |||||||||
1,695 | |||||||||
2014 | |||||||||
1,630 | |||||||||
2013 | |||||||||
1,609 | |||||||||
+3.2%
Over the past 10 years, we have invested heavily into automation and business process management systems to improve efficiency and productivity of our employees.
ENVIRONMENTAL
Disclosed Scope 1, 2 and 3 carbon emissions as defined under the GHG Protocol Standard
Disclosed investments which bear
high ESG risk
Maintain Electronic Credit Payments usage above 90%
SOCIAL
More than 50% of LPI's investment portfolio comprise sustainable assets
Cultivate greater ESG awareness among our customers operating in critical industries
GOVERNANCE
A.M. Best reaffirmed its Financial Strength Rating of "A" (Excellent) and the Long-Term
Issuer Credit Rating of "a" (Excellent)
for Lonpac with a stable outlook for both ratings on the basis of Lonpac's balance sheet strength, strong operating performance, and enterprise risk management
No incident of bribery or corruption related to the Group reported during year
No. of Employees | No. of Policies Issued |
827 | 2,371 per employee |
Electricity consumption per staff of
3,171 kWh
Water consumption per staff of
16 m3
Created 9 insurance jobs in 2022
No incident of cyber encroachments, substantiated complaints on breaches of customer privacy and loss of confidential data in 2022
No monetary loss by the Group due to legal proceedings associated with the marketing of insurance products
4 | INTEGRATED ANNUAL REPORT 2022 | INTEGRATED ANNUAL REPORT 2022 | 5 |
OUR BUSINESS | |||||||
LPI CAPITAL BHD | ABOUT THIS REPORT | FROM OUR LEADERSHIP | |||||
OUR INVESTMENT CASE
CORPORATE PROFILE
LPI Capital Bhd ("LPI") is an investment holding company listed on the Malaysian stock exchange, Bursa Malaysia. Founded on 24 May 1962 as the London & Pacific Insurance Company Bhd, the company which would eventually become known as LPI was registered as an approved insurer on 9 April 1963 under the Malaysian Insurance Act 1963. LPI was listed on the Second Board of the Malaysian stock exchange on 8 January 1993 before it was transferred to the Main Market of Bursa Malaysia Securities
THE WAY WE CREATE VALUE | OUR GOVERNANCE | FINANCIAL REPORT | APPENDICES | ||||
OUR INVESTMENT CASE
CORPORATE PROFILE
OUR VALUE PROPOSITIONS
The LPI Group has built a reputation for reliability and trustworthiness because of our customer-centric approach to business and our excellent corporate ethics and governance track record. Our risk management philosophy, which puts prudence and sustainable growth at the forefront, has made LPI a leading figure in the Malaysian general insurance sector. At the same time, our ability to innovate and adapt to dynamic market conditions has helped us remain relevant in a changing market. Our key value propositions to our stakeholders include the following.
Berhad ("Bursa Securities") on 17 January 1997.
All of LPI's Malaysian and Singaporean insurance businesses were assumed by our wholly-owned subsidiary Lonpac Insurance Bhd ("Lonpac") following a corporate rationalisation scheme held on 1 May 1999. Lonpac remains as LPI's sole
Diverse Portfolio of Products and Services
LPI, through Lonpac, provides comprehensive insurance solutions to customers ranging from individual policies to the underwriting of large-scale industrial projects. We recognise that our customers have varying needs and risk appetites, and hence we place great emphasis on ensuring that our products and services are accessible, affordable and relevant. To achieve these levels of performance, LPI conducts extensive market research and works collaboratively with various industry partners, including local and
foreign partners and reinsurers, to plug any gaps in our portfolio of products and services.
While we prioritise the growth of specific classes of business in line with our business model for a specific time frame, we are committed to the overall growth of all classes of business in which we operate. LPI currently offers insurance solutions in the following segments:
operational arm for all of its insurance activities in Malaysia and Singapore, while LPI's insurance activities in Cambodia are undertaken by Campu Lonpac Insurance PLC, in which LPI holds a 45% stake. These companies, including LPI, Lonpac and Campu Lonpac Insurance, are collectively referred to in this document as the LPI Group ("LPI Group" or "the Group").
Employee | Health | Liability | Motor | Marine | ||||
Benefits | Insurance | Insurance | Insurance | Insurance | ||||
Pecuniary | Personal Accident | Project | Property | Trade Credit | ||||
Insurance | Insurance | Insurance | Insurance | Insurance | ||||
Extensive Distribution Network
LPI is a market leader in the Malaysian general insurance sector, having weathered all challenges and changes in the market landscape over the past 50 years. LPI has also continued to expand its business in Singapore and Cambodia, which continue to remain viable business propositions with significant potential. Nevertheless, LPI has had to navigate challenges in these countries such as the high degree of competition in Singapore and the relatively nascent stage of development of the Cambodian insurance sector. We remain confident that these strategic markets will continue to grow their contributions to the Group's overall performance in the years to come.
The LPI Group has a wide-ranging and comprehensive distribution network that is supported by a network of agents who have been carefully nurtured and developed to provide insurance solutions for our various customer segments. As our frontline representatives, our agents not only play a critical role in communicating product information and services to our customers, but also help us further improve our offerings by channelling customer feedback back to our officers. LPI's agents therefore function as an intermediary between our customers and ourselves, helping us align our products and services with customer needs and expectations.
In addition, the Group also works together with government and industry partners, including local and foreign insurers, to provide specialised coverage as well as to underwrite large projects. In doing so, we expand our underwriting portfolio and, in conjunction with our prudential approach, minimise our risk exposure from any one specific source. Our work in this area is supported by our in-house actuarial and research teams, which work together and jointly with partners to identify opportunities suitable for the Group. This includes exploring opportunities in emergent themes such as sustainability and climate-related risks.
22 | Physical Distribution Channel | |
- 21 branches | - 1 branch |
Finally, LPI has intensified the use of digital technology to further strengthen and broaden our distribution capabilities. Our digital offering makes use of online and mobile platforms to reach out to new customer segments, especially the younger, technologically savvy demographic, giving them greater control and flexibility over their choice of coverage. We have similarly developed the Group's internal information technology ("IT") resources in line with the Group's Digital Transformation plan, which aims to establish our online presence as a key distribution channel.
At present, our physical distribution channel comprises 21 Lonpac branches throughout Malaysia and one in Singapore. We also have an associated company in Cambodia through Campu Lonpac Insurance Plc.
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Disclaimer
LPI Capital Bhd published this content on 20 February 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 March 2023 11:19:57 UTC.
