CIMB cuts LPI forecasts, target price as underwriting outlook weakens

KUALA LUMPUR: CIMB Securities Sdn Bhd has revised its earnings forecasts and target price for LPI Capital Bhd downwards, citing weaker performance in the motor underwriting segment. The firm lowered its earnings forecasts for FY26-FY28 by 12.1 per cent to 14 per cent, and decreased the growth forecasts for GWP from 8.2 per cent to 6.8 per cent.

CIMB Securities raised its motor portfolio combined ratio assumption to 100 per cent, reflecting adverse claims experience. Despite maintaining a Hold rating on LPI, the target price was reduced to RM13.30 from RM14.30, based on a lower price-to-book value multiple of 2.73 times. The weaker performance was mainly due to higher motor claims, with claims ratio rising to 77 per cent in the second quarter of FY26.

CIMB Securities sees near- to medium-term earnings support from cross-selling synergies with Public Bank, but highlights a more challenging underwriting environment and the need for sustained recovery in motor underwriting profitability.