Shocking Losses Reported By Kurnia Asia!

Malaysia's largest general insurer Kurnia Asia Bhd reported its earnings tonight.

It was truly shocking!

It had a sales revenue of 318.784 million. However it reported net losses of 303.093 million!

This is what it had to say in its earnings note.

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The Group suffered pre-tax loss of RM319.927 million for the quarter, compared to the RM33.800 million loss recorded in the preceding quarter. The drastic fluctuation on the results was mainly due to the underwriting loss of RM323.679 million recorded during the quarter, compared to RM48.024 million in preceding quarter, as a result of the following:

a) Claims expense increased by 119.6% quarter-on-quarter from RM217.721 million to RM478.112 million. Correspondingly, net claims ratio increased from 84.6% to 192.8% between quarters. The increase was mainly due to the efforts in strengthening KIMB’s claims provisioning as explained in note B1.

b) Management expenses increased by 9.4% quarter-on-quarter from RM62.448 million to
RM68.292 million for the current quarter, mainly attributable to the revision of the estimated useful life of computer equipment as explained in note B1.

Other than the major reduction in underwriting performance above, investment and other income declined by 59.9% quarter-on-quarter from RM15.927 million to RM6.383 million, due to the poor showing of Bursa Securities.

As mentioned in note B1, the Group’s results for the quarter under review were also mainly contributed by KIMB. KII’s contribution to the Group’s gross premium and net loss for the quarter amounted to RM9.919 million and RM0.955 million respectively.

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How on earth can its claims expenses increase by 119.6% quarter-on-quarter from RM217.721 million to RM478.112 million??????

Totally unreal!