NURTURING

GROWTH
ACHIEVEMENTS AND SUCCESSES WILL HAVE
LESS SIGNIFICANCE WITHOUT SUSTAINABILITY,
PASSION AND PROGRESS.
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-1* -1* $B $BQJU QJUBM BM#IE #IE tt ANN A NUAL UAL UAL UUAA RE RE RE REPPPOR POR RT 2 T 2012 012
60 600 60
Tan Sri Dato Sri
Dr. Teh Hong Piow
Non-Executive Chairman
60
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the art of transforming strengths
Board of
Directors
Mr. Tan Kok Guan
Non-Executive Director
Dato Haji Abdul Aziz
bin Dato Dr. Omar
Independent
Non-Executive Director
Mr. Quah Poh Keat
Independent
Non-Executive Director
Ms. Kong Thian Mee
Company Secretary
Tan Sri Datuk Seri Utama
Thong Yaw Hong
Independent Non-Executive
Co-Chairman
Mr. Tee Choon Yeow
Chief Executive Offcer/
Executive Director
Dato Yeoh Chin Kee
Independent
Non-Executive Director
3 2
4
6
5
7
1. 4. 7.
2.
5.
3.
6.
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62 62
DIRECTORS
PROFILES
Tan Sri Dato Sri
Dr. Teh Hong Piow
PSM, SSAP, SPMJ, SIMP, SSIJ, DSAP,
DPMJ, Datuk Kurnia Sentosa Pahang, JP
Hon LLD (Msia), FIBM (Msia), EFMIM (Msia),
FCIB (UK), FCIS (Aust), FCMI (UK), FICM (UK),
FInstAM (UK)
Non-Executive Chairman
Directors
Profle
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the art of transforming strengths
Tan Sri Dato Sri Dr. Teh Hong Piow, aged 82, was appointed
to the Board of the Company on 27 September 1971 and
has served as Chairman of the Company since then. He
is also a Non-Executive Director and Chairman of the
Companys wholly-owned subsidiary, Lonpac Insurance
Bhd. Presently, Tan Sri Dato Sri Dr. Teh serves as Chairman
of the Investment Committee of the Company.
Tan Sri Dato Sri Dr. Teh is a banker by profession. He began
his banking career in 1950 and has 63 years experience
in the banking and fnance industry. He founded Public
Bank Bhd in 1965 at the age of 35. His directorships in
other companies are as Chairman of Public Bank Bhd,
Public Investment Bank Bhd, Public Mutual Bhd, Public
Islamic Bank Bhd, Public Financial Holdings Ltd, Public
Bank (Hong Kong) Ltd, Cambodian Public Bank Plc,
several other subsidiaries of Public Bank and Tong Meng
Industries Ltd.
Tan Sri Dato Sri Dr. Teh had won both domestic and
international acclaim for his outstanding achievements
as a banker and the Chief Executive Offcer of a leading
fnancial services group. Awards and accolades that he
had received include:
Asia's Commercial Banker of the Year 1991
The ASEAN Businessman of the Year 1994
Malaysia's Business Achiever of the Year 1997
Malaysia's CEO of the Year 1998
Best CEO in Malaysia 2004
The Most PR Savvy CEO 2004
The Asian Banker Leadership Achievement Award 2005
for Malaysia
Award for Outstanding Contribution to the Development
of Financial Services in Asia 2006
Lifetime Achievement Award 2006
Award for Lifetime Achievement in Corporate Excellence,
Dedication and Industry 2006
Asia's Banker of High Distinction Award 2006
The BrandLaureate Brand Personality Award 2007
ASEAN Most Astute Banker Award 2007
Lifetime Entrepreneurship Achievement Award 2007
The Pila Recognition Award 2007
Asian Banker Par Excellence Award 2008
Best CEO in Malaysia 2009
Asia's Banking Grandmaster 2010
Asian Corporate Director Recognition Award 2010
for Malaysia
value Creator: Malaysia's Outstanding CEO 2010
The BrandLaureate - Tun Dr. Mahathir Mohamad Man of
the Year Award 2010-2011
Best CEO (lnvestor Relationsj 2011 for Malaysia
Asian Corporate Director Recognition Award 2011 for
Malaysia
The BrandLaureate Premier Brand lcon Leadership
Award 2011
Best CEO (lnvestor Relationsj 2012 for Malaysia
Asian Corporate Director Recognition Award 2012 for
Malaysia
Tan Sri Dato Sri Dr. Teh was awarded the Medal For
the Course of Vietnamese Banking by the State Bank of
Vietnam in 2002 for his contributions to the Vietnamese
banking industry over the past years. Tan Sri Dato Sri Dr.
Teh was conferred the Recognition Award 2007 by the
National Bank of Cambodia in appreciation of his excellent
achievement and signifcant contribution to the banking
industry in Cambodia.
In recognition of his contributions to society and the
economy, he was conferred the Doctor of Laws (Honorary)
from University of Malaya in 1989.
Tan Sri Dato Sri Dr. Teh had served in various capacities
in public service bodies in Malaysia; he was a member
of the Malaysian Business Council from 1991 to 1993; a
member of the National Trust Fund from 1988 to 2001;
a founding member of the Advisory Business Council
since 2003; and a member of the IPRM Accreditation
Privy Council. He is a Fellow of several institutes which
include the Institute of Bankers Malaysia; the Chartered
Institute of Bankers, United Kingdom; the Institute of
Administrative Management, United Kingdom; the Institute
of Chartered Secretaries and Administrators, Australia and
the Malaysian Institute of Management.
Tan Sri Dato Sri Dr. Teh attended all the 11 Board
Meetings which were held during the fnancial year ended
31 December 2012.

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the art of transforming strengths
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Tan Sri Datuk Seri Utama
Thong Yaw Hong
PSM, SUMW, SIMP, DSAP, DIMP, JMN,
SMP, JBS, AMN
BA (Econs Hons), MPA (Harvard),
AMP (Harvard), D.Econ (Hon)
Independent Non-Executive
Co-Chairman
Tan Sri Datuk Seri Utama Thong Yaw Hong, aged 82, was appointed
to the Board of the Company on 13 February 2008. He is also an
Independent Non-Executive Director and Co-Chairman of the
Companys wholly-owned subsidiary, Lonpac Insurance
Bhd. Presently, Tan Sri Datuk Seri Utama Thong serves as
Chairman of the Audit, Nominating, Remuneration and
Risk Management Committees of the Company.
He graduated with a Bachelor of Arts (Hons)
degree in Economics from University
of Malaya and a Masters degree in
Public Administration from Harvard
University. He attended the
Advanced Management Program at
Harvard Business School. In June 1998,
he was appointed as Pro-Chancellor of
University Putra Malaysia from which he has
retired from at the end of June 2006. In September
2006, he was conferred the Doctor of Economics
(Honorary) from University Putra Malaysia.
He has had a distinguished career with the Government of
Malaysia, primarily in the felds of socio-economic development
planning and fnance. He had served in the Economic Planning Unit
in the Prime Ministers Department since 1957 and became its Director-
General from 1971 to 1978 and thereafter served as Secretary-General,
Ministry of Finance from 1979 until his retirement in 1986.
Tan Sri Datuk Seri Utama Thong also serves as a member in the Boards of Trustees
of Program Pertukaran Fellowship Perdana Menteri Malaysia, Tun Razak Foundation
and the Malaysian Institute of Economic Research, among others. He is a member
of the National Economic Council and is also a Senior Member of the Working Group
of the Executive Committee for the National Economic Council. Tan Sri Datuk Seri
Utama Thong is a Distinguished Fellow of the Institute of Strategic and International
Studies (ISIS) Malaysia and is also a Fellow of the Institute of Bankers Malaysia.
His directorships in other companies are as Co-Chairman of Public Bank Bhd, Public
Investment Bank Bhd, Public Mutual Bhd, Public Financial Holdings Ltd, Public
Bank (Hong Kong) Ltd, Cambodian Public Bank Plc and as Chairman of Campu
Lonpac Insurance Plc and Campu Securities Plc; he is also a Director of Public
Islamic Bank Bhd, several other subsidiaries of Public Bank, Batu Kawan Bhd, Kuala
Lumpur Kepong Bhd, Glenealy Plantations (Malaya) Bhd and Malaysian South-South
Corporation Bhd. He is also the Chairman of Malaysia Property Incorporated.
Tan Sri Datuk Seri Utama Thong attended all the 11 Board Meetings which were held
during the fnancial year ended 31 December 2012.
Directors Profle
65 65
the art of transforming strengths
Mr. Tee Choon Yeow
B.Com., CA (NZ), CA (Msia), FCPA (Aust)
Chief Executive Offcer/ Executive Director
Mr. Tee Choon Yeow, aged 60, was appointed to the Board of the
Company on 29 October 1991. He is also the Chief Executive Officer of
the Company. Presently, Mr. Tee serves as member of the Investment
and Risk Management Committees of the Company.
Mr. Tee holds a Bachelors Degree in Commerce from the University of
Canterbury, New Zealand. He joined the Company as an Accountant
in 1980. He is a Chartered Accountant of the Institute of Chartered
Accountants, New Zealand and the Malaysian Institute of Accountants
and a Fellow of the CPA Australia.
Mr. Tee attended all the 11 Board Meetings which were held during
the financial year ended 31 December 2012.
Dato Yeoh Chin Kee
DIMP
FCPA (Aust), F Fin (Aust)
Independent Non-Executive Director
Dato Yeoh Chin Kee, aged 70, was appointed to the Board of the
Company on 10 February 1978. He is also an Independent Non-
Executive Director of the Companys wholly-owned subsidiary, Lonpac
Insurance Bhd. Presently, Dato Yeoh serves as member of the Audit,
Nominating, Remuneration and Risk Management Committees of the
Company.
He is a Fellow of CPA Australia and the Financial Services Institute of
Australasia.
Dato Yeoh began his banking career in 1961 and has 51 years of
experience in the banking and finance industry. Currently, he is a
Director of Public Bank Bhd and several companies of that Group
including Public Bank (L) Ltd (Chairman), PB Trustee Services Bhd
(Chairman), Public Investment Bank Bhd and Public Islamic Bank Bhd.
Dato Yeoh attended all the 11 Board Meetings which were held during
the financial year ended 31 December 2012.
Directors Profle
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Directors Profle
Mr. Tan Kok Guan
Chartered Insurer
B.Sc. (Hons.), MBA, ACII, AMII
Non-Executive Director
Mr. Tan Kok Guan, aged 56, was appointed to the Board of the Company on
29 October 1996. He is also the Chief Executive Offcer of the Companys
wholly-owned subsidiary, Lonpac Insurance Bhd. He joined the Company as
Deputy General Manager in 1994. He is presently not involved in any Board
Committee of the Company but is fully focused on discharging his duties and
responsibilities as the Chief Executive Offcer of Lonpac Insurance Bhd.
Mr. Tan holds a Bachelors Degree in Science (Hons.) from the University of
London, United Kingdom and a Master of Business Administration from the
University of Hawaii. He is also a Chartered Insurer of the Chartered Insurance
Institute in London and an Associate of the Malaysian Insurance Institute in
Kuala Lumpur.
Mr. Tan attended all the 11 Board Meetings which were held during the
fnancial year ended 31 December 2012.
Dato Haji Abdul Aziz bin Dato Dr. Omar
DIMP
ACA (England & Wales), CA (Msia), FIBM (Msia)
Independent Non-Executive Director
Dato Haji Abdul Aziz bin Dato Dr. Omar, aged 65, was appointed to the
Board of the Company on 9 October 2007. He is also an Independent Non-
Executive Director of the Companys wholly-owned subsidiary, Lonpac
Insurance Bhd. Presently, Dato Haji Abdul Aziz serves as Co-Chairman of
the Audit Committee and member of the Nominating, Remuneration and Risk
Management Committees of the Company.
Dato Haji Abdul Aziz qualifed as a Chartered Accountant from the Institute
of Chartered Accountants in England & Wales, and is also a Chartered
Accountant of the Malaysian Institute of Accountants.
During his previous banking experiences, he became a Fellow of the Institute
of Bankers Malaysia. His 44-year experiences to date also include the areas
of audit and accounting, taxation, property, plantation, hotelling, trading and
manufacturing, both locally and abroad. Currently, Dato Haji Abdul Aziz is a
Director of Public Bank Bhd and several companies of that Group including
Public Islamic Bank Bhd (Co-Chairman), Public Investment Bank Bhd, Public
Mutual Bhd, PB Trustee Services Bhd and ING PUBLIC Takaful Ehsan Bhd.
Dato Haji Abdul Aziz attended all the 11 Board Meetings which were held
during the fnancial year ended 31 December 2012.
67 67
the art of transforming strengths
Mr. Quah Poh Keat
FCCA (UK), CA (Msia), CPA (Msia), ACMA (UK), Fellow MIT (Msia)
Independent Non-Executive Director
Mr. Quah Poh Keat, aged 60, was appointed to the Board of the Company on
2 January 2009. He is also an Independent Non-Executive Director of the
Companys wholly-owned subsidiary, Lonpac Insurance Bhd. Presently,
Mr. Quah serves as a member of the Audit, Nominating, Remuneration and
Risk Management Committees of the Company.
He is a Fellow of the Malaysian Institute of Taxation and the Association of
Chartered Certifed Accountants; and a Member of the Malaysian Institute of
Accountants, the Malaysian Institute of Certifed Public Accountants and the
Chartered Institute of Management Accountants.
Mr. Quah was a partner of KPMG since October 1982 and was appointed
Senior Partner (also known as Managing Partner in other practices) in October
2000 until 30 September 2007. He retired from the frm on 31 December 2007.
Mr. Quah is experienced in auditing, tax and insolvency practices and has
worked in Malaysia and the United Kingdom; his feld of expertise include
restructuring, demergers and privatisation.
His directorships in other companies are as Director of Public Bank Bhd,
Public Investment Bank Bhd, Public Mutual Bhd, Public Islamic Bank Bhd,
Public Financial Holdings Ltd, Public Bank (Hong Kong) Ltd, Public Finance
Ltd, Cambodian Public Bank Plc, Campu Lonpac Insurance Plc, Campu
Securities Plc, IOI Corporation Bhd and Telekom Malaysia Bhd.
Mr. Quah attended all the 11 Board Meetings which were held during the
fnancial year ended 31 December 2012.
Ms. Kong Thian Mee
FCIS
Company Secretary
Ms. Kong Thian Mee was appointed as Company Secretary of LPI Group on
1 August 2000. Presently, she serves as a member of the Investment Committee
of the Company.
Currently, she is serving as a Secretary for various Board Committees; and
since 2000, heads the Groups Secretariat Department. Ms. Kong is also a Joint
Company Secretary of Campu Lonpac Insurance Plc, an associated company.
Ms. Kong is a Chartered Secretary (ICSA) and is a Fellow of The Malaysian
Institute of Chartered Secretaries and Administrators.
NONE OF THE DI RECTORS HAS:
An] famil] relationship with an] Director
and/ or major shareholder of lPl Capital Bhd.
An] confict of interest in an] ousiness arrangement
involving lPl Capital Bhd.
An] convictions for an] offences within the past
1O ]ears other than traffc offences.
Accepted an] new appointment of directorship.
All the Directors are Nala]sians.
Directors Profle
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68 68
The global economy is expected to grow moderately in 2013. The economic outlook
appears less encouraging with uncertainty in the major advanced economies weighing down
the economic prospects. Risks from the unresolved sovereign debt crisis in Europe and fscal
health in the United States of America remains a major concern. Growth in most Asian economies,
however, is expected to remain healthy, underpinned by sustainable domestic demand.

For the Malaysian economy, domestic demand will continue to be the anchor of growth. Healthy
labour market and moderate infation will continue to support private consumption. The various
measures proposed for 2013 Budget addressing the rising cost of living would further stimulate
private consumption. The ongoing implementation of Economic Transformation Programme (ETP)
continues to drive private investments. On the supply side, growth is expected to be broad-based.
The construction sector is expected to expand strongly on account of the acceleration of ongoing
construction-related projects from the ETP. Various initiatives under the ETP will also continue to
underscore growth in the services sector.
LPI Capital Bhd (LPI) and its wholly-owned subsidiary, Lonpac Insurance Bhd (Lonpac) have
demonstrated resilience in weathering economic turbulence and adversity. The Group was able to
draw on its fnancial strength and competency to deliver another year of increased proftability and
improved asset quality in 2012. Committed to the practice of good business ethics and excellent
delivery of services to all our stakeholders, the Group has demonstrated consistent effciencies and
cost-effectiveness to return yet another set of positive results to all its shareholders.
We, the Board of Directors (Board) of LPI are pleased to present the Annual Report and the Audited
Financial Statements of LPI Group for the fnancial year ended 31 December 2012.
Letter To Stakeholders
TO OUR SHAREHOLDERS
Delivering Results
The year 2012 continued to be a successful year for LPI
Group despite the uncertainties in the global market and
several catastrophic events. Lonpac set a new milestone
for the Group with its gross premium income crossing
the RM1 billion mark for the fnancial year ended 31
December 2012. Pre-tax proft surged to a record high
of RM214 million, representing an improvement of 7%
over the preceding year on the back of the signifcant
increase in the operating revenue of RM1.04 billion.
Net proft attributable to shareholders grew by 8% to
RM166.9 million that translated to an improved earnings
per share of 75.8 sen and a net return on equity of 12.2%
in 2012. The growth in both its operating revenue and
pre-tax profts was mainly attributed to its wholly-owned
subsidiary, Lonpac. We are pleased to note that Lonpacs
robust risk management in the areas of underwriting,
business development and claims management have
enabled the Group to register underwriting surplus for
all classes of risks underwritten. The underwriting results
continued to improve by 10.2% to RM151.9 million from
RM137.9 million in 2011.
69 69
the art of transforming strengths
Letter To Stakeholders
Consistent Performance Over Medium-Term
The Groups outstanding and resilient track record
over the years is a testament to its consistently sturdy
fnancial and business performance over the medium-
term. Notwithstanding the market challenges and global
fnancial crisis, the LPI Group managed to:
Expand its balance sheet with total assets growing from
RM792.4 million in 2007 to RM2.7 billion
lmprove its proft before tax by 75.7% from RM121.8
million in 2007 to RM214 million
Grow its net proft attributable to shareholders from
RM87.8 million in 2007 to RM166.9 million
Strategic Business Direction Going Forward
The LPI Groups core business focus remained with its
wholly-owned arm, Lonpac. The year 2012 continued
to pose challenging economic environment both
domestically and globally. The global insurance industry
was adversely affected by the numerous catastrophic
events in 2012. The implementation of Risk-Based Capital
("RBC"j Framework and the Guidelines on lnternal Capital
Adequacy Assessment Process ("lCAAP"j for lnsurers as
well as more liberal foreign equity participation policy had
changed the landscape of the local insurance industry and
made it more challenging. Notwithstanding this, the Group
is well prepared to face the challenges and also the need
to constantly raise the bar of excellence.

Sustaining Momentum For Organic Growth
For the year 2013, the Group's business and fnancial
performance will be driven and inspired by the strategic
business plans as identifed and approved by the Board.
Lonpac will continue to pursue the strategy of strong
organic business growth that has generated remarkable
increase in its market share whilst upholding its tradition
of prudent asset quality management. We will intensify our
business development strategies to acquire more business
opportunities and tap on the wide market. In line with
this business objective, we have established two (2j new
branches in 2012, one (1j each in Kajang and Segamat to
add to our broad branch network. With the establishment
of these new branches, we have expanded our network
to twenty one (21j local branches, one (1j foreign branch
in Singapore and an associated insurance company in
Cambodia. ln addition, the Group's distribution channels
comprising four (4j main divisions, namely Agency,
Financial lnstitution, Broking & Global Partnership and
NlPPONKOA have effectively expanded the Group's
productivity plans and enabled greater penetration into the
selected proftable markets.
The Group will endeavour to improve its effectiveness in
operation through maintaining cost effciency at all levels
of work processes. Amongst the initiatives undertaken in
this direction is the development of human capital. The
staff force represents the most valuable asset of the Group
in delivering healthy bottom line growth and long-term
value to shareholders. Notwithstanding having a bigger
work force, the Group had successfully maintained its
management expenses ratio at 11% for the year 2012.
Keeping Strong And Healthy Financial Position
The Groups statement of fnancial position continued to
remain strong and healthy as its total assets increased to
RM2.74 billion from RM2.41 billion in 2011. The 13.7%
increase was primarily driven by the sturdy growth in proft
on the back of the 15.1% increase in the gross written
premiums to RM1.03 billion. On the investments side, the
Groups total portfolio in available-for-sale fnancial assets
and held-to-maturity fnancial assets grew by 11.7% to
RM1,179.5 million from RM1,055.6 million in 2011 amidst
the volatility in the equity market and low interest rates.
2007 2012 Variance
RMMillion RMMillion
Total assets 792.4 2,749.2 247.0%
Proft before tax 121.8 214.0 75.7%
Proft for the year 87.8 166.9 90.1%
-1*$BQJUBM#IEtANNUAL REPORT 2012
70
Maintaining Value Of Shareholders Investment
The Board views enrichment of shareholders value
as the ultimate measure of the Groups success. The
Groups ability to deliver consistent fnancial performance
as evidenced by its unbroken proftability track record
underpinned the value of the investment of shareholders
in LPI. Strong capital adequacy ratios, positive business
growth, best asset quality and consistently high dividend
yields are amongst some of the positive attributes of LPIs
shareholder value.
The LPI Group remains fully committed to maintaining
superior shareholder value by enhancing the effciency of
its capital employed and increasing its return on equity,
pursuing a consistent dividend payout policy as well as
upholding excellent corporate governance.
Consistent Dividend Payout
LPI will pay a 2
nd
interim single tier dividend of 50 sen per
share on 4 February 2013. The Board of Directors does
not propose any fnal dividend for the fnancial year ended
31 December 2012.
The 2
nd
interim single tier dividend of 50 sen per share
together with the 1
st
interim single tier dividend of 15
sen per share paid on 31 July 2012 will mean that
shareholders will receive a total net dividend of 65 sen
per share for the fnancial year ended 31 December 2012.
The total net dividend of 65 sen per share amounting to
RM143.2 million, representing 85.8% of the Groups net
proft for 2012. This translates into a net dividend yield
of approximately 4.9% based on the previous years
average market price.
The Group endeavours to maintain a consistent and
regular dividend payout taking into account the allocation
of capital resources to support its business growth and
expansion plans.
Proactive Capital Management
Lonpac continued to register Capital Adequacy Ratio
(CAR) higher than its Individual Target Capital Level and
the supervisory target CAR set by Bank Negara Malaysia
(BNM) in line with the RBC Framework and Guidelines
on ICAAP for Insurers issued by BNM. The increased
CAR has not only refected Lonpac's fnancial resilience
and robustness of risk management infrastructure but also
reinforced its effciency in capital utilisation by maintaining
a capital adequacy level that commensurate with its risk
profles and business growth.
The Group has updated its Capital Management Plan
(CMP) in line with the Guidelines on ICAAP for Insurers
issued by BNM which became effective from 1 September
2012. The CMP aims at optimising the effcient and effective
use of resources and capital in order to maximise the return
on equity.
The LPI Group has successfully enhanced its capital structure
to support the Groups rapidly growing business through
proactively managing its capital to meet the challenges of
the capital requirement without compromising on its organic
growth strategies. The Groups strong and consistent
earnings generating capacity is a clear refection of its
ability to support the capital requirements for expansion on
its core business without the need for fresh capital injection
from shareholders. Going forward, the Group will continue
to effectively manage its capital structure and maintain the
highest fnancial fexibility in line with its business objectives
while maximising shareholders value.
Superior Returns To Shareholders
The LPI Group continued to deliver superior returns to
shareholders, both in the medium and long-term. The
consistent return on equity and dividend payout combined with
effcient capital engagement and strong corporate governance
have continuously benefted the shareholders of LPI.
Over the medium-term period of 5 years, a shareholder of
LPI who purchased 1,000 LPI shares at a price of RM12.10
per share at the beginning of 2008 or an investment of
RM12,100 and held them for 5 years to the end of 2012
would have received gross dividends amounting to
RM5,403 and would have held 1,600 LPI shares as at the
end of 2012. At the price of RM14.54 per ordinary share at
the end of 2012, the shareholder would have shares worth
RM23,264 which together with the gross dividends of
RM5,403 and would give the shareholder an exceptionally
high annual rate of return on investment of 20.6% or a total
return of 124% for the 5-year period.
Letter To Stakeholders
71
the art of transforming strengths
If a shareholder of LPI had bought 1,000 shares in LPI
when it was listed in 1993, and assuming the shareholder
had subscribed for every right issue to date and had not
sold any of the shares, she/ he would have, at the end
of 2012, 8,640 LPI shares worth RM125,626, based on
the share price of LPI shares of RM14.54 as at the end of
2012. In addition, she/ he would have also received a total
gross dividend of RM51,846 over the years which LPI has
unfailingly paid every year since its listing in 1993. With a
capital outlay of RM10,730, including subscription for all
rights issues, the total return to this shareholder would be
RM166,742 or a remarkable average rate of return of 26.2%
annually for each of the 19 years that this shareholder has
held the shares in LPI since it was listed in 1993 or a total
return of 1,554% for the period.

TO OUR CUSTOMERS

BrandLaureate BestBrands In Financial Services General
Insurance
Lonpac was conferred the Best Brands in Financial
Services General Insurance in The BrandLaureate
BestBrands Awards 2011-2012 for Corporate Branding
by the Asia Pacifc Brands Foundation for the second
consecutive year.
Meeting Customers Needs
With increasingly well-informed customers and continued
evolution of products and services, customers have
the luxury of choosing their preferred fnancial service
providers. It is the Groups priority to meet customers
expectations by proactively identifying and fulflling their
needs with effective insurance solutions. The challenge
is to convince our customers of the importance of being
protected with the right insurance policy and fulfl customer
service level expectations.
Moving forward, the Group constantly reviews and
repositions its business strategies to include greater
customer awareness, innovative insurance solutions as
well as better product and services. A key difference in
trying to capture the market is the manner in which a
product or service is delivered and how best customers
are served. Thus, the Group will endeavour to pursue
excellent service to sustain its competitive edge.
The Groups record of service excellence continued
to be validated in 2012 with the conferment of Chubb
Multinational Solutions Group Outstanding Affliate Service
Award 2011 by the Chubb Multinational Solutions for the
ffth consecutive year. Such recognition refects our efforts
in service excellence and will motivate us further in our
quest for higher level of service standards.
Enhancing Customer Service Infrastructure
Signifcant resources are invested in enhancing customer
service infrastructure to promote a high standard of
customer service delivery and stay ahead in a borderless
consumer market. The Group also remains focused in
positioning itself as a responsive insurance company
through its customer service infrastructure.
One of the cornerstone of the Groups customer service
infrastructure is the continuous investment in Information
and Communication Technology (ICT). We constantly
review our ICT architecture for high operational effciency,
quality and timeliness of service delivery. These include the
provision of an E-Portal (corporate website) which serves
as a communication channel for existing and potential
customers as well as a base for the implementation
of Customer Relationship Management (CRM). The
E-Portal allows customers to register as users which
enable them to access their insurance policies with Lonpac
online and perform various online insurance transactions.
CRM provides effective collaboration amongst various
departments where information on customers can be
shared and accessed in a more structured manner for
faster communication amongst the departments.
In addition, we constantly enhance our web interface in
delivering information and services to our customers and
agents (including providing more features and interactivity
to our online presence). The Group will continue to
pursue service excellence to provide our customers with
accessibility, comfort and convenience.
Letter To Stakeholders
-1*$BQJUBM#IEtANNUAL REPORT 2012
72
TO OUR STAFF
Our People Are Our Most Important Asset
We acknowledge that the noteworthy achievements
of the LPI Group today could not have been achieved
without a team of committed, dedicated, and competent
employees who are focused on a common goal of
performance excellence. The Group has continuously
nurtured, trained and proactively managed its human
capital to produce the best in each and every staff. The
staff force collectively represents the most invaluable
asset of the LPI Group. Hence, we are fully committed
to creating value and building growth for our people
indefnitely.
Strengthening The Staff Force
Throughout the year 2012, we continued to strengthen
and expand our staff force to support our business
expansion strategies. The Group is committed to
developing its human capital and increasing its regional
presence as refected in the expansion of staff force to
667 staff from 611 staff in 2011. It is the Groups strategy
to invest in the long-term development of our staff and
provide them with a sense of job security and good
career prospects. This eventually helps us to inculcate
a higher sense of belonging and commitment to the
Group.
Skill And Knowledge Development
The Group believes that learning is a life-long experience
and has allocated signifcant management and fnancial
resources to enhance the long-term value of its human
capital. During the year under review, we conducted
several seminars/ conferences for our staff ranging from
offcer level to higher management level, each covering
different aspects of hard and soft skills required for
improving their technical competencies. Competent and
skilful staff will enhance the Groups ability to redeploy
staff without compromising on service delivery standards.
The Groups investment in developing the quality of skills
and knowledge of its human capital fulfls the Groups
structured management succession planning objectives
and also prepares staff for career progression within the
Group. A well-trained, skilful and knowledgeable workforce
is more adaptable to the changing needs of the Group in
its quest for excellence, giving the Group a competitive edge.
On this note, the LPI Groups overall staff turnover rate in
2012 remained stable at 9.75%.
Structured Management Succession
The LPI Group has established a structured succession
planning process for its senior management staff in all
business areas. Instituted for many years, suitable candidates
are identifed and earmarked for the succession of every
senior managerial position. We nurture these candidates with
the relevant training and skills development programmes and
job related exposures to the related areas of the positions
and responsibilities being planned for them. In addition, the
Group promotes competitive benchmarking of performance
to encourage emerging talents to create a robust pipeline of
candidates for succession planning.
Rewarding Our People
The Groups human capital development is reinforced by
a fair and transparent performance-based remuneration
system and a meritocracy-based career progression
path. We entrench a talent development framework in
our culture of excellence and success to keep our staff
highly engaged and motivated to perform to the peak of
their capabilities. Rewards are closely and transparently
correlated to the delivery of superior performance as
measured by the staffs contribution to the Groups core
business performance. Career progression is given based
on staffs demonstrated work ethics, talent and ability on
assigned responsibilities. The reward scheme is carefully
and consistently aligned with the Groups prudent risk
profles. Through the Groups leadership development
programmes, we have successfully produced top talent at
senior levels and attracted new talent as well.
Increasing Productivity
Through its constant investment in human capital
development in staff training and the transparent and
fair performance-based remuneration structure, the
productivity of LPI Groups staff force continued to rise.
The productivity of the Groups staff force as measured
by the standard industry indicators continued to rise
signifcantly as the gross written premiums per employee
rose from RM931,000 in 2003 to RM1,550,000 in 2012.
Letter To Stakeholders
73
the art of transforming strengths
Staff Values
LPI Group remained committed to upholding and
inculcating the right ethical corporate values and a culture
of trust, honesty and integrity in each of its staff. The
Group, being primarily in the insurance industry where
integrity and trust are of utmost importance is governed
by the Code of Ethics issued by Persatuan Insurans Am
Malaysia (PIAM) which has been codifed in the Staff
Disciplinary Handbook.
The Group also promotes an environment of exemplary
corporate conduct and meticulous regulatory compliance
to which each and every staff is held accountable. The
uncompromising adherence to the Groups policy of zero
tolerance of dishonesty and lack of integrity is necessary
to sustain the trust of the insuring public. This corporate
philosophy is one of the key drivers in outperforming our
competitors and uphold the trust of the public implicit in
the role of the Group as a trusted and respected leading
fnancial institution in Malaysia and in the Asia Pacifc
region.
Caring For Our Staff
While pursuing its corporate goals, LPI Group has never
neglected the well-being of its staff and their family. Their
welfare is taken care of through the provision of a fair and
competitive salary structure and a host of staff benefts.
Various measures are adopted to provide immediate
fnancial incentives to staff in view of rising infation and
the cost of living.
TO OUR COMMUNITY
The Group has continuously played its role in the
community by conducting its business activities ethically,
responsibly and prudently. Serving the community is a
focal area of the Groups Corporate Responsibility with the
aim of caring for the well-being of society at large.
Contribution To The Countrys Economy
LPI Group contributed to the development and maturity of
the fnancial system with its continuous proftability. The
Group has also been contributing to the fscal revenue of
the country with tax payments totalling RM225 million in
the fve years since 2007, with the Group paying RM45
million in 2012 alone.
The Groups core business strategies in providing
innovative and affordable insurance solutions have
benefted the wider community and contributed to the
socio-economic development of the country. Given the
continued proftability performance expected in the next
few years as envisaged by the Groups medium-term
scenario planning, the Group will contribute signifcantly
to the fnances of the country.
Community Activities
The LPI Group continued with its corporate responsibility
initiatives and took part in various social activities in
support of the community. These included organising
charity fund raising activities for children with special
needs and contributing fnancially to sporting events. We
successfully organised a Blood Donation Campaign in
support of Tabung Darah Negara that attracted donors
from among our staff as well as the general public.

With the aim of reducing our carbon footprint,
environmentally themed activities were undertaken to
create awareness among staff and the general public on
the importance of conserving Mother Nature. Our initiatives
included organising an environmental project, Love
the Earth, Green Mid-Autumn! to create environmental
awareness, providing recycle bins at our Head Offce to
cultivate recycling habits among staff, and organising
jungle and garden walks for the staff to appreciate Mother
Nature as well as participating in the World Wild Fund for
Natures Earth Hour 2012.
Letter To Stakeholders
-1*$BQJUBM#IEtANNUAL REPORT 2012
74
AWARDS AND RECOGNITION
LPI Group was conferred numerous awards and
accolades for its industry excellence, superior
shareholder value and outstanding service level. In
2012, the Groups efforts for excellence continued to
be recognised by reputable domestic and international
publications and other third party organisations such as:
For industry excellence
BrandLaureate BestBrands in Financial Services
General Insurance for the second consecutive year.
For superior shareholder value
Admitted as a member of The Edge Billion Ringgit
Club since 2010.

For outstanding service level
Chubb Multinational Solutions Outstanding Affliate
Service Award 2011 for the ffth consecutive year.
These awards and accolades will further motivate and
reaffrm the commitment of the Group and its entire staff
to continue its relentless pursuit of excellent performance
and the delivery of distinctive value to all its shareholders.
MEDIUM-TERM SCENARIO PLANNING
The Group is guided by its medium-term planning
processes in its effort to achieve the Groups Corporate
Mission and sustain the Groups leading position in
the market. The planning processes include putting
into place medium-term plans for the next 6 years to
deliver continued growth and proftability as well as
to provide distinctive value for all its stakeholders. In
setting its medium-term plans, the Group assessed the
performance of its general insurance activities in Lonpac
as compared to the industry benchmark.
The Key Performance Indicators (KPIs) of Lonpac and
the actual delivery in 2012 against its KPIs as compared
to the industry benchmark are refected below:
(Source: Benchmark Indicators for General Insurance
Companies for the Period January-December 2011 issued
by Bank Negara Malaysia)
In the review of the Groups performance, the KPIs included
in the medium-term plans are monitored and measured.
Barring unforeseen circumstances, the Board is confdent
that the envisaged growth and proftability targets in the
medium-term plans will be achieved.
PROSPECTS
While facing heightened uncertainties in the external sector,
the Malaysian economy has made further progress towards
becoming a high-income and developed nation in 2020.
The outlook for the Malaysian economy remained positive
with the implementation of the National Transformation
Policy. The 2013 Budget is geared towards cushioning the
domestic economy from the spillover of the weaker external
sector. The Malaysian economy is expected to grow further
in 2013 within the range of 4.5% to 5.5% mainly supported
by improving export and strong domestic demand. These
positive developments augur well for the insurance industry
and provide a strong foundation for growth in 2013.

Lonpac was able to successfully renew its treaty reinsurance
arrangement for the next underwriting year 2013 well before
the close of 2012, refecting the quality of its business
portfolio. With its resilient fnancial performance, strong
and healthy fnancial position and commendable capital
adequacy ratio, Lonpac has the capacity to compete
effectively in its core insurance business and is confdent of
emerging as one of the most established and well managed
insurance companies in the insurance industry. Prospects
for the year 2013 therefore remain bright.
Key
performance
indicators
Actual in 2012
Latest available
industry
benchmark
Operating Margin
Ratio 20.7 19.0
Net Claims
Incurred Ratio 47.5 61.0
Gross Written
Premiums Growth 13.9 10.9
Letter To Stakeholders
75
the art of transforming strengths
We are pleased to announce that A.M. Best, a worldwide
insurance rating and information agency, affrmed the
fnancial strength rating of A- (Excellent) and the issuer
credit rating of a- to Lonpac on 11 October 2012. The
ratings refect Lonpac's good market profle, strong liquidity
and consistently stable operating performance. The ratings
also recognise Lonpacs strong risk culture and strong risk-
adjusted capitalisation.
OUR APPRECIATION
We wish to thank our stakeholders for their continued support
and confdence in the LPI Group that had enabled us to mark
a major milestone with gross premium income surpassing
RM1 billion.
We wish to express our sincere gratitude to all our valued
agents, brokers, reinsurers, policyholders and other business
associates for choosing us as their preferred fnancial service
provider and for their continued contributions towards the
success of the Group.
To the Management and all the staff of LPI Group, we
wish to place on record our deepest appreciation for their
invaluable contributions, loyalty, diligence and whole-hearted
commitment to the continuing success of the Group.
Last but not least, the Board and Management would also
like to thank Bank Negara Malaysia and all other relevant
Regulatory Authorities for their invaluable advice, guidance
and support.
Tan Sri Dato Sri Dr. Teh Hong Piow
Chairman
Mr. Tee Choon Yeow
Chief Executive Offcer
Mr. Tan Kok Guan
Director
Mr. Quah Poh Keat
Director
8 January 2013
Tan Sri Datuk Seri Utama Thong Yaw Hong
Co-Chairman
Dato Yeoh Chin Kee
Director
Dato Haji Abdul Aziz bin Dato Dr. Omar
Director
Letter To Stakeholders