PACIFIC & Orient (P&O) has received the building approval for its land in Miami, Florida, according to sources familiar with the matter.

“The bayfront land in North Bay Village, Florida, has been earmarked for a residential project. The company is looking to build 54 units, with [built-ups of] 1,300 sq ft to more than 7,000 sq ft. It will be the first residential project in the area in 12 years. Facilities include a gym, swimming pool and private dining room with an east-meets-west concept,” says a source familiar with plans for the land.

It is unclear how much P&O would make out of this project.

A quick check on North Bay Village real estate websites shows that the average price per sq ft for the area in the past month was US$257.

The company acquired the 33,600 sq ft freehold land in Miami for US$8.3 million in 2014. The land is zoned for residential development.

As P&O positions itself to venture into property development in the US, the company’s mainstay continues to be in financial services, where it is in the insurance and money lending businesses.

The bulk of its earnings comes from the financial services segment. For FY2019, the sector registered revenue of RM309.9 million, representing 87% of the group’s total top line. The financial services segment is the only money-making segment, as it recorded profit before tax of RM21.8 million in FY2019.

P&O’s other business segment — IT — recorded a loss before tax of RM4.8 million in FY2019. The IT business is involved in highly customised financial software/hardware solutions for the insurance industry and security and surveillance systems with a wide range of applications.

Zooming into its insurance business, the sector has been seeing higher growth in motor premium income for FY2019, ­resulting in a rise in its top line to RM309.4 million compared with RM302.4 million a year earlier. Still, the bottom line of P&O’s insurance segment has been impacted by higher-than-expected claims cost and higher marketing expenses in FY2019, causing its pre-tax profit to be lower at RM21.3 million last year compared with RM38.4 million in 2018.

According to AbsolutelyStocks, P&O’s gross premium earned increased 2% year on year to RM282 million in FY2019 from RM275.6 million. Net earned premiums grew 3% y-o-y to RM174.4 million in FY2019 from RM168.7 million.

In the same period, its net claims ratio rose 20% to RM98 million while management expenses grew 6% to RM112 million.

Looking ahead, P&O’s board expects margins to come under further pressure, mainly as a result of intense competition in the insurance industry, according to its chairman Chan Hua Eng.

“However, [the] board remains cautiously optimistic about further improving business growth through sound financial management and enhancing customer experience through the digitalisation of services. A key focus area for the general insurance business will be introducing new products with customised solutions to meet industry needs,” Chan notes in the P&O annual report.

The company is also invested in start-ups that operate in various industries, ranging from financial technology to renewable energy. The start-ups are located in the UK and Southeast Asia and grouped together as “other investments”, as they have yet to make any significant contributions to the group.

With a market capitalisation of RM255.5 million, P&O is one of the smaller insurers in the industry.

At its close of 95 sen last Thursday, P&O had a dividend yield of 7.11% and was valued at 0.88 times price-to-book.

In 2019, P&O paid total dividends of 6.25 sen.

In terms of earnings, P&O fell into the red in FY2019, registering a net loss of RM972,000 for its financial year ended Sept 30, 2019, compared with a net profit of RM1.3 million in 2018. The fall in earnings was due to higher operating expenses that resulted in a lower pre-tax profit of RM5.9 million compared with RM16.5 million in 2018.

The company is active in buying back shares as well.

As at Jan 23, the total number of shares purchased and/or held as treasury shares against the total number of issued shares of P&O stood at 5.83%.

This is an increase from the 4.98% on Jan 24, 2019 and 3.9% on Jan 24, 2017.