KUALA LUMPUR: Tune Protect Group Berhad’s (“Tune Protect” or “Group”; TUNEPRO, 5230) financial results for the second quarter of the financial year 2024 (“2Q24”) were affected by one-off impairments from the Group’s subsidiary Tune Protect Ventures (“TPV”) and its associate company, Tune Protect Thailand (“TPT”), and abnormally high fire losses. Insurance revenue also declined 6.7% year-on-year (“YoY”) which led to a Loss Before Tax (“LBT”) of RM10.3 million.
How Kim Lian (“How”) Tune Protect Group’s Chief Executive Officer elaborated further on the key factors affecting the Group’s 2Q24 financial performance.
Normalised numbers, excluding one-off impairments and claims
“The Group’s profitability was impacted by the one-off impairments from TPV of RM3.0 million, as well TPT of RM4.9 million. Our net claims incurred were also higher as we experienced two abnormally large fire losses in 2Q24, contrary to 2Q23 where we had benefitted from the better-than-anticipated claims experience from the Tenang Personal Accident (“Tenang PA”) scheme, which had since been discontinued,” said How.
Consequently, the Group’s combined ratio increased by 9.9% YoY due to the higher net incurred claims and attributable expenses. Increased acquisition cost ratio also contributed to the increase in the Group’s combined ratio, partially offset by a lower reinsurance ratio.
“The lower reinsurance ratio was due to the Group’s gradual exit from the Large Industrial Risk business leading to savings in reinsurance premiums. If we were to remove the anomalies mentioned above from the equation, overall, the Group would have recorded a slight Profit Before Tax (“PBT”) of RM1.5 million,” added How.
| Tune Protect Group (RM’mil) | 2Q24 | 2Q23 | YoY | 1H24 | 1H23 | YoY |
| Insurance revenue | 95.4 | 102.3 | -6.7% | 190.0 | 224.3 | -15.2% |
| Net incurred claims and attributable expenses | (50.9) | (39.8) | 28.1% | (108.0) | (87.8) | 23.0% |
| Amortisation of insurance acquisition cash flow | (34.9) | (36.6) | -4.7% | (66.9) | (68.9) | -2.9% |
| Allocation of reinsurance premiums | (14.5) | (21.2) | -31.4% | (29.3) | (57.0) | -48.6% |
| Net insurance service result | (4.9) | 4.8 | >-100% | (14.2) | 10.4 | >-100% |
| Combined ratio | 105.2% | 95.3% | 9.9% | 107.5% | 95.4% | 12.1% |
| Total investment income | 7.0 | 8.7 | -19.7% | 16.4 | 18.0 | -8.9% |
| Total other income and expenses | (7.3) | (2.5) | >100% | (11.7) | (12.6) | -7.0% |
| Share of results1 | (5.0) | 2.0 | >-100% | (4.8) | 1.0 | >-100% |
| Profit/(loss) before tax | (10.3) | 13.0 | >-100% | (14.3) | 16.8 | >-100% |
| Profit/(loss) after tax | (10.1) | 11.2 | >-100% | (14.0) | 14.4 | > -100% |
Notes:
- Share of results of an associate (TPT) and a joint venture company (TP EMEIA)
- Amounts presented may not foot due to rounding.
Stable investment performance and strategy
The Group maintains a conservative investment strategy while looking for opportunities to enhance its overall investment returns. Moving forward, it plans to progressively increase its investment into Low-Risk Unit Trust Funds, with underlying investment predominantly in Malaysian Government Securities, Government Investment Issues, and Government Guaranteed Corporate Bonds.
“The Group’s investment performance in 1H24 has been stable and we expect more of the same in 2H24. We will be rebalancing some of our money market or fixed deposits into Malaysian government guaranteed bond funds where we are aiming for a reallocation mix of 2% in deposits and 98% in low-risk unit trust funds by the end of 2024,” said How.
Capitalising on market gaps and opportunities
The Group is reprioritising its efforts in the Travel segment with various initiatives in key growth areas such as championing the regional travel ecosystem. For example, it is focused on increasing the take-up rate (“TUR”) through existing distribution channels, such as AirAsia.
“Through in-depth analysis of our current Travel business, we acknowledge that more can still be done to address the gaps in the take-up rate for the Group’s airline business such as AirAsia. Now that we’ve seen where the gaps are, we will be actively rolling out various initiatives to increase the take-up rate and grow our Travel business further,” said How.
To capitalise on various market gaps and opportunities identified by the Group, there are exciting plans to optimise the airline market by seizing new opportunities based on flight durations and meeting the demands of customers with new products based on certain behaviours and lifestyles.
For medium-haul flights, there are opportunities to reprice bundled products to be more competitive by offering better product benefits. For international short-haul flights, the Group is benchmarking the affordability of insurance relative to air tickets and premiums to airfare ratio. It is conducting some experiments to increase the TUR by adjusting prices to match affordability.
“We are also actively looking at addressing market needs with unique new products. For example, for budget-conscious non-tourists we plan to offer gadget protection at low premiums on top of our travel insurance. For eventgoers and concertgoers, we plan to offer event protection at affordable premiums. For affluent travellers, we plan to offer cancellation insurance,” explained How.
