Tune Protect’s GWP to be driven by general insurance, global travel insurance

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A significant amount of Tune Protect’s GWP is expected to be underpinned by Malaysia’s general insurance business for 2018E, while the rest is to come from digital global travel insurance, analysts observed.

KUCHING: A significant amount of Tune Protect Group Bhd’s (Tune Protect) gross written premium (GWP) is expected to be underpinned by Malaysia’s general insurance business for 2018 estimate (2018E), while the rest is to come from digital global travel insurance, analysts observed.

For 2018E, Affin Hwang Investment Bank Bhd (Affin Hwang) expected the bulk of gross written premium (GWP) to be underpinned by Malaysia’s general insurance business (80 per cent of GWP), while the rest is to come from digital global travel insurance (approximately 10 per cent).

Nonetheless, at the profit-after-tax line, the research firm estimated that about 55 per cent will be driven by the digital global travel insurance segment.

“In our view, there may not be major unforeseen circumstances in the travel industry as well as the Malaysian general insurance market (motor, fire, marine or aviation or transport) that may drive down premium growth or a major calamity that could cause a spike in claims,” the research firm said.

“As Tune potentially introduces more innovative and new products into the market (working out a business model through a partnership with Laka Ltd from the UK), we believe that this will bring in additional revenues to the group.

Though the domestic general insurance market remains challenging and competitive, the research firm did not see significant price-discounting under the detariffed market (for motor and fire) in Malaysia.

Overall, Affin Hwang believed that the 2018-2020E period will be potentially recovery years compared to 2017, which saw Tune Protect’s core net profit suffer a 40 per cent decline year on year (y-o-y) arising from the high motor claims liabilities, adverse effects of the ‘Opt-in’ regulatory changes and higher marketing expenses.

“This will be driven by new partnerships with airlines or car dealers to promote Tune’s insurance products, introduction of Insurtech ideas, development of new digital platforms coupled with product innovation and introduction, cost-control measures (through panel workshop management), revised underwriting terms, more digital initiatives (claims processing, underwriting) and expansion of presence into other countries,” the research firm said.

Affin Hwang thus raised its net profit for 2018E, 2019E and 2020E by seven, 20.8 and 22.7 per cent, respectively.

“We believe that the earnings outlook in 2019-20E is increasingly more promising on the back of stronger revenue growth arising from initiatives to boost digitisation (which includes global travel and motor insurance) and potentially lower net claims.”