KUCHING: Tune Ins Holdings Bhd (Tune Ins) has not only met but exceeded its targets and expectations for the year 2013, validating its belief in a unique business model that marries traditional with online insurance.
According to Tune Insurance chairman Razman Hafidz Abu Zarim, their online business has grown much faster than they had anticipated, indicating a significant increase in the take-up rate of travel insurance by AirAsia Bhd (AirAsia) passengers.
“We had targeted a 20 per cent increase in premiums sold, but insteac achieved 33 per cent – much higher than the industry average of 15 per cent,” Razman said.
In addition, Tune Ins’s subsidiary, Tune Insurance Malaysia Bhd (TIMB), which offers insurance products through the traditional distribution channel of agents, also stepped up its pace of transformation that began in 2012 to reduce its previous over-dependence on motor insurance while setting claims to strengthen its balance sheet.
TIMB had managed to increase sales of non-motor products from 52 per cent of the total as at end 2012 to 68 per cent as at the end of 2013.
Razman highlighted that this had contributed to gross written premiums of RM340.3 million, marking a 35.9 per cent increase from the 2012 figure, and a sizeable profit after tax of RM27.1 million.
“TIMB’s healthy bottomline is all the more impressive given that it has been achieved while the company has been reducing its investment exposure to equities to further enhance its capital adequacy ratio (CAR) which stood at a very robust 272 per cent as at December 31, 2013,” Razman added.
Overall, the extremely encouraging performance of both businesses and consolidation of the full 12 months result of the group’s 83.26 per cent subsidiary, TIMB, led to a 71 per cent increase in Tune Ins’ revenue year on year to RM388.1 million and a group profit after tax of RM72.5 million, up 50 per cent from 2012.
“This has led to the board recommending a dividend of RM29.02 million, our first ever to shareholders, to be approved at our upcoming third Annual General Meeting.
“The proposed shareholder return meets with the dividend policy we had announced in our initial public offering (IPO) prospectus of a minimum payout of 40 per cent of profit after tax (PAT),” he said
A key highlight of the year under review was the number of new partnerships built, with Razman noting that in May, they had entered into a partnership with Cebu pacific Air to offer insurance to passengers flying into the Philippines.
In January 2014, Tune Ins signed an agreement with travel agency Cozmo Travel LLC based in the United Arab Emirates to form a joint venture company, Tune Protect Commercial Brokerate LLC which will provide travel insurance and customised travel solutions to independent and corporate travellers.
These include passengers of the Air Arabia Group, a successful low-cost carrier that flies to 51 destinations in the Middle East and North Africa (MENA) region.
“This is a very exciting development because the MENA region represents another high-growth area. Having established a presence in the region, we will now be able to ride along with its growth,” Razman commented.
In addition, Tune Ins has also forged a close working relationship with a human resources consultancy which it has developed an entirely novel insurance product for the small and medium enterprise (SME) sector which would serve to encourage better operating and management procedures to the benefit of both employees and companies.
Building on its online expertise, the year also saw Tune Ins establish Tune Direct Limited (TDL), which is to offer a wider range of innovative insurance products online.
“Already, a couple of products have been developed and are in the final stage of being fine-tuned before being launched into the market.
“Although the focus will be on non-travel products, the company will tap into our vast travel insurance customer database and reach out to potential customers through emails or mobile apps,” Razman said.
The plan is for TDL to set up online subsidiaries in Indonesia and Thailand, initially, and other countries in the region eventually.
“These subsidiaries will act as brokers and link up with local insurance companies to underwrite our proceducts with Tune GenRe (TGR) providing reinsurance and earning a commission for every sale, in the same manner in which we have been operating our foreign travel online business,” he added.
All in, with Tune Ins’ ability to move fast and flexibility to take on unplanned challenges, Razman concluded that he is very optimistic of the group’s performance, not just in 2014, but also the years ahead.