Tune Protect Q2 net profit down 50.87% on higher net claims

PETALING JAYA: Tune Protect Group Bhd's net profit for the second quarter ended June 30, 2017 fell 50.87% to RM13 million from RM26.47 million a year ago due to an increase in net claims.

In a filing with Bursa Malaysia, the group said the increase in net claims was mainly from the motor class of its general insurance business, but was offset by a minor improvement in share of profits of overseas ventures.

The decline in net profit was also due to the subdued topline of its Digital Global Travel as a result of the Malaysian Aviation Commission's opt-in ruling on ancillary offerings online.

Revenue for the quarter rose 6.65% to RM133.88 million from RM125.54 million a year ago due to an increase of RM11.9 million in gross earned premiums (GEP) mainly from the motor class of general insurance business.

For the general reinsurance business, operating revenue was lower at RM27.5 million during the quarter, compared with RM32.5 million a year ago due to lower GEP in Malaysia, Australia and China markets.

The segment's profit was also lower at RM13.2 million compared with RM14.5 million a year ago, due to a decrease of RM4.6 million in net earned premiums (NEP) mainly in Malaysia, China and Australia markets.

This was offset by decreases in net commission, net claims and management expenses totaling RM3.3 million.

For the general insurance business, operating revenue was higher at RM116.5 million compared with RM107.8 million a year ago due to improvement of RM12.1 million in GEP of the motor class, offset by a decrease of RM3.4 million in investment income due to lower share of MMIP investment income and marginally lower interest income.

The segment's profit plunged to RM2 million from RM24.3 million a year ago due to higher net claims of the motor class.

For the six months ended June 30, 2017, Tune Protect's net profit fell 49.20% to RM24.94 million from RM49.10 million a year ago while revenue rose 3.48% to RM263.96 million from RM255.08 million a year ago.

Moving forward, the group said it has rolled out a number of pricing and marketing initiatives for the global travel business and these are expected to gain traction in the topline in the second half of the year.

In addition, new products such as annual plans and migrant plans are scheduled to be launched later in the year.

"We also expect to formalise a new partnership with an Asean airline, bringing us closer to becoming a leading travel insurer in the region," it said. The partnership with Cambodia Angkor Air is slated to commence in 3Q2017.

In terms of the general insurance business, the group will continue efforts to address the high claims from the motor class with its strategies focusing on providing further online accessibility and product differentiation via risk-adjusted pricing.

The group's share price fell 0.98% to close at RM1.01 on Friday with a total of 2.33 million shares traded, giving it a market capitalisation of RM759.28 million.