PETALING JAYA: Tune Insurance Holdings is expected to potentially secure another airline partner in the near future, as there may be more merger and acquisitions, margin expansion and market expansion opportunities arising from an Asean customer base, said RHB Research Institute. Tune Insurance briefed analyst Kong Ho Meng last Friday on the company's expanded revenue stream and new markets, including contributions from Air Arabia's customers from this month, Osotspa Insurance (OSI) in FY15 and Tune Hotel 'Guest Cover'. "We think the diversification angle is key to offsetting uncertainties in the regional tourism outlook and AirAsia's plans to defer delivery of its aircraft," Kong said in a report yesterday. He tweaked the insurers earnings forecast by 3% lower based on the latest information that AirAsia plans to defer delivery of seven to 19 of its aircraft. However, the upside bias is with regard to its assumptions of an additional customer base from Air Arabia (half-year contribution for FY14 and full-year for FY15), as well as assuming that Tune Insurance secures another airline partner by FY15. "The company expects its 50% joint venture (JV) with Cozmo Travel LLC, a unit of a fast-growing Middle East and North Africa (MENA) low-cost airline Air Arabia, to contribute from 2Q14 onwards," he said. Since this month, the Tune Protect travel insurance plan has been made available on Air Arabia's flights, which in the first quarter of 2014 alone carried 1.6 million passengers, higher than the historical average of 1.4 million per quarter. With pricing and benefits similar to those offered to existing airline partners, AirAsia and Cebu Pacific, the research institute expects the bulk of MENA's contribution to be from Air Arabia customers. Tune Insurance also expects its penetration into Thailand via a 49% stake in OSI to give rise to long-term earnings accretion in its Thailand contribution on both the online and general insurance business fronts. The agreement gives a five-year synergistic access to OSI's group businesses. "Online sales managed to grow in 1Q14 despite the political turmoil in Thailand. While 2Q14 could potentially be another weak travel quarter for its Thai travel business, due to concerns over a worsening political situation in May till June, Tune Insurance remains optimistic on Thailand being its key market," said RHB Research. It added that the risks faced by Tune Insurance include a surge in online claims ratio, competition and weak marketing which may hurt take-up rates while AirAsia may defer the delivery of as many as seven to 19 aircraft in FY14/FY15.