The group aims to rebalance its motor portfolio by focusing on more profitable segments.
PETALING JAYA: Tune Protect Group Bhd
’s contribution from travel revenue is expected to increase to 36% for the financial year 2025 (FY25) compared with 24.2% in FY23.
TA Research said in a report it believed the combined ratio will improve to 93.9% in FY25 versus 102.8% for the nine months of 2024.
This would be driven by ongoing efforts to leverage the regional travel ecosystem and product innovation, the research house added.
TA Research has maintained a “buy” call on the stock with an unchanged target price of 48 sen per share.
The research house noted that the insurer will place greater focus on the travel business as it is its key competency.
Thus far, the group has observed that tickets from its airline partners are increasingly being sold through indirect channels (39% pre-pandemic versus 56% post-pandemic), corresponding with a relatively lower take-up rate (TUR) for its offerings.
Moving forward, Tune Protect plans to increase TUR through price optimisation in selected markets and the launch of new products, TA Research said.
The research house expects TUR for international short-haul flights from direct channels to increase to approximately 20% in FY25, up from 15% currently, driven by new product launches such as the Tune Protect Travel Gadget and bundled ancillaries.
According to the General Insurance Association of Malaysia, the total net claims incurred ratio for the motor insurance class increased to 66.7% in 2023, up from 65.3% in 2022.
Tune Protect’s motor loss ratio is higher than the industry average.
As such, the group aims to rebalance its motor portfolio by focusing on more profitable segments, such as mid-to high-sum-insured motor vehicles and motorcycles.
This strategy is expected to allow Tune to raise its average premium level to align more closely with the industry average.
Additionally, the group increased prices by approximately 4% for the private-car segment in July 2024, which is expected to have a favourable impact on the motor claims ratio in 2025.
Tune Protect reported a net profit of RM5.9mil in the third quarter of 2024 (3Q24).
This compared with a net loss of RM9.8mil in 2Q24.
The improvement was driven by a 5% quarter-on-quarter (q-o-q) increase in insurance revenue to RM100.2mil, primarily from the travel segment, particularly from AirAsia and in the Middle East.
It was also attributed to better claims experiences in the fire, engineering, cargo and personal accident segments, and a lower expense ratio due to enhanced cost efficiency.
Overall, the group recorded a positive underwriting result of RM6.1mil in 3Q24, compared with an underwriting loss of RM4.9mil in 2Q24.
As a result, the combined ratio improved to 93.9% (versus 105.2% in 2Q24).
For 4Q24, TA Research expects further q-o-q improvement driven by the year-end peak travel period and cost discipline efforts.
