Malaysian insurer Tune Protect Group Berhad has reported a RM10.3 million pre-tax loss for the second quarter of 2024 (Q2 2024), impacted by one-time impairments and an unusual rise in fire-related claims.
The group also saw a 6.7% year-on-year decrease in insurance revenue.
How Kim Lian (pictured), newly appointed CEO of Tune Protect Group Berhad, explained that one-off impairments from Tune Protect Ventures and Tune Protect Thailand, amounting to RM3 million and RM4.9 million respectively, were significant contributors to the loss in insurance revenue.
The group’s financial performance was further strained by two large fire incidents, which led to an increase in net claims compared to the previous year, when the now-discontinued Tenang Personal Accident scheme had provided a more favourable claims experience.
As a result, the group’s combined ratio increased by 9.9% year-on-year, driven by higher net claims and acquisition costs. This increase was somewhat mitigated by a lower reinsurance ratio, a result of Tune Protect’s gradual withdrawal from the large industrial risk sector, which reduced reinsurance premiums.
Excluding these unusual factors, the group would have reported a slight pre-tax profit of RM1.5 million.
For the quarter, Tune Protect’s insurance revenue dropped to RM95.4 million from RM102.3 million the previous year.
The combined ratio climbed to 105.2%, reflecting the higher claims and expenses. Investment income fell by 19.7%, contributing to the overall challenging financial results.
Tune Protect continued to follow a conservative investment strategy, focusing on low-risk unit trust funds, with investments mainly in Malaysian Government Securities and other government-backed bonds.
The group plans to increase its allocation to these funds, aiming for 98% of its investment portfolio to be in low-risk assets by year-end 2024.
In light of these challenges, Tune Protect is intensifying its focus on the travel insurance sector, leveraging existing partnerships like AirAsia to improve take-up rates.
The group intends to close gaps in its travel segment and expand its reach within the regional travel market. Key initiatives include:
Additionally, Tune Protect is exploring opportunities to activate indirect airline channels, including partnerships with travel agents, to bundle travel insurance with tour packages.
As the travel and tourism industry recovers to pre-pandemic levels, Tune Protect is optimistic about the growth prospects of its travel insurance products.
The group will focus on the most profitable business segments while maintaining strict cost controls to achieve favourable underwriting outcomes in the coming quarters.
How Kim Lian said the group is cautiously optimistic that its strategic initiatives and strong capital position will continue to support its growth.
