PETALING JAYA: Tune Protect Group Bhd (formerly Tune Ins Holdings Bhd), which saw its third quarter earnings drop by 20%, is unperturbed by the external headwinds and slower domestic consumption as it strives to chalk up a better set of results this year.
Its chief executive officer Junior Cho (pic) told StarBiz that despite the anticipated softness in domestic consumption and external uncertainties, the company is optimistic to maintain strong sales growth this year underpinned by its key strategic initiatives.
Without going into specific numbers, he said: “We expect a double digit growth in top line performance this year as we continue to actively take initiatives to further grow our business and heighten awareness of the value of travel insurance.
“The company will also continue to aggressively pursue strategic partnerships in the region.
“As for our general insurance business, we expect to outpace the industry average with high single digit growth for Tune Insurance Malaysia Bhd (TIMB) despite the continued softness in the market, through innovative product profiling and benefit enhancements,’’ Cho noted.
TIMB is the group’s non-life insurance unit.
He said Tune Protect would bank on two key channels in a bid to outpace the general insurance industry growth of mid-single digit by this year.
He said they involved growing its global travel business (through innovative products, new markets and new partnerships) as well as enhancing its general insurance business and digitising its direct-to-consumer products.
In September last year, the company launched its Direct-to-Consumer website whereby consumers could directly and easily purchase a number of lifestyle based products including travel insurance.
Meanwhile, analysts are expecting a single digit expansion in the premium income of the life and non-life insurance sectors in Malaysia over the next few years.
CIMB Research is urging investors to focus on insurance companies that have exposure to overseas markets and the takaful business, given the cautious outlook for growth in the conventional insurance sector.
It has kept an “overweight” rating on Malaysia’s insurance sector, naming Tune Protect Group and Syarikat Takaful Malaysia Bhd as its top picks.
The research house is projecting single digit growth rates for the industry’s premiums in 2015-16, at 5%-6% for general insurance and 7%-8% for life insurance.
For the third quarter ended Sept 30, 2015, Tune Protect Group’s net profits were down by some 20% to RM12.9mil compared with RM16.2mil a year ago. Earnings for the nine months stood at RM47.7mil, an 8.2% decrease over the same period last year mainly due to higher management expenses which include higher royalty fees related to the use of the Tune trademark and cost of rebranding, as well as the one-time sale of building in 2014.
However, operating revenue for the said quarter increased by 10.5% to RM121mil while net earned premium grew 18.9% to RM80.7mil.
Despite the weaker third quarter earnings, analysts are reiterating their add and buy calls on the company’s stock. CIMB Research said it was maintaining an “add” call on Tune Protect Group although it was cutting its financial year (FY) 2015 and FY 2017 forecast earnings per share by about 17-18%.
This was premised on the growth potential for its travel insurance business in the region, positive prospects for its non-life insurance unit in Thailand in the longer term and possibly more tie-ups with other airlines, it noted.
An insurance product manager and underwriter across the Asia-Pacific, Tune Protect has online and general insurance businesses.
It also provides online travel protection products for AirAsia Bhd and has partnerships with Cebu Pacific and Air Arabia and has footprints in over 30 countries across four continents, including countries in the Middle East-North Africa and European Union regions.
For this year, Cho said among some of the broad strategies or areas of focus to boost earnings would be to increase its global travel business, grow its offline and biz-to-biz partnerships including establishing new airline partnerships and grow its market presence in the Middle East and Asean.
On its latest plans in Indonesia after the recent termination agreement with Indonesia-based insurer PT Asuransi Staco Mandiri, he said: “We will continue to evaluate a number of opportunities within Indonesia.
“However, we cannot comment on any specific timeline at the moment.
At the same time, the company will continue to actively evaluate opportunities across Asean to further our expansion strategy. This is both for the general insurance and online business (including digital and travel partnerships).” The company’s shares were down by 2 sen to RM1.29 last Thursday.