Tune Protect sees lower 4Q, aims to focus on expanding product range in 2017
KUCHING: Tune Protect Group Bhd’s (Tune Protect) earnings for the fourth quarter of 2016 (4Q16) ended December 2016 fell by 30 per cent year-on-year (y-o-y) to RM16.54 million from RM23.49 million recorded in 4Q15 ended December 2015.
Nevertheless, Tune Protect aims to focus on product innovation, customer experience, and channel innovation as well as to introduce Takaful into its product range in 2017.
The insurance provider in a filing to Bursa Malaysia yesterday said its 4Q16 pre-tax profit dropped by 39 per cent y-o-y to RM16.81 million from RM27.36 million recorded in 4Q15.
Tune Protect explained that the lower earnings in 4Q16 were attributed to higher expenses as a result of higher net claims, allowance for doubtful debts and fixed assets written off as well as lower realised and fair value gains in investments.
However, the insurance company noted that 4Q16 revenue grew marginally by 3.5 per cent y-o-y to RM135.47 million against RM130.92 million generated in 4Q15.
Elaborating further, Tune Protect said its operating revenue for the general reinsurance segment decreased by RM5.1million from RM35.5 million in 4Q15 to RM30.3million in 4Q16 due to the drop of RM6.4 million in gross earned premiums (GEP) from its Malaysian operation but offset by RM0.9 million increase in GEP from its operation in the Middle East and RM0.4 million in investment income.
It noted the decrease of RM5.3 million in the general reinsurance segment’s profit was due to decrease in net earned premiums (NEP) from its operation in Malaysia but offset by higher investment income.
Nonetheless, Tune Protect pointed out that its operating revenue for the general insurance segment has increased by RM4.8 million from RM113 million in 4Q15 to RM117.8 million in 4Q16 due to improvement in GEP of motor, engineering and medical classes.
However, the company said the segment’s profit has decreased by RM7.1million from RM12.1 million in 4Q15 to RM5 million in 4Q16 due to higher net claims, allowance for doubtful debts and fixed assets written off, as well as lower realised and fair value gains in investments.
Tune Protect further noted the decrease was offset by improvement in NEP of motor and medical classes and lower net commission expense.
As for financial year 2016 (FY16), Tune Protect observed that its revenue improved by 7.6 per cent y-o-y to RM516.62 million from RM480.19 million generated in FY15 ended December 2015.
At the same time, the company said FY16 net profit gained by 16 per cent y-o-y to RM79.98 million from RM68.97 million recorded in FY15.
Tune Protect in a statement said for the 12 months ended December 31, 2016, the group’s financial performance has exceeded its target for post-tax profits as compared with the target set internally FY16.
The company added its general insurance entity in Malaysia (Tune Protect Malaysia) has bolstered the group result, achieving a 74 per cent growth in post-tax profits to RM40 million as compared to RM23 million in 2015.
Tune Protect noted the improved results was attributed to its focus on underwriting profitable classes of business, particularly workers’ compensation.
It also noted the boost in profit was strengthened by Tune Protect Malaysia’s increased share of profits from the Malaysian Motor Insurance Pool (MMIP).
Commenting on the latest financial results, Tune Protect Group’s chief executive officer (CEO) Razman Hafidz Abu Zarim said, “As previously shared, we are making tremendous inroads into digital insurance and the numbers of our digital business further proves our claims.
“The group has strengthened its direct-to-consumer business and although the numbers are still relatively modest, the business achieved close to 500 per cent growth that amounts to 7,506 in total policies issued in 2016.
“Total gross written premium (GWP) for the group’s airline-independent travel insurance, Tune Protect Travel Easy, soared encouragingly by more than 426 per cent to record RM440,000 in total sales for the full year.