Tune Protect faces bleak outlook despite resilient 1Q

KUALA LUMPUR: Tune Protect Group Bhd (Tune Protect) faces a bleak outlook of earnings performance in financial year 2020 (FY20) despite remaining resilient in the first quarter of 2020 (1Q20).

Tune Protect Group Bhd (Tune Protect) posted a profit after tax (PAT) of RM2.8 million with operating revenue (OR) of RM122.4 million and gross written premiums (GWP) of RM113.2 million for the first quarter of 2020 (1Q20).

The group’s PAT and OR declined by 86.2 per cent and 3.4 per cent respectively while its GWP decreased 3.8 per cent year on year (y-o-y).

The lower 1Q20 PAT is a factor of the decrease in travel business, lower underwriting profit and unrealised investment loss due to weaker performance in the fixed income market, whilst the drop in GWP is partly due to a decline in its travel business recorded by Tune Protect Re (TPR), the group’s reinsurance arm, aligned to the reduction in air travel demand, and a decrease in the Motor line of business recorded by Tune Protect

Malaysia (TPM), the group’s Malaysian General Insurance subsidiary.

TPR managed to record a PAT of RM7.8 million in 1Q20, despite the challenging business environment caused by the Covid-19 pandemic. On a y-o-y basis, TPR’s PAT declined by 37.8 per cent, attributed to lower travel demand in Asia and Middle East.

However, on a quarter on quarter (q-o-q) basis, TPR’s 1Q20 PAT was 26 per cent higher.

Meanwhile, TPR posted a 1Q20 GWP of RM17.8 million, a decrease of 22.9 per cent y-o-y. The decrease in premium was a result of the reduced performance of the Travel business and the lower premium retention for the Malaysian market.

TPM recorded a minor decrease in GWP by two per cent to RM98.2 million compared to the same period a year ago, mainly due to the lower Travel Personal Accident (TPA) and Motor portfolios, partially offset by the growth in the commercial and retail Non-Motor classes of business.