MyCC financial penalty will not have any impact on Tune Protect’s FY20 profit

KUALA LUMPUR: The Malaysia Competition Commission (MyCC) has imposed a financial penalty on Tune Protect Group Bhd (Tune Protect), but analysts project that it will not have any impact on the group’s financial year 2020 (FY20) profit.

In a filing on Bursa Malaysia referring to the previous announcement on the following ma er dated February 28, 2017, Tune Protect’s board of directors announced that its general insurance subsidiary Tune Insurance Malaysia Bhd (TIMB) received a notice from the MyCC on their decision wherein they have found that TIMB and 21 other general insurance companies in Malaysia who are members of the General Insurance Association of Malaysia (PIAM) had infringed Section 4 of the Competition Act 2010.

“The MyCC has imposed a financial penalty of RM2,571,077.52 only on the part of TIMB and a consolidated amount of RM130,241,474.74 on all the 22 members of PIAM,” the filing read.

AmInvestment Bank Bhd (AmInvestment Bank) recalled that initially, MyCC imposed a financial penalty of RM3.6 million on TIMB and a consolidated RM213.4 million on all 22 general insurance companies (members of PIAM).

In spite of this development, AmInvestment Bank opined that this will not have any impact Tune Protect’s FY20 profit, but may affect the group’s FY21 earnings.

“The financial penalty will not have any impact on Tune Protect’s FY20 profit,” the research firm said.

“However, it will affect the group’s FY21 earnings should it fail in its legal appeal to set aside the fines. The financial penalty impact is estimated to be 7.6 per cent of FY21’s net profit.”

Looking ahead, AmInvestment Bank noted that the outlook for the travel and general insurance business continues to be challenging due to the outbreak of Covid-19.

“With the second wave of the pandemic, most international borders for air travel remain closed, and this will impact the progress of recovery for travel insurance.”