Tune Protect Group Berhad (TUNEPRO) has reported a challenging second quarter for the financial year 2024 (2Q24), marked by significant financial impacts from one-off impairments and abnormally high fire losses. The Group posted a Loss Before Tax (LBT) of RM10.3 million, a sharp contrast to the RM13.0 million profit recorded in the same quarter of the previous year.
The financial downturn was primarily driven by one-off impairments related to the Group’s subsidiary, Tune Protect Ventures (TPV), which amounted to RM3.0 million, and its associate company, Tune Protect Thailand (TPT), which faced impairments of RM4.9 million. Additionally, the Group incurred higher net claims due to two large fire losses, further exacerbating the financial strain. This is a notable departure from 2Q23, where Tune Protect benefited from favorable claims experience under the now-discontinued Tenang Personal Accident (Tenang PA) scheme.
“The Group’s profitability was impacted by the one-off impairments from TPV of RM3.0 million, as well TPT of RM4.9 million. Our net claims incurred was also higher as we experienced two abnormally large fire losses in 2Q24, in contrary to 2Q23 where we had benefitted from the better than anticipated claims experience from the Tenang Personal Acccident (Tenang PA) scheme, which had since been discontinued,” stated How Kim Lian, Tune Protect Group’s Chief Executive Officer.
The Group’s combined ratio increased by 9.9% year-on-year, a reflection of the higher net incurred claims and increased acquisition costs, which were only partially offset by a lower reinsurance ratio. The lower reinsurance ratio was attributed to the Group’s strategic exit from the Large Industrial Risk business, resulting in savings on reinsurance premiums.
Despite these challenges, Tune Protect maintained a conservative investment strategy and reported stable investment performance in 1H24. Looking ahead, the Group plans to increase its investment in Low Risk Unit Trust Funds, with a focus on Malaysian Government Securities, Government Investment Issues, and Government Guaranteed Corporate Bonds.
“The Group’s investment performance in 1H24 has been stable and we expect more of the same in 2H24. We will be rebalancing some of our money market or fixed deposits into Malaysian government guaranteed bond funds where we are aiming for a reallocation mix of 2% in deposits and 98% in low-risk unit trust funds by the end of 2024,” said How.
As part of its forward-looking strategy, Tune Protect is reprioritising its efforts in the Travel segment, leveraging its existing distribution channels, such as AirAsia, to address gaps in the take-up rate. The Group is also exploring new opportunities to optimize the airline market by tailoring products to meet the specific needs of different customer segments, including budget-conscious non-tourists and affluent travelers.
“The Group has reviewed its portfolio and will focus on the more profitable segments of the business while maintaining cost discipline to ensure favorable underwriting results in upcoming quarters. We remain cautiously optimistic that our business strategies and capital strength will continue to fuel growth for the Group over the medium to longer term,” How concluded.
Tune Protect remains committed to navigating the current challenges while capitalizing on market opportunities to drive future performance, particularly within the travel and tourism sector, which has shown a strong recovery to pre-pandemic levels.
