KUCHING: A substantial quantity of Tune Protect Group Bhd’s (Tune Protect) gross written premium (GWP) is likely to be underpinned by Malaysia’s general insurance business for 2018 estimate (2018E), as the rest would be to result from digital global travel cover, analysts observed.
For 2018E, Affin Hwang Investment Bank Bhd (Affin Hwang) expected the majority of gross written premium (GWP) to be underpinned by Malaysia’s general insurance business (80 % of GWP), as the rest would be to result from digital global travel cover (approximately 10 %).
Nonetheless, at the profit-after-tax line, the study firm estimated that about 55 % will be driven by the digital global travel cover segment.
“Inside our view, there is probably not major unforeseen circumstances in the travel industry and also the Malaysian general insurance market (motor, fire, marine or aviation or transport) which could lower premium growth or perhaps a major calamity which could result in a spike in claims,” the extensive research firm said.
“As Tune potentially introduces more innovative and services in to the market (training a small business model by way of a partnership with Laka Ltd from the united kingdom), we think that this will generate additional revenues to the combined group.
Though the domestic general insurance market remains competitive and challenging, the study firm didn’t see significant price-discounting beneath the detariffed market (for motor and fire) in Malaysia.
Overall, Affin Hwang believed that the 2018-2020E period will undoubtedly be recovery years in comparison to 2017 potentially, which saw Tune Protect’s core net profit suffer a 40 % decline year on year (y-o-y) due to the high motor claims liabilities, undesireable effects of the ‘Opt-in’ regulatory changes and higher marketing expenses.
“This is driven by new partnerships with car or airlines dealers to market Tune’s insurance products, introduction of Insurtech ideas, development of new digital platforms in conjunction with product introduction and innovation, cost-control measures (through panel workshop management), revised underwriting terms, more digital initiatives (claims processing, underwriting) and expansion of presence into other countries,” the study firm said.
Affin Hwang raised its net profit for 2018E thus, 2019E and 2020E by seven, 20.8 and 22.7 %, respectively.
“We think that the wages outlook in 2019-20E is a lot more promising on the trunk of stronger revenue growth due to initiatives to improve digitisation (which include global travel and motor insurance) and potentially lower net claims.”