Tune Protect hits record high NWP in 2Q22; exponential growth strain, investments and Covid claims in Thailand weighed on bottom line

Highlights:

• Strong quarterly NWP in 2Q22, grew 3x – highest since IPO
• Key growth areas on track to meet objectives by end of 2023
• Number of policies issued grew by more than 50% YoY
• Bottom line impacted by exponential growth strain, investment losses, as well as losses by Thailand associate
• Commission ratio expected to normalise in 2H22 as premiums are earned
• Investment defensive stance remains for 2022 due to prevailing market uncertainties

KUALA LUMPUR, 25 AUGUST 2022 – Tune Protect Group Berhad (“Tune Protect” or “Group”; TUNEPRO, 5230) continued its growth momentum in 2Q22 by posting a record high Net Written Premiums (“NWP”) of RM113.3 million and Net Earned Premiums (“NEP”) of RM79.5 million, rising by more than 100% Year-on-Year (“YoY”) respectively.

The YoY NWP for the Group’s preferred business segments; Health, Lifestyle and SME grew 3.7x, 3.0x and 1.4x, respectively. The growth in Health was encouraged by new accounts secured in Vietnam, Lifestyle was driven by the growth in PA, Motor and Travel, whilst SME grew in its Fire business.

Rohit Nambiar (“Rohit”), Tune Protect Group’s Chief Executive Officer said, “The Group’s 2Q22 results show that we are on the right path of growth. It was our highest quarterly NWP since the Group’s Initial Public Offering (“IPO”). However, despite the commendable NWP and NEP, the Group posted Loss After Tax of RM21.5 million in 2Q22 owing to exponential growth strain, investment losses, as well as share of losses by our associate Tune Protect Thailand (“TPT”).”


Commendable progress in key growth areas The Group continues to improve its retention ratio in the Group’s preferred segments which are Health, Lifestyle and SME in line with its strategy to achieve retention upwards of 70% for all Lines of Business (“LOB”). In 2Q22, the Group’s retention ratio was on track, rising 22% YoY to 55%. Its ASEAN expansion is going from strength to strength with 2 new insurance partners secured in Vietnam.

The Group’s expense ratio has significantly reduced YoY in line with the plan from 58.2% to 35.2%, driven by its strong growth story.

The Group is accelerating its mobile strategy through simple, and affordable offerings via its mobile applications in Malaysia and Thailand. New retail products available in the mobile apps included 2 Health and 1 Travel products. A Health Tech offering, integrated with the mobile app will also be made available by 4Q22.

Claims expected to normalise “Currently, motor claims are normalising and at pre-Covid levels, whilst travel in the region has yet to fully recover. Growth was substituted by the Personal Accident (“PA”) segment which has a higher claims profile than travel although still profitable. But with a lower margin profile,” said Rohit.

TPT impacted by high Covid claims TPT’s losses were attributed to the exceptionally high Covid claims, though it is gradually stabilising in line with the overall improvement in Thailand’s Covid infection rate observed during the current quarter. Nevertheless, the Group remains cautious that the financial performance of TPT may continue to be challenging in the coming quarters.

Maintains investment defensive stance on market uncertainties The Group’s portfolio losses were mainly from Asia Pacific equity markets which reflected the lagging inflationary pressure and adjustments to higher interest rate environment in the region. Year-to-Date (“YTD”), the US Federal Reserve (“US Fed”) has hiked interest rates by 200 basis points (“bps”) to 2.5% and the market is expecting interest rates to rise further to 3.5% by year-end.

“Market uncertainties will continue as the US Fed is still battling inflation. Headwinds in China added another dimension to the market turbulence. Our stance for the next half of the year remains defensive,” Rohit concluded.