KUALA LUMPUR: Tune Protect Group Bhd (TPG) is expected to see slower premium growth and softer retention rate for the less lucrative motor segment, moving forward.
TA Securities Holdings Bhd believes general insurance, particularly the motor segment will remain extremely challenging due to the intense price competition and high claims ratio.
The research firm said the focus for TPG will be on the travel insurance and non-motor segment.
Earnings-wise, TPG's second quarter (2Q) financial year (FY) 2019 net profit plunged 42.8 per cent to RM10.4 million, underpinned by increases in management expenses and higher net claims in motor and fire insurance.
Nevertheless, the group managed to record an increase of 6.4 per cent in gross written premium to RM125.2 million, thanks to stronger contribution from the non-motor business, TA Securities noted.
TPG recently signed a digital partnership agreement with Bao Viet Holdings, one of the largest insurance players in Vietnam, to distribute their travel protection plan via the TUNEPRO’s platform.
It is expected to be launched in the third quarter (3Q) of 2019, which will help the group to generate additional service fee income.
The group also entered into a partnership with TieThai to sell its travel insurance products through a mobile application that is mainly developed for the Chinese tourist in Thailand.
TA Securities said TPG had guided that dynamic pricing was implemented in four key markets. The results were encouraging, contributing about three per cent to AirAsia’s overall travel protection business in 2Q of 2019.
The research firm made no change to TPG target price of 87 sen and maintained a “buy” call on the stock.