by Ganesh Sahathevan
TO BE READ WITH
Friday, October 21, 2022
Problems at Tune Protect may not be contained given its reinsurance business - Bank Negara negligence in policing Tune could affect entire Malaysian insurance industry
by Ganesh Sahathevan
The market for Tune Protect shares remains at and around its all time low of RM 0.23. Bank Negara is still silent, and it remains so despite the fact that problems at Tune, which the market seems to be aware of if not anticipating, can affect the entire insurance industry given Tune Protect's reinsurance business.
Tune seems to have adapted the AirAsia model of trying to derive a cashflow from anything and everything (recall Tony Fernandes' untold fountains of wealth) in deciding that it should get into the reinsurance business. The added risks assumed from that business may compound the risks arising from the undisclosed leverage that it appears to have taken on to finance its asset trading activities (see story below).
TO BE READ WITh
Wednesday, October 12, 2022
Market rejects Tune Protect buying support, massive buying greeted by massive sell-off to a low of 25 Sen -Some evidence that Bank Negara may have prompted buying
by Ganesh Sahathevan
The market seems to have been unimpressed by the massive buying of Tune Protect sock towards the end of the trading day on Wednesday 12 October 2022. Buying support appears to have been greeted by a massive sell-off at the end of the trading day that has pushed share price down to a low of 25 Sen.
The buying follows approaches made to this writer by Tune Protect executives wanting a private discussion about the issues raised below. The approaches coincide with queries sent by this writer to Bank Negara Governor Shamsiah Yusof about the issues below, and Bank Negara's apparent lack of supervision.
TO BE READ WITH
Sunday, September 11, 2022
Tune Protect's trading in financial assets reveals levels of leverage that may be inconsistent with its obligations to its customers, but Bank Negara remains silent
by Ganesh Sahathevan
The following numbers have been extracted from Tune Protect's annual report for the financial year ended 31 December 2021.
Tune Protect began the year with RM 35 Million in cash and cash equivalents and generated RM &.223 Million from its operating activities. There was no injection of fresh capital or borrowing.
RM 819,868,000 in purchases of fair value through profit or loss (FVTPL) assets are likely therefore to have been financed by borrowing that has not been disclosed.
It appears that Tune Protect's levels of leverage may be inconsistent with its obligations to its customers, but Bank Negara remains silent.
TO BE READ WITH
Friday, September 9, 2022
AirAsia's problems refunding airfares should have triggered Bank Negara intervention into Tune Protect; Tune Protect share price hits new low
by Ganesh Sahathevan
In May 2022 Al-Jazeera reported:
AirAsia faces backlash over delayed pandemic refunds
Given that AirAsia and Tune Protect are part of the same corporate group, Bank Negara ought to have intervened in the operations of Tune Protect. It did not, and meanwhile , Tune Protect's share price has fallen to a new low of RM 0.30.
TO BE READ WITH
Friday, August 26, 2022
Bank Negara must show that it is not providing Tune Protect regulatory cover - Old habits hard to break, but post 1MDB, it cannot be business as usual
by Ganesh Sahathevan
All of the above cast doubt on Tune Protect CEO Rohit Chandrasekharan Nambiar's claims that the company is no longer reliant on AirAsia for business, and has a diverse revenue base that is not reliant on air travel, even as he admits (as reported):
He (Nambiar) highlighted that the travel business was already declining pre-Covid-19, marking a 16% decline in 2019 and subsequently “fell off the cliff” in 2020 due to the pandemic, as AirAsia halted operations.
"AirAsia’s contribution today is less than 6% of our travel, which is a little more than 50% of our entire business. That translates to AirAsia accounting for 3% to 4% of our topline."
“I look at it as a massive opportunity because we know AirAsia is going to come back. This number will grow, and when it does, it will add on to these new businesses that we have,” he explained.
To BE READ WITH
Tune Protect slips into the red, dragged by lower underwriting profits and investment income
Izzul Ikram/theedgemarkets.com
August 25, 2022 15:05 pm +0
KUALA LUMPUR (Aug 25): Tune Protect Group Bhd posted a net loss of RM19.8 million for the second quarter ended June 30, 2022 (2QFY22), compared with a net profit of RM14.25 million a year earlier.
This was despite a 29% boost in its revenue for the quarter to RM142.82 million from RM110.69 million last year, according to the insurer's filing on Thursday (Aug 25).
The insurer said its earnings were dragged by a RM17.7 million drop in underwriting profits, RM19.7 million fall in investment income as well as an increase of RM5.7 million in an associate's share of losses.
The decrease of RM17.7 million in underwriting profits was mainly attributable to the increase in unearned premiums of RM34.8 million whereas total fee and commission expenses (RM35.73 million) were recognised immediately during the quarter," it added.
For the cumulative six months ended June 30, 2022, Tune Protect's net loss widened to RM22.78 million from RM1.2 million a year ago, mainly attributed to an RM18.4 million decrease in underwriting profits and an RM8 million increase in an associate's share of losses.
It explained that the decrease of RM18.4 million in underwriting profits was mainly because of higher unearned premiums of RM51 million whereas total fee and commission expenses (RM53.92 million) were recognised immediately in the quarter under review.
In terms of its prospects, Tune Protect said that it expects its "three main pillars" — namely lifestyle, health and small and medium enterprise — to experience healthy growth as the economy recovers, contributed especially by its partnerships and agency channels.
"The new collaborations with strategic partners and our continued innovation of B2B (business-to-business) platforms and B2C (business-to-consumer) apps in widening the distribution of products are expected to contribute positively to the overall business of the group, notwithstanding corresponding fees and commissions.
"Additionally, the group is also expected to benefit from the unearned premium reserve over the year arising from the high net written premium growth in the current quarter (2QFY22)," it added.
However, the group said it expects its investment return to remain volatile in the coming quarters given uncertainties in the global market outlook, exacerbated by global inflation and risks of a global recession.
At noon break on Thursday, shares in Tune Protect settled down one sen or 2.86% to 34 sen, giving it a market capitalisation of RM270.63 million.
Tune Protect dispels investors’ concerns over AirAsia impact on group
Ahmad Naqib Idris/theedgemarkets.com
January 26, 2022 19:16 pm +08
-A
+AReferring to comments that AirAsia’s business “makes or breaks” Tune Protect, Nambiar pointed out that the group has been building its business in the Middle East, Vietnam, Cambodia and has also undertaken many partnerships, tying up with 44 new partners in 2021.
KUALA LUMPUR (Jan 26): Tune Protect Group Bhd addressed concerns raised by investors regarding its reliance on AirAsia Group Bhd’s business, with the group pointing out that its business with the low-cost carrier accounts for 3% to 4% of its topline.
During a Wednesday (Jan 26) briefing on Tune Protect’s outlook, group chief executive officer Rohit Chandrasekharan Nambiar (pictured) made several points to dispel concerns over the impact that AirAsia’s business may have on the group’s performance going forward.
“Firstly, AirAsia owns a little more than 13% of this organisation through AirAsia Digital. Secondly, AirAsia’s outstanding payments with us is at a very healthy level and they have been paying,” he said.
Referring to comments that AirAsia’s business “makes or breaks” Tune Protect, Nambiar pointed out that the group has been building its business in the Middle East, Vietnam, Cambodia and has also undertaken many partnerships, tying up with 44 new partners in 2021.
He highlighted that the travel business was already declining pre-Covid-19, marking a 16% decline in 2019 and subsequently “fell off the cliff” in 2020 due to the pandemic, as AirAsia halted operations.
"AirAsia’s contribution today is less than 6% of our travel, which is a little more than 50% of our entire business. That translates to AirAsia accounting for 3% to 4% of our topline."
“I look at it as a massive opportunity because we know AirAsia is going to come back. This number will grow, and when it does, it will add on to these new businesses that we have,” he explained.
Asked if the Middle Eastern segment is sustainable, given the weaker performance in the recent quarter, Nambiar said it is very much sustainable as the group does not rely on a single partner and has tied up with Air Arabia and Salam Air, for example.
He added that over 1,000 travel agencies in the region are using Tune Protect’s business-to-business platform and are selling the group’s products.
On the weak performance of the Middle East segment in its recent quarter, he said that there were months when people travel to the region, while other months are slower, such as during Ramadhan for example.
He also pointed to the fears arising from spikes in Covid-19 infections as a factor, although he said there should be more consistency in 2022 as fears subside.
Besides the Middle East, the group is also looking at new markets such as Eastern Europe, which Nambiar said Tune Protect is aggressively pursuing.
Meanwhile, the group is also eyeing to expand its operations in Indonesia and Vietnam as it seeks to tap the rising mobile penetration rate in these countries via its proprietary mobile app.
Nambiar highlighted several trends that could pick up in 2022 which the group could capitalise on, including the simplification of travel restrictions, vaccine passports, mandatory insurance coverage and pent-up travel demand, which opens up opportunities in trip cancellation insurance, Covid-19 coverage and trip delay benefits.
He added that Tune Protect is also looking at e-commerce amid the pandemic-induced digital acceleration, which could allow the group to engage in more partnerships, as well as products related to the gig economy.
He also noted that the group is hoping to capitalise on technology trends such as hyper-personalisation, protection against data theft, identity fraud, and the rise of hacks and phishing attacks, he said.
By 2023, Nambiar said Tune Protect aims to achieve a 25% to 33% compounded annual growth rate for its total net premiums written (NWP), which stood at RM145.5 million as at the end of the third quarter of 2021.
He expects the health industry and small and medium enterprises to be critical drivers of its growth going forward, expecting these two segments each to make up about 15% of NWP, while the lifestyle segment will continue to be the largest premium contributor, making up the major 70%.
For the nine months ended Sept 30, 2021, Tune Protect posted a net loss of RM2.86 million, amid lower investment income under its general insurance business, after posting a net profit of RM18.39 million for FY20 and RM50.68 million for FY19.
According to Bloomberg data, all three analysts covering Tune Protect have the counter on “buy”, with an average target price of 53 sen.
Bloomberg’s estimates forecast the group will register a net profit of RM9.3 million for FY21 and RM26.5 million for FY22.
Tune Protect's share price closed one sen or 2.5% higher at 40.5 sen on Wednesday, giving it a market capitalisation of RM304.46 million.
Joyce Goh
