On its own a modest sum but it marks a huge turnaround from a loss of RM12.1 million in the corresponding quarter a year ago, or four consecutive quarterly losses.
Revenue for the quarter rose 35.1% to RM138.95 million from RM102.79 million in Q4 2021, while full year revenue increased by 21.8% to RM529.51 million from RM434.72 million in 2021.
Tune Protect attributed the lift to unrealised investment income, as well as a reduction in claims reserved for the last quarter.
Operating revenue for this segment grew by RM43.6 million or 59.1% to RM117.4 million in Q4 2022 from RM73.8 million in Q4 2021.
The rise in operating revenue was mainly contributed by an increase in gross earned premiums, largely from growth in the personal accident and motor segments.
According to the company’s website, AirAsia founder Tony Fernandes and Kamarudin Meranun’s Tune Group holds a 15.8% stake in Tune Protect.
Still too early to celebrate
However, any optimism needs to be tempered by the fact Tune Protect still made a loss of RM34.4 million for 2022, wider than the RM14.99 million loss in the preceding fiscal year.
This was a result of higher net claims in both general insurance and general reinsurance segments, as well as foreign exchange losses.
Nevertheless, the growth in both revenue and profit quarter-on-quarter may signal a turnaround for the group.
“It was our first profitable quarter since Q3 2021. Quarter-on-quarter, the group’s Q4 net earned premium was higher than net written premium, as we are seeing the flow through of earned premiums,” said CEO Rohit Nambiar.
“The strong performance was a reflection of the group’s constant and concerted efforts to become a more efficient organisation on a ratio basis,” he said.
Moving forward with momentum
Tune Protect’s board expressed optimism at seeing their revenue and profit stabilising, anticipating growth in tourist arrivals of 40% to 52% in air passenger traffic in 2023.
“The group expects healthy net written premium growth in the coming quarters contributed through our digital and agency channels in the travel and motor insurance segments under the lifestyle pillar,” it said.
Additionally, it foresees Bank Negara Malaysia’s phase 2 liberalisation in the second half of 2023 to contribute positively to growth in the motor sector.
In line with that, investment return is also expected to pick up, to help mitigate against macroeconomic threats faced by the firm.
“For our fixed income portfolio, the end to central bank monetary policy tightening is within sight. Asset allocation wise, money market funds will form at least 70% of the overall portfolio by the end of Q1 2023.
“In Q4 2022, we reduced our equity exposure to 2% and will make a full exit by H1 2023,” Rohit added.
He shared that Tune Protect was on track to recovery, tracking a growth in net written premiums of 72.5% year-on-year that made a company record.
Travel recovery boost
The group is gearing up to capitalise on expected travel recovery in the region, the effects which have been seen in the upturn in AirAsia’s financial performance.
Tune Protect recently partnered with AirAsia to provide free flight delay insurance, as well as secured Middle-eastern low-cost carrier Fly Arna as its sixth airline partner.
All in all, its diverse streams of income from its fledgling technology arm and new partnerships with fellow Asean neighbours serve to defend the group against headwinds.
“The group remains confident its business strategies and capital strength will enable it to weather the potential negative implications over the medium to longer term,” it said.
At the close today, Tune Protect’s share price fell 2.5 sen or 5.95% to 42 sen, valuing the group at RM297 million.