KUALA LUMPUR (Nov 19): Tune Protect Bhd’s net profit sank 79% to RM2.28 million in the third quarter ended Sept 30, 2020 (3QFY20) from RM10.99 million a year ago, on lower gross written premiums (GWP) and net earned premiums (NEP), owing to lower contribution from its travel segment due to the Covid-19 pandemic.

“The lower GWP and profit after tax (PAT) year-on-year (y-o-y) were a direct impact of the Covid-19 pandemic as air travel, especially international travel, was halted. 

However, the decline was partially offset by a decrease in net commission expense and net claims incurred in tandem with the lower topline, and an increase in investment income due to the reallocation of assets to fixed income,” the insurer said in a bourse filing today.

Its quarterly revenue fell 11% year-on-year (y-o-y) to RM110 million from RM123.84 million. On a quarter-to-quarter (q-o-q) basis, net profit saw a bigger 82% drop from the RM12.60 million it recorded in 2QFY20, though revenue climbed 9% from RM100.94 million.

For the nine months ended Sept 30, the group's net profit more than halved to RM17.38 million from RM40.04 million a year ago, while revenue shrank 11% to RM333.3 million from RM374.97 million.

On prospects, Tune Protect said it has seen continued recovery in its travel business in the third quarter (3Q20) with 311% q-o-q increase in total travel policies sold, with a 463% increase in travel premiums, compared to 2Q20.

“In response to the pandemic, some countries (such as the United Arab Emirates and Oman) responded quickly and had taken the lead to strongly encourage travel and health insurance coverage for its inbound passengers. Closer to home, Thailand has also followed suit and made travel and health insurance coverage mandatory for its inbound passengers.

“The group is currently involved in various discussions with selected airlines which expressed strong interest to bundle insurance coverage in their value plan or air fares,” it said.

As such, the group is cautiously optimistic that travel business demand may achieve further recovery in the fourth quarter of 2020.

The group is confident that with a strong capital position, it will remain resilient to weather through the potential negative implications from the pandemic over the medium to longer term.

Tune Protect's share price closed unchanged at 35.5 sen today, valuing the group at RM266.88 million. The stock's value has more than halved from when it was trading at 56 sen apiece on Jan 2.