KUALA LUMPUR: Tune Protect Group Bhd stands to benefit from diversifying its product offerings, which includes growing its general insurance segment even as other business divisions begin to recover.

       As the country's macroeconomic environment starts to normalise, Kenanga Research noted that part of Tune Protect's strategy is to introduce more lifestyle products, which is its most profitable segment.

       It added that the insurance provider has identified the younger consumer demographic as a segment with strong potential given existing insurance products that are not compatible enough with their spending habits.

       Consequently, Tune Protect seeks to introduce a range of personalised products that can be marketed in more affordable and customised bit-sized offerings that are assessable digitally.

       "Essentially riding on AirAsia ’s product strategy of 'pay-only-what-you-need', these offerings include customisable home insurance plans that can be matched to market, student travel protection for studies, and pet travel coverage," said Kenanga.

       Tune Potect has also embraced its insuretech dentity by capitalising on data and cloud capabilities to form more partnership to cross-distribute services between its platforms.

       "Currently, the group has 42 partners within a wide range of services besides airlines, including property, e-commerce, e-wallets, telcos, logistics and will likely ink more partnerships along the way.

       "A strong digital backbone should translate to cost savings as the group scales (supporting heavy volumes of claims processing, quotations, and customer support) as a disruptor from traditional platform," said Kenanga.

       Meanwhile, Tune Protect's travel segment is expected to recover as flights are poised to resume.

       The travel insurance segment's contribution is down to only 5% to 7% of the group's gross written premium due to Covid-19 restrictions, from about 20% previously.

       Moving forward, the group expects stronger exponential growth from greater travel insurance due to Covid-19 concerns.

       That said, Tune Protect has also reduced its dependency on AirAsia as it has formed partnerships that gives it strong regional exposure in the Middle East and Asean, where Covid restrictions are looser.

       According to Kenanga, in 2QFY21 AirAsia comprised of less than 10% of the group's business from about 90% pre-pandemic.

       Kenanga added that the motor insurance segment, which makes up 30% the Tune Protect's gross written premiums, is also expected to normalise with the economic reopening and rebound in consumer spending.

       The research house anticipates Tune Protect's earnings per share to grow 62% and 27% in FY21 and FY22 respectively.

       It has a "trading buy" call on the stock with a fair value of 60 sen per share premised on a 0.7 times FY22 price-book value which is 0.5 standard deviation above Tune Protect's three-year mean, in line with pre-Covid valuations.