KUALA LUMPUR (Dec 26): Tune Protect Group Bhd (KL:TUNEPRO), which mainly provides travel insurance, is expected to end 2024 with a small profit following a recent turnaround before a jump in 2025, said TA Securities.

The final quarter of the year is expected to be driven by the year-end peak travel period and “cost discipline efforts”, the research house said in a note. TA Securities, one of only two research houses covering Tune Protect, maintained its ‘buy’ call on the stock with a target price of 48 sen.

Moving into the fourth quarter, “we expect further [quarter-on-quarter] improvements”, the research house said and forecasts Tune Protect to end 2024 with a net profit of RM1.6 million.

Shares of Tune Protect have fallen nearly 30% this year as the company, which also provides home and motor insurance, grappled with three straight quarters of net losses amid a sharp increase in service expenses and decline in insurance revenue.

CIMB Securities, the other research house covering Tune Protect, has a ‘hold’ call on the stock. Tune Protect was unchanged at 28.5 sen on Thursday.

The combined ratio — an insurer’s profitability metric that measures claims and expenses as a percentage of premiums — will likely improve to 97.6% this year versus 102.7% in 2023, according to TA Securities.

A ratio above 100% indicates underwriting loss at an insurer, paying out more for claims than it receives from premiums.

The combined ratio could improve further to 93.9% in 2025, driven by ongoing efforts to leverage the regional travel ecosystem and product innovation, TA Securities said. All in all, the company could make a net profit of RM33.1 million in 2025.

Tickets from its airline partners are increasingly being sold through indirect channels that made up more than half of the sales post-pandemic compared to 39% pre-pandemic, corresponding with a relatively lower take-up rate of travel insurance, the research house flagged.

However, TA Securities expects the take-up rate for international short-haul flight from direct channels to increase to about 20% from about 15% currently, driven by new product launches such as the Tune Protect Travel Gadget and bundled ancillaries.

Net profit for the third quarter ended Sept 30, 2024 was RM5.86 million, thanks largely to reversal of allowance for impairment losses and investment income.