5th June 2015 10am: I am here in Sime Darby Convention Centre in Kuala Lumpur for the annual general meeting of Tune Insurance Holdings Bhd. It is my second meeting and the first time after Tune Insurance changed its Chief Executive Officer. This is my few takeaways from the meeting.
- Many of the shareholders present are AirAsia Berhad’s It does not come as a surprise as the main reason someone might be aware of Tune Insurance is from AirAsia. Yet, although the company is counts the Tune Group and AirAsia as its largest shareholder, the company has more than 50% of its shares in the public’s hand.
- The company is slowly reducing its dependency on the travel insurance business from AirAsia. Currently, more than 8% of the company’s travel insurance business is coming from airlines outside the AirAsia Group. Tune Insurance plans to increase that figure to about 15% in the next 3 years.
- The company is still experimenting with its digital platform with Tunedirectonline.com. It is planning to launch a new revamped site later in the year. The plan is to make sure the digital platform works well in Malaysia before rolling it out in its other key markets such as Thailand.
- The company is extremely conservative when it comes to managing its investment portfolio. About 80% of its investment is in short term cash deposits. Tune Insurance view their core competence in the underwriting business and want to keep their investment as conservative as possible. The company has a 40% payout ratio policy on dividend.
- Tune Insurance is already selling insurance in 50 countries. It sees itself as a global insurance player instead of merely an ASEAN insurer. The company is expanding its foothold through partnership with other airlines, acquiring insurers in key markets and other possible distribution platforms.
Value In Action
Tune Insurance holds great potential. Its addressable market is huge and there are many areas where the company can expand into as well. Maybe the only thing to be concern with is its relatively high valuation. The company trades at about 3.22 times its book value. Investors might need to make your own decision if the company is worth the price.
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The information provided is for general information purposes only and is not intended to be any investment or financial advice. All views and opinions articulated in the article were expressed in Stanley Lim’s personal capacity and do not in any way represent those of his employer and other related entities. Stanley Lim owns Tune Insurance Holdings Bhd and AirAsia Bhd.
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