In a Caribbean Business Report follow-up, the directors of the financially-plagued Key Insurance Company have voted in favour of a rights issue, as it seeks to recapitalise the company which has been bleeding financially.
The board, at its meeting last week, agreed to four resolutions which would pave the way for a rights issue to shore up the company’s financial stability having incurred year-to-date losses of J$305 million.
The resolutions were put to shareholders at an extraordinary shareholders meeting on December 3, 2019 at which time they were reportedly approved.
“…improved underwriting and reinsurance strategies in conjunction with cost containment and income earned from its investment portfolio which stands at J$1.2 billion continues to be our focus to reverse the company’s loss-making position.”– Key Insurance Directors
One of the resolutions authorises,”the directors and the Secretary of the Company to execute all steps and documents necessary to implement and effect the Rights Issue, so as to dispose of all participating voting shares not taken up by Allottees on terms and conditions as the Directors may consider expedient in their absolute discretion, in consultation with the Arranger for the Rights Issue; as well as for the withdrawal or non-issuance of the Offer.”
Another resolution calls for the approval of the appointment of the advisors to assist, guide and provide services to the company, as it pertains to the Rights Issue.
JN Fund Managers has been appointed as Arrangers for the rights issue with JCSD Trustee Services appointed as Registrar and Transfer Agents. The law firm of Hart Muirhead Fatta has been appointed as legal advisors to the rights issue.
In its last quarterly report for the period ended September 30, Key Insurance recorded losses of J$116 million, which brought the year-to-date nine-month losses to J$305 million.
The directors reported “improved underwriting and reinsurance strategies in conjunction with cost containment and income earned from its investment portfolio which stands at J$1.2 billion continues to be our focus to reverse the company’s loss-making position.”
They further reported that the company’s capital base remains strong and the management team remains committed to the company’s profitability and growth.
Having incurred net losses of $167.5 million over the last financial year, Key Insurance said it is pushing the company up to profitability levels having undertaken more conservative measures in managing risk and improving finances.
Through its three-year turnaround plan, Key Insurance hopes to cauterise its financial deficiencies and return to profitability within the next couple of years.