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Key Insurance looks to raise new funding

Key Insurance Company Limited (KEY) will consider a rights issue to the ordinary shareholders of the company a meeting of the Board of Directors on September 8, 2020.

Key Insurance will consider a rights issue to ordinary shareholders at a board meeting tomorrow.

The loss-making company passed in 2020 to the ownership of food and finance conglomerate GraceKennedy Limited which is now seeking to shore up the company’s capital base and improve profitability.

Net losses of JM$267.48 million at year-end December 2019 for the insurance company, were made on revenue of JM$1.4 billion, compared to a loss of JM$167.49 million made on revenues of JM$1.7 billion I 2018.

The company is making a comeback from challenges with its solvency ratios.

Key had net losses of approximately $268 million at year-end 2019.

Company chairman Don Wehby, who is also chief executive officer of GraceKenendy, had previously indicated the need to inject capital in the company, with options being a rights issue or additional share offer.

The company has moved to the main market of the Jamaica Stock Exchange, which allows it to raise more capital than its previous placement on the Junior Market.

The reduction in the company’s capital base was due to increased insurance liabilities and larger net losses.

For the second quarter ended June 2020, Key said that the combined impact of strategic and operational changes implemented by management has resulted in a reduction in the second quarter net loss from JM$144.5 million in 2019 to JM$25.4 million 2020.

Chairman of Key Insurance Don Wehby

Management said a reduction in gross premiums written reflects Key’s strategy to refocus the portfolio into more profitable segments.
For the three months ended June 30, the company grew premiums written from JM$79.1 million, to JM$206.3 million, an increase of 161 per cent, when compared to the corresponding period in 2019.

Similarly, there was a 157 per cent increase in the net premiums written for the six months ended June 30, 2020, when compared to the six months ended June 30, 2019.

Administration and other expenses increased by JM$14M or 6.9 per cent compared to prior period due to redundancy costs as well as unanticipated legal and professional costs, management said.

They noted that the effects of the termination of the Motor Quota Share Reinsurance Agreement (the MQS Agreement) resulted in a one-time charge of $323 million to the Statement of Comprehensive Income.

Key said in its June quarter report that it is  progressing with the optimisation of its branch network with a view to realizing further efficiencies as well as to improve overall branch effectiveness and performance.

Changes include “amendments to operating hours and the strategic deployment of staff to service areas where we lack a physical presence,” management stated.