Key Insurance Company Limited executed a quota share reinsurance treaty with Hanover Re that reinsured 75 per cent of losses on aspects of its motor vehicle portfolio during the last financial year.
In addition to providing reinsurance for business written during the year, the new contract with Hanover Re provided reinsurance for losses as at December 31, 2019 (loss portfolio transfer), as well as losses developing from unexpired risks (unearned premium) as at December 31, 2019.
The Jamaica-based general insurance provider, which GraceKennedy Financial Group acquired in 2020, has undergone a series of restructuring activities.
During March 2021, the company entered into a funds-withheld loss transfer (LPT), which is a proportional reinsurance coverage applied to the outstanding claims liabilities.
In notes attached to the 2020 financials, Key said the impact of this reinsurance programme will see the company’s net outstanding liabilities decreasing while increasing the company’s Minimum Capital Test (MCT) ratio.
The company commuted the quota share as at April 6, 2020. Based on the terms of the commutation, the reinsurance assets and liabilities were extinguished as at April 6, 2020.
Total company assets for the year ended December 31, 2020, declined year over year to JM$2.91 billion, below JM$4.51 billion in 2019. The company recorded shareholder equity of JM$235.28 million for both 2020 and 2019.
For 2020, the company ended the year with net losses of JM$299.66 million up from losses of JM$267.48 million in 2019. At the same time, loss per stock unit came out at JM$0.81 compared to JM$0.73 the year before.
Gross Premiums written during 2020 amounted to JM$1.43 billion, compared to JM$1.40 billion reported at year end 2019. Reinsurance ceded during the year dropped to JM$489.72 million, compared to JM$1.74 billion the year before.
The year ended with an underwriting loss of $JM521.23 million, down from JM$793.49 million lost in underwriting in 2019.
Cash and cash equivalents at the end of the year dropped to JM$745.18 million, down from JM$934.03 million in 2019.
At the company’s annual general meeting, held on October 21, 2020, the stockholders approved a renounceable rights issue for the purposes of raising capital for the benefit of the company.
The renounceable rights issue opened to the existing stockholders on December 23, 2020, and successfully closed on January11 2021, raising $668,018,000 in gross consideration.
The company has also entered into an arrangement to sell its investment property located on Knutsford Boulevard. The carrying value of the property is $226.58 million.