The financially-plagued Key Insurance Company is considering a rights issue, as it seeks to recapitalise the company which has experienced heavy losses in recent time.
The board of directors has convened a meeting for this Friday, November 22, at which time a decision will be made on the rights issue. The board has hinted at the immediate need for raising additional capital to shore up the company’s financial stability having incurred year-to-date losses of J$305 million.
In its recently released 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.
A risk management unit was established, which comprises a risk and re-insurance manager and financial director and through them the insurance company is seeking to re-define its risk appetite. Through its three-year turnaround plan, Key Insurance hopes to cauterise its financial deficiencies and return to profitability within the next couple of years.
The company reported first quarter losses amounting to some $28 million, earlier this year. It said the direct losses from the motor business activities contributed to the company’s inability to achieve its Minimum Capital Test ratio, which at the end of 2018 was 112.5 per cent, less than half of the regulatory requirement of 250 per cent required by the Financial Services Commission.
However, this ratio rose to the required 250 per cent minimum by the end of the first quarter in March.