Key Insurance Company Limited (KICL) disclosed on June 1 that it has restructured its insurance portfolio with the result of significant losses for its first quarter.
In the results for the first quarter ended 31 March 2020, the company reports two strategic decisions taken by the board of directors, which it says are designed to enhance future long-term profitability and contributed significantly to the company reporting a net loss of $339 million.
On 24 March 2020, GraceKennedy Limited, through its wholly-owned subsidiary, GraceKennedy Financial Group Limited, acquired 65 per cent of the share capital of the company.
A new board was put in place and management changes were made.
The portfolio realignment executed by new management led to a reduction in gross premiums written relative to prior year of $99 million or 27 per cent.
This, management said, which is attributable to a deliberate strategy to align the risk profile of the insurance portfolio with the company’s risk appetite.
Accordingly, Key has terminated its previous Motor Quota Share Reinsurance Agreement.
The company outlines, “The MQS Agreement was reviewed by management and the board of directors and a strategic decision was taken to terminate effective 01 January 2020. The termination of the MQS Agreement is an integral part of the restructuring plan for the Company’s operations and the streamlining of its underwriting business to make it more profitable on a go forward basis.”
Additionally, upon termination of the MQS Agreement, management decided to accelerate the amortisation of certain underwriting assets resulting in a one-time charge of $323 million to the Statement of Comprehensive Income for the quarter ended 31 March 2020, comprising $235 million relating to the terminated MQS Agreement and the amount of $88M relating to Deferred Policy Acquisition Costs.
Management also said that the outlook for 2020 will be impacted by the effect on the Jamaican economy by the COVID-19 virus containment measures.
In the statement attached to the period’s results, management said continues to monitor the developments with the virus.
It was further noted that board and management are focused on executing strategic drivers. “We see significant opportunities in improving the use of technology, increasing our digital offerings, optimising our branch network and cost containment,” it was stated.
The statement outlined, “GraceKennedy Limited has over 39 years of experience in the insurance industry. KICL, as a subsidiary of GraceKennedy Financial Group Limited, is already benefitting from a culture of strong corporate governance and a robust risk management framework.”
The company’s new Board of Directors was installed on 31 March 2020. Changes were also made to the senior management team.
Tammara Glaves-Hucey, an insurance executive with over 15 years in the industry, assumed the role of General Manager.
Management said that over the course of the remainder of the year, the performance of KICL is expected to benefit from the restructuring of its insurance portfolio, restructuring of the reinsurance programs along with various growth opportunities identified as strategic areas of focus.