KEY reports first quarter net profit of $770,000

May 10, 2021

KEY Insurance Company Limited (KEY) for the quarter ended March 31, 2021, reported an 81% increase in net premiums written to $319.51 million from $176.68 million in 2020.

  • The Company recorded a 54% increase in gross premiums written from $269.28 million in 2020 to $414.77 million for the quarter ended March 31, 2021.
  • Reinsurance ceded for the quarter went up 3% to close at $95.26 million (2020: $92.59 million).

KEY booked a loss in ‘change in unearned premium reserve’ of $72.39 million relative to a gain of $26.18 million last year. As such, net premiums earned increased by 22% totalling $247.12 million versus $202.87 million for the comparable quarter in 2020.

Changes in insurance reserves for the period was nil relative to $152,000 booked for the corresponding quarter.

The Company reported $20.56 million for commission income relative to $12.72 million for the comparable quarter of 2020, this represents a 62% increase year over year.  Commission expense amounted to $34.65 million (2020: $23.14 million).

Claims expense posted a decrease to $146.73 million from the $276.03 million recorded for the first three months of 2020.

No amortization of underwriting assets was booked for the period under review relative to $323.14 million recorded for the quarter ended March 31, 2020.

Administration and other expenses inched up 13% to close at $123.41 million compared to $109.34 million recorded in 2020.

There was an underwriting loss of $37.11 million for the first quarter compared to a loss of $515.91 million reported in 2020. Management noted that this improvement is, “largely due to better underwriting practices being employed since last year resulting in reduced loss ratios when compared to the prior year corresponding period.”

Investment income for the period amounted to $9.71 million, up 214% when compared to $3.10 million in 2020. The company noted, “this was due to restructuring of the investment portfolio as well as additional investments obtained using the proceeds of the investment property. Through KEY’s investment committee the Company’s management will continue to restructure the investment portfolio and place greater emphasis on its performance.” While other income for the period amounted to $28.56 million relative to $4.89 million in 2020.

Profit before taxation for the quarter closed at $1.16 million compared to a loss of $507.92 million. A taxation of $385,000 was booked for the quarter (2020: tax credit $169.31 million), which resulted in a net profit for the period of $770,000 (2020: net loss $338.62 million). Management noted, “This is the third consecutive quarter KEY is reporting a profit, demonstrating the benefits being realised from the continued execution of the Company’s turnaround plan.”

Total comprehensive loss for the quarter amounted to $3.67 million, in contrast to a loss of $352.55 million recorded twelve months earlier.

Earnings per share (EPS) for the quarter amounted to $0.001 relative to loss per share of $0.92 in 2020. The trailing twelve months earnings per share totalled $0.071. The number of shares used in the calculation was 559,323,101 units. KEY last traded at $6.45 as at May 10, 2021 with a corresponding P/E of 90.83 times.

KEY highlighted, “During the quarter, KEY sold its investment property realising a gain on the sale of $22.6 million which contributed to the Company’s ability to better meet its capital adequacy requirements.”

Balance Sheet Highlights:

The Company’s total assets amounted to $4.81 billion as March 31, 2021 up from $4.22 billion in 2020. The overall growth in the asset base was attributed to a 92% increase in ‘Cash and Deposits’ which closed at $1.72 billion (2020: $898.12 million). The overall movement in the asset base was tempered by a 100% decline in ‘Investment properties’ which was nil (2020: $200.15 million) for the period under review.

Total stockholders’ equity as at March 31, 2021 was $923.33 million (2020: $307.79 million), resulting in a book value of $2.51 (2020: $0.84).


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