KEY reports nine months net loss of $358.39 million

November 17, 2020

Key Insurance Company Limited (KEY) for the nine months ended September 30, 2020 reported a 222% increase in net premiums written to $642.85 million relative to $199.62 million recorded for the same period in 2019. This performance was because of a 57% decrease in reinsurance ceded which closed the period at $402.22 million (2019: $935.80 million). Notably, gross premium written for the period fell 8% to $1.05 billion relative to $1.14 billion for the period ended September 30, 2019. For the quarter, net premium written went up 413% closing at $259.93 million (2019: $50.64 million).

Change in unearned premium reserve related to current year gross closed the period under review at a deficit of $43.65 million, relative to a surplus of $24.71 million booked last year. As a result, net premiums earned increased by 167% to $599.20 million from $224.32 million in 2019. While for the third quarter, net change in unearned premium reserve decline to deficit of $55.62 million relative to a surplus of $12.89 million reported in the prior comparable year. Which led to a net premium earned of $204.30 million (2019: $63.54 million).

Claims expenses increased by 120% to $490.47 million from $223.35 million reported for the same period last year. Likewise, administrative and other expenses increased by 5% to $326.90 million (2019: $312.29 million) for the current nine months period.

Commission on premium written closed at $89.19 million compared to $107.02 million for the same period of 2019. Commission on reinsurance ceded fell 30% to $61.37 million from $87.07 million incurred for the nine months ended September 2019.

There was no change in insurance reserve and change in unexpired risk reserves for period under review versus $1.07 million and $8.94 million recorded twelve month earlier, respectively. Amortization of underwriting assets stood at $323.14 million (2019: nil) as at September 2020.

As a result, underwriting loss closed the period at $569.13 million compared a loss of $341.28 million experienced last year. As for the quarter, underwriting loss amounted to $2.57 million (2019: $112.52 million).

Investment income totalled $16.31 million, 38% decrease from $26.23 million recorded for last year’s corresponding period, while other income fell 9% to $14.79 million from $16.24 million booked in 2019’s corresponding period.

Loss before taxation closed at $538.04 million for the period ended September 30, 2020, relative to a loss of $298.81 million in 2019. There was a tax credit of $179.65 million for the period versus no taxation for the comparable period in 2019. Consequently, net loss for the period totalled $358.39 million relative to $298.81 million for the period ended September 30, 2019. Net profit for the quarter however, closed at $5.65 million versus a loss of $116.22 million for the prior comparative quarter.

Total comprehensive loss for the nine months amounted to $382.20 million (2019: $307.80 million), while comprehensive loss for the quarter amounted to $1.73 million (2019: $113.16 million).

Loss per share (LPS) for the nine months totalled $0.97 relative to a loss per share of $0.81 in 2019, while EPS for the quarter totalled $0.02 compared to a LPS of $0.32 in 2019. The trailing twelve months loss per share is $0.89. The number of shares used in the calculation was 368,460,691 units. KEY stock last traded on November 16, 2020 at $8.07.

KEY highlighted, “these results are attributable to the successful implementation by management of the Company’s strategic initiatives, including a focus on the company’s customer centricity and improving underwriting practices, as well as adopting more effective risk management practices and enhancing investment returns. The Company expects to meet its financial targets for 2020, despite the ongoing challenges attributable to the COVID-19 pandemic, as management is confident that these initiatives will continue to drive positive results for the rest of 2020 and into 2021.”

Balance Sheet Highlights:

The company’s total assets amounted to $4.33 billion as at September 30, 2020, 36% up from $3.17 billion as at the corresponding period in 2019. This was mainly as a result of a 52% increase in ‘Due from reinsurers’ to $1.80 billion (2019: $934.54 million) and ‘Cash and Deposits’ amounting to $924.04 million (2019: $847.49 million).

Total Shareholders’ Equity as at September 30, 2020 closed the period at $182.57 million (2019: $584.06 million), thus resulting in a book value of $0.50 (2019: $1.59).


Analyst Certification –This research report is for information purposes only and should not be construed as a recommendation. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation (s) or view (s) expressed by that research analyst in this research report.

Company Disclosure –The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.