KEY reports six months net loss of $182.59 million

Date: August 15, 2019

Key Insurance Company Limited (KEY), for the six months ended June 30, 2019 reported a 75% decrease in net premiums written from $603.02 million to $148.98 million; as a result of a 15% decrease in gross premium written which closed the period at $802.48 million (2018: $946.45 million). Reinsurance ceded for the period also increased to $653.50 million relative to $343.43 million in 2018. Net premiums written for the second quarter decreased 77% to $79.12 million compared to $341.42 million booked in last year.

Net premiums earned decreased by 70% to $160.79 million from $533.51 million in 2018. This was as a result of a positive net change in unearned premium reserve of $11.81 million relative to a loss of $69.51 million for the same period ended June 30, 2018.

The Company booked a underwriting loss of $228.75 million as at June 30, 2019 relative to a loss of $116.59 million. This was attributable to an increase in claims expense to $739.35 million for the six months ended June 30, 2019 compared to $523.61 million reported for the same period last year. However, this was offset by an increase in Reinsurance recoveries to $580.22 million from $74.33 million. Administrative and other expenses totaled $204.16 million for the six months, a 8% increase when compared to $188.86 million the prior year. Commission expense decreased by 18% for the six months to total $75.03 million relative $91.87 million last year, while commission income closed the period at $58.21 million (2018: $69.67 million), a 16% decrease.

KEY noted, “As a pre-emptive action in response to the increasing motor claims, at the start of the year the company purchased additional motor reinsurance that is aligned to its turnaround strategy of maintaining and increasing its targeted profile book of business. This fruitful six-month action has resulted in reinsurance recoveries increasing by $506 million. Additionally, the company’s MCT as at the end of the six-month period is 277% surpassing the FSC minimum regulatory requirement of 250%. The company’s liquidity position remains robust in conjunction with our continued efficiency in handling the claims of our valued policyholders. ”

Investment income totaled $22.51 million a 9% decline relative to $24.68 million last year’s corresponding period, while other income went up 19% to $23.65 million from $19.81 million in 2018.

Loss before taxation drastically went up to $182.59 million as at June 30, 2019 compared to a loss of $72.10 million last year. There was no tax charges for the period and as such, net loss for the period totaled $182.59 million relative to a loss of $72.13 million as at June 30, 2018. Net loss for the quarter closed at $144.54 million versus a loss of $32 million.

Loss per share (LPS) for the six months totaled $0.50 relative to a loss per share of $0.20 in 2018, while LPS for the quarter totaled $0.39 compared to a loss per share of $0.09 for the 2018 period. The trailing twelve months loss per share is $0.75. The number of shares used in the calculation was 368,460,691 units. KEY stock last traded on August 14, 2019 at $3.25.

KEY added, “There was an overall increase of $7 million in operating costs for the period, due to non-recurring professional fees in the second quarter of 2019 in comparison to that obtained in the similar quarter of 2018.”

 

Balance Sheet Highlights:

The company’s total assets amounted to $3.15 billion as at June 30, 2019 down from $2.56 million as at the corresponding period in 2018 which represents a 23% increase year over year. This was mainly as a result of increases in “Due from reinsurers” from $234.59 million as at June 30, 2018 to $738.13 million as at the corresponding period in 2019. In addition, ‘Cash and Deposits’ attributed to the increase to close the period at $1.07 billion (2018: $664.67 million). However, ‘Investment Securities’ declined, moving from $559.54 million to $148.85 million as at June 30, 2019.

Total Stockholders’ Equity as at June 30, 2019 was $888.80 million (2018: $697.22 million), resulting in a book value of $1.89 (2018: $2.41).

Disclaimer: Analyst Certification -The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer (s) or securities as at the date of this report. 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.

2019-08-15T18:19:26+00:00