KEY reports six months net loss of $364.04 million

August 17, 2020

Key Insurance Company Limited (KEY), for the six months ended June 30, 2020 reported a 157% increase in net premiums written from $148.98 million in 2019 to $382.92 million. This performance stemmed from a 20% decrease in gross premium written which closed the period at $643.09 million (2019: $802.48 million). Reinsurance ceded for the period fell to $260.17 million relative to $653.50 million in 2019. Net premiums written for the second quarter increased 161% to $206.24 million compared to $79.12 million booked in last year. Management noted that, “the reduction in gross premiums written reflects KICL’s strategy to refocus the portfolio into more profitable segments.”

Net premiums earned rose by 146% to $394.90 million from $160.79 million in 2019. This was as a result of a change in unearned premium reserve of $11.98 million relative to a positive change of $11.81 million for the same period ended June 30, 2019.

The Company booked an underwriting loss of $566.56 million as at June 30, 2020 relative to a loss of $228.75 million. This was attributable to an increase in claims expense to $399.88 million for the six months ended June 30, 2020 compared to $159.13 million reported for the same period last year. Administrative and other expenses totalled $218.18 million for the six months, a 7% increase when compared to $204.16 million the prior year, “due to redundancy costs as well as unanticipated legal and professional costs,” as per Management.

Commission on premium written decreased by 19% for the six months to total $60.75 million relative $75.03 million last year, while commission on reinsurance ceded closed the period at $43.92 million (2019: $58.21 million), a 25% decrease year over year. Amortization of underwriting amounted to $323.14 million (2019: nil). Change in insurance reserves totalled $3.43 million (2019: $493,000).

Investment income totaled $7.22 million a 68% decline relative to $22.51 million reported for last year’s corresponding period, while other income slid 44% to $13.23 million from $23.65 million in 2019.

Loss before taxation amounted to $546.11 million as at June 30, 2020 compared to a loss of $182.59 million last year. There was a taxation credit for the period of $182.07 million (2019: nil), as such net loss for the period totalled $364.04 million relative to a loss of $182.59 million as at June 30, 2019. Net loss for the quarter closed at $25.42 million versus a loss of $144.54 million.

Total comprehensive loss amounted to $380.46 million (2019: $191.58 million) for the six months ended June 2020. For the quarter, total comprehensive loss amounted to $27.91 million (2019: $144.54 million). KEY noted that, “as reported in the first quarter, the effects of the termination of the Motor Quota Share Reinsurance Agreement (the MQS Agreement) resulted in a one-time charge of $323M to the Statement of Comprehensive Income.”

Loss per share (LPS) for the six months totalled $0.99 relative to a loss per share of $0.50 in 2019, while LPS for the quarter totalled $0.07 compared to a loss per share of $0.39 for the 2019 period. The trailing twelve months loss per share is $1.22. The number of shares used in the calculation was 368,460,691 units. KEY stock last traded on August 17, 2020 at $6.53.

KEY added, “the Company is progressing with the optimisation of its branch network with a view to realizing further efficiencies as well as to improve overall branch effectiveness and performance. This will include amendments to our operating hours and the strategic deployment of staff to service areas where we lack a physical presence.”

Looking ahead KEY stated, “improved use of technology, increasing our digital offerings, and cost containment will be key focus areas for the transformation of the Company. We will continue efforts to optimize our branch operations to efficiently serve our customers.”

Balance Sheet Highlights: 

The company’s total assets amounted to $4.26 billion as at June 30, 2020 up from $3.15 million as at the corresponding period in 2019 which represents a 35% increase year over year. This was mainly as a result of increases in “Due from reinsurers” from $738.13 million as at June 30, 2019 to $1.75 billion as at the corresponding period in 2020. In addition, ‘Deferred Taxation’ contributed to the increase to close the period at $460.40 million (2019: nil).

Total Stockholders’ Equity as at June 30, 2020 was $184.30 million (2019: $697.22 million), resulting in a book value of $0.50 (2019: $1.89).

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