August 11, 2021
Key Insurance Company Limited (KEY), for the six months ended June 30, 2021 reported a 74% increase in net premiums written from $382.92 million in 2020 to $665.12 million for the period under review. This performance stemmed from a 42% increase in gross premium written which closed the period at $915.51 million (2020: $643.09 million). Reinsurance ceded for the period fell to $250.39 million relative to $260.17 million in 2020. Net premiums written for the second quarter increased 68% to $345.61 million compared to $206.24 million booked in last year. Management noted that this performance reflects, “the Company’s focus to realign its portfolio and better manage its risks.”
Net premiums earned rose by 39% to $548.19 million from $394.90 million in 2020. This was as a result of a change in unearned premium of $116.94 million relative to a change in earned premium of $11.98 million for the same period ended June 30, 2020.
The Company booked an underwriting loss of $57.80 million as at June 30, 2021 relative to a loss of $566.56 million. This was attributable to an decrease in claims expense to $338.20 million for the six months ended June 30, 2021 compared to $399.88 million reported for the same period last year. Administrative and other expenses totalled $239.81 million for the six months, a 10% increase when compared to $218.18 million the prior year.
Commission on premium written increased by 20% to total $72.81 million (2020: $60.75 million) for the six months, while commission on reinsurance ceded closed the period at $44.83 million (2020: $43.92 million), a 2% increase year over year. There was no amortization of underwriting for the period but amounted to $323.14 million in the similar period in 2020. KEY recorded no change in insurance reserves relative to $3.43 million in 2020.
Underwriting loss for the second quarter amounted $20.68 million, relative to a loss of $50.65 million reported twelve months earlier.
Investment income totaled $22.76 million a 215% increase relative to $7.22 million reported for last year’s corresponding period. “During the quarter, the Company continued the repositioning of its investment portfolio to obtain the best yields, while continuing to adhere to all regulatory requirements,” as per KEY. While other income surged 185% to $37.76 million from $13.23 million in 2020.
Profit before taxation amounted to $2.72 million as at June 30, 2021 compared to a loss of $546.11 million last year. There was a taxation change for the period of $906,000, relative to a tax credit of $182.07 million booked in 2020, as such net profit for the period totalled $1.81 million relative to a loss of $364.04 million as at June 30, 2020. Net profit for the quarter closed at $1.04 million versus a loss of $25.42 million in 2020. Management noted, “this profit trend reflects the continued progress being made on the Company’s turnaround strategies.”
Total comprehensive income amounted to $3.68 million, an improvement from a loss of $380.46 million for the six months ended June 2020. For the quarter, total comprehensive income amounted to $7.35 million, relative to a loss of $27.91 million booked in 2020. KEY noted that, “growth and profitability continue to be major drivers of the Company’s turnaround focus. In pursuit of this, the Company has expanded its distribution channel and continues to monitor the underwriting performance of its partners against the targets set. Management’s attention to targeted growth areas and continuous review of the underwriting and claims practices are expected to positively contribute to the financial performance of the Company.”
Earnings per share (EPS) for the six months totalled $0.003 relative to a loss per share of $0.65 in 2020, while EPS for the quarter totalled $0.002 compared to a loss per share of $0.05 for the 2020 period. The trailing twelve months earnings per share is $0.12. The number of shares used in the calculation was 559,323,101 units. KEY stock last traded on August 10, 2021 at $4.66 with a corresponding P/E of 39.38 times.
KEY remains optimistic about the future, “despite the ongoing effects of the COVID-19 pandemic on the local economy, KEY has remained resilient in ensuring that its targeted metrics are achieved. There is increased brand awareness and confidence in the Company, which is displayed by the growth in revenue compared to prior year. The Board and Management look forward to the potential opportunities that should unfold once the global and local economies return to normalcy,” according to KEY.
Balance Sheet Highlights:
The company’s total assets amounted to $4.88 billion as at June 30, 2021 up from $4.26 billion as at the corresponding period in 2020 which represents a 15% increase year over year. This was mainly as a result of increases in “Investment Securities” from $220.41 million as at June 30, 2020 to $782.94 million as at the corresponding period in 2021. In addition, ‘Cash and Deposit’ contributed to the increase to close the period at $1.15 billion (2020: $903.27 million).
Total Stockholders’ Equity as at June 30, 2021 was $930.67 million (2020: $184.30 million), resulting in a book value of $1.66 (2020: $0.33).
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