GraceKennedy makes offer to acquire Key Insurance

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GraceKennedy makes offer to acquire Key Insurance

Wednesday, January 22, 2020

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Following on the heels of its 15 per cent share acquisition last year December, the GraceKennedy Group (GKG) has announced plans to further strengthen and expand its financial division through an offer by the holding company, GraceKennedy Financial Group Limited (GKFG), to acquire a greater stake in Key Insurance Company Limited.

In going public on the offer, GKG disclosed that in its pursuit they intend to limit share acquisition to not more than 80 per cent, so that Key Insurance will remain listed on the junior market. The offer will be open for acceptance by Key Insurance's shareholders at 9:00 am on January 27, 2020 and end at 4:30 pm on February 17.

Speaking about the acquisition, Group chief executive officer (CEO) at GraceKennedy, Don Wehby disclosed that mergers and acquisitions (M&A) will be a key strategic driver for growth for the group this year.

“We will be focusing on growing our core business in the areas of food & financial services, both in Jamaica as well as the English-speaking Caribbean. M&A opportunities are therefore being looked at very carefully,” he said.

He further stated that it is because of the potential for growth of Key Insurance that his company is aiming to acquire and properly capitalise the company and maximise shareholder value.

“We did our due diligence, and having looked at the performance of Key Insurance to date, we see potential for the company to grow. GK's aim is to properly capitalise it, and maximise shareholder value. Naturally, there will be synergistic value from Key joining the GK family, as we have complementary businesses within the GK Financial Group,” he continued.

Listed on the junior market of the Jamaica Stock Exchange, Key Insurance was incorporated in 1982 and has grown its customer base with offices located in Kingston, Portmore, May Pen, Ocho Rios, Montego Bay and Mandeville. In the last couple of years the company has faced some challenges which saw it incurring a series of net losses and also coming up short on its solvency test, where its minimum capital test (MTC) fell below the regulatory requirement.

The company since then has been trying to combat its misfortunes by taking steps to manage risk and improve its finances through a series of “turnaround strategies”, in the hope of resuscitating its financial woes.

GKG, a large food and financial services conglomerate, in its third-quarter report for the nine-month period ending last September, accumulated net profits amounting to $3.71 billion and revenues of $77.03 billion. The global entity which will celebrate it's 100th anniversary in 2022, is also aiming to push revenues up to the $100-billion mark by latest this year.

In a recent interview with the Jamaica Observer a tight-lipped Wehby in referring to their upcoming quarterly results, but hinted that the company is well advanced in meeting this objective.

“We are ahead of our targets, we are ahead of our plans in reaching the $100 billion,” he shared with the Business Observer.

Though not yet a done deal, Key Insurance, GK has said “will become the newest member of the GKFG already comprising Western Union, Bill Express, FX Trader, GK General Insurance, Allied Insurance Brokers and First Global Bank”.

— Kellaray Miles

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