Business

Key Insurance continues on its journey to recovery

Friday, October 25, 2019

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After incurring net losses of 167.5 million over the last financial year, Key Insurance has said that in pushing its company up to profitability levels, they will be undertaking more conservative measures in managing risk and improving their finances.

A risk management unit was established which comprises a risk and re-insurance manager and financial director and through them the company is seeking to re-define their risk appetite. Through their three year turnaround plan, the company hopes to cauterise its financial deficiencies and return to profitability within the next couple of years.

“At the company's third annual general meeting (AGM) held on Wednesday, held at their Half-Way-Tree offices, Chairman and Non-Executive Director Natalia Gobin-Gunter said that in mitigating the challenges of the past year, the company responded with an in-depth strategic review of all operations.

“The outcome of this review was the adoption of a more conservative risk based approach for 2019. It is expected that this more conservative approach to our underwriting screening processes will result in a flattening of growth trajectory with regards to both its book of business and previously burgeoning claims.

“Our ultimate goal in the adoption of a more conservative underwriting process is to reduce our claims experience which will result in a more profitable organisation. We are at this time committed to slow and controlled growth. Key Insurances' management staff and board of directors and committees remains committed in 2019 to maintaining our growth and efficiency agenda,” Gunter-Gobin said.

The company, in its first quarter earlier this year, also reported further losses amounting to some $28 million. It said that the direct losses from the motor business activities contributed to the company's inability to achieve its Minimum Capital Test (MCT) ratio which at the end of 2018 was 112.5 per cent, less than half of the regulatory requirement of 250 per cent required by the Financial Services Commission (FSC). By the end of the first quarter in March this however rose to the required minimum.

Sandra Masterton, managing director of Key Insurance said that currently this figure has been improved and is now registering about 277 per cent, with hopes that it will continue to be maintained by the end of the next quarter.

While losses were experienced in 2018, it should be noted that there were also some positives, as administrative expenses were prudently kept in check by employing efficient and cost-cutting measures. It is believed that these measures will result in the containment of the company's management expenses. She highlighted some improvements wherein gross premium income for 2018 increased to 27 per cent over the prior year, motor premium also grew by 28 per cent over 2017 and 17 per cent in non-motor premium.

“We're confident that with the various measures put in place, in line with our turnaround plan, we will stem the negative trajectory and restore the company to profitability,” Masterton told shareholders in attendance.

— Kellaray Miles


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