The financially plagued Key Insurance Company is considering a rights issue, as it seeks to recapitalise the company, which has been bleeding under heavy losses in recent time.

Today the board of directors will be meeting, at which time the crucial decision will be made whether to pursue the rights issue or another means of shoring up the company’s financial standing, having incurred year-to-date losses of $305 million.

Key Insurance recorded losses of $116 million during its third quarter for the period ended September 30, 2019.

This caused its year-to-date losses to climb to $305 million. The company, in its first quarter earlier this year reported further losses amounting to some $28 million.

Key Insurance is a relatively small player in the insurance market with assets of about $2.6 billion in a general insurance market last valued at $84 billion, based on industry data for 2018 from the Financial Services Commission (FSC), which regulates the insurance industry.

During the quarter under review, the directors report “Improved underwriting and reinsurance strategies in conjunction with cost containment and income earned from its investment portfolio, which stands at $1.2 billion continues to be our focus to reverse the company’s loss-making position”.

According to the directors, “The company’s capital base remains strong and the management team remains committed to the company’s profitability and growth,” having incurred net losses of $167.5 million over the last financial year.

The directors say they are moving the company up to profitability levels, having undertaken more conservative measures in managing risk and improving finances.

A risk management unit was established, which comprises a risk and re-insurance manager and financial director and through them the insurance company is seeking to redefine its risk appetite.

Through its three-year turnaround plan, Key Insurance hopes to cauterise its financial deficiencies and return to profitability within the next couple of years.

Last year, Key Insurance reported that 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.

This was less than half of the regulatory requirement of 250 per cent required by the FSC. By the end of the first quarter in March this year, the MCT ratio rose to the required 250 per cent minimum.