The much-anticipated Key Insurance Company rights issue is set to take place on December 10.

The date was decided recently by a duly appointed committee of directors having first been approved by shareholders at the company’s annual general meeting (AGM) last month. The rights issue is being effected to raise much-needed capital for the insurance company, which have been chalking up losses over the past year.

Key, which was taken over by GraceKennedy Limited (GK) in March this year, is aiming to execute a possible billion-dollar renounceable rights issue, which should strengthen its capital base following a deterioration of its minimum capital test ratio over the years. Key’s authorised share capital was increased to 700 million shares at its recent AGM with a directive which allows the directors to issue a minimum of 122,820,288 shares for a renounceable rights issue.

The rights issue will be renounceable, meaning shareholders can choose to sell their rights to other existing shareholders.

GK TO MAKE SIZABLE CAPITAL INJECTION FROM RIGHTS ISSUE

Given GK’s majority shares in Key Insurance, it is anticipated that the Jamaican conglomerate will be making a sizeable capital injection into the company via the rights issue. In March this year, GK, through its wholly owned subsidiary GraceKennedy Financial Group, acquired 65 per cent of the share capital of Key.

As such, it is expected that GK will utilise its share equity to command the greatest take-up of the additional shares being made available in the rights issue. The maximum take-up by GK will ensure that its shareholding in the insurance company is not diluted.

Since GK’s acquisition of the company, Key has attracted 330 new shareholders, taking the total to 501 as of October 21, 2020. Additionally, Key insurance has also seen a 357 per cent increase in market capitalisation, moving from $774 million to $3.5 billion.

This is reflected in the increase in the company’s share price from $2.10 pre-acquisition in March 2020 to $8.55 on Thursday, November 26, 2020.

Less than six months after gaining full control of Key Insurance Limited, GK’s strategic initiatives and turnaround plan has borne fruit with Key recording a net profit of $5.7 million for the third quarter compared to the prior nine-figure loss.

In the last 18 months, Key Insurance finances have gone into the red with some reprieve in the last quarter, where strategic and operational changes implemented by the new management resulted in a significant reduction in net losses. The losses for the second quarter were cut from $144.5 million in 2019 to $25.4 million in June 2020.