DOUBLE-digit growth for Key Insurance in 2022 shines a positive light on GraceKennedy's acquisition.
In its normalised financial statements for 2022, gross written premiums increased by 16 per cent to $2.2 billion from $1.9 billion the previous year, achieving Key's highest revenues since inception and growing 97 per cent from 2020 to the end of 2022.
"When we bought the company it was making a huge loss and now we're making a decent profit although, as I said to my board, I think we can do better," said Don Wehby, chief executive officer of GraceKennedy Limited and chairman of Key Insurance, at its virtual annual general meeting on Tuesday.
Profits before tax amounted to $72 million from $29 million. Its insurance revenues also grew by $100.7 million or 20.8 per cent from $484.4 million in the first quarter of 2022 to $585 million in the first quarter of its financial year in 2023. Key surpassed $200 million for the first time in its investments and other income.
"We bought a company that was losing half-a-billion dollars. To be exact, $566 million was lost in 2020, and as we speak now on a normalised basis, we made $72 million [in 2022], and 2023 is going to be better. This is a company I'm very proud of. The future is bright, and I believe the growth rate is going to continue. And as I've said before, for our GraceKennedy Group of Companies, the best is yet to come for Key Insurance," Wehby said.
General Manager Tammara Glaves-Hucey explained that the company realigned its investment portfolio to mitigate against the impact of falling bond prices and to capitalise on higher-yielding investments.
For 2022, motor insurance accounted for 72 per cent of its business. Effective May 2023, Key increased its motor premiums, but according to Glaves-Hucey, the increases will not affect the company's overall performance.
"Despite the increase though, I can say that we have remained very competitive in the motor space and what we continue to do is to look at our portfolio to see where there are different areas within which we can ensure we remain competitive," she said.
Developments outside of motor insurance were raised during the meeting, including whether Key would be doing property business coverage in this environment.
"We have not been doing a lot of new business because given the increase in the reinsurance expense and the reduction in capacity which was made available, we are not able to grow the level of new business that we would want, but notwithstanding we are maintaining our book of business and the increases on our premiums are allowing us to grow," Glaves-Hucey said.
She revealed that in Key's non-motor book of business, increases in liabilities, travel insurance and the solar products are also growing. The solar product was launched in 2021 and has been slowly growing but Key Insurance has written almost 100 per cent more in premiums as of June, in comparison with the full 12 months of 2022.
"Quite a bit of people are investing more in solar energy and so that has created an opportunity for us and we continue to exploit those opportunities," she said.
Developments in its digital infrastructure are also underway. Digital projects slated for 2023 were impacted by a loss in its administration staff but Glaves-Hucey reassured that it's still a major initiative in the pipeline and committed to completing those projects this year.
"We are looking at technological solutions to assist us with enhancing our operational efficiencies and the delivery of our products to our customers, so one of the areas we are hoping to have ready before the end of 2023 is the ability to purchase not just third-party or comprehensive motor coverage, but also homeowners comprehensive coverage online. So purchasing and paying online, that is something we want to execute before the end of 2023," she shared.
And touching on whether or not a merger is impending between Key Insurance and GraceKennedy's insurance business, Wehby said, "We are always looking at the synergistic values between both companies and that's an ongoing exercise. I don't know if a formal merger is in the pipeline but we are going through it very carefully."