Sat | Aug 19, 2017

Big claims bill overshadows Key revenue

Published:Wednesday | February 22, 2017 | 2:00 AMSteven Jackson

Key Insurance Company posted a net loss for its full year, after suffering a pile-up of motor claims, which nearly equated to its record revenues.

The company's milestone of $1.08 billion in revenues during its financial year ending December 2016 came with claim expenses totalling $1.008 billion, up 250 per cent from the $287 million a year earlier.

"Our motor portfolio again performed well in 2016, showing 39 per cent growth; however, our claims and administrative costs grew proportionately in response to this increasing growth," said Key Chairman Natalia Gobin-Gunter in a preface to the financials.

"The company's management team is committed to a reduction in operating costs and has already implemented strategies to decrease both administrative and claims expenses," Gobin-Gunter said.

The net loss for the full year totalled $69.7 million, with the final quarter alone contributing $135.7 million to the losses.

Its current performance totally erases the net profit of $23 million made in 2015.

 

HISTORIC SALES

 

"While the year was not without challenges, the company for the first time in its history achieved sales of over a billion dollars, an accomplishment of which we are very proud," said Gobin-Gunter. "The company is dedicated to ensuring profitability and is committed to improving shareholder equity. While 2016 was a challenging year, the company has already put in place strategies to control both costs and claims and is anticipating 2017 to be a productive and profitable year," she said.

Key's cash flows grew in the year to $431 million, up from $183 million a year earlier, partially due to $107 million from the proceeds of listing on the junior arm of the Jamaica Stock Exchange. Key's asset base also remains strong, as evidenced by its minimum capital test or MCT ratio of 333 per cent, said the company, while also noting that it continues to benefit from "being backed" by some of the world's largest and financially stable reinsurers.

"Due to our long-standing and excellent relationship with our reinsurers, we were able to maintain our underwriting capacity in 2016 and managed to secure increases in commission, despite the very competitive market locally. Our reinsurers are committed to supporting our reinsurance programme, and this was reflected by the ease in the company's renewal of our reinsurance treaties for 2017," said Gobin-Gunter.

steven.jackson@gleanerjm.com

 

 

Key Insurance FY 2016

 

Revenue: $1.16 B + 11%

Net Profit: -$69.70 M - 402%

Assets: $2.38 B + 22%

Current Stock Price: $2.89

Current Market Value: $1.06 B