Claims put a lock on Key profits
Key Insurance Company's claims are growing faster than premium income - and locking out profits.
But the general insurer, which went public just over a year ago, expects revenues to rise in coming quarters amid risk management measures to mitigate the portfolio's exposure, according to finance director Jacqueline Johnson.
"We are growing the business, but not the risk," Johnson told Gleaner Business.
The company posted a net loss of $1.1 million for its March 2017 first quarter, which reversed the profit earned in the prior period. First-quarter revenues climbed to $295 million or 49 per cent year on year, but claims grew 74 per cent to $98 million, leading to an underwriting loss.
In the first quarter, the underwriting losses were all non-motor related. Johnson said that, generally, property claims are larger but less frequent than motor claims.
During the first quarter, Key Insurance motor portfolio increased by 59 per cent year on year, while its non-motor portfolio, led by property, increased 38 per cent over the corresponding period.
"Claims will go up, but we cannot say by how much because it's on the basis of when they arise. However, we are managing the risk which limits the extent of the exposure," said Johnson. "We are conducting proper underwriting."
Key's total comprehensive income amounted to $30 million in the March quarter, up from $8 million, which reflects unrealised earning from its financial assets. Johnson said that the company invests excess cash in bonds and equities and that during the quarter it choose to hold investments rather than sell due to expected gains.
In the 2016 financial year, Key Insurance suffered a pile-up of motor claims, which nearly equated to its record revenues. The company's milestone of $1.08 billion in revenues last year with claim expenses totalling $1.008 billion, up 250 per cent from the $287 million a year earlier. The company posted a net loss of $42.2 million in 2016.