CANOPY INSURANCE Limited aims to make its first profit in 2023 following its $2.7 billion revenue haul last year.
It would represent a milestone for the health and life insurance start-up that began booking revenue in 2018. The entity continues to gain a sliver of the life market while providing more options to consumers.
“We are hoping to make a profit for 2023,” said Don Wehby, group CEO at GraceKennedy, in response to Sunday Business queries.
GraceKennedy and the Musson Group teamed together to form Canopy as a joint venture. The audited financials at Canopy showed revenue hitting $2.7 billion for its December 2022 year-end or 22 per cent higher year on year, but inking a net loss of $188 million. That said, the company holds about 2.5 per cent market share up from 2.0 per cent a year earlier, when compared to the overall revenue in the life insurance market.
As large employers, GK and Musson were ‘dissatisfied’ with the value received in exchange for its monthly group health and life insurance premiums. So, in true conglomerate fashion, they decided to form a competing entity against main peers Sagicor Life and Guardian Life. Other players in the space are Cuna Caribbean Insurance, JN Life Insurance, and Scotia Life, according to data from the Financial Services Commission (FSC) which regulates the sector.
In the early days, the company told Sunday Business that it secured a client base of 10,000 individuals, 6,000 of whom were staff at GK and Musson. Wehby on Wednesday explained that currently most of Canopy’s client base are persons outside of the GK and Musson group.
“We have been getting great feedback regarding our customer service from a lot of the stakeholders,” said Wehby, “The GK and Musson partnership brings a lot to the value proposition.”
Regarding its 2023 strategy, a key pillar involves cutting costs. But he declined to give details due to what he called the competitive nature of the industry.
“We have strategies already implemented to reduce expenses significantly, most of which will be realised in the second half of 2023,” Wehby said in response to queries.
It will result in material savings, added Wehby.
“It’s a comprehensive efficiency strategy, including loss ratio management,” he noted.
The revenues have now reached a stage where efficiency measures can allow it to ink a profit. Overall, Canopy’s revenues have grown at a compounded annual growth rate of some 133 per cent. That’s a ramp-up from $93 million in 2019 to $1.4 billion in 2020, $2.2 billion in 2021, and $2.7 billion in 2022. As context, the 2019 financials spanned 22 months as the company began setting up operations.
Despite the growth in revenue in 2022, the company recorded an underwriting loss of $278 million, but after including other line items it recorded an after-tax net loss of $188 million in 2022 compared to a loss of $168 million a year earlier. Since its inception, its accumulated deficit stood at $619 million to December 2022.
Canopy said that it provides value to customers through technology and personable customer service. Oliver Tomlinson leads the company as CEO after the 2022 departure of Sean Scott, who rejoined Wisynco Group in a senior position as its deputy CEO.
Industry data released last week by the FSC regulator showed combined revenue of $105 billion for 2022, or 5.0 per cent lower than the $111 billion a year earlier. Net income before tax rose by 6.1 per cent to $30.2 billion for the sector.