2 months ago
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Key Insurance Company Limited earned profit of $16 million in the June second quarter, a seven per cent improvement that was driven by higher core revenue and investments.
The company’s outlook remains positive despite external risks.
“Despite a challenging economic climate and the risks posed by increased motor claims, projections for an active hurricane season, and the risk of falling interest rates, our second-quarter performance highlights the resilience of the company and its strong potential for growth,” Key said in its earnings report.
“Management continues to execute its strategic plan, which is focused on increasing revenue and improving profitability.”
The general insurance company reported revenue of $760 million for the quarter, an increase of 8.0 percent from $705 million a year earlier. The company benefited from improved income delivered by its low-risk investments, which are currently yielding relatively high returns.
“Our investment portfolio continues to perform well as we continue to take advantage of elevated interest rates, while remaining agile to any changes in market conditions,” Key said.
Investment income for the April-June quarter improved to $67 million, compared to $47 million in the same period last year. Over six months, from January to June, investments generated $119.5 million, compared to year-earlier levels at $91 million.
The investments have provided a buffer for the company, contributing to overall profitability during periods of heavier insurance payouts and offsetting losses on its core business. Specifically, Key Insurance Company recorded an insurance loss of $22 million for the June quarter, a slight improvement from a loss of $26 million a year earlier.
“There was an increase in frequency and severity of motor vehicle accidents, which resulted in claim expenses increasing,” the company said.
During the six months, claim expenses increased to $605 million, up 21 per cent year-on-year.
Key Insurance was formed in 1982 by Sonny Gobin, who led the company until his passing in 2011. The company is currently majority owned by the GraceKennedy Group, a large food and financial services conglomerate, which acquired interest in the faltering business in late 2019 to early 2020, and thereafter set about recapitalising it after designing a turnaround plan.
Four years ago, Key’s capital was below the 10 per cent buffer that regulators prefer.
In 2020, its capital to total assets was nine per cent, but now it’s at 31 per cent, with equity at $1.36 billion and assets amounting t0 $4.36 billion.
Over the period, Key’s share of the general insurance market has improved from from 3.0 per cent to 4.4 per cent of total assets, which stood at $100 billion across the sector.
English (US) ·