Key Insurance Company Issues Three Year Turnaround Plan Covering Period 2019-2021.
The Directors of Key Insurance Company Limited (KEY) have issued a statement outlining what they have labeled as a Three Year Turnaround Plan covering the period 2019-2021.
According to the statement published on the website of the Jamaica Stock Exchange, the company’s operating performance for the financial year ended 31 December 2018 was significantly influenced by an unusual severity of claims arising from newly acquired motor business.
Management, the statement outlined, has been fully aware of the urgent need to reverse organizational decline for business sustainability and profitable growth and in response has designed an aggressive turnaround plan to reverse the losses and restore the company to sustained profitability.
According to the statement management has outlined a plan with two main objectives, that of Returning Key Insurance Company Limited to stable profits by 2021 and Achieving and maintaining at least the Minimum Capital Test of 250%, as prescribed by the FSC.
To achieve these, eight (8) strategies have been formulated by the company’s management for priority implementation, including
1. Reducing the motor claims ratio by 15% from 2019 to 2021 for each of 3 years through more stringent underwriting
2. Enhancing the profitability of the portfolio of the company’s motor business in line with stated risk factors;
3. Grow and introduce new non-motor business by product and channels
4. Maintain administrative expense ratio at maximum 30% of premium by year end, 2019
5. Converting investment securities to cash or near cash
6. Reduce net retention exposure on Property Business by US$750,000 to US$250,000
7. Improve the company’s underwriting practices by 2nd quarter, 2019
8. Establish an Enterprise Risk Management Framework by 3rd Quarter 2019
In relation to initiatives and results since January 2019, the company is pointing to actions taken to-date having achieved noteworthy results, as evidenced by the improvement in the company’s operating performance and the meeting of regulatory capital requirements.
The key actions include among others, that of an increase in reinsurance for their motor and non-motor business and the purchase of additional reinsurance coverage effective January 1, 2019.
Management is also highlighting positive results evident from initiatives including –
• The Company’s claims expense remaining at the same level as that at 31 March 2018 reversing the increasing trend.
• Net premiums earned increasing by 4% as at 31 March 2019 in comparison to March 2018, due to price increases and the culling of high-risk/non-profitable book of business
• Loss at March 2019 reduced by 30% from the 2018 loss position and that by February 2019, the Company surpassed the regulatory FSC Capital test of 250%.
Chairman Natalia Gobin-Gunter sought to further assure shareholders, investors and other stakeholders that they were confident that these measures will satisfy them all and that they commit that Key Insurance Company Limited will be restored to full viability by 2021.