The Board of Directors of Key Insurance Company Limited, recently released the unaudited financial statements for the year ended 31 December 2019, reporting for the year a net loss of $769,494,000.
Director, Natalia Gobin-Gunter, who was Chairman up to December 31, 2019, commenting on the results, reported that gross premiums written for the 4th quarter of $268,272,000 was an 18% decrease over the same period in 2018.
Reinsurance ceded premium and reinsurance recoveries on claims increased in comparison with 2018 final quarter by $376,722,000 and $274,595,000 respectively aligned with the strategy of managing the motor business segment.
The gross claims expense increased by $262,726,000 in the final quarter of 2019 as against the similar period in 2018, reflecting the challenges with the motor segment.
Strategic investment activities in the fourth quarter of 2019 exhibited an increase in non-operating income of $104,193,000.
In the fourth quarter, the finalisation of the 2019 motor quota share reinsurance arrangement resulted in additional reinsurance premium ceded of $236,000,000. Additionally, the second actuarial review for 2019, which occurred in the final quarter, resulted in an actuarial adjustment of $329,000,000. However, for the year 2019 total gross premiums written of $1,403,690,000 decreased by 22% ($388,000,000) in contrast with the 2018 year.
The motor and non-motor business contribution to this reduction in 2019 by $265,589,000 (21.33%) and $122,288,000 (22.38%) respectively.
Reinsurance ceded increased by $791,549,000 compared to 2018, resulting in net premiums written of $178,000 for the 2019 financial year.
Gross claims expense increased by $499,146,000 or 44% for 2019 in comparison with 2018. The primary contributor is the book of business with associated high-risk factors, which influenced the attendant actuarial adjustment increase of $409,000,000 for the year.
Reinsurance was one component of the risk management strategy to mitigate the negative motor claims trajectory, which resulted in an increase in reinsurance recoveries by $965,676,000 in 2019. Concomitant with the reduction in gross premium written for the two business segments and increase in the actuarial adjustment emanating from the existing risk profile of the motor business, there was a net improvement of $64,000,000 in 2019 from other associated underwriting activities.
Commenting further she noted that management has also taken action to expedite the implementation of its Information Technology strategy to improve internal processes and customer experience.
Administration and other costs increased by $28,000,000 in 2019 as the company implemented the various risk management strategies. Non-operating income for 2019 improved by $77,000,000 as a product of the investment strategy aligned with the risk management strategy.
The group, she reported, is excited about the opportunities this presents to expand insurance services to a new customer and market segment in the general insurance sector and foresees many synergies to the benefit of KICL’s shareholders.
The new Management has presented its strategic plan to the new Board of Directors and it provides the foundation for KICL to become a leading local motor insurer in key market segments while driving growth in other non-motor segments by restructuring its motor portfolio and expanding its customer base and product portfolio.
Management she said was anticipating improvements in the company’s operating performance going forward, noting that KICL as a subsidiary of the GraceKennedy Financial Group will benefit from the replication of a strong corporate governance culture and a robust risk management framework as well as leverage a wide cadre of expertise and talent in several functional areas.
This is not only expected to enhance KICL’s internal control environment and accountability framework going forward, but also will enable operational efficiency in the rollout of the company’s strategic plan to support a turnaround and return to strong operating performance for the benefit of shareholders, she said, noting that there are some important and urgent activities, which will be foremost during this transitionary period, regarding the recapitalization of the company to meet regulatory compliance levels as well as to support the company’s strategy going forward.
Effective March 24, 2020, the GraceKennedy Financial Group Limited acquired 65% of the shareholdings of KICL. At a Board Meeting held on March 31, 2020, Mrs. Natalia Gobin-Gunter resigned as Chairman of the Board and Mr. Donald Wehby was appointed Director and Chairman of the Company with immediate effect.