Key Insurance profits from non-core investments
Published:Wednesday | August 30, 2023 | 12:06 AM
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Key Insurance Company made a profit from its investments but its core operating segments recorded losses in the second quarter. The general insurance provider made flat profit of $9.4 million for the April-June quarter compared to $9.7 million a...
Key Insurance Company made a profit from its investments but its core operating segments recorded losses in the second quarter.
The general insurance provider made flat profit of $9.4 million for the April-June quarter compared to $9.7 million a year earlier. Over six months, profit totalled $12.9 million, compared to $12.25 million in HY2022.
“Demonstrating the effectiveness of its strategic initiatives, the company’s investment portfolio continues to perform strongly,” the company stated in its financials, which recorded net investment income of $117.8 million.
“This represents a noteworthy 145.7 per cent increase over the prior year six-month period. This substantial growth is attributable to the repositioning of our investment portfolio to take advantage of increased interest rates,” it said.
Key offers insurance coverage for vehicles, property, workers’ compensation, travel, and solar systems. It divides the operations into two segments: motor, which made a loss of $25.65 million; and non-motor, which made a loss of $21.1 million.
The segment losses arose even as insurance revenue grew 24 per cent to $704.8 million from $566.6 million a year earlier. Over six months, revenue amounted to $1.29 billion, up from $1.05 billion a year earlier.
Non-motor revenue grew 48 per cent to $468.2 million over six months compared. Key said the motor segment, which grew 11.7 per cent over six months, remains the “backbone” of business.
The company reported a spike in insurance service expenses, which largely attributed to “the escalation in reinsurance costs as well as increased claims costs in certain segments.”
Notwithstanding these elevated costs, Key reported that net revenue grew 79 per cent in the quarter and 44 per cent over six months.
Food and financial group GraceKennedy holds 73.2 per cent of Key Insurance which it acquired in separate transactions in 2019 and 2020.
At the time, Key was a failing company, but GraceKennedy has been turning around the operation, via a restructuring of its business model and injection of capital via a rights issue.
Last year, Key Insurance achieved a minimum capital test or MCT ratio of 234.4 per cent, which was well above the 150 per cent capital adequacy benchmark set by regulator Financial Services Commission.
Key’s capital now stands at $1.2 billion, equating to 30 per cent its total assets as at June.