Key turnaround continues, driven by non-core investment
Published:Friday | August 13, 2021 | 12:11 AM
Key Insurance Company made a million dollars in profit for the June quarter, but from non-core activity.
The general insurer, which was taken over by the GraceKennedy group over a year ago, earned $22 million from investments and other income, which was sufficient to erase losses on its core insurance operations. GK’s acquisition of the company served to rescue it from faltering finances, and the conglomerate immediately set about developing a turnaround strategy and then shoring up Key’s capital via a rights issue that raised $668 million in January.
Key said the gains from its investment activity was not accidental, but the result of a strategic play.
“During the quarter, the company continued the repositioning of its investment portfolio to obtain the best yields, while continuing to adhere to all regulatory requirements,” stated Key in the preface to its financials. “The continued focus on management of the investment portfolio has now started to produce benefits, and management foresees even better performance of the investment portfolio in the remaining quarters.”
The stock traded flat and closed at $4.66 on the release of the results on Wednesday. Year to date, the share price has fallen by 20 per cent. The general insurance company’s market value now stands at $2.6 billion.
The company, however, continues to build on its revenue growth momentum. Revenue for the June quarter totalled $501 million, up from $374 million a year earlier. Net premiums jumped to $301.1 million from $192 million.
Underwriting losses contracted from $51 million to $21 million, while net profit swung from a loss of $25 million to profit of $1.04 million.
“The company has now recorded its fourth consecutive quarter of profitable performance. This profit trend reflects the continued progress being made on the company’s turnaround strategies,” said Key.