Date: November 13, 2018
Key Insurance Company Limited (KEY) for the nine months ended September 30, 2018 reported a 48% growth in net premiums written from $636.72 million to $943.53 million as a result of a 42% increase in gross premium written which closed the period at $1.46 billion (2017: $1.03 billion). For the quarter, gross premium written went up 39% closing at $518.06 million (2017: $372.14 million). KEY indicated that, “The company continues to experience growth in both its non-motor and motor portfolios where gross premiums income increased by 48% and 31% respectively, over the same period last year.”
Reinsurance ceded for the period also increased for the nine months to $520.97 million relative to $396.12 million in 2017. Net premiums written for the third quarter rose 54% to $340.51 million compared to $221.28 million booked in last year.
Net premiums earned increased by 55% to $851.67 million from $548.18 million in 2017. Additionally, net change in unearned premium reserve went up 4% closing the period at $91.87 million (2017: $88.54 million). While for the third quarter, net change in unearned premium reserve fell to $22.36 million relative to $24.02 million reported in the prior comparable year.
There was an underwriting loss of $142.53 million as at September 30, 2018 relative to a loss of $71.72 million. Claims expenses increased grossly by 278% to $783.27 million compared $207.35 million reported for the same period last year. For the quarter, claims expenses closed at $259.66 million (2017: $7.10 million). The Company highlighted that, “The year-to-date expense included an actuarial estimate of $98,910,000 for claims incurred but not yet reported. This estimate was calculated by our independent actuary based on two methods that reflect our historical claims incurred and paid development patterns. As a result of this trend, management has been tasked to reassess the underwriting practices (risk assessment and pricing) with a view to improving the company’s profitability.”
Administrative and other expenses totaled $289.34 million for the nine months, a 12% decline when compared to $328.89 million the prior corresponding year. However, for the third quarter, administrative and other expenses fell by 26% to close at $100.48 million (2017: $136.57 million).
Investment income totaled $38.85 million, an 11% improvement relative to $34.86 million recorded for last year’s corresponding period, while other income went up to $30.78 million from $19.21 million in 2017. For the third quarter, investment income and other income closed at $14.17 million (2017: $10.62 million) and $10.97 million (2017: $7.50 million), respectively.
Loss before taxation drastically went up to $72.90 million as at September 30, 2018 compared to a loss of $17.65 million last year. Tax charges for the period totaled $30,000 (2017: 60,000), resulting in a net loss for the period totaled $72.93 million relative to $17.71 million as at September 30, 2017. Net loss for the quarter closed at $798,000 versus a loss of $25.70 million in the prior comparative quarter.
Loss per share (LPS) for the nine months totaled $0.20 relative to a loss per share of $0.05 in 2017, while LPS for the quarter totaled $0.002 compared to an LPS of $0.07 for the 2017 period. The trailing twelve months loss per share is $0.034. The number of shares used in the calculation was 368,460,691 units. KEY stock last traded on November 12, 2018 at $3.25.
Balance Sheet Highlights:
The company’s total assets amounted to $2.85 billion as at September 30, 2018 up from $2.40 billion as at the corresponding period in 2017, indicating a 19% increase year over year. This was mainly as a result of a 48% increase in ‘cash and deposits’ to $558.78 million (2017: $376.92 million) and a 79% growth in ‘investment properties to $331.37 million (2017: $185.15 million).
Total Shareholders’ Equity as at September 30, 2018 closed the period at $1.05 billion (2017: $1.04 billion), thus resulting in a book value of $2.84 (2017: $2.83).
Disclaimer: Analyst Certification -The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer (s) or securities as at the date of this report. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation (s) or view (s) expressed by that research analyst in this research report.
Company Disclosure -The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.