Key Insurance Company Limited (KEY) has issued the following statement:
THREE YEAR TURNAROUND PLAN 2019-2021
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 has been fully aware of the urgent need to reverse organizational decline for business sustainability and profitable growth. In response the management designed an aggressive a turnaround plan to reverse the losses and restore the company to sustained profitability.
The Plan has two main objectives:
1. Return Key Insurance Company Limited to stable profits by 2021.
2. Achieve and maintain at least the Minimum Capital Test of 250%, as prescribed by the FSC.
To achieve the objectives outlined, the company’s management adopted the following strategies for priority implementation:
1. Reduce the motor claims ratio by 15% from 2019 to 2021 for each of 3 years through
more stringent underwriting
2. Enhance the profitability of the portfolio of the company’s motor business in line with our stated risk factors;
3. Grow and introduce new non-motor business by product and channels
4. Maintain our 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
. Improve the company’s underwriting practices by 2nd quarter, 2019
. Establish an Enterprise Risk Management Framework by 3rd Quarter 2019
Initiatives and Results since January 2019
The actions taken to-date have 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:
1. Increase in reinsurance for our motor and non-motor business
2. Purchase of additional reinsurance coverage effective January 1, 2019, which included
• additional Fire Catastrophe Excess of Loss reinsurance coverage and additional Motor Excess of Loss Coverage.
• Motor Quota Share Reinsurance coverage designed to reduce loss exposure in the motor segment of the business.
Positive results evident from the initiatives also include:
3. The Company’s claims expense has remained at the same level as that at 31 March 2018 reversing the increasing trend.
4. Net premiums earned increased 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
5. Loss at March 2019 reduced by 30% from the 2018 loss position
6. By February 2019, the Company surpassed the regulatory FSC Capital test of 250%. The trend is as below up to 30 April 2019:
- Dec 112.55
- Jan 235.12%
- Feb 372.38%
- Mar 406.10%
- Apr 381.96
We are confident that the aforementioned will satisfy all our valued stakeholders and we commit that Key Insurance Company Limited will be restored to full viability by 2021.