Key hunts for market share among auto policy bargain hunters
Published:Friday | October 8, 2021 | 12:10 AM
Key Insurance Company wants to grow its third-party policies as it hunts for market share among the motoring public.
“We have set our target on growing our third-party business, and we have shown significant growth in 2021 when compared to our competitors with this line of business,” said General Manager Tammara Glaves-Hucey, while addressing the company’s annual general meeting on Wednesday.
Third-party insurance, which is offered to auto owners only, provides a cheaper policy to the client, but in exchange, the company provides no coverage for damage of the policyholder’s asset. It does, however, cover damage to others involved in a motor vehicle accident with the policyholder.
The GraceKennedy conglomerate took over Key Insurance as a loss-making operation that was failing. More than a year later, under a new plan, revised reinsurance arrangements, different leadership and an injection of fresh capital, the company is showing signs of a turnaround.
For the first half of this year to June, Key grew its gross premiums by 42 per cent to $916 million and inked $1.8 million of net profit, which reversed losses of $364 million a year earlier.
“As we move forward, we want to grow — not just in terms of market share, but also profitability,” said Glaves-Hucey.
The general insurance company currently holds 6.0 per cent of the market, up from 4.0 per cent in 2020, according to Key Insurance Chairman Don Wehby.
“We are hoping to increase our market share to about 8.0 per cent by 2022, and 10 per cent by 2024,” said Wehby in response to Financial Gleaner queries.
The general insurance sector earned some $52 billion in gross premiums in 2019, which represents the latest data, but also the last period prior to economic upheavals related to the pandemic.
“We are moving in the right direction,” said Wehby, who is also the Group CEO of GraceKennedy. “I expect the profitability that we are seeing for the first six months will continue for the rest of the year.”
Following a rights issue under which new shares were sold to existing stockholders as well as other investors in January, Key’s capital has quadrupled over the past year from $184 million to $931 million as of June. Its market value is over $2.4 billion.
At last year’s annual meeting, Key Insurance’s management revealed five-year revenue targets that are aiming for $1.9 billion by 2022 and $2.7 billion by 2025. The 2025 target would double the $1.3 billion out-turn in 2020.
GraceKennedy, a financial and food conglomerate, acquired two-thirds of the shares in Key in two tranches, starting in 2019 and then in 2020. The acquisition served to rescue the general insurer from faltering finances, and the conglomerate immediately set about developing a turnaround strategy and then shoring up Key’s capital via the rights issue, which raised $668 million in January. Under the transaction, GraceKennedy’s interest in Key Insurance increased to at least 73.58 per cent, held through GK Financial Group Limited and GK Capital Management Limited.
Key remains on track towards its 2022 revenue target of $1.9 billion, and could potentially hit that mark this year. Its 2021 annualised revenue, based on the half-year results, is already tracking at $1.8 billion.