All participants got 100% of their request

KEY Insurance Company Limited (KEY) has raised some $668 million from its just concluded renounceable rights issue, which aims to provide much needed capital for the company taken over by the GraceKennedy group last year.

The renounceable rights issue, which opened on December 11, 2020 and closed one month later on January 11, 2021, saw up to 190,863,000 new ordinary shares being created to subscribers of the issue at a subscription price of $3.50 per share, thus pulling in capital of $668 million.

A renounceable rights issue is one where shareholders can choose to sell their rights to other existing shareholders. The money raised would strengthen KEY Insurance’s capital base, which is seen as an imperative at this time considering the deterioration of the company’s minimum capital test ratio over the years.

GraceKennedy had previously confirmed that it would be taking up its full allotment of new shares from their 65 per cent shareholding in the GK insurance subsidiary

Details of allotment

KEY Insurance has confirmed that all subscribers got 100 per cent of their subscription requests. The insurance company reports that existing ordinary shareholders were allocated 100 per cent of their provisional allotment of new ordinary shares while existing ordinary shareholders were allocated 100 per cent of their application for new ordinary shares in the excess shares pool.

In addition, shareholders who renounced their shares were allocated 100 per cent of the provisional allotment of new ordinary shares held by existing ordinary shareholders renounced to the renouncee.

KEY Insurance’s authorised share capital was increased to 700 million shares at its annual general meeting late last year with a directive, allowing the directors to issue a minimum of just over 122.8 million shares for the renounceable rights issue. GK Capital Management was one of the brokers that handled the capital raise.

GK pumped money to save KEY from collapse

KEY got a much-needed lifeline when it was taken over in March this year by GraceKennedy through its wholly owned subsidiary, GraceKennedy Financial Group, which acquired 65 per cent of the share equity of KEY Insurance. The conglomerate company pumped millions of dollars into KEY to shore up its finances.

Since GK’s acquisition, KEY Insurance has attracted 330 new shareholders, taking the total to 501 as of October 21, 2020. In addition, the company has seen a 357 per cent increase in market capitalisation, moving from J$774 million to J$3.5 billion.

This is reflected in the increase in the company’s share price from $2.10 pre-acquisition in March 2020 to $10.02 at the end of trading yesterday. Following years of sustained losses and a breach of its regulatory requirements, KEY Insurance is turning a new leaf as the GK-led subsidiary, growing its premiums by 20 per cent to $402 million during its third quarter.

KEY Insurance turning the tide

In less than six months since gaining full control of KEY Insurance, GK’s strategic initiatives and turnaround plan have borne fruit with the company, which recording a small net profit of $5.7 million for the third quarter compared to the losses for the same period in 2019.

Don Wehby, group chief executive officer of GK and chairman of Key Insurance, attributed the turn-around results to the new management’s implementation of the GK model of digital transformation, consumer centricity, risk management and performance-driven pillars at Key Insurance.

This was supported by a greater focus on managing claim liabilities, a new business development department unit and a strong marketing campaign for some of its new and existing product lines.