Middlesea Insurance posts Lm1.14m profit

Middlesea Insurance shareholders will be receiving a gross dividend of 7.0c per 50c share, equivalent to a return of 3.18 per cent based on the closing price on April 11, 2003.

The dividend was approved during Middlesea Insurance's 22nd annual general meeting at the Radisson SAS Baypoint Resort in St Julian's last Wednesday.

Middlesea showed a group profit of Lm1.14 million for the year ended December 31, 2002.

Middlesea's chairman, Mario Grech said 2002 was a year of unprecedented financial challenges for the insurance industry.

Whereas insurance and reinsurance companies' balance sheets and investment portfolios suffered badly, positive signs were at the same time being seen for the insurance business with continued development on price adjustments of risks worldwide. Overall, international capital markets continued to be very volatile and recorded their third successive year of overall decline.

Disappointing news from companies caused the stock markets to slump further during 2002. The local equity market also delivered a negative return. In the circumstances, the board applied a write down on certain equities of Lm0.25 million which had a direct impact on this year's group profits

Costs to the primary insurance industry soared as a result of attritional catastrophe losses, the rising cost of court awards, the spectre of terrorism, and the dismal investment climate. This was reflected in 2002 with additional cost of reinsurance protection to Middlesea, which resulted in an increased overall total cost of Lm473,281.

Certain classes of business, particularly group life, health and accident produced another year of positive results.

However, the negative results from the indigenous motor vehicle and liability classes of business, together with the ongoing turmoil in the local and international capital markets adversely affected Middlesea's result. Corrective measures were being introduced gradually to address the motor and liability classes.

When reviewing the subsidiaries' operations, Mr Grech said that Middlesea Valletta Life Assurance Company contributed positively to the group's result with the group's share of profit increasing by 101 per cent to Lm250,843.

The benefit of this investment is reflected in the increase of the embedded value from Lm9.5 million to Lm10.79 million.

Progress Assicurazioni SpA, the group's subsidiary in Italy, was also a significant contributor to the technical operations. The importance of this company was reflected in the year-to-year increase in premium income of 55.7 per cent to Lm18.45 million and its contribution of a profit after minority interest of Lm533,585 to the Middlesea group.

The following were appointed on the board of directors until the next general meeting:

H. Attard Montalto, J. Camilleri, V. Galea Salamone, J.C. Grech, M.C. Grech, M. Grima, M. Sparberg, F. Xerri de Caro and J.F.X. Zahra.

As there were as many nominations as there were vacancies, no election took place and the following nominees were automatically appointed directors: G. Bonnici, E. Caruana Demajo, G. Debono Grech, L. Grech, L. Spiteri and D. Sugranyes.

Immediately after the general meeting, the board of directors appointed M.C. Grech as chairman and J.F.X. Zahra as deputy chairman.