Pre-tax profits up 55% at Middlesea Group

The Middlesea Group results for the first half year of 2007 have been positive, with profits before taxation amounting to Lm1.93 million, the company said in a statement last week. This reflected a 55% increase over the profits of Lm1.24 million registered in the same period last year.

Commenting on the company's results, Middlesea Group executive chairman Mario C. Grech said: "Technical insurance results before investment income have shown positive upward movements in both the Maltese and Italian operations."

The profit attributable to shareholders as at the end of June amounted to Lm1.16 million, compared to Lm1.55 million last year. The technical result on the group's general business, before allocating investment income, which was also favourably impacted by the effect of a net positive run-off amounting to Lm0.7 million (2006 - Lm0.2 million) from the Malta operations, improved from Lm0.3 million to Lm0.67 million.

Business underwritten in Malta and Gibraltar during the first six months of 2007 amounted to Lm7.7 million, an increase of 6.6% over the same period in 2006.

The premiums written by the group increased by Lm3.89 million, from Lm18.67 million in 2006 to Lm22.56 million this year. The combined operational ratio for general business, with the total technical charges as a percentage of net earned premium, reduced from 98.1% in 2006 to 95.7%.

The overall rate of return for general business, after allocation of investment income to premiums written, was 8% as compared to 4.3% in 2006. Total assets, which include investments of Lm94.07 million, amounted to Lm126.3 million, compared to Lm118.17 million in 2006.

Progress Assicurazioni SpA continued to pursue its strategy of expanding its distribution network, with the number of agencies increasing to 155 at the end of June. Premium written increased by Lm3.4 million to reach Lm14.44 million and the contribution of this subsidiary towards the profit before tax increased to Lm1 million.

Business written by associate company Middlesea Valletta Life Assurance Co. Ltd (MSV) also increased from Lm26.62 million last year to Lm29.21 million this year and the contribution for the six months up to June 30 remained satisfactory, MSI commented, at Lm0.39 million. While this company has continued to experience growth in the Maltese market, it is pursuing plans to enter the Italian life assurance market.

The group's gross technical reserves increased by 8.8% over last year and the ratio of net technical reserves to annualised net premium written remains strong at 158%. The net asset value per 25c share, after taking into account the dividend approved by the shareholders during the annual general meeting held on June 28, amounts to Lm1.35.

The negative capital returns on equities and bonds listed on the Malta Stock Exchange and on foreign bond markets continued to impact the investment income earned by the local companies within the group. However, these were mitigated by the positive returns earned on foreign equity markets.

The foreign market equity returns contributed to the increase in the overall investment income earned amounting to Lm1.3 million when compared to that earned during the same period in 2006 amounting to Lm0.77 million.

The Middlesea Group noted a high volatility in the international capital markets at the time of reporting and Mr Grech said: "Barring a natural catastrophic event, or an unexpected increase in the frequency of claims and/or a deterioration in investment returns, the Middlesea Group expects that the improvement in the results registered in the first six months of 2007 will be maintained."