Middlesea Insurance's pre-tax profit up 8%

The first six months of this year will give negative results to all those working in the insurance industry, said Mario C. Grech, Middlesea Insurance's executive chairman, at the company's annual general meeting last week.

He told shareholders: "The Group's Gross Written Premium in general business increased by over 24 per cent over the preceding year reaching €104.2 million (Lm44.7 million). The group's prudent investment policy once again benefited the group".

The holding company, Middlesea Insurance plc, registered a profit before tax of €6.97 million (Lm3.0 million) a growth of almost 8 per cent over the profitability registered in 2006. The Italian subsidiary company, Progress Assicurazioni SpA, strengthened its position in business growth and coupled with its continued strict pricing policy booked a gross premium of €71.28 million (Lm30.6 million) that reflected an increase of 35 per cent over the previous year. In February 2007, a new obligatory procedure for claims handling called direct indemnification (risarcimento diretto) was introduced by regulation. This unusual system imposed on the vechile insurance market, entitles injured parties to be indemnified by their own insurer even if they are only covered on a third party basis. This system of fixed sum recovery exposes insurers to potential variability especially in relatively small portfolios of business.

Membership of the European Union continued to trigger considerable interest from international companies that looked at Malta as a financial centre from which they can register and operate. The subsidiary company, International Insurance Management Services (IIMS), though facing strong foreign competition, was committed to offering professional management services to international companies, including insurers, reinsurers and captives.

Last year, Middlesea's associate Middlesea Valletta Life Assurance Company (MSV) persevered in its successful operations through its distribution network with total business written by the company amounting to €135.90 million (Lm58.34 million), an increase of 16 per cent over the previous year. The demand for life assurance and investment related products in Malta increased substantially and MSV registered a profit before tax of €7.24 million (Lm3.11 million) that amounted to an increase of almost 11 per cent over the previous year. However the higher incidence of income tax expense reduced this improvement and consequently MSV share to this year's profit decreased to €2.63 million (Lm1.13 million).

Mr Grech said: "In the face of continued rating pressure, last year saw Middlesea looking at operational reorganisation and business model refinements. Substantial investment was made locally in the new IT underwriting system with the implementation of new state-of-the-art software packages as a means to obtain real time information."

He highlighted the turbulence in the financial markets that will have a negative effect on the company and said: "Our medium-term strategy remains constant in seeking and identifying international partners that offer the required synergies to realise further overseas expansion with a total focus on primary insurance markets. In addition MSI is ready for opportunities that will present themselves since we firmly believe in our collective ability to sustain our leadership in the market. Our commitment to our shareholders is to maximise the value of their investment over time.

"During 2008, the board of directors will be re-visiting the group's structure and the balance sheet strength of all companies within the Middlesea Group. This will enhance clarity, ensure group board focus on all components, separate board focus on Middlesea Group's needs, place all operating companies at par, make shareholding reporting easier, enhance segregation for regulatory, risk and capital rationalising purposes and add business flexibility for strategic partners. This will give the group the necessary infrastructure to enable it to face future challenges."

The AGM passed two extraordinary resolutions authorising the company to buy back its own shares in certain specific circumstances in order to contribute to a stable market and to renominalise and increase the share capital of the company from €0.582343 (25c) share to €0.60 per share through the capitalisation of retained profits.

Middle Sea Insurance's annual general meeting also approved a dividend distribution of a final dividend of €0.1281 (Lm0.05c5) per €0.582343 (25c) share amounting to €3,202,500 (Lm1,375,000), an increase of 22 per cent over last year. This was the 24th consecutive year that a dividend was declared and distributed.

Immediately after the meeting, the new board of directors appointed Mr Grech as executive chairman and Mr R.E.D. Chalmers as deputy chairman.