The net investment income of Middlesea Valletta Life fell from €26.54 million in 2007 to a loss of €31.77 million in 2008, after taking into account fair value markdowns on a €777 million investment portfolio, MSV CEO David Curmi told The Times Business.
"Our fair value markdowns were less than 10 per cent of our total investment portfolio," Mr Curmi pointed out. "These investment results must be seen in the context of the unprecedented financial turmoil during 2008, which hit both equity and fixed income markets. MSV, and the rest of Middlesea Group, had no direct or indirect exposure to any of the toxic assets that were one of the root causes of the crisis.
"MSV is a long-term investor and we never compromised our prudent investment strategy for short-term gains. We feel that the asset and currency mix, geographical spread and asset quality mean that our investment portfolio is well positioned to capture the upturn in investment markets as and when it happens."
MSV, Malta's largest life assurance company, on Monday announced a profit before tax of €1.92 million for the year ended December 31, 2008, a decrease of 63 per cent over 2007. Business written was down 19 per cent from €135.91 million in 2007 to €109.70 million in 2008. The company, a joint venture between Bank of Valletta plc and Middlesea Group, said total assets increased marginally to €843.02 million from 2007's €832.25 million.
2008 was the first time in seven years that MSV saw business written decrease. The decrease was attributed to lower unit-linked business volumes as policy holders opted for safer savings and investment products in the current climate.
"We expect our with-profits business to grow this year because with-profits plans are balanced investments that aim to reduce the effects of short-term market instability and deliver relatively stable long-term capital growth," Mr Curmi said.
MSV has declared regular bonuses on its with-profits plans for 2008 ranging from 3.8 per cent to 3.65 per cent. Mr Curmi said the bonuses compare very favourably with those declared by life insurers internationally.
"MSV's bonuses are certainly among the highest on the local market," he emphasised. "Once a regular bonus is declared and added to a policyholder's investment, it cannot be withdrawn. However, regular bonuses that have been declared are only payable on policies that become claims by way of death or maturity, and are not guaranteed on policies that are cashed-in early or surrendered. It is important to point out that with-profits policyholders are not liable to pay personal or capital gains tax on bonuses declared, since an exit tax is paid by the insurance company (at its expense) on policies that are surrendered or which mature. Similarly, beneficiaries and legal heirs will not be liable to any tax if they receive payment under a with-profits policy. Therefore the declared regular bonuses are net of the standard 15 per cent withholding tax."
Meanwhile, MSV has pursued its strategy to penetrate the Italian market and is confident that it will sell its first products towards the middle of the year. The company is authorised to transact individual life and savings insurance business in Italy under the EU Freedom of Services regime.
"We have been working on a business model that will enable us to market a small range of products in Italy," Mr Curmi explained. "We have made a significant investment in a state-of-the-art sales and administration system that will enable us to administer the business that we write in Italy from Malta. Our first product will be a single premium unit-linked plan linked to a range of 10 funds which will be provided by two of the world's leading fund providers, with whom we have partnered to develop this first product." MSV's distribution channels will be based in the Rome and Lazio region. A second product, a pure life protection policy, will be launched in Italy only shortly after the introduction of the first.
"Our fair value markdowns were less than 10 per cent of our total investment portfolio," Mr Curmi pointed out. "These investment results must be seen in the context of the unprecedented financial turmoil during 2008, which hit both equity and fixed income markets. MSV, and the rest of Middlesea Group, had no direct or indirect exposure to any of the toxic assets that were one of the root causes of the crisis.
"MSV is a long-term investor and we never compromised our prudent investment strategy for short-term gains. We feel that the asset and currency mix, geographical spread and asset quality mean that our investment portfolio is well positioned to capture the upturn in investment markets as and when it happens."
MSV, Malta's largest life assurance company, on Monday announced a profit before tax of €1.92 million for the year ended December 31, 2008, a decrease of 63 per cent over 2007. Business written was down 19 per cent from €135.91 million in 2007 to €109.70 million in 2008. The company, a joint venture between Bank of Valletta plc and Middlesea Group, said total assets increased marginally to €843.02 million from 2007's €832.25 million.
2008 was the first time in seven years that MSV saw business written decrease. The decrease was attributed to lower unit-linked business volumes as policy holders opted for safer savings and investment products in the current climate.
"We expect our with-profits business to grow this year because with-profits plans are balanced investments that aim to reduce the effects of short-term market instability and deliver relatively stable long-term capital growth," Mr Curmi said.
MSV has declared regular bonuses on its with-profits plans for 2008 ranging from 3.8 per cent to 3.65 per cent. Mr Curmi said the bonuses compare very favourably with those declared by life insurers internationally.
"MSV's bonuses are certainly among the highest on the local market," he emphasised. "Once a regular bonus is declared and added to a policyholder's investment, it cannot be withdrawn. However, regular bonuses that have been declared are only payable on policies that become claims by way of death or maturity, and are not guaranteed on policies that are cashed-in early or surrendered. It is important to point out that with-profits policyholders are not liable to pay personal or capital gains tax on bonuses declared, since an exit tax is paid by the insurance company (at its expense) on policies that are surrendered or which mature. Similarly, beneficiaries and legal heirs will not be liable to any tax if they receive payment under a with-profits policy. Therefore the declared regular bonuses are net of the standard 15 per cent withholding tax."
Meanwhile, MSV has pursued its strategy to penetrate the Italian market and is confident that it will sell its first products towards the middle of the year. The company is authorised to transact individual life and savings insurance business in Italy under the EU Freedom of Services regime.
"We have been working on a business model that will enable us to market a small range of products in Italy," Mr Curmi explained. "We have made a significant investment in a state-of-the-art sales and administration system that will enable us to administer the business that we write in Italy from Malta. Our first product will be a single premium unit-linked plan linked to a range of 10 funds which will be provided by two of the world's leading fund providers, with whom we have partnered to develop this first product." MSV's distribution channels will be based in the Rome and Lazio region. A second product, a pure life protection policy, will be launched in Italy only shortly after the introduction of the first.