Tuesday, 28th April 2009 - 14:50CET
MiddleSea makes €20.6m loss
The MiddleSea Group said today it made a loss of of €20.6m after taxation in the year which ended on December 31.
It said the crisis in the world financial markets and the performance of its Italian subsidiary were the factors which broke its 27 year history of positive financial results. It had made a profit of €6.9m in 2007.
Mario C. Grech, Executive Chairman, said that the group’s focus on the strength of the balance sheet over the years had helped it to absorb this loss in 2008, whilst at the same time retaining a strong balance sheet. All the regulated companies within the group adequately satisfied the statutory and regulatory solvency margins – with Middlesea Insurance plc holding a 250% solvency cover.
Mr Grech reported that the group’s investment strategy of preserving capital security whilst maintaining liquidity and maximizing returns continued to apply throughout the group. This strategy had contributed towards the containment of fair value losses incurred during the year. However, the group followed the fortunes of the financial sector, and, due to the unprecedented downturn of the local and international investments in equity markets, the Group registered capital losses of €14.7m during the year.
These losses were partly offset by capital gains on the portfolio of fixed income securities of €2.6m. He reiterated that none of the companies within the group held any exposures to those toxic assets which were one of the root causes of the current financial crisis. Furthermore, the Italian subsidiary Progress Assicurazioni SpA, registered a post tax loss of €19.1m.
Whilst these two sources of revenue produced disappointing results in 2008, Mr Grech said that Middlesea Insurance plc, the holding company, had maintained a satisfactory positive technical result of €1.78m from its insurance operations in Malta and Gibraltar.
The associated company Middlesea Valletta Life Assurance Co Ltd and the subsidiary International Insurance Management Services Ltd both contributed positive results to the group during 2008.
The Board of Directors will not be recommending the payment of a dividend to shareholders.
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Comments
Air Malta registered loss of income, Gozo Channel likewise, hotels complain of 14% less tourists, and the list goes on. More companies are now seeking Government's direct intervention like ST and Dedicated Micros to mention but two.
Then comes Tonio Fenech and claims that Malta would be unscathed by the international economic turmoil. Say it to the marines Tonio!!
Joining the EU will impose on Iceland precisely the same regulatory regime as we have here in Malta. The regulation and solvency margins imposed within the Eurozone have proven to be more resilient than the US or UK. Many European financial institutions were exposed to the US Sub prime market because they were misled by the credit institutions.
All this goes to prove that regulation can influence business performance to a point - it is there to safeguard the consumer primarily. Which all goes to prove that in spite of regulation a business can still be poorly managed - and that has nothing to do with the Govt.
More to the point our dear friend Dr Muscat was vehemently against EU membership and latterly against Euro adoption and on both points had we taken his advice we would be in far worse shape than we are now. Moreover we would have had Dr Sant as PM and that in itself is another sad story.
MSI's poor performance has nothing to do with the Govt or Govt policy.
Iceland's government was a conservative one, till yesterday!Now they elected the socialists! However, Iceland got bankrupt not because it did not have the Euro, but because its banks lended more than their base capital dictated.Indeed, Iceland has a small market- like ours, but to overcome this weakness, they used the internet to develop on a world wide scale, Internet Banking. The problem was that they did not believe in regulations and in the power of the state to regulate ( socialist?) but in self regulation, or rather in blind faith of the markets! European and American banks encouraged consumers to borrow and spend and when the going was good no one dared doubt this model. The problems of Iceland and elsewhere, go back to the ideological approaches, stretching back as far at least as the 'liberalization' of markets in the late 80's. Since then the political climate has fostered derugulation-like Malta-with politicians supporting light-touch rules, that took into consideration the business interests rather than those of the consumer. Credit rating agencies were not objective in their rating and their assessments were paid for by the very firms that sell securities the agencies review! De-regulation was the main problem.
Since when does membership of the EU have anything to do with how well you manage a business or an operation? You are determined to politicize anything and everything regardless of political influence. The EU and the Govt create the framework for wealth creation - they do not manage businesses!
It is no mystery and since when did anyone ever say Malta will not be affected by the recession? The PM sent out warning signals during the election campaign - but you were probably too busy celebrating the PL win to have noticed.
Remember one thing tho......if the PM had taken Joseph Muscat's advice, first we would not have been part of the EU and secondly we would not have been part of the Euro. Now go have a look at what happened in Iceland and what the top priority of their newly elected Govt is - to join the EU and the Euro.
This is a mystery especially when one considers that theMaltese were assured that we would not have been impacted this much !!!!!
This whole Global economic crash was caused by an energy shock, or the last oil crisis.
Think about it, $4 or $5 oil killed the US economy drove business and consumers to the wall and then they could not keep up home loan payments - global oil production peaked in 2006 or 2007 we are now on the way down the bell curve or sitting at the top. Our money system is debt based, it lends money on future economic earning potential, it ceases to function in a world of declining energy.
It really is that simple, it will all become very apparent to all of us very soon.
WAKE UP PEOPLE, IMMIGRATION IS NOT OUR PROBLEM, OUR PROBLEM IS OUR ECONOMY!!