Middlesea posts €29.8m loss after 27 years of positive results

Insurance group Middlesea registered a loss of €29.8 million before tax in 2008, in contrast with the profits of €9.3 million posted in the previous year.

The company said the crisis in the world financial markets and the performance of its Italian subsidiary were the factors that broke the 27-year history of positive financial results for the Middlesea Group.

Mario Grech, executive chairman of Middlesea Insurance plc, said the group's focus on the strength of the balance sheet over the years helped it absorb this loss in 2008.

All the regulated companies within the group adequately satisfied the statutory and regulatory solvency margins, with Middlesea Insurance plc holding a 250 per cent solvency cover.

Mr Grech reported that the group's investment strategy of preserving capital security while maintaining liquidity and maximising returns continued to apply. 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, Middlesea registered capital losses of €14.7million during the year.

The losses were partly offset by capital gains on the portfolio of fixed income securities of €2.6 million. He reiterated that none of the companies within the group held any exposures to those toxic assets that were one of the root causes of the financial crisis.

But the downturn for Middlesea was compounded by losses of €19.1 million by its Italian subsidiary Progress Assicurazioni SpA.

While these two sources of revenue produced disappointing results in 2008, Mr Grech said Middlesea Insurance plc, the holding company, had maintained a satisfactory positive technical result of €1.78 million 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 also both contributed positive results to the group during 2008.

In view of the loss incurred for the financial year 2008, the board did not recommend the payment of a final dividend to shareholders at the forthcoming AGM.