Middlesea says the worst is over

Joe Bartolo

Nov 23rd 2009, 15:16

@ J.Portelli

Let us stop deluding ourselves and tell the truth. We all kmow that the MSI losses were not brought about due to the financial situation. The one and only reason is bad management. MSI entered into a market it had no idea of(southern Italy).
Can some one from MSI explain if there was gross under reserving of claims?

I believe that MSI will continue with this hammerage for at least another two years.

JOE BARTOLO

Nov 23rd 2009, 09:51

What Mr. Portelli is forgetting or is not aware of,is that this is not the first time MSI has lost money in foreign ventures. When MSI opened its re insurance office in London it lost money year after year for twelve years, not to mention MIB spa in Palermo which although has nothing to do with MSI it was run all the same by the present big wig of Middlesea.

This situation was clearly brought about be extermely bad management and it is the CEO and the board who should shoulder the responsibility.

James Portelli

Nov 23rd 2009, 03:52

@Ms. M. Borg

Respectfully I disagree with the use of the terms ‘completely wiped out’ and ‘mistakes’.

‘Completely wiped out’: Even a cursory look at financials would indicate that this is not the case. ‘Completely’ is perhaps more emotive than factual.

‘Mistakes’: The root cause was a change in motor insurance (compensation) legislation which adversely impacted the whole market. Admittedly and with the power of hindsight bias, corrective action may have been initiated earlier … but being an external factor one could only have been looking at damage limitation (and not avoidance) in this case.

Let us not be caught in the old adage that ‘those who are capable work and those who aren’t simply dictate’ because a lot can be said by shareholders who at the end of the day are not held to account. A shareholder is a part-taker in risk and can also vote with his/her feet (although one would be ill-advised to do so in this case). Respectfully and – I reiterate – as a shareholder – we should allow and support the Board and management to get on with the job.

It is a simple rule of crisis management to preserve business continuity.

Adrian Sciberras

Nov 22nd 2009, 20:02

I wonder if there is any bagholder who is happy with the new terms of the rights issue, years of capital gains wiped out by a single bad investment......

the management knew the investment wasn't going well, so they kept holding and holding, so Maltese profits eroded by foreign losses, so the Maltese finance the mistakes done in a wrong investment offshore.

Future dividends will be difficult to be distributed for a couple of years at least, because of the massive losses the company has piled in the last year... they have to clean their balance sheet first! As they don't have any distributable reserves left.

Current shareholders wiped out with the rights offering - they have lost 63% of their value overnight .... I believe the only way for the company to survive on the stock exchange is to create a PR team to handle investor relations. I also believe this might be the first real candidate to make a reverse stock-split locally.

Corporate rebranding of MSI is needed too - what a complete mess.

Melina Borg

Nov 22nd 2009, 16:01

I disagree with the comments made by James Portelli. The existing board and its management should shoulder the responsibility of these significant losses. Past profits and reserves of MSI were completely wiped out by the losses made in Italy.

Now, the major shareholders in MSI, namely BOV, the Spanish Mapfre and the German Munich Re are going to ensure that the rights issue is a success and that the company does not go down the gutter. Therefore, the owners should appoint a new board and ensure that the mistakes done in the past are not repeated.

I as a shareholder expect to see changes by the new owners. Accountability and responsibility is the name of the game!!

Stephen Borg Cardona

Nov 22nd 2009, 15:00

Is the worst over however ? Or is it possible that more money will be lost through the Italian operation ?

James Portelli

Nov 22nd 2009, 13:15

As a shareholder I stress that the Chairman's Statement has to be seen in the light of following facts:

1) In its history, MSI did not suffer other losses locally or internationally;
2) Progress was re-structured to profit in a shorter than anticipated time. Credit goes to MSI's management;
3) The loss circumstances were unforeseen to the market. The Italian motor market AS A WHOLE suffered a 26%-point LR drop due to legislation changes;
4) Economics dictate that competition generates a 'normal profit' in the short run. In EU markets motor insurance runs at an average LR at best rarely lower than 90%. Imagine what happens if hit by an 26% market deterioration. A smaller player is more proportionally exposed. The € 6 million profit is otherwise proof to the localisation of event.
5) "Change in management": I differ (for want of stronger diction) with Mr. Sciberras. MSI's management steered through legal cession abrogation, public listing, regional restructuring.. etc.. MSI's strength lies in continuity....they are best equipped to bring the ship to port.
6) Reserves substantiate the Chairman's statement ('worst is over').
7) I suggest that it is probably the best time to buy the MSI shares (0.60c). I'm buying.

Eric McDonald

Nov 22nd 2009, 12:20

The worst is over can we please have that in writing and endorsed, as there seems to be too may knowalls lately who think positive nothing wrong in that in theory,, but in actual fact when it comes to the nitty gritty bits, we see the opposite. i just hope you right Sir, personally i just play it by ear. Have a nice day all

Adrian Sciberras

Nov 22nd 2009, 11:24

After the shareholders "bagholders" lose 80%+ of their value the CEO comes out to defend the company with these statements.... and the company has now been diluted with the new shares @ 60c !!! u leee

Nice very wise investor relations.

THIS SHAREHOLDER OFFERING SHOULD COME WITH A CHANGE IN MANAGEMENT, AS USUAL NO ONE IS WILLING TO TAKE RESPONSIBILITIES FOR THE BAD INVESTMENTS THE COMPANY DID IN THE PAST..

Too little too late....