Middlesea appoints investigative specialists as subsidiary's losses grow

Mark Zerafa

Jan 13th 2010, 23:19

MiddleSea Valletta Life Insurance is a subsidiary comany to MiddleSea, which is a joint venture with Bank of Valletta. This already distances the company from Progress Assicurazioni.

Life policy holders are not investing in Middlesea shares. What they invest in is units in Collective investment schemes managed by Valletta Fund Management, JP Morgan and Fidelity, or the Middlesea With-Profits Fund. The value of your policy's investment value depends on the performance of these funds, rather than the profits of Middlesea itself.

It is indeed sad that some well-known public figures tend to speak early without doing much homework beforehand, and thus spread panic amongst the general public.

James Portelli

Jan 13th 2010, 07:03

@Jimmy Magro, Raymond Zammit, Charles Grech

Since a life policy is something personal, it is reasonable for consumers to voice their fears.

Perhaps a clarification from Middlesea Valletta Life Assurance (MSVLA) would be appropriate. It is worth noting that life business is transacted by MSVLA and not MSI. MSVLA is an associated (not subsidiary) company of Middlesea Insurance (MSI) and its reserving is, therefore, distinct from and 'ring-fenced' from Italian losses. MSVLA's interest is limited to a minority shareholding.

Regarding why the losses took 2 years to unfold, one has to take into account the fact that the effect of a law take time to unfold and policies are of a 12-month duration. Therefore a 24-month claims' tail is very reasonable for a full picture (the Bersani Laws impacted the whole of the Italian motor insurance market by about – 26%).

Should Progress SpA be closed/sold? Do we amputate a leg for a knee problem? It depends. So far the Italian agency network has been more than halved … there may be good opportunities from consitently good performing agents given that Progress gave MSI some 5 relatively good years. Of course, prudence has to be the operative word.

Jimmy Magro

Jan 12th 2010, 19:53

@Raymond Zammit
You seem to be living away from reality. This has been said many a times that companies have reserves and reserves. But those reserves are no liquid cahs but are held in investments that as the saying goes may go up and may go down. A loss of 29 million euros for a Maltese company is extraordinary and it is already known that this loss has wiped out the retained earnings of MSI when Consolidated Accounts are prepared.

I believe in MSI, and want it not only to survive but to continue to grow as it is a success story for Malta that kicked off the insurance sector in Malta.

All I am saying is that MSI should come out of the Italian market.

Let us not forget that many strong companies faded away in the financial crises; even Nationa States came to their knees (last case Iceland) and no one can be without doubt that MSI can survive unless the proper remedial actions are taken asap.

E. Vassallo

Jan 12th 2010, 19:08

I think that the provisions in place will cover in the worst case scenario. However, Middlesea should reassure all life policy holders re their investment. And what was the board of directors doing these last two years to stem the losses some of which were already foreseen in 2008?

P Sciberras

Jan 12th 2010, 18:41

This 29 million loss is very strange after noting that this has been building up for the last 2 years So during these last 2 years none of the directors was monitoring what was happening there .Why was the investigation started now after the Chairman responsable has been replaced, as he was responsable for the situation,or this is another.we will be carefull and it wan t happen again?

Raymond Zammit

Jan 12th 2010, 17:05

@Jimmy Magro / Charles Grech

Life policy holders need not to worry as enough provisions and reserves are in place to guarantee the fulfilment of such policies in any worst case scenario.

@ Lawrence Fenech

MFSA cannot regulate the italian market!! As a regulator, it has supervised the latest share issue and appointments at Middlesea.

Maybe the company should issue a clarification statement as many people are unnecessarily concerned when they need not.

Lawrence Fenech

Jan 12th 2010, 16:44

Yes, where was the MFSA or where is it now?

Charles Grech

Jan 12th 2010, 16:37

Can the MFSA or Government tell us, Life Policy holders with Middlesea,what to do.
Can there be a run on Middlesea?
What can we do to avoid losing our Life Savings?

E.Muscat

Jan 12th 2010, 15:16

I believe shareholders are more willing to know how the italian subsidiary is performing in Q1 of 2010 rather than Q4 of 2009. What I mean is, Progress had a terrible year in 2009 very much in line with all other Italian insurance companies in Italy. Bad luck. Late last year we were told that corrective measures were taken and the worst is over. The worst being Q4 of 2009, I would like to know what bearing these corrective measures had on the performance of Q1 2010.

Dominic Vella

Jan 12th 2010, 15:13

And nobody knew this a few business days ago when the rights issue completed? This stinks! BOV shoved in more good millions after bad and all other shareholders followed them in such that the rights issue was oversubscribed. Somebody knew and those somebodies should have declared what they knew.

Jimmy Magro

Jan 12th 2010, 14:51

the only solution is to close down this firm in Italy.

many life policy holders are worried with the situation

it would be worthwhile to have some inidcations on what are the liabilities of the parent company (MSI) and indicate an immediate exit strategy from Italy; a country where business is dominated by specialised sharks and not fair competition