Middlesea chairman Joseph F.X. Zahra has referred to 2010 as a year of stabilisation, with satisfactory results that sustained the company’s leading status in the local insurance market, strengthened its balance sheet with total shareholders’ equity increasing to €54 million as at December 31, 2010 and boosted its solvency position which currently stands at 360 per cent.
“A challenging, eventful and overall satisfactory year, marked by an important turnaround in performance, testament to the hard work put in by the board of directors, management and the people at Middlesea, together with the support of our shareholders, in particular our industrial shareholder Mapfre”, Mr Zahra said during the company’s annual general meeting on Tuesday.
Mr Zahra said Middlesea registered a satisfactory profit before tax of €8.86 million in 2010 when compared to the comparative loss of €62.88 million registered in 2009. The Middlesea Group reported a profit before tax of €6.44 million when compared to the consolidated loss of €54.4 million registered in 2009. On a consolidated basis, Middlesea’s shareholders’ equity in 2010 improved by €6.2 million, standing at €54.9 million as at December 31, 2010.
The AGM was held in the wake of the announcement that subject to regulatory approval by the Malta Financial Service Authority, Mapfre Internacional reached an agreement with Munich Re to acquire the shareholding of 19.9 per cent held by Munich Re. Once the regulatory go ahead is confirmed, this would mean that Mapfre Internacional, an expert subsidiary company responsible for international expansion within the Mapfre Group, would have a controlling interest in the company with its shareholding position of 50.8 per cent.
Mr Zahra explained that Mapfre Internacional “is the leader in the whole Spanish insurance market and the leader in the whole Latin American continent in the non-life insurance business”.
During the meeting, shareholders approved the extraordinary resolution which was proposed by the board of directors in order to restore the company’s ability to declare future prudent dividend distributions.
Notwithstanding the satisfactory profits registered during the last financial year ending December 31,2010, the board of directors could not recommend the payment of a dividend due to regulatory requirements imposed by the Companies Act that did not allow the company to make a dividend distribution, because of the negative accumulated reserves on the profit and loss account featuring in the balance sheet.
Such a negative balance had developed from the losses incurred during the Progress Assicurazioni SpA saga over the previous two years and the write-off of the whole investment in that subsidiary.
“That is the bad news” stated Mr Zahra. “The good news is that we have found a solution to restore the company’s ability to distribute dividends”.
A company statement said: “As contemplated in the Companies Act, the solution to set off the accumulated losses against the issued share capital and share premium account of the company was accepted with a resounding ‘yes’ vote.
“The approved resolution not only restored the company’s future ability to pay dividends based on future profits but it ensured there was no impact on the shareholders’ funds, on the net asset value, and on the solvency of the company.”