Mapfre Middlesea has signed an agreement to acquire Allcare Insurance, a twist in a tale which has been brewing for years.
For over 25 years, Allcare was the main agent for Middlesea Insurance, as it then was. In 2012, it got a licence to act as an insurance company itself, so Middlesea lost 18 per cent of its non-life portfolio. By the first half of 2013, it had already reported a drop in premiums of 11.8 per cent.
Mapfre Middlesea president and CEO Alfredo Munoz said the intention was to “buy the business, not the company itself” to be integrated into Mapfre Middlesea but the price was not revealed. The brokerage company was not part of the deal and no rebranding or capital injection would be required, he told Times of Malta.
Mapfre Middlesea’s shares gained 7.7 per cent after the announcement.
Allcare is owned by La Laguna – belonging to Eric Schembri’s family – (55 per cent), the Tumas Group (25 per cent) and Global Management Services – belonging to Alfred Mifsud – (20 per cent).
The company made a loss of €551,476 in 2013, notwithstanding premiums of €6.8 million. As the losses eroded the capital requirements of €3.7 million, the shareholders – the Schembris forking out proportionately more – had to put more money into the company as subordinated loans. An injection of €500,000 was made in February 2014, followed by €500,000 in December 2014 and a further €300,000 in April 2015.
Mapfre Middlesea knows our portfolio and they made an offer we found interesting
Allcare managing director Simon Schembri said interested investors had approached the company since 2013 but it was not looking to sell at the time.
“However, a number of things changed. George Fenech, of Tumas Group, passed away; Alfred Mifsud was made deputy governor of the Central Bank of Malta; and my father, Eric, is not able to take as active a role as he used to. Mapfre Middlesea knows our portfolio and they made an offer we found interesting.”
Dr Schembri said that gross premiums reached €8.9 million by the end of 2014.
Allcare’s headquarters in Msida will be retained but its branches in Naxxar, Birkirkara and Mosta are shared with Crystal Finance, in which Eric Schembri holds a 45 per cent stake.
About 50 staff are employed by Allcare and another 30 doing shared duties for Crystal and AIB. Dr Schembri said every effort would be made to ensure that all staff would be retained “although there could be some lay-offs”.
The acquisition agreement signed requires the authorisation of the regulatory authorities.
Allcare has a market share of seven per cent and Mapfre Middlesea of 22 per cent.