Middlesea Insurance plc has appointed Joseph F. X. Zahra as its new non-executive chairman, taking over from Mario Grech whose contract expires today.

The company's board of directors said yesterday Mr Grech had chosen not to renew his executive position within the company, saying: "I retire from Middlesea with nothing but goodwill for the group and its future."

In an interview with The Sunday Times recently, Mr Grech said that Progress Assicurazioni Spa, Middlesea's subsidiary in Italy, had made a loss of €29 million up to the third quarter of this year. However, he expected 2010 figures to improve, saying "the haemorrhage of our Italian subsidiary is over..."

Middlesea started as a reinsurance company in 1981 and in 1994 set up a specialist life company, Middlesea Valletta Life Assurance Company Ltd, which now boasts €1 billion in assets.

In 2000, it acquired 51 per cent of Progress Assicurazioni Spa in view of the liberalisation of the motor insurance sector in Italy. The Italian venture was initially worthwhile but in February 2007 the so-called Bersani law came into effect in Italy, introducing direct settlement of motor accident claims.

According to Mr Grech, its implementation was flawed, because the driver who was not at fault had to resort to his own insurance, which would then be able to recover just part of the damages. This change in the law alone impacted Progress Assicurazioni to the tune of €16 million.

The board said Mr Grech had promised his utmost to ensure a smooth transition and that he would remain available to assist in an advisory capacity as may be mutually agreed in the future.

Mr Grech was thanked for his 25 years of "outstanding service" to the Middlesea Group. It was noted that he was instrumental in building up Middlesea into Malta's leading insurance group, his name becoming synonymous with the business, education and training of insurance in Malta.

The board also announced its intention to call an extraordinary general meeting early next year to propose further amendments to the company's Memorandum and Articles of Association "to better reflect the resulting shareholding structure and to implement certain changes in the governance of the Group".