The Middlesea Group has reported a post tax loss of €1.61 million for the first six months of 2008 as compared to a profit of €2.84 million in 2007.
It said that the positive technical results achieved up to June were outweighed by the significant unfavourable fair value movements experienced in the investment portfolios.
Middlesea Group Executive Chairman Mario C. Grech said that technical insurance results before investment income showed positive movements in the group's operations. But the turmoil experienced in the capital markets, both locally and internationally, during the first six months of this year had a significant negative impact on the half yearly results.
The group said that in line with its accounting policies, fair value movements on the equity and bond portfolios were taken directly to the profit and loss account, making a direct impact on the positive technical result due to the cyclical nature of the financial markets. The fair value losses on the investment portfolio amounted to €5.9 million, as compared to a marginal gain of €0.16 million in the previous year.
Middlesea Insurance plc registered an increase in turnover of six percent in business written in Malta and Gibraltar during this reporting period as compared to 2007. Before the impact of the investment return, Middlesea Insurance plc registered a positive technical result of €1.44 million as compared to €0.99 million in 2007. Further strengthening was registered in the gross technical reserves of the company which increased by 8.5 percent to €53 million during the six month period.
The group said that Progress Assicurazioni S.p.A., continued to pursue its strategy of growth in the Italian market with premiums written totalling €44.8 million, an increase of 33 percent over 2007. The contribution of this subsidiary towards the result after tax of the group also reflected the negative impact of the international financial markets which reduced the subsidiary’s performance to a loss of €0.52 million from a profit of €1.28 million in June 2007.
The turbulence in the financial markets during the first six months of 2008 had an adverse effect on investors’ risk appetite, which in turn impacted sales of savings and investment products by life insurance companies. As a result Middlesea Valletta Life Assurance, the associate company, registered a decrease in turnover with business written amounting to €59.7 million during the reporting period as compared to €67.6 million in the previous year. With an investment portfolio of €671 million, the investment return of this company reflected the negative performance experienced in the financial markets.
Nevertheless the associate company’s contribution towards the group’s result for the six months up to June 30 remained positive, at €0.41 million, as compared to €0.9 million for the same period last year.