Middlesea Insurance plc's consolidated profits last year almost doubled, to Lm1.42 million, a marked increase on the profits of Lm0.76 million posted in 2000.
The profits were announced last night during Middlesea's 21st annual general meeting held at the Hilton Malta in St Julian's.
The financial results also showed that earnings per share increased by 90 per cent to 11.4 cents from six cents. However, the net asset value fell to Lm1.64.
The company posted good results for 2001 but Middlesea said its companies within the group were adversely affected by capital markets.
In order to spread the risk in its investment, Middlesea participates in most international capital markets including Malta, applying a strict policy of security liquidity and maximisation of return. All the capital markets experienced a considerable downfall in 2001, it noted.
Middlesea said it was not affected by the September 11 terrorist attacks that had a direct impact on the insurance industry.
Primarily, in September 2000 Middlesea had decided to withdraw its international re-insurance capacity from the London market. Furthermore, as a re-insurer, it excluded the US and Canadian property re-insurance business, unless incidental.
Middlesea chairman Mario Grech told shareholders that last year the company had started to reap the first benefits of the hard work and strategic changes undertaken in previous years and which had strengthened the foundations for future growth.
Middlesea entered 2001 with a number of important objectives. These were mainly the management and spread of risk in primary markets; preserving a balanced approach to growth between various classes of insurances; responding more to customers' needs and strengthening its human resource capital through training and sharing of knowledge.
Based on the board's recommendation, the payment of a gross dividend of 7 cents per 50 cents share was approved. This is equivalent to a return of 14 per cent on the nominal value of each share and 3.02 per cent on the current price on the Stock Exchange as at yesterday.
Mr Grech demonstrated how the success of the adopted strategy was borne out by comparing a few key indicators over the period.
Gross premiums written in general business last year amounted to Lm23.84 million, an increase of 58 per cent over the previous year.
While the main reason for this increase could be attributed to the consolidation of premiums written by Progress Assicurazioni SpA, a significant increase of 19 per cent was also registered in premium written by the holding company.
Middlesea's operation in Italy started to yield profits to the group much earlier than projected.
Mr Grech said the strength of an insurance company rested on the adequacy of capital, the quality of re-insurers and the correct level of reserves.
Middlesea, as any other insurer, depended very much on its re-insurers. Over the last four years, reserves increased from Lm9.1 million to Lm10.35 million.
"The sound state of these reserves has proven to be adequate from year to year. The adequacy of capital has to be continuously viewed in accordance with the volume of its underlying business," he said.