Middlesea Valetta Life Assurance Co. Ltd (MSV) has registered a profit before tax of €7.24 million (Lm3.11 million) for the year ended December 31, 2007. This represents an increase of 10 per cent over the previous year. The profit after tax amounted to €5.26 million (Lm2.26 million) compared to €6.96 million (Lm2.99 million) recorded in 2006. The reduction of 24 per cent in the after-tax profit is due to the fact that the 2006 change was stated net of a tax credit adjustment relating to prior years. Business written increased by 16 per cent from €117.32 million (Lm50.36 million) in 2006 to €135.91 million (Lm58.35 million) in 2007, while the company's total assets increased by 16 per cent from €717.37 million (Lm307.97 million) in 2006 to €832.25 million (Lm357.29 million) at the end of 2007.
MSV chairman Roderick Chalmers said: "In 2007, MSV produced another satisfactory performance in challenging circumstances. Through a combination of a strong brand, financial strength, product breadth and distribution reach, MSV maintained its position as the market leader in the individual protection and long-term savings market in Malta. The Bancassurance partnership with Bank of Valletta plc continued to perform strongly and remains MSV's most important channel of distribution."
Mr Chalmers added: "The AGM approved the payment of a final dividend of €4.81 million (Lm2.06 million) net of tax, which dividend has been reinvested by shareholders partly as consideration for the re-nominalisation of shares to the new nominal and paid-up value of €2.50 each share (necessitated by the conversion to euro), and partly as consideration for a new share issue of 900,000 ordinary shares of €2.50 per share. Consequently, the issued and fully paid-up capital of MSV was increased from €35 million to €39.75 million."
MSV's board approved a resolution whereby differential rates of reversionary bonuses were declared in respect of with-profits plans held with MSV for the year ending December 31, 2007.
For the third consecutive year, the board also approved the declaration of a terminal bonus in respect of comprehensive life plan (single and regular premium) policies that have been in force for more than 10 years.
On the 'old series' endowment and whole life policies, a reversionary bonus of 2.2 per cent of the basic sum assured plus bonuses was declared.
The board also approved a reversionary bonus of 3.45 per cent on those secure growth policies which formed part of the portfolio of business transferred to MSV from Assicurazioni Generali SpA during 2000.
MSC deputy chairman and Middlesea Group executive chairman Mario C. Grech said: "In the light of the volatility in global markets during 2007, MSV's prudent investment strategy and conservatively oriented and diversified investment portfolio demonstrated a strong resilience in this tumultuous market. The investment strategy of MSV is to hold a diversified range of assets to help reduce the investment risk that arises from holding any single type of asset. Our asset and currency mix, geographical spread and asset quality mean that we were well placed to capture an upturn in investment markets.
"MSV's prudent smoothing policy enabled the board to maintain reversionary bonuses at the same level of 2006. Smoothing entails establishing reserves from certain favourable years to compensate for unfavourable investment returns in other years during the policy term so that bonuses declared in any one year do not reflect underlying investment returns in that year alone.
"In the light of the current high volatility in the capital markets, the investment return is expected to fluctuate further in 2008. Fair value movements in investment returns impinge directly on the rates of bonuses declared by MSV. Reversionary bonuses are expected to vary over the lifetime of the policy."
Mr Grech pointed out that although for the third consecutive year MSV declared a terminal bonus in respect of its comprehensive life plan portfolio, policyholders should be aware that future terminal bonus rates are likely to be volatile and very dependent on the investment performance of the company.