Middlesea Insurance plc held its 23rd annual general meeting at the Hilton conference Centre on Friday.
Consonant with the company's dividend policy in the context of the balance sheet, contingencies and sustainability, the meeting approved a dividend distribution of Lm625,000. This dividend would be subject to a withholding tax of 15% on distribution.
Middlesea chairman Mario C. Grech said that the overall group result was a profit after tax of Lm1.07 million for the year ended December 31, 2003. When one considered that the group's result in 2002 had benefited from a one-off item of Lm320,000 from unutilised tax losses inherited at Progress, the company's subsidiary in Italy, while 2003 earnings were negatively affected by the heavy claims arising from the storm in September, it was reassuring to note the improvement coming through in the group's underlying performance.
Mr Grech reviewed the operations of the companies within the Middlesea Group. Middlesea Insurance plc, the holding company, recorded an increase in Gross Written Premiums to Lm13.92 million. The net underwriting result of the company's domestic operations, after allocation of expenditure and apportionment of investment income, but before the effect of the equalisation reserve, was a loss of Lm0.63 million, while that of its Gibraltar branch was a profit of Lm50,000.
Group Life business performed positively, having contributed a profit of Lm0.21 million. A commitment to applying the stated strategy clearly and consistently helped to achieve the main operational targets notwithstanding the heavy impact of claims due to the September 15 storm.
Motor insurance remained the largest class of non-life business in the company's portfolio and was the classic high-volume, low margin and difficult class of insurance business, mainly due to inadequate pricing and high claims ratio.
Furthermore there were the implications of the introduction of the Fourth Motor insurance directive to contract law and jurisdiction, with the ultimate increased onus for third party liability.
The September 15 storm impacted heavily on the result attained from the Property business necessitating a review of the current market pricing on Property business to reflect the unfavourable terms and high costs of reinsurance with particular reference to the catastrophe XL protection.
The gross underwriting result of Health, Liability, Accident and Group Life generated a profit. Middlesea was determined to achieve acceptable results especially from the motor business through selective underwriting commensurate with adequate pricing and notwithstanding the high level of competition.
Progress Assicurazioni SpA, the group member which operates in Italy, was an important contributor to the technical operations.
The importance of the investment in this company was reflected in the year-to-year increase in Gross Written Premiums of 18% to Lm21.9 million generated primarily through a network of 111 agents operating in Sardinia, Lazio, Campania, Puglia, Calabria and Sicily.
This company continued with its planned strategy of applying technically correct pricing, ensuring adequate reserving and pursuing growth with a territorial spread and portfolio mix between motor and general business.
Total pre-tax profit was Lm0.9 million resulting in a contribution of a profit after tax and minority interest of Lm0.31 million to the Middlesea Group. During the year the shareholders agreed to increase the company's capital by €6 million to €15 million by the end of 2004.
Middlesea Valletta Life Assurance Company, also contributed positively to the Group's result with the share of profit after tax increasing to Lm0.65 million.
The demand for life assurance shifted positively and MSV registered an improvement in sales, especially from the bancassurance distribution reflecting an increased customer confidence.
The Gross Written Premiums increased to Lm22 million. The Life Fund increased to Lm120.8 million, while shareholders' funds increased to Lm20 million. The benefit of this investment was reflected in the increase of the embedded value (the discounted value of projected future profits on secured business) from Lm10.8 million to Lm11.9 million.
The board of directors of this company decided to increase the share capital of the company to sustain its projected growth through a bonus share issue of Lm1.3 million increasing the capital to Lm7.6 million.
International Insurance Management Services Ltd was a specialist insurance management company that continued to develop its wide range of services in risk management and the formation and management of captive insurance and reinsurance companies.
Its insurance, reinsurance, financial and legal expertise placed the company in a leading position. In this respect it was able to offer the full breadth of management and administrative services to prospective international clients who chose to establish an insurance/reinsurance company operating from Malta and benefiting from the country's passporting rights to other EU countries.
During 2003, this company produced a profit after taxation of Lm0.24 million. It was expected that the services provided by this company would be actively marketed further outside the Group thereby creating a source of additional income from third party business. The Group's total investments excluding its share in MSV amounted to Lm52.7 million. The Group's investment income (excluding unrealised capital gains and share of MSV profits) after investment expense and charges amounted to Lm1.65 million.
During the year, the Middlesea Group continued to benefit following the adoption of corporate governance principles through the various appointed Group committees as shown in the chairman's statement.
Members of the board actively participated on these committees with the assistance, when required, of the executive members of management. This underscored the Group's recognition of traditional values which became a permanent part of our structure to ensure best corporate practice.
During 2004 Middlesea would be marking the 10th anniversary of the listing of Middlesea Insurance plc shares on the Malta Stock Exchange and the setting up of Middlesea Valletta Life Assurance Co. Ltd. As a consequence, Mr Grech announced the launch of an additional benefit that would be given to individual shareholders in the form of a Lm10 voucher redeemable for business transacted with the company.
The following members were appointed on the board of directors:
Mr H. Attard Montalto, Mr J. Camilleri, Mr V. Galea Salamone, Dr J.C. Grech, Mr M.C. Grech, Mr M. Grima, Dr M. Sparberg, Mr F. Xerri de Caro and Mr J.F.X. Zahra.
As a result of the withdrawal of Mr Louis Grech's nomination no election took place. As there were as many nominations as there were vacancies, the following nominees were automatically appointed directors.
Mr G. Bonnici, Dr E. Caruana Demajo, Mr A. Corsi, Mr G. Debono Grech, Mr L. Spiteri and Mr D. Sugranyes-Bickel.
The general meeting passed an Extraordinary Resolution authorisng the company to buy back its own shares.