Middlesea Insurance p.l.c. (MSI) registered an operating profit before tax of Lm3.65 million (€8.5m) for the year ended 31 December 2006.  Mr Mario C. Grech, Executive Chairman of the MSI Group observed that Middlesea’s previous year’s figures had been very favourably impacted by an exceptional net fair value movement in investments of Lm2.2 million (€5.1m), mainly as a result of a sharp rise in the value of domestic equities, against a loss of Lm0.17 million (€0.40m) in 2006..  The other item affecting the comparative results was the favourable run-off in incurred claims of Lm1.10 million (€2.56m) in 2005, compared to Lm0.37 million (€0.86m) in 2006. Other companies within the Group attained encouraging results, reflecting a strong and varied operational portfolio and the continued successful implementation of the Group’s strategy.

The Board of Directors, meeting on Thursday, 26 April 2007, agreed that, in line with the Company’s dividend policy to ensure the sustainable enhancement of its Balance Sheet, they would recommend the payment of a final dividend of 4.5 cents per ordinary share of 25c. This amounts to Lm1,125,000, an increase of 29% over 2005 (exclusive of the special dividend paid in that year on the occasion of the 25^th Anniversary of Middlesea Insurance p.l.c.)

The Executive Chairman recalled the previous year’s message that “future expectations need to be based on a prudent analytical appreciation.  The inherent uncertain nature of insurance business, which is also exposed to cyclical movements in capital markets, presents a continuous challenge in achieving well defined objectives”.

Middlesea’s shareholders’ funds grew by 9% to Lm33.74 million (€78.6m) during 2006..  The net asset value per 25c share increased to Lm1.35. Earnings per share decreased to 12c7.  Total Group assets increased by 9% to Lm118.2 million (€275.3m). Gross technical reserves remained very strong increasing from last year by over 8% to Lm65.40 million (€152.3m).

The Group’s Gross Written Premium, which included gross premia by the Italian subsidiary, increased by 6.4% to Lm36 million (€83.9m).  The prudent reserving methodology adopted by the Group gave favourable result albeit lower than 2005.  Selective underwriting and a disciplined approach to pricing, coupled with efficient claims handling and strict cost control achieved the satisfactory technical result for the year of Lm2.58 million (€6.0m).

Mr Grech stated that it was encouraging that the Group’s overall business net operating ratio (net of reinsurance but before allocation of investment income) was running at 98%. After taking into consideration investment income it improved to 91%. A return of 9.4% was registered on capital employed and the ratio of net technical reserves to net premiums remained unchanged at 181%. 

International Insurance Management Services (IIMS) continued to face strong competition.  The company offered professional management services to international companies including insurers and reinsurers wishing to register and operate from Malta.  The Group believed that there were distinct opportunities in this market and continued with its endeavours to increase the portfolio of clients. The company pursued its policy to invest in the professional development of its most important asset - a professional work force that satisfied clients’ expectations.

The Group’s total investments (excluding its share in MSV) amounted to Lm73.4 million (€171.0m) at the end of 2006 and generated an income of Lm2.55 million (€5.9m) during the year.

Middlesea’s associate, Middlesea Valletta Life Assurance Company Ltd (MSV), contributed positively to the Group’s overall result with a share of profit after tax of Lm1.49 million (€3.47m).  The demand for life assurance and investment related products in Malta increased substantially, as evidenced by the take up of the various products offered by MSV.  The company continued to experience a strong demand for savings products with the Euro Capital Guarantee Bond Fund and the MSV Single Premium Plan being the largest contributors to the total business written by the company.  This amounted to Lm50.4 million (€117.4 m).

The Group maintained its presence in Gibraltar and was seeking further growth over the short to medium term. Mr Grech stated that the strategy of the Group was to continue moving towards achieving a greater territorial spread, having a better mix of business and varied distribution channels, as well as to diversify into non-risk insurance operations.  The spread was evidenced by the increased business generated overseas which represented 68% of total general business.  Contracts concluded in Italy and Sicily represented 64% of general business.

The Group sought to expand further in the Italian market via its associate, MSV.  A development which has occurred this year (2007) was that the company was authorized by the MFSA to carry on long term business under the provisions of freedom to provide services in Italy.  Mr Grech said that the Group remained committed to expanding outside Malta’s shores, whilst at the same time taking cognizance of risks that can emerge from such ventures.

The Executive Chairman said that Middlesea remained faithful to the values that have defined the Company since its inception and, were articulated in 2007 in the revised and focused Mission Statement and Business Philosophy. These contained the fundamental principles and rules of conduct that governed the Group’s relations with the various parties with which it interacted in conducting its business.  Such principles were aimed at protecting the interests of the individual parties and all stakeholders, and constituted an integral part of the strategy of the Group.

Mr Grech concluded his comments as follows:

“Middlesea seeks to increase client satisfaction and to become the preferred company in our industry.  Being “preferred” means being chosen by clients on the basis of our ability to differentiate ourselves from the competition through the quality of our advice and service, as well as through product innovation and the proximity of our distribution channels to clients.  .

As direct insurers, we follow the fortunes of the jurisdictions in which we operate.  The past will continue to serve us well in our endeavours to meet future challenges and opportunities successfully.  I am confident of our collective ability to retain the leading role in the Maltese insurance sector.”

Middlesea Group is composed of Middlesea Insurance plc, Progress Assicurazioni SpA, Middlesea Valletta Life Assurance Co. Ltd, International Insurance Management Services Ltd, Growth Investments Ltd and Malta International Training Centre Ltd all of which are licensed and regulated by their respective      Authorities.    COM260407C