Middlesea Insurance p.l.c. held its Twenty Sixth Annual General Meeting at the Hilton Conference Centre on Thursday, 28 June 2007.

In line with Middlesea’s dividend policy of enhancing its balance sheet and ensuring future sustainability, the Meeting approved a dividend distribution of a final dividend of 4.5 cents per 25c share amounting to Lm1,125,000, an increase of 29% over last year.  This amount will again be paid from the company’s untaxed account and will therefore be subject to a final withholding tax of 15% on distribution.  This was the 23^rd consecutive year that a dividend was declared and distributed.

Middlesea’s Executive Chairman, Mario C. Grech said that in his address last year to shareholders, whilst reporting on the extraordinary results registered in 2005, he had also cautioned that future expectations needed to be based on a prudent analytical appreciation.  The inherent uncertain nature of insurance risk business, which is also exposed to cyclical movements in capital markets, presented a continuous challenge in achieving well defined objectives.  The overall group result for the year ended 31 December 2006 was a profit before tax of Lm3.6 million.  When one considered that the Group’s result in 2005 had been favourably impacted by an exceptional net fair value movement in investments of Lm2.2 million, mainly as a result of a sharp rise in the value of domestic equities and the favourable run-off in incurred claims of Lm1.1 million, it was reassuring to note the improvement coming through in the Group Companies’ underlying performance reflecting a strong and varied operational portfolio and the continued successful implementation of the Group’s strategy.

Addressing the AGM, Mr Grech reviewed the operations of the companies within the Middlesea Group during 2006.  The Group’s Gross Written Premium in general business increased by 6.4% over the preceding year reaching Lm36 million with Motor insurance representing 72% of total premium written.  This result was in the direction of the Group’s policy to achieve a balanced portfolio mix between motor and other classes of business; an objective which still had to be achieved.

The holding company, Middlesea Insurance plc, produced positive net underwriting results for all classes, except for liability and health.  Selective underwriting, a disciplined approach to pricing, efficient claims handling and strict cost control, allowed Middlesea to achieve a satisfactory technical result of Lm1.6 million for the year.  The subsidiary company, Progress Assicurazioni SpA, following  a strict pricing policy complemented by the strengthening of reserves, the motor class of business, again produced positive results.  The liability class of business both in Malta and overseas should be seen in the light of increasing court awards on injuries coupled with the inflationary effect caused by prolonged periods for the settlement of claims and the resultant strengthening of reserves.  Progress registered a technical result of Lm1.1 million.

Membership of the European Union triggered considerable interest from international companies looking at Malta as a financial centre to register in and operate from.  International Insurance Management Services, though facing strong foreign competition, was committed to offering professional management services to international companies, including insurers, reinsurers and captives.  Middlesea Group believed that there were distinct opportunities in this market and continued with our endeavours to increase the portfolio of third party business. 

In 2006, Middlesea’s associate Middlesea Valletta Life Assurance Company (MSV) persevered in its successful operations through its multi-channel distribution network.  Demand for life assurance and investment related products in Malta increased substantially, as evidenced by the take up of various products offered by MSV.  During 2006 the Company launched the 2^nd tranche of its Capital Guaranteed products, through the MSV Capital Guaranteed Bond.  The tranche was fully subscribed.  MSV continued to experience a strong demand for savings products, with the MSV Single Premium Plan being a large contributor to the total business written by the company, at Lm50.4 million an increase of 28% over last year.

The Group, besides maintaining its presence in Gibraltar and seeking further growth over the medium term, is also seeking to expand further in the Italian market through Middlesea Valletta Life Assurance Co.  During 2007 the company was authorised by the MFSA to carry on long term business under the provisions of freedom to provide services in Italy.  The Group remains committed to expanding outside the Maltese shores, whilst at the same time taking cognizance of challenges that would emerge from such ventures.

During 2006, Middlesea remained faithful to the values that have defined the Company since its inception.  The Board revisited both the Mission Statement and the Business Philosophy to focus on the Group’s future direction.  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 stakeholders, and thus constitute an integral part of the strategy of the Group.

Mr Grech concluded:

In the face of continued rating pressure, 2006 saw Middlesea looking at operational reorganisation and business model refinements.  Substantial investment was made locally in the new IT underwriting system and we considered this implementation as a means of increasing client satisfaction, becoming the preferred company in our industry.  Being “preferred” meant being chosen by clients on the basis of Middlesea’s ability to differentiate from the competition through the quality of advice and service, as well as through product innovation and the proximity of distribution channels to clients. Underlying this was an internal reorganisation that produced enhanced customer service leading to more opportunities for management development. 

Middlesea’s direction has been based on a fundamental clear strategy of providing a broad range of products through multi-channel distribution, applying technically correct pricing, ensuring adequate reserving, pursuing growth within the projected ultimate territorial spread and portfolio mix, together with an absolute resolve to succeed.  This is the generic direction adopted at Group level.  Understandably, each company within the Group would then adapt and adopt its strategy depending on the market in which it is operating.

The Maltese market has limitations and therefore one has to develop a strategy for overseas expansion in primary markets with the potential of seeking and identifying international partners who offer the required synergy to realise further expansion with particular emphasis on the Euro-Mediterranean region.  To our mind, the local and international operating environment will remain highly competitive even more so now with the ease of cross border transactions complemented with the freedom of services within the EU.  Therefore, our intention was to continue seeking opportunities, both those that present themselves because of our brand name as well as those we actively seek to pursue and within the Euro Med region.  As direct insurers, we follow the fortunes of the jurisdictions in which we operate.  The past continues 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.

The following members were appointed by the various large shareholders on the Board of Directors until the Twenty Seventh Annual General Meeting namely Mr R.E.D. Chalmers, Mr T. Depasquale, Dr J.C. Grech, Mr A. Jimenez Herradon, Dr M. Sparberg, Mr D. Sugranyes Bickel and Mr J.F.X. Zahra.

Pursuant to the Articles of Association, since the number of nominations did not exceed the vacancies, the following nominees were automatically appointed Directors, namely Mr G. Bonnici, Dr E. Caruana Demajo, Mr A. Corsi, Mr G. Debono Grech, Mr V. Galea Salomone,and Mr L. Spiteri.

Mr Mario C. Grech, was re-elected Director of the Company until the conclusion of the Twenty Seventh Annual General Meeting pursuant to the Company’s Articles of Association.

The Annual General Meeting passed an Extraordinary Resolution authorising the Company to buy back its own shares in certain specific circumstances in order to contribute to a stable market.

Immediately after the General Meeting, the new Board of Directors appointed Mr M.C. Grech as Executive Chairman and Mr R.E.D. Chalmers as Deputy Chairman.

Middlesea Group is comprised of Middlesea Insurance p.l.c., Middlesea Valletta Life Assurance Company Ltd, International Insurance Management Services Ltd, Malta International Training Centre, Growth Investments Ltd and Progress Assicurazioni S.p.A. which are licensed by their respective authorities COM280607A.