Middlesea Insurance p.l.c. held its Twenty Seventh Annual General Meeting (AGM) at the Hilton Conference Centre on Wednesday 25 June 2008.

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 €0.1281 (Lm0.05c5) per €0.582343 (25c) share amounting to €3,202,500 (Lm1,375,000), an increase of 22% over last year.  This was the 24^th consecutive year that a dividend was declared and distributed.

In his address Mr Mario C. Grech, Middlesea’s Executive Chairman, explained to shareholders that during the previous year’s AGM he had reported satisfactory overall results but at the same time he had cautioned that future expectations needed to be based on a prudent analytical appreciation.  The inherent uncertain nature of insurance risk business, which was reflected in the cyclical movements both in the investment capital and technical operations, presented a continuous challenge in achieving well defined objectives. The overall group result for the year ended 31 December 2007 was a profit before tax of €9.3 million (Lm4.0 million) that reflected an increase of 9.0% over the corresponding period in 2006. 

Addressing the AGM, Mr Grech reviewed the operations of the companies within the Middlesea Group during 2007, and indicated that the first six months of 2008 will give negative results.  Mr Grech said “The Group’s Gross Written Premium in general business increased by over 24% over the preceding year reaching €104.2 million (Lm44.7 million). The Group’s prudent investment policy once again benefited the Group”. 

The holding company, Middlesea Insurance plc, registered a profit before tax of €6.97 million (Lm3.0 million) a growth of almost 8% over the profitability registered in 2006. The Italian subsidiary company, Progress Assicurazioni SpA, strengthened its position in business growth and coupled with its continued strict pricing policy booked a gross premium of €71.28 million (Lm30.6 million) that reflected an increase of 35% over the previous year. In February 2007, a new obligatory procedure for claims handling called Direct Indemnification (“Risarcimento Diretto”) was introduced by regulation. This unusual system imposed on the vechile insurance market, entitles injured parties to be indemnified by their own insurer even if they are only covered on a third party basis. This system of fixed sum recovery exposes insurers to potential variability especially in relatively small portfolios of business.

 Membership of the European Union continued to trigger considerable interest from international companies that looked at Malta as a financial centre from which they can register and operate. The subsidiary company, International Insurance Management Services (IIMS), though facing strong foreign competition, was committed to offering professional management services to international companies, including insurers, reinsurers and captives. 

In 2007, Middlesea’s associate Middlesea Valletta Life Assurance Company (MSV) persevered in its successful operations through its distribution network with total business written by the Company amounting to €135.90 million (Lm58.34 million), an increase of 16% over the previous year. The demand for life assurance and investment related products in Malta increased substantially and MSV registered a profit before tax of €7.24 million (Lm3.11 million) that amounted to an increase of almost 11% over the previous year. However the higher incidence of income tax expense reduced this improvement and consequently MSV share to this year’s profit decreased to €2.63 million (Lm1.13 million).

During 2007, Middlesea remained faithful to the values that have defined the Company since its inception.  The Mission Statement and Business Philosophy were key elements in focusing the Group’s future direction. These entrenched principles were aimed at protecting the interests of individual parties and stakeholders thus constituting an integral part of the Group’s strategy.

Mr Grech said:

“In the face of continued rating pressure, 2007 saw Middlesea looking at operational reorganisation and business model refinements.  Substantial investment was made locally in the new IT underwriting system with the implementation of new state-of-the-art software packages as a means to obtain real time information.”

In conclusion Mr Grech highlighted the turbulence in the financial markets that will have a negative effect on the company and said:

Our medium term strategy remains constant in seeking and identifying international partners that offer the required synergies to realise further overseas expansion with a total focus on primary insurance markets. In addition MSI is ready for opportunities that will present themselves since we firmly believe in our collective ability to sustain our leadership in the market. Our commitment to our shareholders is to maximise the value of their investment over time.

During 2008, the Board of Directors will be re-visiting the Group’s structure and the Balance Sheet strength of all companies within the Middlesea Group. This will enhance clarity, ensure Group Board focus on all components, separate Board focus on Middlesea Group’s needs, place all operating companies at par, make shareholding reporting easier, enhance segregation for regulatory, risk and capital rationalising purposes and add business flexibility for strategic partners. This will give the Group the necessary infrastructure to enable it to face future challenges.

The past will continue to serve us well in our endeavours to meet future challenges and opportunities successfully. I continue to believe in our collective ability to retain the leading role in the Maltese insurance sector and at the same time seek new opportunities overseas.

The following members were appointed by the various large shareholders on the Board of Directors until the Twenty Eighth Annual General Meeting namely Mr R.E.D. Chalmers, Mr T. Depasquale, Dr J.C. Grech, Mr A. Jimenez Herradon, Dr M. Sparberg, Mr J. Fernàndes-Cid 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 Eighth Annual General Meeting pursuant to the Company’s Articles of Association.

The Annual General Meeting passed two Extraordinary Resolutions authorising the Company to buy back its own shares in certain specific circumstances in order to contribute to a stable market and to renominalise and increase the share capital of the company from €0.582343 (25c) share to €0.60 per share through the capitalisation of retained profits.

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, Growth Investments Ltd and Progress Assicurazioni S.p.A. which are licensed by their respective authorities.