The positive performance and better than expected results and profits registered by the Malta operations of Middlesea Group in 2009 were not enough to compensate for the write off of the full investment in the Italian subsidiary Progress Assicurazioni SpA.  This was reported by Mr Joseph F.X. Zahra, Non Executive Chairman of Middlesea Insurance plc since the beginning of the year 2010, during the 29^th Annual General Meeting of the shareholders of Middlesea Insurance plc held on Wednesday 9 June 2010.  “Whereas the domestic operations of the Group reported a more than satisfactory profit of €8.7 million, representing a significant improvement over previous year losses of €3million, i.e. an improvement of €11 million, the full write off of €63 million taken on the investment in Progress Assicurazioni SpA, means that the overall Group loss for the year amounts to €55 million”. 

The Chairman stated that the write-off of Progress and the subsequent losses imply that it would not be prudent for the Board of Directors to declare a dividend.  This is only the second time that Middlesea Insurance plc had to pass on declaring a dividend following a positive twenty five year history of year on year dividend payouts.  “That is the bad news.  The good news is that Middlesea is looking at the future with renewed vigour and optimism”.

Despite the write off of the Italian operation, the fundamental strengths of the core operations and the balance sheet of Middlesea Insurance plc remain intact. Notwithstanding tough economic conditions and the difficulties that were encountered in Italy, healthy profits were registered from local operations and Middlesea remains a financially strong company.  Indeed the Group balance sheet shows that the shareholders’ equity as at 31 December 2009 stood at over €48 million.  This makes Middlesea the highest capitalized insurance company in Malta by far.

The Chairman referred to the company announcement in May which reported that during the first quarter of the current financial year 2010, unaudited results indicated satisfactory operating profits for Middlesea Insurance plc and its associate company Middlesea Valletta Life Assurance Co Ltd (MSV). The Group registered a profit before taxation of €2.8 million for the period, as compared to a loss of €5.3 million during the first quarter of the previous year. MSV also had an encouraging first quarter, with profits after taxation for the period of €2.0 million (March 2009: loss of €3.3 million), 50% of which have been accounted for in the Group results.   

The balance sheet of Middlesea Insurance plc was further strengthened during the period under consideration by the profits generated. Furthermore, following the strains imposed by Progress, Middlesea Insurance plc also concluded the implementation of a number of measures which restored the regulatory capital position of the company to the level required by the MFSA.

“We are confident on the way forward for the company”, stated Mr Zahra.  “We are confident that through hard and dedicated work of our people, product innovation and improved client focus we will not only create value to our customers but also drive the earnings power to achieve attractive returns in the medium and long term”.  “Over the course of my first few months as Chairman, I have been impressed by the strength of the Company’s business capacity and the respect and reputation carried by the Middlesea brand”, continued Mr Zahra.  “But nothing has impressed me more than observing first hand the skilled and dedicated people base of this company.  It is only because of their hard work, experience and depth of knowledge that we have succeeded in stabilizing our business and setting the strategies for moving forward.”

Mr Zahra highlighted that clear focussed strategies have already been set for each local operation based on 3 main business building blocks: “Our Customers – driven by a passion to deliver quality, innovative products and services with customer centricity in the business decision making process ;  Our People – aimed at empowering and developing a trained and motivated workforce. We already have a very good technical and professional team - we will continue to invest further in their training and we will reward and retain talent;  Technical and business efficiency – spurred by the objective of ensuring technical discipline and operational effectiveness to ensure security and protection to our customers and sustainable returns to our shareholders”.  Mr Zahra underlined that “our emphasis on IT and the support from our institutional shareholders will be catalyst in boosting technical and business efficiency”.

Mr Zahra stated that “the vision and strategies of Middlesea are geared to improve Middlesea’s leadership status in the local market.  Looking forward, our underwriting performance and discipline, our ability to innovate, focus on our clients, our people and our capacity to conduct large transactions are the strengths on which we will enhance our competitive advantage, build long term sustainable success and achieve our strategic objectives”. 

Mr Zahra also made reference to the associate company Middlesea Valletta Life Assurance Co Ltd (MSV) which is a 50/50% joint venture with Bank of Valletta.   “He stressed that “MSV is geared to maintain its leadership status in Life business notwithstanding competition from market players with international repute. The company has shareholders’ equity in excess of €100 million; Gross Premiums written in FY 2009 totaled €122 million, and it has a gross balance sheet value that has reached the €1 billion mark. With over 80,000 customers, Middlesea Valletta is clearly not only Malta’s leading provider of life insurance, long term savings and retirement planning, but is also one of the largest enterprises on the island.  Business Premiums generated over the initial months of 2010 have also been very encouraging, as was the result for the first quarter”.

In conclusion Mr Zahra thanked the shareholders for their trust and loyalty.  In particular he expressed his gratitude for the technical, financial and professional support offered by the three institutional shareholders, Bank of Valletta, Mapfre Internacional and Munich Re referring to them as excellent partners and significant assets.  Mr Zahra also made strong reference to and thanked the wide and loyal customer base of Middlesea which he said was evidenced by the level of premiums written and the extent of year on year renewals. 

The Board of Directors elected during the Extraordinary General Meeting of 16 March 2010 was reconfirmed by the shareholders during the Annual General Meeting.  Mr Joseph F.X. Zahra remained at the helm as Non Executive Chairman, assisted by a team of directors which carries a good mix of professional expertise and experience in local and international markets.  Mr Zahra is aided on the Board by the following team of directors: Mr Roderick Chalmers, Mr Lino Spiteri, Mr Tonio Depasquale, Mr Gaston Debono Grech, Mr Paul Testaferrata Moroni Viani, Dr Michael Sparberg, Mr Andres Jimenez Herradon, Mr Javier Fernàndez-Cid and Mr Pedro Lopez.  The latter holds the post of Executive Director.  

Middlesea Insurance p.l.c. (C-5553) is authorised by the Malta Financial Services Authority to carry on both Long Term and General Business under the Insurance Business Act, 1998. COM 080610 448