Mario C. Grech, Chairman of the Middlesea Group, announced an increase of 64% in pre-tax profit for the half year ended 30 June 2004 when compared to the results obtained for the corresponding period in 2003.  The Group's total profit on ordinary activities before tax amounted to Lm1.27 million.

The first half of 2004 was a successful period for Middlesea with operating results improving steadily. The Group's strategy for growth in the primary insurance market through a controlled expansion programme in the Euro-med region was evidenced by the continued increase of 11.4% registered in the gross premiums written, locally and overseas, of Lm 19.1 million. The Company implemented an enhanced pricing policy together with stricter underwriting guidelines that resulted in an improved technical underwriting result for the period. The positive effect of the new underwriting measures was especially seen in the motor class of business that overall recorded a net underwriting profit, reflecting a significant improvement over the loss incurred last year. The low incidence of large losses together with the stable financial and capital markets provided for a favourable environment in which all operational areas of Middlesea performed well.

The Group's profit from Middlesea Valletta Life Assurance Co. Ltd (MSV), the specialist life company of the Group, was Lm371,110 (June 2003 - Lm566,532). MSV registered further growth of 25% in the total premium written to reach Lm15.1 million for the six month period. After a further strengthening of the Life Fund by 13.2%, which, based on an interim valuation carried out by the company's independent actuaries has now reached Lm136.8 million, the Group's share of the surplus attributable to shareholders was Lm0.37 million. Total assets increased by 12.8% to Lm160.2 million.

The Group's strategy of expansion in overseas primary markets through its investment in the Italian subsidiary Progress Assicurazioni SpA continued to impact favourably on the Group's results. This company registered a 9% increase in premiums, which totaled Lm11.5 million. This represented 60% of the Group's total turnover from annual business thereby underlining the importance of this subsidiary. Progress Assicurazioni SpA contributed a net profit of Lm0.24 million before taxation but after minority interest (June 2003 - Lm0.12 million).

The continued recovery of the local and international capital markets positively affected the investments held by the Group. The capital appreciation of group investments transferred directly to shareholders funds was Lm0.18 million. The Group continued to monitor the movements in the capital markets and more specifically the market values of each individual equity investment held. With this in mind, as at June 2004 a further impairment of Lm0.09 million was charged to the profit and loss account. The total investment income of the Group after this charge was Lm0.65 million.

The Group's balance sheet was further strengthened in the first half year when total assets increased by 5% to Lm98.4 million. The earnings per 50c share increased to 6c9 for the half year. The retained profits after taxation generated during the period, the overall improvement in the market value of investments and the Group's share of the increase in the value of in-force business of Middlesea Valletta Life positively affected the net asset value which increased by 6c to Lm1.81 per share.

Mario C. Grech stated that,

Following actions taken over recent years, we now have a balanced mix in our portfolio of business coupled with a strong market position. As with all of our operations, we will continue to explore ways to strengthen our balance sheet and enhance the value of the Group. While the process will continue to be challenging, we have made significant progress in our strategy both in general and long term business delivering sustainable and acceptable results.

This has been an important six months for the Group with good results across all of our ongoing operations Our strong balance sheet, when combined with our successful programmes for new product focused on market developments and on-going operational improvements, provides a solid platform for future growth.

These results, achieved in a challenging period, show that Middlesea's fundamental business model is robust and puts it in a strong position to deliver the profitable growth which underpins shareholder value.

The Board of Directors did not propose to pay an interim dividend in respect of the first six months of operations ended 30 June 2004 (30 June 2003 - Nil).

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

COM 240904