Middlesea Group has registered a 40 per cent increase in net profit before tax to Lm2.15 million (Lm1.54 million in June 2004) for the half year ended 30 June 2005.
Chairman of the Middlesea Group, Mario C. Grech, said all the companies in the group had registered positive performances.
In a statement, Mr Grech said the group continued to enhance the pricing policy, together with stricter underwriting guidelines and a continuous drive to achieve a desirable portfolio business mix.
This resulted in a decrease of 6.6 per cent in premium income; the anticipated reduction coming from Progress Assicurazioni SpA and Gibraltar, though business written locally assisted in mitigating this.
He said the positive effect of this underwriting strategy was reflected in the technical performance (general and group life) with an underwriting profit of Lm1.4 million as compared to Lm1.1 million generated during the same period last year.
The positive returns generated on the group’s investment portfolio, also contributed to the overall improvement in results.
Progress Assicurazioni SpA, the group’s Italian subsidiary, was in the process of consolidating its position by continuing to pursue a strictly technical pricing policy while assessing its agency network against performance criteria, even more so with currently prevailing weaker market conditions.
The company has simultaneously worked on a new development plan which aims to curb the shortfall in business resulting from the application of these policies as well as to create further growth through concentration on identified market segments and products.
The group’s confidence in the Italian subsidiary was further demonstrated in July 2005 when Middlesea Insurance plc accepted an offer to purchase 38.97 per cent of the shares in Progress Assicurazioni held by Corporacion Mapfre Compania Internacional De Reaseguros SA. The Middlesea Group now owns 99.97 per cent of the shares of this Italian subsidiary.
Middlesea Valletta Life, the specialist life associate company of the group, registered a further growth of 21 per cent in the total business written to register Lm18.2 million for this period. An interim valuation carried out by the company’s independent actuaries showed that the Life Fund and other technical provisions were further strengthened by 13.7 per cent to Lm185.4 million.
The group’s share of the surplus attributable to shareholders during the six month period was Lm0.40 million.
Under the IAS 39 revised accounting policies, the group’s profit for the first six months of 2004 was restated upwards from Lm1.02 million to Lm1.20 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 taken directly to the profit and loss account was Lm1.1 million (June 2004 –
Lm 0.01 million), of which Lm 0.75 million (June 2004 – loss Lm0.03 million) was allocated to the technical accounts.
The total investment income generated by the group was Lm2.12 million, compared to Lm0.96 million last year.
The group’s balance sheet was further strengthened when group total assets increased by 4.1 per cent (as at December 2004) to Lm105.61 million as at 30 June 2005.
The retained profits after taxation generated during the period and the group’s share of the increase in the value of in-force business of Middlesea Valletta Life Assurance Co Ltd affected the net asset value of the Middlesea Group that increased from Lm2.01 per share at December 2004 to Lm2.13 at 30 June 2005.