A high delegation made up of members of the Supervisory Board of the Central Bank of Estonia (Eesti Pank) paid a courtesy visit to Bank of Valletta. The Estonian delegation was greeted by Bank of Valletta’s chief executive officer, Tonio Depasquale at BOV Centre in St Venera.

The delegation was led by chairman of the Supervisory Board of Bank of Estonia, Prof. Mart Sorg and governor of the Bank of Estonia, Andres Lipstok. Apart from the chairman and the governor, the Supervisory Board of the Bank of Estonia is made up of three parliamentarians and four academics.

Under Estonian Law, this board is responsible for supervising the activities of the Central Bank while the governor of the bank and the Management Board are in charge of policy making and implementation.

This board is thus the highest authority of the bank and its members are nominated by the Estonian Parliament.

Greeting the delegation, Mr Depasquale spoke about BOV’s strategic outlook and how the bank is looking at new growth areas. “Bank of Valletta’s strategy is directed at broadening our revenue base, so as to secure the continued development of BOV as a financial institution. He also spoke about the bank’s preparation to the adoption of the euro, possibly as soon as January 2008. “Joining the Eurozone and being part of the single market will have significant advantages to the economy with wider investment choices being available right across our business range. Being part of the Eurozone also sustains the efforts being undertaken to develop Malta as a meaningful and reputable Financial Services Centre, competing successfully with established jurisdictions such as Luxembourg, Ireland and the Channel Islands”, concluded Mr Depasquale.

Strong investment performance enables Middlesea Valletta Life to increase 2005 bonus rates

The board of directors of Middlesea Valletta Life (MSV) approved a resolution whereby the following reversionary bonuses were declared on policyholders’ with-profits investments held with MSV for the year ending 31 December 2005:

• Comprehensive Life Policies, 3.85 per cent (single and regular premium policies)

• Comprehensive Flexi Plan, 4.25 per cent (single and regular premium policies)

• MSV Single Premium Plan, 4.50 per cent

• MSV Investment Bond, 4.50 per cent on the with-profits option of the product.

The board also approved the declaration of a terminal bonus in respect of Comprehensive Life Plan (single and regular premium policies) that have been in force for more than 10 years. The terminal bonus will be paid on claims payable as a result of death or maturity in 2006, at a rate of 1.5 per cent for every year after the 10th year of the policy, subject to a maximum of five per cent. This terminal bonus will be paid on the value of the policy account as at the date of death or maturity.

The chairman of MSV, Roderick E.D. Chalmers said: “The most important factor that affects bonus rates on with-profits investments is the underlying investment performance of the funds invested. In 2005, MSV was successful in achieving a very strong investment return. We were therefore in a position to increase bonus rates to all our with-profits policyholders.”

He continued: “In addition, MSV has declared a terminal bonus on its Comprehensive Life Plan portfolio, and this is in line with the promise made to our policyholders that we may consider the declaration of a terminal bonus after the end of a policy’s tenth year.

The investment strategy of MSV is to hold a diversified range of assets to help reduce the investment risk that arises from holding any single type of asset. Our asset and currency mix, geographical spread and asset quality mean that we were well placed to capture an upturn in investment markets.”

On the “old series” endowment and whole of life policies, a reversionary bonus of 2.20 per cent of the basic sum assured plus bonuses was declared, an increase of 0.20 per cent on the bonus rate of 2.00 per cent declared for 2004. Although no terminal bonus has been declared for policies on claims arising out of death or maturity during 2006, any terminal bonus declared on the “old series” policies accumulated over previous years to date, shall remain payable on such claims occurring in 2006.

The board also approved a reversionary bonus of 3.45 per cent on the secure growth policies that were part of the portfolio of business transferred from Assicurazioni Generali SpA. This represents an increase of 0.20 per cent on the bonus rate of 3.25 per cent declared for 2004.

Deputy chairman and CEO, Mario C. Grech, said: “Investment returns in 2005 were favourable and we have reflected this in our bonus declaration. Our policy is to achieve a fair, consistent and equitable distribution of these investment returns among the different generations and types of with-profits policies.”

“With-profits policies are valuable medium to long-term investment instruments because in addition to the lump sum at maturity these can provide life insurance protection which is rarely available with other forms of regular savings plans. MSV continues to emphasise the importance of individual life protection through its products,” he continued.

“Furthermore, with -profits policyholders are not liable to pay any personal or capital gains tax on bonuses declared since an Exit Tax is paid by the company on surrenders and maturities of contracts in force to date. Similarly, beneficiaries will not be liable to any tax if they receive payment under a with-profits policy arising from a death claim.”

Mr Grech added: “We aim to smooth returns under our with-profits policies over the term of the policy. Smoothing entails establishing reserves from certain favourable years to compensate for unfavourable investment returns in certain other years during the policy term.”

He continued: “Notwithstanding the prudent investment policy adopted by MSV, past performance is no guarantee for the future, and, in the light of uncertainties that surround the capital markets the investment return may fluctuate positively as well as negatively. Fluctuations in investment returns impinge directly on the rates of bonuses declared by MSV. Reversionary bonus rates are therefore likely to vary over the lifetime of a policy.”

Mr Grech also pointed out that although for 2005 the company declared a terminal bonus in respect of its Comprehensive Life Plan portfolio, policyholders should be aware that future terminal bonus rates are likely to be highly volatile and very dependent on the investment performance of the company.

MSV is committed to continue to focus on product innovation to fulfill the evolving demands of its customers. MSV’s strategy is to offer its customers innovative products that offer protection and the highest long term returns commensurate with an acceptable level of risk and backed by high-quality service.

MSV will shortly be sending policy account and bonus statements to all policyholders holding with-profits investments with the company.