Middlesea Insurance plc held its 26th annual general meeting at the Hilton Conference Centre on Thursday.
In line with the company’s dividend policy of enhancing its balance sheet and ensuring future sustainability, the meeting approved a dividend distribution of a final dividend of 4.5 cents per 25c share amounting to Lm1,125,000, an increase of 29 per cent over last year. This amount will again be paid from the company’s untaxed account and will therefore be subject to a final withholding tax of 15 per cent on distribution. This was the 23rd consecutive year that a dividend has been declared and distributed.
Middlesea’s executive chairman Mario C. Grech said that in his address last year to shareholders, while reporting on the extraordinary results registered in 2005, he had also cautioned that future expectations needed to be based on a prudent analytical appreciation. The inherent uncertain nature of the insurance risk business, which is also exposed to cyclical movements in capital markets, presented a continuous challenge in achieving well-defined objectives.
The overall group result for the year ended 31 December 2006 was a profit before tax of Lm3.6 million.
When one considered that the group’s result in 2005 had been favourably impacted by an exceptional net fair value movement in investments of Lm2.2 million, mainly as a result of a sharp rise in the value of domestic equities and the favourable run-off in incurred claims of Lm1.1 million, it was reassuring to note the improvement coming through in the Group companies’ underlying performance, reflecting a strong and varied operational portfolio and the continued successful implementation of the group's strategy.
Addressing the AGM, Mr Grech reviewed the operations of the companies within the Middlesea Group during 2006. The Group’s gross written premium in general business increased by 6.4 per cent over the preceding year, reaching Lm36 million with motor insurance representing 72 per cent of total premium written. This result was in the direction of the Group’s policy to achieve a balanced portfolio mix between motor and other classes of business, an objective which still had to be achieved.
The holding company, Middlesea Insurance plc, had produced positive net underwriting results for all classes, except for liability and health. Selective underwriting, a disciplined approach to pricing, efficient claims handling and strict cost control, had allowed Middlesea to achieve a satisfactory technical result of Lm1.6 million for the year. The subsidiary company, Progress Assicurazioni SpA, following a strict pricing policy complemented by the strengthening of reserves, the motor class of business, again produced positive results. The liability class of business, both in Malta and overseas, should be seen in the light of increasing court awards on injuries coupled with the inflationary effect caused by prolonged periods for the settlement of claims and the resultant strengthening of reserves. Progress registered a technical result of Lm1.1 million.
In 2006, Middlesea’s associate Middlesea Valletta Life Assurance Company (MSV) had persevered in its successful operations through its multi-channel distribution network. Demand for life assurance and investment-related products in Malta had increased substantially, as evidenced by the take up of various products offered by MSV. During 2006, the company had launched the second tranche of its capital guaranteed products, through the MSV Capital Guaranteed Bond.
The tranche was fully subscribed. MSV continued to experience a strong demand for savings products, with the MSV Single Premium Plan being a large contributor to the total business written by the company, at Lm50.4 million, an increase of 28 per cent over last year.