Middlesea Insurance’s interim results, expected to be published after a board meeting on Tuesday, are to be significantly dampened by the performance of its struggling Italian subsidiary Progress Assicurazioni.
In a pre-interim result statement published on the Malta Stock Exchange website this week, the company noted, “The very difficult trading conditions experienced by Middlesea’s Italian subsidiary Progress Assicurazioni, referred to in the 2008 annual report... have persisted, and will have a material adverse impact on the half yearly results.”
Full details of the situation, it adds, will be provided in the company’s interim statement.
Last May Middlesea reported an about-face in its 27-year history of positive financial results, after registering post-tax losses of e20.6 million for 2008, compared with the e9.3 million in profits witnessed in 2007.
The state of affairs had been put down to on the one hand by the global financial crisis and, on the other, by a “considerable” technical loss registered by the Italian subsidiary. The two factors had combined to break the group’s 27-year positive earnings spell.
Although in 2008 Progress Assicurazioni had generated gross premiums written of e86 million – a 20 per cent increase over 2007, its pre-tax contribution to the Middlesea Group’s results resulted, however, in a gross loss of e26.8 million – a considerable deterioration from 2007’s positive e3.1 million return.
The introduction of the Convenzione tra Assicuratori per Risarcimento Diretto, (CARD) in Italy – the mandatory direct indemnification system in February 2007 – created, as expected, uncertainties and negatively impacted 2008’s technical results.
Over 2008, Progress had undertaken a further strengthening of its technical provisions, which, together with the unfavourable impact of the CARD system and the increased reserves in personal injuries and fatalities, impacted negatively on the results.
An overall increase in the frequency of motor liability claims, late reported claims and a concentration in the challenging Campania region, Middlesea said in May, also contributed to the deterioration of the results.