MAPFRE MSV Life p.l.c. registered a profit before tax of €14.5 million for the year ended 31 December 2019, up 5.8% on the previous year where a €13.7 million profit before tax was generated. Profit after tax amounted to €11.7 million, up 7.3% on the €10.9 million in the previous year.
Operating results were supported by a significant appreciation in asset values on the back of favourable market conditions as well as strong inflows of premium revenue across the Company's range of insurance and investment products.
Gross premiums written for financial year 2019 totalled €282.9 million, 11.6% down on a prior year €320.0 million, impacted by a lower demand for single premium business partially offset by a growing demand for longer-term regular premium savings and retirement products.
Net claims incurred increased to €210.1 million compared to a prior year €145.7 million due to higher maturities of medium-term single premium contracts. A large proportion of maturing contracts were subsequently re-invested in new medium-term contracts.
Total assets increased by 12.8% from €2,213.4 million at the end of 2018 to €2,497.1 million at the end of 2019, whilst net technical provisions (including investment contracts without DPF) increased by 14.3% from €2,013.9 million in 2018 to €2,301.8 million in 2019.
The value of in-force business, which projects future transfers to shareholders arising from policies in force at the end of the year, increased significantly by 17.4%, from a €62.6 million value in 2018 to €73.5 million in 2019. This is attributable to the impact of new business inflows, strong investment returns, improved technical margins, low surrenders and improved mortality performance when comparing actual mortality to assumed mortality.
Total shareholders' funds at the close of 2019 amounted to €147.4 million (2018: €160.0 million), a decrease of 7.9% over the previous year due to the distribution of prior year dividends, yet well ahead of minimum solvency requirements. The solvency ratio stood at 245% at the end of 2019. The shareholders of MAPFRE MSV Life are wholly committed to ensuring that the Company remains adequately capitalised at all times and well positioned for both business growth and effective regulatory capital thresholds in place under the Solvency II framework.
The MAPFRE MSV With-Profits Fund increased by 13.8% from €1.89 billion in 2018 to €2.15 billion at 31 December 2019. The total investment return of the Fund amounted to €222.9 million recovering strongly from the negative €43.1 million downturn in 2018.
The Chairman of MAPFRE MSV Life p.l.c., John Cassar White, stated, "2019 turned out to be a very good year for investors. MAPFRE's MSV With-Profits Fund returned a net return of 11.02% reflecting strong gains in most asset classes in its portfolio. Developed market equity holdings delivered double digit returns as markets recovered from their 2018 slump."
Mr. Cassar White added, "the investment strategy of the MAPFRE MSV With-Profits Fund is to hold a diversified range of quality assets and currencies that mitigates against market risk. This asset diversification together with the robust investment management process, the quality of the asset managers engaged and the Company's strong track record of investment management mean that the Fund is well placed to capture an upturn in investment markets".
The Chief Executive Officer of MAPFRE MSV Life p.l.c., David G. Curmi, stated, "in 2019, the life insurance market in Malta displayed some weakening of the strong demand patterns for With Profits single premium contracts that have characterised the market in last few years. This was mainly due to the lower regular bonus rates on these contracts and the increased competition for liquidity from the corporate bond market. On the other hand, there is an evolving demand for new regular premium retirement savings products driven mainly by fiscal benefits."
Mr. Curmi added, "during the year, there were important developments within the Voluntary Occupational Pension market following Government's introduction of a number of fiscal incentives to encourage employers to set up Voluntary Occupational Pension Scheme (VOPS) for their employees. The regulatory framework and fiscal incentives were formalised towards the end of the year and we immediately launched the first insurance based voluntary occupational pension scheme in the market - the MAPFRE MSV Life WorkSave Pension Scheme, resulting in a significant amount of interest at this early stage of the product's life.
Going forward we will maintain strong focus on our customers by continuously assessing our business processes and operations in order to provide good value and excellent service. To this end, we will continue to invest and innovate in information technology. In 2019, we initiated the replacement of our core life administration system by selecting Sapiens CoreSuite for Life & Pension and digital solutions over the cloud for our core and digital transformation project. Sapiens International Corporation is a leading global provider of cutting-edge software solutions for the insurance industry. This project will involve the implementation and integration of Sapiens CoreSuite for Life & Pensions, Sapiens AgentConnect for Life & Pensions and Sapiens Intelligence for Life & Pensions."
Mr. Curmi concluded, "the Maltese life insurance market has, for a number of years, registered growth that is significantly above the average in Europe but remains an underinsured market. Although life insurance companies are playing an increasingly important role in Maltese household savings, comparative studies with other European life insurance markets show that whilst the Maltese life insurance market has grown significantly between 1996 and 2019, the life insurance density and life insurance penetration still fall below the European average. We therefore see attractive potential for an uplift in life protection, long term and retirement solutions in the local life insurance market. We continue to see good demand for all our product groupings as customers continue to choose MAPFRE MSV Life, reflecting trust in our brand and in the quality of our service proposition."
The Board expressed its gratitude and appreciation to the management and staff for their commitment and contribution to closing off financial year 2019 as another satisfactory year, to intermediaries for their continued support and to the many loyal customers for placing their trust in MAPFRE MSV Life p.l.c.
In view of the developments pertaining to COVID-19 pandemic that occurred after the end of the Reporting Period the Company stated that the outlook for the insurance industry, particularly for the life insurance industry, is one of concern since the full economic and financial consequences of the COVID-19 pandemic cannot yet be ascertained. The unprecedented COVID-19 crisis is being considered by insurers and particularly by life insurance companies as a high impact exceptional adverse situation. As a result of COVID-19, difficult investment markets feature heavily in the outlook for the life insurance industry.
Although the Company's strong solvency and financial fundamentals enable it to withstand better the current unprecedented financial turmoil, it is expected that as a direct result of the COVID-19 crisis its solvency ratio will reduce from the financial year 2019 year-end reported figure. In this context, the Company will continue to take all necessary measures in the best interest of its policyholders and to protect its solvency position in these unprecedented times.
The Board of Directors is continuously monitoring the solvency and financial implications of the COVID-19 crisis on the Company. A number of measures have already been taken to protect the solvency position of the company as well as the interest of policyholders. An initial measure was for the Board of Directors to cancel the payment of a final net dividend of €11.77 million that had been proposed for approval on 04 March 2020, thus safeguarding the Company's solvency position better.
The Company will continue to take all the necessary measures in the context of the unfolding economic, financial and regulatory developments to ensure that the Company is well positioned for the uncertainties brought about by the COVID-19 pandemic.
MAPFRE MSV Life p.l.c. (C-15722) is authorised by the Malta Financial Services Authority (MFSA) to carry on long term business under the Insurance Business Act, Cap 403 of the Laws of Malta. MAPFRE MSV Life p.l.c. is regulated by the MFSA.