Mapfre Middlesea plc - Interim Results

During the first six months of 2004, the Middlesea Group increased its premium income by 11.6% to Lm19.5 million. This is composed of the premiums written by Middlesea Insurance plc in Malta and through its branch office in Gibraltar as well as by the Italian subsidiary Progress Assicurazioni Spa. Gross premiums written by Middlesea Insurance plc increased by 14% during the period under review and amounted to Lm7.1 million as the Company implemented an enhanced pricing policy. In Italy, Progress registered a 9% increase in premiums to Lm11.5 million, accounting for just under 60% of total Group premiums.

The increase in premium rates by Middlesea Insurance together with stricter underwriting guidelines resulted in a marked improvement in the technical underwriting result for the period. In fact the balances on the general business technical accounts and the long-term business technical accounts transferred to the non-technical account amounted to Lm1.1 million, compared to just Lm322,900 during the same six months of 2003. The Directors attribute this turnaround mainly due to the underwriting profits from the motor class of business.

After taking into account the Group’s share of profits of Middlesea Valletta Life Assurance Co. Ltd. (51% owned by Middlesea Insurance plc), which amounted to Lm371,110 as against Lm566,532 in June 2003, the total Group income from insurance activities during the first six months of 2004 amounted to Lm1.4 million, a 62% increase over the comparative period last year.

During the first six months of the year this specialist life company registered premium income growth of 25% to Lm15.1 million. MSV’s Life Fund increased by 13.2% to Lm136.8 million with total assets increasing by 12.8% to Lm160.2 million. The other major subsidiary of Middlesea, Progress Assicurazioni also registered an increase in income during the first six months of the year as mentioned earlier. More importantly, this company’s contribution to the Group increased from Lm124,569 in the first six months of 2003 to Lm244,217 during the period under review.

The Group’s net investment income decreased by 7.8% to Lm653,776, whilst administrative expenses also dropped by 4.9% to Lm614,627 (June 2003: Lm646,280). This resulted in Group profit before tax of Lm1.3 million, 64% above the pre-tax profit of Lm773,260 earned in the first six months of 2003. After accounting for taxation and minority interests the profit for the period amounted to Lm862,325, an increase of 23.8% over the Lm696,614 of June 2003. One must note that during the review period the Group incurred a tax charge of Lm241,203 compared to a minimal tax credit in June 2003. Earnings per share increased from 5c6 to 6c9.

The Group’s balance sheet shows total assets of Lm98.4 million as at 30 June 2004 with shareholders funds of Lm26.5 million, inclusive of minority interests. This results in a net asset value per share of 212c.

As in previous years, the Directors have not recommended the payment of an interim dividend.

Commenting on these results Chairman and CEO Mario C. Grech said "This has been an important six months for the Group with good results across all of our ongoing operations. These results, achieved in a challenging period, show that Middlesea’s fundamental business model is robust and puts it in a strong position to deliver the profitable growth which underpins shareholder value".

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