Mapfre Middlesea plc - Interim Results

On 26 September 2005, Middlesea Insurance plc published its half-yearly report following approval of the financial results at a Board of Directors meeting held on 23 September 2005.

Total gross premiums written by the Middlesea Group during the first six months of the year decreased by 6.6% to Lm18.2 million due to the anticipated reduction coming from Progress Assicurazioni Spa and Gibraltar which was partly mitigated by an increase in business written locally. However, the Group’s strict underwriting guidelines reflected positively on its technical performance with an underwriting profit of Lm1.4 million, a 25.3% rise compared to the Lm1.1 million generated in the first six months of last year. Coupled with an 8.2% increase in the share of profits from Middlesea Valletta Life Assurance Co. Ltd. of Lm0.4 million, the total income from insurance activities amounted to Lm1.8 million during the review period.

On 1 January 2005 the Group adopted the revisions under IAS 39 – Financial Instruments: Recognition and Measurement. This standard has affected the categories of financial assets and financial liabilities of the Group for recognition and measurement purposes. The principal impact of the revised standard as adopted by the Group concerns the accounting treatment of available-for-sale investments, which are comprised mainly of listed bonds and equities. In previous years, such investments were measured at fair value, with movements thereon being generally accounted for through reserves. As from 1 January 2005, such movements are accounted for directly in the profit and loss account. This change, while introducing an unavoidable measure of volatility in the future results of the Group, is generally considered best practice as the profit and loss account now provides a more complete measure of the performance of the Group’s investments. The continued recovery of the international and local capital markets enhanced the investments held by the Group. As a result of the rule changes mentioned above, this also affected positively the overall profit for the period of the Group. The capital appreciation of group investments taken directly to the profit and loss account was Lm1.1 million (June 2004 – Lm0.01 million). The net investment income generated by the Group during the first half of the year surged to Lm2.1 million from Lm0.96 million in the corresponding period of 2004. Group administrative expenses dropped slightly to Lm0.58 million.

Group profit on ordinary activities before tax increased by 40% to Lm2.15 million. Due to the revised accounting policies, the Group’s profit for the first six months of 2004 was restated upwards from Lm1.02 million to Lm1.2 million. After accounting for taxation, the Group’s profit for the first six months of the year of Lm1.8 million represents a rise of 49% over the restated profits in the same period last year. Earnings per share increased to 12c9 from 8c1.

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

During the first six months of the year, the Group’s balance sheet continued to strengthen with total assets rising by 4.1% to Lm105.6 million. Shareholders’ funds (including minority interests) of Lm31.5 million translates into a net asset value per share of 252c.

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