On 22 September 2006, Middlesea Insurance plc published its half-yearly report following approval of the financial results at a Board of Directors’ meeting held on the same day. As in previous years, the Directors did not declare an interim dividend.
Total gross premiums written by the Middlesea Group during the first six months of the year increased by 2.6% to Lm18.7 million on the back of an 11% rise in premiums written by the Group’s Italian subsidiary Progress Assicurazioni SpA, which amounted to Lm11 million. Meanwhile, gross premiums written in Malta dropped by 6.8% to Lm7 million.
The balance on the Group’s technical accounts dropped by 35% to Lm0.9 million (2005: Lm1.4 million). On the other hand, the share of profits from the Group’s investment in Middlesea Valletta Life Assurance Co. Ltd. climbed 33% to Lm0.5 million. It was reported that the Group’s specialist life assurance company registered a 47% rise in business written to Lm26.4 million in the first six months of the year.
Total income from insurance activities during the first six months of the year amounted to Lm1.4 million, 20% lower than the income generated in the comparative period. Meanwhile net investment income came in sharply lower at Lm0.74 million compared to Lm2.1 million in the first half of 2005. Whilst other investment income dropped by 21% to Lm1.9 million (2005: Lm2.3 million), there was a significant rise in investment expenses and charges including fair value losses. This increased from just Lm0.2 million in the first half of 2005 to Lm1.1 million in the period under review.
The company reported that the overall performance of the international capital markets, in particular the unfavourable movements in the foreign bond market, impinged negatively on the Group’s overall result. This negative effect was mostly evident in the Group’s Italian subsidiary. In fact, the segmental analysis provided in the half-yearly report reveals that during the first six months of the year, Progress Assicurazioni incurred a loss before tax of Lm92,680 in the first half of 2006 against a pre-tax profit of Lm660,668 in 2005. On the other hand, the pre-tax profit from Malta was largely unchanged at Lm1.35 million whilst from Gibraltar the profitability in the first six months of the year was a marginal Lm33,109 compared to Lm130,425 in 2005. The Group’s administrative expenses surged by 34% in the first six months of the year to Lm0.8 million resulting in a Group pre-tax profit of Lm1.25 million, 42% lower than in the 2005 interim period. However, the Group recognised a tax credit of Lm0.3 million in the period under review against a tax expense of Lm0.35 million in 2005. This helped the Group’s profit to rise to Lm1.5 million, narrowing the drop seen in the first six months of the year. After accounting for minority interests, the earnings per share dropped by just 3% to 6c2 from the adjusted earnings per share in the 2005 interim period of 6c4 per share.
The Group’s balance sheet continued to strengthen during the first six months of the year, with total assets amounting to Lm112.7 million, 3.9% higher than the level at the end of the year. The Group’s total gross technical reserves also increased to Lm62.6 million. Shareholders’ funds (including minority interests) amounted to Lm32.6 million as at 30 June 2006 resulting in a net asset value per share of Lm1.31. At the current market price of Lm2.40, the equity is trading at a price to book multiple of 1.84 times.