On 15 March 2011, Middlesea Insurance plc published its full-year results to 31 December 2010. During the year, the Middlesea Group registered a pre-tax profit of €6.4 million compared to a pre-tax loss of €54.4 million incurred in 2009 (which reflected the full impairment of the investment in Progress Assicurazioni SpA of €63.1 million following the decision to place the Italian company into administration). However Group profit before tax and the impairment charge decreased by 25.7% from €8.7 million in 2009 to €6.4 million during the period under review.
The Group’s technical income for the 12 months ended 31 December 2010 amounted to €3.58 million, 34.6% below the level registered in 2009. Net investment income also dropped heavily from €4.3 million in 2009 to €2 million during 2010.
On the other hand, the share of profits from the Group’s associate company MSV Life plc improved to €3.9 million in 2010 compared to €3.1 million registered the previous year.
Middlesea reported that its solvency position improved as shareholders’ funds increased by 12.9% to €54.9 million as at 31 December 2010 representing a net asset value per share of €0.60.
Despite the profits registered during 2010, the Board of Directors did not recommend the payment of a dividend. This was due to the fact that during the past two years the Middlesea Group accumulated significant losses from the negative results registered by the Italian subsidiary Progress and therefore, according to the provisions of the Company’s Act, Middlesea was prohibited from declaring a dividend.
In the Preliminary Profits Statement, Middlesea explained that during 2010 it focused on consolidating its local operations and on improving its leadership position in the Maltese market. Moreover, in line with its corporate strategy, as from 1 January 2011, Middlesea decided to cease writing business in the geographical territory of Gibraltar and the book is now in ‘run-off’. During the year ended 31 December 2010, the Gibraltar operations contributed €1.4 million to the financial results of Middlesea Insurance plc. The company has also commenced the process to close-off its discontinued operation in London.
In order to enable the Company to declare dividends in future years, the Directors will be recommending a solution that is contemplated directly by the Companies Act involving the offsetting of all the accumulated losses against the issued share capital and share premium account of the Company. This proposal will also require an extraordinary resolution which will have to be approved by shareholders during the upcoming Annual General Meeting scheduled to be held on 3 May 2011. This proposed change should not affect the net asset value of the Company.
A copy of the Preliminary Profits Announcement can be downloaded from here.