Mapfre Middlesea plc - Interim Results

On 15 July 2020, Mapfre Middlesea plc published its interim financial statements covering the six-month period ended 30 June 2020.

Performance Overview 

Total income from insurance activities increased by 10.7% to €11.9 million as the strong growth within the ‘general business technical account’ (i.e. the non-life business) outweighed the lower contribution within the ‘long-term business technical account’. In this respect, Mapfre Middlesea explained that its non-life business experienced a decline in premiums written reflecting the adverse impact from COVID-19. However, net combined ratios improved as the coronavirus lockdown led to a significant drop in claim frequencies (particularly in the motor and health segments) which mitigated the spike in travel and business interruption claims. Meanwhile, the company’s life subsidiary – Mapfre MSV Life plc – had a very challenging six months as premium levels were materially lower than the previous corresponding period. Furthermore, movements across international financial markets were extremely volatile reflecting the considerable uncertainties brought about by COVID-19. This was however partly compensated by the management fee charged on the value of assets under management which provides an element of stability compared to the fluctuations across financial markets.

Other income (including additional investment income) dropped by 20.4% to €1.14 million compared to €1.43 million in H1 2019. On the other hand, total investment and administration expenses eased by 1% to €2.29 million.

Overall, Mapfre Middlesea reported an 8.9% increase in pre-tax profits to €10.7 million. After accounting for a tax charge of €3.55 million and minority interests of €2.3 million, the net profit attributable to shareholders amounted to €4.86 million compared to €4.31 million registered during the first six months of 2019. This translated into an annualised return on average equity of 11.1%.

The Statement of Financial Position shows that total assets contracted by 2.4% to €2.55 billion when compared to the position as at 31 December 2019. Similarly, total liabilities dropped by 2.8% to €2.39 billion whilst net assets grew by 3.7% to €92.8 million. Accordingly, the net asset value per share increased to €1.0087 compared to €0.9729 as at the end of 2019.

Outlook

In their commentary, the Directors explained that both premium and claim frequency have been observed to be increasing to normal levels as from June 2020. Furthermore, Mapfre Middlesea remained compliant with regulatory capital requirements throughout the period under review despite the extraordinary circumstances that took place related to COVID-19. Nonetheless, the company entered into discussions with the MFSA on an action plan aimed at strengthening its position should a re-occurrence of market turbulence seen over the past few months takes place in the future.

Meanwhile, Mapfre Middlesea also warned that despite the improved technical result, its profit for the year will be well below that recorded in the 2019 financial year due to the non-recurrence of the dividend paid by Mapfre MSV Life plc to Mapfre Middlesea which, in 2019, amounted to €17.65 million. Accordingly, this will have an impact on the dividend that Mapfre Middlesea is expected to declare for the 2020 financial year.

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Mapfre Middlesea plc – Half-Yearly Report for the six-month period ended 30 June 2020.