23 May 2007

The Web
Business Today

Malta Today



Middlesea Valletta Life registers 24% increase in pre-tax profits

Middlesea Valetta Life Assurance Co. Ltd. (MSV) registered a profit before tax of Lm3.27 milllion (€7.62m) for the year ended 31 December 2006. This represents an increase of 24% over the previous year. Business Written increased by 28% from Lm39.27 million (€91.5m) in 2005 to Lm50.36 million (€117.3m) in 2006, whilst the company’s Total Assets increased by 23% from Lm250.2 million (€582.8m) in 2005 to Lm 308 million (€717.4m) at the end of 2006.
The Chairman of MSV, Roderick Chalmers stated, “In 2006 MSV produced a set of very strong results. MSV continued to demonstrate its strength in the individual protection and long-term savings market in Malta. Despite operating in a competitive market, MSV succeeded in increasing its share of the individual life market, from 67% in 2005 to over 70% in 2006. MSV is clearly reaping the benefits of its strategy to promote and provide a broad range of value for money savings, investment and protection products and services through a multi-channel distribution platform. The bancassurance venture with Bank of Valletta p.l.c. remains the most important distribution channel for MSV and, during 2006, this continued to register further significant growth.”
The Board of Directors of MSV approved a resolution whereby differential rates of reversionary bonuses were declared in respect of with-profits plans held with MSV for the year ending 31 December 2006. These amounted to 4.05% for the Comprehensive Life Plan (regular and single premium policies), 4.35% in respect of the Comprehensive Flexi Plan (regular and single premium policies), 4.5% under the Single Premium Plan and 4.5% under the with-profits option of the MSV Investment Bond.
The Board also approved the declaration of a Terminal Bonus in respect of Comprehensive Life Plan (single and regular premium) policies that have been in force for more than 10 years. The Terminal Bonus will be paid on claims payable as a result of death or maturity between 1 January 2007 and the next bonus declaration, at a rate of 1.5% for every year after the 10th year of the policy, subject to a maximum of 5%. This Terminal Bonus will be paid on the value of the Policy Account as at the date of death or maturity.
Mario C. Grech, Executive Chairman of Middlesea Group and Deputy Chairman of MSV stated “MSV is the leading provider of with-profits policies in Malta. During 2006, MSV registered an increase of 23% in with-profits investments which represented 69% of MSV’s total business written. This is a clear indication of the popularity of these types of products as long term savings instruments. The most important factor that affects bonus rates on with-profits investments is the underlying investment performance of the funds invested. Notwithstanding that in 2006 MSV’s investment return was lower than that achieved in the previous year, MSV’s strong financial position and the prudent bonus policy adopted over the years has enabled us to increase Bonus Rates on the Comprehensive Life Plan and Comprehensive Flexi Plan polices which make up the larger part of our with-profits portfolio. In addition, for the second consecutive year, MSV has declared a Terminal Bonus on its Comprehensive Life Plan portfolio, and this is in line with the promise made to our policyholders that we may consider the declaration of a Terminal Bonus after the end of a policy’s tenth year.”
Mr. Grech added, “the bonus philosophy of MSV is centred on the ability to pay supportable bonus rates to policyholders in the medium term. We therefore aim to smooth returns under our with-profits policies over the term of the policy. Smoothing entails establishing reserves from certain favourable years to compensate for unfavourable investment returns in certain other years during the policy term. Notwithstanding the prudent investment policy adopted by MSV, past performance is no guarantee for the future, and, in the light of uncertainties that surround the capital markets, the investment return may fluctuate positively as well as negatively. Fluctuations in investment returns impinge directly on the rates of bonuses declared by MSV. Reversionary Bonus rates are therefore likely to vary over the lifetime of a policy. The investment strategy of MSV is to hold a diversified range of assets to help reduce the investment risk that arises from holding any single type of asset. Our asset and currency mix, geographical spread and asset quality mean that we were well placed to capture an upturn in investment markets.”
David G. Curmi, CEO of MSV stated: “during 2006 MSV continued to experience an increased demand for with-profits policies, with policyholders showing a preference to single premium products. This has resulted in a very significant increase in sales of the MSV Single Premium Plan, which remains the flagship with-profits product of MSV. Mr. Curmi added “with -profits policyholders are not liable to pay any personal or capital gains tax on bonuses declared since an Exit Tax is paid by the company on surrenders and maturities of contracts in force to date. Similarly beneficiaries will not be liable to any tax if they receive payment under a with-profits policy.”
MSV will shortly be sending Policy Account and Bonus Statements to all policyholders holding with-profits investments with the company.

Business Today is published weekly on Wednesdays.
Website is updated weekly on Thursdays
Copyright © MediaToday., Malta
Managing Editor - Saviour Balzan

Business Today, MediaToday, Vjal ir-Rihan, San Gwann
Tel: (356) 2138 2741 | Fax: (356) 2138 5075 | E-mail