LifeStar Insurance sees huge rise in 2021 profits as income almost doubles

LifeStar Insurance recorded a pre-tax profit of €1.4 million in 2021 and generated a total comprehensive income for the year of €2.6 million, according to the company’s financial statements.

The company generated €0.6 million in comprehensive income in 2020 and recorded a loss before tax of €0.4 million.

In 2021, LifeStar Insurance’s assets increased by six per cent, up to €172m, equity was up to €32m and consolidated profits before tax rose by 40 per cent.

The company also registered a 10 per cent rise in premiums, now standing at 22.3m, and now serves over 40,000 customers.

The profit in 2021 was due to the benefits and claims remaining fairly flat on the previous year despite suffering some severe adverse unrealised losses on local equities and sovereign bonds resulting in a fall in net investment income and fair value movements of €1.4 million. Gross written premium decreased on the previous year mainly due to a number of maturities and cancellations that did not result in re-investments.

On the other hand the company registered a very encouraging increase in its Index Linked and Unit Linked insurance of 36.6%.

During the year, LifeStar Insurance received a gross dividend of €1.37 million from its subsidiary LifeStar Health which is still subject to a regulatory no objection.

LifeStar Health Ltd, which last year celebrated its 50th anniversary as local representative for Bupa, also performed well, declaring a €1.37m gross dividend subject to regulatory approval.

The company’s operating expenses increased on the prior year by €0.3 million, due mainly to professional fees and salary costs to retain and protect talent loss. The balance on the long-term technical account closed off with a loss of €0.3 million compared to a loss in 2020 of €1.3 million.

In the published annual report accompanying the financial statements, LifeStar insurance directors said they will continue to monitor the situation closely to mitigate the impact brought about by the COVID-19 pandemic as well as its impact on capital.

LifeStar Chairman Paolo Catalfamo said the results for 2021 exceeded the most optimistic expectations.

“I would like to thank the team for this incredible effort in a very difficult year during which we also completed a successful IPO and a Subordinated Bond placement in a very challenging market and regulatory environment,” he said.

LifeStar Insurance CEO, Cristina Casingena said the company’s success has not happened by chance.

“We have completely restructured the company in terms of corporate governance and compliance and have invested heavily in technology to put ourselves in a position where we can offer among the best insurance products on the market while providing our clients with individual attention,” she said.

Total assets of the LifeStar Group increased by 6.5% (2020: 6.2%) from €161.9 million to €171.9 million as at the end of the current reporting period. Technical provisions increased by 4.5% (2020: 10.6%) from € 124.4 million to €130.1 million. The company’s Solvency II ratio was a healthy one and, as at 31 December 2021 amounting to 165%.

The company’s value of in-force business for 2021 registered an increase of €1.4 million (2020: €0.1 million) and, in aggregate, amounted to €11.9 million (2020: €10.5 million) at end of the current year - representing the discounted projected future shareholder profits expected from the insurance policies in force as at year end, adjusted for taxation.

The Board of directors approved a 2021 bonus declaration of 3.5% for Money Plus policies (2020: 3.5%) and 1% (2020: 1.5%) for all other interest sensitive products. The Company also announced a bonus rate of 0.5% (2020: 0.5%) for paid up policies.

“While economic challenges remain – we are still feeling the effects of Covid, and the Ukraine crisis has sparked global inflation – we are very confident about the future and welcome all the efforts Malta’s current administration is making to remove the country from the FATF  grey list in order to create an even more attractive climate for investment,” Catalfamo said.

“Agility is a key component for companies in the current client and I cannot praise the LifeStar team  enough  for  the  ability  they  have  shown  to  adapt  and  evolve  to  rapidly  changing circumstances.”

Litigation

Meanwhile, LifeStar Insurance plc, together with LifeStar Holding plc and GlobalCapital Financial Management Limited – all part of the LifeStar Group – on Friday instituted a lawsuit against the Malta Financial Services Authority (MFSA) in a bid “to safeguard its legal right to communications”.

Mazars Consulting Limited and Keith Cutajar, a sub-contractor of Mazars, are also named as defendants.

LifeStar Insurance said it had decided to initiate the judicial action following the appointment of Mazars, on 26 November 2021, as an inspector in connection with an investigation by the MFSA relating to the LifeStar Group’s business and operations.

The company said it was objecting to the powers conferred on Mazars by the MFSA, on 25 January 2022, in relation to its information and documents, including its privileged communications.

“While the LifeStar Group continues to co-operate with the Authority and Mazars in relation to the investigation, the Company, based on legal advice, considers its right to privileged communications to be significantly prejudiced by the Authority’s actions,” LifeStar Group’s announcement read.

“Accordingly, the Company is pursuing, and intends to continue to pursue, all remedies available to it at law.”

LifeStar Insurance said it remains committed to adhere to its legal and regulatory obligations to meet compliance requirements on an on-going basis and at all times.