Mapfre Middlesea Plc — Interim / Quarterly Report 2016

Jul 21, 2016

MMS/CF/MSE00916

21 July 2016

Company Announcement pursuant to the Listing Rules of the Malta Financial Services Authority

The following is a Company Announcement issued by Mapfre Middlesea p.l.c., pursuant to the Listing Rules of the Malta Financial Services Authority.

Quote

The Board of Directors of Mapfre Middlesea p.l.c., have today the 21 July 2016, considered and approved the unaudited financial statements of the Group for the financial half year ended 30 June 2016. A preliminary statement of interim results is being attached herewith in terms of the Listing Rules. The Interim Financial Statements are available for viewing on the Company's website at www.middlesea.com.

In line with Company policy, the Board of Directors does not propose the payment of an interim dividend.

Unquote

By Order of the Board

Carlo Farrugia Company Secretary

Review of Group Operations Half Yearly Financial Statements - 30 June 2016

Commentary

The Directors present the unaudited consolidated interim results of Mapfre Middlesea p.l.c..

The consolidated Mapfre Middlesea Group result for the first six months of 2016 amounted to a profit before tax of €5.67 million, compared to €15.18 million registered during the comparative period last year. The profit after tax allocated to shareholders amounted to €2.17 million as compared to €5.27 million in 2015. The June 2015 result was an exceptional one particularly for MSV Life p.l.c. ("MSV") both due to a one-off reinsurance cost adjustment and returns on financial investments that peaked in the first six months of 2015.

The growth in general business acquired by Mapfre Middlesea p.l.c. ("Company") during the last twelve months and the growth in operations to support it, increased the cost base of the Company significantly. With such portfolios still being fully assimilated, and with pricing still being adjusted, the resulting technical result performed below the comparative period of 2015. The recent poor performance in both local and foreign financial markets lead to negative fair value movements further compounded the subdued technical results.

The results of MSV reflect the introduction of an annual management charge on assets under management introduced at the beginning of the year which provides stability to the results shielding them from the impact of fluctuations in the financial markets.

Group's gross premiums written have increased by 44.90% during the first six months of 2016. The growth in General Business turnover of 47.42% was derived from the portfolio transfer concluded in 2015 and new intermediaries but also through strong organic growth. Life premiums written saw a growth of 44.40%. This reflects the competitiveness of such products as compared to other available financial instruments in the market with a high percentage of maturities being reinvested with MSV.

The Group continues to enjoy a healthy Solvency position as a result of the attained positive results.

Financial highlights for the half year

• · General Business Gross Premium written increased by 47.42% from €20.86 million in 2015 to €30.75 million as at the 30 June 2016.
• · Long term Gross Premium Written by the Group increased by 44.40% to €151.91 million compared to €105.20 million in the comparative period in 2015.
• · Return from Investments allocated to the non-technical account for the six months to 30 June 2016 amounted to a gain of €0.50 million compared to €1.04 million in 2015.
• The Group registered a Profit after taxation for the 6 months ended 30 June 2016 of €4.02 million, of which €2.17 million attributable to shareholders, compared with a profit after taxation of €9.77 million for the same period last year of which €5.27 million attributable to shareholders.
• · Gross Technical Provisions at 30 June 2016 increased by 4.49% to €1.69 billion over the 31 December 2015 reserves of €1.62 billion. Net of reinsurers' share, technical provisions stand at €1.68 billion, an increase of 4.46% over the 31 December 2015 provisions of €1.61 billion.
• Total assets increased by 4.28% and totaled €1.90 billion as at 30 June 2016, as compared to the total assets of €1.82 billion at 31 December 2015.
• Total Equity of the Group attributable to shareholders amounted to €82.37 million as at 30 June 2016, up from €82.30 million at 31 December 2015 with a net asset value per share of €0.90.
• · Both insurance companies in the Group are compliant with the regulatory solvency requirements under Solvency II regime.

Outlook

The Group will continue to take the necessary actions aimed at improve its technical results during the second half of the year. Through the execution of strategic initiatives the Company aims at delivering improved results to its shareholders whilst continuing to offer its clients the best value in all lines of business and adhering to its mission of being the most trusted insurer.

In line with Company policy, the Board of Directors do not propose to pay an interim dividend for the half year ended 30 June 2016 (2015 - nil).

Condensed Profit and Loss Accounts Non - technical accounts
for the half year ended 30 June	Group
	6 months to 30 June 2016	6 months to 30 June 2015
	€ 000	0000.3
Balance on the general business technical account Balance on the long term business technical account	494 5,255	1,061 13,604
Total income from insurance activities	5,749	14,665
Other investment income Investment expenses and charges	789 (12)	1,644 (17)
Allocated investment return transferred to the general business technical account Other income	(276) 654	(592) 655
Administration expenses	(1,237)	(1,172)
Profit for the half year before tax	5,667	15,183
Income tax expense	(1,647)	(5,413)
Profit for the half year	4,020	9,770
Attributable to:
- shareholders	2,172	5,267
- non-controlling interests	1,848 4,020	4,503 9,770
Farnings nor chara attributania to charaholders	201	5~7

Condensed Statements of Comprehensive Income for the half year ended 30 June

	Group
	6 months to	6 months to
	30 June 2016	30 June 2015
	8'000	€'000
Profit for the half year	4,020	9,770
Other comprehensive income:
Other comprehensive Income to be reclassified to profit and loss in subsequent periods
Change in other available-for-sale investments	74	(59)
Other comprehensive Income not to be reclassified to profit and loss in subsequent periods
Increase/(decrease) in value of in-force business	2,688	(1,182)
Total other comprehensive income, net of tax	2,762	(1,241)
Total comprehensive income for the half year	6,782	8,529
Attributable to:
- shareholders	3,590	4,617
- non-controlling interests	3,192	3,912
Total comprehensive income for the half year	6,782	8,529

	Group
	June	December
	2016	2015
	000.3	€'000
ASSETS
Intangible assets	63,329	59,908
Property, plant and equipment	10,133	10,203
Investment property	93,753	93,619
Investment in associated undertakings	30,090	27,273
Other investments	1,588,718	1,540,320
Deferred income tax	2,624	2,253
Reinsurers' share of technical provisions	17,261	16,016
Deferred acquisition costs	5,916	5,113
Insurance and other receivables	30,917	26,548
Income tax receivables	2,640	3,690
Cash and cash equivalents	54,199	36,675
Total assets	1,899,580	1,821,618
EQUITY Capital and reserves attributable to shareholders Non-controlling interests	82,367 75,793	82,297 75,101
Total equity	158,160	157,398
LIABILITIES
Deferred income tax	25,715	23,856
Provisions for other liabilities and charges	1,211	1,231
Technical provisions:
- Insurance contracts and investment contracts with DPF	1,642,823	1,559,250
- Investment contracts without DPF	52,026	62,785
Denvative financial instruments
Insurance and other payables	19,635	17,091
Income tax payable	10	7
Total liabilities	1,741,420	1,664,220
Total equity and liabilities	1,899,580	1,821,618

These condensed financial statements were approved by the Board on 22 July 2016 and were signed on its behalf by;

Martin Galea Chairman

Alfred Attard Director

Felipe Navarro Lopez de Chicheri President & CEO

® MAPFRE | MIDDLESEA

Preliminary Statement of Interim Results 30 June 2016

Statements of Changes in Equity for the half year ended 30 June

Group

			Attributable to shareholders
		Share		Profit &		Non-
	Share	premlum	Other	10 SS		controlling
	capital	account	reserves	account	rotal	Interests	Total
	€.000	€'000	€,000	€'000	€,000	€'000	€'000
Balance as at 1 January 2015	19,320	688	28,275	31,846	80,129	73,566	153,695
Comprehensive Income
Profit for the haif year				5,267	5,267	4,503	9,770
Other comprehensive income:
Change in other available-for-sale investments			(		(га)		(29)
Decrease in value of in-force business			(591)		(591)	(591)	(1,182)
Total other comprehensive income, net of tax		-	(650)		(650)	( 291)	(1,241)
Total comprehensive Income	F	-	(650)	5,267	4,617	3,912	8,529
Transactions with owners
Dividends for 2014				(3,520)	(3,520)	(2,340)	(5,860)
Totai transactions with owners				(3,520)	(3,520)	(2,340)	(5,860)
Balance as at 30 June 2015		288			81,226	75,138	156,364
	19,320		27,625	33,593
Balance as at 1 January 2016	19,320	688	27,094	35,195	82,297	75,101	157,398
Comprehensive income
Profit for the half year				2,172	2,172	1,848	4,020
Other comprehensive income:
Change In other available-for-sale investments			74		74		74
Increase in value of in-force business			1,344		1,344	1,344	2,688
Total other comprehensive income, net of tax			1,418		1,418	1,344	2,762
Total comprehensive Income			1,418	2,172	3,590	3,192	6,782
Transactions with owners
Dividends for 2015				(3,520)	(3,520)	(2,500)	(6,020)
Total transactions with owners		-		(3,520)	(3,520)	(2,500)	(6,020)
Balance as at 30 June 2016
	19,320	688	28,512	33,847	82,367	75,793	158,160

Condensed consolidated statements of cash flows for the half year ended 30 June

	Group
	6 months to	6 months to
	30 June 2016	30 June 2015
	€ 000	€ 000
Net cash generated from operating activities	85,369	74,412
Net cash used in investing activities	(61,825)	(60,969)
Net cash used in financing activities	(6,020)	(5,860)
Netmovement in cash and cash equivalents	17,524	7,583
Cash and cash equivalents at beginning of year	36,675	44,679
Cash and cash equivalents at end of half year	54,199	52,262

@ MAPFRE | MIDDLESEA

Preliminary Statement of Interim Results 30 June 2016

Notes to the Condensed Financial Statements For the half year ended 30 June 2016

• 1. Mapfe Middlesea p.l.c. is authorized by the Malta Financial Services Authority to carry on long term and general business of insurance under the Insurance Business Act, 1998.
• 1. Basis of preparation

These condensed financial statements are being published in accordance with Chapter 5 of the Listing Rules of the Listing Authority - Malta Financial Services Authority and the Prevention of Financial Markets Abuse Act 2005. These statements have been extracted from the Group's unaudited financial statements as approved by the Board on 22 July 2016 and have been prepared in accordance with International Financial Reporting Standards as adopted by the EU applicable to interim financial reporting (IAS34). They do not include all information required for full annual financial statements, and should be read in conjunction with the financial statements for the year ended 31 December 2015. The accounting policies applied in these condensed financial statements are the same as those applied by the group in its financial statements for the year ended 31 December 2015.

Related party transactions with other members of the Mapfre Middlesea Group were at a similar level to the comparable period.

Segmental information

The Group is organized into three geographic segments: Malta, Gibraltar and London. Whilst the Malta segment is involved in general business and long term business, the Gibraltar and London segments are general business segments that are in run-off.

		Gross written premiums Profit/(loss) before taxation
	6 months to 30 June 2016	30 June 2015 30 June 2016	6 months to 6 months to	6 months to 30 June 2015
	e 000	€ 000	€ 000	€'000
Malta Gibraltar - discontinued London - discontinued	182,661	126.057	5,732 ﺎ (69)	14,975 (31) 239
	182.661	126.057	5,667	15,183

Statement pursuant to Listing Rule 5.75.3 issued by the Listing Authority

We confirm that to the best of our knowledge:

• · the condensed interim financial statements for the Group give a true and fair view of the financial position as at 30 June 2016, financial performance and cash flows for the period then ended, in accordance with accounting standards adopted for use in the EU for interim financial statements ( IAS 34 ' Interim Financial Reporting') for the Group; and
• the commentary includes a fair review of the information required in terms of Listing rule 5.75.2.

Martin Galea Chairman

Alfred Attard Director

Felipe Navarro Lopez de Chicheri President & CEO