Mapfre Middlesea Plc — Interim / Quarterly Report 2017

Jul 24, 2017

MMS/CF/MSE00917

24 July 2017

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.

Ouote

The Board of Directors of Mapfre Middlesea p.l.c., have today the 21 July 2017, considered and approved the unaudited financial statements of the Group for the financial half year ended 30 June 2017. 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 2017

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 2017 amounted to a profit before tax of €7.02 million, compared to €5.67 million registered during the comparative period last year. The profit after tax allocated to shareholders amounted to €3.24 million as compared to €2.17 million in 2016. The increase in profit was derived from improved non-life business and long term business results when compared to previous year.

Mapfre Middlesea p.l.c.'s ('the Company') non-life business has registered a marked recovery in results as actions taken by Management to address the price deficiency in the Motor line of business are showing the desired progress in returning this line of business to being profitable again. The improvement in the technical results was augmented by an increase in investment income derived particularly from the property investment held by the Company.

MAPFRE MSV Life continues to have stable results reflecting the annual management charge on assets under management introduced at the beginning of the previous 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 8.0% during the first six months of 2017. The growth in General Business turnover of 6.4% was derived from organic growth and Motor tariff increases that mitigated the premium volume lost from a terminated agency agreement. Life premiums written saw a growth of 8.3%. Single premium business remains the driver of such growth as the competitiveness of such product as compared to other available financial instruments in the market induce both existing clients to reinvest matured policies as well as attract new client investment.

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

@ MAPFRE | MIDDLESEA

Preliminary Statement of Interim Results 30 June 2017

Financial highlights for the half year

• · General Business Gross Premium written increased by 6.4% from €30.75 million in 2016 to €32.73 million as at the 30 June 2017.
• · Long term Gross Premium Written by the Group increased by 8.3% to €164.55 million compared to €151.91 million in the comparative period in 2016.
• · The Group registered a Profit after taxation for the 6 months ended 30 June 2017 of \$5.62 million, of which €3.24 million attributable to shareholders, compared with a profit after taxation of €4.02 million for the same period last year of which €2.17 million attributable to shareholders.
• Gross Technical Provisions at 30 June 2017 increased by 5.8% to €1.91 billion over the 31 December 2016 reserves of €1.80 billion. Net of reinsurers' share, technical provisions stand at €1.89 billion, an increase of 5.8% over the 31 December 2016 provisions of €1.79 billion.
• · Total assets increased by 5.3% and totaled €2.13 billion as at 30 June 2017, as compared to the total assets of €2.02 billion at 31 December 2016.
• · Total Equity of the Group attributable to shareholders amounted to €88.08 million as at 30 June 2017, up from €86.83 million at 31 December 2016 with a net asset value per share of €0.96.
• · 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 reaching pre-established targets both in delivering improved results to its shareholders and improving efficiency and client satisfaction aligned with 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 2017 (2016 - nil).

Condensed Statement of Profit or Loss Non - technical account for the half year ended 30 June
	Group
	6 months to 30 June 2017	6 months to 30 June 2016
	2000	€'0000
		494
Balance on the general business technical account Balance on the long term business technical account	1,541 5,875	5,255
Total income from insurance activities	7,416	5,749
Other investment income	927	789
Investment expenses and charges Allocated investment return transferred to	(7)	(12)
the general business technical account Other income	(669) 721	(276) 654
Administration expenses	(1,369)	(1,237)
Profit for the half year before tax	7,019	5,667
Income tax expense	(1,399)	(1,647)
Profit for the half year	5,620	4,020
Attributable to:
- shareholders	3,240	2,172
- non-controlling interests	2,380	1,848
	5,620	9,770
Earnings per share attributable to shareholders	3c5	2c4

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

	Group
	6 months to	6 months to
	30 June 2017	30 June 2016
	3000	€ 000
Profit for the half year	5,620	4,020
Other comprehensive income:
Other comprehensive Income to be reclassified to profit and loss in subsequent periods
Change in other available-for-sale investments	(76)	74
Other comprehensive Income not to be reclassified to profit and loss in subsequent periods
Increase in value of in-force business	3,212	2,688
Total other comprehensive income, net of tax	3,136	2,762
Total comprehensive income for the half year	8,756	6,782
Attributable to:
- shareholders	4,770	3,590
- non-controlling interests	3,986	3,192
Total comprehensive income for the half year	8,756	6,782

Condensed Statement of Financial Position

	Group
	June	December
	2017	2016
	C'000	€'000
ASSETS
Intangible assets	72,403	68,535
Property, plant and equipment	1,009	9,941
Investment property	99,320	98,904
Investment in associated undertakings	28,213	33,074
Other investments	1,747,850	1,681,499
Deferred income tax	2,494	2,425
Reinsurers' share of technical provisions	17,976	16,444
Deferred acquisition costs	6,568	6,049
Insurance and other receivables	33,256	29,380
Income tax receivables	3,293	3,750
Cash and cash equivalents	105,348	70,015
Total assets	2,117,730	2,020,016
EQUITY Capital and reserves attributable to shareholders	88,077	86,826
Non-controlling interests	78,372	80,160
Total equity	166,449	166,986
LIABILITIES
Deferred income tax	27,649	26,686
Provisions for other liabilities and charges	1,163	1,186
Technical provisions:
- Insurance contracts and investment contracts with DPF	1,856,072	1,750,364
- Investment contracts without DPF	52,889	54,141
Derivative financial instruments		320
Insurance and other payables	22,489	20,316
Income tax payable	19	17
Total liabilities	1,960,281	1,853,030
Total equity and liabilities	2,126,730	2,020,016

These condensed financial statements were approved by the Board on 21 July 2017 and were signed on its behalf by:

Martin Galea Chairman

Alfred Attard Director

Felipe Navarro Lopez de Chicheri President & CEO

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

Group
		Attributable to shareholders Share Profit &		Non-
	share	premium	Other	10 SS		controlling
	capital	account	reserves	account	Total	Interests	Total
	€,000	€ 000	€'000	€'000	C'000	€ 000	€,000
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
Decrease 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
Balance as at 1 January 2017	19,320	688	30,499	36,319	86,826	80,160	166,986
Comprehensive Income
Profit for the half year				3,240	3,240	2,380	5,620
Other comprehensive income:
Change in other available-for-sale investments			(76)		(76)		(76)
Increase in value of in-force business			1,607		1,607	1,607	3,214
Total other comprehensive Income, net of tax			1,531		1,531	1,607	3,138
Total comprehensive Income			1,531	3,240	4,771	3,987	8,758
Transactions with owners
Dividends for 2016				(3,520)	(3,520)	(5,775)	(9,295)
Total transactions with owners				(3,520)	(3,520)	(5,775)	(9,295)
Balance as at 30 June 2016	19,320	688	32,030	36,039
					88,077	78,372	166,449

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

	Group
	6 months to	6 months to
	30 June 2017	30 June 2016
	0000	€000
Net cash generated from operating activities	101,956	85,369
Net cash used in investing activities	(57,328)	(61,825)
Net cash used in financing activities	(9,295)	(6,020)
Net movement in cash and cash equivalents	35,333	17,524
Cash and cash equivalents at beginning of year	70,015	36,675
Cash and cash equivalents at end of half year	105,348	54,199

@ MAPFRE MIDDLESEA

Preliminary Statement of Interim Results 30 June 2017

Notes to the Condensed Financial Statements For the half year ended 30 June 2017

• 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 21 July 2017 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 2016. 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 2016.

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

Gross written premiums Profit/(loss) before taxation

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.

	6 months to 30 June 2017	30 June 2016 30 June 2017	6 months to 6 months to	6 months to 30 June 2016
	€ 000	€'000	€ 000	€'000
Malta Gibraltar - discontinued London - discontinued	197,281	182.661	7,070 (29) (22)	5,732 ব (69)
	197,281	182,661	7,019	5,667

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 2017, 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