Mapfre Middlesea Plc — Interim / Quarterly Report 2021

Jul 28, 2021

MMS/DSD/MSE01221

28 July 2021

The following is a Company Announcement issued by MAPFRE Middlesea plc, pursuant to the Listing Rules of the Listing Authority.

Quote

The Board of Directors of MAPFRE Middlesea p.l.c. ('the Company'), has today the 28 July 2021, considered and approved the unaudited financial statements for the financial half year ended 30 June 2021. 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 has not proposed the payment of an interim dividend.

Unquote

By Order of the Board

Dr Daphne Sims Dodebier Company Secretary

Review of Group Operations Half Yearly Financial Statements - 30 June 2021

Commentary

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

The consolidated MAPFRE Middlesea Group registered a profit before tax for the first six months of 2021 of £10.98 million, compared to €10.71 million recorded during the comparative period last year. The profit after tax and non-controlling interests, allocated to shareholders, amounted to €4.93 million as compared to €4.86million in 2020. Long term business delivered a stronger performance both as a result of significant increases in new business revenue and a positive investment return, compared to low volumes and financial losses that were being registered in the comparative period last year from the economic fallout of the COVID-19 pandemic. On the other hand, non-life business, though registering a satisfactory performance, could not match the pandemic driven exceptional result achieved last year.

MAPFRE Middlesea p.l.c.'s ('the Company') non-life business saw premium written recover from the subdued levels of June 2020. The net combined ratio moved upwards reflecting the increased claim frequency in Motor as the country returned to a new form of normality. Notwithstanding, the technical results still delivered a satisfactory profit above expectations. Financial returns saw an improvement over 2020 but again do not include any receipt of dividend from MAPFRE MSV Life p.l.c., which like in 2020, will not be paying a dividend to further strengthen is Solvency position. In this regards, both MAPFRE Middlesea p.l.c. ad Bank of Valletta p.l.c., the shareholders of MAPFRE MSV Life p.l.c., have invested €20.00 million each in the share capital of the company in March 2021.

MAPFRE MSV Life p.l.c. had a very positive first half year with premium levels returning to near all-time highs. Financial markets continued to recover and the company reported a sound investment return contrary to the losses registered at the half-way mark of 2020. The With-Profits Fund increased by 1.6% as at June and 7.0% higher compared to June 2020.

Group's gross premiums written have increased by 25.9% during the first six months of 2021. Turnover in General Business moved up by 7.5% with the major lines of business delivering higher volume levels. Life premium written soared over comparative figures by 31.4% reflecting the consumer confidence in our brand, with strong levels of reinvestment of maturities and new business.

The Group is compliant with the regulatory capital requirements as stipulated by the MFSA which are in line with the Solvency II requirements and continues to maintain its healthy Solvency position as a result of the attained positive results.

Financial highlights for the half year

• · General Business Gross Premium written increased by 7.54% from €38.44 million in 2020 to €41.34 million as at the 30 June 2021.
• · Long term Gross Premium Written by the Group registered an upward movement of 31.45% to €168.40 million compared to €128.11 million in the comparative period of 2020.
• · The Group registered a Profit after taxation for the 6 months ended 30 June 2021 of €7.61 million, of which €4.93 million attributable to shareholders, compared with a profit after taxation of €7.16 million for the same period last year of which €4.86 million attributable to shareholders.
• · Gross Technical Provisions at 30 June 2021 increased by 2.1% to €2.49 billion over the 31 December 2020 reserves of €2.44 billion. Net of reinsurers' share, technical provisions stood at €2.46 billion, and an increase of 2.2% over the 31 December 2020 provisions of €2.41 billion.
• · Total assets increased by 3.2% and totaled €2.77 billion as at 30 June 2021, as compared to the total assets of €2.69 billion at 31 December 2020.
• · Total Equity of the Group attributable to shareholders amounted to €104.94 million as at 30 June 2021, up from €100.60 million at 31 December 2020, with MAPFRE Middlesea p.l.c. having paid a dividend for financial year 2020 of €3.2 million. The net asset value per share stands at €1.14 as at June 2021.
• · Both insurance companies in the Group are compliant with the regulatory solvency requirements under Solvency II regime as at June 2021.

Outlook

The Group looks at the second half of 2021 with cautious optimism in an environment wary of the evolving effects of the pandemic both on the local and global economies. Focus remains on the Group's strategic actions to meet its set Key Performance Indicators, continue delivering improved results to its shareholders whilst improving efficiency and client satisfaction in line 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 2021 (2020 - nil).

Condensed Statement of Profit or Loss Non - technical account for the half year ended 30 June
	Group
	6 months to	6 months to
	30 June 2021	30 June 2020
	000.3	€'000
Balance on the general business technical account	4,077	4,910
Balance on the long term business technical account	8,117	6,950
Total income from insurance activities	12,194	11,860
Other investment income	629	609
Investment expenses and charges	(151)	(290)
Allocated investment return transferred to
the general business technical account	(393)	(148)
Other income	675	527
Administration expenses	(1,977)	(1,848)
Profit for the half year before tax	10,977	10.710
Income tax expense	(3,365)	(3,552)
Profit for the half year	7,612	7,158
Attributable to:
- owners of the Company	4,927	4,862
- non-controlling interests	2,685	2,296
	7,612	7,158
Earnings per share attributable to owners of the Company	5c4	5c3

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

	Group
	6 months to	6 months to
	30 June 2021	30 June 2020
	000.3	€'000
Profit for the half year	7,612	7,158
Other comprehensive income:
Other comprehensive Income to be reclassified to profit and loss in subsequent periods
Change in other available-for-sale investments	(33)	(304)
Other comprehensive Income not to be reclassified to profit and loss in subsequent periods
Increase/(decrease) in value of in-force business	5,282	(2,518)
Total other comprehensive income, net of tax	5,249	(2,822)
Total comprehensive income for the half year	12,861	4,336
Attributable to:
- owners of the Company	7,535	3,299
- non-controlling interests	5,326	1,037
Total comprehensive income for the half year	12,861	4,336

® MAPFRE | MIDDLESEA

Preliminary Statement of Interim Results 30 June 2021

Condensed Statement of Financial Position
	Group
	June	December
	2021	2020
	000.3	€ 000
ASSETS
Intangible assets	102,498	94,836
Property, plant and equipment	17,929	17,913
Right-of-use assets	926	931
Investment property	112,038	111,518
Investment in associated undertakings	22,175	25,174
Other investments	2,382,036	2,262,757
Deferred income tax	2,317	2,350
Reinsurers' share of technical provisions	30,605	31,807
Deferred acquisition costs	8,702	8,080
Insurance and other receivables	35,785	33,828
Income tax receivables	242	1,174
Cash and cash equivalents	59,220	97,060
Total assets	2,774,473	2,687,428
EQUITY
Capital and reserves attributable to owners of the Company	104,938	100,603
Non-controlling interests	106,022	80,696
Total equity	210,960	181,299
LIABILITIES
Deferrred income tax	39,260	37,467
Provisions for other liabilities and charges	1,029	1,057
Technical provisions:
- Insurance contracts and investment contracts with DPF	2,430,558	2,383,550
- Investment contracts without DPF	57,713	53,531
Derivative financial instruments		168
Lease liabilities	982	1,021
Insurance and other payables	31,584	27,491
Income tax payable	2,387	1,844
Total liabilities	2,563,513	2,506,129
Total equity and liabilities	2,774,473	2,687,428

These condensed financial statements were approved by the Board on 28 July 2021 and were signed on its behalf by:

Martin Galea Chairman

P Javier Moreno Gonzalez

President & CEO

® MAPFRE | MIDDLESEA

Preliminary Statement of Interim Results 30 June 2021

Statement of Changes in Equity

for the half year ended 30 June

Group

	Attributable to owners of the Company
		Share		Profit &		Non-
	Share	premium	Other	loss		controlling
	capital	account	reserves	account	I otal	interests	Total
	€'000	€'000	€'000	€ 000	€ 000.3	€'000	€'000
Balance as at 1 January 2020	19,320	688	36,863	32,634	89,505	73,684	163.189
Comprehensive income
Profit for the half year				4,862	4,862	2,296	7,158
Other comprehensive income:
Change in available-for-sale investments' fair value			(304)		(304)		(304)
Decrease in value of in-force business			(1,259)		(1,259)	(1,259)	(2,518)
Total other comprehensive income, net of tax			(1,563)		(1,563)	(1,259)	(2,822)
Total comprehensive income			(1,563)	4,862	3,299	1,037	4,336
Balance as at 30 June 2020	19,320	688	35,300	37,496	92,804	74,721	167,525
Balance as at 1 January 2021	19,320	688	38,829	41,766	100,603	80,696	181,299
Comprehensive income
Profit for the half year				4,927	4,927	2,685	7,612
Other comprehensive income:
Change in available-for-sale investments' fair value			(33)		(33)		(33)
Increase in value of in-force business			2,641		2,641	2,641	5,282
Total other comprehensive income, net of tax			2,608		2,608	2,641	5,249
Total comprehensive income			2,608	4,927	7,535	5,326	12,861
Transactions with owners
Increase in share capital of subsidiary undertaking
by non-controlling interest						20,000	20,000
Dividends for 2020				(3,200)	(3,200)		(3,200)
Total transactions with owners				(3,200)	(3,200)	20,000	16,800
Balance as at 30 June 2021	19,320	688	41,437	43,493	104,938	106,022	210,960

® MAPFRE | MIDDLESEA

Preliminary Statement of Interim Results 30 June 2021

Statement of cash flows
for the half year ended 30 June
	Group
	6 months to	6 months to
	30 June 2021	30 June 2020
	000.3	€'000
Cash flows from operating activities
Cash generated from/(used in) operations	413	(272)
Dividends received	5,653	3,890
Interest received	10,744	12,029
Interest paid	(44)	(67)
Taxpaid	(68)	(26)
Net cash generated from operating activities	16,698	15,554
Investing activities
Purchase of investment property	(537)	(1,179)
Disposal of investment property	16
Purchase of financial investments	(678,509)	(549,466)
Disposal offinancial investments	611,602	545,264
Purchase of property, plant and equipment and intangible assets	(3,910)	(4,033)
Net cash used in investing activities	(71,338)	(9,414)
Financing activities
Increase in share capital of subsidiary by non-controlling interest	20,000
Dividends paid to owners of the Company	(3,200)
Cash generated from financing activities	16,800
Increase in cash and cash equivalents	(37,840)	6,140
Movement in cash and cash equivalents
At beginning of year	97,060	70,987
Net cash (outflow)/inflow	(37,840)	6,140
At end of half year	59,220	77,127

Notes to the Condensed Financial Statements For the half year ended 30 June 2021

• 1. MAPFRE 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 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 28 July 2021 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 2020. 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 2020.

Related party transactions with other members of the MAPFRE Middlesea Group were at a similar level to the comparable period with the exception of the increase in share capital in the subsidiary MAPFRE MSV Life p.l.c. of €20 million each by the parent MAPFRE Middlesea p.l.c. and the related company Bank of Valletta p.l.c..

Segmental information

The Group writes business from Malta and in the past wrote business in 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 before taxation
	6 months to 30 June 2021	6 months to	6 months to 30 June 2020 30 June 2021	6 months to 30 June 2020
	€ 000	€000	€ 000	€'000
Malta	209.738	166.553	10.977	10.727
	209,738	166.553	10.977	10.727

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 2021, 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

mi Javier Moreno Gonzalez President & CEO