Mapfre Middlesea Plc — Interim / Quarterly Report 2022

Jul 28, 2022

MMS/DSD/MSE00822

28 July 2022

The following is a Company Announcement issued by MAPFRE Middlesea plc, pursuant to the Capital Markets Rules of the Malta Financial Services Authority.

Quote

The Board of Directors of MAPFRE Middlesea p.l.c. ('the Company'), has today the 28 July 2022, considered and approved the unaudited financial statements for the financial half year ended 30 June 2022. A preliminary statement of interim results is being attached herewith in terms of the Capital Markets Rules. The Interim Financial Statements are available for viewing on the Company's website at www.mapfre.com.mt.

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 2022

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 2022 of €11.76 million, compared to €10.98 million recorded during the comparative period last year. The profit after tax and non-controlling interests, allocated to shareholders, amounted to €5.17 million as compared to €4.93 million in 2021. Long term business delivered an improved performance as the positive effect of increased interest rates on protection business results outweighed the adverse impact of negative investment returns on the With-Profit fund. On the other hand, non-life business, registered a less satisfactory performance, with claim frequency returning to pre-pandemic levels coupled by the rising impact of inflation.

MAPFRE Middlesea p.l.c.'s ('the Company') non-life business saw premium written registering a strong growth from the already improving levels of June 2021. The net combined ratio moved upwards reflecting the increased claim frequency in Motor verging closely towards pre-pandemic levels and at a higher average cost. Non-Motor lines of business had overall a good performance with a particular class deteriorating as a result of large losses concentration. The Company's results saw an overall improvement as a result of a contained €1.0 million net dividend received from MAPFRE MSV Life p.l.c., which in 2021 had paid no dividend in order to strengthen its Solvency position at the time. The results were also supplemented by a receipt of €0.54 million from the liquidation of Progress Assicurazioni S.p.A..

MAPFRE MSV Life p.l.c. premium sales levels were subdued in the first six months of the year. The With-Profits Fund reduced by 12.9% as at June and 11.3% lower compared to June 2021 in the wake of the financial markets protracted decline and the geopolitical environment and its impact on world economies.

Group's gross premiums written have reduced by 6.3% during the first six months of 2022. Turnover in General Business moved up by 8.6% with the major lines of business delivering higher volume levels with Life premium written registering a drop of 9.9% on the comparative figures.

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.

@ MAPFRE | MIDDLESEA

Preliminary Statement of Interim Results 30 June 2022

Financial highlights for the half year

• · General Business Gross Premium written increased by 8.57% from €41.34 million in 2021 to €44.89 million as at the 30 June 2022.
• · Long term Gross Premium Written by the Group registered an downward movement of 9.89% to €151.75 million compared to €168.40 million in the comparative period of 2021.
• · The Group registered a Profit after taxation for the 6 months ended 30 June 2022 of €8.13 million, of which €5.17 million attributable to shareholders, compared with a profit after taxation of €7.61 million for the same period last year of which €4.93 million attributable to shareholders.
• · Gross Technical Provisions at 30 June 2022 reduced by 12.1% to €2.23 billion compared to the 31 December 2021 reserves of €2.53 billion. Net of reinsurers' share, technical provisions stood at €2.20 billion, a sharp reduction of 12.1% below the 31 December 2021 provisions of €2.50 billion.
• Total assets retracted by 11.0% and totaled €2.52 billion as at 30 June 2022, as compared to the total assets of €2.83 billion at 31 December 2021.
• · Total Equity of the Group attributable to shareholders amounted to €108.47 million as at 30 June 2022, down from €111.04 million at 31 December 2021, with MAPFRE Middlesea p.l.c. having paid a dividend for financial year 2021 of €2.4 million and the reduction in the value of-in-force business outweighing the results for the half year. The net asset value per share stands at €1.18 as at June 2022.
• · Both insurance companies in the Group are compliant with the regulatory solvency requirements under Solvency II regime as at June 2022.

Outlook

The Group looks at the second half of 2022 with cautious optimism in an environment wary of the evolving effects of the Ukraine war, inflation and challenging investment backdrop. The Board and Management remains focused on the Group's strategic actions to meet its set Key Performance Indicators and increasing shareholders returns whilst improving operational 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 2022 (2021 - 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 2022	30 June 2021
	000.3	€'000
Balance on the general business technical account	2,905	4.077
Balance on the long term business technical account	9,186	8,117
Total income from insurance activities	12,091	12.194
Other investment income	125	629
Investment expenses and charges	(224)	(151)
Allocated investment return transferred to
the general business technical account	(200)	(393)
Other income	813	675
Administration expenses	(1,388)	(1,977)
Reversal of impairment on group undertaking	540
Profit for the half year before tax	11,757	10,977
Income tax expense	(3,626)	(3,365)
Profit for the half year	8,131	7,612
Attributable to:
- owners of the Company	5,175	4,927
- non-controlling interests	2,956	2,685
	8,131	7,612
Farnings ner share attributable to owners of the Comnany	506	501

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

		Group
	6 months to	6 months to
	30 June 2022	30 June 2021
	€'000	€'000
Profit for the half year	8,131	7,612
Other comprehensive income:
Other comprehensive Income to be reclassified to profit and loss in subsequent periods
Change in other available-for-sale investments	(470)	(33)
Other comprehensive Income not to be reclassified to profit and loss in subsequent periods
(Decrease)/Increase in value of in-force business	(9,738)	5,282
Total other comprehensive income, net of tax	(10,208)	5,249
Total comprehensive income for the half year	(2,077)	12,861
Attributable to:
- owners of the Company	(164)	7,535
- non-controlling interests	(1,913)	5,326
Total comprehensive income for the half year	(2,077)	12,861

® MAPFRE | MIDDLESEA

Preliminary Statement of Interim Results 30 June 2022

Condensed Statement of Financial Position

		Group
	June	December
	2022	2021
	000.3	€'000
ASSETS
Intangible assets	100,952	109.729
Property, plant and equipment	17,947	17,657
Right-of-use assets	1,629	1,802
Investment property	110,490	110,016
Investment in associated undertakings	19,910	22,831
Other investments	2,080,310	2,421,911
Deferred income tax	2,300	2,313
Reinsurers' share of technical provisions	30,151	33,247
Deferred acquisition costs	9,580	8,427
Insurance and other receivables	37,024	32,069
Income tax receivables	493	308
Cash and cash equivalents	110,624	71,443
Total assets	2,521,410	2,831,753
EQUITY
Capital and reserves attributable to owners of the Company	108,472	111,036
Non-controlling interests	108,019	110,932
Total equity	216,491	221,968
LIABILITIES
Deferrred income tax	44.720	42,599
Provisions for other liabilities and charges	ala	997
Technical provisions:
- Insurance contracts and investment contracts with DPF	2,171,899	2,470,668
- Investment contracts without DPF	54.544	60,869
Derivative financial instruments		775
Lease liabilities	1,698	1,866
Insurance and other payables	30,047	31,173
Income tax payable	1,042	838
Total liabilities	2,304,919	2,609,785
Total equity and liabilities	2,521,410	2,831,753

These condensed financial statements were approved by the Board on 28 July 2022 and were signed on its behalf by:

Martin Galea Chairman

James Mallia

Acting Chief Executive Officer

® MAPFRE | MIDDLESEA

Preliminary Statement of Interim Results 30 June 2022

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
	ca pital	account	reserves	account	Total	interests	Total
	€ 000	€'000	€'000	€ 0000	€'000	€'000	€'000
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				4,862	4,862	2,296	7,158
Other comprehensive income:
Change in available-for-sale investments' fair value			(33)		(33)		(33)
Increase in value of in-force business			2,64 1		2,64 1	2,641	5,282
Total other comprehensive income, net of tax			2,008		2,608	2,641	5,249
Total comprehensive income			2,608	4,862	7,470	4,937	12,407
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	43,428	104,873	105,633	210,506
Balance as at 1 January 2022	19,320	688	44,817	46,211	111,036	110,932	221,968
Comprehensive income
Profit for the half year				5,175	5,175	2,956	8,131
Other comprehensive income: Change in available-for-sale investments' fair value			(470)		(470)		(470)
Decrease in value of in-force business			(4,869)		(4,869)	(4,869)	(9,738)
Total other comprehensive income, net of tax			(5,339)		(5,339)	(4,869)	(10,208)
Total comprehensive income			(5,339)	5,175	(164)	(1,913)	(2,077)
Transactions with owners
Dividends for 2021				(2,400)	(2,400)	(1,000)	(3,400)
Total transactions with owners				(2,400)	(2,400)	(1,000)	(3,400)
Balance as at 30 June 2022	19.320	688	39.478	48.986	108.472	108.019	216,491

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	(36,073)	413
Dividends received	6,676	5,653
Interest received	9,082	10,744
Interest paid	(23)	(44)
Tax paid	(1,465)	(68)
Net cash generated from operating activities	(21,803)	16,698
Investing activities
Purchase of investment property	(475)	(537)
Disposal of investment property		16
Purchase of financial investments	(631,032)	(678,509)
Disposal of financial investments	698,934	611,602
Purchase of property, plant and equipment and intangible assets	(3,043)	(3,910)
Net cash used in investing activities	64,384	(71,338)
Financing activities
Increase in share capital of subsidiary by non-controlling interest		20,000
Dividends paid to owners of the Company	(2,400)	(3,200)
Dividends paid to non-controlling interests	(1,000)
Cash generated from financing activities	(3,400)	16,800
Increase in cash and cash equivalents	39,181	(37,840)
Movement in cash and cash equivalents
At beginning of year	71,443	97,060
Net cash (outflow)/inflow	39,181	(37,840)
At end of half year	110,624	59,220

Notes to the Condensed Financial Statements For the half year ended 30 June 2022

• 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 Capital Markets Rules of the 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 28 July 2022 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 2021. 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 2021.

Related party transactions with other members of the MAPFRE Middlesea Group were at a similar level to the comparable period with the exception of IT services being now rendered to MAPFRE Middlesea p.l.c. and MAPFRE MSV Life p.l.c. by BEE Insurance Management Ltd, the Group's insurance management entity.

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 have been or still in run-off.

	Gross written premiums		Profit before taxation
	6 months to 30 June 2022	6 months to	6 months to 30 June 2021 30 June 2022	6 months to 30 June 2021
	€ 000	€'000	€'000	€ 000
Malta	196.636	209.738	11,757	10.977
	196,636	209,738	11,757	10,977

Statement pursuant to Capital Markets Rule 5.75.3 issued by the Malta Financial Services 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 2022, 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 Capital Markets rule 5.75.2.

Martin Galea Chairman

James Mallia Acting Chief Executive Officer