Mapfre MSV Life plc. registered a profit before tax of €14.5 million for the year ended December 31, 2019, up 5.8 per cent on the previous year where a €13.7 million profit before tax was generated. Profit after tax amounted to €11.7 million, up 7.3 per cent on the €10.9 million in the previous year.
Operating results were supported by a significant appreciation in asset values on the back of favourable market conditions as well as strong inflows of premium revenue across the company’s range of insurance and investment products. Gross premiums written for financial year 2019 totalled €282.9 million, 11.6 per cent down on a prior year, €320.0 million, impacted by a lower demand for single premium business partially offset by a growing demand for longer-term regular premium savings and retirement products.
Net claims incurred increased to €210.1 million compared to a prior year €145.7 million due to higher maturities of medium-term single premium contracts. A large proportion of maturing contracts were subsequently re-invested in new medium-term contracts.
Total assets increased by 12.8 per cent from €2,213.4 million at the end of 2018 to €2,497.1 million at the end of 2019, whilst net technical provisions (including investment contracts without DPF) increased by 14.3 per cent from €2,013.9 million in 2018 to €2,301.8 million in 2019.
The value of in-force business, which projects future transfers to shareholders arising from policies in force at the end of the year, increased significantly by 17.4 per cent, from a €62.6 million value in 2018 to €73.5 million in 2019. This is attributable to the impact of new business inflows, strong investment returns, improved technical margins, low surrenders and improved mortality performance when comparing actual mortality to assumed mortality.
Total shareholders’ funds at the close of 2019 amounted to €147.4 million (2018: €160.0 million), a decrease of 7.9 per cent over the previous year due to the distribution of prior year dividends, yet well ahead of minimum solvency requirements. The solvency ratio stood at 245 per cent at the end of 2019. The shareholders of Mapfre MSV Life are wholly committed to ensuring that the company remains adequately capitalised at all times and well positioned for both business growth and effective regulatory capital thresholds in place under the Solvency II framework.
The Mapfre MSV With-Profits Fund increased by 13.8 per cent from €1.89 billion in 2018 to €2.15 billion at 31 December 2019. The total investment return of the Fund amounted to €222.9 million recovering strongly from the negative €43.1 million downturn in 2018.
Mapfre MSV Life plc chairman John Cassar White said: “2019 turned out to be a very good year for investors. Mapfre’s MSV With-Profits Fund returned a net return of 11.02 per cent reflecting strong gains in most asset classes in its portfolio. Developed market equity holdings delivered double digit returns as markets recovered from their 2018 slump.
“The investment strategy of the Mapfre MSV With-Profits Fund is to hold a diversified range of quality assets and currencies that mitigates against market risk. This asset diversification together with the robust investment management process, the quality of the asset managers engaged and the company’s strong track record of investment management mean that the Fund is well placed to capture an upturn in investment markets.”
Mapfre MSV Life plc CEO David G. Curmi said: “In 2019, the life insurance market in Malta displayed some weakening of the strong demand patterns for With Profits single premium contracts that have characterised the market in last few years. This was mainly due to the lower regular bonus rates on these contracts and the increased competition for liquidity from the corporate bond market. On the other hand, there is an evolving demand for new regular premium retirement savings products driven mainly by fiscal benefits.
“During the year, there were important developments within the Voluntary Occupational Pension market following Government’s introduction of a number of fiscal incentives to encourage employers to set up Voluntary Occupational Pension Scheme (VOPS) for their employees. The regulatory framework and fiscal incentives were formalised towards the end of the year and we immediately launched the first insurance based voluntary occupational pension scheme in the market – the Mapfre MSV Life WorkSave Pension Scheme, resulting in a significant amount of interest at this early stage of the product’s life.
“The Maltese life insurance market has, for a number of years, registered growth that is significantly above the average in Europe but remains an underinsured market. Although life insurance companies are playing an increasingly important role in Maltese household savings, comparative studies with other European life insurance markets show that while the Maltese life insurance market has grown significantly between 1996 and 2019, the life insurance density and life insurance penetration still fall below the European average. We therefore see attractive potential for an uplift in life protection, long term and retirement solutions in the local life insurance market. We continue to see good demand for all our product groupings as customers continue to choose Mapfre MSV Life, reflecting trust in our brand and in the quality of our service proposition.”