Updated: Middlesea to wind up Italian operation

(Adds chairman's comments)

Middlesea Insurance (MSI) said today that it intends to wind up its loss-making Italian subsidiary.

In a company announcement, MSI referred to its earlier statement reporting a further marked deterioration in the finances of Progress Assicurazioni SpA in the fourth quarter of last year.

"A further detailed examination of the unaudited data as at 31 December 2009 indicated that it would not be possible for Progress Assicurazioni SpA to continue in business in conformity with Italian regulations without the injection of further capital support. The board of directors of Middlesea Insurance plc has concluded that it is not feasible at this time for Middlesea Insrance to provide further capital to Progress Assicurazioni over and above the €45 million that has been injected over the past year."

Progress Assicurazioni has therefore informed the Italian insurance regulators of the situation and that it wished to take the necessary measures to cease writing business in Italy and to wind up the company.

A provisional administator has been appointed.

Chairman Joseph FX Zahra told a news conference that with regard to the reorganisation of MSI, he was greatly encouraged to note that Mapfre and Munich Re committed to providing the insurance with strong professional, technical and technology support.

"Product innovation and development will follow shortly, as will the further enhancement of the strong technical and professional management skills that already reside within MSI”, he said.

Mr Zahra emphasised that he was “very optimistic” as to the prospects of MSI and IIMS which generated positive profits from their local operations.

Asked about Middlesea Valletta Life Assurance Company Limited (MSV), Mr Zahra stressed that MSV was “completely unaffected” by the events at Progress.

“MSV is a completely separate and independent company in which MSI has a 50 per cent shareholding, with the balance of 50 per cent being held directly by the Bank of Valletta. The company and its policyholders are completely unaffected by the losses registered by Progress and MSI, since MSV is a completely independent and separately capitalised company, which does not hold any shareholding in, or other connection with, Progress Assicurazioni SpA.”

He explained that MSV wasrequired by the MFSA to meet very rigorous solvency requirements and capital tests, and had, and would always continue to, maintain solvency and capital ratios that were well above those required at law.

“With over 80,000 customers, shareholders’ equity at close to €100 million, annual revenues of over €100 million, and total assets approaching the €1 billion mark, Middlesea Valletta Life has grown to become Malta’s leading provider of life insurance, long term savings and retirement planning.” said Mr Zahra, adding that MSV would be announcing its FY 2009 results shortly, and that these would show a very satisfactory financial performance for the year.