MAPFRE MSV Life p.l.c. (“MAPFRE MSV Life”) registered a profit before tax of €11.6 million for the year ended 31 December 2016, down 25.6% on the previous year where a €15.6 million profit before tax was generated but which was influenced by a one-off pre-tax gain of €5.05m arising as a result of a major restructuring of the Company’s reinsurance programme replacement as from financial year 2015. Profit after tax stood at €8.6 million, down 14.9% on the previous year.
Operating results were supported by strong inflows of premium revenue across the Company’s range of life insurance, savings and investment products resulting from stronger customer demand.
Gross premiums written for financial year 2016 increased by 23.5% from €220.8 million to €272.6 million. This was mainly due to an increased demand across all products in particular single premium savings contracts and life protection business.
Claims increased to €144.4 million through the year compared to a prior year €109.2 million due to a higher amount of maturing medium-term single premium contracts, the large proportion of which has subsequently been re-invested in new medium-term contracts.
In aggregate the balance on the long term business technical account decreased to €10.7 million from a prior year €14.1 million as a result of the non-recurring gain from the restructuring of the reinsurance programme in 2015 but the technical result was still supported by strong business growth and technical performance.
The MAPFRE MSV Group’s total assets increased by 10.7% from €1,743.9 million at the end of 2015 to €1,930.4 million at the end of 2016, whilst net technical provisions (including investment contracts without DPF) increased by 11.0% from €1,561.1 million in 2015 to €1,733.4 million in 2016.
The value of in-force business, which projects future transfers to shareholders arising from policies in force at the end of the year, increased by 12.4% from €53.4 million in 2015 to €60.0 million in 2016. This is partially attributable to the future value of business written during the year and the impact of the year’s updated mortality assumptions.
Equity and bond markets produced robust yet somewhat weaker returns than those generated in prior year with net investment income decreasing from €91.2 million in 2015 to €78.1 million in 2016. Investment performance was underpinned by the Company’s conservative and diversified portfolio of assets, as well as by the rigorous and prudent investment management process that is so important in the management of life insurance companies.
Total shareholders’ funds at the close of 2016 amounted to €160.3 million (2015: €150.2 million), an increase of 6.7% over the previous year.
The net asset value per share has increased from €6.86 as at the end of 2015 to €7.32 per share driven by the underlying profitability of the business.
The Directors recommended the payment of a final net dividend of €11.55 million (2015: €5.00 million). The Company’s expected Solvency II Ratio as at 31 December 2016 reported to the MFSA is 307% and 288% before and after the payment of dividend respectively.
The Chairman of MAPFRE MSV Life, Mr. John Cassar White stated, “2016 was another challenging year for insurance companies as investment conditions were characterised by continuing low interest rates, low inflation and a relatively weak Euro currency resulting in lower realised yields and stable unrealised gains when compared to the prior year. This investment environment is not ideal for a long-term investor like MAPFRE MSV Life.”
Mr. Cassar White stated, “We are however encouraged by the fact that in 2016 the life insurance market in Malta retained strong demand patterns. We continue to see good momentum in 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.”
Mr. Cassar White concluded, “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 the regulatory capital requirements of the now applicable Solvency II framework. The smooth and seamless transition from the outgoing Solvency I regime to the incoming Solvency II regime has allowed MAPFRE MSV Life to recognise a higher element of excess regulatory capital on transition and this has been taken into consideration by the Directors when recommending an uplift to this year’s dividend level. MAPFRE MSV Life remains focused on the generation of capital and its disciplined allocation and appropriation.”
The Chief Executive Officer of MAPFRE MSV Life, Mr. David G. Curmi, stated, “2016 marked another strong performance for MAPFRE MSV Life. During 2016 we rebranded as MAPFRE MSV Life p.l.c. reflecting better our new corporate roots and aligning with the brand promises of our ultimate owner MAPFRE. We believe that this investment in our branding reinforces the identity of the Malta brand, adds a new layer of value by connecting the Company to the MAPFRE Group and gives the Company an important international dimension.”
Mr. Curmi added, “we are totally committed to maintain a strong focus on our customers by regularly assessing our business processes and operations in order to provide good value and excellent service. We regard the continuous uplift of our service to our customers as the clear path to sustainable competitive advantage. To this end we will continue to invest and innovate in information technology. During 2016 we made significant progress on our core IT project and commenced on a series of product rollouts from old legacy systems to new technologies. This will enable us to offer superior levels of service to our customers. In tandem we have a number of initiatives lined up to strengthen further our digital platform and widen our digital marketing strategy.”
Mr. Curmi concluded, “as the leader in the medium to long-term savings market in Malta, we are following very closely developments within the voluntary occupational pension scheme (VOPS) area following Government’s announcement in last year’s Budget that it will introduce a number of fiscal incentives to encourage employers to set up VOPS for their employees. We believe we are well positioned to lead on the creation and provision of eligible schemes in this area.”
The Board expressed its gratitude and appreciation to the management and staff for their commitment and contribution to another satisfactory year, to intermediaries for their continued support and to the many loyal customers for placing their trust in MAPFRE MSV Life.