This was mainly due to the upturn in the equity and bond markets which resulted in a significant increase in net investment income. Furthermore, deferred tax was significantly impacted by the recognition of all unutilised tax amounts available for relief against future taxable income in terms of the applicable law in 2012. This change contributed positively to the Group’s after-tax profit of €15.95 million for the year.
Business written contracted, closing off financial year 2012 at €87.31 million compared to €128.02 million in 2011. This was due to a lower demand for Single Premium investments.
The MSV Group’s total assets increased from €1,165.11 million at the end of 2011 to €1,265.5 million at the end of 2012, whilst the life fund increased by 7.97% from €1,034.55 million in 2011 to €1,117.02 million in 2012.
The value of in-force business increased by 9.46% from €41.77 million in 2011 to €45.72 million in 2012. The value of in-force business reflects the after tax value of the projected future transfers to shareholders arising from policies in force at the end of the year.
At the end of 2012 the level of net admissible assets for statutory solvency purposes stood at €86.49 million (2011: €72.61 million), which represents an excess of €40.88 million (2011: €30.27 million) over the ‘required margin of solvency’ as stipulated in the Insurance Business Regulation of €45.61 million (2011: €42.34 million).
Total shareholders’ funds at the close of 2012 amounted to €129.82 million (2011: €111.65 million), an increase of 16.27% over the previous year.
The net asset value per share has increased from €5.10 as at the end of 2011 to €5.93 per share driven by the underlying profitability of the business.
The Chairman of MSV Group, Frederick Mifsud Bonnici, stated “I am pleased to be able to announce the best sets of results registered by MSV Group to date. During 2012, investment conditions in both local and international markets were once again very challenging and were characterised by continuing low interest rates, a downturn in the global economic activity and a dampened demand for retail financial products. This investment environment is not ideal for a long term investor like MSV Life.”
Mr. Mifsud Bonnici added, “against this background our investment performance was very satisfactory and well underpinned by the company’s conservative and diversified portfolio of assets as well as by the rigorous and prudent investment management process which is so important in the management of life insurance companies.”
Mr. Mifsud Bonnici stated, “in contrast to 2011, our equity and corporate bond portfolios delivered very positive results and were a major contributor to the very satisfactory investment performance.”
Mr. Mifsud Bonnici concluded “MSV Life has total assets of over €1,265.5 million, it has a customer base of over 85,000 policyholders and shareholders’ equity of €129.82 million. It is Malta’s leading life insurance company and prospects for continuing growth and development are encouraging, both in the life insurance and in the long term savings and retirement areas.”
Mr. Mifsud Bonnici on behalf of the Board of MSV Life thanked Roderick Chalmers, who resigned as Chairman of the Group in June 2012, for his immense contribution to the Group. Mr. Mifsud Bonnici stated, “Mr. Chalmers’ vision, foresight and stewardship have no doubt had an important bearing on the excellent results achieved by MSV Life in 2012”
The Board of Directors of MSV Group approved a resolution whereby differential rates of Regular Bonuses were declared in respect of with-profits plans held with MSV Life for the year ending 31 December 2012. These amounted to 2.90% for the MSV Comprehensive Life Plan (regular and single premium policies), 3.10% in respect of the MSV Comprehensive Flexi Plan (regular and single premium policies), 3.10% under the MSV Single Premium Plan and 3.10% under the with-profits options of the MSV Investment Bond and of the MSV Retirement Plan. On the ‘Old Series’ Endowment and Whole Life policies, a Regular Bonus of 2.2% of the basic sum assured plus bonuses was declared.
In addition the Board also approved the declaration of a Final Bonus in respect of the Comprehensive Life Plan (single and regular premium) and the Comprehensive Flexi Plan (single and regular premium) policies that have been in force for more than 10 years. The Final Bonus will be paid on claims payable as a result of death or maturity between 1 January 2013 and the next bonus declaration, at a rate of 0.75% for every year after the 10th year of the policy. This final bonus will be paid on the value of the Policy Account as at the date of death or maturity.
The Board also approved a Regular Bonus of 3.10% on those Secure Growth policies which formed part of the portfolio of business transferred to MSV Life from Assicurazioni Generali S.p.A. during 2000. Finally the Board also approved a Regular Bonus of 1.75% on the Alico 78 policies and a Regular Bonus of 2.0% on the Alico 66 polices which formed part of the portfolio of business transferred to MSV Life in 2011 from American Life Insurance Company (“ALICO”).
The Chief Executive Officer of MSV Life, David G. Curmi, stated, “in 2012 the life insurance market in Malta experienced a lower demand for Single Premium and Unit Linked business. This has led to a reduction in the business written by MSV Life. On the other hand, new sales of our protection and regular savings policies held up well, both against prior year and target levels despite the subdued consumer confidence, and were well spread across all principal product groups. We continue to see good momentum in all our product groupings as customers continue to choose MSV Life, reflecting trust in our brand and in the quality of our service proposition.”
Mr. Curmi added “through the combination of a strong brand, solid reputation, financial strength, product breadth and significant distribution reach, particularly through our successful bancassurance partnership with Bank of Valletta p.l.c. and the important alliance with the Mapfre group, MSV Life is set to play an increasingly important role in the local protection, savings and retirement market.”
Mr. Curmi concluded, “our mission is a very clear one. We shall seek to continue to achieve above average profitability in terms of return on equity. Through a very prudent and conservatively oriented investment strategy we will strive to preserve the capital of our shareholders and the assets of our policyholders at all times. We are driven by an aspiration to excellence in all our actions and we will not compromise our highest standards of responsible corporate management.”