In 2014 the Group recorded an after-tax profit of €10.41 million for the year.
Gross premiums written (including investment contracts without DPF) for financial year 2014 increased by 40.2% from €111.32 million to €156.05 million. This was mainly due to an increased demand across all products in particular life protection business and single premium savings contracts.
The MSV Group’s total assets increased by 13.7% from €1,372.10 million at the end of 2013 to €1,559.45 million at the end of 2014, whilst the net technical provisions (including investment contracts without DPF) increased by 13.6% from €1,218.98 million in 2013 to €1,385.44 million in 2014.
In 2014, the value of in-force business, disclosed as an intangible asset, increased by 13.3% from €49.21 million in 2013 to €55.77. The value of in-force business reflects the value of the projected future transfers to shareholders arising from policies in force at the end of the year.
The resilience and upturn in equity and bond markets produced stronger returns than those generated in prior year with net investment income increasing from €98.19 million in 2013 to €119.38 million in 2014.
At the end of 2014 the level of net admissible assets for statutory solvency purposes stood at €89.43 million (2013: €82.92 million), which represents an excess of €32.97 million (2013: €33.27 million) over the ‘required margin of solvency’ as stipulated in the Insurance Business Regulation of €56.46 million (2013: €49.65 million).
Total shareholders’ funds at the close of 2014 amounted to €147.13 million (2013: €135.13 million), an increase of 8.9% over the previous year.
The net asset value per share has increased from €6.17 as at the end of 2013 to €6.72 per share driven by the underlying profitability of the business.
The Chairman of MSV Group, John Cassar White, stated “I am pleased to be able to announce another strong set of results registered by MSV Group for 2014. Results were supported by the continuing resilience and upturn in the equity and bond markets which further strengthened on prior year levels as we went through another full year cycle of historically low interest rates. MSV Life’s diversified investment portfolio, the robust investment management process, the quality assets that we hold in the portfolio as well as our tactical positions contributed favourably to our results in 2014. MSV has a strong track record of investment management and we will continue to manage our balance sheet prudently, ensuring that MSV Life remains adequately capitalised at all times and well positioned for both business growth and the forthcoming Solvency II regime. MSV Life remains focused on the generation of capital and its disciplined allocation.”
Mr. Cassar White added, “going forward we will maintain strong focus on our customers by continuously assessing our business processes and operations in order to provide good value and excellent service. To this end we will continue to invest and innovate in information technology. During 2014 we progressed on our major IT programme which will involve the migration of our business to the latest technology in our business. This will enable us to offer superior levels of service to our customer base. In tandem we have a number of initiatives lined up to strengthen further our digital platform and widen our digital marketing strategy.
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 2014. These amounted to 3.15% for the MSV Comprehensive Life Plan (regular and single premium policies), 3.35% in respect of the MSV Comprehensive Flexi Plan (regular and single premium policies), 3.35% under the MSV Single Premium Plan and 3.35% 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 2.4% 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 2015 and the next bonus declaration, at a rate of 1.5% 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 3.15% 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 2.00% 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”).
Notwithstanding the prudent investment policy adopted by MSV Life, past performance is no guarantee for the future. Although MSV’s with-profits investments have generally provided policyholders with satisfactory returns when compared with other similar investment products, in the light of the current uncertainty in the capital markets, investment returns could fluctuate further. Fair value movements and investment returns impinge directly on the rates of bonuses declared by MSV Life. Regular Bonuses are therefore expected to vary over the lifetime of the policy whilst Final Bonuses are likely to be highly volatile and very dependent on the investment performance of the company.
The Chief Executive Officer of MSV Life, David G. Curmi, stated, “in 2014 the life insurance market in Malta retained the strong demand patterns experienced in prior year. 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. We are not driven by growth; we are driven by doing the right thing. We believe that doing the right thing will ultimately lead to growth.”
Mr. Curmi added, “the Maltese life insurance market 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 whilst the Maltese life insurance market has grown significantly between 1994 and 2014, the per capita spend on life insurance is positioned at almost half of the average European spend. We therefore see significant life protection and long term savings uplift potential in the local life insurance market. We look forward with enthusiasm to the opportunity for us to play an important role in the expected national pension reform particularly in the creation of third pillar retirement solutions now that the required legislative framework has been put in place.”
Mr. Curmi concluded, “whilst we have an important role to provide our customers with prosperity and peace of mind we acknowledge that we have a wider commitment to society by also supporting those who are not our customers. We believe that the companies that perform best over time are those that build a social purpose into their operations that is as important as their economic purpose. Over the years we have developed a Corporate Social Responsibility (CSR) policy framework which encompasses shareholders, the environment, employees, communities and customers. Through our CSR programme we provide financial assistance to various sectors ranging from art, culture, heritage, sport, education and charity.”