Middle Sea takes majority shareholding in Mapfre Spa

by Ivan Brincat

Middle Sea Insurance has acquired a 51 per cent shareholding in Mapfre Progress Spa for Lm1.8m.

The company has joined forces with one of the largest financial institutions in Spain, the Corporacion Mapfre Compania Internacional de Reaseguros, to operate a non-life insurance company based in Sicily and operating in southern Italy.

Details of the agreement were given by Middle Sea Group chairman Mario C. Grech. Middle Sea entered into a promise of sale agreement on Tuesday with Corporacion Mapfre to acquire a controlling interest in Mapfre Progress. The new capital of Mapfre Progress will increase to US$8.5m as a result of this acquisition. Mapfre will retain 49 per cent shareholding in Mapfre Progress. Middle Sea's first move will be to make the company break even and post a profit within four years, Mr Grech said. The company is still registering losses due to the Spanish company's focus on the Latin American market. However, the Middle Sea chairman said the losses were acceptable, otherwise the company, which was established in the 1970s, would have closed down.

The company has 55 agents operating in Sicily, Puglia, Calabria and Campagna and Middle Sea wants to introduce other services, such as a retirement plan, once it gets a licence.

Following this acquisition, Middle Sea will also be looking at other countries in the Mediterranean to the south of Malta and has plans to expand in Cyprus and Greece. Mr Grech also said the company had a voluntary option to buy more shares in Mapfre Progress. The conclusion of the actual transfer of shares is expected to take place by the end of September in accordance with the statute of Mapfre Progress.

Domingo Sugranyes, director and general manager of Corporacion Mapfre, said he was pleased to have signed an agreement with Middle Sea. The company, he said, had been looking for an ideal partner and had found one in Middle Sea. The board of directors, to be appointed after the share transfer, will consist of five directors - three to be appointed by Middle Sea Insurance plc and two by Corporacion Mapfre.

The chairman will be appointed by Middle Sea. Stephen Gauci will be general manager, assisted by other management executives from Middle Sea. The supporting services, including internal audit, management information systems and finance and investments will be supported by the Middle Sea Group.

Mapfre Progress was established in the late 1970s with its legal headquarters in Sicily. In 1988, the company became a subsidiary of the Spanish group. The company employs 27 executives and is licensed to write most classes of general business.

Middle Sea is the leading Maltese life and general insurance group. As at December 1999, the company's assets amounted to US$114.7m with an annual premium income of US$25m. Middle Sea holds a 51 per cent shareholding of Middle Sea Valletta Life Assurance Company Limited which, at 31 December 1999 had total assets of US$155m and premium revenue of US$33m for the year then ended. Since 1987 Middle Sea has been active in reinsurance through its branch office in London and on 22 March was issued a licence to operate in Gibraltar. Mapfre is the leading Spanish life and non-life insurance group. The group had consolidated revenues of US$4.5bn in 1999 and consolidated net income of US$138m.

Mapfre's direct international insurance strategy in the first place is oriented towards Latin America where it has operations in 12 countries. The group is also internationally active in reinsurance (Mapfre Re) and in travel assistance (Mapfre Asistencia).

Corporacion Mapfre is a holding company which regroups Mapfre Mutualidad's subsidiaries.