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Company Registration Number: C 5553

MAPFRE MIDDLESEA p.l.c.

Annual Report

31 December 2025

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Contents

		Page		Page
	Chairman's Statement	i.	6.    Amounts determined in transition to IFRS 17	127
	President & Chief Executive Officer's Statement	v	7.    Segment information	131
	Directors’ Report	1	8.    Investment return	134
	Corporate Governance Statement	8	9.    Other income	136
	Remuneration Statement and Report of the   Remuneration Committee to the Shareholders	29	10.    Profit before tax	136
	Statement of profit or loss	40	11.    Employee compensation	137
	Statement of  profit or loss and other      comprehensive income	41	12.    Income tax expense	137
	Statement of financial position	42	13.    Directors’ emoluments	138
	Statement of changes in equity	43	14.    Earnings per share	139
	Statement of cash flows	47	15.    Dividends	139
	Notes to the financial statements	48	16.    Intangible assets	140
	1.    Basis of preparation	48	17.    Leases	142
	2.    Accounting policies	49	18.    Property, plant and equipment	143
	2.1    Consolidation	49	19.    Investment property	147
	2.2    Segment reporting	51	20.    Investment in subsidiary undertakings	155
	2.3    Foreign currency translation	51	21.    Investment in associated undertakings	157
	2.4    Intangible assets	52	22.    Other investments	159
	2.5    Property, plant and equipment	52	23.    Deferred income tax	164
	2.6    Investment property	53	24.    Insurance contract assets, insurance contract                  liabilities, reinsurance contract assets and                    reinsurance contract liabilities	166
	2.7    Investments in subsidiary undertakings	54	24.1  Composition of statement of financial             position	166
	2.8    Investments in associated undertakings	55	24.2  Short-term insurance contracts under PAA             model	167
	2.9    Financial instruments	55	24.3  Long-term insurance contracts - Life risk	176
	2.10  Insurance and investment contracts issued               and reinsurance contracts held	63	24.4  Life risk - Reinsurance contracts held	181
	2.11  Current and deferred income tax	86	24.5  Investment contracts with DPF	185
	2.12  Provisions for pension obligations	87	24.6 Long term contracts - inputs assumptions               and estimation techniques	188
	2.13  Revenue recognition	87	25.    Investment contract liabilities	194
	2.14  Investment return	88	26.    Trade and other receivables	194
	2.15  Leases	89	27.    Cash and cash equivalents	195
	2.16  Impairment of non-financial assets	90	28.    Share capital	195
	2.17  Offsetting	91	29.    Other reserves	196
	2.18  Dividend distribution	91	30.    Other payables	198
	2.19  Share capital	91	31.    Cash generated from  operations	199
	3.    Use of accounting estimates and judgements           in applying accounting policies	91	32.    Commitments	199
	4.    Management of risk		33.    Contingencies	200
	4.1  Insurance risk	93	34.    Related party transactions	200
	4.2  Financial risk	102	35.    Statutory information	206
	4.3  Fair values	122	Independent Auditors’ report	207
	5.    Capital management	126

i

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Chairman’s Statement

I have great pleasure in informing you that the MAPFFRE Malta Group has recorded the

highest profit in its history. This is coming on the back of three years of consistent growth in

total premium sales as well as net profit. There are a number of reasons for this including

closer alignment of the risks the Company underwrites to pricing which has improved our

loss ratio, a general reduction in losses in motor business, and an increase in premiums

written across the major lines of business.

To some extent this reflects the strong economic performance within the country with GDP

expected to increase by approximately 4% whilst the main economic pillars including

tourism, financial services, and gaming continuing to perform strongly. The labour market

remains very tight, which may impact growth, on the other hand population pressures and

increasing tourism numbers on the Island are having an impact on quality of life. Adjusted

population figures indicate that population is fast approaching 600,000. Other economic

indicators including Government deficit, inflation, public debt and unemployment indicate a

strong economy.

Internationally the outlook is less rosy and indeed more uncertain, and any adverse events can

impact our own economy. The United States new administration has implemented a radical,

and highly transactional approach to international politics, marking a departure from the post-

WWII international order. This is exacerbated by the continuing tragic war in Ukraine and

the conflict in Gaza and recently the instability in the Middle East, which continue to create

global tension. The use of tariffs for political persuasion, and the turmoil within NATO and

the EU with United States point to a continuing uncertainty. These dynamics create

uncertainty around energy prices, supply chains, and trade policy, influencing inflation and

central bank decisions. In this environment, diversification across regions and asset classes,

along with exposure to defensive sectors and liquidity buffers, remains essential. In the

specific case of MAPFRE MSV Life p.l.c., the With-Profits portfolio, is well diversified and

structured to meet these challenges as far as possible while capturing selective opportunities

arising from geopolitical shifts. At present no pressures have been identified that would

challenge the Group's capital or liquidity adequacy, business continuity, and cyber threats due

to such heightened geopolitical risks.

In these last years we have lived through almost continuous upheave with Financial Crises,

Covid and now political crises and must continue to manage in a world increasingly fraught

with uncertainty. To MAPFRE as insurers we must add climate risk as a specific risk

affecting our industry.

MAPFRE operation in Malta

The Group results comprise of MAPFRE Middlesea p.l.c. (“MAPFRE Middlesea”, “MMS”

or “Company”), which is principally a General Insurance company (writing mainly Motor,

Health, Home, Travel, Hull and others (including a small element of Group Life). MAPFRE

Middlesea also has a 50% interest in MAPFRE MSV Life p.l.c. (“MAPFRE MSV Life”,

“MMSV”), which is a Life and Savings Investment company – the other 50% being owned

by our partner Bank of Valletta p.l.c.. Other Group companies include the subsidiary BEE

Insurance Management Limited and the associate Middlesea Assist Limited. whose positive

results, though not material, contribute to these financial statements.

ii

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Chairman’s Statement - continued

Results

Both MMS and MMSV have delivered a satisfactory result exceeding set targets delivering to

the Group an improved result on the already significant 2023 and 2024 result. The Group’s

€29.6 million profit before tax represents a healthy pre-tax return on equity of 15.5%. The

Statement of Financial Position remains strong and our liquidity and solvency ratios remain

well above the minimums required reflecting the groups cautious approach to risk.

Dividends

MAPFRE Middlesea is declaring a net dividend of €6.0 million ( 2024 €4.8 million) out of

the net attributable profit after tax of €11.6 million. This translates into a net dividend per

share of €0.065217. During the year we received a net dividend of €1.5 million from

MAPFRE MSV Life which is an increase of 50% over last year. Although MAPFRE MSV

Life has a high solvency ratio, the Board of Directors maintain a defensive dividend policy.

The profits retained at MAPFRE MSV Life remain part of the shareholders' funds.

Corporate Social Responsibility

In 2025, MAPFRE Malta successfully achieved its CSR goals by partnering with various

entities to organize numerous activities, including food and blood donations, environmental

initiatives, and contributions to several charitable organizations and NGOs.

The local commitment of Fundación MAPFRE, which in 2025 celebrated its 50th anniversary

continued unabated. A number of local projects continue to be supported by the foundation

such as the "Street Smart Campaign”, Doctors For Road Safety (D4RS), and the "Logging

Off" initiative. Furthermore, the Foundation also provided its support in respect to the launch

of a pensions guide in Malta. This guide, which was rolled out digitally aims to educate on

the importance of starting to save for retirement as early as possible.

Change of Name

In the forthcoming Annual General Meeting you will have before you a resolution to change

the name of the company from MAPFRE Middlesea to MAPFRE Malta. The name

Middlesea has served us well and has been part of the name of this company since inception.

A change of name is not something the board of directors undertakes lightly. We do see clear

tangible benefits in aligning our name with the larger global brand of MAPFRE - this in

marketing, recognizability, profile as well as image. We therefore cast aside nostalgia and

perhaps affection, for a harder nosed business calculation. You will note that this coincided

with a new branding at MAPFRE Group level and therefore the opportunity had to be seized

at this time. I do hope you are as pleased with the rebrand as your Board of Directors is.

iii

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Chairman’s Statement - continued

Governance

The world of insurance is increasingly complex and remains highly regulated. The Board of

Directors is determined to maintain the highest levels of compliance with the welter of new

regulations, accounting standards, and codes of practice which we have had to implement in

recent years. We maintain an open relationship with our regulators; the MFSA, FIAU and

Sanctions Board, as well as the Listing Authority and we have ensured that our Risk and

Compliance functions are adequately resourced to meet our obligations. This comes at some

cost and I do believe that whilst we do believe in strong regulation, we also believe this

should be tailored to ensure that operators comply with the law, as well as the spirit of the

law, and enforcement, and inspections carefully targeted to capture the bad players.

I can report that the Board meets regularly and is supported by board committees for Risk

and Compliance, Audit, and Remuneration as well as receiving technical support from

MAPFRE S.A. This allows the board to set strategy, challenge management, and ensure

adherence with the highest standards of the group, relevant regulation and best practice.

Distribution

The business relies heavily on a network of 6 agents, around 60 Tied Insurance

Intermediaries, and brokers to generate the majority of its insurance premium, with only 10%

of business written directly. Beyond providing insurance coverage, the company focuses on

supporting its intermediaries with products, and technical support and ensuring as far as

possible competitive pricing. Whilst we commit to continue provide an improved service, the

Board of Directors would wish to recognize the efforts of our agents and tied intermediaries,

as well as brokers, in achieving the excellent results we enjoy this year, as well as for

providing an excellent service to our ultimate customers.

It is pertinent to mention Bank of Valletta which is the largest producer for MAPFRE MSV

Life, particularly for investment products and term assurance. The partnership can be 

described as crucial to the company's results and has proven successful for both shareholders

and customers.

Digital Transformation

Whilst we can, I believe justifiably record our achievements, we must also record where we

have not. Our digital transformation at MAPFRE Middlesea has not been completed as

planned and target moved to 2026 with  considerable expertise and resources from MAPFRE

S.A. to ensure we get over the line by mid this year. It is yet another example of the benefit of

forming part of a large international group.

On the other hand I am pleased to report that at MAPFRE MSV Life we have achieved live

status in the new digital platform introduced there.

iv

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Chairman’s Statement - continued

Directors and shareholders

MAPFRE Middlesea p.l.c. is a listed entity regulated by the Malta Financial Services

Authority. It is a subsidiary of MAPFRE Internacional S.A.. Being part of one of the largest

insurance companies in the world allows us to access technical knowhow and expertise which

is at the cutting edge of the industry. It has allowed us to develop the business to the latest

standards by providing relevant support in all sectors. MAPFRE Internacional S.A. has a

shareholding of 55.83% in the Company.

Bank of Valletta p.l.c. is the other major corporate shareholder with 31.08% of the

shareholding and is a 50% co-shareholder in MAPFRE MSV Life p.l.c.. The bank has proved

to be a steady partner throughout the years, providing input and insight at board level and the

relationship remains strong. 13.09% of the shareholding in MAPFRE Middlesea is held by

the so-called smaller shareholders, of which we have some 3,700.

I have the privilege to work with a dedicated board of professionals who have provided

direction and support to the Company’s executives. Javier Moreno, Jose Maria del Pozo,

Etienne Sciberras and Elvira López de Lara Merida who represented the MAPFRE

shareholding. Gordon Cordina, who is the chair at Bank of Valletta, and Godfrey Swain were

appointed by Bank of Valletta. The smaller shareholders elected Antoinette Caruana and Paul

Testaferrata Moroni Viani. I work with a board which has a full range of skills, and

intellectual capability to grapple with the tasks before it. To all of them I am very grateful for

their contribution and support.

During the year Eduardo Perez de Lema, CEO International Insurance at MAPFRE S.A., and 

Jose Luis Jimenez, resigned due to their increased work commitments at the highest echelons

within the MAPFRE group in Madrid. I must place on record my own personal thanks as well

as that of the board for their important contribution to the board. I am happy to report

however that their connection with MAPFRE Malta remains due to our interactions with the

MAPFRE Group.

I must also mention the retirement of Joseph FX Zahra from the board of MAPFRE MSV

Life. Mr Zahra was a director connected with the MAPFRE Malta group for 28 years

including during the most turbulent times. His erudite contributions will be missed.

Etienne Sciberras, as Malta and MAPFRE Middlesea CEO as well as Elvira López de Lara

Merida, CEO of MAPFRE MSV Life, who have ably led and inspired our team of dedicated

professionals including Chief officers, managers, and all staff who form part of this group of

companies, together with the board I salute their hard work and achievement.

Signed by Martin Galea (Chairman) on 24 March 2026

v

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

President & Chief Executive Officer’s Statement

MAPFRE Middlesea Group highlights

It is with great pleasure that I am reporting to you the highest ever consolidated profit figure

for the MAPFRE Group in Malta ("Group"). In 2025, we have registered an extraordinary

performance across the local group operation.  We have managed to exceed the already

excellent 2024 performance. This result was possible as both MAPFRE Middlesea p.l.c.

(“MAPFRE Middlesea”, “MMS”, “Company”) and MAPFRE MSV Life p.l.c. ("MAPFRE

MSV Life", "MMSV") registered an excellent financial performance over the reporting

period.

Therefore, I would like to start by thanking and acknowledging the work and contribution of

our staff, our Tied Insurance Intermediaries, our Agents and our strategic partners for such an

outstanding performance. I am also grateful for the various brokers who place their business

with us. Finally, I cannot fail to mention my fellow Board members and various members of

our governance bodies for their guidance, challenge and support.

The year 2025 marks the mid-point in our current three-year Strategic Plan. The execution of

this plan is progressing well. The key performance indicators set have been achieved.

The Political and Economic Context

The political context remained a complex and uncertain one. Never have we witnessed such a

seismic shift within a relatively short time span in US government policy. Transatlantic

relations between the US and European countries have come under considerable strain. Many

countries have been hit by the imposition of tariffs by the US. The US stance towards NATO

and climate change brought about a recognition that the EU needs to stand on its own feet. In

this climate, global growth has remained modest. The US maintained a relative strong

momentum, but China’s growth moderated compared to the pre-pandemic period while

growth in Europe was modest. On the positive side, inflation broadly continued to decline.

This enabled Central Banks to continue to normalize interest rates.

Global financial markets experienced another volatile year. The initial concerns of the impact

on inflation and global growth induced by the roll out higher tariffs by the US administration

resulted in a steep fall in developed markets equities. However, these concerns were later on

during the year shrugged aside as the markets focused on the positive implications of fiscal

and monetary stimulus. Artificial intelligence (AI) remained the dominant theme driving US

equities.  Sectors mostly exposed to this theme outperformed the broader market returns. In

general fixed income delivered low but positive returns. For European investors, the

weakening dollar lowered investment returns from dollar denominated investments. 

The local economy continued to register one of the strongest economic growth rates in the

European Union. While inflation remained aligned with European averages, unemployment

remained well below the European averages. The fiscal situation continued to improve with

the deficit ratio converging towards the EU threshold. Public debt moved below 50% of

GDP, below the EU average and the Maastricht 60% guideline.

This sustained positive economic activity continues to spur the demand for various insurance

products.

vi

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

President & Chief Executive Officer’s Statement - continued

Group Financial Performance

The total business written has been €323.5 million (2024: €309.5 million). Both MAPFRE

Middlesea and MAPFRE MSV Life registered year-on-year increases in terms of total

business written. MAPFRE Middlesea registered growth in gross premium earned across all

its classes of business.

The consolidated MAPFRE Group's result in Malta for the year under review have been

excellent with a pre-tax profit of €29.6 million. The reported profitability is significantly

above last year reported figure of €24.8 million. This equates to Earnings per share of 16c2

(2024: 13c6) an increase of 19.3% over 2024 corresponding figure.

The Premium written figure for MAPFRE Middlesea including group life reached a total of

€113.6 million at the end of 2025, representing an increase of 9.6% over 2024.  MMS

registered a profit before tax of €16.9 million. This is 60.2% above the 2024 reported

profitability. Profit after tax was equal to €11.6 million compared to previous year’s figure of

€7.1 million.  This exponential increase in reported profitability was underpinned by

significantly better technical and financial performance. Furthermore, these results reflect a

higher dividend from Group companies, primarily from MMSV.

The insurance service results saw a significant improvement from previous year, driven by an

improvement in the non-life net combined ratio which has moved to 82.3% compared to

86.4%. The main lines of business continued to perform well, particularly motor. While this

result is testament to a prudent underwriting approach, robust risk management, cost

discipline and rigorous claims management process, it is recognized that the significantly

lower than expected frequency of motor claims experienced in 2025 is unlikely to be

sustained at the same levels, in the near future. 

Regarding the long-term business, while a notable improvement was registered in business

written, the competitive landscape remains challenging. Key figures of MMSV's results are

disclosed in a specific section within this report.

General Business

Premium Written in 2025 reached €111.1 million, representing an increase of 9.2% over

2024. This represents an all-time high in premium written. Premium growth was achieved

across all the lines of business.

In our comparison with the rest of the market, we maintained a clear leadership position with

a market share of 31.9% in 2025, which is a slight increase from the 31.6% we had in 2024.

We maintain proportionate leadership in most business lines.

Our business model caters for various insurance needs covering commercial and personal

segments. Personal lines remain our core business. Motor, health and Fire and property

damage remain the main classes of business written. Together these three lines of business

represent over 83.5% of the gross written premium.

The overall non-life net Combined Ratio (COR) which is the key performance indicator in

our business closed at a positive 82.3% a satisfactory improvement on the already very

positive 86.4% registered a year earlier.

vii

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

President & Chief Executive Officer’s Statement - continued

General Business - continued

The main contributor to the improved combined ratio was the motor class of business. The

performance of the Motor business portfolio weighs heavily on the overall financial

performance of our company. This is a direct consequence of motor representing 45.2% of

the non-life portfolio. The already very positive evolution registered in 2024, for this line of

business, was sustained and improved upon in 2025. The motor portfolio registered a

significantly better performance than its long-term average. The motor net combined ratio in

2025 was 83.0%, a further improvement on the 85.0% reported in 2024. In the main this was

the result of the disciplined underwriting approach applied and a lower claims frequency.

Particularly the latter left a significant positive impact compared to normal long-term

experience. As can be appreciated, some of these factors are not within the company’s

control. Having said this, a sound motor portfolio remains critical for the sustained

profitability of our company. Therefore, in line with our strategy, data remains a key enabler.

Improving data quality and analysis capabilities to better quantify and price risk remains high

on our strategic priorities.

On the other hand, the Health business and other classes of business registered an

improvement in the net combined ratio compared to the previous year from 89.8% and 87.1%

to 89.1% and 73.4% respectively. The health portfolio saw a marginal improvement in loss

ratio. Other lines of business also registered a positive evolution compared with previous

year. All other lines of business, with exception made for travel, closed the year with a net

combined ratio below 100%. The most notable positive development was registered in

Marine hull, which in 2024 had the worse net combined ratio compared to the other lines of

business.

These results highlight reflect a positive commercial and extraordinary technical performance

during the reporting period. The company’s business model remains well diversified across

lines of business and sources of business generation. Our risk appetite remains tilted on the

conservative side with a reinsurance program reviewed and approved by the Board of

Directors on a yearly basis. This allows us to mitigate negative movements in specific asset

classes and hence mitigate the volatility in our statement of financial position.

Finance Income

Investment income was €4.8 million an increase over the €2.6 million reported in the

previous period. While the return from the investment portfolio was lower than in 2024, the

higher dividends from Group companies more than offset this reduction.

Long Term Business

MAPFRE MSV Life offers a wide range of protection, savings, investments and retirement

solutions addressing the diverse needs of individual clients, companies as well as other

organisations.

viii

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

President & Chief Executive Officer’s Statement - continued

Long Term Business - continued

Total business written for financial year 2025 totaled €209.9 million, representing an increase

of 2% compared to the previous year-end close of €205.8 million. Single premium business

was marginally better than 2024 as demand for With-profits business improved. Regular

premium business continued to perform well, supported by strong demand for life protection

products and sustained pension business. 

MAPFRE MSV Life registered a profit before tax of €15.7 million for the year ended

31 December 2025, compared to a profit of €15.0 million registered for the previous year.

Profit after tax is at €11.2 million, compared to a €11.0 million for the previous year. These

results are underpinned by a positive contribution both from the insurance activities and

financial income.

This business performance is influenced by both internal and external factors. The internal

factors are those normally considered within management control. These depend on the

business model of the company, its strategy and effective and efficient execution. On the

other hand, the external factors include the health of the local economy, the performance of

global capital markets and Central banks’ monetary policy. These elements influence the

demand and purchasing capacity of the consumer, the investors’ appetite and sentiment and

the competitive landscape.

In terms of the insurance activities, the release of the Contractual Service Margin (CSM)

remains the main determinant of reported profitability. Most of the release in CSM relates to

business written in prior years. New profitable business being written adds to the stock of

CSM for future release. Thus, normally, in life insurance, as long as business written is

profitable, a lower volatility in insurance performance from one year to the next is observed.

During 2025, the CSM release represented  €12.4 million (2024:  €10.8 million).

Net claims incurred decreased to €226.1 million through the year compared to a prior year

€249.0 million, largely as a result of a decline in maturing contracts. A proportion of these

maturing contracts were subsequently re-invested in new medium to long-term contracts.

Total assets increased by 1.1% to €2,384.0 million by the end of 2025.

Total shareholders’ funds at the close of 2025 amounted to €182.5 million (2024: €174.3

million), an increase of 4.7% over the previous year.

The MMSV With-Profits fund Assets Under management remained practically at the same

level when compared to previous year. The MMSV With-Profits fund closed at €1.84 billion

as at 31 December 2025 (2024: €1.86 billion). Over the past year, we continued to see

increased debt issuance, particularly in Malta Government stock issues. These heightened

debt issuances coupled with time deposits continue to compete directly with the With-Profits

product offering.

The With-Profits Fund registered a total investment gain of €78.5 million generating a

positive return of 4.3%%. The investment return was similar to 2024, which had amounted to

€79.7 million.

ix

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

President & Chief Executive Officer’s Statement - continued

Long Term Business - continued

Financial markets dealt with many cross currents in 2025. The first half of the year was

dominated by trade concerns as the US raised tariff rates. Developed market equities fell in

early April but ultimately shrugged off the impact. In the second half of the year markets

focused on the positive implications of fiscal and monetary stimulus. Risk-on sentiment

drove an “everything rally,” and 2025 was the first year since the pandemic where all major

asset classes delivered positive returns. Emerging markets were the top-performing equity

market in 2025. Gold dominated the headlines as international central banks continued to

diversify their reserve holdings and gold exchange-traded funds saw strong inflows, however,

silver outperformed. Strong performance from precious metals offset falling oil prices, lifting

overall commodities returns in 2025. Fixed income however, underperformed other asset

classes as fiscal concerns continued to weigh on government bonds and curves steepened in

all major markets.

The investment strategy of the MMSV’s With-Profits fund is to hold a diversified range of

quality assets, spread across different geographies and currencies to mitigate market and

concentration risk. This asset diversification together with the robust investment management

process, the expertise of the asset managers engaged, and the Company’s track record of

investment management continue to be fundamental in managing policyholders’ assets in this

challenging and ever more volatile investments market environment. Notwithstanding the

prudent investment policy adopted by MAPFRE MSV Life, past performance remains no

guarantee of future results.

Statement of Financial Position

The Group's total assets increased by 1.5% and totaled €2.5 billion at year end. MAPFRE

Middlesea's total assets increased by 5.2% from €173.3 million in 2024 to €182.4 million by

end of December 2025.

On the liabilities side, 98.1% of the balance pertains to Insurance, investment and reinsurance

contracts liabilities. MMSV’s Insurance contract liabilities decreased as With-profits policy

maturities outweighed new fund flows into the With-Profits fund. Investment contract

liabilities continued to increase as further unit linked products were issued in the year under

review. MMS’s insurance contracts liabilities increased by 3.8% compared to the previous

year reflecting mainly the increased business written.

Total equity increased by €14.7 million or 8.0% including the minority with the profit for the

year partly mitigated by the dividends paid.

x

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

President & Chief Executive Officer’s Statement - continued

Strategic Plan 2024-2026 (previously 2025-2027)

During 2025, Management sought and obtained Board approval to reset and align the period

of its strategic plan to 2024-2026. The rational for this recommendation was twofold. On the

one hand the realization that the political, economic and technological landscape has evolved

significantly and secondly this reset will align the MAPFRE Group in Malta to the MAPFRE

SA strategic cycle. Thus, we can benefit from the roll out of MAPFRE Group wide projects,

their execution and be in sync with respect to the global strategic plan for the forthcoming

strategic cycle.     

The current strategic plan is based on the four strategic Pillars outlined below. These are

supported by a number of transversal enablers.

Profitable growth

The level of execution of the various initiatives and projects falling under this pillar has been

good. The main Key performance indicators (KPIs) have been met and exceeded. We have

delivered on our growth, profitability and return on equity targets while maintaining a strong

solvency position. Our growth strategy has a two-pronged approach. Growing in those

segments where there is a market need which can be served in a technically sound manner

while at the same time adjusting the overall risk of our portfolio closer to our risk appetite.

On the other hand, managing the rate of growth in those risk sectors where technical

profitability is challenging or risk exposure is not adequately compensated by the market. 

It is extremely positive to note that MMS registered year on year growth across all lines of

business and across all distribution channels. All our distribution channels had an excellent

performance in 2025.

Our direct business, consisting of our regional offices and TIIs performed well. As a

Company, we believe this channel has further growth potential and acts as a perfect

complement to the other channels. During 2025, the execution of the direct channel plan

moved according to the established milestones. We have undergone a review of our human

capital capabilities and recruited various new profiles to augment the teams’ skills set while

also continued to invest in upskilling our front liners. The company has a very comprehensive

training program for its distribution channel not only to meet the continuous professional

development requirements but also to equip our people with the necessary knowledge to

better serve the needs of our customers. 

The agents’ network has increased premium in high single digits. Here, I would like to thank

all our agents with a special mention to the consistent and excellent performance achieved by

Laferla Insurance Agency, our trusted strategic partner for many years.

We firmly believe that our customers expect us to be as accessible as possible. We are

cognizant that different clients have different preferences on when and how they interact with

us. With four regional offices, a large network of TIIs and six agencies, we believe that we

are well positioned to deliver on this objective. Nonetheless, we have revisited opening hours

at our regional offices to offer increased convenience to our clients. Furthermore, our clients

also benefit from our increasing digital services through MyInsurance and our website.

xi

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

President & Chief Executive Officer’s Statement - continued

Profitable growth - continued

MAPFRE Middlesea remains the local insurer of choice for thousands of clients. Our

customer base has exceeded 130,000 with more than 250,000 policies in force. Our purpose

is to care for what matters to our clients and so be by their side. This commitment is

crystallized by the amount of claims we paid in 2025 which has reached €42.5 million. The

Life company’s corresponding numbers are equally impressive. Our market share figures

have remained consistent over the last two years.

The strategic priority to grow profitability can only be achieved with robust cost

management. Our management team did a great job in mitigating the inflationary pressures

on costs. We have a well-established budgeting and monitoring process across all

organization. This is fundamental in a highly competitive market and to deliver value for

money to customers. We must note that the regulatory and compliance cost have increased

significantly over the past years as new regulations came on board. We understand and

appreciate the importance of a robust consumer protection and prudential regulatory

framework, however as ex ECB president, Mr Mario Draghi well highlights in his report,

Europe needs to take measures to remain competitive with legislative simplification being

one of them. We do not need more regulation but more effective regulation.

MAPFRE Middlesea, as a subsidiary of MAPFRE International and part of the global

MAPFRE Group has direct access to group resources, network and expertise.  This means

that we are better able to serve clients’ insurance needs. 

Finally, we would like to note, the long overdue positive development whereby the banks are

no longer prohibited from offering general insurance cover to its clients. Though still limited

to home, health and travel, undoubtedly, this is a first step in the right direction.  We are

convinced that in the medium term this channel should be contributing to our growth and

help to improve the underinsured reality in the local market.

Productivity and Efficiency

Under this pillar, our focus is to lay the foundations for future proofing our business while

capitalizing on tactical initiatives that can deliver immediate rewards. Key to the future

proofing of our operations in Malta has been the implementation of the core systems. We

have achieved good progress in the implementation of our non-life core policy administration

system, albeit not to the extent desired. Today, all new business, except for two products can

be issued from our new general insurance system. Once this implementation is fully

completed an immediate benefit will accrue as the managing of two core systems is removed.

Furthermore,  on the Life core system implementation, we have even better news. This

system has been successfully implemented and now we can look forward to the next phase of

the digitalization plan.

In the past years, we have invested in growing internal capabilities in process management, a

digital and a data governance teams. These teams together with the relevant business and

informational technological area have contributed towards the introduction of robotic process

automation (RPA), operational workflows, management information dashboards and

customer servicing chatbots.  We have also embraced general AI technology which has been

rolled out by market vendors like Microsoft. As MAPFRE, we also benefit from our own

developed AI space called MAPFRE ChatGPT.

xii

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

President & Chief Executive Officer’s Statement - continued

Productivity and Efficiency - continued

A key project under this pillar is the data quality project. Data quality is fundamental for any

organization to reap any benefits from AI models. Therefore, this project focuses on

improving the data quality within our data universe, which is key for success of future AI

initiatives.

Another driver for enhanced productivity has been the roll out of collaboration spaces.

Through this initiative our people can work in a smart, real time way thus improving quality,

turnaround time and fostering an environment more conducive to innovation.   

On the IT infrastructure side, we have progressed well in consolidating most of our assets

through migration to Group and on the cloud. This will derive various benefits including

improved resiliency, monitoring but also software deployment.

Transformation and Culture

The competitive landscape is changing at a pace as never seen before. Artificial Intelligence

(AI) is being described as the engine of the fourth industrial revolution. A fourth industrial

revolution also characterized by advanced robotics, internet of things (IoT) and quantum

computing. Furthermore, consumer expectations have also evolved reflecting the overall

changes experienced in the broader society and wider consumer markets.

We want to transform because we want to have a more customer centric approach, an agile

and data driven company. To achieve this goal, we have identified a number of

transformation levers with clear key performance indicators to track progress.

Our Net Promotor Score (NPS) score is good, but we aspire to do better. We have mapped

our customer journey and know what needs to be done. We are convinced that once we

execute our plans the end result will be the desired one. The focus of these plans are on

delivering the customer experience.

There are many elements contributing to an agile company. We have restructured our

Business Development and Commercial areas to provide a leaner, more cohesive and focused

approach across MAPFRE Middlesea and MAPFRE MSV. We continue to look after our

talent by building on our leadership program. The growth of our professional workforce

through empowerment and knowledge remains the key for a more dynamic and agile

company. We have also started a renewal process leading to a number of changes in our

leadership team.

To become a truly data driven company, the first step is to make sure of the quality of the

data. To this effect, a data quality project has been launched. This project is coordinated by

the MAPFRE Group corporate area.

The importance of culture is reflected in it being one of the strategic priorities. The

combination of transformation and culture is based on our understanding that transformation

to be successful needs to be supported by a strong organizational culture. Long lasting

success can only be achieved if the company’s culture is a healthy one. To this effect, within

the MAPFRE Group, a culture reactivation plan has been launched. Our culture is based on

our vision, purpose and values. Our vision is to be our clients trusted insurance company,

xiii

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

President & Chief Executive Officer’s Statement - continued

Transformation and Culture - continued

with a stated purpose that “we care about what matters to you”. This requires that our people

embody the five core value that make MAPFRE a unique organization.

Sustainability

Our objectives under this pillar are being achieved. Our leadership team composition is very

well balanced in terms of gender.  Females make up 40% of our Chief Officer roles and 52%

of our Unit Heads. The majority of our workforce is female. The gender pay gap is almost

nonexistent but well within the narrow tolerance margin set. We are very proud of the NCPE

award achieved. The same applies for two other recognition received during the year. The

FHRD HR Quality mark and the Malta Business award for Exceptional wellbeing at the

workplace. These recognitions are testament to our beliefs and how we bring to life what we

believe in.

On the investment side, more than 80% of our investments are being rated based on ESG

criteria. This is below the MAPFRE Group target. The reason for this is that no ESG rating is

available for local issued assets.

Finally, we are proud to share that following a number of initiatives to reduce our carbon

footprint,  we have also taken the step to invest in carbon credits to offset our CO2 emissions.

Thus, as from 2025, MAPFRE MMS and MAPFRE MSV have become carbon neutral. This

was achieved ahead of schedule.

Capital Management

A sustainable profitable business enables us to generate internal capital for investment

purposes and to finance business growth. A prudent but consistent dividend policy is also key

in ensuring adequate capital resources. This together with the underwriting, investment and

risk management policy shape to a great degree the risk profile of the Company. Within the

risk management tool kit, the reinsurance aspect continues to be one of the main levers in

maintaining the Company risk profile within the established risk appetite. This means that

during normal years we forego a certain level of profitability to ensure we are better protected

in case of less frequent but more severe events or what we refer to as catastrophic events. The

risk profile and solvency position of an insurance company is measured by the solvency ratio.

Once again, the company continues to maintain a solvency ratio significantly above the

regulatory requirements.

Dividend Recommendation

The board of directors will be proposing for shareholders’ approval the payment of a net

dividend of € 0.065217 per share. The Company's payout will be 51.8% of this year’s profit

after tax of the Company.

While the Board of Directors is committed to provide an adequate return to its shareholders

on their invested capital,  the dividend recommendation makes consideration of the future

capital needs of the Company and the need to maintain sufficient capital buffers to be able to

withstand any negative market shocks.

xiv

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

President & Chief Executive Officer’s Statement - continued

Our Contribution to our community

We understand that we have a social responsibility towards the society we form part of. As a

GROUP we are committed to bring about positive change and to support the advancement of

our society. During the year, we supported various organizations in their respective mission.

Sometimes this support takes the form of financial assistance, to making our premises

available to upcoming artists or educational events. We are very proud that through our

initiatives we manage to reach many noble causes ranging from philanthropy to arts, culture,

education and the environment. However, I would like to make a special mention to the

volunteering activities our staff and their families participated in during the year. In 2025, we

had 139 participants across 17 activities. For this I am very grateful and thankful. This is also

a reflection of the values we embrace at MAPFRE.

The local commitment of Fundación MAPFRE, which in 2025 celebrated its 50^th anniversary

continued unabated. A number of local projects continue to be support by the foundation such

as the "Street Smart Campaign”, Doctors For Road Safety (D4RS). and the "Logging Off"

initiative. Furthermore, the Foundation also provided its support in respect to the launch of a

pensions guide in Malta. This guide, which was rolled out digitally aims to educate on the

importance of starting to save for retirement as early as possible. Finally, I would also like to

mention that MAPFRE MMS and MAPFRE MSV, in collaboration with the BOV foundation

and Heritage Malta brought to Malta an incredible collection of works of art. The exhibition

held in the Grand Master Palace, in Valletta, at the end of last year and beginning of January,

titled “The Disasters of War” by Francisco Goya was only made possible by the generosity of 

Fundacion MAPFRE which made its collection available to the public for viewing. Over 50

thousand viewers had the opportunity to admire and enjoy this impressive collection. 

Looking forward

The global geopolitical situation remains highly concerning. The war between Russia and

Ukraine is now in its 5^th year, with the war between Israel and Hamas still ongoing and the

recent attack of the US and Israel on Iran. On top of the tragic loss of human life, these events

bring about significant global economic and financial uncertainties. While the ramifications

of the latest conflict in the Middle East is, at time of writing, still unfolding, the stability of

global financial systems becomes even more important. Our cautious approach in terms of

capital management, with a focus on strengthening and diversifying our statement of

financial position gives us the resiliency and confidence to navigate these challenging times

and seize opportunities as they arise.

Apart from the global context, locally, the start of the year was characterized by Storm Harry.

The island was badly struck, particularly in the coastal areas. From the company’s financial

perspective this was a setback, but its impact relatively contained thanks to our prudent risk

management approach as expressed through the reinsurance program in place. However, such

events do remind us that the nature of our business requires prudence in capital management

with rigor and discipline in underwriting and pricing of risks.

xv

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

President & Chief Executive Officer’s Statement - continued

Looking forward - continued

However, during the initial months of the year we have already achieved a number of

exciting milestones. Our global rebranding has been a great success. We are extremely proud

of our global brand, an important asset. We believe that this new modern image is more

attuned with the MAPFRE of today. A MAPFRE which over the years has significantly

transformed itself but remained true to the strong values it believes in. 

Over the past years, the MAPFRE Group in Malta has consistently delivered positive results

even in the context of a challenging economic and financial environment. This is testament to

a well-defined and executed strategy. Over the past years, we have built solid foundations

upon which we can look at the medium to longer term with optimism. To better align with

the GROUP strategic cycle and to leverage on the tremendous technological changes the

world has been experiencing over the past years, we have decided to reset the strategic plan

during 2026. 

Later this year, management will present to the Board of Directors a new strategic Plan for

the period 2027-2029. Our vision is clear and our ambition unwavered. Our new Strategic

Plan will remain inspired by the vision, purpose and values that distinguish us. This will be a

period of further organizational and digital transformation, key enablers in the shareholders’

value creation process.               

Signed by Etienne Sciberras (President & CEO) on 24 March 2026

1

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Directors’ Report

The Directors present their annual report for the year ended 31 December 2025.

Principal activities

The principal activities of the Group consist of the business of insurance. The Group is

licensed to carry on general and long-term business. The Group is also authorised to provide

insurance management services.

Review of business

The Company

MAPFRE Middlesea p.l.c. (the ‘Company’) registered a profit before tax of €16.9 million

during the financial year ended 31 December 2025 (“FY 2025”) compared to the €10.5

million registered in the previous financial year (“FY 2024”) with post-tax profits of €11.6

million, compared to €7.1 million in FY 2024. 

Premiums written by the Company reached €113.6 million (2024: €103.6 million), a 9.6% 

increase over FY2024, with growth in all classes of business but notably in Health, Property

and Group Life. MAPFRE Middlesea p.l.c. remained the leader of the non-life market with

the Company’s market share increasing marginally from the previous year, following the

receipt of provisional market data collated by the Association of Insurance Malta, as the

market registered a growth below that of  the Company's.

The insurance service result increased to €16.4 million from €12.3 million of FY 2024, a

32.9% growth.  Insurance revenue grew by 9.8% reflecting the growth in premium written.

Claims frequency improved in Motor with no significant increase in attritional claim severity,

whilst Health registered an increase in both frequency and severity mitigated by tariff

increase.

The Company’s net investment return amounted to €4.8 million compared to the €2.6 million 

in FY 2024 as a result of a net dividend of €1.5 million received from MAPFRE MSV Life

p.l.c. (2024: €1.0 million) and a net dividend of €1.0 million from BEE Insurance

Management Limited with no comparative in the previous year. Fair value movements on the

fair value through profit or loss portfolio though positive were at same level of FY 2024.

Revaluation of investment property held by the Company rendered a marginal loss of €0.3

million against a marginal loss of € 0.2 million for 2024.

The Shareholder’s Funds of the Company at €91.5 million saw an increase of 8.3% during

FY 2025 resulting from the profit for the year exceeding the payment of dividend for FY

2024 and positive investment value movements in equity. Net Asset Value per share as at

31 December 2025 amounted to €0.99.

MAPFRE Middlesea p.l.c.’s solvency position remained strong with net assets remaining

adequately above the capital requirements under Solvency II with the cover being reported in

the Solvency and Financial Condition Report (SFCR) to be published by the Company later

in the year. 

2

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Directors’ Report - continued

Review of business - continued

MAPFRE MSV Life p.l.c.

MAPFRE MSV Life p.l.c. (“MAPFRE MSV Life” and “MMSV”) registered a profit before

tax of €15.7 million for FY 2025, as compared to the €15.0 million registered for the previous

year. Profit after tax is recorded at €11.2 million, compared to a €11.0 million in the previous

year.

Total business written for financial year 2025 totaled €209.9 million, an increase of 2.0%

over the prior year. Single premium business performed better than in 2024 as demand for

With‑Profits business improved. Regular premium business continued to perform well,

supported by strong demand for life protection products and sustained pension business. The

robust performance of the local economy and the high levels of liquidity present in the market

remained supportive of savings and investment products.

The MMSV With-Profits fund closed at €1.8 billion as at 31 December 2025 (2024: €1.9

billion) registering a total investment gain of €78.5 million generating a positive return of

4.3%. The investment return was similar to that in 2024, which had amounted to €79.7

million.

Total assets increased by 1.1% to stand at €2,384.0 million by the end of 2025.

Total shareholders’ funds at the close of 2025 amounted to €182.5 million (2024: €174.3

million), an increase of 4.7% over the previous year.

Other subsidiaries

The other subsidiaries within the Group, though not significant to the size of the Group, had a

mixed contribution to the results of the year.

During the year BEE Insurance Management Limited (‘BEE’) remained servicing the

Group’s insurance entities in the Information Technology sphere. A combined profit of €0.4

million was registered compared to the €0.5 million in the comparative period. BEE's

subsidiary EuroMed Risk Solutions which had surrendered its Corporate Service Provider

(CSP) license in January 2025 was placed into liquidation during 2025.

Church Wharf Properties Limited holds a property within the Regeneration of the Grand

Harbour Area. A negligible loss was recorded in the year similar to the loss registered at the

end of 2024. The directors continue to monitor the evolution of this project which gives a

potential future increase in value of this investment.

3

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Directors’ Report - continued

Review of business - continued

The Group

The Group registered a profit before tax of €29.6 million in FY 2025 compared to €24.8

million achieved in FY 2024. Profit after tax for FY 2025 closed at €20.5 million as

compared to the €18.0 million achieved in FY 2024. Group business written reaching €323.5

million saw an increase of 4.5% against that registered in FY 2024, with both insurance

companies remaining leaders in their respective markets.

MAPFRE Middlesea’s Group capital and reserves attributable to shareholders at 31

December 2025 amounted to €107.0 million (2024: €96.3 million) on a consolidated basis

with a net asset value per share of €1.16 as at 31 December 2025 mainly as the result for the

year outweighed the payment of dividend by MAPFRE Middlesea and MAPFRE MSV Life.

A review of the business of the Group for the year ended 31 December 2025 and an

indication of future developments are provided in the Chairman’s Statement and the President 

and CEO Statement, which can be found in the front section of this Annual Report.

Whilst as a Group 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. Over the years we have developed a Corporate

Social Responsibility (CSR) policy framework which encompasses shareholders, the

environment, people, communities and customers. Through our CSR programme we

cooperate with and assist a number of public and private institutions, NGOs, museums,

foundations and associations who share similar goals and values as us.

Sustainability is also very high in our agenda. In line with the MAPFRE Group's

Sustainability Plan, the Group is committed to be carbon neutral by the end of 2030. To this

effect a number of initiatives have been and continue to be implemented which together with

investment in carbon credits have seen the local Group achieve carbon neutrality in 2025.

Good progress is also being registered in terms of the environment, social and governance

(ESG) dimensions.

4

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Directors’ Report - continued

Principal Risks and Uncertainties

The Group’s principal risks and uncertainties are further disclosed in Note 4 dealing with

management of risk as supplemented by Note 3 relating to the use of accounting estimates

and judgements in applying accounting policies, and Note 24 on insurance contract liabilities,

reinsurance contract assets and investment contracts liabilities covering assumptions

underlying their valuation.

Results and dividends

The consolidated profit or loss account is set out on page 40.  A gross dividend in respect of

year ended 31 December 2025 of €0.091128 per share amounting to a total dividend of

€8,383,779 is to be proposed by the Directors at the forthcoming annual general meeting. 

This is equivalent to a net dividend of €0.065217 per share amounting to a total net dividend

of €6,000,000 (2024: €4,800,000).

Directors

The Directors of the Company who held office during the period under review were:

Martin Galea  

Antoinette Caruana

Gordon Cordina

Jose Maria del Pozo

Jose-Luis Jimenez (until 30 April 2025)

Elvira Lopez de Lara Merida (as from 30 April 2025)

Javier Moreno Gonzalez (as from 30 April 2025)

Eduardo Perez de Lema (until 30 April 2025)

Etienne Sciberras

Godfrey Swain

Paul Testaferrata Moroni Viani

In accordance with the Articles of Association of the Company, all Directors retire from

office at the Annual General Meeting and are eligible for re-election or re-appointment.

Further information is given in the Statement of Corporate Governance.

5

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Directors’ Report - continued

Statement of Directors’ responsibilities for the financial statements

The Directors are required by the Insurance Business Act, 1998 and the Companies Act, 1995

to prepare financial statements which give a true and fair view of the state of affairs of the

Group and the Company as at the end of each reporting period and of the profit or loss for

that period.

In preparing the financial statements, the Directors are responsible for:

• ensuring that the financial statements have been drawn up in accordance with

International Financial Reporting Standards as adopted by the EU;

• selecting and applying appropriate accounting policies;

• making accounting estimates that are reasonable in the circumstances;

• ensuring that the financial statements are prepared on the going concern basis unless it

is inappropriate to presume that the Group and the Company will continue in business

as a going concern

The Directors are also responsible for designing, implementing and maintaining internal

control as the Directors determine is necessary to enable the preparation of financial

statements that are free from material misstatement, whether due to fraud or error, and that

comply with the Insurance Business Act, 1998 and the Companies Act, 1995.  They are also

responsible for safeguarding the assets of the Group and the parent Company and hence for

taking reasonable steps for the prevention and detection of fraud and other irregularities.

The financial statements of MAPFRE Middlesea p.l.c. for the year ended 31 December 2025

are included in the Annual Report 2025, which is published in hard-copy printed form and

also made available on the Company’s website. The Directors are responsible for the

maintenance and integrity of the Annual Report on the website in view of their responsibility

for the controls over, and the security of, the website. Access to information published on the

Company’s website is available in other countries and jurisdictions, where legislation

governing the preparation and dissemination of financial statements may differ from

requirements or practice in Malta.

The directors confirm that, to the best of their knowledge:

• the financial statements give a true and fair view of the financial position of the Group

and Company as at 31 December 2025, and of its financial performance and its cash

flows for the year then ended in accordance with International Financial Reporting

Standards as adopted by the European Union on the basis explained in Note 1 to the

financial statements; and

• the Annual Report includes a fair review of the development and performance of the

business and the position of the Group and Company, together with additional

information of the principal risks and uncertainties that the Group and Company face.

6

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Directors’ Report - continued

Information pursuant to Capital Markets Rule 5.64

The Company has an authorised share capital of €31,500,000 divided into 150,000,000

ordinary shares with a nominal value of €0.21 each.  The issued share capital of the Company

is €19,320,000 divided into 92,000,000 ordinary shares of €0.21 each. The issued shares of

the Company consist of one class of ordinary shares with equal voting rights attached.

The directors confirm that as at 31 December 2025, only MAPFRE Internacional (55.83%)

and Bank of Valletta p.l.c. (31.08%) held a shareholding in excess of 5% of the total issued

share capital.

Pursuant to the Company’s Articles of Association, the appointment of Directors to the Board

is reserved exclusively to the Company’s shareholders (in line also with general and

commonly accepted practice in Malta).  Shareholders with 11% or more of the shares in issue

are entitled to appoint one director for every 11% holding, whilst the other shareholders are

entitled to appoint the remaining Board members at the Annual General Meeting in

accordance with the provisions of the Articles of Association. The Chairman shall be

appointed by the Board of Directors.

The rules governing the appointment and replacement of the Company’s directors are

contained in Articles 93 to 102 of the Company’s Articles of Association.

The Directors can only issue shares following an extraordinary resolution passed in the

General Meeting. This and other powers vested in the Company’s Directors are contained in

Articles 84 to 90 of the Company’s Articles of Association.

The Memorandum and Articles of the Company may be amended by means of an

extraordinary resolution of the Company during general meetings.

There are no agreements between the Company and the Directors on the Company’s Board or

employees providing for compensation on termination or cessation of their office for any

reason whatsoever.

It is hereby declared that as at 31 December 2025, information required under Capital

Markets Rules 5.64.2, 5.64.4, 5.64.5, 5.64.6, 5.64.7 and 5.64.10 is not applicable to the

Company.

7

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Directors’ Report - continued

Going concern

The Directors, as required by Capital Markets Rule 5.62 have considered the Group’s and

Company’s operational performance, the statement of financial position as at year end as well

as the business plans for the coming year, and declare that they have a reasonable expectation

that the Group and the Company have adequate resources to continue in operational existence

for the foreseeable future. For this reason, in preparing the financial statements, the Group

and Company are in a position to continue operating as a going concern for the foreseeable

future.

Auditors

The auditors, KPMG, have indicated their willingness to continue in office and a resolution

for their re-appointment will be proposed at the Annual General Meeting.

Information pursuant to Capital Markets Rule 5.70

There were no material contracts in relation to which a Director of the Company was directly

or indirectly interested.

Information pursuant to Capital Markets Rule 5.70.2

The Company Secretary is Dr Daphne Sims Dodebier and the registered office is Middle Sea

House, Floriana, Malta.

Information pursuant to Capital Markets Rule 5.68

We, the undersigned, declare that to the best of our knowledge, the financial statements

prepared in accordance with the requirements of International Financial Reporting Standards

as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and

profit or loss of the Company and its subsidiaries and that this report includes a fair review of

the development and performance of the business and the position of the Company and its

subsidiaries, included in the consolidation taken as a whole, together with a description of the

principal risks and uncertainties that they face.

Signed on behalf of the Company’s Board of Directors on 24 March 2026 by Martin Galea

(Chairman) and Godfrey Swain (Director) as per the Directors Declaration on ESEF Annual

Financial Report submitted in conjunction with the Annual Report and Accounts 2025.

8

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Corporate Governance Statement

1. Introduction

In accordance with Rule 5.94 of the Capital Markets Rules, an Issuer whose securities are

admitted to trading on the Malta Stock Exchange should endeavour to adopt the principles as

promulgated within Appendix 5.1 of the Capital Markets Rules entitled The Code of

Principles of Good Corporate Governance (‘the Code’). Moreover, the Issuer is obliged to

prepare a report disclosing both compliance and non-compliance with the said principles and

the Company’s auditors are to include a report on the Corporate Governance Statement in the

Annual Financial Report of the Company.

The Board of Directors (‘the Board’) of MAPFRE Middlesea plc (the ‘Company’ or ‘MMS’)

notes that compliance with the said Code is not mandatory, however it acknowledges that the

principles are designed to serve as a guide for the Board and the Company’s Management in

the pursuit of objectives that are in the interests of both the Company and all its stakeholders.

The Board, therefore, firmly upholds the principles therein contained as guaranteeing the

standards of accountability, transparency and integrity inherent to good Corporate

governance. The Board continues to strive to adhere to the Code to maintain the highest

standards of disclosure both in relation to compliance with the Code as well as in relation to

explaining the rationale behind the instances of non-compliance. 

As shall be evidenced by the information set out in this Statement and that contained in the

Remuneration Statement and the Report of the Remuneration Committee to the Shareholders,

the Company is of the opinion that it has, save as otherwise indicated herein, not only

complied with the provisions of the Code throughout the accounting period under review but

also acted in accordance with the spirit of the Code.  In the Non-Compliance Section, the

Board then outlines the limited instances where there has been a departure from, or non-

application of, the principles as contained within the Code and the reasons therefore, in

accordance with the same Code.

2. Compliance with the Code

Principle 1: The Board

Good business, well done, is a force for good in society. Within this context, the Board’s role

and responsibility is to lead the Company, to discuss and approve the strategy for long-term

sustainable value and to exercise appropriate oversight; challenging the Management and

Internal Control Functions where necessary to this end. 

9

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 1: The Board - continued

The maximum number of Directors pursuant to the Memorandum and Articles of Association

is ten. As at 31 December 2025 the Board was composed of a non-Executive Chairman,

seven non-Executive Directors and one Executive Director being the Chief Executive Officer

(President & CEO) of the Company as will be detailed. The Directors, appointed in terms of

the Memorandum and Articles of Association of the Company, were and remain competent,

trustworthy and solvent individuals and thus fit and proper to direct the business of the

Company. Martin Galea was re-appointed as the non-Executive Chairman of the Board

during the Board meeting held on the 30 April 2025, which followed the Annual General

Meeting (AGM) held on the same day.

During the said AGM the majority institutional shareholder MAPFRE Internacional S.A.

appointed Javier Moreno Gonzalez and Elvira Lopez de Lara Merida as new Directors,

replacing the outgoing Eduardo Perez de Lema and Jose Luis Jimenez who did not seek re-

election, in addition to the reappointment of Martin Galea, Etienne Sciberras and Jose Maria

del Pozo. The institutional shareholder Bank of Valletta p.l.c. re-appointed the retiring

Directors Gordon Cordina and Godfrey Swain, while the other shareholders re-appointed the

retiring Directors Antoinette Caruana and Paul Testaferrata Moroni Viani bringing the total

number of Directors to nine. 

All of the Directors of the Company are approved by the Regulator further to a detailed

Personal Questionnaire process as being fit and proper to direct the business of the Company

and are deemed to conduct themselves with honesty, competence and integrity. Both on an

individual basis and collectively, the Members of the Board possess the necessary skills and

experience to ensure effective leadership  of the Company and to make positive contributions

to the decision-making processes of the Company and to the business strategy as reflected

within the Company’s policies. Moreover, the Board ensures prudent and effective controls

in order to achieve both the short and long-term sustainability of the business and assesses the

compatibility of the MAPFRE Group policies with local legal and regulatory requirements,

adapting them where appropriate.

Effective Boards ensure that the business operates with a clear sense of purpose and

collective vision and the Board liaises closely with the President & CEO of the Company to

this end, in a consistent and continuing manner in order to ensure that the Board receives

timely and complete information in relation to the business and performance of the Company.

This enables the Board to maintain effective oversight of the decision-making process and to

exercise the aforementioned controls. Etienne Sciberras, appointed President & CEO as from

1 January 2025 replacing the Director Javier Moreno Gonzalez who resigned in order to take

up new responsibilities within the MAPFRE Group continued to act as Director throughout

the year.

10

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 1: The Board - continued

As has been customary in previous years, at the Board Meeting held subsequent to the AGM,

the Board delegated specific responsibilities to a number of Board Committees, namely the

Audit Committee, the Risk and Compliance Committee, the Investments Committee and the

Remuneration Committee, each of which operated under their respective formal terms of

reference as approved by the Board.

Further detail in relation to the Committees and the responsibilities of the Board is provided

under Principles 4 and 5 of this Statement.

Principle 2: Chairman and Chief Executive Officer

The positions of Chairman and the President & CEO of the Company, as per previous years,

continued to be held by different individuals throughout 2025 with a clear demarcation

between the leadership of the Board of Directors by the former and the latter's management

of the business of the Company, despite the strong cooperation between the two.

The Chairman is independent and is responsible for the overall effectiveness of the Board,

promoting open debate and facilitating constructive discussion. Through the Office of the

Company Secretary, the Chairman sets the Board agenda and ensures that all the Board’s

decisions are supported by comprehensive and timely information. The Chairman also

ensures that the Board discusses the pertinent issues with adequate depth, that the opinions of

all the Directors are taken into account and  encourages active engagement by all the

members of the Board to constructively challenge Management where necessary and

generally promote the effective functioning of the Board.

The President & CEO, on the other hand, is charged with the leadership of the Management

team with the main role and responsibility of managing the Company’s business in line with

its Strategy and informing and making recommendations to the Board. Within this context,

2025 was the first year of the Company's three-year Strategic cycle as developed by

Management, discussed with the Chairman and approved by the Board. The evolution of the

Strategic Plan was extensively discussed during a dedicated Board Briefing held in October

2025, as detailed further below.

Within the parameters of this Board-approved Strategy, the President & CEO develops and

drives performance and leads the decisions on all matters affecting the operations and

technical performance of the Company in the interest of all the stakeholders save for those

matters specifically reserved to the Board or its' delegated Committees. The Company also

has Technical Committees composed of senior members of the relative technical areas that

hold regular meetings and a Management Committee that meets on a monthly basis bringing

together the Chief Officers of the various business and support areas under the Chairmanship

of the President & CEO.

11

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 2: Chairman and CEO - continued

The positions of the Chairman of the Board and President & CEO are distinguished

accordingly within the Terms of Reference of the Board of Directors and remain completely

independent from one another to avoid concentration of authority within a single individual,

to differentiate leadership from the running of the business and to maintain clear lines of

accountability and responsibility. 

Principle 3: Composition of the Board

The Board considers and history has shown, that the number of Members as stipulated in the

Memorandum and Articles of the Company are appropriate relative to the size of the

Company and its operations. 

The combined and varied knowledge, experience and skills of the Board members, including

a broad knowledge of the business of the Company and awareness of statutory and regulatory

requirements, provide a balance of competencies, as required, and add value both to the

functioning of the Board and to the direction given to the Company. In this regard the

Company remains committed to non-discrimination, not least in its Boardroom, promoting a

diverse and inclusive culture where Directors’ views are heard, concerns are attended to and

the environment does not tolerate bias, discrimination or harassment of any kind.

The Company’s Articles of Association determine the composition of the Board. The

appointment of Directors to the Board is accordingly reserved exclusively to the Company’s

shareholders, except in so far as an appointment may be made to fill a casual vacancy. All

Directors, as well as some key officers, are required to fulfil the 'fit and proper' regime

prescribed by the Malta Financial Services Authority (‘MFSA’) in line with standard

regulatory due diligence procedures. Moreover, all Directors are required to apply the

necessary time and attention to their duties and limit the number of directorships held in other

companies, thereby also ensuring the proper performance of their functions.

In 2025 the majority of the Board members remained non-Executive Directors, with only one

Executive Director. Of the nine Directors sitting on the Company's Board, seven were male

and two were female as at 31 December 2025 whereas, at the same date, out of eight non-

Executive Directors six were male and two were female. The presence of the President &

CEO around the Boardroom table ensured the provision of direct input as required to

facilitate Board discussions. In addition, members of Senior Management were invited to

report to the Board as and when required, thereby securing effective information flows as

well as fostering a culture of continuous dialogue between the Board and the Company’s

Management. 

As at the date of this review, the Board consists of five independent Directors (including the

Chairman) and four non-independent Directors, including the only Executive Director (as

indicated on page 14 of the Annual Report) as defined by the Code.

12

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Corporate Governance Statement - continued

2.Compliance with the Code - continued

Principle 3: Composition of the Board - continued

In determining the independence or otherwise of its Directors, the Board considers, amongst

others, the principles relating to independence of directors contained in the Code, the

Company’s own policies, as well as general principles of good Corporate governance.

In relation to Code Provision 3.2.5 specifically the Code requires that the Board states its

reasons if it determines that a director is independent notwithstanding inter alia if the

director: “has served on the board for more than twelve consecutive years”.

It is noted in this regard that Paul Testaferrata Moroni Viani (as from April 2022) has served

on the Board for a period of more than twelve consecutive years. The Company however,

retains that Paul Testaferrata Moroni Viani has sufficient experience and maturity to remain

independent of character and objective in his judgment at all times notwithstanding the lapse

of the recommended twelve years. Similarly, the Board Chairman Martin Galea (as from his

re-appointment in April 2024) has also served on the Company's Board for a period of more

than twelve years but the Company is of the opinion that his knowledge and experience of the

business remain invaluable while further transitions at this stage, given the appointment of

new CEOs for both the Company and its main subsidiary as from 1 January 2025, would not

be of benefit to any of the stakeholders. Martin Galea is moreover highly competent and

astute and will undoubtedly remain entirely unbiased in his judgement despite his service

over the years, continuing to act in accordance with the highest principles of governance. 

In terms of Code provision 3.4 each non-Executive director has moreover submitted his / her

confirmation in writing that he / she undertakes:

i. to maintain in all circumstances his independence of analysis, decision and action;

ii. not to seek or accept any unreasonable advantages that could be considered as

compromising his / her independence; and

iii. to clearly express his / her opposition in the event that he / she finds that a decision of

the Board may harm the Company.

Principle 4: The Responsibilities of the Board

The Board acknowledges its statutory mandate to establish and maintain Corporate

governance practices that provide clear lines of accountability and responsibility to support

effective decision-making and to monitor the implementation thereof. The Board fulfils this

mandate and discharges its responsibilities through the execution of the four basic principles

of Corporate governance namely, accountability, monitoring, strategy formulation and policy

development.

13

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 4: The Responsibilities of the Board - continued

The Board continually and consistently reviews all the different aspects of the Company

within the parameters of the relevant laws, regulations and codes of best practice. It seeks to

ensure adherence to high ethical standards whilst taking into account all stakeholders’

interests, maintaining an effective dialogue with all stakeholders, monitoring the application

of management policies and motivating Company Management.

Principle 5: Board Meetings

The Board of Directors sets and supervises the strategy and the policies of the Company, both

of which are discussed on a regular basis, and the Board's agenda as well as its business are

managed in such a way so as to ensure effective supervision of the Company’s operations in

accordance therewith.

The Board meets as often as required to discharge its duties effectively but no less than five

times a year. As aforementioned, members of the Management team are invited to attend

Board meetings from time to time, to update and provide the Directors with a direct report

relative to the items on the agenda. A detailed review of the Company's Management

Accounts and Key Performance Indicators (as promulgated by the MAPFRE Group in line

with industry norms) is carried out at every Board Meeting and the background information

on various subjects provided, particularly those requiring the approval of the Board.

The Board also remains actively involved in monitoring progress against the set Budget and

Strategy and in approving material or significant transactions.

The Chairman in conjunction with the Company Secretary ensures that all relevant issues are

on the Board agenda and supported by relevant and complete information.  The agenda for

each meeting seeks to strike a balance between long-term strategic objectives and shorter-

term performance matters. 

Notices of the dates of forthcoming Board meetings are circulated well in advance of the

relative meetings and meeting packs containing all relevant information, including the

minutes of the previous Board Meeting, are circulated to the Directors ahead of each meeting

by the Company Secretary. In issuing these communications, regard is had to the timing in

order to allow sufficient opportunity for the Directors to review the information and prepare

for the next Board or Committee meeting as scheduled within the annual meeting  calendar.

Minutes are taken of each and every Board meeting faithfully recording attendance, matters

discussed, action points and resolutions. These minutes are subsequently made available to

all Directors for review, and then signed off by the Chairman.

Decisions at Board level are taken by a majority vote of those present subject to the

Chairman’s casting vote as may be necessary.

14

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 5: Board Meetings - continued

During financial year 2025, the Board of Directors of the Company held eight Board

Meetings which were attended as per below.

Antoinette Caruana (NED, I)8

Gordon Cordina (NED , I)8

Jose Maria del Pozo (NED)5

Martin Galea (Chairman) (NED, I)8

Jose-Luis Jimenez (NED, until 30 April 2025)-

Elvira Lopez de Lara Merida (NED, appointed as from 30 April 2025)*5

Javier Moreno Gonzalez (NED, appointed as from 30 April 2025)*4

Eduardo Perez de Lema (NED, until 30 April 202524)-

Etienne Sciberras (President  & CEO)8

Godfrey Swain (NED, I)8

Paul Testaferrata Moroni Viani (NED, I)7

NED – Non-executive Director

I – Independent

* With regulatory approval as from 28 July 2025;

** With regulatory approval as from 13 October 2025

Moreover, during 2025 a Board Briefing was also held in order to provide the Directors with

more detailed information on the subject matter identified as well as to allow opportunity for

deeper discussions of pertinent issues. The focal point of the Directors’ Briefing in October

was to carry out an in-depth review of the evolution of the Strategic projects during the first

year of the three-year plan including the relative Budget and to discuss and approve the draft

Budget requirements for the following year.

Principle 6: Information and Professional Development

No Induction Briefing was delivered in 2025 as both new Directors appointed to the

Company's Board at the AGM held on 30 April 2025 were long-standing employees of the

MAPFRE Group, Javier Moreno Gonzalez having previously served as the Company's

President & CEO while Elvira Lopez de Lara Merida was the Distribution Channels Manager

for MAPFRE S.A. prior to her appointment and thus both familiar with the strategy and

operations of the Company in Malta. In all other cases, however, where a new Director is

appointed a formal and structured induction programme consisting in a series of presentations

and meetings with members of the Management team of the Company is conducted to enable

new incumbents to familiarise themselves with the Company’s strategy, risk appetite and

operations.

15

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 6: Information and Professional Development - continued

During 2025 the members of the Company's Board continued to benefit from the MAPFRE

Group structured Board training and development programme including a full on-line

training schedule available for subscription covering a range of topics ranging from

Operational to Technical and Risk to AML matters. The key objective of the programme is to

contribute to the continued professional development of the Directors and the Board’s

collective awareness of corporate governance, solvency, insurance finance, strategy and

operations. Physical training sessions were also held specific to new regulatory requirements

including the obligations arising from the Digital Operational Resilience Act and Corporate

Governance.

Moreover, Directors remain at liberty to take independent professional advice on any matter

at the Company’s expense where they deem it necessary in order to better discharge their

duties as Directors and have open access to the advice and services of the Office of the

Company Secretary and that of all other Chief Officers. The Company Secretary remains

mindful at all times of the responsibility of ensuring adherence to Company policies, Board

procedures as well as the facilitation of continual and consistent information flow within the

Board and its Committees. 

The President & CEO is appointed by and enjoys the full confidence of the Board and

ensures that systems are in place to cater for, amongst others, consistent and continuous

support and monitoring of Management, development and training of employees and

Directors, as well as succession planning, as required by the provisions of principle 6.4 of

Appendix 5.1 of the Capital Markets Rules. The President & CEO, although responsible for

the recruitment and selection of Senior Management, consults with and acts on the advice of

the Remuneration Committee and the Board generally relative to appointments and

succession for Senior Management. Training (both internal and external) of management and

employees is prioritised and is implemented through the Human Resources Department.

Several training sessions, both on-line and live, were also held on various topics during the

course of 2025 including on Cyber Security, Business Continuity, Compliance, Data

Protection and the Customer Experience.

Indeed 2025 saw the culmination of an intense and specialised training initiative for the

President & CEO, Chief Officers and Heads in conjunction with external specialists referred

to as the Transformational Leadership Programme. The Programme represented a significant

investment in the leadership team intended to boost collaboration, competence and encourage

positive transformation across the Management team with initiatives including individual and

team coaching sessions commencing in Q4 2023 and running over a period of eighteen

months.

16

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 7: Evaluation of the Board’s Performance

During the year under review, the Board once again undertook an evaluation of its own

performance, the Chairman’s performance and that of its Committees. The evaluation was

not conducted externally, but rather, the evaluation exercise was conducted through a Board

Effectiveness Questionnaire prepared by the Compliance Function in cooperation with the

Company Secretary and the Chairman. The outcome of the exercise was summarised into a

Report based on the replies of each individual Director that was then submitted to the

Chairman before being circulated amongst all Board members. The Report was then

discussed during an informal meeting amongst the Directors and the Company Secretary. 

No requirement for material changes in the governance structure or processes resulted from

this evaluation exercise.

Principle 8: Committees

The activities of the Board and of the Company’s Senior Management team are additionally

supported by the Company’s Board Committees structured in such a way as to assist in the

guiding and monitoring of particular business processes and specific governance issues. The

said Board Committees are the Audit Committee, the Risk and Compliance Committee, the

Investments Committee and the Remuneration Committee.

The Terms of Reference of all the Board Committees have been set out and approved by the

Board of Directors and by the MFSA. 

Audit Committee

The Audit Committee’s terms of reference are modelled on the recommendations of statutory

directives, the Capital Markets Rules and the principles of Corporate Governance, whilst also

reflecting the provisions of the relevant MAPFRE Group principles. The responsibilities of

the Audit Committee include the following:-

i. monitoring of the financial reporting process

ii. monitoring of the independence and effectiveness of the Company’s internal control, 

internal audit and risk management systems

iii. monitoring of the audit of the annual and consolidated accounts

iv. maintenance of communication on such matters between the Board, management,

the external Auditors and the internal Auditors

v. making of recommendations to the Board in relation to the appointment of the

external Auditor and the approval of the remuneration and terms of engagement of

the external Auditor following appointment by the Shareholders in general meeting

17

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 8: Committees - continued

Audit Committee - continued

vi. monitoring and reviewing of the external Auditor’s independence and in particular

the provision of additional services

vii. development and implementation of a policy on the engagement of the external

Auditor to supply non-audit services

viii. reviewing of actuarial reports

ix. management of financial risks

x. analysis and endorsement of the Annual Internal Audit Plan

xi. verification of the arm’s length nature of related party transactions and

xii. oversight over the statutory audit process including the setting of the relative fees in

discussion with the external auditors in accordance with the provisions of the

Statutory Regulations governing statutory audits of public interest entities within the

European Union.

The Committee protects the interests of all stakeholders in general and particularly those of

the shareholders and assists Directors in ensuring the accuracy of the Company’s Financial

results and reporting. It ensures that the Company’s Accounting and Finance functions are

robust and transparent, advises the Board on financial reporting in terms of both the Financial

Statements and announcements relative to performance and has oversight of the Internal

Audit Function to ensure adequate resources, independence and monitor follow up on

pertinent audit recommendations. 

In regard to the latter, Internal Audit is an independent appraisal function established to

examine and evaluate the activities of the Company and its subsidiaries. The Internal Auditor

reports to the Audit Committee and attends its meetings. The Internal Auditor is charged by

the Audit Committee with the conducting of business process risk-based audits aimed at

assessing the adequacy of controls and business process efficiency. The Internal Audit Area

also liaises closely with the MAPFRE Group Internal Audit Area to this end.

The Audit Committee moreover ensures co-operation between the internal and external

auditors of the Company.

Furthermore, although no such instances arose within 2025, the Audit Committee also

reviews related party transactions, considering their nature and materiality and approves them

if it deems fit, as well as overseeing the implementation of the Company’s Internal

Information System including any reports received by the Whistleblowing Reporting Officer. 

18

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 8: Committees - continued

Audit Committee - continued

The composition of the Company’s Audit Committee is regulated by the Capital Markets

Rules and the Malta Financial Services Authority is kept informed as to any changes in its

composition. In terms of Capital Markets Rule 5.117.3, Jose Maria del Pozo and Martin

Galea are the members of the Audit Committee with the necessary qualifications, experience

and knowledge to render them competent in accounting and auditing. Jose Maria del Pozo

having held the position of Chief Financial Officer of the MAPFRE Group since 2018 and a

consultant professor for accounting and financial analysis, while Martin Galea is qualified in

accounting and audit with years of experience in company management.

Godfrey Swain was re-appointed for a second term as Chairman of the Audit Committee by

the Board of Directors in accordance with Capital Markets Rule 5.117.4 as of 30 April 2025. 

Of the four Directors making up the Audit Committee, three are considered Independent

Directors in accordance with the criteria set out in Capital Markets Rule 5.119.

The Audit Committee held seven meetings during 2025. In accordance with Capital Markets

Rule 5.117.2, three out of four members are considered independent in line with the criteria

set out in Capital Markets Rule 5.119 as stated. These are Godfrey Swain, Antoinette

Caruana and Martin Galea. The Audit Committee members and relative attendance at

meetings is listed below.

Antoinette Caruana                                                                            7

Martin Galea                                                                                      7

Jose Maria del Pozo                                                                            6

Godfrey Swain (Chairman)            7

In accordance with Capital Markets Rule 5.118, the Board considers the four Audit

Committee members as having the required competence individually and jointly as a

Committee, due to their professional background and experience in company management at

a senior level, as well as in other sectors, including financial and insurance, at both national

and international level.

The President & CEO, the Chief Financial Officer and the Chief Internal Auditor, amongst

other members of Management, attend the Audit Committee meetings by invitation. The

Whistleblower Reporting Officer reports to the Audit Committee as and when required. The

external auditors are invited to attend meetings of the Audit Committee and are entitled to

convene a meeting of the Committee if they consider that it is necessary. The Company

Secretary also acts as Secretary to the Audit Committee.

19

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 8: Committees - continued

Audit Committee - continued

The Chairperson of the Audit Committee reports to the Board at every Board meeting

providing a summary of the salient matters discussed at Committee level thus ensuring

transparency and fostering communication and continuity between the said Board Committee

and the other members of the Board.

Risk and Compliance Committee

The Board has responsibility for the Company's overall approach to strategic decision-

making and effective risk management (financial and non-financial including reputational).

Thus the Board exercises oversight of risk and how it is managed with appropriate

accountability to stakeholders.

The Risk and Compliance Committee has a two-fold function: it assists the Board in

overseeing the Company’s compliance with the obligations imposed by legislation and other

rules and regulations as relevant to the Company and its business and; it maintains oversight

for review and proper implementation of the Company’s Risk policies and for assessing and

advising the Board on high-level risk-related matters, including the different types of Risk

which the Company and its subsidiaries may be exposed to from both a financial and non-

financial perspective.

To this end the Committee ensures that the Company’s strategy and risk appetite are aligned

and monitors the stress testing framework, governance and internal control structures.

Furthermore, the Committee approves the annual plan for the Compliance Function and is

updated at every meeting on progress in relation to the said plan and other matters referring

to Regulatory Compliance risk including the relationship with the regulatory authorities.

The Money Laundering Reporting Officer, the Complaints Officer and the Anti-Fraud

Officer report directly to this Committee. The Money Laundering Reporting Officer and the

Compliance Officer of the subsidiary entity Bee Insurance Management Ltd. also reports to

this Committee at every meeting.

The Risk and Compliance Committee held six meetings during 2025. The Committee, as re-

elected during the Board Meeting held after the AGM on 30 April 2025, comprised the

following members and their respective attendance at the meetings held was as detailed:

Diane Bugeja                                                                          4

Martin Galea (Chairman)                                                        6

Jose Maria del Pozo                                                                6

Etienne Sciberras                                                                    6

20

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 8: Committees - continued

Risk and Compliance Committee - continued

The Chief Compliance Officer and the Chief Risk Officer, amongst others as may be

required, attend the Committee meetings by invitation. The Company Secretary also acts as

Secretary to the Committee.

The Chairperson of the Risk & Compliance Committee reports to the Board at every Board

meeting providing a summary of the salient matters discussed at Committee level thus 

ensuring transparency and fostering communication and continuity between the said Board

Committee and the other members of the Board.

Investment Committee

The Investment Committee is a joint Committee composed of Directors of the Company and

Directors of its subsidiary MAPFRE MSV Life p.l.c.. The Investment Committee oversees

the investment activities of the Company and its subsidiaries, executes its policies and

guidelines, scrutinises and approves material transactions and monitors results.

Although the Investment Committee meets more regularly, the business of the Company was

discussed at four meetings during 2025. The Committee members and relative attendance to

meetings is listed below.

Simon Azzopardi	3
Juan Bernal Aranda	3
Romeo Cutajar (Chairman)	4
Jose-Luis Jimenez, until 30 April 2025	2
Jose Maria del Pozo	4
Javier Moreno, until 30 April 2025	3
Etienne Sciberras, as from 30 April 2025	2
Patrick Spiteri Swain	4
Godfrey Swain	4
Paul Testaferrata Moroni Viani	3

The CEO of the subsidiary MAPFRE MSV Life p.l.c., the Chief Financial Officer both of the

Company and of its subsidiary MAPFRE MSV Life p.l.c., the MAPFRE Regional Chief

Financial Officer, amongst others as may be required, attend the Committee meetings by

invitation. The Company Secretary of the subsidiary MAPFRE MSV Life p.l.c. acts as

Secretary to the Committee.

21

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 8: Committees - continued

Remuneration Committee

The Board of Directors approves the remuneration of Directors and Chief Officers through

the Remuneration Committee which remuneration is set based on the principles established in

the Remuneration Policy as approved by the shareholders during the General Meeting on a

bi-annual basis. The shareholders also approve the maximum aggregate Directors'

emoluments on an annual basis.

Further detail on the various aspects of how the Company remunerates its employees, the

workings of this Committee and information relative to its’ meetings in 2025 are considered

in the Remuneration Statement and Report to the Shareholders. 

The Remuneration Committee held three meetings during 2025. The Committee, as re-

elected during the Board Meeting held after the AGM on 30 April 2025, comprised the

following members and their respective attendance at the meetings held was as detailed:

Antoinette Caruana (Chairperson)	3
Gordon Cordina	3
Martin Galea	3

The President & CEO for MAPFRE Middlesea p.l.c., the CEO for MAPFRE MSV Life p.l.c.

and the Chief Officer for Human Resources, amongst others as may be required, attend the

Remuneration Committee meetings by invitation. The Company Secretary also acts as

Secretary to the Committee.

The 2025 Annual Report includes a separate Remuneration Statement in terms of Code

Provisions 8.A.3 and 8.A.4 and Remuneration Report in terms of Code Provision 12.26K.

Principle 9: Relations with Shareholders and with the Market

The Company recognises the importance of maintaining a dialogue with its shareholders and

of keeping the market informed to ensure that its strategies, as well as performance, are not

merely transparent but also understood. The Board is of the view that during the period under

review the Company has communicated effectively with the market through the various

company announcements and press releases.

The Company also communicates with its shareholders through the Company’s Annual

General Meeting (‘AGM’) concerning which further detail is provided under the section

entitled General Meetings. The Chairman ensures that all relevant individuals including the

Chairpersons of the Board Committees are present at the AGM to answer any questions as

may arise.

22

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 9: Relations with Shareholders and with the Market - continued

Apart from the AGM, the Company communicates with its shareholders through the Annual

Report, as available for review and downloading from the Company’s web site. The

Company’s website (www.mapfre.com.mt) also contains information about the Company and

its business, including the six-monthly financial statements and all issued company

announcements together with a section entirely dedicated to investor relations for the benefit

of all shareholders and the general public. 

Furthermore, the Chairman ensures that constant and consistent communication is maintained

with all stakeholders including the shareholders to discuss matters of significant importance

or to address particular issues or concerns. To this end, the Chairman and the President &

CEO maintain open dialogue with the major shareholders and the Chairman, President &

CEO and Company Secretary hold an annual meeting with representatives of the Malta

Association of Small Shareholders to discuss various matters in the interests of the minority

shareholders.

Individual shareholders can raise matters relating to their shareholding and the business of the

Company at any time throughout the year via the Office of the Company Secretary, a facility

which is well availed of and functions very well in practice. Shareholders are also given the

opportunity to ask questions at the AGM or submit written questions in advance and the

Company recognises their statutory right to request the convening of an extraordinary general

meeting in accordance with Article 52 of the Articles of Association of the Company and

Article 129 of the Companies Act (Cap. 386 of the Laws of Malta). 

Principle 10: Institutional Shareholders

The Company’s Institutional shareholders keep the market updated on issues related to their

respective companies through company announcements, press releases, press meetings and

their web site. During the year under review, the controlling shareholder, MAPFRE S.A,

issued various communications in connection with its international operations abroad. The

other institutional shareholder, namely Bank of Valletta plc, is a listed company on the Malta

Stock Exchange and consequently a steady flow of information is maintained as

aforementioned. In addition, the six monthly and annual results include a section on the

insurance interests of institutional shareholders.

23

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 11: Conflicts of Interest

The Directors are strongly aware of their responsibility to act in the interest of the Company

and its stakeholders including its shareholders at all times, irrespective of whom appointed

them to the Board, and of their obligation to avoid conflicts of interest. During the period

under review, the Board maintained its practice that in the event of a real or potential conflict

of interest arising in respect of a Director in connection with any transaction or other matter,

the interest is to be declared and the individual concerned shall refrain from taking part in

proceedings or decisions relating to the matter. The Board minutes evidence such

declarations as and when they arise.

In accordance with the MAPFRE Corporate Governance Policy and the Policy for Managing

Conflicts of Interest, a Director is to avoid situations in which he could have a conflict of

interest, whether direct or indirect, actual or potential, with the interest of the Company and

shall ensure that personal interests of any nature do not take precedence over the interests of

the Company and its stakeholders.

The Company also has an Internal Code of Conduct Relating to Listed Securities addressed

to all directors and selected officers of the Company and its Subsidiary undertakings.  The

aim behind this Code is to ensure compliance with the Prevention of Market Abuse

Regulatory Framework as well as the recommendations and principles contained in the

Capital Markets Rules. The Company keeps a record of all advance notices received in

connection with permitted dealings by directors and selected officers and acknowledgements

of such advance notices. The Company reminds all Directors and senior officers of their

obligation to conform to the Code on an annual basis.

As required by principle 11.3 of Appendix 5.1 of the Capital Markets Rules a Directors’

beneficial interest in the share capital of the Company as at 31 December 2025 has been

declared by Paul Testaferrata Moroni Viani stemming from his indirect shareholding in the

Company’s shares through his shareholding in family businesses. 

Principle 12: Corporate Social Responsibility

Throughout 2025, MAPFRE Malta continued to meet its Corporate Social Responsibility

objectives by collaborating with a wide range of organisations to deliver numerous initiatives.

These included food and blood donation drives, environmental activities, and financial

support to several charitable entities and NGOs. Among the beneficiaries were Caritas,

Hospice, Puttinu Cares, Dar Bjorn, Dar il-Kaptan, and YMCA, to name a few.

As in previous years, Fundación MAPFRE allocated over €200,000 towards projects in Malta

across areas such as road safety awareness, health campaigns, and social initiatives. The

Foundation once again partnered with Caritas Malta to support the Adventure Therapy

Cycling Project, offering therapeutic outdoor activities for adolescents facing substance abuse

challenges.

24

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 12: Corporate Social Responsibility - continued

During 2025, Fundación MAPFRE also reinforced its commitment to road safety by

contributing to educational efforts aimed at young people and the wider public. In addition to

its ongoing campaign with Malta Public Transport, the Foundation also continued its

partnership with Doctors for Road Safety (D4RS), who share the same concerns regarding

this pressing national issue.

A key highlight of the year was Fundación MAPFRE’s support for the Goya exhibition held

in Malta, which stood out as an important cultural milestone. The exhibition brought

internationally recognised works to the local community, further reinforcing MAPFRE’s

commitment to making art and culture more accessible and enriching Malta’s cultural

landscape. The exhibition was attended by over 45,000 visitors.

Fundación MAPFRE also strengthened its commitment to community wellbeing through a

dedicated partnership with the Malta Society for Wellbeing, supporting their POP Up

initiative. The collaboration created safe, welcoming spaces where individuals could learn

simple practices to support mental and emotional health, aligning with MAPFRE’s broader

efforts to enhance overall wellbeing within the community.

3.Non-compliance with the code

Principle 3: Composition of the Board

The Code recommends that the Board of Directors be composed of Executive and non-

Executive Directors, including Independent non-Executives. The Company’s Board, as

explained in Section 2 – Principle 3 of this Statement, is composed almost exclusively of

non-Executive Directors with the one exception being the Chief Executive Officer of the

Company who is also a member of the Board and thus arguably does not represent the

balance as suggested by the Code.

That said, the appointment of Directors to the Board is a matter reserved exclusively to the

Company shareholders (except in the case of the filling of a casual vacancy) as provided for

in the Memorandum and Articles of Association and each Director retires from office at the

subsequent AGM although he / she may stand for re-election.

Nominations to the Board require an 11% shareholding which nominations are to be

communicated to the Company in writing. Provided the nominations do not exceed the

vacancies on the Board, those nominations are confirmed subject to their approval at the

Annual General Meeting of shareholders. Therefore, the composition of the Board of

Directors is determined by the shareholders during the AGM.

25

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Corporate Governance Statement - continued

3.Non-compliance with the code - continued

Principle 3: Composition of the Board - continued

The President & CEO of the Company presents his Management Report at every Board

meeting and various Senior Managers attend by invitation to report on salient matters thereby

ensuring a constant and effective flow of information between the Company’s Management

and Board of Directors.

Principle 4: The Responsibilities of the Board

Code Provision 4.2.7 recommends: “the development of a succession policy for the future

composition of the Board of Directors and particularly the executive component thereof, for

which the Chairman should hold key responsibility”.

Regard being had to the non-executive role of most of the Company’s Directors and in view

of the facts explained above, particularly that the appointment of Directors is a matter

reserved exclusively to the Company’s shareholders and that every director retires from

office at the Annual General Meeting, the Company has not felt the necessity to date to

formalise a succession policy for the Board of Directors. That said, the Company does have

and uphold a policy on the selection of Directors not least to promote diversity within the

Board.

Insofar as the management of the Company, the Human Resources Area maintains a

succession plan for the key executives which plan is monitored and discussed by the

Remuneration Committee as necessary.

Principle 7: Evaluation of the Board’s Performance

Code Provision 7.1 recommends: “the Board should appoint a committee chaired by a non-

executive Director in order to carry out a performance evaluation of its role”.

As explained above the Board has not appointed a specific committee to carry out a

performance evaluation but has rather opted to have an annual performance evaluation

exercise carried out under the auspices of the internal Compliance Area through the

compilation of a Board Effectiveness Questionnaire by each individual Director.

The questionnaire is particularly robust and is structured into eight sections with a total of 63

statements covering several aspects of Board membership including the understanding of the

workings of the Board and its Committees, the Company’s products and services, distribution

channels, strategy and risk, as well as governance, training requirements, subsidiaries and

contingent liabilities.  Directors are also invited to elaborate further on any of the statements

at the end of the questionnaire.

26

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Corporate Governance Statement - continued

3.Non-compliance with the code - continued

Principle 7: Evaluation of the Board’s Performance - continued

An objective and independent report as to the overall outcome of the findings is then drawn

up by the Compliance Area and shared with the Chairman to co-ordinate further individual or

group discussion with the Directors based on the replies.

For these reasons the process is deemed to be comprehensive and sufficient to meet the

intended aims.

Principle 8B: Nomination Committee

Pursuant to the Company’s Articles of Association and as aforementioned the appointment of

Directors to the Board is reserved exclusively to the Company’s shareholders. Shareholders

holding 11% or more of the issued shares are entitled to appoint one director for every 11%

holding, whilst the other shareholders are entitled to appoint the remaining Board members at

the Annual General Meeting in accordance with the provisions of the Articles of Association.

Thus the procedure is sufficiently defined and the requirements of transparency are also well-

met without the need for the establishment of a formal Nomination Committee.

Principle 9: Relations with Shareholders and with the Market

Code Provision 9.3 recommends the Company having a mechanism in place to resolve

conflicts between minority shareholders and controlling shareholders.

The Board is mindful of its duty to act in the interest of all stakeholders, independent of

whom appoints them and the balance between the interests of all shareholders is of

paramount consideration at all times. To this end the Board seeks to make available a fair,

balanced and understandable assessment of the Company's position and prospects, publish all

relevant information on its web site and ensures there are channels to receive feedback from

stakeholders including shareholders.

To this end, although the Company does not have a specific mechanism in place there is open

dialogue between Management and all the non-Executive Directors of the Company. The

Company also ensures a good relationship with the Malta Association for Small Shareholders

maintaining an open-door policy with them, as well as with any individual shareholders who

may be interested in making direct submissions to the Company, through the Office of the

Company Secretary.

In light of this, and as the Company is mindful of the protection granted to minority

shareholders in terms of the Companies Act (Cap. 386 of the Laws of Malta) by which it

would necessarily be bound to abide, the Company is of the opinion that no formal

procedures to resolve conflict between minority and controlling shareholders are necessary at

this stage.

27

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Corporate Governance Statement - continued

Internal Control and Risk Management System

This information is being provided in terms of Capital Markets Rule 5.97.4.

While authority to manage the daily business of the Company is delegated to the President &

CEO within the limits set by the Board, the Board is ultimately responsible for the

Company’s internal control systems and for ensuring their effectiveness. Such systems are

designed to manage, rather than eliminate, the risks associated with achieving business

objectives and can only provide reasonable (as opposed to absolute) assurance against

material misstatement or loss.

The Company manages its internal risk through the ‘three lines of defence’ approach,

ensuring achievement of commercial aims while continuing to meet all legal and regulatory

requirements. These then feed into the Board through the Audit Committee and the Risk and

Compliance Committee in order for the Board to maintain oversight of the processes and

procedures ensuring the effectiveness of the systems of internal control.

The key features of the Company’s systems of Internal Control remain primarily three-fold,

in terms of its organisation, risk identification and reporting. Insofar as the former, the

Company has a clear organisational structure and structured reporting lines including from

the Boards of Directors of subsidiary and associated entities. The MMS Chairman is also kept

informed as to the operations of the subsidiary companies as aforementioned and through the

other Company Directors and Senior Management who sit on the subsidiary boards,

Management and Operational Committees.

In terms of Risk Identification, the Board reviews its Risk Management policies and

strategies and oversees their implementation to ensure that identified key risks are properly

assessed and managed through a dedicated and specialised Risk Area reporting in to the

Board Committee as previously referred to. Moreover, the risk-based nature of the Solvency

II regime requires the company to have an effective risk management system in place to

identify, measure, manage, monitor and report on the main risks which could impact the

entity. This process is embodied in the annual ORSA (Own Risk and Solvency Assessment)

process. Expert judgements, stress testing and sensitivity analysis are important elements in

the company’s risk identification framework embedded in the ORSA process. The ORSA

report is submitted to the competent Authority on an annual basis after a thorough discussion

at the level of the Risk and Compliance Committee and ultimate approval by the Board of

Directors.

Lastly with reference to Reporting, functional, operating and financial reporting standards are

applicable to all entities of the Group. Systems and procedures are in place to identify,

control and report on the major risks. The Board receives periodic management information

giving comprehensive analysis of financial and business performance including variances

against budgets and detailed presentations on various aspects of the business from an

operational and a technical perspective.

28

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Corporate Governance Statement - continued

General Meetings

This information is being provided in terms of Capital Markets Rule 5.97.6. 

The General Meeting is the Company’s most supreme decision-making organ and its

functions are governed by, and conducted in accordance with, the Company’s Articles of

Association.  The General Meeting is called with not less than twenty-one days’ notice in

writing.  In addition to any matters which are deemed to constitute ’special business’, the

annual general meeting deals with matters of a recurring nature namely, the declaration of a

dividend, the consideration of the accounts, statement of financial position and reports of the

directors and auditors, the election of directors, the appointment of  the auditors and the

authorisation of the directors to set their remuneration. The Memorandum and Articles of the

Company may be amended by means of an extraordinary resolution (as defined in the

Articles) of the Company during general meetings.

The Board of Directors is responsible for developing the agenda for the AGM and sending it

to the shareholders.

Shareholders’ rights can be exercised in accordance with the Articles of the Company, the

Companies Act and the Capital Markets Rules. Accordingly, all shareholders registered in the

Shareholders’ Register on the Record Date as defined in the Capital Markets Rules, have the

right to attend, participate and vote in the general meeting. A shareholder or shareholders

holding not less than 5% of the nominal value of all the shares entitled to vote at the General

Meeting may request the Company to include items on the agenda of a General Meeting and /

or table draft resolutions for items included in the agenda of a general meeting. Such requests

are to be received by the Company at least forty-six days before the date set for the relative

General Meeting.

A shareholder who cannot participate in the General Meeting can appoint a proxy by written

or electronic notification to the Company. Every shareholder represented in person or by

proxy is entitled to ask questions which are pertinent and related to items on the agenda of the

General Meeting and to have such questions answered by the Directors or such persons as the

Directors may delegate for that purpose.                                             

In 2025 the Company held its AGM on 30 April to enable active participation by all those

having an interest in doing so and to allow the shareholders proper opportunity to engage

with the Company Directors and members of Management.

Signed by Martin Galea (Chairman) and Antoinette Caruana (Director) on the 24 March

2026.

29

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Remuneration Statement and Report of the Remuneration Committee to

the Shareholders

1. Terms of Reference and Membership

In accordance with Section 8A of The Code of Principles of Good Corporate Governance

(Appendix 5.1 of the Capital Markets Rules under Chapter 5 on Continuing Obligations), the

Remuneration Committee ('the Committee') of MAPFRE Middlesea p.l.c. ('MMS' or 'the

Company') hereby submits its Remuneration Statement and Report to the shareholders of

MMS.

The Committee’s main task, in accordance with its Terms of Reference, is to ensure that the

MMS Remuneration Policy is implemented and to propose appropriate remuneration

packages for Directors and Chief Officers in accordance therewith. The Remuneration

Committee also monitors the level and structure of the remuneration packages for Directors

and Chief Officers based on the information presented by Management from time to time.

As at 1 January 2025, the Committee Members were Antoinette Caruana (Chairperson),

Martin Galea and Gordon Cordina. These individuals stood for re-election as Directors at the

Company's Annual General Meeting ("AGM") held on the 30 April 2025 and, at the Board

meeting held directly after the AGM, the said individuals were again appointed as members

of the Remuneration Committee. Antoinette Caruana was once again appointed Chairperson.

All the Committee Members are non-Executive Directors of MMS with no personal financial

interest as recommended by Code provision 8.A.1.

The MMS President & Chief Executive Officer ("CEO"), Etienne Sciberras, the MAPFRE

MSV Life p.l.c (MMSV) Chief Executive Officer, Elvira Lopez de Lara Merida and

Loredana Mallia, in her capacity as Chief Officer Human Resources for both companies

replacing Ines Silva as from 20 January 2025, were invited to attend the Committee meetings

held throughout the year. The Company Secretary, Dr Daphne Sims Dodebier, acted as the

Secretary to the Committee.

Code provision 8.A.1 recommends that an independent non-Executive Director (NED) chair

the Committee and indeed Antoinette Caruana is an independent NED. Nonetheless, the

Committee takes decisions by the unanimous agreement of its Members further to open and

transparent discussions. 

30

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Remuneration Statement and Report of the Remuneration Committee to

the Shareholders - continued

2. Meetings

The Remuneration Committee held three meetings during the period under review and the

attendance was as follows:

MemberAttended

Antoinette Caruana (Chairperson)  3

Gordon Cordina    3

Martin Galea                            3

The Committee determined and/or discussed the following matters:

• Gender & Cultural Diversity;

• Senior Management Appointments:

• HR Policies & Legislative Developments;

• Training & Development;

• Proposed Performance Bonus Pay-Out for FY2024 & Salary increase for 2025;

• 2025 Management by Objectives Variable remuneration framework;

• Collective Agreement Amendments;

• Implementation of the Transformational Leadership Programme;

• Succession Planning;

• Outcome of the eNPS 2025 Survey;

3.    Remuneration Statement

a. Remuneration Policy - Senior Management

The MMS Remuneration (also sometimes referred to as Compensation) Policy framework is

set by the Board of Directors acting through the Remuneration Committee. It is based on the

guidelines and principles contained within the MAPFRE Group Compensation Policy which

was most recently approved by the majority of shareholders during the MAPFRE Middlesea

p.l.c Annual General Meeting held on 30 April 2025.

The Committee reviews and approves the individual remuneration arrangements for Senior

Management, namely, the CEO, the Chief Financial Officer, the Company Secretary, the

Chief Officers and the Internal Auditor. 

The Committee has access to both internal and independent external advice on remuneration

matters as and when required.

31

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Remuneration Statement and Report of the Remuneration Committee to

the Shareholders - continued

3.    Remuneration Statement - continued

    a.    Remuneration Policy – Senior Management - continued

The Committee deems the current Senior Management remuneration packages to be in line

with the local market equivalents and holds them to be fair, reasonable and commensurate to

the responsibilities involved. The Committee also believes that the remuneration packages

are such as to enable the Company to attract, retain and motivate employees having the

appropriate skills and qualities to ensure the proper management of the organisation. This

was also confirmed by the outcome of the benchmarking exercise commissioned by the

Human Resources Area during 2025.

There have been no significant changes to the Company’s Remuneration Policy for Senior

Management during the financial year under review. The Pension Scheme implemented in

the second half of Financial Year 2022 continues with good take up from employees. 

As previously explained, the Pension Scheme is voluntary and intended to provide employees

with an opportunity to build up their retirement savings during their employment. All

employees of the Company, including Senior Management, but excluding Directors, are

eligible to be enrolled in the Pension Scheme, provided that they have been in employment

with the Company for at least two years. The limitation was updated as from 1 January 2026

in that employees now become eligible upon completion of their probation period. Those

employees who opt to participate in the Pension Scheme, determine their own monthly

contribution between the minimum and maximum amounts established by the Pension

Scheme’s Terms and Conditions. In return, the Company then makes contributions into the

accounts of these employees who would have opted to participate in the Pension Scheme and

contributes twice the amount contributed by the employee subject to a maximum based on

duration of service, which is also established in the Pension Scheme’s Terms and Conditions.

Please refer to Note 11 in the Financial Statements for further information with regard to the

contribution made by the Company for Financial Year 2025 relative to the said Scheme.

The performance appraisal system underpinning the Company’s remuneration structure as

implemented in 2013 and the performance bonus scheme implemented in 2014 also

continued to apply in 2025 with the latter being reviewed and further enhanced as necessary

on an annual basis.

The said performance bonus scheme is still based on the achievement of Group, Company

and Departmental objectives and was further enhanced in 2019 to give some weight to the

adherence to Corporate Values although the weightings were modified for Financial Year

2025. Furthermore, in Financial Year 2020 the performance appraisal system was upgraded

to a new tool which allows for the generation of 360 degree feedback between peers and

internal clients and continuous communication between employees and their direct managers

throughout the year making the performance evaluation more holistic. This continued to

apply during 2025.

32

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Remuneration Statement and Report of the Remuneration Committee to

the Shareholders - continued

3.    Remuneration Statement - continued

a. Remuneration Policy – Senior Management - continued

The terms and conditions of employment for Senior Management are set out in their

respective contracts of employment.  In principle, these contracts do not contain provisions

for termination payments or other amounts linked to early termination nor have there been

any cases of early termination in practice. Share options, pension benefits and profit sharing

are not part of the MMS Remuneration Policy for Senior Management. Indeed Senior

Management, is not entitled to any compensation of a variable nature except the performance

bonuses set out hereunder.

The MMS CEO is eligible for an annual bonus entitlement calculated with reference to the

attainment of pre-established objectives and targets as recommended by the Remuneration

Committee and approved by the Board of Directors.

Insofar as the performance bonus for Senior Management as aforementioned, this is

calculated in accordance with the percentage achievement of the Group and Departmental

objectives referred to above. The performance bonus is inter alia approved by the

Remuneration Committee and  determined in accordance with the performance appraisal

process. No supplementary pension or other pension benefits are payable to Senior

Management. Additionally, in 2022, a right of clawback was introduced in the Remuneration

Policy for Key Staff where, if the relevant Variable Remuneration attains one of two

quantitative criteria, 30% of the applicable Variable Remuneration would be deferred over

three years to provide for the potential of such clawback.

The Remuneration Committee remains of the opinion that the proportion of fixed

remuneration and performance bonus is reasonable and appropriate for both the MMS CEO

specifically and for Senior Management generally.

Non-cash benefits to which Senior Management are entitled include the use of a company car

and health insurance. The death-in-service benefit also forms part of the non-cash benefits

and the same terms are applicable to all other Company employees.

Total emoluments and compensation received by Senior Management during Financial Year

2025 are deemed to be of a commercially sensitive nature and are thus not being disclosed in

this Report in line with Code Provision 8.A.6.

b.  Remuneration Policy – Directors

The MMS Remuneration (also sometimes referred to as Compensation) Policy framework as

aforementioned also extends to the compensation paid to Board members.

33

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Remuneration Statement and Report of the Remuneration Committee to

the Shareholders - continued

3. Remuneration Statement - continued

b. Remuneration Policy – Directors - continued

As at 31 December 2025, the Board of Directors of MAPFRE Middlesea p.l.c. was composed

of eight non-Executive directors and one Executive Director.  Three Directors, namely

Eduardo Perez de Lema, Jose-Luis Jimenez and Jose Maria del Pozo, did not receive a fee in

accordance with the established policy of the MAPFRE Group with which they are employed

and which appointed them for the period January 2025 until they stepped down at the AGM

held on 30 April 2025. Jose Maria del Pozo was re-elected as a Director at the said AGM and

the same principle continued to apply in relation to him and to Javier Moreno Gonzalez and

Elvira Lopez de Lara Merida who were newly appointed to the Board for the period May to

December 2025.. Etienne Sciberras also did not receive a fee since during Financial Year

2025 he occupied the position of Chief Executive Officer of the Company.

Based on the recommendations of the Committee, the current Directors’ fees, for each

Director as applicable, and as approved by the Board are as follows:

Directors’ Fees including Board Committees as applicable

Chairman€60,000 per annum (2024: €60,000)

Other Directors (per Director)€40,000 per annum (2024: €40,000)

Audit Committee Fees

Chairman€7,000 per annum (2024: €7,000)

Member (per member)€5,000 per annum (2024: €5,000)

Subsidiary Fees

Chairman€7,000 per annum (2024: €7,000)

Member (per member)€5,000 per annum (2024: €5,000)

None of the Company’s Directors had any service contracts with either the Company or any

of its subsidiaries as at the end of the Financial Year. 

Directors’ emoluments are established to reflect the responsibility and time committed by

Directors to the affairs of the Company, including the Board Committees of which a Director

may be a member save for the Audit Committee that is additionally remunerated as detailed

above. None of the Directors, in their capacity as Director of the Company and/or Committee

members, are entitled to profit sharing, share options, pension benefits, participation in the

Employee Pension Scheme or any other remuneration.

34

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Remuneration Statement and Report of the Remuneration Committee to

the Shareholders - continued

3. Remuneration Statement - continued

c.Code Provision 8.A.5

Directors' Emoluments 2025

Fixed Remuneration	Variable Remuneration	Share Options	Others
€247,000	None	None	None

Fees payable to directors in respect of 2025 amounted in total to €247,000 (2024: €249,753).

Remuneration received by directors from companies within the Group (in addition to the

above fees) is set out in section d. Code Provision 12.26k below.

The emoluments of Senior Management are not being disclosed in line with Code Provision

8.A.6 since these are deemed to be of a commercially sensitive nature. This decision will

continue to be reviewed on an annual basis.

d.Code Provision 12.26K

In addition to the information provided above and with reference to Appendix 12.1 of the

Capital Markets Rules it is noted that the maximum annual aggregate emoluments payable to

the Directors in their capacity as Board members that may be paid to them are approved by

the shareholders in the General Meeting in terms of Article 81 of the Company’s Articles of

Association. This amount was established by the Board of Directors after consultation with

the MAPFRE Group and based on the guidelines as set forth in the Compensation Policy

relative to the fixing of compensation for the members of the governance bodies having

regard to the Company’s financial situation, profitability and sustainability. The maximum

annual aggregate amount was then confirmed in the total sum of €350,000 per annum at the

forty-third Annual General Meeting held on the 30 April 2025, which has remained

consistent since 2018.

The amount paid to each Director by the Company for attendance at meetings of the Board or

of the Board Committees, when due as explained above, is not tied to the Company’s

performance or other performance criteria but is a pre-determined, fixed annual amount as

indicated below:

35

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Remuneration Statement and Report of the Remuneration Committee to the Shareholders - continued

3. Remuneration Statement - continued

d.Code Provision 12.26K - continued

Non-Executive Directors	2025 Fees €	2024 Fees €	Percentage Annual Change of Remuneration * %
			2024 - 2025	2023-2024	2022-2023	2021-2022	2020-2021
Martin Galea (NED & Board Chairman)	65,000	65,000	0.00	0.00	-10.55	4.81	1.96
Antoinette Caruana (NED)	45,000	45,003	0.00	0.00	0.00	4.65	0.00
Gordon Cordina (NED)1	50,000	50,000	0.00	-12.28	0.00	n/a	n/a
Jose Maria del Pozo (NED)	nil	nil	n/a	n/a	n/a	n/a	n/a
Jose Luis Jimenez (NED until 30 April 2025)	nil	nil	n/a	n/a	n/a	n/a	n/a
Javier Moreno Gonzalez (NED from   30 April 2025)2	nil	nil	(81.85)	n/a	n/a	n/a	n/a
Elvira Lopez de Lara Merida (NED from   30 April 2025)3	nil	nil	n/a	n/a	n/a	n/a	n/a
Eduardo Perez de Lema (NED until   30 April 2025)	nil	nil	n/a	n/a	n/a	n/a	n/a
Godfrey Swain (NED)	47,000	49,750	(12.15)	2.88	n/a	n/a	n/a
Paul Testaferrata Moroni Viani (NED)	40,000	40,000	0.00	0.00	0.00	0.00	(6.98)
Total	247,000	249,753

¹The amount includes €50,000 paid to Dr Gordon Cordina as Chairman of the subsidiary Board.

36

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Remuneration Statement and Report of the Remuneration Committee to

the Shareholders - continued

3. Remuneration Statement - continued

d.Code Provision 12.26K - continued

²Whilst there were no directors fees for 2025 and 2024, total emoluments for 2024 paid to Mr

Javier Moreno Gonzalez in his then position of CEO of MAPFRE Middlesea p.l.c. amounted

to €706,657 as was disclosed in the Annual report for 2024. In relation to his emoluments for

2024, a further 4,508 shares in MAPFRE S.A. (10% of the entitlement) having a value of 

€16,770 were delivered on the 20 March 2026 the value of which was determined by the

closing price on 18 March 2026. The value of the remaining 20% (9,016 shares in MAPFRE

S.A.) will be determined based on the share price when such shares will be delivered over the

coming two years. During 2025 further variable emoluments became payable in relation to

his time as CEO of MAPFRE Middlesea plc amounting to €128,243 of which €52,500

payable in cash and the remaining through the delivery of 20,361 shares MAPFRE S.A.

shares, being 70% of the share entitlement, that were delivered on the 20 March 2026 the

value of which was determined by the closing price on 18 March 2026 of €3.72. The amount

does not include the value of  8,724 shares in MAPFRE S.A. whose value will only be

determined when such shares will be delivered over the coming two years. The 81.85%

decrease in emoluments is due to the change in roles of Javier Moreno Gonzalez from

President & CEO to a Non-Executive Director (the percentage changes for the previous five

years are set out in the table named Performance Indicators - Remuneration of Company's

President & CEO).

³Total emoluments for 2025 paid to Ms Elvira Lopez de Lara Merida as CEO of MAPFRE

MSV Life amounted to €436,539. This amount included €15,155 being the value of 4,074

MAPFRE S.A. shares, being 70% of the share entitlement, that were delivered on the 20

March 2026 the value of which was determined by the closing price on 18 March 2026 of

€3.72. The amount does not include the value of  1,743 shares in MAPFRE S.A. whose value

will only be determined when such shares will be delivered over the coming two years.

* Percentage annual change of remuneration were based on annualised remuneration for the

years compared, as applicable, to allow for a meaningful comparison.

Remuneration paid to Directors as shown in the above table are all fixed in nature and thus

the ratio of fixed and variable remuneration was 100%-0% for both years being reported. The

changes in the total remuneration of Non-Executive Directors is to be considered together

with the information included in the table, further down in this report, reflecting the

comparatives between the percentage annual change of CEO remuneration relative to the

Company performance metrics and percentage annual change of the Company’s employees’

average remuneration employed on a full-time basis equivalent.

None of the Directors and Members of the Board Committees held any service contracts with

the Company or any of its subsidiary undertakings and no Director is entitled to share

options, profit sharing, pension benefits or any other type of emoluments save for the

provision of cover under a Group Life scheme. It is also confirmed that no other fees were

37

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

payable or paid to any of the Directors or Committee Members during the financial year

under review.

Remuneration Statement and Report of the Remuneration Committee to

the Shareholders - continued

3. Remuneration Statement - continued

d.Code Provision 12.26K - continued

By reference to Capital Markets Rule 12.2A no other person is deemed to be in charge of the

operations or the activities of the Company, and thus fall within the definition of director,

beyond the members of the Board and the Chief Executive Officer.

In this respect and relative to Appendix 12.1 the total emoluments paid by the Company to

the Chief Executive Officer in office during Financial Year 2025 were as follows:

	2025
	€
President & CEO
Etienne Sciberras
Fixed Salary	220,513
Defined pension contribution	5,300
Other fringe benefits	9,047
Total Fixed remuneration	234,860
Variable remuneration
In cash *	125,448
In MAPFRE S.A. shares   (6,788 shares)**	25,251
Total variable remuneration	150,699
Total remuneration ***	385,559
Fixed variable proportion	61%-39%

* The amount is 70% paid immediately after the respective financial year with the remaining

30% being settled in three equal installments in the following three years.

** The amount is for the 70% of the shares entitlement that were delivered on the 20 March

2026 the value of which was determined by the closing price on 18 March 2026 of €3.72. The

value of the remaining 30% (2,907 shares in MAPFRE S.A.) will be determined based on the

share price when such shares will be delivered over the coming three years.

38

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Remuneration Statement and Report of the Remuneration Committee to

the Shareholders - continued

3. Remuneration Statement - continued

d.Code Provision 12.26K - continued

^*** Total emoluments for 2024 paid to Mr Etienne Sciberras as CEO of MAPFRE MSV Life

amounted to €381,492. This amount included €60,959 being the value of 21,035 MAPFRE

S.A. shares, being 70% of the share entitlement, that were delivered on the 20 March 2025

the value of which was determined by the closing price on 19 March 2025 of €2.898. A

further 3,005 shares in MAPFRE S.A. (10% of the entitlement) having a value of  €11,179

were delivered on the 20 March 2026 the value of which was determined by the closing price

on 18 March 2026.The amount does not include the value of  6,010 shares in MAPFRE S.A.

whose value will only be determined when such shares will be delivered over the coming two

years. During 2025 further variable emoluments became payable in relation to his time as

CEO of MAPFRE MSV Life amounting to €85,495 of which €35,000 payable in cash and the

remaining through the delivery of 13,574 shares MAPFRE S.A. shares, being 70% of the

share entitlement, that were delivered on the 20 March 2026 the value of which was

determined by the closing price on 18 March 2026 of €3.72. The amount does not include the

value of 5,817 shares in MAPFRE S.A. whose value will only be determined when such

shares will be delivered over the coming two years.

In respect of Variable Remuneration, deferred or otherwise, paid or pending payment, a

partial or total reduction is possible if particular circumstances arise including in the event of

a restatement of annual accounts other than resulting from a change in legislation and in the

event of fraud. No such occurrence took place in 2025.

Variable remuneration for the CEO is based on Global, Regional and Country results together

with Country premium written targets, with the highest weighting given to the Country

results and premiums respectively.  The main objective of the Group is profitable growth and

the targets are aligned with such objectives. As part of a Global Group it is expected that as a

Country we contribute towards the profitability of both the Region and the Global Group

results and accordingly part of the variable remuneration is attached to the achievement of the

higher Group results. The achievement percentage follows a set scale going from complete

non-achievement, to pro-rata if not fully achieved, to accelerated achievement if targets are

exceeded. These scales are in line with the Remuneration Policy and approved accordingly

by the Remuneration Committee and by the AGM.

In terms of the requirements within Appendix 12.1 of the Capital Markets Rules, the

following table presents the annual change of remuneration of the CEO, of the Company’s

performance, and of average remuneration on a full-time equivalent basis of the Company’s

employees over the four most recent financial years:

39

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Remuneration Statement and Report of the Remuneration Committee to

the Shareholders - continued

3. Remuneration Statement - continued

d.Code Provision 12.26K - continued

Performance indicators	% Difference FY2025- FY2024	% Difference FY2024- FY2023	% Difference FY2023- FY2022	% Difference FY2022- FY2021	% Difference FY2021- FY2020
Company's profit after tax	62.59%*	6.45%	59.86%	45.30%	(36.64)%
Company's gross premium written	9.57%	8.27%	9.88%	8.75%	6.64%
Remuneration of Company's   President & CEO **	n/a	44.60%	8.73%	(2.98)%	1.90%
Company's employees' average   remuneration on full time   equivalent	1.53%	6.98%	1.34%	3.39%	6.44%
Group's employees' average   remuneration on full time equivalent	2.96%	4.29%	2.90%	3.01%	5.54%

* The increase arose mainly from a 32.8% increase in Insurance Service Result and €1.50

million net dividend received from MAPFRE MSV Life p.l.c. in 2025 (2024: €1.00 million)

and a net dividend of €1.00 million received from BEE Insurance Management Limited with

no comparative.

** As 2025 was the first year of Mr Etienne Sciberras as President & CEO of the Company a

percentage change could not be computed. The comparative figures for the previous four

years all related to the previous President & CEO Mr Javier Moreno Gonzalez.

In terms of the requirements within Appendix 12.1 (f) there has been no deviation from the

procedure for the implementation of the remuneration policy as defined in Chapter 12 of the

Capital Markets Rules.

As required by provision 12.26N of the Capital Markets Rules the Company’s auditors have

verified that the information that needs to be included in the Remuneration Report as per

Chapter 12 and Appendix 12.1 of the Capital Markets Rules, has been included.

Signed by Antoinette Caruana (Director and Remuneration Committee Member) on 24

March 2026.

40

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Statement of profit or loss

		Year ended 31 December
		Group		Company
		2025	2024	2025	2024
	Notes	€’000	€’000	€’000	€’000
Insurance revenue	7	155,678	146,692	109,693	99,922
Insurance service expenses	7	(114,123)	(112,029)	(83,475)	(78,496)
Net expenses from reinsurance contracts held	7	(13,086)	(11,840)	(9,837)	(9,096)
Insurance service result	7	28,469	22,823	16,381	12,330
Interest revenue calculated using the effective   interest method		4,612	5,440	526	355
Other investment revenue		88,778	98,141	4,230	2,245
Net credit impairment losses		62	9	5	1
Net investment return	8	93,452	103,590	4,761	2,601
Net change in investment contract liabilities	8	(7,052)	(13,131)	—	—
Finance expense from insurance   contracts issued	8	(82,466)	(83,192)	(364)	(818)
Finance income/(expense) from reinsurance   contracts held	8	2,157	(515)	94	182
Net financial result		(87,361)	(96,838)	(270)	(636)
Net insurance and investment results		34,560	29,575	20,872	14,295
Other income	9	1,707	1,282	—	—
Other operating expenses		(6,649)	(6,053)	(4,000)	(3,764)
Profit before tax		29,618	24,804	16,872	10,531
Tax expense	12	(9,104)	(6,810)	(5,297)	(3,412)
Profit for the year		20,514	17,994	11,575	7,119
Attributable to:
- owners of the Company		14,935	12,519	11,575	7,119
- non-controlling interests		5,579	5,475	—	—
		20,514	17,994	11,575	7,119

The Notes on pages 48 to 206  are an integral part of these financial statements.

41

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Statement of profit or loss and other comprehensive income
		Year ended 31 December
		Group		Company
		2025	2024	2025	2024
	Notes	€’000	€’000	€’000	€’000
Profit for the financial year		20,514	17,994	11,575	7,119
Other comprehensive income:
Items that are or may be reclassified subsequently to profit or loss
Net change in fair value of investments   measured at FVOCI	29	6	163	(5)	159
Investments measured at FVOCI   reclassified to profit or loss on disposal	29	51	—	51	—
Revaluation gain on freehold land and   buildings		444	—	183	—
Items that will not be reclassified  to profit or   loss
Re-measurement actuarial gain/(loss) on   provision for other liabilities and charges		5	(5)	5	(5)
Total other comprehensive income, net of tax		506	158	234	154
Total comprehensive income for the year		21,020	18,152	11,809	7,273
Attributable to:
- owners of the Company		15,441	12,677
- non-controlling interests		5,579	5,475
Total comprehensive income for the year		21,020	18,152

Items disclosed in the statement above are disclosed net of tax.

The Notes on pages 48 to 206 are an integral part of these financial statements.

42

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Statement of financial position

	Notes	Group		Company
		As at 31 December		As at 31 December
		2025	2024	2025	2024
		€’000	€’000	€’000	€’000
ASSETS
Intangible assets	16	36,768	34,411	11,080	10,573
Property and equipment	18	16,193	17,115	3,880	4,063
Right-of-use assets		2,027	1,702	1,930	1,616
Investment properties	19	107,125	105,806	13,519	13,712
Investment in associated undertakings	21	388	5,226	388	399
Investment in subsidiary undertakings	20	—	—	76,119	77,214
Other investments	22	2,230,707	2,159,560	25,188	19,086
Deferred income tax asset	23	2,398	2,532	1,223	1,248
Insurance contract assets	24	4,484	7,080	—	—
Reinsurance contract assets	24	11,122	11,815	11,122	11,815
Trade and other receivables	26	27,435	24,457	23,372	19,693
Current income tax receivable		1,861	2,290	—	—
Cash and cash equivalents	27	50,244	81,899	14,559	13,908
Total assets		2,490,752	2,453,893	182,380	173,327
EQUITY
Capital and reserves attributable to   owners of the Company
Share capital	28	19,320	19,320	19,320	19,320
Share premium account		688	688	688	688
Other reserves	29	1,301	800	34,941	34,712
Retained earnings		85,684	75,538	36,508	29,722
		106,993	96,346	91,457	84,442
Non-Controlling Interest		91,248	87,169	—	—
Total equity		198,241	183,515	91,457	84,442
LIABILITIES
Deferred income tax liabilities	23	15,106	14,340	2,702	2,565
Provisions for other liabilities and charges		838	889	838	889
Insurance contract liabilities	24	2,004,641	2,027,446	75,737	72,968
Investment contract liabilities	25	229,748	179,685	—	—
Reinsurance contracts liabilities	24	15,225	17,073	—	—
Derivative financial instruments	22	638	6,816	—	—
Lease liabilities		2,146	1,790	2,052	1,694
Other payables	30	22,269	19,899	8,501	9,134
Current income tax liabilities		1,900	2,440	1,093	1,635
Total Liabilities		2,292,511	2,270,378	90,923	88,885
Total equity and liabilities		2,490,752	2,453,893	182,380	173,327

The Notes are an integral part of these financial statements. 

These financial statements on pages 40 to 206 were approved by the Board of Directors and

authorised for issue on 24 March 2026 and signed on its behalf by Martin Galea (Chairman) and

Godfrey Swain (Director) as per the Directors' Declaration on ESEF Annual Financial report

submitted in conjunction with the Annual Report 2025.

43

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Statement of changes in equity

Group
		Attributable to owners of the Company
		Share capital	Share premium account	Other reserves	Retained earnings	Total	Non- controlling interests	Total equity
	Notes	€’000	€’000	€’000	€’000	€’000	€’000	€’000
Balance as at 1 January 2024		19,320	688	637	67,524	88,169	82,694	170,863
Comprehensive income
Profit for the year		—	—	—	12,519	12,519	5,475	17,994
Other comprehensive income:
Net gain in fair value of   investments measured at   FVOCI	29	—	—	163	—	163	—	163
Re-measurement actuarial   loss on provision for   other liabilities and   charges		—	—	—	(5)	(5)	—	(5)
Total other comprehensive   income, net of tax		—	—	163	(5)	158	—	158
Total comprehensive income		—	—	163	12,514	12,677	5,475	18,152
Transactions with owners
Dividends for 2023		—	—	—	(4,500)	(4,500)	(1,000)	(5,500)
Total transactions with   owners		—	—	—	(4,500)	(4,500)	(1,000)	(5,500)
Balance as at 31 December   2024		19,320	688	800	75,538	96,346	87,169	183,515

44

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Statement of changes in equity - continued

Group - continued
		Attributable to owners of the Company
		Share capital	Share premium account	Other reserves	Retained earnings	Total	Non- controlling interests	Total equity
	Notes	€’000	€’000	€’000	€’000	€’000	€’000	€’000
Balance as at 1 January 2025		19,320	688	800	75,538	96,346	87,169	183,515
Comprehensive income
Profit for the year		—	—	—	14,935	14,935	5,579	20,514
Other comprehensive income:
Net gain in fair value of investments   measured at FVOCI	29	—	—	6	—	6	—	6
FVOCI investments - reclassified to profit   or loss		—	—	51	—	51	—	51
Revaluation gain on freehold land and buildings		—	—	444	—	444	—	444
Re-measurement actuarial   gain on provision for   other liabilities and   charges		—	—	—	5	5	—	5
Total other comprehensive   income, net of tax		—	—	501	5	506	—	506
Total comprehensive income		—	—	501	14,940	15,441	5,579	21,020
Transactions with owners
Write-back of prior year   dividends		—	—	—	6	6	—	6
Dividends for 2024	15	—	—	—	(4,800)	(4,800)	(1,500)	(6,300)
Total transactions with   owners		—	—	—	(4,794)	(4,794)	(1,500)	(6,294)
Balance as at 31 December   2025		19,320	688	1,301	85,684	106,993	91,248	198,241

The Notes on pages 48 to 206 are an integral part of these financial statements.

45

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Statement of changes in equity - continued

Company
			Share
		Share	premium	Other	Retained
		capital	account	reserves	earnings	Total
	Notes	€’000	€’000	€’000	€’000	€’000
Balance as at 1 January 2024		19,320	688	34,553	27,108	81,669
Comprehensive income
Profit for the financial year		—	—	—	7,119	7,119
Other comprehensive income:
Net gain in fair value of investments   measured at FVOCI	29	—	—	159	—	159
Re-measurement actuarial loss on provision   for other liabilities and charges		—	—	—	(5)	(5)
Total other comprehensive   income, net of tax		—	—	159	(5)	154
Total comprehensive income		—	—	159	7,114	7,273
Transactions with owners
Dividend for 2023		—	—	—	(4,500)	(4,500)
Total transactions with   owners of the  Company		—	—	—	(4,500)	(4,500)
Balance as at 31 December   2024		19,320	688	34,712	29,722	84,442

46

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Statement of changes in equity - continued

Company - continued
			Share
		Share	premium	Other	Retained
		capital	account	reserves	earnings	Total
	Notes	€’000	€’000	€’000	€’000	€’000
Balance as at 1 January 2025		19,320	688	34,712	29,722	84,442
Comprehensive income
Profit for the financial year		—	—	—	11,575	11,575
Other comprehensive income:
Net loss in fair value of investments   measured at FVOCI	29	—	—	(5)	—	(5)
FVOCI investments - reclassified to profit   or loss		—	—	51	—	51
Revaluation gain on freehold land and   buildings		—	—	183	—	183
Re-measurement actuarial gain on provision   for other liabilities and charges		—	—	—	5	5
Total other comprehensive   income, net of tax		—	—	229	5	234
Total comprehensive income		—	—	229	11,580	11,809
Transactions with owners
Write-back of prior year dividends		—	—	—	6	6
Dividend for 2024	15	—	—	—	(4,800)	(4,800)
Total transactions with   owners of the  Company		—	—	—	(4,794)	(4,794)
Balance as at 31 December   2025		19,320	688	34,941	36,508	91,457

The Notes on pages 48 to 206 are an integral part of these financial statements.

47

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Statement of cash flows

		Year ended 31 December
		Group		Company
		2025	2024	2025	2024
	Notes	€’000	€’000	€’000	€’000
Cash flows from operating activities
Cash (used in)/generated from operations	31	(20,721)	(47,789)	14,618	14,949
Dividends received		24,587	18,328	3,643	1,502
Interest received		32,031	28,384	315	198
Income tax paid		(8,365)	(10,671)	(5,675)	(3,669)
Net cash  generated from/(used in) operating   activities		27,532	(11,748)	12,901	12,980
Cashflow from investing activities
Sale of associated undertaking		7,528	20,800	—	—
Sale of a subsidiary undertaking		—	—	1,095	—
Purchase of investment property	19	(1,367)	(934)	(73)	(100)
Disposal of investment property		317	1	317	1
Purchase of financial investments		(935,618)	(1,444,839)	(14,058)	(6,180)
Disposal of financial investments		884,922	1,485,885	8,377	3,910
Purchase of property, plant and equipment and   intangible assets		(8,675)	(9,741)	(3,114)	(2,983)
Net cash (used in)/generated from investing   activities		(52,893)	51,172	(7,456)	(5,352)
Cash flows from financing activities
Dividends paid to owners of the Company		(4,794)	(4,500)	(4,794)	(4,500)
Dividends paid to minority interests		(1,500)	(1,000)	—	—
Cash used in financing activities		(6,294)	(5,500)	(4,794)	(4,500)
Net movement in cash and cash equivalents		(31,655)	33,924	651	3,128
Movement in cash and cash equivalents
Cash and cash equivalents at beginning of year		81,899	47,975	13,908	10,780
Cash and cash equivalents at end of year	27	50,244	81,899	14,559	13,908

The Notes on pages 48 to 206 an integral part of these financial statements.

48

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

Notes to the financial statements

1.      Basis of preparation

The financial statements of MAPFRE Middlesea p.l.c. are prepared in accordance with

International Financial Reporting Standards as adopted for use in the European Union

and the Companies Act, 1995. The financial statements of the Group to which the

Company is parent are prepared in accordance with Article 4 of Regulation (EC)

1606/2002 on the application of international accounting standards (the “Regulation”)

which requires that, for each financial period starting on or after 1 January 2005,

companies governed by the law of an EU Member State shall prepare their consolidated

financial statements in conformity with IFRS as adopted by the EU if, at their reporting

date, their securities are admitted to trading on a regulated market of any EU Member

State. The Regulation prevails over the provisions of the Companies Act, 1995 to the

extent that the said provisions of the Companies Act, 1995 are incompatible with the

provisions of the Regulation. Both sets of financial statements as referred to in the

Annual Report relate to both those of the Company and the Group and have also been

prepared in accordance with the Insurance Business Act, 1998.

The financial statements are prepared under the historical cost convention as modified

by the revaluation of property, investment property and financial assets and financial

liabilities (including derivatives) at fair value through profit or loss (FVTPL) or at fair

value through other comprehensive income (FVOCI).  Investment in associated

undertaking is measured using equity method, that is, cost plus or minus net income or

loss of associate.

The preparation of financial statements in conformity with the above reporting

framework requires the use of certain critical accounting estimates. It also requires

management to exercise its judgement in the process of applying the Group’s

accounting policies.  The areas involving a higher degree of judgement or complexity,

or areas where assumptions and estimates are significant to the consolidated financial

statements, are disclosed in Note 3.

The statement of financial position is organised in increasing order of liquidity, with

additional disclosures on the maturity analysis of the Group’s assets and liabilities

provided within the Notes to the financial statements. All amounts in the Notes are

shown in thousands of euro, rounded to the nearest thousand, unless otherwise stated.

Amendments to published standards effective in 2025

In 2025, the Group adopted amendments to existing standards that are mandatory for

the Group’accounting period beginning on 1 January 2025. The adoption of these

amendments  to standards as per the requirements of IFRSs as adopted by the EU did

not result in material changes to the Group’s accounting policies.

49

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

1.Basis of preparation - continued

Standards and amendments to published standards that are not yet effective

A number of new standards and amendments to existing standards are effective for

annual periods beginning after 1 January 2025. However, the Group has not early

adopted the new standards or amendments in preparing these financial statements and

management are of the opinion that there are no requirements that are expected to have

a material impact on the Group’s financial statements in the period of initial application.

2.Accounting policies

The material accounting policies adopted in the preparation of these consolidated

financial statements are set out below. These policies have been consistently applied to

all the years presented, unless otherwise stated.

2.1Consolidation

(a) Subsidiary undertakings

The consolidated financial statements incorporate the assets, liabilities and results of

the Company and its subsidiary undertakings drawn up to 31 December each year. 

Subsidiary undertakings are those companies over which the Group has control, either

by way of majority shareholding, through contractual agreements with the other vote

holders of the investee or rights arising from other contractual agreements, giving it the

power to govern the financial and operating policies of the investee. Specifically, the

Group controls an investee if and only if the Group has:

– Power over the investee (i.e. existing rights that give it the current ability to direct

the relevant activities of the investee);

– Exposure, or rights, to variable returns from its involvement with the investee; and

– The ability to use its power over the investee to affect its returns.

The Group re-assesses whether or not it controls an investee if facts and circumstances

indicate that there are changes to one or more of the three elements of control.

Consolidation of a subsidiary begins when the Group obtains control over the

subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities,

income and expenses of a subsidiary acquired or disposed of during the year are

included in the statement of financial position and the statement of comprehensive

income from the date the Group gains control until the date the Group ceases to control

the subsidiary.

The Group applies the acquisition method to account for business combinations. The

consideration transferred for the acquisition of a subsidiary is the fair value of the assets

transferred, the liabilities incurred to the former owners of the acquiree and the equity

interests issued by the Group. The consideration transferred includes the fair value of

any asset or liability resulting from a contingent consideration arrangement. Identifiable

assets acquired and liabilities and contingent liabilities assumed in a business

combination are measured initially at their fair values at the acquisition date. The Group

50

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.Accounting policies - continued

2.1Consolidation - continued

(a) Subsidiary undertakings - continued

recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition

basis, either at fair value or at the non-controlling interest’s proportionate share of the

recognised amounts of acquiree’s identifiable net assets.

Acquisition-related costs are expensed as incurred.

If the business combination is achieved in stages, the acquisition date fair value of the

acquirer’s previously held equity interest in the acquiree is re-measured to fair value at

the acquisition date through profit or loss.

Goodwill is initially measured as the excess of the aggregate of the consideration

transferred and the fair value of non-controlling interest over the net identifiable assets

acquired and liabilities assumed. If this consideration is lower than the fair value of the

net assets of the subsidiary acquired, the difference is recognised in profit or loss.

Profit or loss and each component of other comprehensive income are attributed to the

equity holders of the parent of the Group and to the non-controlling interests, even if

this results in the non-controlling interests having a deficit balance. When necessary,

adjustments are made to the financial statements of subsidiaries to bring their

accounting policies in line with the Group’s accounting policies. All intra-group assets

and liabilities, equity, income, expenses and cash flows relating to transactions between

members of the Group are eliminated in full on consolidation. A list of the Group’s

subsidiaries is set out in Note 20.

(b)  Associated undertakings

An associate is an entity over which the Group has significant influence.  Significant

influence is the power to participate in the financial and operating policy decisions of

the investee, but is not control or joint control over those policies.  The considerations

made in determining significant influence are similar to those necessary to determine

control over subsidiaries. Except for investment-linked insurance funds, interests in

associated undertakings are accounted for by the equity method of accounting and are

initially recognised at cost and the carrying amount is increased or decreased to

recognise the investor’s share of profit or loss of the investee after the date of

acquisition.

The Group’s investment in associates includes goodwill (net of any accumulated

impairment loss) identified on acquisition. Equity accounting involves recognising in

the profit or loss the share of the associated undertaking’s post-acquisition profits or

losses.  The interest in the associated undertaking is carried in the statement of financial

position at an amount that reflects the share of the net assets of the associated

undertaking.  When the Group’s share of losses in an associate equals or exceeds its

interest in the associate, including any other unsecured receivables, the Group does not

51

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.      Accounting policies - continued

2.1Consolidation - continued

(b) Associated undertakings - continued

recognise further losses, unless it has incurred obligations or made payments on behalf

of the associate.

Intra-group gains on transactions between the Group and its associates are eliminated to

the extent of the Group’s interest in the associates. Intra-group losses are also

eliminated unless the transaction provides evidence of an impairment of the asset

transferred. Accounting policies for associated undertakings are changed where

necessary to ensure consistency with the policies adopted by the Group. A list of the

Group’s associated undertakings is set out in Note 21.

Interests in associated undertakings that are allocated to the insurance fund are

designated as financial assets at fair value through profit or loss.  They are accounted

for in accordance with the recognition and measurement principles described in Note

2.9.

2.2Segment reporting

Operating segments are reported in a manner consistent with the internal reporting

provided to the chief operating decision-maker.  The chief operating decision-maker,

responsible for allocating resources and assessing performance of the operating

segments, has been identified as the executive management which implements the

strategic decisions taken by the Board.  In identifying the Group’s business segments,

the chief operating decision-maker has considered the different categories of insurance

classes of business.  

2.3Foreign currency translation

Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured

using the currency of the primary economic environment in which the entity operates

(the ‘functional currency’). The euro is the Group’s and Company’s functional and

presentation currency.

Transactions and balances

Transactions in foreign currencies have been converted into the functional currency at

the rates of exchange ruling on the date of the transaction or valuation where items are

re-measured.  Foreign exchange gains and losses resulting from the settlement of such

transactions and from the translation at year-end exchange rates of monetary assets and

liabilities denominated in foreign currencies are recognised in the profit or loss account.

All other foreign exchange gains and losses are presented in the profit or loss account

within ‘Other investment revenue’.

52

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.Accounting policies - continued

2.3    Foreign currency translation - continued

Transactions and balances - continued

Translation differences on non-monetary items, mainly arising on equities held at fair

value through profit or loss, are reported as part of 'Other investment revenue'.

2.4Intangible assets

(a)Computer software

Acquired computer software licences are measured at cost less any accumulated

amortization and any accumulated impairment losses. Acquired computer software

licenses are capitalised on the basis of the costs incurred to acquire and bring to use the

specific software.  These costs are amortised using the straight-line method over their

useful lives, not exceeding a period of ten years.  All costs associated with maintaining

computer software programmes are recognised as an expense as incurred.

(b) Deferred policy acquisition costs

Incremental costs that are incurred in acquiring new investment contracts without DPF

are capitalised as deferred acquisition costs (DAC).

The DAC is subsequently amortised over the life of the contracts as follows:

– For long-term investment contracts with a fixed maturity date, DAC is amortised

over the life of the contract.

– For long term investment contracts with no fixed date of maturity, DAC is

amortised over the estimated life of the contract. This basis is reviewed periodically

with reference to the historical experience of surrenders for these contracts.

2.5Property, plant and equipment

All property, plant and equipment is initially recorded at historical cost. Freehold land

and buildings are subsequently shown at revalued amount being its fair value at the end

of the revaluation less accumulated depreciation for buildings and any accumulated

impairment losses. Fair value is based on periodic valuations by qualified valuers to

ensure that the carrying amount of property does not differ materially from that which

would be determined using fair values at the end of the reporting period. Any

accumulated depreciation at the date of revaluation is eliminated against the gross

carrying amount of the asset, and the net amount is restated to the revalued amount of

the asset.  All other property, plant and equipment is stated at historical cost less

depreciation and impairment losses.  Historical cost includes expenditure that is directly

attributable to the acquisition of the items.

53

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2. Accounting policies - continued

2.5Property, plant and equipment - continued

Subsequent costs are included in the asset’s carrying amount or recognised as a separate

asset, as appropriate, only when it is probable that future economic benefits associated

with the item will flow to the Group and the cost of the item can be measured reliably.

The carrying amount of the replaced part is derecognised. All other repairs and

maintenance costs are charged to the profit or loss account during the financial period

in which they are incurred.

Increases in the carrying amount arising on revaluation of land and buildings are

credited to other comprehensive income as other reserves in shareholders’ equity. 

Decreases that offset previous increases of the same asset are charged against other

comprehensive income as other reserves directly in equity; all other decreases are

charged to the profit or loss account.  Each year the difference between depreciation

based on the revalued carrying amount of the asset charged to the profit or loss account

and depreciation based on the asset’s original cost is transferred from ‘other reserves’ to

‘retained earnings’. 

Freehold land is not depreciated as it is deemed to have an indefinite life.  Depreciation

on other assets is calculated using the straight-line method to allocate their cost or

revalued amounts to their residual values over their estimated useful lives as follows:

	Buildings	100 years
	Leasehold improvements	10 - 40 years
	Motor vehicles	5 years
	Furniture, fittings and equipment	3 - 10 years

The assets’ residual values and useful lives are reviewed at the end of each reporting

period and adjusted if appropriate.

An asset’s carrying amount is written down immediately to its recoverable amount if

the asset’s carrying amount is greater than its estimated recoverable amount (accounting

policy 2.16).

Gains and losses on disposals are determined by comparing proceeds with carrying

amounts and are included in the profit or loss account. When revalued assets are sold,

the amounts included in other reserves relating to the assets are transferred to retained

earnings.

54

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2. Accounting policies - continued

2.6Investment property

Freehold and leasehold properties treated as investment property principally comprise

office and other commercial buildings that are held for long term rental yields and that

are not occupied by the Group or Company respectively. Investment property is initially

measured at cost and subsequently carried at fair value.  Fair value is based on active

market prices, adjusted, if necessary for any difference in the nature, location or

condition of the specific asset. If this information is not available, the Group uses

alternative valuation methods such as discounted cash flow projections or recent prices

in less active markets. These valuations are reviewed annually by qualified valuers. 

Investment property that is being redeveloped for continuing use as investment

property, or for which the market has become less active, continues to be measured at

fair value.  Changes in fair values are reported in the profit or loss account.

If an investment property becomes owner-occupied, it is reclassified as property, plant

and equipment, and its fair value at the date of reclassification becomes its cost for

subsequent accounting purposes.

2.7Investments in subsidiary undertakings

In the Company’s financial statements, investments in subsidiary undertakings are

accounted for by the cost method of accounting less impairment. 

Provisions are recorded where, in the opinion of the directors, at the end of a reporting

period, there is an impairment in value. Where there has been an impairment in the

value of an investment, it is recognised as an expense in the period in which the

impairment is identified or has occurred.  If in a subsequent period, the amount of the

impairment loss decreases and the decrease can be related objectively to an event

occurring after the impairment was recognised, the previously recognised impairment

loss is reversed by adjusting the allowance account.  The amount of the reversal is

recognised in the profit or loss account.

The dividend income from such investments is included in the profit or loss account in

the accounting year in which the Company’s rights to receive payment of any dividend

is established. 

On disposal of an investment, the difference between the net disposal proceeds and the

carrying amount is charged or credited to the profit or loss account and included within

'Other investment revenue'.

55

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2. Accounting policies - continued

2.8Investments in associated undertakings

In the Company’s financial statements, investments in associated undertakings are

accounted using the equity method. They are initially recognised at cost which includes

transaction costs. Subsequent to initial recognition the carrying amount is increased or

decreased to recognise the investor’s share of profit or loss. Distributions received from

an investee reduce the carrying amount of the investment. The changes in the investee’s

proportionate interest arising from changes in the investee’s other comprehensive

income, such as those arising from revaluation of property, plant and equipment and

from exchange translation differences are recognised in the other comprehensive

income.

2.9Financial instruments

(a) Summary of measurement categories

The Group classifies its financial assets and financial liabilities into the following

categories:

		Classification	Reason
	Cash and cash equivalents	Amortised Cost	SPPI, hold to collect business model
	Other investments	FVTPL	Trading or portfolio managed at FV
	Other investments	FVOCI	SPPI, hold to collect and sell business model
	Other investments	Amortised Cost	SPPI, hold to collect business model
	Trade and other receivables	Amortised Cost	SPPI, hold to collect business model
	Other payables	Amortised Cost	Not managed at FV
	Investment contract liabilities	FVTPL	Managed at FV

The Group does not apply hedge accounting.

(b)Initial recognition and measurement       

Financial assets and financial liabilities are recognised when the Group becomes a party

to the contractual provisions of the instrument. Regular way purchases and sales of

financial assets are recognised on the trade date (that is, the date on which the Group

commits to purchase or sell the asset).

At initial recognition, the Group measures a financial asset or financial liability at its

fair value, plus or minus, in the case of a financial asset or financial liability not at

FVTPL, transaction costs that are incremental and directly attributable to the acquisition

or issue of the financial asset or financial liability, such as fees and commissions.

Transaction costs of financial assets and financial liabilities carried at FVTPL are

expensed in profit or loss. Immediately after initial recognition, an ECL allowance is

recognised for financial assets measured at AC and investments in debt instruments

measured at FVOCI.

56

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2. Accounting policies - continued

2.9Financial instruments - continued

(b)Initial recognition and measurement - continued        

When the fair value of financial assets and liabilities differs from the transaction price

on initial recognition, the entity recognises the difference as follows:

a. When the fair value is evidenced by a quoted price in an active market for an

identical asset or liability (that is, a Level 1 input) or based on a valuation technique

that uses only data from observable markets, the difference is recognised as a gain

or loss.

b. In all other cases, the difference is deferred and the timing of recognition of

deferred day one profit or loss is determined individually. It is either amortised over

the life of the instrument, deferred until the instrument’s fair value can be

determined using market observable inputs, or realised through settlement.

(c) Amortised cost and effective interest rate

Amortised cost (AC) is the amount at which the financial asset or financial liability is

measured at initial recognition minus the principal repayments, plus or minus the

cumulative amortisation using the effective interest method for any difference between

the initial amount and the maturity amount and, for financial assets, adjusted for any

loss allowance.

The effective interest rate (EIR) is the rate that exactly discounts estimated future cash

payments or receipts through the expected life of the financial asset or financial liability

to the gross carrying amount of a financial asset (that is, its AC before any impairment

allowance) or to the AC of a financial liability. The calculation does not consider the

ECL and includes transaction costs, premiums or discounts and fees and points paid or

received that are integral to the EIR.

When the Group revises the estimates of future cash flows, the carrying amount of the

respective financial asset or financial liability is adjusted to reflect the new estimate

discounted using the original EIR. Any changes are recognised in profit or loss. 

Interest revenue is calculated by applying the EIR to the gross carrying amount of

financial assets recognised at AC or FVOCI.

57

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2. Accounting policies - continued

2.9Financial instruments - continued

2.9.1 Financial assets

(a) Business model

The business model reflects how the Group manages assets in order to generate cash

flows. That is, it reflects whether the Group’s objective is solely to collect the

contractual cash flows from assets or to collect both the contractual cash flows and cash

flows arising from the sale of assets. If neither of these is applicable (for example,

financial assets are held for trading purposes), the financial assets are classified as part

of the other business model and measured at FVTPL.

Factors considered by the Group in determining the business model for a group of

assets include past experience on how the cash flows for these assets were collected,

how the asset’s performance is evaluated and reported to key management personnel,

how risks are assessed and managed, and how managers are compensated. For example,

the business model for the investments underlying investment contracts with DPF is to

hold to collect and sell contractual cash flows. The proceeds from the contractual cash

flows of the financial assets are used to settle insurance contract liabilities as they

become due.

(b) Solely payments of principal and interest ('SPPI')

Where the business model is to hold assets to collect contractual cash flows or to collect

contractual cash flows and sell, the Group assesses whether the financial instruments’

cash flows represent SPPI (the SPPI test). In making this assessment, the Group

considers whether the contractual cash flows are consistent with a basic lending

arrangement (that is, interest includes only consideration or the time value of money,

credit risk, other basic lending risks and a profit margin that is consistent with a basic

lending arrangement). Where the contractual terms introduce exposure to risk or

volatility that are inconsistent with a basic lending arrangement, the related financial

asset is classified and measured at FVTPL.

(c)  Debt instruments

Debt instruments are those instruments that meet the definition of a financial liability

from the issuer’s perspective, such as government and corporate bonds.

The classification and subsequent measurement of debt instruments depend on:

– the Group’s business model for managing the asset; and

– the cash flow characteristics of the asset (represented by SPPI).

58

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2. Accounting policies - continued

2.9Financial instruments - continued

2.9.1 Financial assets - continued

(c)  Debt instruments - continued

Based on these factors, the Group classifies its debt instruments into one of the following

three measurement categories:

a. AC: Assets that are held for collection of contractual cash flows where those cash

flows represent SPPI, and that are not designated at FVTPL, are measured at AC. The

carrying amount of these assets is adjusted by any ECL allowance recognised and

measured, as described further below. Interest revenue from these financial assets is

included in the profit or loss under interest revenue calculated using the effective

interest method.

b. FVOCI: Financial assets that are held for collection of contractual cash flows and for

selling the assets, where the assets’ cash flows represent SPPI, and that are not

designated at FVTPL, are measured at FVOCI. Movements in the carrying amount are

taken through OCI, except for the recognition of impairment gains or losses, interest

revenue and foreign exchange gains and losses on the instrument’s AC, which are

recognised in profit or loss. When the financial asset is derecognised, the cumulative

gain or loss previously recognised in OCI is reclassified from equity to profit or loss

and recognised in other investment revenue. Interest revenue from these financial

assets is included in interest revenue calculated using the effective interest method.

c. FVTPL: Assets that do not meet the criteria for AC or FVOCI are measured at

FVTPL. Also, some assets are voluntarily measured at FVTPL, because this

significantly reduces an accounting mismatch. A gain or loss on a debt investment

that is subsequently measured at FVTPL is recognised and presented in the

consolidated statement of profit or loss within other investment revenue in the period

in which it arises.

The Group reclassifies debt instruments only when its business model for managing

those assets changes. The reclassification takes place from the start of the first

reporting period following the change. Such changes are expected to be very

infrequent, and none occurred during the period.

(d) Equity instruments

Equity instruments are instruments that meet the definition of equity from the issuer’s

perspective (that is, instruments that do not contain a contractual obligation to pay and

that evidence a residual interest in the issuer’s net assets). Examples of equity

instruments include basic ordinary shares.

The Group subsequently measures all equity investments at FVTPL. Gains and losses on

equity investments at FVTPL are included in the line ‘Other investment revenue’ in the

consolidated statement of profit or loss.

59

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.    Accounting policies - continued

2.9Financial instruments - continued

2.9.1 Financial assets - continued

(e) Cash and cash equivalents

Cash and cash equivalents include cash balances and financial instruments with original

maturities of three months or less from the date of acquisition that are subject to an

insignificant risk of changes in their fair value, and are used by the Group in the

management of its short-term commitments. Cash and cash equivalents are carried in the

statement of financial position at AC net of ECL.

(f) Fair Value Measurement

For financial instruments traded in active markets, the determination of fair values of

financial assets and financial liabilities is based on quoted market prices or dealer price

quotations. This includes listed equity securities and quoted debt instruments on major

exchanges. The quoted market price used for financial assets held by the Group is the

current bid price or closing price as appropriate. A financial instrument is regarded as

quoted in an active market if quoted prices are readily and regularly available from an

exchange, dealer, broker, industry group, pricing service or regulatory agency, and those

prices represent actual and regularly occurring market transactions on an arm’s length

basis. If the market for a financial asset is not active, the Group establishes fair value by

using valuation techniques.  These include the use of recent arm’s length transactions,

reference to other instruments that are substantially the same or valued by reference to

the net assets of the underlying investment. 

(g) Impairment

(i) Debt instruments and cash and cash equivalents

The Group assesses the ECL associated with its debt instruments measured at AC and

debt instrument assets carried at FVOCI. The Group recognises a loss allowance for

such losses at each reporting date. The measurement of the ECL reflects:

a. an unbiased evaluation of a range of possible outcomes and their probabilities of

occurrence;

  b. discounting for the time value of money; and

  c. reasonable and supportable information that is available without undue cost or effort

at the reporting date about past events, current conditions and forecasts of future

economic conditions

60

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2. Accounting policies - continued

2.9Financial instruments - continued

2.9.1 Financial assets - continued

(g) Impairment - continued

(i) Debt instruments and cash and cash equivalents- continued

However, IFRS 9 emphasises that estimating ECL may not necessarily need to be a

complex process and that an entity need not identify every possible scenario. In some

cases, relatively simple modelling may be sufficient without the need for many detailed

simulations or scenarios.

The Group calculates the ECL at an instrument level, using three main components:

– a probability of default (‘PD’),

– a loss given default (‘LGD’),

– and the exposure at default (‘EAD’).

At initial recognition, an allowance is required for ECL resulting from default events

that are possible within the next 12 months, or less, where the remaining life is less than

12 months (‘12-month ECL’).

In the event of a ‘significant increase in credit risk’ (SICR), an allowance is required for

ECL resulting from all possible default events over the expected life of the financial

instrument (‘Lifetime ECL’). In the case of a non-maturity deposit, the Group assumes a

lifetime of 1 month.

Financial assets where 12-month ECL is recognised are considered to be ‘stage 1’;

financial assets which are considered to have experienced a SICR are classified as ‘stage

2’; and financial assets for which there is objective evidence of impairment, and which

are so considered to be in default or otherwise credit impaired, are classified as ‘stage 3’.

The ECL allowance and any changes to it are recognised by recognising impairment

gains and losses in profit or loss.

(ii) Trade receivables

For trade receivables, the Company applies the simplified approach required by IFRS 9,

which requires expected lifetime losses to be recognised from initial recognition of the

receivables. An impairment analysis is performed at each reporting date using a

provision matrix to measure expected credit losses. The provision rates are based on

days past due for groupings of various customer segments with similar loss patterns. The

Company considers trade receivables in default when contractual payments are past their

credit terms.

61

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2. Accounting policies - continued

2.9Financial instruments - continued

2.9.1 Financial assets - continued

(g) Impairment - continued

(ii) Trade receivables - continued

Trade receivables are written off when there is no reasonable expectation of recovery.

Indicators that there is no reasonable expectation of recovery include, among others, the

probability of insolvency or significant financial difficulties of the debtor. 

(h) Derecognition

Financial assets, or a portion thereof, are derecognised when the contractual rights to

receive the cash flows from the assets have expired, or when they have been transferred

and either (i) the Group transfers substantially all of the risks and rewards of ownership;

or (ii) the Group neither transfers nor retains substantially all of the risks and rewards of

ownership and the Group has not retained control.

The Group enters into transactions where it retains the contractual rights to receive cash

flows from assets but assumes a contractual obligation to pay those cash flows to other

entities and transfers substantially all of the risks and rewards. These transactions are

accounted for as pass-through transfers that result in derecognition if the Group:

a. has no obligation to make payments unless it collects equivalent amounts from the

assets;

b. is prohibited from selling or pledging the assets; and

c.  has an obligation to remit any cash that it collects from the assets without material

delay

(i)  Modification

If cash flows are modified when the debtor is in financial difficulties, then the objective

of the modification is usually to maximise recovery of the original contractual cash

flows rather than to originate a new asset with substantially different terms. If the Group

plans to modify a financial asset in a way that would result in forgiveness of cash flows,

then it first considers whether a portion of the asset should be written off before the

modification takes place.

2.9.2 Financial liabilities

(a)  Classification and subsequent measurement

Financial liabilities are classified and subsequently measured at AC, except for

derivatives and investment contracts without DPF, which are measured at FVTPL.

62

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2Accounting policies - continued

2.9Financial instruments - continued

2.9.2 Financial liabilities - continued

(a)  Classification and subsequent measurement - continued

Investment contracts without DPF are financial liabilities whose fair value is dependent

on the fair value of underlying financial assets and are designated at inception at

FVTPL. The Group designates these investment contracts to be measured at FVTPL,

because it eliminates or significantly reduces a measurement or recognition

inconsistency (that is, an accounting mismatch) that would otherwise arise from

measuring assets or liabilities or recognising the gains and losses on them on different

bases.

The Group’s main valuation techniques incorporate all factors that market participants

would consider and make maximum use of observable market data. The fair value of

financial liabilities for investment contracts without DPF is determined using the

current unit values in which the contractual benefits are denominated. These unit values

reflect the fair values of the financial assets contained within the Group’s unitised

investment funds linked to the financial liability. The fair value of the financial

liabilities is obtained by multiplying the number of units attributed to each contract

holder at the end of the reporting period by the unit value for the same date.

When the investment contract has a surrender option, the fair value of the financial

liability is never less than the amount payable on surrender.

Changes in the fair value of financial liabilities measured at FVTPL are presented in the

statement of profit or loss.

(b)  Derecognition

Financial liabilities are derecognised when they are extinguished (that is, when the

obligation specified in the contract is discharged, is cancelled or expires). The Group

also derecognises a financial liability when its terms are modified and the cash flows of

the modified liability are substantially different, in which case a new financial liability

based on the modified terms is recognised at fair value.

On derecognition of a financial liability, the difference between the carrying amount

extinguished and the consideration paid (including any non-cash assets transferred or

liabilities assumed) is recognised in profit or loss.

(c) Modification

If a financial liability measured at amortised cost is modified but not substantially, then

it is not derecognised.

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MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2Accounting policies - continued

2.9Financial instruments - continued

2.9.2 Financial liabilities - continued

(d)  Derivatives

Derivatives are initially recognised at fair value on the date on which the derivative

contract is entered into and are subsequently remeasured at fair value. All derivatives

are carried as assets when fair value is positive and as liabilities when fair value is

negative. Fair values are obtained from quoted market prices in active markets, and

other valuation techniques, as appropriate.  Subsequent changes in the fair value of any

derivative instruments are recognised immediately in profit or loss.

2.10  Insurance and investment contracts issued and reinsurance contracts held

The Group issues contracts that transfer insurance risk or financial risk or both.

(a)Definition and classification

The following table provides an overview of the Group’s assessment of its products

and whether these fall in scope of IFRS 17:

64

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.Accounting policies - continued

2.10 Insurance and investment contracts issued and reinsurance contracts held -

continued

(a)Definition and classification - continued

	Type of contract	Contracts issued	Within scope of IFRS 17	Measurement model	Description of benefit
	Short-term insurance contracts	Insurance contracts - Non-Life and Group Life  contracts	Yes	PAA	Pure insurance contracts carrying significant insurance risk where the obligation of the Group towards the insured is the payment for loss incurred if the insured event occurs whilst the policy is in force.
	Long-term insurance contracts - Life risk	Insurance contracts - Term assurance including term riders	Yes	General Measurement Model ('GMM')	Pure insurance contracts carrying significant insurance risk where the obligation of the Group towards the insured is the payment of a death benefit, if the death occurs whilst the policy is in force.
	Long-term insurance contracts - Life risk	Unit-linked – Maximum Investment Plan	Yes	GMM	A unit-linked contract with significant insurance risk is one that incorporates a material sum assured within the contract (i.e. the sum assured/minimum death benefit provided, exceeds the investment value of the product). This group of contracts was substantially modified resulting to derecognition during 2025.

	Direct participating contracts	With-profits (Investment contracts with DPF)	Yes	Variable Fee Approach ('VFA')	Investment contracts with DPF where the obligation of the Group towards the insured also includes an annual discretionary investment return (declared bonus rate).
	Direct participating contracts	Hybrids (Investment contracts with DPF)	Yes	VFA	These are mainly unit-linked products including with-profits components (investment contract with DPF).
	Investment contracts	Unit-linked - others (Investment contracts without DPF)	No	FVTPL	Investment contracts which pays the policyholder an additional 1% of the fund value at the time of death, this component is deemed to be immaterial to the overall value of the fund and therefore, no significant insurance risk is deemed to arise from it. Therefore, these contracts are  valued in line with IFRS 9 'Financial Instruments'.

65

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.Accounting policies - continued

2.10Insurance and investment contracts issued and reinsurance contracts held

        - continued

(a)Definition and classification - continued

Insurance contracts are contracts under which the Group accepts significant insurance

risk from a policyholder by agreeing to compensate the policyholder if a specified

uncertain future event adversely affects the policyholder. In making this assessment, all

substantive rights and obligations, including those arising from law or regulation, are

considered on a contract by contract basis. Judgement is used to assess whether a

contract transfers insurance risk and whether the accepted insurance risk is significant.

Generally, the Group defines as significant insurance risk the possibility of having to

pay benefits on the occurrence of an insured event that at least 5% more than the

benefits payable (on a present value basis) if the insured event did not occur. The

Group accounts for these contracts under IFRS 17.

The Group also issues term riders which represent an add-on to a basic policy that

provides additional benefits to policyholders (at additional cost). They can be

purchased by a policyholder concurrently to a basic policy or at a subsequent date, i.e.

a date after the inception of the basic policy. The addition of a term rider triggers

medical underwriting at the point in time the rider is added, giving the Group the

ability to reprice the policy at that point in time. The Group has concluded that term

riders are to be separated from the host contract and will form part of the term

portfolio.

Contracts that have a legal form of insurance but do not transfer significant insurance

risk and expose the Group to financial risk are classified as investment contracts, and

they follow financial instruments accounting under IFRS 9, unless they have DPF as

described below, in which case they are accounted for as insurance contracts.

A number of investment contracts contain a DPF. This feature entitles the holder to

receive, as a supplement to guaranteed benefits (i.e. amounts not subject to the Group's

discretion), additional benefits or bonuses:

– that are likely to be a significant portion of the total contractual benefits;

– whose amount or timing is contractually at the discretion of the Group; and

– that are based on realised and/or unrealised investment returns on specified pools

of underlying assets held by the Group.

The Group also issues a ‘hybrid’ product which is a unit-linked product that gives

policyholders the possibility to initially allocate, and subsequently switch, a portion of

the premium to a ‘with-profits’ DPF holding as well as a unit-linked holding. This

product was deemed to fall within scope of IFRS 17 when the policyholder allocates a

percentage holding in the with-profits fund as at inception or transition date.

Furthermore, management concluded that the unit-linked component of the product

does not constitute a distinct investment component, given that both elements of the

‘hybrid’ product cannot be measured and presented separately and are interdependent

on each other.

66

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.Accounting policies - continued

2.10Insurance and investment contracts issued and reinsurance contracts held

        - continued

(a)Definition and classification - continued

Since this product is primarily a unit-linked product with the option to hold a

percentage of the holding in the with-profits fund, management has determined that for

such a contract to be in scope of IFRS 17, it needs to hold a 5% level of significant

discretionary benefit.

Local statutory regulations and the terms and conditions of both investment contracts

with DPF and hybrids set out the basis for the determination of the amounts on which

the additional discretionary benefits are based (the DPF eligible surplus), and within

which the Group may exercise its discretion as to the quantum and timing of their

payment to contract holders, also considering the advice of the Approved Actuary.  The

Group accounts for these contracts under IFRS 17, as it also issues insurance contracts.

The Group assesses investment contracts that qualify as having direct participation

features as a result of the nature of their design (i.e. they are primarily investment

related contracts where the investment risk is substantially borne by the policyholder) to

ascertain whether or not they meet the VFA eligibility criteria.

IFRS 17 requires these criteria to be assessed at the individual contract level. The

Group assessed the criteria at the product level. The assessment is carried out based on

the Group's expectations at inception, and is not reassessed subsequently, unless the

product is modified.

The with-profits policies are ring fenced, meaning, a barrier clearly segregates the

policyholder assets participating in the fund from the shareholders’ ones. Therefore, the

pool of assets is clearly identifiable. The ‘underlying items’ in this case would be the

with-profits assets.

Investment contracts with direct participation features are viewed as creating an

obligation to pay policyholders an amount that is equal to the fair value of the

underlying items, less a variable fee for service. The variable fee comprises the amount

of the Group’s share of the fair value of the underlying items less the fulfillment cash

flows ('FCF') that do not vary based on the returns on underlying items. Therefore, on

an average probability-weighted basis, the Group considers that the amount it expects to

pay to policyholders comprises a substantial portion of the fair value returns on

underlying items.

The variability in cash flows is assessed over the duration of the insurance contracts and

on the basis of the average of the probability-weighted present value. The duration of

the contract takes into account all the cash flows in the contract boundary. The major

component of the liability (the present value of the future net cash outflows) is made up

of claims which vary substantially with the underlying items.

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MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.Accounting policies - continued

2.10Insurance and investment contracts issued and reinsurance contracts held

        - continued

(a)Definition and classification - continued

In the normal course of business, the Group uses reinsurance to mitigate its risk

exposures. A reinsurance contract transfers significant risk if it transfers substantially

all of the insurance risk resulting from the insured portion of the underlying insurance

contracts, even if it does not expose the reinsurer to the possibility of a significant loss.

For short-term insurance contracts, the Group uses the PAA simplified method to

measure groups of contracts. All short-term insurance contracts originated by the

Group, are without direct participation features.

All references to insurance contracts in these consolidated financial statements apply to

insurance contracts issued or acquired, reinsurance contracts held and investment

contracts with DPF, unless specifically stated otherwise.

(b)    Unit of account

The Group manages insurance contracts issued by product type, where each product

type includes contracts which are subject to similar risks and are managed together. The

Group has determined that contracts have similar risk and are managed together if they

are priced together, have the same underwriting process, have common reporting, and

claims and risks underlying the contracts are managed together. All insurance contracts

of the same product type represent a portfolio. Each portfolio is further disaggregated

into groups of contracts that are issued within a calendar year (annual cohorts) and are

at initial recognition:

– contracts that are onerous; or

– all remaining contracts.

In variation to the above, as further described below, in contrast with all other contracts

in scope of IFRS 17, investment contracts with DPF are not grouped by annual cohort.

As per Article 2 of the Commission Regulation (EU) 2021/2036 and 2023/1803, a

Group may choose not to apply the annual cohorting requirement to groups of

investment contracts with discretionary participation features and with cash flows that

affect or are affected by cash flows to policyholders of other contracts.

The Group’s with-profits fund is a pool of policies sharing in the same pool of

underlying items. Therefore, the risk that a particular policy becomes onerous (i.e. the

possibility of the with-profits fund assets being lower than the present value of its future

liabilities) is shared between the policyholders within this pool. In such instances,

policies, which do not exhibit such onerosity, will make good for those policies which

are onerous.

68

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.Accounting policies - continued

2.10Insurance and investment contracts issued and reinsurance contracts held

        - continued

(b) Unit of account - continued

Given that the Group’s with-profits fund has all mutualisation features described above,

the Group has chosen to apply the option to avoid allocating policies to annual cohorts

as these are groups of investment contracts with DPF and with cash flows that affect or

are affected by cash flows to policyholders of other contracts. All with-profits and

hybrid policies will therefore be allocated to a single cohort.

Portfolios of reinsurance contracts held are assessed for aggregation separately from

portfolios of insurance contracts issued. Separate portfolios for reinsurance contracts

held were therefore established and the Group has a number of reinsurance portfolios.

In groups of reinsurance contracts held, the amount an entity pays generally exceeds the

expected present value of the cash flows generated by that reinsurance contract plus the

risk adjustment for non-financial risk and thus the Group is usually in a net cost

position. The Group has determined that the reinsurance contracts held will be grouped

by calendar or underwriting year (annual cohorts) depending whether they are loss

occurring or risk attaching under the category ‘all remaining contracts’ which includes

reinsurance contracts held with an initial net cost but with a possibility of a future net

gain.

Transition approaches that were applied by the Group on adoption of IFRS 17 with

respect to contracts aggregation requirements are included in Note 6.

Before the Group accounts for an insurance contract based on the guidance in IFRS 17,

it analyses whether the contract contains components that should be separated. IFRS 17

distinguishes three categories of components that have to be accounted for separately:

-    cash flows relating to embedded derivatives that are required to be separated;

-    cash flows relating to distinct investment components; and

-  promises to transfer distinct goods or distinct services other than insurance contract

services.

The Group applies IFRS 17 to all remaining components of the contract. The Group

does not have any contracts that require further separation (except for term riders – refer

to note 2.10(a). The Group also does not have any contracts that require combination.

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MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.      Accounting policies - continued

2.10Insurance and investment contracts issued and reinsurance contracts held

        - continued

(c)    Recognition, modification and derecognition

Recognition

Groups of insurance contracts issued are initially recognised from the earliest of the

following:

-    the beginning of the coverage period;

-    the date when the first payment from the policyholder is due or actually received, if

there is no due date; and

-    when the Group determines that a group of contracts becomes onerous.

Investment contracts with DPF are initially recognised at the date when the Group

becomes a party to the contract.

Reinsurance contracts held are recognised from the later of the following:

        -  the beginning of the coverage period of the group; and

-    the initial recognition of any underlying insurance contract;

Unless the Group entered into the reinsurance contract held at or before the date when

an onerous group of underlying contracts is recognised prior to the beginning of the

coverage period of the group of reinsurance contracts held, in which case the

reinsurance contract held is recognised at the same time as the group of underlying

insurance contracts is recognised. 

Only contracts that individually meet the recognition criteria by the end of the reporting

period are included in the groups. When contracts meet the recognition criteria in the

groups after the reporting date, they are added to the groups in the reporting period in

which they meet the recognition criteria, subject to the annual cohorts restriction.

Composition of the groups is not reassessed in subsequent periods.

Modification and derecognition

An insurance contract is derecognised when it is extinguished (that is, when the

obligation specified in the insurance contract expires or is discharged or cancelled), or

when the contractual terms are modified in a way that would have changed the

accounting for the contract significantly had the new terms always existed, in which

case a new insurance contract is recognised.

If a contract modification is not significant, the changes in cash flows caused by the

modification are treated as changes in estimates of FCF.

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MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.      Accounting policies - continued

2.10Insurance and investment contracts issued and reinsurance contracts held

        - continued

(c)    Recognition, modification and derecognition - continued

Modification and derecognition - continued

When an insurance contract is derecognised from within a group of insurance contracts, the

Group:

– adjusts the FCF to eliminate the present value of future cash flows and risk adjustment

for non-financial risk relating to the rights and obligations removed from the group;

– adjusts the CSM; and

– adjusts the number of coverage units for the expected remaining insurance contract

services, to reflect the number of coverage units removed.

On the other hand, when an insurance contract accounted for under the PAA is

derecognised, adjustments to the future cash flows to remove related rights and

obligations to account for the effect of the derecognition result in the following amounts

being charged immediately to profit or loss:

a. if the contract is extinguished, any net difference between the derecognised part of

the Liability for Remaining Coverage (LRC) of the original contract and any other

cash flows arising from extinguishment.

b. if the contract is transferred to the third party, any net difference between the

derecognised part of the LRC of the original contract and the premium charged by

the third party; or

c. if the original contract is modified resulting in its derecognition, any net difference

between the derecognised part of the LRC and the hypothetical premium that the

entity would have charged if it had entered into a contract with equivalent terms as

the new contract at the date of the contract modification, less any additional

premium charged for the modification.

(d)Measurement

Fulfilment cash flows

Fulfilment cash flows (‘FCF’) are the current estimates of the future cash flows within

the contract boundary of a group of contracts that the Group expects to collect from

premiums and pay out for claims, benefits and expenses, adjusted to reflect the timing

and the uncertainty of those amounts.

Estimates of future cash flows:

a. are based on a probability-weighted average of all possible outcomes;

b. are reflective of the Group’s perspective, provided estimates of any relevant market

variables are consistent with observable market prices for those variables; and

c. are reflective of conditions existing at measurement date.

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MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.      Accounting policies - continued

2.10Insurance and investment contracts issued and reinsurance contracts held

        - continued

(d)Measurement - continued

Fulfilment cash flows - continued

An explicit risk adjustment for non-financial risk is estimated separately from the other

estimates for Assets for Remaining Coverage ('ARC') and Liability for Remaining

Coverage ('LRC'). For contracts measured under the PAA, unless the contracts are

onerous, the explicit risk adjustment for non-financial risk is only estimated for the

measurement of the Liability for Incurred Claims ('LIC').

The estimates of future cash flows are also adjusted using current discount rates to

reflect the time value of money and financial risks relating to these cash flows. The

discount rates reflect the characteristics of the cash flows arising from the groups of

insurance contracts, including timing, currency and liquidity of cash flows. The

determination of the discount rate that reflects the characteristics of the cash flows and

liquidity characteristics of the insurance contracts requires judgement and estimation.

Risk of non-performance is not included in the measurement of groups of insurance

contracts issued. In the measurement of reinsurance contracts held, the probability-

weighted estimates of the present value of future cash flows include the potential credit

losses and other disputes of the reinsurer to reflect the non-performance risk of the

reinsurer.

The Group estimates certain FCF at the portfolio level or higher and then allocates such

estimates to groups of contracts.

The Group uses consistent assumptions to measure the estimates of the present value of

future cash flows for the group of reinsurance contracts held and such estimates for the

groups of underlying insurance contracts.

Contract boundary

The Group uses the concept of contract boundary to determine what cash flows should

be considered in the measurement of groups of insurance contracts.

Cash flows are within the boundary of an insurance contract if they arise from

substantive rights and obligations that exist during the reporting period in which the

Group can compel the policyholder to pay the premiums or in which the Group has a

substantive obligation to provide the policyholder with insurance contract services.

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MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.      Accounting policies - continued

2.10Insurance and investment contracts issued and reinsurance contracts held

        - continued

(d)Measurement - continued

Contract boundary - continued

A substantive obligation lasts until:

a) the Group has the practical ability to reassess the risks of a particular policyholder,

and hence, can set a price to fully reflect those risks; or

b) both of the following criteria are satisfied:

i. the Group has a practical ability to reassess the risks of the portfolio of insurance

contracts, as a result of which it can set a price to fully reflect those risks; and

ii. the pricing of premiums up to the date when the risks are reassessed does not take

into account the risks that relate to periods after the reassessment date.

In assessing the practical ability to reprice, risks transferred from the policyholder to the

Group, such as insurance risk and financial risk, are considered; other risks, such as

lapse or surrender and expense risk, are not included.

For contracts issued under the PAA, riders, representing add-on provisions to a basic

insurance policy that provide additional benefits to the policyholder at additional cost,

that are issued together with the main insurance contracts, form part of a single

insurance contract with all the cash flows within its boundary.

Cash flows outside the insurance contracts boundary relate to future insurance contracts

and are recognised when those contracts meet the recognition criteria.

Cash flows are within the boundaries of investment contracts with DPF if they result

from a substantive obligation of the Group to deliver cash at a present or future date.

For groups of reinsurance contracts held, cash flows are within the contract boundary if

they arise from substantive rights and obligations of the Group that exist during the

reporting period in which the Group is compelled to pay amounts to the reinsurer or in

which the Group has a substantive right to receive insurance contract services from the

reinsurer.

The Group's quota share, surplus and facultative reinsurance contracts have an annual

term and cover underlying contracts issued within the term on a risk-attaching basis.

Meaning that they cover policies ceded for the entire duration of the contract, even if

this duration exceeds that of the reinsurance contract itself.

73

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.      Accounting policies - continued

2.10Insurance and investment contracts issued and reinsurance contracts held

        - continued

(d)Measurement - continued

Contract boundary - continued

The Group treats such reinsurance contracts as a series of annual contracts that cover

underlying business issued within a year. Estimates of future cash flows arising from all

underlying contracts issued and expected to be issued within the reinsurance contracts’

one-year boundary are included in the measurement of the reinsurance contracts.

The excess of loss contracts held provide coverage for claims incurred during an

accident year. Thus, all cash flows arising from claims incurred and expected to be

incurred in the accident year are included in the measurement of the reinsurance

contracts held. Some of these contracts include mandatory reinstatement reinsurance

premiums, which are included within the respective reinsurance contracts’ boundaries.

Cash flows that are not directly attributable to a portfolio of insurance contracts are

recognised in other operating expenses as incurred.

Insurance acquisition costs

Insurance acquisition cash flows are cash flows arising from the costs of selling,

underwriting and starting a group of insurance contracts that are directly attributable to

the portfolio of insurance contracts to which the group belongs. Insurance acquisition

cash flows for the Group comprise commission paid to intermediaries for new business

and salaries of employees whose efforts are directly related to the acquisition of new

insurance business.

Insurance acquisition cash flows that are directly attributable to a group of insurance

contracts shall be allocated to that group. IFRS 17 requires that insurance acquisition

cash flows are also allocated to groups that will include insurance contracts that are

expected to arise from renewals of the insurance contracts in that group. The latter does

not apply to the Group as it does not incur acquisition costs in relation to future

renewals.

Insurance acquisition cash flows not directly attributable to a group of contracts but

directly attributable to a portfolio of contracts are allocated to groups of contracts in the

portfolio or expected to be in a portfolio.

The Group does not incur any material directly attributable acquisition cash flows, or

other inflows or outflows, before a group of insurance contracts is recognised.

Consequently, it does not recognise any ‘pre-recognition cash flows’.

74

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.      Accounting policies - continued

2.10Insurance and investment contracts issued and reinsurance contracts held

        - continued

(d)Measurement - continued

Risk adjustment for non-financial risk

The risk adjustment for non-financial risk is applied to the present value of the

estimated future cash flows, and it reflects the compensation that the Group requires for

bearing the uncertainty about the amount and timing of the cash flows from non-

financial risk as the Group fulfils insurance contracts.

For reinsurance contracts held, the risk adjustment for non-financial risk represents the

amount of risk being transferred by the Group to the reinsurer.

Methods and assumptions used to determine the risk adjustment for non-financial risks

are discussed in Note 24.

Contracts not measured under the PAA

Initial measurement and CSM

The CSM is a component of the carrying amount of the asset or liability for a group of

insurance contracts issued representing the unearned profit that the Group will

recognise as it provides insurance contract services in the future. At initial recognition,

the CSM is an amount that results in no income or expenses arising from:

-    the initial recognition of the FCF;

-    cash flows arising from the contracts in the group at that date;

When the above calculation results in a net outflow, the group of insurance contracts

would be onerous. A loss arising from onerous insurance contracts is recognised

immediately in profit or loss, with no CSM recognised in the statement of financial

position and a loss component is established in the amount of loss recognised.

No onerous contracts have been identified by the Group.

For groups of reinsurance contracts held, any net gain or loss at initial recognition is

recognised as the CSM unless the net cost of purchasing reinsurance relates to past

events, in which case the Group recognises the net cost immediately in profit or loss.

For reinsurance contracts held, the CSM represents a deferred gain or loss that the

Group will recognise as a reinsurance expense as it receives insurance contract services

from the reinsurer in the future.

75

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.      Accounting policies - continued

2.10Insurance and investment contracts issued and reinsurance contracts held

        - continued

(d)Measurement - continued

Contracts not measured under the PAA - continued

Subsequent measurement

The carrying amount at the end of each reporting period of a group of insurance contracts

issued is the sum of:

– the LRC, comprising:

– the FCF related to future service allocated to the group at that date; and

– the CSM of the group at that date; and

– the liability for incurred claims ('LIC'), comprising the FCF related to past service

allocated to the group at the reporting date.

The carrying amount at the end of each reporting period of a group of reinsurance contracts

held is the sum of:

– the remaining coverage, comprising:

– the FCF related to future service allocated to the group at that date; and

– the CSM of the group at that date; and

– the incurred claims, comprising the FCF related to past service allocated to the group at

the reporting date.

i. Changes in fulfilment cash flows

The FCF are updated by the Group for current assumptions at the end of every reporting

period, using the current estimates of the amount, timing and uncertainty of future cash

flows and of discount rates.

The way in which the changes in estimates of the FCF are treated depends on which

estimate is being updated:

– changes that relate to current or past service are recognised in profit or loss; and

– changes that relate to future service are recognised by adjusting the CSM or the loss

component within the LRC as per the policy below.

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MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.      Accounting policies - continued

2.10Insurance and investment contracts issued and reinsurance contracts held

        - continued

(d)Measurement - continued

Contracts not measured under the PAA - continued

Subsequent measurement - continued

i. Changes in fulfilment cash flows - continued

For insurance contracts measured under the General Measurement Model (‘GMM’), the

following adjustments relate to future service and thus adjust the CSM:

a. experience adjustments – arising from premiums received in the period that relate to

future service and related cash flows;

b. changes in estimates of the present value of future cash flows in the LRC, except

those described in the following paragraph;

c. differences between any investment component expected to become payable in the

period and the actual investment component that becomes payable in the period; and

d. changes in the risk adjustment for non-financial risk that relate to future service.

Adjustments a. and b. above are measured using discount rates determined on initial

recognition (the locked in discount rates).

For insurance contracts under the GMM, the following adjustments do not adjust the

CSM:

a. changes in the FCF for the effect of the time value of money and the effect of

financial risk and changes thereof;

b. changes in the FCF relating to the LIC;

c. experience adjustments arising from premiums received in the period that do not

relate to future service and related cash flows; and

d. experience adjustments relating to insurance service expenses (excluding insurance

acquisition cash flows).

When measuring a group of investment contracts with DPF, the Group adjusts the

fulfilment cash flows for the whole of the changes in the obligation to pay policyholders

an amount equal to the fair value of the underlying items. These changes do not relate

to future services and are recognised in profit or loss. The Group then adjusts any CSM

for changes in the amount of the Group’s share of the fair value of the underlying items,

which relate to future services, as explained below.

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MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.      Accounting policies - continued

2.10Insurance and investment contracts issued and reinsurance contracts held

        - continued

(d)Measurement - continued

Contracts not measured under the PAA - continued

Subsequent measurement - continued

i. Changes in fulfilment cash flows - continued

For contracts measured under the VFA, the following adjustments relate to future

service and thus adjust the CSM:

– changes in the amount of the Group’s share of the fair value of the underlying

items; and

– changes in the FCF that do not vary based on the returns of underlying items:

a. changes in the effect of the time value of money and financial risks including the

effect of financial guarantees;

b. experience adjustments arising from premiums received in the period that relate to

future service and related cash flows;

c. changes in estimates of the present value of future cash flows in the LRC, except

those described in the following paragraph;

d.differences between any investment component expected to become payable in the

period and the actual investment component that becomes payable in the period;

and

e.  changes in the risk adjustment for non-financial risk that relate to future service.

Adjustments b. to e. are measured using the current discount rates.

For contracts under the VFA, the following adjustments do not adjust the CSM:

– changes in the obligation to pay the policyholder the amount equal to the fair value

of the underlying items;

– changes in the FCF that do not vary based on the returns of underlying items:

– changes in the FCF relating to the LIC; and

– experience adjustments arising from premiums received in the period that do not

relate to future service and related cash flows; and

– experience adjustments relating to insurance service expenses (excluding

insurance acquisition cash flows).

The Group does not have any products with complex guarantees and does not use

derivatives as economic hedges of the risks.

78

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.      Accounting policies - continued

2.10Insurance and investment contracts issued and reinsurance contracts held

        - continued

(d)Measurement - continued

Contracts not measured under the PAA - continued

Subsequent measurement - continued

ii  Changes to the contractual service margin

For insurance contracts issued, at the end of each reporting period the carrying amount

of the CSM is adjusted by the Group to reflect the effect of the following changes:

a. The effect of any new contracts added to the group.

b. For contracts measured under the GMM, interest accreted on the carrying amount of

the CSM.

c. Changes in the FCF relating to future service are recognised by adjusting the CSM.

Changes in the FCF are recognised in the CSM to the extent that the CSM is

available. When an increase in the FCF exceeds the carrying amount of the CSM,

the CSM is reduced to zero, the excess is recognised in insurance service expenses

and a loss component is recognised within the LRC. When the CSM is zero,

changes in the FCF adjust the loss component within the LRC with correspondence

to insurance service expenses. The excess of any decrease in the FCF over the loss

component reduces the loss component to zero and reinstates the CSM.

d. The effect of any currency exchange differences.

e. The amount recognised as insurance revenue for insurance contract services

provided during the period, determined after all other adjustments above.

For a group of reinsurance contracts held, the carrying amount of the CSM at the end of

each reporting period is adjusted to reflect changes in the FCF in the same manner as a

group of underlying insurance contracts issued.

iii. Interest accretion on the CSM

Under the GMM, interest is accreted on the CSM using discount rates determined at

initial recognition that are applied to nominal cash flows that do not vary based on the

returns of underlying items. The Group uses the discount curves at the middle of each

quarter during the year. MMSV will be assuming equal weighting per quarter given the

stability of new business written.

79

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.      Accounting policies - continued

2.10Insurance and investment contracts issued and reinsurance contracts held

        - continued

(d)Measurement - continued

Contracts not measured under the PAA - continued

Subsequent measurement - continued

iv. Adjusting the CSM for changes in the FCF relating to future service

The CSM is adjusted for changes in the FCF, measured applying the discount rates as

specified in the Changes in fulfilment cash flows section above.

v. Release of the CSM to profit or loss

The amount of the CSM recognised in profit or loss for insurance contract services in

the period is determined by the allocation of the CSM remaining at the end of the

reporting period over the current and remaining expected coverage period of the group

of insurance contracts based on coverage units.

The coverage period is defined as a period during which the entity provides insurance

contract services. Insurance contract services include coverage for an insured event

(insurance coverage), the generation of an investment return for the policyholder, if

applicable (investment-return service) for the contracts under the GMM, and the

management of underlying items on behalf of the policyholder (investment-related

service) for the contracts under the VFA. The period of investment-return service or

investment-related service ends at or before the date when all amounts due to current

policyholders relating to those services have been paid. Investment-return services are

provided only when an investment component exists in insurance contracts or the

policyholder has a right to withdraw an amount, and the Group expects these amounts

to include an investment return that is achieved by the Group by performing investment

activities to generate that investment return.

For contracts issued, the Group determines the coverage period for the CSM

recognition as follows:

-  for investment contracts with DPF (including hybrids), the coverage period

corresponds to the period in which investment-return services are expected to be

provided; and

-    for term life risk contracts, no investment-return services are provided and, thus, the

coverage period is determined by insurance coverage;

80

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.      Accounting policies - continued

2.10Insurance and investment contracts issued and reinsurance contracts held

        - continued

(d)Measurement - continued

Contracts not measured under the PAA - continued

Subsequent measurement - continued

v. Release of the CSM to profit or loss - continued

The total number of coverage units in a group is the quantity of service provided by the

contracts in the group over the expected coverage period. The coverage units are

determined at each reporting period-end prospectively by considering:

– the quantity of benefits provided by contracts in the group;

– the expected coverage period of contracts in the group; and

– the likelihood of insured events occurring, only to the extent that they affect the

expected coverage period of contracts in the group.

The Group determines coverage units as follows:

– for term life insurance contracts, coverage units are determined based on the

policies’ face values that are equal to the fixed death benefit amounts in force and

– for investment contracts with DPF, including with-profits and unit-linked hybrids,

coverage units are based on the fund assets and value of the fund.

The Group does not reflect the time value of money in the allocation of the CSM to

coverage units.

For reinsurance contracts held, the CSM is released to profit or loss as insurance

contract services are received from the reinsurer in the period.

Coverage units for the proportionate term life reinsurance contracts held are based on

the insurance coverage provided by the reinsurer, and they are determined by the ceded

policies’ fixed face values in force, taking into account new business projected within

the reinsurance contract boundary.

The coverage period for these contracts is determined based on the coverage period of

all underlying contracts whose cash flows are included in the reinsurance contract

boundary.

81

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.      Accounting policies - continued

2.10Insurance and investment contracts issued and reinsurance contracts held

        - continued

(d)Measurement - continued

Contracts measured under the PAA

The Group uses the PAA for measuring contracts with a coverage period of one year or

less. In addition to the contracts with coverage of less than one year, the PAA can be

used for measurement of groups of contracts where the entity reasonably expects that

such a simplification would produce a measurement of the LRC that would not differ

materially from the one that would be produced by applying the GMM.

For insurance contracts issued, insurance acquisition cash flows allocated to a group are

deferred and recognised over the coverage period of contracts in a group.

For insurance contracts issued, on initial recognition, the Group measures the LRC at

the amount of premiums received, less any acquisition cash flows paid.

For reinsurance contracts held, on initial recognition, the Group measures the remaining

coverage at the amount of ceding premiums paid.

The carrying amount of a group of insurance contracts issued at the end of each

reporting period is the sum of:

a. the LRC; and

b. the LIC, comprising the FCF related to past service allocated to the group at the

reporting date.

The carrying amount of a group of reinsurance contracts held at the end of each

reporting period is the sum of:

a. the remaining coverage; and

b. the incurred claims, comprising the FCF related to past service allocated to the

group at the reporting date.

For insurance contracts issued, at each of the subsequent reporting dates, the LRC is:

a. increased for premiums received in the period;

b. decreased for insurance acquisition cash flows paid in the period;

c. decreased for the amounts of expected premium receipts recognised as insurance

revenue for the services provided in the period; and

d.increased for the amortisation of insurance acquisition cash flows in the period

recognised as insurance service expenses.

82

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.Accounting policies - continued

2.10Insurance and investment contracts issued and reinsurance contracts held

        - continued

(d)Measurement - continued

Contracts measured under the PAA - continued

For reinsurance contracts held, at each of the subsequent reporting dates, the remaining

coverage is:

a. increased for ceding premiums paid in the period;

b. decreased for the expected amounts of ceding premiums, net of reinsurance

commissions, recognised as reinsurance expenses for the services received in the

period.

The Group does not adjust the LRC for insurance contracts issued and the remaining

coverage for reinsurance contracts held for the effect of the time value of money,

because insurance premiums are due within the coverage period of contracts, which is

one year or less.

For contracts measured under the PAA, the LIC is measured similarly to the LIC’s

measurement under the GMM. Future cash flows are adjusted for the time value of

money, since insurance contracts issued by the Group and measured under the PAA

may have a settlement period of over one year.

If facts and circumstances indicate that a group of insurance contracts measured under

the PAA is onerous on initial recognition or becomes onerous subsequently, the Group

increases the carrying amount of the LRC by the loss component which is determined

by the percentage of onerosity as a function of the LRC for the remaining period.

Subsequently, the loss component is remeasured at each reporting date as the change in

the percentage of onerosity as a function of the LRC for the remaining period.

Movements in the loss component are recorded in the insurance service expenses.

Onerosity of a group of insurance contracts does not automatically indicate that a

reinsurance contract held, protecting such onerous underlying group of contracts will

result in a net gain at initial recognition. However, for reinsurance contract held for

which there is a net gain at initial recognition or becomes so subsequently, the carrying

amount of the asset for remaining coverage (ARC) for reinsurance contracts held

measured under the PAA is increased by the amount of loss-recovery component.  The

loss-recovery component is calculated by multiplying the percentage of onerosity as a

function of reinsurance ARC for the remaining period. Movements in the loss-recovery

component are recorded in the net reinsurance expenses.

The Company does not have any reinsurance contracts held measured under the PAA

with underlying contracts measured under the GMM.

83

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.Accounting policies - continued

2.10Insurance and investment contracts issued and reinsurance contracts held

        - continued

(e)  Amounts recognised in profit or loss

Insurance revenue

As the Group provides insurance contract services under the group of insurance

contracts, it reduces the LRC and recognises insurance revenue. The amount of

insurance revenue recognised in the reporting period depicts the transfer of promised

services at an amount that reflects the portion of consideration that the Group expects to

be entitled to in exchange for those services.

For contracts not measured under the PAA, insurance revenue comprises the following:

• Amounts relating to the changes in the LRC:

a. claims and other directly attributable expenses incurred in the period measured

at the amounts expected at the beginning of the period, excluding: 

– repayments of investment components and policyholder rights to withdraw

an amount;

– amounts of transaction-based taxes collected in a fiduciary capacity;

– insurance acquisition expenses; and

– amounts related to the risk adjustment for non-financial risk (see (b));

b. changes in the risk adjustment for non-financial risk, excluding:

– changes included in insurance finance income (expenses);and

– changes that relate to future coverage (which adjust the CSM);

c. amounts of the CSM recognised for the services provided in the period;

d. experience adjustments – arising from premiums received in the period other

than those that relate to future service; and

e. other amounts.

• Insurance acquisition cash flows recovery is determined by allocating the portion of

premiums related to the recovery of those cash flows on the basis of the passage of

time over the expected coverage of a group of contracts.

For groups of insurance contracts measured under the PAA, the Group recognises

insurance revenue based on the passage of time over the coverage period of a group of

contracts.

84

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.Accounting policies - continued

2.10Insurance and investment contracts issued and reinsurance contracts held -

continued

(e)  Amounts recognised in profit or loss - continued

Insurance service expense

Insurance service expenses include the following:

a. incurred claims and benefits, excluding investment components;

b. other incurred directly attributable expenses;

c.insurance acquisition cash flows amortisation;

d. changes that relate to past service – changes in the FCF relating to the LIC; and

e.    onerous contract losses or reversals of those losses.

For contracts measured under the PAA, amortisation of insurance acquisition cash

flows is based on the passage of time.

Other expenses that do not meet the above criteria are included as other operating

expenses in the consolidated statement of profit or loss.

Net income (expenses) from reinsurance contracts held

The Group presents financial performance of groups of reinsurance contracts held on a

net basis in net income (expenses) from reinsurance contracts held, comprising the

following amounts:

a. reinsurance expenses;

b. incurred claims recovery;

c. other incurred directly attributable expenses;

d. changes that relate to past service i.e. changes in the FCF relating to incurred claims

recovery; and

e. effect of changes in the risk of reinsurers’ non-performance.

Reinsurance expenses are recognised similarly to insurance revenue. The amount of

reinsurance expenses recognised in the reporting period depicts the transfer of received

insurance contract services at an amount that reflects the portion of ceding premiums

that the Group expects to pay in exchange for those services.

85

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.Accounting policies - continued

2.10Insurance and investment contracts issued and reinsurance contracts held -

continued

(e)Amounts recognised in profit or loss - continued

Net income (expenses) from reinsurance contracts held - continued

For contracts not measured under PAA, reinsurance expenses comprise the following

amounts relating to the changes in the remaining coverage:

a. claims and other directly attributable expenses recovery in the period, measured at

the amounts expected to be incurred at the beginning of the period, excluding

amounts related to the risk adjustment for non-financial risk (see b);

b. changes in the risk adjustment for non-financial risk, excluding:

– changes included in finance income (expenses) from reinsurance contracts held;

and

– changes that relate to future coverage (which adjust the CSM); 

c. amounts of the CSM recognised for the services received in the period; and

d. experience adjustments arising from premiums paid in the period other than those

relating to future service.

For groups of reinsurance contracts held measured under the PAA, the Group

recognises reinsurance expenses based on the passage of time over the coverage period

of a group of contracts.

Ceding commissions that are not contingent on claims of the underlying contracts issued

reduce ceding premiums and are accounted for as part of reinsurance expenses. Ceding

commissions that are contingent on claims of the underlying contracts issued reduce

incurred claims recovery.

Insurance finance income or expenses

Insurance finance income or expenses comprise the change in the carrying amount of

the group of insurance contracts arising from:

a. the effect of the time value of money and changes in the time value of money; and

b. the effect of financial risk and changes in financial risk.

For contracts measured under the PAA, the main amounts within insurance finance

income or expenses are:

a. interest accreted on the LIC; and

b. the effect of changes in interest rates and other financial assumptions.

The Group disaggregates changes in the risk adjustment for non-financial risk between

insurance service result and insurance finance income or expenses.

For contracts measured under the GMM, the main amounts within insurance finance

income or expenses are:

a. interest accreted on the FCF and the CSM; and

b.the effect of changes in interest rates and other financial assumptions.

86

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.Accounting policies - continued

2.10Insurance and investment contracts - continued

(e)Amounts recognised in profit or loss - continued

Insurance finance income or expenses - continued

For contracts measured under the VFA, insurance finance income or expenses comprise

changes in the value of underlying items (excluding additions and withdrawals).

The Group has opted to include all its insurance finance income and expenses in profit

or loss for all of its insurance contracts. The Group does not issue insurance contracts

that generate cash flows in a foreign currency.

2.11Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in

the profit or loss account, except to the extent that it relates to items recognised in other

comprehensive income or directly in equity. The amount of current tax payable or

receivable is the best estimate of the tax amount expected to be paid or received that

reflects uncertainty related to income taxes, if any.

The current income tax charge is calculated on the basis of the tax laws enacted or

substantively enacted at the statement of financial position date in the countries where

the Company’s subsidiaries and associates operate and generate taxable income. 

Management periodically evaluates positions taken in tax returns with respect to

situations in which applicable tax regulation is subject to interpretation and establishes

provision where appropriate.

Deferred income tax is recognised in respect of temporary differences arising between

the tax bases of assets and liabilities and their carrying amounts in the financial

statements.  However, if the deferred income tax arises from initial recognition of an

asset or liability in a transaction other than a business combination that at the time of

the transaction affects neither accounting nor taxable profit or loss, it is not accounted

for.  Deferred income tax is measured at the tax rates that are expected to be applied to

temporary differences when they reverse, using tax rates (and laws) that have been

enacted or substantively enacted at the reporting date and reflect uncertainty relating to

income taxes, if any. Deferred tax is expected to apply when the related deferred tax

asset is realised or the deferred tax liability is settled.

Deferred tax assets are recognised only to the extent that future taxable profit or taxable

capital gains will be available such that realisation of the related tax benefit is probable.

Deferred income tax is provided on temporary differences arising on investments in

subsidiaries and associates, except where the Group controls the timing of the reversal

of the temporary difference and it is probable that the temporary difference will not

reverse in the foreseeable future.

87

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.Accounting policies - continued

2.11Current and deferred income tax - continued

If the amount of taxable temporary differences is insufficient to recognise a deferred tax

asset in full, then future taxable profits, adjusted for reversals of existing temporary

differences are considered. Deferred tax assets are reviewed at each reporting date and

are reduced to the extent that it is no longer probable that the related tax benefit will be

realised; such reductions are reversed when the probability of future taxable profit

improves.

Deferred income tax assets and liabilities are offset when there is a legally enforceable

right to offset current tax assets against current tax liabilities and when the deferred

income tax assets and liabilities relate to income taxes levied by the same taxation

authority on either the same taxable entity or different taxable entities where there is an

intention to settle the balance on a net basis.

Deferred tax related to fair value re-measurements charged or credited directly in other

comprehensive income or to equity, is also credited or charged directly to equity and

subsequently recognised in the profit or loss account together with the deferred gain or

loss.

2.12Provisions for pension obligations

Provisions are recognised when the Group has a present legal or constructive obligation

as a result of past events, it is probable that an outflow of resources will be required to

settle the obligation, and a reliable estimate of the amount can be made.

A defined benefit plan defines an amount of pension that an employee will receive on

retirement.  In the Group’s case, this amount is dependent upon an employee’s final

compensation upon retirement.

The liability recognised in the statement of financial position is the present value of the

defined benefit obligation at the end of the reporting period.  The present value of a

defined benefit obligation is determined by discounting the estimated future cash

outflows using interest rate yields of government or high-quality corporate bonds that

are denominated in the currency in which the benefits will be paid, and that have terms

to maturity approximating to the terms of the related pension liability. Actuarial gains

and losses arising from experience adjustments and changes in assumptions are charged

or credited to other comprehensive income in the period in which they arise.

2.13  Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the

sale of services in the ordinary course of the Group’s activities. The Group recognises

revenue when the amount of revenue can be reliably measured, it is probable that future

economic benefits will flow to the entity and when specific criteria have been met as

described below.

88

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.Accounting policies - continued

2.13  Revenue recognition - continued

Rendering of services

Insurance revenue recognition is described in Note 2.10 dealing with insurance

contracts and investment contracts with DPF.

Revenue arising from the issue of investment contracts without DPF and other related

services offered by the Group, is recognised in the accounting period in which the

services are rendered.

Fees include investment management fees arising from services rendered in

conjunction with the issue and management of investment contracts where the Group

actively manages the consideration received from its customers to fund a return that is

based on the investment profile that the customer selected on origination of the

instrument.  The Group recognises these fees on a straight-line basis over the estimated

life of the contract.

The Group charges its customers for management and other related services using the

following different approaches:

– Front-end fees are charged to the client on inception.  The consideration received is

deferred as a liability and recognised over the life of the contract on a straight-line                     

basis.

– Regular fees are charged to the customer periodically (monthly, quarterly, half

yearly or annually) either directly or by making a deduction from invested funds. 

Regular charges billed in advance are recognised on a straight-line basis over the

billing period.

Other revenue receivable by the Group mainly comprises commission or trailer fees

receivable on account of investment or other services provided in an intermediary

capacity which is accounted for on an accruals basis.

2.14Investment return

Investment return includes dividend income, net gains or losses on financial assets at

fair value through profit or loss, interest income from financial assets not classified as

fair value through profit or loss, rental income receivable, share of associated

undertaking’s result, and other fair value movements of investment properties, and is

net of other investment expenses.

(a)  Dividend income

Dividend income from subsidiary and associated undertakings is recognised in the

profit or loss account as part of investment income when the right to receive payment is

established.

89

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.Accounting policies - continued

2.14Investment return - continued

(b)  Net fair value gains/(losses) from financial assets at fair value through profit or

loss

This category includes gains or losses arising from changes in the fair value of the

financial assets at fair value through profit or loss in the year in which they arise,

dividend income recognised when the right to receive payment is established and

interest income received on financial assets at fair value through profit or loss.

(c)  Interest income

Interest income from financial assets not classified as fair value through profit or loss is

recognised using the effective interest method.

(d)  Investment income from investment properties

Rental income from investment property is accounted for on an accruals basis in

accordance with the substance of the relevant lease agreements.

2.15Leases

At inception of a contract, the Group assesses whether a contract is, or contains, a lease.

A contract is or contains a lease if the contract conveys the right to control the use of an

identified asset for a period of time in exchange for consideration. To assess whether a

contract conveys the right to control the use of an identified asset, the Group uses the

definition of a lease in IFRS 16.

(a) As a lessor

When the Group acts as a lessor, it determines at lease inception whether each lease is a

finance lease or an operating lease.

To classify each lease, the Group makes an overall assessment of whether the lease

transfers substantially all of the risks and rewards incidental to ownership of the

underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an

operating lease. As part of this assessment, the Group considers certain indicators such

as whether the lease is for the major part of the economic life of the asset.

The Group recognises lease payments received under operating leases as income on a

straight-line basis over the lease term as part of ‘other income’ – Note 9.

90

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.Accounting policies - continued

2.15Leases - continued

(b) As a lessee

At commencement or on modification of a contract that contains a lease component, the

Group allocates the consideration in the contract to each lease component on the basis

of its relative stand-alone prices.

The Group recognises a right-of-use asset and a lease liability at the lease

commencement date. The right-of-use asset is initially measured at cost, which

comprises the initial amount of the lease liability adjusted for any lease payments made

at or before the commencement date, plus any initial direct costs incurred. The right-of-

use asset is subsequently depreciated using the straight-line method from the

commencement date to the end of the lease term.

The lease liability is initially measured at the present value of the lease payments that

are not paid at the commencement date, discounted using the interest rate implicit in the

lease or, if that rate cannot be readily determined, the Group’s incremental borrowing

rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise of fixed

payments.

The lease liability is measured at amortised cost using the effective interest method. It is

remeasured when there is a change in future lease payments. When the lease liability is

remeasured in this way, a corresponding adjustment is made to the carrying amount of

the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-

of-use asset has been reduced to zero.

2.16Impairment of non-financial assets

Assets that have an indefinite useful life and are not subject to amortisation, or assets

not yet available for use, are tested annually for impairment.  Assets that are subject to

amortisation or depreciation are reviewed for impairment whenever events or changes

in circumstances indicate that the carrying amount may not be recoverable.  An

impairment loss is recognised for the amount by which the asset’s carrying amount

exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair

value less costs to sell and value in use. For the purposes of assessing impairment,

assets are grouped at the lowest levels for which there are separately identifiable and

independent cash flows (cash-generating units).

91

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

2.Accounting policies - continued

2.17Offsetting

Financial assets and liabilities are offset and the net amount reported in the statement of

financial position when, and only when the Group currently has a legally enforceable

right to set-off the recognised amounts and it intends to settle them on a net basis, or to

realise the asset and settle the liability simultaneously. Income and expenses are

presented on a net basis only when it is required or permitted by a standard – e.g. gains

and losses arising from a group of similar transactions such as the gains and losses on

financial assets measured at FVTPL.

2.18Dividend distribution

Dividend distribution to the Company’s shareholders is recognised as a liability in the

period in which an obligation to pay a dividend is established.

2.19Share capital

Shares are classified as equity when there is no obligation to transfer cash or other

assets. Incremental costs directly attributable to the issue of new shares are shown in

equity as a deduction from the proceeds net of tax.

3.Use of accounting estimates and judgements in applying accounting policies

The Group makes estimates and assumptions concerning the future.  Estimates and

judgements are continually evaluated and are based on historical experience and other

factors, including expectations of future events that are believed to be reasonable under

the circumstances.

Information about judgements made in applying accounting policies that have the most

significant effects on the amounts recognised in the financial statements is included in

the following notes, which also include information about assumptions and

uncertainties at 31 December 2025 that have a significant risk of resulting in a material

adjustment in the carrying amounts of assets and liabilities in the next financial year.

92

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

3.Use of accounting estimates and judgements in applying accounting policies -

continued

(a) Long-term contracts - insurance contract assets, insurance contract liabilities and 

reinsurance contract liabilities

Insurance contract assets, insurance contract liabilities and reinsurance contract

liabilities are subject to an annual valuation using generally accepted accounting and

actuarial practice.

Different principles and valuation methodologies are adopted depending on the type

and generation of products.  The key assumptions used in determining the measurement 

of insurance contract assets, insurance contract liabilities and reinsurance contract

liabilities are described in Note 24.6 to the financial statements.

b)  Short-term insurance contracts under PAA - liability for incurred claims

Liability of incurred claims (LIC) of short-term business insurance contracts, measured

under the PAA, comprise of the estimates of future cash flows, adjusted to reflect the

time value of money and a risk adjustment for non-financial risks. The estimates of

future cash flows is derived using a standard actuarial claims projection technique, the

Chain Ladder method, other than for non-motor large losses. The key assumptions

underlying this technique is that past claims development experience can be used to

project future claims development.

Claims reserves which exceed a certain quantum (large losses), particularly those

involving fatalities and/or serious bodily injuries, are initially reserved at the case-by-

case reserve estimate. The measurement of claim payments due by the Group involves

the assessment of future settlements and is therefore dependent on assumptions around

determining such reserves based on, among others, legal precedent and current trends in

compensation awards. Specifically for Motor large losses, the Chain Ladder Method is

subsequently used to project the ultimate cost of these claims.

More detail on the key assumptions used in determining the LIC in respect of short-

term insurance contracts under PAA are described in Note 24.2 (a) to the financial

statements.

(c) Consolidation of entities in which the Group holds less than majority of voting

rights

The Group considers that it controls MAPFRE MSV Life p.l.c. (‘MMSV’) even though

it does not own more than 50% of the voting rights. This is because strategic, operating

and financing policies of MMSV are directed by means of shareholders’ agreement

which provides MAPFRE Middlesea p.l.c. with the right to select, appoint and remove

the key management personnel of MMSV and approve its business plan and capital

expenditure.

93

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

3.Use of accounting estimates and judgements in applying accounting policies -

continued

c) Consolidation of entities in which the Group holds less than majority of voting rights

- continued

For all the financial years up to 31 December 2010, MMSV was considered to be an

associate and was accounted for using the equity method.  Following the shareholders’

agreement, on 29 July 2011, MAPFRE Middlesea p.l.c. acquired control over MMSV

based on the factors explained in this note and started consolidating MMSV as from

that date.

4.      Management of risk

The Group is a party to contracts that transfer insurance risk and/or financial risk. This

section summarises these risks and the way that the Group manages them.

The following table describes the composition of the underlying items for long-term

contracts with direct participation features:

	2025	2024
	€'000	€'000
Cash at bank and in hand	6,632	21,490
Deposits with banks and credit institutions	30,032	9,108
Debt securities	941,256	955,212
Equity securities and units in unit trusts	802,402	823,008
Assets held to cover linked liabilities - collective investment schemes	39,331	36,330
Investment in associated undertakings	947	5,793
Investment property	93,769	93,127
Forward foreign exchange contracts and swaps	2,209	—
Total investment assets and cash and cash equivalents	1,916,578	1,944,068
Insurance contract liabilities	(1,928,847)	(1,948,078)
Forward foreign exchange contracts and swaps	(638)	(6,816)

4.1Insurance risk

The risk under any one insurance contract is the possibility that the insured event occurs

and the uncertainty of the amount of the resulting claim.  By the very nature of an

insurance contract, this risk is fortuitous, however, it can be predicted with a certain

disclosed level of reliability.

94

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

4.      Management of risk - continued

4.1Insurance risk - continued

For a portfolio of insurance contracts where the theory of probability is applied to

pricing and provisioning, the principal risk that the Group faces under its insurance

contracts is that the actual claims and benefit payments are significantly different to the

amounts included within insurance/reinsurance contract liabilities and assets.  This

could occur because the frequency or severity of claims and benefits are greater than

estimated.  Insurance events are fortuitous and the actual number and amount of claims

and benefits may vary from year to year from the estimate established using statistical

and actuarial techniques. 

Experience shows that the larger the portfolio of similar insurance contracts, the smaller

the relative variability of the expected outcome will be.  In addition, a more diversified

portfolio is less likely to be affected across the board by a change in any subset of the

portfolio.  The Group manages this risk through adequate reinsurance arrangements and

proactive claims handling.

The Group has developed its insurance underwriting strategy to diversify the type of

insurance risk accepted and within each of these categories to achieve a sufficiently

large population of risks to reduce the variability of the expected outcome. The

objective of the underwriting strategy is to ensure that the underwritten risks are well

diversified in terms of type and amount of risk. The variability of risks is improved by

the careful selection and implementation of underwriting strategies, which are designed

to ensure that risks are diversified in terms of type of risk and level of insured benefits.

Key risks arising from insurance contracts issued:

	Contract	Key risks	Risk mitigation
	Short-term contracts	Insurance risk – frequency and   severity of claims	Underwriting strategy, adequate reinsurance arrangements and proactive claim handling
	Life risk - Term	Mortality risk: death of   policyholder earlier than expected	Reinsurance with financially strong reinsurer and adequate underwriting
	Investment contracts with DPF	Market risk: investment return on   underlying items falling below   guaranteed minimum rates	Management discretion to determine amount and timing of policyholder bonus rates
		Interest rate risk: difference in   duration and yield of assets and   liabilities	Matching of asset and liability cash flows
	Unit-linked	Lapse risk: insufficient charges to   cover acquisition expenses	Surrender penalties and review of charges

95

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

4.Management of risk - continued

4.1Insurance risk - continued

Factors that aggravate insurance risk include lack of risk diversification in terms of type

and amount of risk and lack of geographical spread. The Group is largely exposed to

insurance risk in one geographical area, Malta and in one currency, the Euro.

(a) Short-term business insurance contracts

Frequency and severity of claims

The terms and conditions of the contracts set out the bases for the determination of the

Group’s liability should the insured event occur.  The risks underwritten include motor

(including third party liability), health, fire and other damage to property, other classes

and group life.  Details of insurance revenue as well as insurance service expenses

analysed by segment are provided in the “Segment information” (Note 7).

The frequency and severity of claims can be affected by several factors.  The following

are considered by the Group to be the most significant:

-The increasing levels of court awards in cases where damages are suffered as a

result of injuries, the divergence of awards that is dependent on the territory of the

claim and the jurisdiction of the court, the effect of inflation due to the prolonged

period typically required to settle such cases; and

- The risk of a single event that can extensively affect a multiple of individual risks

to which the Group is exposed.

The Group manages these risks through its underwriting strategy, adequate reinsurance

arrangements and proactive claims handling.

The underwriting strategy ensures that the risks underwritten are well diversified in

terms of type and amount of risk. The Group follows strict underwriting guidelines and

sets limits on the overall retention of risk that it carries. Any risk in excess of this limit

is either reinsured under a facultative cover note or is declined. Underwriting limits are

in place to enforce appropriate risk selection criteria. In certain circumstances, certain

exclusions to risks are included within these guidelines. For example, the Group does

not insure US risks unless they are incidental. The Group can impose deductibles to

help manage its costs.  It also uses its experience and expertise to mitigate the risk of

fraudulent claims.  Insurance contracts also entitle the Group to pursue third parties for

payment of some or all of the costs (i.e. subrogation). A significant portion of the

Group’s business is underwritten through an agency distribution network. 

Underwriting authority limits are set for individual agencies or branches, and any

contracts through which the Group is committed to cover risks in excess of these

authority limits require head office approval.

96

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

4.Management of risk - continued

4.1Insurance risk - continued

(a)  Short-term business insurance contracts - continued

Frequency and severity of claims - continued

The Group has reinsurance protection in place for all classes of business.  The type of

reinsurance cover, and the level of retention, is based on the Group’s internal risk

management assessment which takes into account the risk being covered, the sums

assured and the geographical location of the risk.  The Board approves each reinsurance

programme on an annual basis. The reinsurance arrangements include a mix of

proportional, facultative and non-proportional covers, which limit the liability of the

Group to any one individual claim or event. Generally, the Group’s policy is to place

reinsurance with listed multinational reinsurance companies whose credit rating is not

less than BBB. No rating limitation shall apply to treaty placements with MAPFRE Re

or any MAPFRE Group company designated to write any or all of the MAPFRE Group

Reinsurance treaties. At 31 December 2025, MAPFRE Re’s rating stood at A. The

Board monitors the security rating of MAPFRE on a periodic basis.

The Group has specialised claims units dealing with the mitigation of risks surrounding

known claims.  These units investigate and adjust claims as appropriate.  Claims are

individually reviewed regularly, and are adjusted to reflect the latest information on the

underlying facts, current law, jurisdiction, contractual terms and conditions and other

factors.  The Group actively manages and pursues early settlement of claims to reduce

its exposure to unpredictable developments.  Authority limits are set for the settlement

of claims through the individual agents. Any claims incurred above these limits are

referred to head office for handling. In addition, all claims involving bodily injury are

referred to head office irrespective of their amount.

Concentration of insurance risk

Up until 31 December 2025, 100% of the Group’s business was written in Malta (2024:

100%). The portfolio is diversified in terms of type of business written, with motor

business comprising 44% (2024: 47%) and health comprising 20% (2024: 17%) and fire

and other property damage 19% (2023: 19%) of the total portfolio (including short-term

Group Life business).  The remaining 17% (2024: 17%) of premium revenue is

generated across a spread of classes including marine, income protection, general

liability, travel and short-term group life.  Further information on insurance revenue,

and insurance service expenses by insurance business class is provided in Note 7 to

these financial statements. 

97

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

4.Management of risk - continued

4.1Insurance risk - continued

(a)  Short-term business insurance contracts - continued

Sources of uncertainty in the estimation of future claim developments and payments

Claims on contracts are accounted for on a claims-occurrence basis.  The Group is

liable for all insured events that occurred during the term of the contract, even if the

loss is discovered after the end of the contract term.  Certain classes of business, most

notably those exposed to liability, can take several years to develop and are therefore

subject to a greater degree of uncertainty than other classes of business which are

typically settled in a shorter period of time.

The estimated cost of claims includes direct expenses to be incurred in settling claims,

net of the expected subrogation value and recoveries.  The Group takes all reasonable

steps to ensure that it has appropriate information regarding its claims exposures. 

However, given the uncertainty in establishing the liability for incurred claims, it is

possible that the final outcome will prove to be different from the original liability

established.

In calculating the estimated cost of unpaid claims, the Group considers the results of

estimation techniques that are based partly on known information at year-end and partly

on statistical analysis of historical experience. 

Further details on the process of estimation is provided in Note 24.2 which also presents

the development of the estimate of future cash flows for claims incurred in a given year.

Sensitivity analysis to underwriting risk variables

The following tables present information on how reasonably possible changes in

assumptions made by the Company with regard to underwriting risk variables impact

product line insurance liabilities and profit or loss and equity before and after risk

mitigation by reinsurance contracts held. The analysis is based on a 5% upwards and

downwards change in the ultimate loss amount while holding all other assumptions

constant. In practice, this is unlikely to occur, and changes in some of the assumptions

might be correlated.

98

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

4.Management of risk - continued

4.1Insurance risk - continued

(a)  Short-term business insurance contracts - continued

Sensitivity analysis to underwriting risk variables - continued

	31 December 2025	Impact on profit before income tax		Impact on equity
		Gross	Net	Gross	Net
		€'000	€'000	€'000	€'000
	Non-life
	Ultimate loss – 5% increase	(308)	(270)	(200)	(176)
	Ultimate loss – 5% decrease	308	270	200	176
	31 December 2024	Impact on profit before income tax		Impact on equity
		Gross	Net	Gross	Net
		€'000	€'000	€'000	€'000
	Non-life
	Ultimate loss – 5% increase	(385)	(334)	(250)	(217)
	Ultimate loss – 5% decrease	385	334	250	217

(b) Long term business insurance contracts

Frequency and severity of claims (Mortality risk)

For contracts where death is the insured risk, the most significant factor that could

increase the overall frequency of claims are epidemics or wide spread changes in

lifestyle resulting in earlier or more claims than expected.

At present these risks do not vary significantly in relation to the location of the risk

insured by the Group. However, undue concentration by amounts could have an impact

on the severity of benefit payments on a portfolio basis.

For contracts with fixed and guaranteed benefits and fixed future premiums, there are

no mitigating terms and conditions that reduce the insurance risk accepted.  For

investment contracts with DPF, the participating nature of the contracts results in a

portion of the insurance risk being reduced over the term of policy.  Investment

contracts with DPF carry negligible mortality risk.

The Group manages these risks through its underwriting strategy and reinsurance

arrangements. The underwriting strategy is intended to ensure that the risks

underwritten are well diversified in terms of type of risk and level of insured benefits.

Medical selection is also included in the Group’s underwriting procedures with

premiums varied to reflect the health condition and life expectancy of the applicants.

99

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

4.Management of risk - continued

4.1Insurance risk - continued

(b) Long term business insurance contracts - continued

Frequency and severity of claims (Mortality risk) - continued

The Group has reinsurance protection in place to cover death claims.  The type of

reinsurance cover and the level of retention for each risk are based on the Group’s

internal risk management assessment, which takes account of the nature of the risk

covered and the sum assured. The reinsurance programme is approved by the Board of

Directors ("the Board") annually. The reinsurance arrangements in place include a mix

of quota share, facultative, excess of loss and catastrophe protection, which limits the

liability of the Group to any one individual life or event.  The Group’s reinsurance is

placed with listed multinational reinsurance companies whose rating is not less than A.

The mortality assumptions applied are disclosed in Note 24.

Policyholder lapse risk

Higher lapses than expected cause a loss of future profits and possibility of non-

recovery of sales expenses.

The amount of insurance risk is also subject to contract holder behaviour. On the

assumption that policyholders will make decisions rationally overall underwriting risk

can be assumed to be aggravated by such behaviour. For example, it is likely that

contract holders whose health has deteriorated significantly will be less inclined to

terminate contracts insuring death benefits than those contract holders remaining in

good health. This results in an increasing trend of expected mortality as the portfolio of

insurance contracts reduces due to voluntary terminations.

Unit-linked and with-profits policies, can be surrendered before maturity for a cash

surrender value specified in the contractual terms. Cash surrender value equals the

policyholder account/investment value at the time of termination, less any surrender

penalties. Through these penalties, policyholders are discouraged from surrendering

contracts earlier than policy maturity. As such, penalties mitigate the expense risk

arising from acquisition and other costs incurred when policies were issued, because

such costs were originally assumed to be spread over a longer period, since early

surrender was not expected.

The lapse assumptions applied are disclosed in Note 24.

100

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

4.Management of risk - continued

4.1Insurance risk - continued

(b) Long term business insurance contracts - continued

Expense Risk

Expense risk is the risk of unexpected increases in policy maintenance, claim handling

and other costs relating to fulfilment of insurance contracts. The risk is managed

through budgeting and periodic cost evaluations. Investment contracts with DPF carry

negligible expense risk.

The expense assumptions applied are disclosed in Note 24.

Market Risk

This risk is covered in Note 4.2 (a). The investment assets return and discount rate

assumptions are disclosed in Note 24.

Sensitivity analysis to underwriting risk variables

The following tables present information on how reasonably possible changes in

assumptions made by the Group with regard to underwriting risk variables impact

product line insurance liabilities and profit or loss and equity before and after risk

mitigation by reinsurance contracts held. The analysis is based on a change in an

assumption while holding all other assumptions constant. In practice, this is unlikely to

occur, and changes in some of the assumptions might be correlated.

101

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

4.Management of risk - continued

4.1Insurance risk - continued

(b) Long term business insurance contracts - continued

Sensitivity analysis to underwriting risk variables - continued

	31 December 2025	Impact on CSM		Impact on profit before income tax		Impact on equity
		Gross	Net	Gross	Net	Gross	Net
		€'000	€'000	€'000	€'000	€'000	€'000
	Life Risk (Net)
	Mortality rate – 10% increase	(4,411)	(1,901)	174	92	113	60
	Mortality rate – 10% decrease	4,408	1,903	(179)	(94)	(116)	(61)
	Lapse rates – 10% increase	(1,822)	(288)	282	27	183	18
	Lapse rates – 10% decrease	1,822	288	(282)	(27)	(183)	(18)
	Expenses – 10% increase	(1,629)	(2,068)	14	16	9	10
	Expenses – 10% decrease	1,629	2,068	(14)	(16)	(9)	(10)
	Investment contracts with DPF
	Mortality rate – 10% increase	(319)	(319)	3	3	2	2
	Mortality rate – 10% decrease	319	319	(3)	(3)	(2)	(2)
	Lapse rates – 10% increase	(455)	(455)	40	40	26	26
	Lapse rates – 10% decrease	455	455	(40)	(40)	(26)	(26)
	Expenses – 10% increase	(1,199)	(1,199)	(62)	(62)	(40)	(40)
	Expenses – 10% decrease	1,199	1,199	62	62	40	40
	31 December 2024	Impact on CSM		Impact on profit before income tax		Impact on equity
		Gross	Net	Gross	Net	Gross	Net
		€'000	€'000	€'000	€'000	€'000	€'000
	Life Risk (Net)
	Mortality rate – 10% increase	(4,274)	(1,870)	(174)	(63)	(113)	(41)
	Mortality rate – 10% decrease	4,269	1,872	172	63	112	41
	Lapse rates – 10% increase	(1,652)	(171)	149	118	97	77
	Lapse rates – 10% decrease	1,652	171	(149)	(118)	(97)	(77)
	Expenses – 10% increase	(1,649)	(2,045)	(86)	(108)	(56)	(70)
	Expenses – 10% decrease	1,649	2,045	86	108	56	70
	Investment contracts with DPF
	Mortality rate – 10% increase	(311)	(311)	—	—	—	—
	Mortality rate – 10% decrease	311	311	—	—	—	—
	Lapse rates – 10% increase	53	53	98	98	64	64
	Lapse rates – 10% decrease	(53)	(53)	(98)	(98)	(64)	(64)
	Expenses – 10% increase	(1,707)	(1,707)	(116)	(116)	(76)	(76)
	Expenses – 10% decrease	1707	1707	116	116	76	76

102

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

4.Management of risk - continued

4.1Insurance risk - continued

(b) Long term business insurance contracts - continued

Sensitivity analysis to underwriting risk variables - continued

Changes in underwriting risk variables mainly affect the CSM, profit or loss and equity

as follows.

		GMM	VFA
	a. CSM	Changes in fulfilment cash flows, other than those   recognised as  insurance finance income or expenses	Changes in fulfilment   cash flows
	b. Profit or       loss	Changes in fulfilment cash flows that are   recognised as insurance finance income or expenses   in profit or loss and change in CSM release and /or   coverage units	Changes in CSM   release and /or   coverage units
	c. Equity	The effect on profit or loss under b.   after tax	The effect on profit or   loss under b. after tax

4.2    Financial risk

The Group is exposed to financial risks through its financial assets, financial liabilities

and insurance contract assets and liabilities and reinsurance contracts assets and

liabilities.  In particular, the key risk is that in the long term, the proceeds from its

financial assets are not sufficient to fund the obligations arising from its insurance and

investment contracts.  The components of financial risks for the Group are market risk

(including cash flow and fair value interest rate risk, equity price risk and currency

risk), credit risk and liquidity risk. These risks arise from open positions in interest rate,

currency and equity products, all of which are exposed to general and specific market

movements.  The risks that the Group primarily faces due to the nature of its assets and

liabilities are interest rate risk and equity price risk.

The Group has developed its Asset/Liability management framework to further support

the manner in which these risk positions are managed.  It actively manages its assets to

achieve a competitive rate of return within risk objectives delineated by asset liquidity

measures, duration targets and credit quality parameters.  The respective Investment

Committees review and approve investment strategies on a periodic basis ensuring that

assets are managed efficiently and within approved risk mandates.

(a)  Market risk

Market risk comprises interest rate, equity price and foreign currency risks. These risks

arise from variability in fair values of financial instruments or related future cash flows,

as well as from variability of the FCF of insurance contracts due to variability in market

risk variables.

103

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

4.Management of risk - continued

4.2    Financial risk - continued

(a)  Market risk - continued

(i)  Cash flow and fair value interest rate risk

Insurance and investment contracts with DPF at Group level have benefit payments that

are fixed and guaranteed at the inception of the contract (for example, sum assured), or

as annual discretionary bonuses are declared. The Group’s primary financial risk on

these contracts is the risk that interest income and capital redemptions from the

financial assets backing the liabilities are insufficient to fund the guaranteed benefits

payable.

The Group does not guarantee a positive fixed rate of return to its long-term contract

policyholders at the inception of a contract. The declaration of discretionary bonuses is

guided by the bonus philosophy of the Board. Once a reversionary bonus is declared, it

is guaranteed to be paid in full at maturity or on the prior death of the life assured. Also

policyholders have the option to withdraw their current year’s bonus without any

charges following the date the bonus is declared.

The bonus philosophy considers historic and current rates of return generated by the

Group’s investment portfolio as well as the Group’s expectations for future investment

returns. The impact of interest rate risk is mitigated by the presence of the DPF. These

guaranteed benefits increase as discretionary benefits are declared and allocated to

contract holders. The current rates of regular and final bonuses are determined by the

Board in consultation with the Approved Actuary.  Different bonus rates are declared

on different generations of contracts depending on the type of product, cost structure,

past investment performance and premium rates.  Different bonuses are declared to

maintain equity between different generations of contract holders and products with

different characteristics. Future bonus rates are not guaranteed and the assumptions are

set to allow for a fair and orderly run-off of the fund.

All unit-linked and investment contracts with a DPF feature can be surrendered before

maturity for a cash surrender value that is always less than the actual contract liability.

Cash surrender values are determined at the discretion of the Group, and can be varied

from time to time.

The primary factor affecting the level of cash surrender value is the investment return

earned on the assets of the Group. In addition, the cash surrender value is affected by

the expenses, tax and the cost of risk benefits (such as life cover) borne by the Group,

deductions to provide a return to shareholders, as well as profits and losses arising on

other contracts. The expenses include payment of commission, medical report expenses,

office administration costs and other expenses incurred in the setting up and

maintenance of the contract. At most, the cash surrender value will be the amount of the

actual liability reduced by the surrender charge (where applicable).

104

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

4.      Management of risk - continued

4.2    Financial risk - continued

(a)  Market risk - continued

(i)    Cash flow and fair value interest rate risk - continued

Furthermore, in respect of all with-profits (with the exception of some contracts that

have been in force more than a certain number of years), the Group reserves the right to

increase the level of the surrender charge and, if necessary, to apply a Market Value

Reduction (‘MVR’). A MVR is a deduction which the Group may make on surrender of

a contract with DPF. For example, if the underlying investment return, after allowing

for expenses, tax, risk benefits, shareholder returns and adjustment for profits or losses

on other contracts is less than the return already provided for in the form of

reversionary bonuses, the Group may decide to apply a MVR.

The MVR serves to protect the interests of remaining investors and the Group, who

would otherwise have to subsidise the amount paid on surrendering contracts. The

Group does not apply a standard percentage deduction on all contracts but determines

the deduction to apply to each individual surrender at the time the surrender is made.

The amount depends on a number of factors including the length of time the contract

has been in force and the underlying investment return over the same time period. There

will be no MVR at maturity or on death. This means that at maturity or on death the

payment of the actual contract liability is guaranteed.

The cash surrender value may also be less than the total amount of premiums paid up to

the date of surrender.  The Group is not required to, and does not, measure the effect of

the above embedded derivative at fair value. 

The Group matches its insurance contract liabilities with a diversified portfolio of assets

which includes equity, debt securities and property.  The return from debt and cash-

based securities is subject to interest rate risk. 

In general, the Group is exposed to risk associated with the effects of fluctuations in the

prevailing levels of market interest rates. Assets/liabilities issued at variable rates

generally expose the Group to cash flow interest risk.  Assets/liabilities issued at fixed

rates generally expose the Group to fair value interest rate risk. Group investment

parameters exist to limit exposure to any one particular issuer and any one particular

security. Periodic reports are prepared at portfolio, legal entity and asset class level that

are circulated to the Group’s key management personnel. Note 22 incorporates maturity

information with respect to the Group's investments.

105

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

  4.      Management of risk - continued

4.2    Financial risk - continued

(a)  Market risk - continued

(i)  Cash flow and fair value interest rate risk - continued

The total assets and liabilities exposed to interest rate risk are the following:

		Group		Company
		2025	2024	2025	2024
		€’000	€’000	€’000	€’000
	Assets at floating interest rates	100,729	93,884	—	—
	Assets at fixed interest rates	1,303,915	1,290,280	26,069	18,773
		1,404,644	1,384,164	26,069	18,773

Reconciled to the notes to the financial statements as follows:

		Group		Company
		2025	2024	2025	2024
		€’000	€’000	€'000	€'000
	Debt securities (Note 22)	1,012,362	1,020,445	22,069	16,273
	Deposits with banks and credit institutions   (Note 22)	59,983	39,657	—	—
	A component of equity securities and units   in unit trusts	328,142	321,387	—	—
	Interest bearing cash and cash equivalents	4,157	2,675	4,000	2,500
		1,404,644	1,384,164	26,069	18,773

		Group		Company
		2025	2024	2025	2024
		€’000	€’000	€'000	€'000
	Insurance and reinsurance contracts
	Liabilities	(1,900,121)	(1,920,554)	(37,657)	(37,710)
	Assets	15,437	19,783	8,446	9,203
		(1,884,684)	(1,900,771)	(29,211)	(28,507)

106

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

  4.      Management of risk - continued

4.2    Financial risk - continued

(a)  Market risk - continued

(i)  Cash flow and fair value interest rate risk - continued

Interest rate risk in relation to hybrid contracts, amounting to €38.2 million (2024:

€35.2 million) has been excluded as the directors consider the exposure to be

insignificant.

In managing its portfolio, the Group entered into fixed income security futures

contracts.  Accordingly, it is exposed to movements in interest rates in the respective

markets of the underlying, which comprise short, medium and long-term sovereign

debt.  The notional amount of futures contracts outstanding at 31 December is shown

below:

	Group
	2025	2024
	€’000	€’000
Long positions
- Federal Republic of Germany	70,690	65,488
- United States Government	11,154	17,884
	81,844	83,372
Short positions
- Federal Republic of Germany	65,501	78,096
- United States Government	6,777	18,601
	72,278	96,697

Up to the reporting date, the Group did not have any hedging policy with respect to

interest rate risk other than as described in note 2.9.

107

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

  4.      Management of risk - continued

4.2    Financial risk - continued

(a)  Market risk - continued

(i)  Cash flow and fair value interest rate risk - continued

Sensitivity analysis – interest rate risk

An analysis of the Group’s sensitivity to a 1% increase or decrease in market interest rates

at the reporting date, assuming that all other variables remain constant, is presented below.

An explanation of the method used in preparing such sensitivity analysis and the main

parameters and assumptions underlying the information provided is found in Note 4.1.

Group

		CSM		Profit or loss before tax		Equity
		Increase	Decrease	Increase	Decrease	Increase	Decrease
		€’000	€’000	€’000	€’000	€’000	€’000
	31 December 2025
	Insurance and reinsurance   contracts (net)	398	(440)	(221)	150	(143)	98
	Investment contracts with   DPF	3,801	(12,290)	301	(1,098)	195	(714)
	Other investments	—	—	—	—	(602)	623
		4,199	(12,730)	80	(948)	(550)	7
	31 December 2024
	Insurance and  reinsurance   contracts (net)	406	(449)	183	(284)	119	(185)
	Investment contracts  with   DPF	6,483	(19,019)	552	(1,714)	359	(1,114)
	Other investments	—	—	—	—	(301)	281
		6,889	(19,468)	735	(1,998)	177	(1,018)

Company

		Profit or loss before tax		Equity
		Increase	Decrease	Increase	Decrease
		€’000	€’000	€’000	€’000
	31 December 2025
	Insurance  and reinsurance contracts (net)	512	(539)	333	(351)
	Other investments	—	—	(602)	623
		512	(539)	(269)	272
	31 December 2024
	Insurance  and reinsurance contracts (net)	554	(517)	360	(336)
	Other investments	—	—	(301)	281
		554	(517)	59	(55)

108

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

  4.      Management of risk - continued

4.2    Financial risk - continued

(a)  Market risk - continued

(ii)    Equity price risk

The Group’s financial assets are susceptible to the risk of decreases in value due to

changes in the prices of equities. The directors manage the risk of price volatility by

entering into a diverse range of investments including equities and collective

investment schemes.  In addition, the Group’s investments are spread geographically in

a diverse number of different countries.  The Group has active Investment Committees

that have established a set of investment guidelines that are also approved by the Board

of Directors.  Investments over prescribed limits are directly approved by the respective

Boards.  These guidelines provide parameters for investment management, including

contracts with external portfolio managers.  They include, inter alia, reference to an

optimal spread of the investment portfolio, assessment of equity issuers and maximum

exposures by the Group to any one issuer and its connected parties (with the exception

of investments in Government paper). These parameters also consider solvency

restrictions imposed by the Regulator.

Management structures are in place to monitor all the Group’s overall market positions

on a regular basis.  Reports are prepared at portfolio, legal entity and asset and liability

class level that are circulated to the Group’s relevant key management personnel. These

are also reviewed by the respective Investment Committees and Boards.

109

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

4.      Management of risk - continued

4.2    Financial risk - continued

(a)  Market risk - continued

(ii)  Equity price risks - continued

The total assets subject to equity price risk are the following:

		Group		Company
		2025	2024	2025	2024
		€’000	€’000	€’000	€’000
	Assets subject to equity price risk	560,764	561,742	3,119	2,813
	The above includes:
	Component of  investments in associated    undertakings (Note 21)*	—	4,805	—	—
	A component of equity securities and units   in unit trusts	560,764	556,937	3,119	2,813
		560,764	561,742	3,119	2,813

*Investments in associates (Note 21) amounting to €0.4 million (2024:€0.4 million) for

the Group and €0.4 million (2024: €0.4 million) for the Company have been excluded

from equity price risk since they are accounted for under the equity method.

In the case of assets held to cover unit-linked liabilities the exposure is carried by the

contract holder.  In the case of capital guaranteed products any shortfalls guaranteed

upon maturity are mitigated by a back-to-back guarantee with international financial

service providers as further referred in 4.2 (a) (i). 

The sensitivity for equity price risk illustrates how changes in the fair value of equity

securities (excluding investments in associated undertakings) will fluctuate because of

changes in market prices, whether those changes are caused by factors specific to the

individual equity issuer, or factors affecting all similar equity traded in the market.

110

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

      4.      Management of risk - continued

4.2    Financial risk - continued

(a)  Market risk - continued

(ii)  Equity price risks - continued

An analysis of the Group’s sensitivity to a 10% decrease in equity prices at the

reporting date, assuming that all other variables remain constant, is presented below. An

explanation of the method used in preparing such a sensitivity analysis and the main

parameters and assumptions underlying the information provided is found in Note 4.1.

Group

		CSM	Profit or loss before tax	Equity
		€’000	€’000	€’000
	31 December 2025
	Investment contracts with DPF	(1,182)	(175)	(114)
	Other investments	—	(312)	(268)
		(1,182)	(487)	(382)
	31 December 2024
	Investment contracts with DPF	(3,580)	(381)	(248)
	Other investments	—	(281)	(241)
		(3,580)	(662)	(489)

Company

			Profit or loss before tax	Equity
			€’000	€’000
	31  December 2025
	Other investments		(312)	(268)
	31  December 2024
	Other investments		(281)	(241)

111

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

    4.      Management of risk - continued

4.2    Financial risk - continued

(a)  Market risk - continued

(iii) Currency risk

The Group’s and Company’s liabilities are substantially denominated in euro.  The

Group’s exposure to foreign currency risk arises primarily from both equity and debt

securities denominated in major foreign currencies. The Group hedges its foreign

currency denominated debt securities using foreign exchange forward contracts in order

to mitigate the risk that principal cash flows for these investments fluctuate as a result

of changes in foreign exchange rates.

The table below summarises the Group’s exposure to foreign currencies other than

euro.

Group

	31  December 2025	Net exposure before hedging	Notional amount of currency derivatives	Net exposure after hedging
		€’000	€’000	€’000
	Currency of exposure:
	USD	294,078	181,811	112,267
	CHF	18,628	—	18,628
	GBP	7,640	747	6,893
	SEK	7,226	—	7,226
	DKK	5,752	—	5,752
	HKD	3,801	—	3,801
	Others	20,851	3,948	16,903
		357,976	186,506	171,470

112

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

4.      Management of risk - continued

4.2    Financial risk - continued

(a)  Market risk - continued

(iii)  Currency risk - continued

Group

	31  December 2024	Net exposure before hedging	Notional amount of currency derivatives	Net exposure after hedging
		€’000	€’000	€’000
	Currency of exposure:
	USD	307,311	178,616	128,695
	CHF	15,318	—	15,318
	GBP	12,142	6,121	6,021
	SEK	7,337	—	7,337
	DKK	8,318	951	7,367
	HKD	1,987	—	1,987
	Others	20,521	(239)	20,760
		372,934	185,449	187,485

 

Within the table above, €166.5 million of the unhedged exposure relates to equity

investments (2024: €185.8 million).  Due to an increasingly globalised economy, the

Group’s equity investments are diversified across various currencies. The directors

consider that the exposure to currency risk is appropriately captured in the equity price

risk sensitivity (Note 4.2(a)(ii)). Any residual currency exposure relating to non-equity

investments is not considered to be significant.

The table below summarises the Company’s exposure to foreign currencies other than

euro. 

Company     

	31  December 2025	Net exposure before hedging	Notional amount of currency derivates	Net exposure after hedging
		€’000	€’000	€’000
	Currency of exposure:
	USD	34	—	34
	GBP	29	—	29
	Other	16	—	16
		79	—	79

113

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

      4.      Management of risk - continued

4.2    Financial risk - continued

(a)  Market risk - continued

(iii) Currency risk - continued

          Company

	31  December 2024	Net exposure before hedging	Notional amount of currency derivates	Net exposure after hedging
		€’000	€’000	€’000
	Currency of exposure:
	USD	34	—	34
	GBP	29	—	29
	Others	16	—	16
		79	—	79

The Company’s foreign exposure relates to foreign operations now in run-off.

(b)    Credit risk

Credit risk is the risk of decreases in value when counterparties are not capable of

fulfilling their obligations or when a change in their credit status takes place. The Group

has exposure to credit risk, which is the risk that a counterparty will be unable to pay

amounts in full when due. Key areas where the Group is exposed to credit risk are:

• Investments and cash and cash equivalents

• Reinsurance contract assets

• Amounts due from insurance intermediaries

• Counterparty risk with respect to forward foreign exchange contracts

The Group places limits on the level of credit risk undertaken from the main categories

of financial instruments. These limits also take due consideration of the solvency

restrictions imposed by the relevant regulations. The investment strategy of the Group

considers the credit standing of the counterparty and control structures are in place to

assess and monitor these risk thresholds.

114

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

    4.      Management of risk - continued

4.2    Financial risk - continued

(b) Credit risk - continued

The Group structures the levels of credit risk it accepts by limiting as far as possible its

exposure to a single counterparty or groups of counterparties. The Group has in place

internal control structures to assess and monitor credit exposures and risk thresholds.

The Group’s cash is placed with a number of core domestic credit institutions and

investment grade international banks, thereby reducing the concentration of

counterparty credit risk to an acceptable level.

Reinsurance is used to manage insurance risk. This does not, however, discharge the

Group’s liability as primary insurer. If a reinsurer fails to pay a claim for any reason,

the Group remains liable for the payment to the policyholder.  The creditworthiness of

reinsurers is monitored on a quarterly basis by reviewing credit grades provided by

rating agencies and other publicly available financial information, thereby ensuring the

continuous financial strength of the reinsurer. At the same time that the Board approves

the overall reinsurance protection of the Group, it ensures that the reinsurers’ credit

rating (either Standard & Poor’s or equivalent) is within the parameters set by it.

The Group is exposed to contract holders and intermediaries for insurance revenue. 

Credit agreements are in place in all cases where credit is granted, and in the case of

certain larger risks, premium payment warranties are in place.  This limits the liability

of the Group towards the insured or any third party if the premium remains unsettled

after the credit period granted and allows the Group to cancel the policy ab initio, if

considered necessary. Records are kept of the payment history for significant contract

holders and intermediaries with whom regular business is conducted.  Credit is not

granted to contract holders whose payment history is not satisfactory.  Credit risk with

respect to debtors is further limited due to the large number of customers comprising

the Group’s debtor base.

The exposure to individual counterparties is also managed by other mechanisms, such

as the right to offset where counterparties are both debtors and creditors of the Group.

Management information reported to the Group includes details of provisions for

impairment on receivables and subsequent write-offs.  The Company performs risk-

based reviews to assess the degree of compliance with the Group’s procedures on credit

and take action accordingly.  In the case of MMSV, it is not normal for credit to be

extended to insurance policyholders due to the nature of their business, unless

automatic policy loans are advanced up to the surrender value of the contract.

The Group does not trade in derivative contracts, with the exception of forward

contracts and exchange traded futures. All derivative contracts are placed with quality

financial institutions within the parameters of a hedging policy approved by the Board.

 

115

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

     

      4.      Management of risk - continued

4.2    Financial risk - continued

(b)  Credit risk - continued

The total assets bearing credit risk are the following:

		Group		Company
		2025	2024	2025	2024
		€’000	€’000	€’000	€’000
	Debt securities	1,012,362	1,020,445	22,069	16,273
	Deposits with banks and credit institutions	59,983	39,657	—	—
	Forward foreign exchange contracts and   swaps	2,209	—	—	—
	A component of reinsurance contract assets	6,395	8,084	6,395	8,084
	Trade and other receivables   (excluding prepayments)	24,858	22,039	21,877	18,788
	Cash and cash equivalents	50,244	81,899	14,559	13,908
	Total	1,156,051	1,172,124	64,900	57,053

The carrying amounts disclosed above represent the maximum exposure to credit risk.

The component of reinsurance contract assets exposed to credit risk is analysed in the

table below using Standard & Poor’s rating (or equivalent).

				Group and Company
				2025	2024
				€’000	€’000
	AA			167	122
	A			5,896	7,446
	Below BBB or not rated			332	516
				6,395	8,084

116

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

4.      Management of risk - continued

4.2    Financial risk - continued

(b)  Credit risk - continued

These assets other than the reinsurance contract assets are analysed in the table below

using Standard & Poor’s rating (or equivalent).

		Group		Company
		2025	2024	2025	2024
		€’000	€’000	€’000	€’000
	AAA	97,564	84,353	3,642	4,085
	AA	129,341	232,871	5,265	2,522
	A	505,410	440,982	13,720	7,690
	BBB	314,384	317,688	10,926	13,013
	Below BBB or not rated	102,957	88,146	24,952	21,659
		1,149,656	1,164,040	58,505	48,969

Debt securities, receivables and cash and cash equivalents that are not rated are

primarily held with highly reputable financial institutions.

The Group does not hold any collateral as security to its credit risk.

117

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

4.      Management of risk - continued

4.2    Financial risk - continued

(b)  Credit risk - continued

Financial assets that are past due but not impaired

The following other assets are classified as past due but not impaired:

				Group and Company
				2025	2024
				€’000	€’000
	Within credit terms			9,673	10,737
	Not more than three months			3,712	3,821
	Within three to twelve months			2,055	1,875
	Over twelve months			921	1,063
				16,361	17,496

IFRS 7 defines a financial asset as being past due when the counterparty has failed to

make a payment when contractually due. It goes further to stipulate that full disclosure

must be made of all balances due from this particular counterparty, including those,

which are still within credit terms and therefore not contractually due.

The overall exposure of the Group and Company in terms of IFRS 7 is €16.4 million

(2024: €17.5 million), of which €9.7 million (2024: €10.7 million) is not contractually

due. It is the view of the directors that no impairment charge is necessary, due to the

following reasons:

1. Settlements after year-end.

2. In cases where the amount has not been settled, agreement for settlement has been

reached or is being negotiated.

Trade receivables at 31 December 2025 did not comprise any amounts (2024: nil)

whose terms had been renegotiated from the original terms and which were classified as

fully performing.

Financial assets that are impaired

Within trade receivables are the following receivables that are classified as impaired

against which a provision for impairment has been provided as per Note 26:

				Group and Company
				2025	2024
				€’000	€’000
	Over twelve months (Note 26)			869	717

118

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

      4.      Management of risk - continued

4.2    Financial risk - continued

(b)  Credit risk - continued

A decision to impair an asset is based on the following information that comes to the

attention of the Group:

• Significant financial difficulty of the debtor.

• It becoming probable that the debtor will enter bankruptcy or other financial

reorganisation.

• A breach of contract, such as protracted default in payments

• The debtor has been referred to the in-house legal office.

(c)  Liquidity risk

The Group is exposed to daily calls on its available cash resources mainly from claims

and benefits arising from insurance contracts.  Liquidity risk is the risk that cash may

not be available to pay obligations when due at a reasonable cost. The Group manages

its funds in such a manner as to ensure an adequate portion of available funds to meet

such calls. With respect to life insurance contracts this is principally managed through

limits set by the Board of MMSV on the minimum proportion of maturity funds

available to meet such calls. Furthermore, the Group invests a majority of its assets in

listed investments that can be readily disposed of.

The following table indicates the expected timing of cash flows arising from the

maturity or settlement of Group’s liabilities. The expected cash flows do not consider

the impact of early surrenders on life insurance contracts.

119

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

  4.      Management of risk - continued

4.2    Financial risk - continued

(c)  Liquidity risk - continued

		Group expected cash flows (€ millions) 2025
		Payable on demand	0-1 yr	1-2 yrs	2-3 yrs	3-4 yrs	4-5 yrs	>5 yrs	Total
		Undiscounted	Discounted	Discounted	Discounted	Discounted	Discounted	Discounted	Discounted
	Insurance contract assets -   Life insurance contracts	3.0	(10.0)	(8.0)	(7.0)	(6.0)	(5.0)	(27.0)	(60.0)
	Insurance contract liabilities   - Life insurance contracts	50.0	186.0	142.0	163.0	182.0	176.0	910.0	1,809.0
	Reinsurance contract   liabilities	7.0	3.0	3.0	2.0	2.0	2.0	17.0	36.0
	Insurance contract liabilities   – liabilities for incurred   claims short- term   contracts under PAA	—	19.5	6.1	3.4	2.4	1.4	3.5	36.3
	Lease liabilities	—	0.5	0.3	0.3	0.3	0.2	0.6	2.2
	Other payables	19.9	—	—	—	—	—	—	19.9

   

		Group expected cash flows (€ millions) 2024
		Payable on demand	0-1 yr	1-2 yrs	2-3 yrs	3-4 yrs	4-5 yrs	>5 yrs	Total
		Undiscounted	Discounted	Discounted	Discounted	Discounted	Discounted	Discounted	Discounted
	Insurance contract assets -   Life insurance contracts	4.0	(9.0)	(8.0)	(7.0)	(6.0)	(5.0)	(25.0)	(56.0)
	Insurance contract liabilities   - Life insurance contracts	56.0	175.0	163.0	133.0	152.0	171.0	984.0	1,834.0
	Reinsurance contract   liabilities	6.0	3.0	2.0	2.0	2.0	2.0	20.0	37.0
	Insurance contract liabilities   – liabilities for incurred   claims short-term  contracts   under PAA	—	18.2	6.3	3.4	2.9	2.2	3.8	36.8
	Lease liabilities	—	0.4	0.3	0.3	0.2	0.2	0.4	1.8
	Other payables	18.2	—	—	—	—	—	—	18.2

Expected cash flows on unit linked liabilities, presented under investment contract

liabilities amounting to €229.7 million (2024:€179.7 million) and as part of insurance

contract liabilities €35.7 million (2024: €39.2 million), have not been included as the

directors consider that there is limited exposure to liquidity risk given that these are

principally backed by unit linked assets.

The amounts which are undiscounted and payable on demand mainly consist of long-

term contracts claims outstanding.

120

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

4.      Management of risk - continued

4.2    Financial risk - continued

(c)  Liquidity risk - continued

		Company expected cash flows (€ millions) 2025
		Payable on demand	0-1 yr	1-2 yrs	2-3 yrs	3-4 yrs	4-5 yrs	>5 yrs	Total
		Undiscounted	Discounted	Discounted	Discounted	Discounted	Discounted	Discounted	Discounted
	Insurance contract liabilities   – liabilities for incurred   claims short-term contracts   under PAA	—	19.5	6.1	3.4	2.4	1.4	3.5	36.3
	Lease liabilities	—	0.4	0.3	0.3	0.3	0.2	0.6	2.1
	Other payables	8.5	—	—	—	—	—	—	8.5

		Company expected cash flows (€ millions) 2024
		Payable on demand	0-1 yr	1-2 yrs	2-3 yrs	3-4 yrs	4-5 yrs	>5 yrs	Total
		Undiscounted	Discounted	Discounted	Discounted	Discounted	Discounted	Discounted	Discounted
	Insurance contract liabilities   – liabilities for incurred   claims short-term contracts   under PAA	—	18.2	6.3	3.4	2.9	2.2	3.8	36.8
	Lease liabilities	—	0.3	0.3	0.3	0.2	0.2	0.4	1.7
	Other payables	9.1	—	—	—	—	—	—	9.1

121

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

4.      Management of risk - continued

4.2    Financial risk - continued

(c)  Liquidity risk - continued

The table below analyses the Group’s derivative financial instruments that will be

settled on a gross basis. The amounts disclosed in the table are the contractual

undiscounted cash flows. Balances due within 12 months equal their carrying balances,

as the impact of discounting is not significant.

		Group
		2025	2024
		€’000	€’000
	At 31 December
	Foreign exchange contracts
	- outflow	(358,492)	(211,300)
	- inflow	360,701	204,484

At 31 December 2025 and 2024, the above derivatives were due to be settled within

three months after year end.

122

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

4.Management of risk - continued

4.3Fair values

The following table presents the assets measured in the statement of financial position

at fair value by level of the following fair value measurement hierarchy at 31 December

2025:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities

(Level 1);

• Inputs other than quoted prices included within Level 1 that are observable for

the asset or liability, either directly (that is, as prices) or indirectly (that is,

derived from prices) (Level 2); and

• Inputs for the asset or liability that are not based on observable market data

(that is, unobservable inputs) (Level 3).

The Group recognises transfers between levels of the fair value hierarchy at the end of

the reporting period during which the change has occurred.

The following tables present the assets and liabilities measured at fair value at 31

December 2025.

	Group
		Level 1	Level 2	Level 3	Total
		€'000	€'000	€'000	€'000
	Assets
	Financial assets at fair value through profit or   loss
	- Equity securities, units in unit trusts and   collective investment schemes	911,971	142,863	101,319	1,156,153
	- Debt securities	549,047	392,209	—	941,256
	Debt securities at FVOCI	9,900	12,169	—	22,069
	Forward foreign exchange contracts and   swaps	—	2,209	—	2,209
	Total assets	1,470,918	549,450	101,319	2,121,687

	Liabilities
	Investment contract liabilities	—	229,748	—	229,748
	Forward foreign exchange contracts and   swaps	—	638	—	638
	Total liabilities	—	230,386	—	230,386

123

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

4.Management of risk - continued

4.3Fair values - continued

	Company
		Level 1	Level 2	Total
		€'000	€'000	€'000
	Assets
	Financial assets at fair value through profit or loss
	- Equity securities, units in unit trusts and collective   investment schemes	845	2,274	3,119
	Debt securities at FVOCI	9,900	12,169	22,069
	Total assets	10,745	14,443	25,188

The following tables present the assets measured at fair value at 31 December 2024.

	Group
		Level 1	Level 2	Level 3	Total
		€'000	€'000	€'000	€'000
	Assets
	Financial assets at fair value through   profit or loss
	- Equity Securities, units in unit trusts and     collective investment schemes	874,858	123,120	101,480	1,099,458
	- Debt Securities	567,135	388,077	—	955,212
	Debt securities at FVOCI	8,946	7,327	—	16,273
	Forward foreign exchange contracts and    swaps	—	4,805	—	4,805
	Investment in associated undertakings	—	—	—	—
	Total assets	1,450,939	523,329	101,480	2,075,748

	Liabilities
	Investment contract liabilities	—	179,685	—	179,685
	Forward foreign exchange contracts and   swaps	—	6,816	—	6,816
	Total liabilities	—	186,501	—	186,501

124

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

4.Management of risk - continued

4.3Fair values - continued

	Company	Level 1	Level 2	Total
		€'000	€'000	€'000
	Assets
	Financial assets at fair value through profit or loss
	-Equity securities, units in unit trusts and   collective investment schemes	762	2,050	2,812
	Debt securities at FVOCI	8,946	7,327	16,273
	Total assets	9,708	9,377	19,085

Fair value measurements classified as Level 1 include government debt securities, units

in unit trusts and collective investments schemes and foreign listed equities.

Corporate debt securities are classified as Level 2 in view of their trading

characteristics. The financial liabilities for unit-linked contracts were also classified as

Level 2. The fair value of these contracts is determined using the current unit values

that reflect the fair values of the financial assets (classified as Level 1) linked to the

financial liability.  Derivative foreign exchange forward contracts have been classified

as Level 2.  The fair value of these instruments is determined by reference to market

observable forward currency rates and interest rates. Domestic equities are classified as

Level 2 in view of their trading characteristics.

At 31 December 2025, 4.8% (2024:4.9%) of the financial assets measured at fair value

on a recurring basis were classified as Level 3.  They constitute investment in unlisted

equities. The Group has €101.3 million (2024:€101.5 million) assets classified as Level

3, the valuation of which has been determined by reference to the latest available net

asset values of the underlying investment or the latest transaction price.

The analysis of freehold land and buildings and investment property are included

within Note 18 and  Note 19 respectively.

125

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

4.Management of risk - continued

4.3Fair values - continued

The following table presents the changes in Level 3 instruments for the year ended 31

December:

	Group
		2024
		Equity securities
		€'000
	Opening balance	94,839
	Additions	5,300
	Disposals	(1,749)
	Total gains recognised in profit or loss	3,090
	Closing balance	101,480
		2025
		Equity securities
		€'000
	Opening balance	101,480
	Additions	1,682
	Disposals	—
	Total losses recognised in profit or loss	(1,843)
	Closing balance	101,319

At 31 December 2025 and 2024, the carrying amount of the Group’s and Company’s

other financial assets and liabilities approximated their fair values with the exception of

financial liabilities emanating from investment contracts with DPF. It is impracticable

to determine the fair value of these contracts due to the lack of a reliable basis to

measure the future discretionary return that is a material feature of these contracts.

126

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

5.Capital management

The Group’s policy is to maintain a strong capital base to support its business growth

plans and comply with all regulatory requirements on an ongoing basis whilst assessing

the impact of shareholder returns on its capital employed and safeguarding the Group's

and individual companies ability to continue as a going concern.  The Group defines

capital as shareholders’ equity.

The Group’s objectives when managing capital are to:

• comply with the obligations to hold Eligible Own Funds to cover the Solvency

Capital Requirement and Minimum Capital Requirement in terms of the Insurance

Business Act, 1998, (Chapter 403, Laws of Malta) and the applicable Insurance

Rules issued under the Insurance Business Act (‘Insurance Rules’) by the Malta

Financial Services Authority (‘MFSA’);

• provide for the capital requirements of the companies within the Group;

• safeguard the Group’s and individual component companies’ ability to continue as a

going concern and provide returns for shareholders and benefits for other

stakeholders; and

• to provide an adequate return to shareholders by pricing insurance contracts

commensurate with the level of risk.

The individual insurance Group companies are required to hold regulatory capital for

their non-life and life assurance business in compliance with the Insurance Rules issued

by the MFSA. The minimum capital requirements must be maintained at all times

throughout the period. The individual Group companies monitor the level of their own

funds on a regular basis.  Any transactions that may potentially affect the individual

company’s own funds and solvency position are immediately reported to their

respective directors and shareholders for resolution.

The Company’s Minimum Capital Requirement Absolute Floor stands at €8,000,000 as

per paragraph 5.6.4 of Chapter 5 (‘Valuation of assets and liabilities, technical

provisions, own funds, Solvency Capital Requirement, Minimum Capital Requirement

and investment rules’) of Part B of the Insurance Rules.

Based on management calculations to date, the Company is sufficiently capitalised and

was compliant at all times with the regulatory capital requirements as stipulated by the

MFSA which are in line with the Solvency II requirements. All other companies within

the Group were also compliant with the respective minimum regulatory requirements

throughout the financial period as per management calculations to date.

127

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

6.      Amounts determined on transition to IFRS 17

Transition approach

At 1 January 2022, the Group applied the following approaches to identify and measure

certain groups of contracts on transition to IFRS 17.

	Year of issue of contracts	Transition approach
	After 2016 – term business including   reinsurance	Full retrospective approach
	Before 2016 – term business including   reinsurance	Fair value approach
	All with-profits and unit-linked business	Fair value approach

The transition approach was determined at the level of a group of insurance contracts

and affected the approach to calculating the CSM on initial adoption of IFRS 17.

The Group applied judgement in determining the transition amounts and the pre-

transition FCF and experience were not considered under this approach.

Applying the fair value approach, the Group determined the CSM to be the difference

between the fair value of a group of insurance contracts, measured in accordance with

IFRS 13 ‘Fair Value Measurement’ and its FCF at the transition date.

The fair value of an insurance liability is the price that a market participant would be

willing to pay to assume the obligation and the remaining risks of the in-force contracts

as at the transition date. A present value technique was used to value groups of

contracts.

In estimating the fair value of groups of insurance contracts, the following

considerations were applied:

– only future cash flows within the boundaries of the insurance contracts were

included in the fair value estimation, excluding future renewals and new business

that would be outside the contract boundary of the contracts under IFRS 17;

– assumptions about expected future cash flows and risk allowances, including

operational risk were adjusted for the market participant’s view, as required by

IFRS 13;

– profit margins were included to reflect what a market participant would require

for accepting obligations under insurance contracts, beyond the risk adjustment

for non-financial risk; and

– diversification between market risk and life risk. Although market risk is

considered as a hedgeable risk, it was assumed that a buyer will be able to capture

this diversification from its other own modules.

128

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

6.      Amounts determined on transition to IFRS 17 - continued

Analysis by transition approach - insurance revenue and contractual service margin

For insurance contracts issued by the Group and reinsurance contracts held, an analysis

of insurance revenue for insurance contracts issued and the CSM by transition method

is included in the following tables.

	31  December 2025	Life Risk	Investment contracts with  DPF	Total
		€'000	€'000	€'000
	Insurance contracts issued
	Insurance revenue
	New contracts and contracts measured   under the full retrospective approach at   transition	(11,832)	(5,302)	(17,134)
	Contracts measured under the fair value   approach at transition	(64)	(28,788)	(28,852)
		(11,896)	(34,090)	(45,986)
	CSM
	New contracts and contracts measured   under the full retrospective approach at   transition	32,946	17,191	50,137
	Contracts measured under the fair value   approach at transition	6,592	64,072	70,664
		39,538	81,263	120,801

	31  December 2025		Life Risk
			€’000
	Reinsurance contracts held
	CSM
	New contracts and contracts measured   under the full retrospective approach at   transition		(11,472)
	Contracts measured under the fair value   approach at transition		(4,184)
			(15,656)

129

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

6.      Amounts determined on transition to IFRS 17 - continued

Analysis by transition approach - insurance revenue and contractual service margin -

continued

	31  December 2024	Life Risk	Investment contracts with  DPF	Total
		€'000	€'000	€’000
	Insurance revenue
	New contracts and contracts measured   under the full retrospective approach at   transition	(13,182)	(4,116)	(17,298)
	Contracts measured under the fair value   approach at transition	(128)	(29,344)	(29,472)
		(13,310)	(33,460)	(46,770)
	CSM
	New contracts and contracts measured   under the full retrospective approach at   transition	27,337	12,012	39,349
	Contracts measured under the fair value   approach at transition	6,214	65,596	71,810
		33,551	77,608	111,159

	31  December 2024	Life Risk
		€’000
	Reinsurance contracts held
	CSM
	New contracts and contracts measured   under the full retrospective approach at   transition	(9,957)
	Contracts measured under the fair value   approach at transition	(4,067)
		(14,024)

130

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

6.      Amounts determined on transition to IFRS 17 - continued

Expected recognition of the contractual service margin

An analysis of the expected recognition of the CSM remaining at the end of the

reporting period in profit or loss is provided in the following table:

	As at 31 December 2025	Insurance contracts issued			Reinsurance contracts held
		Life Risk	Investment contracts with DPF	Total CSM for insurance contracts issued	Life Risk	Total CSM for reinsurance contracts held
		€’000	€’000	€’000	€’000	€’000
	1	(4,208)	(7,978)	(12,186)	1,752	1,752
	2	(3,899)	(7,314)	(11,213)	1,613	1,613
	3	(3,604)	(6,786)	(10,390)	1,482	1,482
	4	(3,327)	(6,144)	(9,471)	1,361	1,361
	5	(3,068)	(5,385)	(8,453)	1,250	1,250
	6 – 10	(11,942)	(17,624)	(29,566)	4,813	4,813
	> 10	(16,736)	(30,032)	(46,768)	6,438	6,438
	Total	(46,784)	(81,263)	(128,047)	18,709	18,709

	As at 31 December 2024	Insurance contracts issued			Reinsurance contracts held
		Life Risk	Investment contracts with DPF	Total CSM for insurance contracts issued	Life Risk	Total CSM for reinsurance contracts held
		€’000	€’000	€’000	€’000	€’000
	1	(3,576)	(7,025)	(10,601)	1,555	1,555
	2	(3,313)	(6,454)	(9,767)	1,433	1,433
	3	(3,054)	(5,904)	(8,958)	1,313	1,313
	4	(2,811)	(5,466)	(8,277)	1,202	1,202
	5	(2,586)	(4,943)	(7,529)	1,100	1,100
	6 – 10	(10,071)	(16,401)	(26,472)	4,226	4,226
	> 10	(14,637)	(31,415)	(46,052)	5,753	5,753
	Total	(40,048)	(77,608)	(117,656)	16,582	16,582

131

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

7.Segment information

Management has determined the operating segments based on the reports reviewed by

the Executive Management team that are used to make strategic decisions. 

The segment results for the years ended 31 December 2025 and 2024 are indicated

below.

(i)  Insurance revenue and insurance service result

Short-term insurance contracts under PAA

Group and Company

	31 December 2025	Motor	Fire and other property damages	Health	Other classes	Group Life	Total
		€’000	€’000	€’000	€’000	€’000	€’000
	Insurance revenue	49,246	19,972	21,472	16,447	2,556	109,693
	Insurance service expenses	(39,783)	(11,333)	(19,083)	(11,240)	(2,036)	(83,475)
	Net expenses from reinsurance contracts held	(1,240)	(7,240)	(49)	(1,139)	(169)	(9,837)
	Insurance service result	8,223	1,399	2,340	4,068	351	16,381
	31 December 2024	Motor	Fire and other property damages	Health	Other classes	Life	Total
		€’000	€’000	€’000	€’000	€’000	€’000
	Insurance revenue	47,166	18,531	17,037	15,220	1,968	99,922
	Insurance service expenses	(38,405)	(10,918)	(15,198)	(12,628)	(1,347)	(78,496)
	Net expenses from reinsurance contracts held	(1,467)	(6,441)	(96)	(1,002)	(90)	(9,096)
	Insurance service result	7,294	1,172	1,743	1,590	531	12,330

132

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

7.Segment information - continued

(i)  Insurance revenue and insurance service result - continued

Long-term and linked long-term business

In the opinion of the directors, the subsidiary MAPFRE MSV Life p.l.c. primarily

operates in a single business segment being that of long-term and linked long-term

insurance business.

An analysis of insurance revenue, insurance service expenses and net expenses from

reinsurance contracts held by contract type for 2025 and 2024 is included in the

following tables.

2025	Life Risk	Investment contracts with DPF	Total
	€’000	€’000	€’000
Insurance revenue
Contracts not measured under PAA
Amounts relating to change in the LRC
-   Expected incurred claims and other directly attributable expenses	6,058	18,523	24,581
-   Changes in risk adjustment for non-financial risk for the risk expired	1,626	232	1,858
-   CSM recognised for the services provided	4,315	8,049	12,364
-   Experience adjustments  – arising from premiums received in the       period other than those that relate to future service	(321)	18	(303)
Insurance acquisition cash flows recovery	217	7,268	7,485
	11,895	34,090	45,985
Insurance service expenses
Incurred claims and other directly attributable expenses	(4,478)	(18,689)	(23,167)
Changes that relate to past service – changes in the FCF relating   to the LIC	4	—	4
Insurance acquisition cash flows amortization	(217)	(7,268)	(7,485)
	(4,691)	(25,957)	(30,648)
Net income (expenses) from reinsurance contracts held
Amounts relating to the changes in the remaining coverage
-   Expected incurred claims and other directly attributable expenses       recovery	(1,755)	—	(1,755)
-   Change in the risk adjustment for non-financial risk for the risk       expired	(322)	—	(322)
-   CSM recognised for the services provided	(1,860)	—	(1,860)
-   Experience adjustments – arising from ceded premiums paid in the       period other than those that relate to future service	(85)	—	(85)
Reinsurance expenses	(4,022)	—	(4,022)
Other incurred directly attributable expenses	(569)	—	(569)
Incurred claims recovery	1,342	—	1,342
	(3,249)	—	(3,249)
Total insurance service result	3,955	8,133	12,088

133

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

7.Segment information - continued

(i)  Insurance revenue and insurance service result - continued

Long-term and linked long-term business - continued

	2024	Life Risk	Investment contracts with DPF	Total
		€’000	€’000	€’000
	Insurance revenue
	Amounts relating to change in the LRC
	-   Expected incurred claims and other directly attributable expenses	7,789	21,733	29,522
	-   Changes in risk adjustment for non-financial risk for the risk expired	1,596	228	1,824
	-   CSM recognised for the services provided	3,664	7,128	10,792
	-   Experience adjustments  – arising from premiums received in the       period other than those that relate to future service	170	33	203
	Insurance acquisition cash flows recovery	91	4,338	4,429
		13,310	33,460	46,770
	Insurance service expenses
	Incurred claims and other directly attributable expenses	(7,259)	(21,845)	(29,104)
	Insurance acquisition cash flows amortization	(91)	(4,338)	(4,429)
		(7,350)	(26,183)	(33,533)
	Net expenses from reinsurance contracts held
	Amounts relating to the changes in the remaining coverage
	-   Expected incurred claims and other directly attributable expenses       recovery	(2,006)	—	(2,006)
	-   Change in the risk adjustment for non-financial risk for the risk expired	(283)	—	(283)
	-   CSM recognised for the services provided	(1,651)	—	(1,651)
	-   Experience adjustments – arising from ceded premiums paid in the       period other than those that relate to future service	(143)	—	(143)
	Reinsurance expenses	(4,083)	—	(4,083)
	Other incurred directly attributable expenses	(519)	—	(519)
	Incurred claims recovery	1,858	—	1,858
		(2,744)	—	(2,744)
	Total insurance service result	3,216	7,277	10,493

100% ( 2024: 100%) of consolidated insurance revenue emanate from contracts

concluded in or from Malta. All premiums emanate from external customers and there

is no business transacted between segments other than as disclosed in Note 34.

134

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

8.Investment return

An analysis of net investment return and net financial result by product line is presented below:

	Group						Company
31  December 2025	Life Risk	Investment contracts with DPF	Invest- ment contracts without DPF	Short- Term contracts measured under the PAA	Other	Total	Short- Term contracts measured under the PAA
	€’000	€’000	€’000	€’000	€’000	€’000	€’000
Net investment income/(expenses)
Share of profit of other associated undertaking, net   of tax	—	—	—	—	91	91	—
Dividend income from group companies	—	—	—	—	—	—	3,415
Interest revenue from financial assets not measured   at FVTPL	—	859	—	526	3,227	4,612	526
Interest expenses from financial assets not measured   at FVTPL	—	—	—	(26)	—	(26)	(26)
Loss on derecognition of subsidiary undertaking	—	—	—	(28)	—	(28)	(28)
Net gains on FVTPL instruments	204	80,152	7,052	565	976	88,949	565
Net losses on FVOCI instruments	—	—	—	(60)	—	(60)	(60)
Other investment income	—	461	—	1	—	462	1
Net losses from fair value  adjustments to   investment properties	—	(652)	—	(251)	—	(903)	(251)
Investment income from investment properties	—	6,026	—	787	—	6,813	787
Expenses arising from investment properties	—	(420)	—	(21)	—	(441)	(21)
Other investment expenses	—	(5,907)	—	(41)	(20)	(5,968)	(41)
Net credit impairment (losses)/gains	—	(9)	—	5	66	62	5
Interest on lease liabilities	—	—	—	(111)	—	(111)	(111)
Net investment income	204	80,510	7,052	1,346	4,340	93,452	4,761
Finance income/(expenses) from   insurance contracts issued
Changes in value of underlying assets   of  contracts measured under VFA	—	(80,510)	—	—	—	(80,510)	—
Interest accreted	809	—	—	—	—	809	—
Effect of changes in interest rates and other financial   assumptions	(2,267)	—	—	(364)	—	(2,631)	(364)
Effect of changes in FCF at current rates  when CSM   is unlocked at locked-in rates	(134)	—	—	—	—	(134)	—
Finance expense from insurance contracts issued	(1,592)	(80,510)	—	(364)	—	(82,466)	(364)
Finance income/(expenses) from reinsurance    contracts held
Interest accreted	(498)	—	—	—	—	(498)	—
Effect of changes in interest rates and   other financial assumptions	2,506	—	—	94	—	2,600	94
Effect of changes in FCF at current rates  when CSM   is unlocked at locked-in rates	55	—	—	—	—	55	—
Finance income from reinsurance   contracts held	2,063	—	—	94	—	2,157	94
Net change in investment contract liabilities	—	—	(7,052)	—	—	(7,052)	—
Net investment return and net financial result	675	—	—	1,076	4,340	6,091	4,491

135

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

8.  Investment return - continued

		Group						Company
	31 December 2024	Life Risk	Investment contracts with DPF	Investment contracts without DPF	Short-Term contracts measured under the PAA	Other	Total	Short-Term contracts measured under the PAA
		€’000	€’000	€’000	€’000	€’000	€’000	€’000
	Net investment income/(expenses)
	Share of profit of other associated   undertaking, net of tax	—	—	—	—	105	105	—
	Dividend income from group   companies	—	—	—	—	—	—	1,323
	Interest revenue from financial assets   not measured at FVTPL	—	1,153	—	355	3,932	5,440	355
	Interest expenses from financial   assets not measured at FVTPL	—	—	—	(27)	—	(27)	(27)
	Net gains on FVTPL instruments	625	83,210	13,131	445	1,179	98,590	445
	Other investment income	—	322	—	2	—	324	2
	Net (losses)/gains from fair value   adjustments to investment   properties and revaluation of property for own use	—	(533)	—	(196)	150	(579)	(196)
	Investment income from investment   properties	—	5,980	—	821	—	6,801	821
	Expenses arising from investment   properties	—	(437)	—	(15)	—	(452)	(15)
	Other investment expenses	—	(6,493)	—	(31)	(20)	(6,544)	(31)
	Net credit impairment gains	—	8	—	1	—	9	1
	Interest on lease liabilities	—	—	—	(77)	—	(77)	(77)
	Net investment income	625	83,210	13,131	1,278	5,346	103,590	2,601
	Finance income/(expenses) from   insurance contracts issued
	Changes in value of underlying   assets of contracts measured under   VFA	—	(83,210)	—	—	—	(83,210)	—
	Interest accreted	1,577	—	—	—	—	1,577	—
	Effect of changes in interest rates and   other financial assumptions	(765)	—	—	(818)	—	(1,583)	(818)
	Effect of changes in FCF at current   rates  when CSM is unlocked at   locked-in rates	24	—	—	—	—	24	—
	Finance expense from   insurance contracts issued	836	(83,210)	—	(818)	—	(83,192)	(818)
	Finance income/(expenses) from   reinsurance contracts held
	Interest accreted	(818)	—	—	—	—	(818)	—
	Effect of changes in interest rates and   other financial assumptions	73	—	—	182	—	255	182
	Effect of changes in FCF at current   rates  when CSM is unlocked at   locked-in rates	48	—	—	—	—	48	—
	Finance (expenses)/income from   reinsurance contracts held	(697)	—	—	182	—	(515)	182
	Net change in investment contract   liabilities	—	—	(13,131)	—	—	(13,131)	—
	Net investment return and net financial result	764	—	—	642	5,346	6,752	1,965

136

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

9.      Other income

		Group
		2025	2024
		€'000	€'000
	Investment management fees	1,625	786
	Management fees	4	125
	Other income	78	371
		1,707	1,282

10.Profit before tax

The profit before tax is stated after charging:

		Group		Company
		2025	2024	2025	2024
		€’000	€’000	€’000	€’000
	Employee compensation (Note 11)	17,741	16,579	9,890	9,238
	Depreciation/amortisation:
	- intangible assets (Note 16)	5,490	5,080	2,048	2,226
	- property, plant and equipment (Note 18)	1,029	1,125	636	626
	Impairment of receivables	35	10	35	10
	Increase in provision for impairment on   receivables (Note 26)	152	182	152	182

The financial statements include fees, exclusive of VAT, charged by the Company's

auditors for services rendered during the financial years ended 31 December 2025 and

2024, relating to entities that are included in the consolidation amounting to:

		Group		Company
		2025	2024	2025	2024
		€’000	€’000	€’000	€’000
	Annual statutory audit	768	911	333	336
	Solvency II audit	118	118	51	51
	Paid during the year:
	for financial year 2025	375	—	167	—
	for financial year 2024	480	413	196	168
	for financial year 2023	—	1,497	—	674

137

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

11.    Employee compensation

		Group		Company
		2025	2024	2025	2024
		€’000	€’000	€’000	€’000
	Salaries	16,708	15,587	9,285	8,677
	Social security costs	808	790	481	457
	Contributions to Employee Voluntary   Occupational Pension Scheme	225	202	124	104
		17,741	16,579	9,890	9,238

The average number of persons employed during the year was:

		Group		Company
		2025	2024	2025	2024
		No.	No.	No.	No.
	Key management personnel	26	26	13	14
	Managerial	41	41	26	25
	Technical	229	229	140	141
	Administrative	16	18	9	11
		312	314	188	191

12.    Income tax expense

		Group		Company
		2025	2024	2025	2024
		€'000	€'000	€'000	€'000
	Current tax expense	8,231	6,967	5,162	3,286
	Deferred tax expense (Note 23)	873	(157)	135	126
	Income tax expense	9,104	6,810	5,297	3,412

138

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

12.    Income tax expense - continued

The tax on the Group’s and Company’s profit before tax differs from the theoretical

amount that would arise using the basic tax rate as follows:

		Group		Company
		2025	2024	2025	2024
		€’000	€’000	€’000	€’000
	Profit before tax	29,618	24,804	16,872	10,531
	Tax at 35%	10,366	8,681	5,905	3,686
	Adjusted for tax effect of :
	Net exempt income and disallowed   expenses	(113)	(826)	(254)	(111)
	Property withholding tax at 8% or10%	(791)	(815)	(6)	59
	Other	(358)	(230)	(348)	(222)
	Income tax expense	9,104	6,810	5,297	3,412

13.    Directors’ emoluments

		Group		Company
		2025	2024	2025	2024
		€'000	€'000	€'000	€'000
	Directors' fees	247	250	197	187

Group Directors’ fees include fees payable to the Company’s directors both from the

Company and from other Group Companies where applicable.

139

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

14.Earnings per share

Earnings per share are based on the net profit for the year divided by the weighted

average number of ordinary shares in issue during the year.

		Group
		2025	2024
		€'000	€'000
	Profit attributable to owners of the Company	14,935	12,519
	Number of ordinary shares in issue (Note 28)	92,000	92,000
	Basic and diluted earnings per share attributable to owners of the   Company (€)	0.162	0.136

15.Dividends

A final gross dividend in respect of year ended 31 December 2025 of €0.091128

( 2024: €0.080268) per share amounting to a total dividend of €8,383,779 (2024 :

€7,384,615) is to be proposed by the directors at the forthcoming annual general

meeting. This is equivalent to a net dividend of €0.065217 (2024: €0.052174) per

share amounting to a total net dividend of €6,000,000 (2024: €4,800,000).

140

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

16.Intangible assets

	Group
		Computer Software	Deferred Acquisition cost (i)	Total (ii)
		€’000	€’000	€’000
	At 1 January 2024
	Cost or valuation	58,330	4,425	62,755
	Accumulated amortisation and impairment	(28,410)	(3,613)	(32,023)
	Net book amount	29,920	812	30,732
	Year ended 31 December 2024
	Opening net book amount	29,920	812	30,732
	Additions	7,448	1,311	8,759
	Disposals	(2,906)	—	(2,906)
	Amortisation charge	(4,960)	(120)	(5,080)
	Amortisation released upon derecognition	2,906	—	2,906
	Closing net book amount	32,408	2,003	34,411
	At 31 December 2024
	Cost or valuation	62,872	5,736	68,608
	Accumulated amortisation and impairment	(30,464)	(3,733)	(34,197)
	Net book amount	32,408	2,003	34,411
	Year ended 31 December 2025
	Opening net book amount	32,408	2,003	34,411
	Additions	5,916	1,931	7,847
	Disposal/Derecognition	(4,960)	—	(4,960)
	Amortisation charge	(5,255)	(235)	(5,490)
	Amortisation released on derecognition	4,960	—	4,960
	Closing net book amount	33,069	3,699	36,768
	At 31 December 2025
	Cost or valuation	63,828	7,667	71,495
	Accumulated amortisation and impairment	(30,759)	(3,968)	(34,727)
	Net book amount	33,069	3,699	36,768

(i)  This intangible asset relates to investment contracts without DPF only.

141

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

16.Intangible assets - continued

	Company	Computer Software
		€’000
	At 1 January 2024
	Cost	23,603
	Accumulated amortisation	(13,212)
	Net book amount	10,391
	Year ended 31 December 2024
	Opening net book amount	10,391
	Additions	2,408
	Disposal	(6)
	Amortisation charge	(2,226)
	Amortisation released on disposal	6
	Closing net book amount	10,573
	At 31 December 2024
	Cost	26,005
	Accumulated amortisation	(15,432)
	Net book value	10,573
	Year ended 31 December 2025
	Opening net book amount	10,573
	Additions	2,555
	Disposal	—
	Amortisation charge	(2,048)
	Amortisation released on disposal	—
	Closing net book amount	11,080
	At 31 December 2025
	Cost	28,560
	Accumulated amortisation	(17,480)
	Net book amount	11,080

Computer software mainly represents amounts capitalised relating to the development

of the Group and Company’s IT system by related companies forming part of the

MAPFRE S.A. Group.

142

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

17. Leases

Leases as the lessor

The Group and the Company lease out certain property. Note 19 sets out information

about investment property. The Group has classified these leases as operating leases

because they do not transfer substantially all the risks and rewards incidental to the

ownership of the assets.

The following table sets out a maturity analysis of lease payments receivable, showing

the undiscounted lease payments to be received after the reporting date.

Operating leases

		Group		Company
		2025	2024	2025	2024
		€’000	€’000	€’000	€’000
	Less than one year	5,799	5,655	770	666
	One to two years	4,115	3,068	285	545
	Two to three years	3,170	2,027	122	138
	Three to four years	2,082	1,393	122	4
	Four to five years	1,625	900	99	—
	More than five years	5,533	2,457	—	—
	Total	22,324	15,500	1,398	1,353

143

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

18.Property, plant and equipment

Group

		Freehold			Furniture
		land and	Leasehold	Motor	fittings and
		buildings	improvements	Vehicles	equipment	Total
		€’000	€’000	€’000	€’000	€'000
	At 1 January 2024
	Cost	14,070	4,381	—	9,450	27,901
	Accumulated depreciation	(357)	(2,620)	—	(7,741)	(10,718)
	Closing net book amount	13,713	1,761	—	1,709	17,183
	Year ended 31 December 2024
	Opening net book amount	13,713	1,761	—	1,709	17,183
	Additions	72	276	—	634	982
	Disposals	—	(1,153)	—	(922)	(2,075)
	Revaluation gain to profit or loss	168	—	—	—	168
	Depreciation charge	(104)	(319)	—	(702)	(1,125)
	Depreciation release on disposal	—	1,063	—	919	1,982
	Closing net book amount	13,849	1,628	—	1,638	17,115
	At 31 December 2024
	Cost	14,310	3,504	—	9,162	26,976
	Accumulated depreciation	(461)	(1,876)	—	(7,524)	(9,861)
	Net book amount	13,849	1,628	—	1,638	17,115
	Year ended 31 December 2025
	Opening net book amount	13,849	1,628	—	1,638	17,115
	Additions	18	116	30	664	828
	Disposals	—	(35)	—	(112)	(147)
	Amounts transferred to   investment property	(998)	—	—	—	(998)
	Revaluation gain to other   comprehensive income	196	—	—	—	196
	Depreciation charge	(102)	(266)	(1)	(660)	(1,029)
	Depreciation on amount   transferred to investment   property (Note 19)	86	—	—	—	86
	Depreciation release on disposal	—	35	0	107	142
	Closing net book amount	13,049	1,478	29	1,637	16,193
	At 31 December 2025
	Cost	13,526	3,585	30	9,714	26,855
	Accumulated depreciation	(477)	(2,107)	(1)	(8,077)	(10,662)
	Net book amount	13,049	1,478	29	1,637	16,193

144

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

18.Property, plant and equipment - continued

Company

		Freehold		Furniture
		land and	Leasehold	fittings and
		buildings	improvements	equipment	Total
		€'000	€'000	€'000	€'000
	At 1 January 2024
	Cost	1,734	3,793	3,922	9,449
	Accumulated depreciation	(49)	(2,037)	(3,154)	(5,240)
	Net book amount	1,685	1,756	768	4,209
	Year ended 31 December 2024
	Opening net book amount	1,685	1,756	768	4,209
	Additions	—	276	299	575
	Disposal	—	(603)	(854)	(1,457)
	Depreciation Charge	(17)	(317)	(292)	(626)
	Amortisation released on disposal	—	512	850	1,362
	Closing net book amount	1,668	1,624	771	4,063
	At 31 December 2024
	Cost	1,734	3,466	3,367	8,567
	Accumulated depreciation	(66)	(1,842)	(2,596)	(4,504)
	Net book amount	1,668	1,624	771	4,063

145

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

18.Property, plant and equipment - continued

	Company - continued
		Freehold		Furniture
		land and	Leasehold	fittings and
		buildings	improvements	equipment	Total
		€’000	€’000	€’000	€’000
	Year ended 31 December 2025
	Opening net book amount	1,668	1,624	771	4,063
	Additions	—	116	443	559
	Amounts transferred to   investment property	(317)	—	—	(317)
	Revaluation gain to other   comprehensive income	196	—	—	196
	Depreciation charge	(17)	(265)	(354)	(636)
	Depreciation on amount   transferred to investment   property (Note 19)	15	—	—	15
	Closing net book amount	1,545	1,475	860	3,880
	At 31 December 2025
	Cost or valuation	1,613	3,582	3,810	9,005
	Accumulated depreciation	(68)	(2,107)	(2,950)	(5,125)
	Net book amount	1,545	1,475	860	3,880

Freehold land and buildings transferred from investment property are transferred at the

fair value at the point of transfer and are subsequently depreciated. Transfers to

investment property are made at the depreciated value at the point of transfer. If the fair

value of the freehold land and buildings is significantly different as compared to its

carrying amount then a revaluation adjustment is recorded.

Depreciation charge has been included in administrative expenses.

The Group’s and Company’s Land and buildings are shown at fair value (level 3).

A valuation of land and buildings was carried out by external qualified valuers in 2025.

The fair value movements were debited to profit or loss. The carrying amount of land

and buildings that would have been included in the financial statements had these assets

been carried at cost less accumulated depreciation for the Group is €13.70 million

(2024: €13.70 million) and for the Company €0.8 million (2024: €0.8 million).

146

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

18.    Property, plant and equipment - continued

Valuation processes

Periodically, the Group engages qualified valuers to determine the fair value of the

Group’s land and buildings.  The Company's land and buildings were revalued by PwC

Malta in 2025 with the gain debited to other comprehensive income. The fair value of

the land and buildings of the subsidiary was last determined by PwC Malta in 2024.

Whenever a valuation is carried out the finance department:

• verifies all major inputs to the valuation report prepared by the qualified valuer;

• assesses property valuation movements when compared to the prior valuation

report; and

• holds discussions with the qualified valuer.

Valuation techniques

The fair value of the Group’s and the Company’s land and buildings, with a total

carrying amount of €13.0 million and €1.5 million respectively (2024: €13.9 million

and €1.7 million respectively), was determined by capitalizing future net income

streams based on significant unobservable inputs.  These inputs include:

Valuation technique	Significant unobservable inputs	Inter-relationship between key unobservable inputs and fair value measurement
Discounted cash flows: The valuation model considers the present value of net cash flows potentially generated from the property, taking into account the expected rental growth rate, void periods and costs not paid for by the tenants. The expected net cash flows are discounted using the risk- adjusted discount rates. Among other factors, the discount rate estimation considers the quality of a building and its location (prime vs secondary), lease terms, property risk premium and inflation.	– Risk-adjusted discount rate varying between 6.2% and 7% (2024: 6.2% and 6.6%) – The valuation provides for a void factor varying between 2.5%  and 7.0% (2024: 2.5% and 5.5%) on rental income. – A benchmark lease market rate was applied once current lease terms expired. – Expected market rental growth rate of 2.0% (2024: 2.0%) in line with the implied inflation rate IRR (Internal Rate of Return).	The estimated fair value would increase/(decrease) if: – The risk-adjusted discount rate were lower/(higher); – Void factor were lower/(higher) – The market rate were higher/(lower); – Expected market rental growth were higher/ (lower).

147

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

18.    Property, plant and equipment - continued

Valuation techniques - continued

Although the properties are currently being used by MMS as its Floriana Regional

Office and MMSV as its head office, for the purpose of the valuation, it was assumed

that the property’s highest and best use would be rental to a third party, assuming same

use.  Although the Market Approach was considered, its applicability is limited, due to

the illiquidity of the commercial property market in Malta and therefore, the limited

number of transactions available.  Moreover, it is inherently difficult to find

transactions including office blocks that are directly comparable to the property.

19.    Investment property

	Group	Company
	€’000	€’000
At 1 January 2024
Cost	68,026	7,885
Accumulated fair value gains	37,593	5,924
Net book amount	105,619	13,809
Year ended 31 December 2024
Opening net book amount	105,619	13,809
Additions	934	100
Net fair value losses	(746)	(196)
Disposals	(1)	(1)
Net book amount	105,806	13,712
At 31 December 2024
Cost	68,959	7,984
Accumulated fair value gains	36,847	5,728
Net book amount	105,806	13,712

148

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

19.    Investment property - continued

		Group	Company
		€’000	€’000
	Year ended 31 December 2025
	Opening net book amount	105,806	13,712
	Transfer from Property plant & equipment at amortised value	1,172	302
	Additions	1,367	73
	Net fair value losses	(903)	(251)
	Disposals	(317)	(317)
	Net book amount	107,125	13,519
	At 31 December 2025
	Cost	71,181	8,042
	Accumulated fair value gains	35,944	5,477
	Net book amount	107,125	13,519

Transfers to or from property, plant & equipment and disposals are inclusive of

accumulated fair value gains at the point of transfer.

Fair value of investment property

A valuation of the Group’s and Company’s investment property was performed by

external qualified valuers to determine the fair value of the land and buildings as at 31

December 2025 and 2024. The fair value movements were credited to profit or loss and

are presented within ‘investment return’ (Note 8).

The Group’s and the Company’s investment property, comprising mainly office

buildings, have been determined to fall within level 3 of the fair valuation hierarchy. 

The different levels in the fair value hierarchy have been defined in Note 4.3.

The Group’s and the Company’s policy is to recognise transfers into and out of fair

value hierarchy levels as of the date of the event or change in circumstances that caused

the transfer.  There were no transfers between levels during the year.

Valuation processes

On an annual basis, the Group and Company engage external, independent property

valuers, having appropriate recognised professional qualifications and recent

experience in the location and category of the properties being valued to determine the

fair value of the land and buildings. As at 31 December 2025 and 2024, the fair values

of the land and buildings have been determined by PwC Malta and DHI Periti.

149

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

19.    Investment property - continued

Valuation processes - continued

At each financial year end the investments department:

• verifies all major inputs to the valuation report prepared by the qualified valuer;

• assesses property valuation movements when compared to the prior year valuation

report; and

• holds discussions with the qualified valuer.

The valuation techniques used for investment properties were the discounted cash flow

valuation, market approach, comparative transaction method and income capitalisation

method to provide accuracy and consistency in arriving at a fair value that reflects a

price that would be reasonably expected to be received in an orderly transaction

between market participants at the measurement date.

Valuation technique - Discounted cash flow

The following tables shows the valuation technique used in measuring the fair value of

investment property using the discounted cash flow technique, as well as the significant

unobservable inputs used. These inputs include:

Group

150

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

	Valuation technique	Significant unobservable inputs	Inter-relationship between key unobservable inputs and fair value measurement
	Discounted cash flows: The valuation model considers the present value of net cash flows generated from the property, taking into account the expected rental growth rate, void periods and costs not paid for by the tenants. The expected net cash flows are discounted using the risk-adjusted discount rates. Among other factors, the discount rate estimation considers the quality of a building and its location (prime vs secondary), lease terms, property risk premium and inflation.	– Risk-adjusted discount rate varying between 6.3% and 8.5% (2024: 6.3% and 8.3%). – A void factor varying between 1.0% to 7% (2024: 1.0% and 5.5%) on rental income. – Lease market rate was applied once current lease terms expired. – Expected market rental growth rate of 2.0% (2024: 2.0%) in line with the general inflation rate – Construction costs for undeveloped airspace and re-developable land varying between €676/sqm and €1,658/sqm (2024: €673/ sqm and €1,621/sqm)	The estimated fair value would increase/(decrease) if: – The risk-adjusted discount rate were lower/ (higher); – Void factor were lower/ (higher); – The market rate were higher/(lower); – Expected market rental growth were higher/ (lower).  – Constructions costs were lower/(higher).

151

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

19.    Investment property - continued

Valuation technique - Discounted cash flow - continued

Company

	Valuation technique	Significant unobservable inputs	Inter-relationship between key unobservable inputs and fair value measurement
	Discounted cash flows: The valuation model considers the present value of net cash flows generated from the property, taking into account the expected rental growth rate, void periods and costs not paid for by the tenants. The expected net cash flows are discounted using the risk-adjusted discount rates. Among other factors, the discount rate estimation considers the quality of a building and its location (prime vs secondary), lease terms, property risk premium and inflation.	– Risk-adjusted discount rate varying between 7% and 7.9% (2024: 6.6% and 7.6%). – A void factor of 7.0% (2024: 5.5%) on rental income. – Lease market rate was applied once current lease terms expired. – Expected market rental growth rate of 2.0% (2024: 2.0%) in line with general inflation rate.	The estimated fair value would increase/(decrease) if: – The risk-adjusted discount rate were lower/ (higher); – Void factor were lower/ (higher); – The market rate were higher/(lower); – Expected market rental growth were higher/ (lower).

The fair value of investment property determined by external, qualified property

valuers on the basis of the discounted cash flow method amounted to €103.0 million

(2024: €101.8 million) for the Group and €12.9 million (2024: €12.8 million) for the

Company.

A transfer was made from Investment Property in 2025 whilst no transfer were made to

or from Investment Property during 2024.

Valuation technique – Market approach

One property held by the Group situated within the Grand Harbour Local Plan has been

valued using the Market Approach.

The property is valued with reference to parameters for comparable properties in terms

of either actual prices from recent transactions or advertised prices for properties

currently available for sale. Through the Market Approach, the property is valued in its

existing state.

152

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

19.    Investment property - continued

Valuation technique – Market approach - continued

Market Value Technique

Valuation technique	Significant unobservable inputs	Inter-relationship between key unobservable inputs and fair value measurement
Market value : The valuation model comprises:                          The estimation of an average sales rate based on information obtained from either actual prices of recent transactions or advertised prices for properties currently available for sale.	– Average sales rate of €1,112/sqm (2024: €1,105/sqm) – Reduction in average sales rate of 60% (2024: 70%) to allow for potential negotiation in rates between what is being advertised to what is actually contracted.	The estimated fair value would increase/(decrease) if: – The average sale rate were higher/ (lower); – The reduction in average sales rate were higher/(lower);

The fair value of investment property determined by external, qualified property

valuers on the basis of market approach method amounted to €2.3 million for the Group

in 2025 (2024: €2.3 million).

Valuation technique - Comparative transactions method

The fair value of the Group’s investment properties determined on the basis of the

market comparison method amounted to €1.2 million in 2025 (2024: €0.7 million). The

comparative method is based on an expected sales value per square metre based on an

average/ median of values derived from observable market transactions for comparable

properties.

Valuation technique - Income Capitalisation Method

The valuation for all other investment property with a total carrying amount of €0.6

million (2024: €0.9 million) for the Group and Company, was determined by

capitalising future net income streams based on significant unobservable inputs.  These

inputs include:

	Future rental cash inflows	based on the actual location, type and quality of the properties and supported by the terms of any existing lease, other contracts or external evidence such as current market rents for similar properties;
	Capitalisation rates	based on actual location, size and quality of the properties and taking into account market data at the valuation date.

153

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

19.    Investment property - continued

Valuation technique - Income Capitalisation Method - continued

Information about fair value measurements using significant unobservable inputs (level

3)

Group & Company

				Significant unobservable  Inputs
		Fair value at 31 December 2025	Valuation technique	Rental value	Capitalisation rate
	Description	€		€	%
	Office buildings	0.63m	Capitalisation of future net income streams	0.05m	3.50-5.00

Group & Company

				Significant unobservable  Inputs
	Description	Fair value at 31 December 2024	Valuation technique	Rental value	Capitalisation rate
		€		€	%
	Office buildings	0.94m	Capitalisation of   future net income   streams	0.04m	5.00

For each valuation for which rental value and capitalisation rate have been determined

to be the significant unobservable inputs, the higher the rental value and the lower the

capitalisation rate, the higher the fair value. Conversely, the lower the rental value and

the higher the capitalisation rate, the lower the fair value.

In the absence of future rental cash inflows, fair value is based on active market prices,

adjusted, if necessary for any difference in the nature, location or condition of the

specific asset.

154

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

19.    Investment property - continued

Sensitivity analysis

Sensitivity analysis was carried out to assess the impact of changing the risk-adjusted

discount rate (0.5 percentage point increase/decrease), or the market rental rate growth

(5.0 percentage point increase/decrease) in the case of the discounted cash flow, and

market approach (5.0 percentage point increase/decrease), and the capitalisation rate for

the income capitalisation method. The tables below show the changes in the valuation

arising from such changes:

Group

	2025	2025	2024	2024
	-0.5%	+0.5%	-0.5%	+0.5%
	€ million	€ million	€ million	€ million
Discount rates	7.9	(8.2)	8.4	(8.7)
	2025	2025	2024	2024
	-5%	+5%	-5%	+5%
	€ million	€ million	€ million	€ million
Market rates	(5.3)	5.4	(5.7)	5.5

Company

	2025	2025	2024	2024
	-0.5%	+0.5%	-0.5%	+0.5%
	€ million	€ million	€ million	€ million
Discount rates	1.0	(0.9)	1.0	(1.0)
	2025	2025	2024	2024
	-5%	+5%	-5%	+5%
	€ million	€ million	€ million	€ million
Market rates	(0.6)	0.6	(0.7)	0.5

The impact on profit or loss would be a maximum increase of €7.9 million (2024: €8.4

million) or a maximum decrease of €8.2 million (2024: €8.7 million) for the Group and

a maximum increase of €1.0 million (2024: €1.0 million) or a maximum decrease of

€0.9 million (2024: €1.0 million) for the Company.

155

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

20.Investment in subsidiary undertakings

		Company
		€’000
	Year ended 31 December 2024
	Opening net book amount	77,214
	Closing net book amount	77,214
	Year ended 31 December 2025
	Opening net book amount	77,214
	Disposal	(1,095)
	Closing net book amount	76,119

The subsidiary undertakings at 31 December are shown below:

	Subsidiary undertakings	Registered office	Class of shares held	Percentage of shares held
				2025	2024
	Euro Globe Holdings   Limited (Struck off   effective 06.03.2025)	Middle Sea House Floriana FRN1442 Malta	Ordinary shares	—%	100%
	Euromed Risk Solutions   Limited (Company in   liquidation)	4th Floor Development House St. Anne Str Floriana FRN9010 Malta	Ordinary shares	100%	100%
	Bee Insurance Management   Limited	Middle Sea House Floriana FRN1442 Malta	Ordinary shares	100%	100%
	MAPFRE MSV Life plc	The Mall Triq il-Mall Floriana FRN1470 Malta	Ordinary shares	50%	50%
	Church Wharf Properties   Limited	Middle Sea House Floriana FRN1442 Malta	Ordinary shares	75%	75%

156

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

20.Investment in subsidiary undertakings - continued

The Group’s aggregated assets and liabilities and the results of its subsidiary

undertakings that have non-controlling interest, before elimination entries, are as

follows:

	2025	% Held by non- controlling interests	Assets	Liabilities	Revenues	Profit before tax	Net cash
			€’000	€’000	€’000	€’000	€’000
	MAPFRE MSV Life p.l.c.	50%	2,383,956	2,201,467	209,892	15,669	(32,569)
	Church Wharf            Properties Limited	25%	2,300	406	—	(38)	—

	2024	% Held by non- controlling interests	Assets	Liabilities	Revenues	Profit before tax	Net cash
			€’000	€’000	€’000	€’000	€’000
	MAPFRE MSV Life p.l.c.	50%	2,357,236	2,182,904	205,847	14,983	31,053
	Church Wharf            Properties Limited	25%	2,301	368	—	(43)	—

The amount of dividends that can be distributed in cash by MAPFRE MSV Life p.l.c. is

restricted by the solvency requirements imposed by the MFSA Regulations.

During 2011, the Company acquired control of MAPFRE MSV Life p.l.c. following a

shareholders’ agreement. MAPFRE MSV Life p.l.c. had previously been accounted for

as an associated undertaking. 

As a result of this business combination, Church Wharf Properties Limited, which was

previously classified as an associated undertaking, also became a subsidiary in view of

the fact that the remaining interest in this company is held by MAPFRE MSV Life

p.l.c.

157

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

21.    Investment in associated undertakings

		Group	Company
		€’000	€’000
	At 1 January 2024
	Cost	14,480	294
	Accumulated share of associated undertaking's equity	109	109
	Accumulated fair value movements	9,334	—
	Net book amount	23,923	403
	2024
	Opening net book amount	23,923	403
	Disposals	(17,900)	—
	Share of associated undertaking's movement in equity	(4)	(4)
	Fair value movement	(793)	—
	Closing net book amount	5,226	399
	At 31 December 2024
	Cost	4,480	294
	Accumulated share of associated undertaking's equity	105	105
	Accumulated fair value movements	641	—
	Net book amount	5,226	399

	Year ended 31 December 2025
	Opening net book amount	5,226	399
	Share of associated undertaking's movement in equity	(11)	—
	Disposal	(4,806)	—
	Fair value movement	(21)	(11)
	Closing net book amount	388	388
	At 31 December 2025
	Cost	294	294
	Accumulated share of associated undertaking's equity	94	105
	Accumulated fair value movements	—	(11)
	Net book amount	388	388

158

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

21 .    Investment in associated undertakings - continued

The Group’s aggregated assets and liabilities and the share of the results of its

associated undertaking, which is unlisted is as follows:

	2025	Registered office	Assets	Liabilities	Revenues	Profit	% of interest held
			€’000	€’000	€’000	€’000
	Middlesea   Assist   Limited	4th Floor, Development House, St. Anne Street, Floriana FRN 9010 Malta	958	66	2,936	294	49%

	2024	Registered office	Assets	Liabilities	Revenues	Profit	% of interest held
			€’000	€’000	€’000	€’000
	Middlesea   Assist   Limited	4th Floor, Development House, St. Anne Street, Floriana FRN 9010 Malta	1,507	520	3,208	309	49%

In addition to the associated undertakings above, MAPFRE MSV Life p.l.c. also held

the following investments in associated undertakings:

	Associated undertakings	Registered office	Class of shares held	Percentage of shares held
				MSV		Group
				2025	2024	2025	2024
	Plaza Centres   p.l.c.	The Plaza Commercial Centre
		Bisazza Street Sliema	Ordinary   shares	0.00%	31.42%	0.00%	31.42%

Plaza Centres p.l.c. is listed on the Malta Stock Exchange and its share price as at 31

December 2025 was €0.90 (31 December 2024: €0.60 ).

159

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

22.    Other investments

The investments are summarised by measurement category in the table below.

		Group		Company
		2025	2024	2025	2024
		€’000	€’000	€’000	€’000
	Fair value through profit or loss	2,099,618	2,054,670	3,119	2,813
	Fair value through OCI	22,069	16,273	22,069	16,273
	Amortised Cost	109,020	88,617	—	—
		2,230,707	2,159,560	25,188	19,086

  (a)    Investments at fair value through profit or loss

Analysed by type of investment as follows:

		Group		Company
		2025	2024	2025	2024
		€’000	€’000	€’000	€’000
	Equity securities, and units in unit trusts	888,906	878,325	3,119	2,813
	Debt securities	941,256	955,212	—	—
	Assets held to cover linked liabilities
	- collective investment schemes	267,247	221,133	—	—
	Forward foreign exchange contracts	2,209	—	—	—
	Total investments at fair value   through profit or loss	2,099,618	2,054,670	3,119	2,813

At 31 December 2025, the Group had €30.3 million financial commitments in respect

of uncalled capital (2024:  €31.9 million).

Equity securities and collective investment schemes are considered to be substantially

non-current assets in nature.

160

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

22.    Other investments - continued

(a) Investments at fair value through profit or loss - continued

The movements for the year are summarised as follows:

		Group	Company
		Fair value through profit & loss	Fair value through profit & loss
		€’000	€’000
	Year ended 31 December 2024
	Opening net book amount	1,971,728	2,486
	Additions	1,384,408	61
	Disposals	(1,355,184)	—
	Net fair value gains (excluding net realised gains)	45,299	266
	Movement in accrued interest receivable	1,603	—
	Closing net book amount	2,047,854	2,813
	Year ended 31 December 2025
	Opening net book amount	2,047,854	2,813
	Additions	861,616	56
	Disposals	(841,850)	—
	Net fair value gains (excluding net realised   gains)	31,389	250
	Movement in accrued interest receivable	(29)	—
	Closing net book amount	2,098,980	3,119

Derivative financial liabilities amounting to €0.6 million (2024 €6.8 million), included

in the table above, are classified within liabilities in the statement of financial position.

The maturity of fixed income debt securities is summarised below:

		Group
		2025	2024
		€'000	€'000
	Within one year	42,032	19,239
	Between 1 and 2 years	48,869	66,756
	Between 2 and 5 years	310,217	246,539
	Over 5 years	540,138	622,678
	Closing net book amount	941,256	955,212

161

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

22.    Other investments - continued

(b)Fair value through OCI

		Group and Company
		2025	2024
		€’000	€’000
	Listed debt securities	22,069	16,273

The movement for the year is summarised as follows:

	Listed debt securities
		Group and Company
		2025	2024
		€’000	€’000
	Year ended 31 December
	Opening net book amount	16,273	13,804
	Additions	14,058	6,120
	Disposals	(8,324)	(3,909)
	Net fair value gains	62	258
	Closing net book amount	22,069	16,273

	Group and Company
	2025	2024
	€’000	€’000
Within one year	3,394	6,347
Between 1 and 2 years	596	4,272
Between 2 and 5 years	16,415	4,312
Over 5 years	1,664	1,342
	22,069	16,273

162

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

22.    Other investments - continued

The movement for the year are summarised as follows:

	Rating of fixed income debt securities
		Group and Company
		2025	2024
		€’000	€’000
	AAA	3,612	4,047
	AA	5,251	2,517
	A	9,441	5,032
	BBB	3,765	4,677
	BB or lower	—	—
		22,069	16,273

  (c)Amortised cost

Analysed by type of investment as follows:

		Group
		2025	2024
		€’000	€’000
	Deposits with banks or credit institutions	59,983	39,657
	Debt securities	49,037	48,960
		109,020	88,617

163

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

22.Other investments - continued

(c)Amortised cost - continued

Analysed by type of investment as follows:

		Group
		2025	2024
		€’000	€’000
	The movements for the year are summarised as follows:
	Opening net book amount	88,617	150,781
	Interest income earned	3,940	4,892
	Interest income collected	(4,317)	(5,854)
	Additions	60,000	54,311
	Redemptions and disposals	(39,276)	(115,521)
	ECL	56	8
	Closing net book amount	109,020	88,617

	Maturity of investments at amortised cost:
		Group
		2025	2024
		€’000	€’000
	Within 3 months	—	—
	Within 1 year  but exceeding 3 months	—	—
	Between 1 and 5 years	100,852	80,442
	Over 5 years	8,168	8,175
		109,020	88,617

	The above investments earn interest as follows:	Group
		2025	2024
		€’000	€’000
	At fixed rates	109,020	88,617

164

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

23.  Deferred income tax

		Group		Company
		2025	2024	2025	2024
		€’000	€’000	€’000	€’000
	Balance at 1 January	11,808	11,961	1,317	1,187
	Movements during the year:
	Profit or loss account (Note 12)	873	(157)	135	126
	Other comprehensive income	27	4	27	4
	Balance at 31 December - net	12,708	11,808	1,479	1,317

Deferred income taxes are calculated on all temporary differences using a principal tax

rate of 35% (2024: 35%) with the exception of investment property and freehold and

other property, for which deferred income taxes may be calculated using a principal tax

rate of 8% or 10% of the carrying amount (2024: 8% or 10%), if appropriate.  The

analysis of deferred tax (assets)/liabilities is as follows:

		Group		Company
		2025	2024	2025	2024
		€’000	€’000	€’000	€’000
	Temporary differences on property, plant   and equipment	7,077	6,358	1,520	1,240
	Temporary differences attributable to   investment property, unrealised capital   losses and fair value adjustments on   financial assets	10,550	10,523	1,155	1,191
	Temporary differences attributable to   unabsorbed tax losses and allowances                    carried forward	(4,624)	(4,840)	(933)	(933)
	Temporary differences attributable to other   provisions	(295)	(233)	(263)	(181)
	Balance at 31 December - net	12,708	11,808	1,479	1,317

165

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

23.  Deferred income tax  - continued

Deferred income tax assets and liabilities are offset when there is a legally enforceable

right to set off a current tax asset against a current tax liability.  The following amounts

determined after appropriate offsetting are shown in the statement of financial position:

		Group		Company
		2025	2024	2025	2024
		€’000	€’000	€’000	€’000
	Deferred tax asset	(2,398)	(2,532)	(1,223)	(1,248)
	Deferred tax liability	15,106	14,340	2,702	2,565
		12,708	11,808	1,479	1,317

The deferred income tax assets and liabilities are, principally, recoverable after more

than 12 months.

Deferred income tax assets are recognised for tax loss carry-forwards to the extent that

the realisation of the related tax benefit through future taxable profits is probable. 

The Group and Company have unutilised capital gains of €14.5 million (2024: €18.7

million), which give rise to a deferred tax asset of €5.1 million (2024: €6.5 million) that

has not been recognised in these financial statements. The Group also has unutilised

trading losses of €0.5 million (2024: €0.7 million) giving rise to a deferred tax asset of

€0.2 million (2024: €0.2 million) which has not been recognised in these financial

statements.

The Group’s and Company’s deferred tax asset and liability were established on the

basis of tax rates that were substantively enacted as at the financial year end.

166

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.  Insurance contract assets, insurance contract liabilities, reinsurance contract assets

and reinsurance contract liabilities

24.1  Composition of statement of financial position

An analysis of the amounts presented on the statement of financial position for

insurance contracts assets, insurance contract liabilities, reinsurance contract assets and

reinsurance contract liabilities, is shown in the table below:

	GROUP	Life Risk	Investment Contracts with DPF	Total long-term business	Short-term Under PAA	Total
		€'000	€'000	€'000	€'000	€'000
	As at 31 December 2025
	Insurance contract assets	4,484	—	4,484	—	4,484
	Insurance contract liabilities	57	1,928,847	1,928,904	75,737	2,004,641
	Reinsurance contract assets	—	—	—	11,122	11,122
	Reinsurance contract liabilities	15,225	—	15,225	—	15,225

	GROUP	Life Risk	Investments Contracts with DPF	Total long-term business	Short-term Under PAA	Total
		€’000	€’000	€’000	€’000	€’000
	As at 31 December 2024
	Insurance contract assets	7,080	—	7,080	—	7,080
	Insurance contract liabilities	6,400	1,948,078	1,954,478	72,968	2,027,446
	Reinsurance contract assets	—	—	—	11,815	11,815
	Reinsurance contract liabilities	17,073	—	17,073	—	17,073

Company
	2025	2024
	€’000	€’000
Insurance contract liabilities	75,737	72,968
Reinsurance contract assets	11,122	11,815

Insurance liabilities and reinsurance assets in relation to short-term insurance contracts

are classified as current liabilities, in that, liability for incurred claims represent events

that happened and which would normally be settled within the normal operating cycle.

The timing of payment can be dependent on factors, like court cases, that could defer

such payment to beyond a year from the reporting date. Insurance and investment

contract liabilities in relation to long-term contracts are substantially non-current.

167

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.2  Short-term insurance contracts under PAA

Reconciliation of the liability for remaining coverage and the liability for incurred claims

The following tables present reconciliations from the opening to the closing balances of the

liability for remaining coverage (LRC) and liability for incurred claims (LIC).

	Group and Company	2025
		LRC		LIC
		Excluding loss component	Loss component	Present value of future cash flows	Risk adjustment for non- financial risk	Total
		€'000	€'000	€'000	€'000	€'000
	Insurance contract liabilities at   1 January	35,072	186	36,792	918	72,968
	Insurance revenue	(109,693)	—	—	—	(109,693)
	Insurance service expenses
	Incurred claims and other directly   attributable expenses	—	—	51,650	377	52,027
	Changes that relate to past service -   changes in FCF relating to the LIC	—	—	941	(432)	509
	Losses on onerous contracts and reversals of   those losses	—	(186)	—	—	(186)
	Insurance acquisition cash flows   amortisation	31,125	—	—	—	31,125
	Insurance service expenses	31,125	(186)	52,591	(55)	83,475
	Insurance service result	(78,568)	(186)	52,591	(55)	(26,218)
	Finance expenses from insurance contracts   issued	—	—	355	9	364
	Total amount recognised in   comprehensive income	(78,568)	(186)	52,946	(46)	(25,854)
	Cash flows
	Premiums received	113,449	—	—	—	113,449
	Claims and other directly attributable    expenses paid	—	—	(52,954)	—	(52,954)
	Insurance acquisition cash flows	(31,872)	—	—	—	(31,872)
	Total cash flows	81,577	—	(52,954)	—	28,623
	Insurance contract liabilities at   31 December	38,081	—	36,784	872	75,737
	Insurance contract liabilities at   31 December	38,081		37,656		75,737

168

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.2  Short-term insurance contracts under PAA - continued

Reconciliation of the liability for remaining coverage and the liability for incurred

claims - continued

	Group and Company	2024
		LRC		LIC
		Excluding loss component	Loss component	Present value of future cash flows	Risk adjustment for non- financial risk	Total
		€'000	€'000	€'000	€'000	€'000
	Insurance contract liabilities at   1 January	32,021	—	39,436	1,010	72,467
	Insurance revenue	(99,922)	—	—	—	(99,922)
	Insurance service expenses
	Incurred claims and other directly   attributable expenses	—	—	48,602	325	48,927
	Changes that relate to past  service -   changes in FCF relating to the LIC	—	—	1,260	(438)	822
	Losses on onerous contracts and reversals of   those losses	—	186	—	—	186
	Insurance acquisition cash flows   amortisation	28,562	—	—	—	28,562
	Insurance service expenses	28,562	186	49,862	(113)	78,497
	Insurance service result	(71,360)	186	49,862	(113)	(21,425)
	Finance expenses from insurance contracts   issued	—	—	797	21	818
	Total amount recognised in   comprehensive income	(71,360)	186	50,659	(92)	(20,607)
	Cash flows
	Premiums received	103,808	—	—	—	103,808
	Claims and other directly attributable    expenses paid	—	—	(53,303)	—	(53,303)
	Insurance acquisition cash flows	(29,397)	—	—	—	(29,397)
	Total cash flows	74,411	—	(53,303)	—	21,108
	Insurance contract liabilities at   31 December	35,072	186	36,792	918	72,968
	Insurance contract liabilities at   31 December	35,258		37,710		72,968

169

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.2  Short-term insurance contracts under PAA - continued

Reconciliation of the asset for remaining coverage and the asset for incurred claims

The following tables present reconciliations from the opening to the closing balances of the

asset for remaining coverage (ARC) and asset for incurred claims (AIC).

Group and Company

		2025
		ARC	AIC
		Remaining coverage excluding loss component	Present value of future cash flows	Risk adjustment for non- financial risk	Total
		€’000	€’000	€’000	€’000
	Reinsurance contract assets at 1 January	2,612	8,995	208	11,815
	Net income/(expense) from reinsurance contracts   held
	Reinsurance expenses	(13,242)	—	—	(13,242)
	Incurred claims recovery	—	2,798	32	2,830
	Changes that relate to past service - changes in FCF   relating to the AIC	—	611	(66)	545
	Effect of changes in the risk of reinsurers' non-   performance	—	30	—	30
	Net expense from reinsurance contracts   held	(13,242)	3,439	(34)	(9,837)
	Finance income from reinsurance contracts held	—	91	3	94
	Total amount recognised in  comprehensive   income	(13,242)	3,530	(31)	(9,743)
	Cash flows
	Premiums paid net of ceding commissions and other   directly attributable expenses paid	13,306	—	—	13,306
	Recoveries from reinsurance	—	(4,256)	—	(4,256)
	Total cash flows	13,306	(4,256)	—	9,050
	Reinsurance contract assets at 31 December	2,676	8,269	177	11,122

170

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.2  Short-term insurance contracts under PAA - continued

Reconciliation of the asset for remaining coverage and the asset for incurred claims -

continued

	Group and Company	2024
		ARC
		Remaining coverage excluding loss component	Present value of future cash flows	Risk adjustment for non- financial risk	Total
		€’000	€’000	€’000	€’000
	Reinsurance contract assets at 1 January	2,625	10,467	267	13,359
	Net income/(expense) from reinsurance contracts   held
	Reinsurance expenses	(12,763)	—	—	(12,763)
	Incurred claims recovery	—	3,739	56	3,795
	Changes that relate to past service - changes in FCF   relating to the AIC	—	23	(120)	(97)
	Effect of changes in the risk of reinsurers' non-   performance	—	(30)	—	(30)
	Net expense from reinsurance contracts held	(12,763)	3,732	(64)	(9,095)
	Finance income from reinsurance contracts held	—	176	5	181
	Total amount recognised in  comprehensive income	(12,763)	3,908	(59)	(8,914)
	Cash flows
	Premiums paid net of ceding commissions and other   directly attributable expenses paid	12,750	—	—	12,750
	Recoveries from reinsurance	—	(5,380)	—	(5,380)
	Total cash flows	12,750	(5,380)	—	7,370
	Reinsurance contract assets at 31 December	2,612	8,995	208	11,815

171

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.2  Short-term insurance contracts under PAA - continued

Short-term insurance contracts – liability for incurred claims

The gross claims reported are net of expected recoveries from salvage and subrogation. 

The liability for incurred claims are largely based on claims incurred data. A Chain

Ladder approach using the Development Factor Method has been used projecting

separately each portfolio of contracts. In choosing the development factors, outliers that

would unrealistically favourably or adversely impact the estimation of the ultimate cost

are excluded. Large losses within each portfolio other than for Motor have not been

projected given the small and infrequent number of such claims over time and have

been taken at the case reserve. In the case of Motor, large losses, in the main involving

fatalities or serious bodily injury, are projected separately from attritional claims given

their severity and different development patterns.

The development tables in this note give an indication of the time it takes to settle

certain claims.  This is attributable to certain classes of business taking several years to

develop and is also due to the length of time it takes for the respective cases to be

resolved in court.

The top half of the tables below illustrates how the Company’s estimate of the ultimate

total undiscounted claims cost for each accident year has changed at successive year-

ends on a gross and net basis. The bottom half of the table reconciles the cumulative

claims to the amount appearing in the statement of financial position on a gross and net

basis. The accident-year basis is the most appropriate for the general business written

by the Company.

The Group provides separately information on the gross and net basis the claims

development for the current reporting period and nine years prior to it. The diagonals

for financial years 2021 until 2024 show the undiscounted projected ultimate claims

incurred inclusive of claims related expenses as restated upon implementation of IFRS

17. The directors have considered that this does not detract the user from adequate

information as to how the claims have evolved from the particular accident year to the

current reporting period.

172

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract assets and reinsurance contract liabilities

- continued

24.2  Short-term insurance contracts under PAA - continued

Insurance contracts under the PAA – gross liability for incurred claims

	Group and Company
	Accident year	2016	2017	2018	2019	2020	2021	2022	2023	2024	2025	Total
		€’000	€’000	€’000	€’000	€’000	€’000	€’000	€’000	€’000	€’000	€’000
	Estimate of the ultimate claim cost undiscounted
	-at end of accident year	34,704	38,545	43,006	43,700	32,634	37,770	42,727	44,496	43,317	47,849
	-one year later	35,127	39,334	44,264	47,172	32,240	37,618	41,788	44,452	42,991
	-two years later	33,780	39,377	44,724	47,326	32,727	35,321	43,365	44,323
	-three years later	33,211	39,741	45,831	49,511	32,333	35,384	42,730
	-four years later	33,159	38,328	46,109	48,483	32,465	35,043
	-five years later	33,045	38,099	46,392	48,291	32,459
	-six years later	32,750	37,715	46,843	48,211
	-seven years later	31,792	37,756	46,978
	-eight years later	31,799	37,792
	-nine years later	31,828
	Current estimates of cumulative claims	31,828	37,792	46,978	48,211	32,459	35,043	42,730	44,323	42,991	47,849	410,204
	Cumulative payments to date	(31,559)	(37,481)	(44,078)	(46,494)	(30,920)	(34,079)	(39,501)	(40,450)	(39,308)	(30,316)	(374,186)
	accident years from 2016 to 2025	269	311	2,900	1,717	1,539	964	3,229	3,873	3,683	17,533	36,018
	Claims liabilities - prior accident years											1,979
	Claims liabilities - Group Life											510
	Effect of discounting											(1,723)
	Liability for incurred claims for the contracts originated											36,784

173

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract assets and reinsurance contract liabilities

-  continued

24.2  Short-term insurance contracts under PAA - continued

Insurance contracts net of reinsurance contracts assets under the PAA – net liability for incurred claims

	Group and Company
	Accident year
		2016	2017	2018	2019	2020	2021	2022	2023	2024	2025	Total
		€’000	€’000	€’000	€’000	€’000	€’000	€’000	€’000	€’000	€’000	€’000
	Estimate of the ultimate claim cost undiscounted
	-at end of accident year	30,079	33,106	33,539	33,848	28,126	34,463	39,334	40,287	40,049	45,232
	-one year later	30,320	33,951	33,645	35,714	27,881	34,094	38,818	39,942	39,457
	-two years later	29,171	33,638	33,846	36,367	28,372	32,035	40,309	39,822
	-three years later	28,863	33,325	32,704	37,032	28,358	32,087	39,660
	-four years later	29,038	32,961	32,524	36,587	28,499	31,796
	-five years later	28,994	32,732	33,182	36,591	28,488
	-six years later	28,746	32,680	33,222	36,492
	-seven years later	28,382	32,624	33,111
	-eight years later	28,391	32,602
	-nine years later	28,420
	Current estimates of cumulative claims	28,420	32,602	33,111	36,492	28,488	31,796	39,660	39,822	39,457	45,232	355,080
	Cumulative payments to date	(28,213)	(32,684)	(32,699)	(35,886)	(27,007)	(30,958)	(36,610)	(36,222)	(37,111)	(29,392)	(326,782)
	Liability recognised in statements of financial position	207	(82)	412	606	1,481	838	3,050	3,600	2,346	15,840	28,298
	Liability in respect of prior years											1,110
	Liability in respect of life risk claims											430
	Discounting element											(1,323)
	Total reserve included in the statements of the   financial position											28,515

174

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.2  Short-term insurance contracts under PAA - continued

(a)  Assumptions

Discount rates

The bottom-up approach was adopted by the Group in determining a suitable discount

rate. Under this approach, the discount rate is determined as the risk-free yield. Given

the short-term nature of its insurance contracts liabilities and liquidity of cash flows, the

Group has selected the risk-free rates as published by EIOPA as appropriate for the

nature of its liabilities taking a zero illiquidity premium.

The yield curves used to discount the estimates of future cash flows that do not vary

based on the returns of the underlying items are as follows:

		2025			2024
		No. of years			No. of years
		1	5	10	1	5	10
	Short term insurance contracts issued   and reinsurance contracts held	2.1%	2.5%	2.9%	2.2%	2.1%	2.3%

Risk adjustment for non-financial risk

Non-financial risk adjustment valuation reflects the compensation that the Group needs

to manage uncertainty regarding the amount and timing of future cash outflows, which

arise from non-financial risks from fulfilling insurance contract obligations.

Underwriting risks as well as other non-financial risks like portfolio expenses and

lapses are taken into consideration when determining this.

The non-financial risk adjustment has been estimated using a confidence-interval-based

approach, using Value at Risk (VaR) metrics for the probability distribution of the

current value of future cash flows, in line with Solvency II capital requirements, and

calibrating the target percentile confidence interval to 65 percentile. The Group

estimates an adjustment for non-financial risk separately from all other estimates.

175

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

        24.2 Short-term insurance contracts under PAA - continued

(a)  Assumptions - continued

Estimates of future cash flows to fulfil insurance contracts

LIC of short-term business insurance contracts, measured under the PAA, comprise of

the estimates of future cash flows. The estimates of future cash flows is derived using a

standard actuarial claims projection technique, the Chain Ladder method, other than for

non-motor large losses. The key assumptions underlying this technique is that past

claims development experience can be used to project future claims development.

Claims reserves which exceed a certain quantum (large losses), particularly those

involving fatalities and/or serious bodily injuries, are initially reserved at the case-by-

case reserve estimate. The measurement of claim payments due by the Group involves

the assessment of future settlements and is therefore dependent on assumptions around

determining such reserves based on, among others, legal precedent and current trends in

compensation awards. Specifically for Motor large losses, the Chain Ladder Method is

subsequently used to project the ultimate cost of these claims.

(b)  Sensitivity analysis

The directors have considered the sensitivity of the key variables underlying the liability

for short-term contracts.  The most sensitive assumptions are the development factors

and discount rate changes. Development factors can be impacted by claims inflation,

increase in claims frequency and severity. Sensitivity analysis for insurance risk has

been disclosed in Note 4. Sensitivity analysis for interest rate risk has also been

disclosed in Note 4.

176

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.3  Long-term insurance contracts - Life risk

Reconciliation of the asset or liability for remaining coverage and the liability for

incurred claims

The following tables present reconciliations from the opening to the closing balances of

the LRC (ARC) and LIC excluding any insurance acquisition cash flows assets and

other pre-recognition cash flows.

	Group	2025
		LRC (ARC)	LIC	Total
		€’000	€’000	€’000
	Insurance contracs assets at 1 January	(9,978)	2,898	(7,080)
	Insurance contract liabilities at 1 January	6,329	71	6,400
	Insurance revenue	(11,895)	—	(11,895)
	Insurance service expenses
	Incurred claims and other directly attributable   expenses	12	4,466	4,478
	Changes that relate to past service - changes in the FCF   relating to the LIC	—	(4)	(4)
	Insurance acquisition cash flows amortization	217	—	217
	Insurance service expenses	229	4,462	4,691
	Insurance service result	(11,666)	4,462	(7,204)
	Finance expenses from insurance contracts   issued	1,592	—	1,592
	Total amounts recognised in profit and loss	(10,074)	4,462	(5,612)
	Investment components	(677)	677	—
	Transfer to the other items in the statement of financial   position (Note 25)	(6,023)	—	(6,023)
	Cash flows
	Premium received	16,059	—	16,059
	Claims and other directly attributable expenses	—	(6,045)	(6,045)
	Insurance acquisition cash flows	(2,126)	—	(2,126)
	Total cash flows	13,933	(6,045)	7,888
	Insurance contract assets at 31   December	(6,490)	2,006	(4,484)
	Insurance contract liabilities at 31   December	—	57	57

177

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.3  Long-term insurance contracts - Life risk - continued

Reconciliation of the asset or liability for remaining coverage and the liability for

incurred claims - continued

	Group	2024
		LRC (ARC)	LIC	Total
		€’000	€’000	€’000
	Insurance contract assets at 1 January	(10,686)	1,741	(8,945)
	Insurance contract liabilities  at 1 January	6,441	47	6,488
	Insurance revenue	(13,310)	—	(13,310)
	Insurance service expenses
	Incurred claims and other directly attributable   expenses	—	7,259	7,259
	Insurance acquisition cash flows amortization	91	—	91
	Insurance service expenses	91	7,259	7,350
	Insurance service result	(13,219)	7,259	(5,960)
	Finance income from insurance contracts   issued	(836)	—	(836)
	Total amounts recognised in   profit or loss	(14,055)	7,259	(6,796)
	Investment components	(934)	934	—
	Cash flows
	Premium received	16,076	—	16,076
	Claims and other directly attributable expenses	—	(7,012)	(7,012)
	Insurance acquisition cash flows	(491)	—	(491)
	Total cash flows	15,585	(7,012)	8,573
	Insurance contract assets at   31 December	(9,978)	2,898	(7,080)
	Insurance contract liabilities at   31 December	6,329	71	6,400

178

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.3  Long-term insurance contracts - Life risk - continued

Reconciliation of the measurement components of insurance contract balances

	Group	2025
	Life Risk - Insurance  contract Issued	Present value of future cash flows	Risk adjustment for non- financial risk	CSM	Total
		€’000	€’000	€’000	€’000
	Insurance contract  assets at 1 January	(56,173)	15,542	33,551	(7,080)
	Insurance contract liabilities at 1 January	6,400	—	—	6,400
	Changes that relate to current service
	CSM recognised for the services provided	—	—	(4,315)	(4,315)
	Change in the risk  adjustment for non-   financial risk for risk expired	—	(1,626)	—	(1,626)
	Experience adjustment relating to insurance service   expenses	(1,259)	—	—	(1,259)
		(1,259)	(1,626)	(4,315)	(7,200)
	Changes that relate to future  service
	Changes in estimates that  adjust the CSM	(5,174)	(53)	5,227	—
	Contracts initially recognised  in the period	(6,447)	1,974	4,473	—
		(11,621)	1,921	9,700	—
	Changes that relate to past service	(4)	—	—	(4)
	Insurance service result	(12,884)	295	5,385	(7,204)
	Finance expenses from insurance contracts   issued	991	—	601	1,592
	Total amounts recognised in profit or loss	(11,893)	295	5,986	(5,612)
	Cash flows
	Premium received	16,059	—	—	16,059
	Claims and other directly attributable expenses paid	(6,045)	—	—	(6,045)
	Insurance acquisition cash flows	(2,126)	—	—	(2,126)
	Total cash flows	7,888	—	—	7,888
	Transfer to other items in the Statement of   Financial Position	(6,023)	—	—	(6,023)
	Insurance contract assets at 31 December	(59,858)	15,837	39,537	(4,484)
	Insurance contract  liabilities at 31 December	57	—	—	57

179

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.3  Long-term insurance contracts - Life risk - continued

Reconciliation of the measurement components of insurance contract balances - continued

	Group	2024
	Total	Present value of future cash flows	Risk adjustment for non- financial risk	CSM	Total
		€’000	€’000	€’000	€’000
	Insurance contract assets  at 1 January	(56,044)	14,905	32,194	(8,945)
	Insurance contract  liabilities at 1 January	6,488	—	—	6,488
	Changes that relate to current service
	CSM recognised for the  services provided	—	—	(3,664)	(3,664)
	Change in the risk  adjustment for non-   financial risk for risk expired	—	(1,596)	—	(1,596)
	Experience adjustment relating to insurance service   expenses	(700)	—	—	(700)
		(700)	(1,596)	(3,664)	(5,960)
	Changes that relate to future  service
	Changes in estimates that adjust the CSM	(1,810)	450	1,360	—
	Contracts initially recognised  in the period	(4,940)	1,783	3,157	—
		(6,750)	2,233	4,517	—
	Insurance service result	(7,450)	637	853	(5,960)
	Finance (income)/expense from insurance contracts   issued	(1,340)	—	504	(836)
	Total amounts recognised in profit or loss	(8,790)	637	1,357	(6,796)
	Cash flows
	Premium received	16,076	—	—	16,076
	Claims and other directly  attributable expenses paid	(7,012)	—	—	(7,012)
	Insurance acquisition cash flows	(491)	—	—	(491)
	Total cash flows	8,573	—	—	8,573
	Insurance contract assets at 31 December	(56,173)	15,542	33,551	(7,080)
	Insurance contract liabilities at 31 December	6,400	—	—	6,400

180

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.3  Long-term insurance contracts - Life risk - continued

Impact of contracts recognised in the year

	Group	2025	2024
		Non-onerous contracts originated	Non-onerous contracts originated
		€’000	€’000
	Estimates of present value of future cash outflows
	-  Insurance acquisition cash flows	2,440	520
	-  Claims and other directly attributable expense	7,615	8,793
		10,055	9,313
	Estimates of the present value of future cash inflows	(16,502)	(14,253)
	Risk adjustment for non-financial risk adjustment	1,974	1,783
	CSM	4,473	3,157
	Increase in insurance contract liabilities from   contracts recognised in the period	—	—

181

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.4  Life risk - Reinsurance contracts held

Reconciliation of the remaining coverage and incurred claims

	Group	2025			2024
		Remaining coverage	Incurred Claims	Total	Remaining coverage	Incurred Claims	Total
		€’000	€’000	€’000	€’000	€’000	€’000
	Reinsurance contract   liabilities at 1 January	21,788	(4,715)	17,073	19,171	(3,678)	15,493
	Net expenses from reinsurance   contracts held
	Reinsurance expenses	4,022	—	4,022	4,083	—	4,083
	Other directly   attributable expenses	—	569	569	—	519	519
	Incurred claims   recovery	—	(1,342)	(1,342)	—	(1,858)	(1,858)
	Net expense/(income) from reinsurance contracts held	4,022	(773)	3,249	4,083	(1,339)	2,744
	Finance (income)/   expenses from    reinsurance contracts   held	(2,063)	—	(2,063)	697	—	697
	Total amounts   recognised in   profit or loss	1,959	(773)	1,186	4,780	(1,339)	3,441
	Cash flows
	Premium paid net of   ceding commission and   other directly attributable   expenses paid	(4,091)	(569)	(4,660)	(2,163)	(519)	(2,682)
	Recoveries from   reinsurance	—	1,626	1,626	—	821	821
	Total cash flows	(4,091)	1,057	(3,034)	(2,163)	302	(1,861)
	Reinsurance contract   liabilities as at 31   December	19,656	(4,431)	15,225	21,788	(4,715)	17,073

182

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.4  Life risk - Reinsurance contracts held - continued

Reconciliation of the measurement components of reinsurance contract balances

	Group	2025
		Present value of future cash flows	Risk adjustment for non- financial risk	CSM	Total
		€’000	€’000	€’000	€’000
	Reinsurance contract liabilities at 1 January	36,762	(5,665)	(14,024)	17,073
	Changes that relate to current service
	CSM recognised for the services received	—	—	1,860	1,860
	Change in the risk adjustment for non- financial   risk for risk expired	—	322	—	322
	Experience adjustment relating to incurred   claims and other directly  attributable expenses        recovery and reinsurance  premium	1,067	—	—	1,067
		1,067	322	1,860	3,249
	Changes that relate to future service
	Changes in estimates that adjust the CSM	2,339	71	(2,410)	—
	Contracts initially recognised in the period	1,206	(345)	(861)	—
		3,545	(274)	(3,271)	—
	Finance income from reinsurance   contracts held	(1,842)	—	(221)	(2,063)
	Total amounts recognised in profit or loss	2,770	48	(1,632)	1,186
	Cash flows
	Premium paid net of ceding commission and   other directly attributable expenses paid	(4,660)	—	—	(4,660)
	Recoveries from insurance	1,626	—	—	1,626
	Total cash flows	(3,034)	—	—	(3,034)
	Reinsurance contract liabilities at 31   December	36,498	(5,617)	(15,656)	15,225

183

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.4  Life risk - Reinsurance contracts held - continued

Reconciliation of the measurement components of reinsurance contract balances -

continued

	Group	2024
		Present value of future cash flows	Risk adjustment for non- financial risk	CSM	Total
		€’000	€’000	€’000	€’000
	Reinsurance contract liabilities at   1 January	34,081	(5,626)	(12,962)	15,493
	Changes that relate to current service
	CSM recognised for the  services received	—	—	1,651	1,651
	Change in the risk  adjustment for non-   financial risk for risk expired	—	283	—	283
	Experience adjustment relating to incurred   claims and other directly  attributable expenses   recovery and reinsurance premium	810	—	—	810
		810	283	1,651	2,744
	Changes that relate to future  service
	Changes in estimates that adjust the CSM	2,276	(36)	(2,240)	—
	Contracts initially recognised in the period	587	(286)	(301)	—
		2,863	(322)	(2,541)	—
	Finance expenses/( income) from reinsurance   contracts held	869	—	(172)	697
	Total amounts recognised in profit or loss	4,542	(39)	(1,062)	3,441
	Cash flows
	Premium paid net of ceding commission and   other directly attributable expenses paid	(2,682)	—	—	(2,682)
	Recoveries from insurance	821	—	—	821
	Total cash flows	(1,861)	—	—	(1,861)
	Reinsurance contract liabilities at 31   December	36,762	(5,665)	(14,024)	17,073

184

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.4  Life risk - Reinsurance contracts held - continued

Impact of contracts recognised in the year

	Group	2025	2024
		Contracts originated not in a net gain	Contracts originated in a net gain
		€’000	€’000
	Estimates of the present value of future cash inflows	(3,669)	(3,632)
	Estimates of the present value of future cash outflows	4,875	4,219
	Risk adjustment for non-financial risk	(345)	(286)
	CSM	(861)	(301)
	Increase in reinsurance contract assets from   contracts recognised in the period	—	—

185

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.5  Investment contracts with DPF

Reconciliation of the liability for remaining coverage and the liability for incurred

claims

	Group	2025			2024
		LRC Excluding Loss Component	LIC	Total	LRC Excluding Loss Component	LIC	Total
		€’000	€’000	€’000	€’000	€’000	€’000
	Insurance contract liabilities at 1 January	1,894,037	54,041	1,948,078	1,935,970	48,919	1,984,889
	Insurance revenue	(34,090)	—	(34,090)	(33,460)	—	(33,460)
	Insurance service expenses
	Incurred claims and other   directly attributable   expenses	—	18,689	18,689	—	21,845	21,845
	Insurance acquisition cash   flows amortization	7,268	—	7,268	4,338	—	4,338
	Insurance service expenses	7,268	18,689	25,957	4,338	21,845	26,183
	Insurance service result	(26,822)	18,689	(8,133)	(29,122)	21,845	(7,277)
	Finance expenses from   insurance contracts   issued	80,510	—	80,510	83,210	—	83,210
	Total amounts recognised in   profit or loss	53,688	18,689	72,377	54,088	21,845	75,933
	Investment components	(211,796)	211,796	—	(233,487)	233,487	—
	Cash flows
	Premium received	150,150	—	150,150	142,452	—	142,452
	Claims and other directly   attributable expenses	—	(235,249)	(235,249)	—	(250,210)	(250,210)
	Insurance acquisition cash   flows	(6,902)	—	(6,902)	(4,240)	—	(4,240)
	Decrease/(increase) in policy   loans	393	—	393	(746)	—	(746)
	Total cash flows	143,641	(235,249)	(91,608)	137,466	(250,210)	(112,744)
	Insurance contract liabilities at 31 December	1,879,570	49,277	1,928,847	1,894,037	54,041	1,948,078

186

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.5  Investment contracts with DPF - continued

Reconciliation of the measurement components of contract balances

	Group	2025
		Present value of future cash flows	Risk adjustment for non- financial risk	CSM	Total
		€’000	€’000	€’000	€’000
	Insurance contract liabilities at 1 January	1,866,991	3,479	77,608	1,948,078
	Changes that relate to current service
	CSM recognised for the services provided	—	—	(8,049)	(8,049)
	Change in the risk adjustment for non-financial risk for risk   expired	—	(232)	—	(232)
	Experience adjustment	148	—	—	148
		148	(232)	(8,049)	(8,133)
	Changes that relate to future service
	Changes in estimates that adjust the CSM	(5,201)	(804)	6,005	—
	Contracts initially recognised in the period	(5,647)	189	5,458	—
	Experience adjustments arising from premiums received   in the period that relate to future service	(241)	—	241	—
		(11,089)	(615)	11,704	—
	Insurance service result	(10,941)	(847)	3,655	(8,133)
	Finance expenses from insurance contracts issued	80,510	—	—	80,510
	Total amounts recognised in profit or loss	69,569	(847)	3,655	72,377
	Cash flows
	Premium received	150,150	—	—	150,150
	Claims and other directly attributable expenses paid	(235,249)	—	—	(235,249)
	Insurance acquisition cash flows	(6,902)	—	—	(6,902)
	Increase in policy loans	393	—	—	393
	Total cash flows	(91,608)	—	—	(91,608)
	Insurance contract liabilities at 31 December	1,844,952	2,632	81,263	1,928,847

187

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.5  Investment contracts with DPF - continued

Reconciliation of the measurement components of contract balances - continued

	Group	2024
		Present value of future cash flows	Risk adjustment for non- financial risk	CSM	Total
		€’000	€’000	€’000	€’000
	Insurance contract liabilities at 1 January	1,910,347	2,815	71,727	1,984,889
	Changes that relate to current service
	CSM recognised for the services provided	—	—	(7,128)	(7,128)
	Change in the risk adjustment for non-financial risk for risk   expired	—	(228)	—	(228)
	Experience adjustment relating to insurance service   expenses	79	—	—	79
		79	(228)	(7,128)	(7,277)
	Changes that relate to future service
	Changes in estimates that adjust the CSM	(8,215)	669	7,546	—
	Contracts initially recognised in the period	(3,095)	223	2,872	—
	Experience adjustments arising from premiums received   in the period that relate to future service	(2,591)	—	2,591	—
		(13,901)	892	13,009	—
	Insurance service result	(13,822)	664	5,881	(7,277)
	Finance expenses from insurance contracts issued	83,210	—	—	83,210
	Total amounts recognised in profit or loss	69,388	664	5,881	75,933
	Cash flows
	Premium received	142,452	—	—	142,452
	Claims and other directly attributable expenses paid	(250,210)	—	—	(250,210)
	Insurance acquisition cash flows	(4,240)	—	—	(4,240)
	Increase in policy loans	(746)	—	—	(746)
	Total cash flows	(112,744)	—	—	(112,744)
	Insurance contract liabilities at 31 December	1,866,991	3,479	77,608	1,948,078

188

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.5  Investment contracts with DPF - continued

Impact of contracts recognised in the year

	Group	2025	2024
	Investment contracts with DPF	Non-onerous contracts originated	Non-onerous contracts originated
		€’000	€’000
	Estimates of present value of future cash outflows
	-    Insurance acquisition cash flows	6,421	4,014
	-    Claims and other directly attributable expense	144,181	149,277
		150,602	153,291
	Estimates of the present value of future cash inflows	(156,249)	(156,386)
	Risk adjustment for non-financial risk adjustment	189	223
	CSM	5,458	2,872
	Increase in insurance contract liabilities from contracts recognised in the period	—	—

24.6  Long term contracts - inputs, assumptions and estimation techniques

In applying IFRS 17 measurement requirements, the below inputs, assumptions and

estimation techniques were used.

(a)Estimation techniques

Best estimate of future cash flows

The best estimate liability is the present value of expected future cash flows, discounted

using a  yield curve (i.e. interest rates at different maturities at a given point in time).

The estimates of these future cash flows are based on probability-weighted expected

future cash flows. The Group estimates which cash flows are expected and the

probability that they will occur as at the measurement date. The projections allow for all

expected decrements and policyholder actions, including lapses. Future premiums are

taken into account up to the contract boundary. Allowance for future expenses take into

account both overheads and directly attributable expenses, and future expense inflation.

The cash flow projections is performed on a policy by policy basis.

Investment contracts with DPF liabilities include the cost of financial guarantees and

options. A market consistent stochastic valuation is used to calculate these costs.

Representative model pointing is used in these stochastic runs. For such contracts,

discretionary benefits are allowed for separately in the technical provisions. The

calculations reflect a pre-defined set of realistic management actions and policyholder

behaviour. The best estimate liability does not include the value of shareholder

transfers.

189

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.6  Long term contracts - inputs, assumptions and estimation techniques - continued

(a)Estimation techniques - continued

Best estimate of future cash flows - continued

For unit-linked business, the unit and non-unit components are unbundled for the

purposes of determining the best estimate liability.

Risk adjustment for non-financial risk

The risk adjustment for non-financial risk is the compensation that is required for

bearing the uncertainty about the amount and timing of cash flows that arises from non-

financial risk as the insurance contract is fulfilled. Because the risk adjustment

represents compensation for uncertainty, estimates are made on the degree of

diversification benefits and expected favourable and unfavourable outcomes in a way

that reflects the Group’s degree of risk aversion. The Group estimates an adjustment for

non-financial risk separately from all other estimates. The Group considers separately

the effect of reinsurance in the risk adjustment for non-financial risk of the underlying

insurance contracts. The risk adjustment applied by the Group only includes mortality

risk, lapse risk, and expenses risk and catastrophic risk.

The risk adjustment was calculated at the issuing entity level and then allocated down to

each group of contracts in accordance with their risk profiles. The value at risk (‘VaR’)

method was used to derive the overall risk adjustment for non-financial risk, whereby

the maximum loss that a portfolio can experience within a one year time horizon at a

confidence level of 85 percent is determined. This technique discounts future cash flows

of the best estimate liabilities under different possible scenarios to produce a risk

distribution. The risk adjustment is taken to be equal to the VaR with that confidence

interval less the value of the best estimate of the discounted cash flows.

(b)  Assumptions

All assumptions are best estimate, with no prudential margins. The Group takes into

account all relevant available data, both internal and external, when arriving at

assumptions that best reflect the characteristics of the underlying insurance portfolio.

In calculating estimates of fulfilment cash flows, the Group uses information about past

events, current conditions and forecasts of future conditions. The Group’s estimate of

future cash flows is the mean of a range of scenarios that reflect the full range of

possible outcomes. Each scenario specifies the amount, timing and probability of cash

flows.

Assumptions used to develop estimates about future cash flows are reassessed at each

reporting date and adjusted where required.

190

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.6  Long term contracts - inputs, assumptions and estimation techniques - continued

(b)Assumptions - continued

Investment assets returns

For with-profits contracts, assumptions about future underlying investment returns are

made. Due to the measurement models applied and the nature of the products,

particularly the determination of the discount rates used to discount future estimates of

cash flows that vary with returns on underlying items, assumptions about future

underlying investment returns do not impact contract measurement significantly. There

are limited financial guarantees in these products. The liabilities associated with these

guarantees are measured using a market-consistent stochastic model. The interest rate

guarantee embedded in investment contracts with DPF was measured using stochastic

modelling, because the guarantee does not move symmetrically with different interest

rate scenarios. The guarantee was measured using a full range of scenarios representing

possible future risk-free interest rate environments published by European Insurance

and Occupational Pensions Authority (‘EIOPA’). Stochastic investment returns reflect

the volatility of the underlying assets.

For a sensitivity analysis, refer to Note 4.2(a).

Discount rates

The bottom-up approach was adopted by the Group in determining a suitable discount

rate. This approach was used to derive the discount rate for the cash flows that do not

vary based on the returns on underlying items in the investment contracts with DPF.

Under this approach, the discount rate is determined as the risk-free yield, adjusted for

differences in liquidity characteristics between the financial assets used to derive the

risk-free yield and the relevant liability cash flows (known as an ‘illiquidity premium’).

The risk-free rates used were as published by EIOPA and the Group evaluates the

illiquidity premium on a yearly basis.

Management uses judgement to assess liquidity characteristics of the liability cash

flows. The Group’s insurance contracts do not have a cash surrender value and hence,

its liabilities can be considered as illiquid which allows the Group to reflect the

illiquidity characteristics of these products via the illiquidity premium. The Group

decided to use a reference portfolio as an appropriate proxy for the term liabilities.

191

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.6  Long term contracts - inputs, assumptions and estimation techniques - continued

(b)Assumptions - continued

Discount rates - continued

On the other hand, the Group’s investment contracts with DPF have surrender value and

therefore, liabilities can be considered highly liquid. Thus, these are discounted using

the risk-free rates without applying any illiquidity adjustment. Cash flows varying based

on underlying items are discounted using a discount rate that reflects the volatility of the

underlying assets.

For a sensitivity analysis, refer to Note 4.2(a).

The yield curves used to discount the estimates of future cash flows that do not vary

based on the returns of the underlying items are as follows:

		2025		2024
		No. of years		No. of years
	Product	5	10	5	10
	Life risk (issued and   reinsurance held)	2.7%	3.4%	2.3%	2.4%
	Investment contracts   with DPF	2.5%	2.9%	2.1%	2.3%

Policy acquisition and maintenance expenses

The Group projects estimates of future expenses relating to fulfilment of contracts

within the scope of IFRS 17 using current expense levels adjusted for inflation, non-

recurring expenses and new budgeted expenses that the Group is expected to incur in

the future. Expenses comprise expenses directly attributable to the groups of contracts,

including an allocation of fixed and variable overheads.

The short-term expense inflation assumption is based on forecasts issued by the Central

Bank of Malta, adjusted for the Group’s own experience. The long-term expense

inflation assumption is based on the Central Bank of Malta long-term inflation target.

Expense inflation is considered to be a non-financial risk.

Where estimates of indirect expenses-related cash flows are determined at the portfolio

level or higher, they are allocated to groups of contracts on a systematic basis, such as

number of policies in force. A renewal per policy maintenance expense including

claims is derived for all portfolios.

192

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.6  Long term contracts - inputs, assumptions and estimation techniques - continued

(b)Assumptions - continued

Policy acquisition and maintenance expenses - continued

	2025	2024
	€	€
Life Risk	€48.0	48.5
Investment contracts with DPF	105.2 - 109.0	76.5 - 102.3

Acquisition cash flows are typically allocated to the groups of contracts from which

they arise or to which they relate. This includes an allocation of acquisition cash flows

among existing new business. An acquisition expense per new business policy is

derived for all portfolios.

The Group provides investment-return services for the investment contracts with DPF

to manage assets in policyholder accounts and investment-related services for the

contracts measured under the VFA. An investment expense per asset under management

is derived.

For a sensitivity analysis, refer to Note 4.1.

Mortality rates

Mortality experience is reviewed annually and assumptions are set separately for term

and investment contracts with DPF having regard to past experience, events not in data 

and future expected mortality trends. The Group makes reference to the following

standard mortality table. This UK mortality table is based on male assured lives of

combined smoker status

		2025	2024
	Life Risk	44% TMC00	44% TMC00
	Investment contracts with DPF	48% AMC00	48% AMC00

The Group fits its own experience as a percentage of the TMC00 and AMC00 (2024:

TMC00 and AMC00) mortality table and uses this as a basis for its mortality

assumption.

For a sensitivity analysis, refer to Note 4.1.

193

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

24.Insurance contract assets, insurance contract liabilities, reinsurance contract

assets and reinsurance contract liabilities - continued

24.6  Long term contracts - inputs, assumptions and estimation techniques - continued

(b)Assumptions - continued

Lapse rates

The Group derives assumptions about lapse and surrender rates based on the Group's

own experience. Historical lapse and surrender rates are derived from the Group’s

policy administration data. An analysis is then performed of the Group’s historical rates

in comparison to the assumptions previously used. Statistical methods are used to derive

adjustments to reflect the Group’s own experience and any trends in the data, to arrive

at the probability-weighted expected lapse and surrender rates. Analysis is performed

and assumptions are set by major product lines.

For investment contracts with DPF, the Group incorporates dynamic lapsing. For these

products lapse experience also vary by market conditions and outlook.

The following assumptions about lapse and surrender rates were used. Methods used to

derive these assumptions have not changed in 2025.

	2025	2024
Life Risk	3.0% - 7.0%	3.0% - 7.0%
Investment contracts with DPF	0.5% - 5.5%	0.5% - 6.0%

For a sensitivity analysis, refer to note 4.1.

194

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

25.Investment contract liabilities

The table shows a reconciliation of the opening to closing balance for the investment

contract liabilities.

		Group
		2025	2024
		€’000	€’000
	Opening balance – 1 January	179,685	123,253
	Contributions received	43,350	47,684
	Benefits paid	(5,684)	(4,308)
	Investment return from underlying assets	7,052	13,131
	Transfer from the other items in the Statement of Financial Position   (Note 24)	6,023	—
	Asset management fees charged	(678)	(75)
	Closing balance – 31 December	229,748	179,685

In the above reconciliation, the investment return from the underlying assets represents

changes in the fair value of the investment contract liabilities due to changes in market

conditions. Asset management fees charged in the profit or loss also includes trailer

fees.

The above liabilities are substantially non-current in nature.

26.  Trade and other receivables

		Group		Company
		2025	2024	2025	2024
		€’000	€’000	€’000	€’000
	Receivables from intermediaries	21,548	18,313	21,548	18,313
	Other prepayments and receivables:
	- prepayments and other receivables	5,829	5,269	1,495	905
	- accrued interest and rent	907	1,161	468	342
	- receivables from group undertakings	—	—	715	624
	- receivables from associated     undertaking	15	226	15	226
	- other debtors	5	205	—	—
	Provision for impairment of receivables	(869)	(717)	(869)	(717)
		27,435	24,457	23,372	19,693
	Current portion	27,435	24,457	23,372	19,693

Balances due from subsidiary undertakings, associated undertaking and other

receivables are unsecured and non-interest bearing.

195

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

26.Trade and other receivables - continued

Movements in the provision for impairment of receivables are as follows:

		Group and Company
		2025	2024
		€’000	€’000
	Balance as at 1 January	717	535
	Increase in provision for impairment	152	182
	Balance as at 31 December	869	717

27.Cash and cash equivalents

For the purpose of the statement of cash flows, the year-end cash and cash equivalents

comprise the following:

		Group		Company
		2025	2024	2025	2024
		€’000	€’000	€’000	€’000
	Cash at bank and in hand	46,244	79,399	10,559	11,408
	T-Bills	4,000	2,500	4,000	2,500
		50,244	81,899	14,559	13,908

As at 31 December 2025 an amount of €1.7 million (2024: €6.2 million) within

deposits with banks or credit institutions, was held in a margin account as collateral

against exchange traded futures.

28.Share capital

				Group and Company
				2025	2024
				€’000	€’000
	Authorised
	150 million ordinary shares of €0.21 each			31,500	31,500
	Issued and fully paid
	92 million ordinary shares of €0.21 each			19,320	19,320

196

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

29.  Other reserves

Group

		Freehold land and buildings	FVOCI investments	Total
		€'000	€'000	€'000
	Balance at 1 January 2024	856	(219)	637
	Fair value movements - gross	—	170	170
	Fair value movements - tax	—	(7)	(7)
	Balance at 31 December 2024	856	(56)	800
	Balance at 1 January 2025	856	(56)	800
	Fair value movements - gross	—	10	10
	Fair value movements - tax	—	(4)	(4)
	FVOCI investment reclassified to profit or loss - gross	—	59	59
	FVOCI investment reclassified to profit or loss - tax	—	(8)	(8)
	Revaluation gain on Property land and buildings - gross	457	—	457
	Revaluation gain on Property land and buildings - tax	(13)	—	(13)
	Balance at 31 December 2025	1,300	1	1,301

The above reserves are not distributable reserves .

       

197

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

29.  Other reserves - continued

Company

		Investment in subsidiary undertakings	Investment in associated undertakings	Freehold land and buildings	FVOCI investments	Total
		€’000	€’000	€’000	€’000	€’000
	Balance at 1 January 2024	34,663	109	—	(219)	34,553
	Fair value movements -   gross	—	—	—	170	170
	Fair value movements - tax	—	—	—	(7)	(7)
	Other	—	(4)	—	—	(4)
	Balance at 31 December 2024	34,663	105	—	(56)	34,712
	Balance at 1 January 2025	34,663	105	—	(56)	34,712
	Fair value movements -   gross	—	—	—	10	10
	Fair value movements - tax	—	—	—	(4)	(4)
	FVOCI investment   reclassified to profit or   loss - gross	—	—	—	59	59
	FVOCI investment   reclassified to profit   or loss - tax	—	—	—	(8)	(8)
	Revaluation gain on   freehold land and   buildings - gross	—	—	196	—	196
	Revaluation gain on   freehold land and   buildings - tax	—	—	(13)	—	(13)
	Others	—	(11)		—	(11)
	Balance at 31 December   2025	34,663	94	183	1	34,941

The above reserves are not distributable reserves.

198

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

30.Other payables

		Group		Company
		2025	2024	2025	2024
		€’000	€’000	€’000	€’000
	Creditors arising out of insurance operations	173	211	173	211
	Amount owed to associated undertakings	203	236	203	236
	Amount owed to group undertakings	—	—	—	1,177
	Social security and other tax payables	5,135	4,364	1,937	1,761
	Accruals and other payables	12,786	12,020	6,031	5,609
	Deferred income	1,601	1,352	157	140
	Other creditors	2,371	1,716	—	—
		22,269	19,899	8,501	9,134

	Current	22,014	19,644	8,501	9,134
	Non-current	255	255	—	—
		22,269	19,899	8,501	9,134

Balances due to subsidiary undertakings and associated undertaking are unsecured and

non-interest bearing.

Deferred income for the Group includes front-end fees received from holders of

investment contracts without DPF as a prepayment for asset management and related

services and rental income received in advance. These amounts are non-refundable and

are released to income as the services are rendered.

199

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

31.Cash generated from operations

Reconciliation of profit before tax to cash (used in)/ generated from operations:

		Group		Company
		2025	2024	2025	2024
		€’000	€’000	€’000	€’000
	Profit before tax	29,618	24,804	16,872	10,531
	Adjustments for:
	Depreciation (Note 18)	1,029	1,125	636	626
	Increase in provision for impairment of   receivables (Note 26)	152	182	152	182
	Settlement of provision for liabilities and   charges	(70)	(69)	(70)	(69)
	Amortisation (Note 16)	5,490	5,080	2,048	2,226
	Depreciation of right-of-use assets	413	411	395	370
	Lease payments against lease liabilities	(488)	(463)	(463)	(434)
	Investment return adjustments	(84,945)	(106,057)	(4,063)	(1,826)
	Loss on sale of property, plant and   equipment	4	92	—	93
	Property revaluation	—	(168)	—	—
	Movements in:
	Trade and other receivables	(2,618)	1,151	(3,710)	1,385
	Insurance and reinsurance contracts	(21,363)	(31,407)	3,463	2,046
	Investment contract liabilities	50,063	56,432	—	—
	Other payables	1,994	1,098	(642)	(181)
	Cash (used in)/generated from operations	(20,721)	(47,789)	14,618	14,949

200

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

32.Commitments

Capital commitments

Commitments for capital expenditure not provided for in these financial statements are

as follows:

		Group		Company
		2025	2024	2025	2024
		€’000	€’000	€’000	€’000
	Authorised and not contracted for
	-  property, plant and equipment	758	1,222	279	638
	-  intangible assets	500	2,657	280	714
	-  investment property	1,782	320	226	170
		3,040	4,199	785	1,522

	Authorised and contracted for
	-  property, plant and equipment	626	359	507	269
	-  intangible assets	3,497	2,864	2,096	2,053
	-  investment property	1,778	2,256	—	—
	-  other investments	30,252	31,935	—	—
		36,153	37,414	2,603	2,322

Operating lease commitments – where a Group company is a lessor

The Group and the Company lease out certain premises under operating leases. The

future minimum lease payments receivable under non-cancellable operating leases are

disclosed in Note 17.

Rental income from operating leases recognised in profit or loss during the year is

disclosed in Note 8.

33.Contingencies

The Group and Company have given guarantees to third parties amounting to €0.1

million (2024: €0.1) not arising under contracts of insurance.

201

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

34.Related party transactions

In the normal course of business, the Group enters into various transactions with related

parties.  Related parties are defined as those that have an ability to control or exercise

significant influence over the other party in making financial and operational decisions. 

These include directors, key management personnel and shareholders, and their close

family members, who hold a substantial amount of the votes able to cast at general

meetings. Parent undertaking refers to MAPFRE S.A. and/or companies owned by

MAPFRE S.A.. Bank of Valletta p.l.c. is a related undertaking in light of its

shareholding in the Company and in MAPFRE MSV Life p.l.c.. Subsidiary

undertakings and associated undertakings refer to the companies listed in Notes 20 and

21 respectively.

Relevant particulars of related party transactions are as follows:

Group

		2025	2024
		€’000	€’000
	Sales of insurance contracts and other services
	Transactions with a parent undertaking:
	Commission received	5,683	5,266
	Claims recoverable	4,491	5,705
	Transactions with related undertaking:
	Trailer fees receivable	1	1
	Sale of insurance contracts	2,560	246
	Dividends received and interest income	2,324	1,611
	Rental income on investment property	261	255
	Transactions with associated undertaking:
	Sale of insurance contracts	9	31
	Dividends received	157	170
	Rental income on investment property	48	44
	Reimbursement of expenses for back office support services	45	23

202

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

34.Related party transactions  - continued

Group - continued

		2025	2024
		€’000	€’000
	Purchase of products and services
	Transactions with a parent undertaking:
	Reinsurance premium ceded	20,619	19,522
	Staff development training & Fringe Benefits	86	2
	Expat staff benefits and services	24	97
	Computer maintenance, Group IT shared services	2,146	1,440
	Capitalisation of software development	42	1
	Other back office support services	728	720
	Investment management services	34	27
	Commission payable	16	96
	Transactions with other related undertaking:
	Acquisition costs payable	3,867	3,449
	Bank charges	213	223
	Investment management services	36	45
	Claims paid	611	556
	Transactions with associates undertaking:
	Road side assistance and other back office support services	2,877	2,819
	Claims paid	4	8

203

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

34.Related party transactions  - continued

        Company

		2025	2024
		€’000	€’000
	Sales of insurance contracts and other services
	Transactions with a parent undertaking:
	Commission received	5,667	5,266
	Claims recoverable	3,640	4,550
	Transactions with related undertaking:
	Sale of insurance contracts	2,560	246
	Dividends received and interest income	214	91
	Trailer fees receivable	1	1
	Transactions with subsidiary undertaking:
	Sale of insurance contracts	312	352
	Dividends received	3,259	1,154
	Rental income on investment property	29	29
	Rental income from sub-letting of shared premises	45	44
	Reimbursement of expenses for back office support services	1,321	1,226
	Transactions with associated undertaking:
	Sale of insurance contracts	9	31
	Dividends received	157	170
	Rental income on investment property	48	44
	Reimbursement of expenses for back office support services	45	23

204

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

34.Related party transactions - continued

Company - continued

		2025	2024
		€’000	€’000
	Purchase of products and services
	Transactions with a parent undertaking:
	Reinsurance  premium ceded	18,652	17,217
	Staff development training & fringe benefits	75	2
	Expat staff benefits and services	24	97
	Computer maintenance, Group IT shared services	986	605
	Capitalisation of software development	42	1
	Other back office support services	535	519
	Investment management services	34	27
	Transactions with other related parties:
	Bank charges	129	126
	Acquisition cost payable	261	—
	Claims paid	611	556
	Transactions with subsidiaries
	Reimbursement of expenses for back office support services	2,503	2,348
	Claims paid	1	4
	Employer's contribution to defined contribution work pension scheme	124	104
	Transactions with associates
	Road side assistance and other back office support services	2,877	2,819
	Claims paid	4	8

Key management personnel during 2025 and 2024 comprised the President & Chief

Executive Officer, Chief Executive Officers, General Manager, Chief Financial Officer,

Chief Officers and Chief Underwriters. Total remuneration paid by the Group to key

management personnel amounted to €3.9 million (Company: €1.8 million). 

Corresponding figures for 2024 were €3.9 million paid by the Group and €2.0 million

paid by the Company.

205

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

34.Related party transactions - continued

Year-end balances arising from the above transactions:

		Group		Company
		2025	2024	2025	2024
		€’000	€’000	€’000	€’000
	Financial assets at amortised cost
	-Related undertaking	180	144	180	144
	-Parent undertaking	178	159	178	159
	Financial liabilities at amortised cost
	-Parent undertaking	1,492	693	1,194	495
	-Related undertaking	265	353	—	—
	Amounts owed to
	-Associated undertaking	188	236	188	236
	-Subsidiary undertaking	—	—	—	1,014
	Amounts owed by
	-Associated undertaking	(26)	226	—	226
	-Subsidiary undertaking	—	—	717	447
	-Parent undertaking	—	—	—	—
	Accruals - Parent undertaking	818	325	300	216
	Reinsurance contract assets
	-Parent undertaking	16,579	16,858	16,012	16,057
	Assets for incurred claims
	-Related undertaking	275	188	275	188
	-Subsidiary undertaking	—	—	5	5
	-Associated undertaking	—	3	—	3
	Investment in related undertakings	20,626	17,064	1,171	969
	Cash and cash equivalents with related   undertakings	32,853	55,879	7,283	8,795

All balances above have arisen in the course of the Group’s and Company’s normal

operations. Balances due from/to these undertakings are unsecured and non-interest

bearing.

206

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2025

35.    Statutory information

        MAPFRE Middlesea p.l.c. is a public limited company and is incorporated in Malta. 

The Group is 55.83% owned by MAPFRE Internacional S.A. (the “immediate parent”),

a company registered in Spain, the registered office of which is situated at Carretera de

Pozuelo 52, Majadahonda 28222, Madrid, Spain.

The Group’s ultimate parent is Fundación MAPFRE, the registered office of which is

situated at Paseo de Recoletos 23, 28004, Madrid, Spain.

The Group’s results are consolidated at MAPFRE S.A. level of which Fundación

MAPFRE is the parent and MAPFRE Internacional S.A. is the subsidiary. MAPFRE

S.A. is a company the registered office of which is situated at Carretera de Pozuelo 52,

Majadahonda 28222, Madrid, Spain.

KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of

organisation of independent member firms affiliated with KPMGpartnership of Certified Publicthe firm is available at Portico

International Limited, a private English company limited guarantee.Accountants in terms of theBuilding, Marina Street, Pietà,

Accountancy Profession ActPTA9044, Malta.

KPMG

92, Marina Street

Pietà, PTA 9044

Malta

Telephone(+356) 2563 1000

Fax (+356) 2566 1000

Websitewww.kpmg.com.mt

Independent Auditors’ Report

To the Shareholders of MAPFRE Middlesea p.l.c.

1  Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of MAPFRE Middlesea p.l.c. (the “Company”) and of the

Group of which the Company is the parent, which comprise the statements of financial position as at

31 December 2025, the statements of profit or loss and other comprehensive income, changes in

equity and cash flows for the year then ended, and notes, comprising material accounting policies and

other explanatory information.

In our opinion, the accompanying financial statements:

(a) give a true and fair view of the financial position of the Company and of the Group as at 31

December 2025, and of their financial performance and their cash flows for the year then

ended in accordance with International Financial Reporting Standards (“IFRS”) as adopted by

the EU; and

a. have been properly prepared in accordance with the provisions of the Companies Act, 1995

(Chapter 386, Laws of Malta) (the “Act”) and the Insurance Business Act, 1998 (Chapter 403,

Laws of Malta) (the “Insurance Business Act”) and, additionally, specifically in relation to those

of the Group, with the requirements of Article 4 of Regulation (EC) No 1606/2002 on the

application of international accounting standards (the “Regulation”).

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our

responsibilities under those standards are further described in the Auditors’ responsibilities for the

audit of the financial statements section of our report. We are independent of the Company and the

Group in accordance with the International Ethics Standards Board for Accountants’ International

Code of Ethics for Professional Accountants (including International Independence Standards)

(“IESBA Code”), as applicable to audits of the financial statements of public interest entities, together

with the ethical requirements that are relevant to our audit of the financial statements in accordance

with the Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued in terms of the

Accountancy Profession Act (Chapter 281, Laws of Malta) (“APA”), and we have fulfilled our other

ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that

the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of

organisation of independent member firms affiliated with KPMGpartnership of Certified Publicthe firm is available at Portico

International Limited, a private English company limited guarantee.Accountants in terms of theBuilding, Marina Street, Pietà,

Accountancy Profession ActPTA9044, Malta.

KPMG

92, Marina Street

Pietà, PTA 9044

Malta

Telephone                  (+356) 2563 1000

Fax                              (+356) 2566 1000

Website                      www.kpmg.com.mt

Independent Auditors’ Report (continued)

To the Shareholders of MAPFRE Middlesea p.l.c

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in

our audit of the financial statements of the current period. These matters were addressed in the

context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we

do not provide a separate opinion on these matters.

Estimates of the liability for incurred claims (“LIC”) with respect to short-term contracts

Accounting policy note 2.10 and Notes 3 and 24 to the financial statements for further disclosures

LIC for short-term contracts (€37,656 thousand) within ‘Insurance Contract Liabilities’

The liability for incurred claims is measured as the total of the expected fulfilment cash flows relating

to insurance events that occurred by the financial reporting date, which comprise estimates of future

cash flows, adjusted to reflect the time value of money and a risk adjustment for non-financial risks.

We have considered the estimate of future cash flows as a key audit matter in view of the significant

assumptions that drive the estimate, being the subjectivity surrounding: the determination of the

development factors for the estimates of future cash flows derived using actuarial claims projection;

and the claims handlers’ judgement for specific claims reserves which exceed a certain quantum.

Due to the degree of such inherent estimation uncertainty underlying the estimate of future cash

flows, the amounts recognized in the statement of financial position may be different to those

eventually settled. Those differences may be material.

Our response

Our procedures include:

• With respect to the actuarial claims projected, we used our own actuarial specialist to develop

an independent expectation using actuarial standard techniques, as well as industry

knowledge and experience, and;

• In relation to the specific claims reserves which exceed a certain quantum, we evaluated the

judgements made by the claims handlers based on the information available to the Company

at the financial reporting date.

Key observation

We have no key observations to report, specific to this matter.

KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of

organisation of independent member firms affiliated with KPMGpartnership of Certified Publicthe firm is available at Portico

International Limited, a private English company limited guarantee.Accountants in terms of theBuilding, Marina Street, Pietà,

Accountancy Profession ActPTA9044, Malta.

KPMG

92, Marina Street

Pietà, PTA 9044

Malta

Telephone(+356) 2563 1000

Fax (+356) 2566 1000

Websitewww.kpmg.com.mt

Independent Auditors’ Report (continued)

To the Shareholders of MAPFRE Middlesea p.l.c

Measurement of assets and liabilities for remaining coverage (“ARC” and “LRC”) for

insurance contracts and reinsurance contracts held in relation to long-term contracts carried

out by the main subsidiary of the Group, MAPFRE MSV Life p.l.c. (MMSV)

Accounting policy 2.10 and Notes 3 and 24 to the financial statements for further disclosures

ARC and LRC for long-term contracts within the ‘Insurance contract assets’ (€4,484 thousand),

‘Insurance contract liabilities' (€1,928,904 thousand) and ‘Reinsurer’s contract liabilities’ (€15,225

thousand)

MMSV enters into insurance contracts which comprise term and unit-linked contracts with significant

insurance risk and investment contracts with discretionary participation features (“DPF”). MMSV also

holds reinsurance contracts to cover its term business.

MMSV applies the general measurement model on its insurance contracts and reinsurance contracts

held, and the variable fee approach on investment contracts with DPF.

ARC and LRC are measured as the total of (i) the expected fulfillment cash flows (“FCF”), which

comprise estimates of future cash flows within the contract boundary, adjusted to reflect the time

value of money and the associated financial risks, and a risk adjustment for non-financial risks; and

(ii) the contractual service margin (“CSM”), which represents the unearned profit that MMSV will

recognize as it provides insurance contract services in the future. The measurement of ARC and LRC

involves use of current and historic data, actuarial methods and models, and significant assumptions

for the estimation of future cash flows.

We have considered the measurement of ARC and LRC as a key audit matter in view of the nature

and subjectivity of the estimate, and its overall inherent estimation uncertainty. The subjectivity

involved relates mainly to the judgement involved in the selection of actuarial assumptions. Due to the

degree of such inherent estimation uncertainty, the ultimate total settlement value may be different

from the amounts provided, and the amount of CSM may be different from the amounts recognized as

profit in the future. Those differences may be material.

KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of

organisation of independent member firms affiliated with KPMGpartnership of Certified Publicthe firm is available at Portico

International Limited, a private English company limited guarantee.Accountants in terms of theBuilding, Marina Street, Pietà,

Accountancy Profession ActPTA9044, Malta.

KPMG

92, Marina Street

Pietà, PTA 9044

Malta

Telephone(+356) 2563 1000

Fax (+356) 2566 1000

Websitewww.kpmg.com.mt

Independent Auditors’ Report (continued)

To the Shareholders of MAPFRE Middlesea p.l.c

Measurement of assets and liabilities for remaining coverage (“ARC” and “LRC”) for

insurance contracts and reinsurance contracts held in relation to long-term contracts carried

out by the main subsidiary of the Group, MAPFRE MSV Life p.l.c. (MMSV) (continued)

Our response

As part of our procedures, we evaluated the ARC and LRC by performing audit procedures which

included:

• the involvement of our actuarial specialist to assist us in:

• assessing and challenging the significant assumptions selected by applying our

experience, industry knowledge, and reference to the related accounting standards; and

• evaluating MMSV’s estimate of ARC and LRC by assessing the overall liability

movements based on the assumptions and data applied;

• testing of the underlying data elements by reference to MMSV’s actual cash flows and policy

data; and

• considering the adequacy of the related disclosures to the financial statements.

Key observation

We have no key observations to report, specific to this matter.

Other information

The directors are responsible for the other information which comprises the:

• ‘Chairman’s Statement’;

• ‘President & Chief Executive Officer’s Statement’;

• ‘Directors’ Report’;

• ‘Corporate Governance Statement’; and

• ‘Remuneration Statement and Report of the Remuneration Committee to the Shareholders’,

but does not include the financial statements and our auditors’ report thereon.

Our opinion on the financial statements does not cover the other information and, other than in the

case of the directors’ report, and the corporate governance statement of compliance and the

remuneration report (included in the Annual report in the ‘Corporate Governance Statement’ and

‘Remuneration Statement and Report of the Remuneration Committee to the Shareholders’,

respectively), on which we report separately below in our ‘Report on Other Legal and Regulatory

Requirements’, we do not express any form of assurance conclusion thereon.

KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of

organisation of independent member firms affiliated with KPMGpartnership of Certified Publicthe firm is available at Portico

International Limited, a private English company limited guarantee.Accountants in terms of theBuilding, Marina Street, Pietà,

Accountancy Profession ActPTA9044, Malta.

KPMG

92, Marina Street

Pietà, PTA 9044

Malta

Telephone(+356) 2563 1000

Fax (+356) 2566 1000

Independent Auditors’ Report (continued)

To the Shareholders of MAPFRE Middlesea p.l.c

Other information (continued)

In connection with our audit of the financial statements, our responsibility is to read the other

information, and, in doing so, consider whether the other information is materially inconsistent with the

financial statements or our knowledge obtained in the audit, or otherwise appears to be materially

misstated. If, based on the work we have performed, we conclude that there is a material

misstatement of this other information, we are required to report that fact. We have nothing to report

in this regard.

Responsibilities of the directors for the financial statements

The directors are responsible for the preparation of financial statements that (a) give a true and fair

view in accordance with IFRS as adopted by the EU, and (b) are properly prepared in accordance

with the provisions of the Act and the Insurance Business Act, and, additionally, specifically in relation

to those of the Group, with the requirements of Article 4 of the Regulation.  The directors are also

responsible for such internal control as they determine is necessary to enable the preparation of

financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Company’s and

the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going

concern and using the going concern basis of accounting unless the directors either intend to liquidate

the Company and/or the Group or to cease operations, or have no realistic alternative but to do so.

The directors are also responsible for overseeing the financial reporting process.

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole

are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report

that includes our opinion.  ‘Reasonable assurance’ is a high level of assurance, but is not a guarantee

that an audit conducted in accordance with ISAs will always detect a material misstatement when it

exists.  Misstatements can arise from fraud or error and are considered material if, individually or in

the aggregate, they could reasonably be expected to influence the economic decisions of users taken

on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain

professional scepticism throughout the audit.

KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of

organisation of independent member firms affiliated with KPMGpartnership of Certified Publicthe firm is available at Portico

International Limited, a private English company limited guarantee.Accountants in terms of theBuilding, Marina Street, Pietà,

Accountancy Profession ActPTA9044, Malta.

KPMG

92, Marina Street

Pietà, PTA 9044

Malta

Telephone(+356) 2563 1000

Fax (+356) 2566 1000

Websitewww.kpmg.com.mt

Independent Auditors’ Report (continued)

To the Shareholders of MAPFRE Middlesea p.l.c

Auditors’ responsibilities for the audit of the financial statements (continued)

We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to

fraud or error, design and perform audit procedures responsive to those risks, and obtain audit

evidence that is sufficient and appropriate to provide a basis for our opinion.  The risk of not

detecting a material misstatement resulting from fraud is higher than for one resulting from error,

as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override

of internal control.

• Consider the extent of compliance with those laws and regulations that directly affect the financial

statements, as part of our procedures on the related financial statement items.  For the remaining

laws and regulations, we make enquiries of directors and other management, and inspect

correspondence with the regulatory authority, as well as legal correspondence.  As with fraud,

there remains a higher risk of non-detection of other irregularities (whether or not these relate to

an area of law directly related to the financial statements), as these may likewise involve

collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.

• Obtain an understanding of internal control relevant to the audit in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the Company’s and the Group’s internal control. 

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting

and, based on the audit evidence obtained, whether a material uncertainty exists related to

events or conditions that may cast significant doubt on the Company’s and the Group’s ability to

continue as a going concern.  If we conclude that a material uncertainty exists, we are required to

draw attention in our auditors’ report to the related disclosures in the financial statements or, if

such disclosures are inadequate, to modify our opinion.  Our conclusions are based on the audit

evidence obtained up to the date of our auditors’ report.  However, future events or conditions

may cause the Company and/or the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the

disclosures, and whether the financial statements represent the underlying transactions and

events in a manner that achieves fair presentation.

KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of

organisation of independent member firms affiliated with KPMGpartnership of Certified Publicthe firm is available at Portico

International Limited, a private English company limited guarantee.Accountants in terms of theBuilding, Marina Street, Pietà,

Accountancy Profession ActPTA9044, Malta.

KPMG

92 Marina Street

Pietà, PTA 9044

Malta

Telephone(+356) 2563 1000

Fax (+356) 2566 1000

Websitewww.kpmg.com.mt

Independent Auditors’ Report (continued)

To the Shareholders of MAPFRE Middlesea p.l.c

Auditors’ responsibilities for the audit of the financial statements (continued)

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or

business activities within the Group to express an opinion on the consolidated financial

statements. We are responsible for the direction, supervision and performance of the Group audit.

We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned

scope and timing of the audit and significant audit findings, including any significant deficiencies in

internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant

ethical requirements regarding independence, and communicate with them all relationships and other

matters that may reasonably be thought to bear on our independence, and where applicable, actions

taken to eliminate threats or safeguards applied.

From the matters communicated with those charged with governance, we determine those matters

that were of most significance in the audit of the financial statements of the current period and are

therefore the key audit matters. We describe these matters in our auditors’ report unless law or

regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we

determine that a matter should not be communicated in our report because the adverse

consequences of doing so would reasonably be expected to outweigh the public interest benefits of

such communication.

KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of

organisation of independent member firms affiliated with KPMGpartnership of Certified Publicthe firm is available at Portico

International Limited, a private English company limited guarantee.Accountants in terms of theBuilding, Marina Street, Pietà,

Accountancy Profession ActPTA9044, Malta.

KPMG

92, Marina Street

Pietà, PTA 9044

Malta

Telephone(+356) 2563 1000

Fax (+356) 2566 1000

Websitewww.kpmg.com.mt

Independent Auditors’ Report (continued)

To the Shareholders of MAPFRE Middlesea p.l.c

2    Report on Other Legal and Regulatory Requirements

Opinion on the Directors’ Report

The directors are responsible for preparing a directors’ report in accordance with the provisions of

article 177 of the Act and Rule 5.64 of the Capital Markets Rules issued by the Malta Financial

Services Authority (the “Capital Market Rules”), and is to include a statement that the Company is a

going concern with supporting assumptions or qualifications as necessary, as required by Rule 5.62 of

the Capital Markets Rules.

We are required to consider whether the information given in the directors’ report for the accounting

period for which the financial statements are prepared is consistent with those financial statements;

and, if we are of the opinion that it is not, we shall state that fact in our report.  We have nothing to

report in this regard.

Pursuant to article 179(3) of the Act, we are also required to:

• express an opinion on whether the directors’ report has been prepared in accordance with the

applicable legal requirements; and

• state whether, in the light of the knowledge and understanding of the entity and its

environment obtained in the course of our audit of the financial statements, we have identified

material misstatements in the directors’ report, giving an indication of the nature of any such

misstatements.

Pursuant to Rule 5.62 of the Capital Markets Rules, we are required to review the directors’ statement

in relation to going concern.

In such regards:

• in our opinion, the directors’ report has been prepared in accordance with the applicable legal

requirements;

• we have not identified material misstatements in the directors’ report; and

• we have nothing to report in relation to the statement on going concern.

KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of

organisation of independent member firms affiliated with KPMGpartnership of Certified Publicthe firm is available at Portico

International Limited, a private English company limited guarantee.Accountants in terms of theBuilding, Marina Street, Pietà,

Accountancy Profession ActPTA9044, Malta.

KPMG

92,Marina Street

Pietà, PTA 9044

Malta

Telephone(+356) 2563 1000

Fax (+356) 2566 1000

Websitewww.kpmg.com.mt

Independent Auditors’ Report (continued)

To the Shareholders of MAPFRE Middlesea p.l.c

2    Report on Other Legal and Regulatory Requirements

Report on Corporate Governance Statement of Compliance

Pursuant to Rule 5.94 of the Capital Market Rules, the directors are required to prepare and include in

the Company’s Annual Report a Corporate Governance Statement of Compliance explaining the

extent to which they have adopted the Code of Principles of Good Corporate Governance set out in

Appendix 5.1 to Chapter 5 of the Capital Markets Rules, and the effective measures that they have

taken to ensure compliance with those principles. The Corporate Governance Statement of

Compliance is to contain at least the information set out in Rule 5.97 of the Capital Markets Rules.

Our responsibility is laid down by Rule 5.98 of the Capital Markets Rules, which requires us to include

a report to shareholders on the Corporate Governance Statement of Compliance (included in the

Annual report in the ‘Corporate Governance Statement’) in the Company’s Annual Report by

expressing an opinion as to whether, in light of the knowledge and understanding of the Company and

its environment obtained in the course of the audit, we have identified any material misstatements

with respect to the information referred to in Capital Markets Rules 5.97.4 (dealing with the

Company’s internal control and risk management systems in relation to the financial reporting

process) and 5.97.5 (where a takeover bid applies). Where material misstatements are identified in

relation to those requirements, we shall, in addition to our conclusion, provide an indication of the

nature of such misstatements. We are also required to assess whether the Corporate Governance

Statement of Compliance includes the other information required by Capital Markets Rule 5.97,

insofar as it is applicable to the Company.

We are not required to, and we do not, consider whether the directors’ statements on internal control

and risk management systems cover all the risks and controls in relation to the financial reporting

process or form an opinion on the effectiveness of the Company’s corporate governance procedures

or its risk and control procedures, nor on the ability of the Company to continue in operational

existence.

In our opinion, in light of our knowledge and understanding of the Company and its environment

obtained in the course of the audit, we have not identified material misstatements with respect to the

information requirements referred to in Capital Markets Rules 5.97.4 and 5.97.5, and the Corporate

Governance Statement of Compliance includes the other information required by Capital Markets

Rule 5.97.

KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of

organisation of independent member firms affiliated with KPMGpartnership of Certified Publicthe firm is available at Portico

International Limited, a private English company limited guarantee.Accountants in terms of theBuilding, Marina Street, Pietà,

Accountancy Profession ActPTA9044, Malta.

KPMG

92, Marina Street

Pietà, PTA 9044

Malta

Telephone(+356) 2563 1000

Fax (+356) 2566 1000

Websitewww.kpmg.com.mt

Independent Auditors’ Report (continued)

To the Shareholders of MAPFRE Middlesea p.l.c

2    Report on Other Legal and Regulatory Requirements (continued)

Report on Remuneration Report

Pursuant to Rule 12.26K of the Capital Markets Rules, the directors are required to prepare a

Remuneration Report (included in the Annual report in the ‘Remuneration Statement and Report of

the Remuneration Committee to the Shareholders’), including the contents required by Appendix 12.1

‘Information to be provided in the Remuneration Report’ to Chapter 12 of the Capital Markets Rules.

Our responsibility is laid down by Rule 12.26N of the Capital Markets Rules, which requires us to

consider whether the information that should be provided in the Remuneration Report, as required in

terms of Appendix 12.1 to Chapter 12 of the Capital Markets Rules, has been included (as

applicable).

In our opinion, the Remuneration Report includes the information required by Appendix 12.1 to

Chapter 12 of the Capital Markets Rules.

Matters on which we are required to report by the Act, specific to public-interest entities

Pursuant to article 179B(1) of the Act, we report as under matters not already reported upon in our

‘Report on the Audit of the Financial Statements’:

• we were first appointed as auditors by the shareholders on 15 July 2015, and subsequently

reappointed at the Company’s general meetings for each financial period thereafter. The

period of total uninterrupted engagement is eleven years;

• our opinion on our audit of the financial statements is consistent with the additional report to

the audit committee required to be issued by the Audit Regulation (as referred to in the Act);

and

• we have not provided any of the prohibited services as set out in the APA.

KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of

organisation of independent member firms affiliated with KPMGpartnership of Certified Publicthe firm is available at Portico

International Limited, a private English company limited guarantee.Accountants in terms of theBuilding, Marina Street, Pietà,

Accountancy Profession ActPTA9044, Malta.

KPMG

92, Marina Street

Pietà, PTA 9044

Malta

Telephone(+356) 2563 1000

Fax (+356) 2566 1000

Websitewww.kpmg.com.mt

Independent Auditors’ Report (continued)

To the Shareholders of MAPFRE Middlesea p.l.c

2    Report on Other Legal and Regulatory Requirements (continued)

Matters on which we are required to report by exception by the Act

Pursuant to articles 179(10) and 179(11) of the Act, we have nothing to report to you with respect to

the following matters:

• proper accounting records have not been kept; or

• the financial statements are not in agreement with the accounting records; or

• we have not obtained all the information and explanations which, to the best of our knowledge

and belief, we require for the purpose of our audit.

Report on compliance of the Annual Report with the requirements of the Commission

Delegated Regulation (EU) 2018/815 supplementing Directive 2004/109/EC (the “European

Single Electronic Format Regulatory Technical Standard” or “ESEF Regulation”), by reference

to Capital Markets Rule 5.55.6 issued by the Malta Financial Services Authority

We have undertaken a reasonable assurance engagement in accordance with the requirements of

Directive 6 issued by the Accountancy Board in terms of the Accountancy Profession Act, 1979

(Chapter 281, Laws of Malta), the Accountancy Profession (European Single Electronic Format)

Assurance Directive, on the Annual Report for the year ended 31 December 2025, prepared in a

single electronic reporting format.

Responsibilities of the directors for compliance with the requirements of the ESEF Regulation

As required by Capital Markets Rule 5.56A, the directors are responsible for the preparation of the

Annual Report in XHTML format, including the relevant mark-ups, in accordance with the

requirements of the ESEF Regulation.

In addition, the directors are responsible for such internal control as they determine is necessary to

enable the preparation of the Annual Report that is in compliance with the requirements of the ESEF

Regulation.

Our responsibility is to obtain reasonable assurance about whether the Annual Report in XHTML

format, including the relevant mark-ups, comply in all material respects with the ESEF Regulation

based on the evidence we have obtained. As part of our work, we obtain an understanding of the

Company’s controls relevant to the preparation of the Annual Report in compliance with the said

requirements, but not for the purpose of expressing an opinion on the effectiveness of the controls in

place. 

KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of

organisation of independent member firms affiliated with KPMGpartnership of Certified Publicthe firm is available at Portico

International Limited, a private English company limited guarantee.Accountants in terms of theBuilding, Marina Street, Pietà,

Accountancy Profession ActPTA9044, Malta.

KPMG

92, Marina Street

Pietà, PTA 9044

Malta

Telephone(+356) 2563 1000

Fax (+356) 2566 1000

Websitewww.kpmg.com.mt

Independent Auditors’ Report (continued)

To the Shareholders of MAPFRE Middlesea p.l.c.

2    Report on Other Legal and Regulatory Requirements (continued)

Report on compliance of the Annual Report with the requirements of the Commission

Delegated Regulation (EU) 2018/815 supplementing Directive 2004/109/EC (the “European

Single Electronic Format Regulatory Technical Standard” or “ESEF Regulation”), by reference

to Capital Markets Rule 5.55.6 issued by the Malta Financial Services Authority (continued)

Auditors’ responsibilities to report on compliance with the requirements of the ESEF Regulation

(continued)

In discharging that responsibility, we:

• obtain an understanding of the entity's financial reporting process, including the preparation of

the Annual Report, in accordance with the requirements of the ESEF Regulation;

• perform validations to determine whether the Annual Report has been prepared in

accordance with the requirements of the technical specifications of the ESEF Regulation; and

• examine the information in the Annual Report to determine whether all the required mark-ups

therein have been applied and whether, in all material respects, they are in accordance with

the requirements of the ESEF Regulation.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our

conclusion.

Conclusion

In our opinion, the Annual Report for the year ended 31 December 2025 has been prepared, in all

material respects, in accordance with the requirements of the ESEF Regulation, by reference to

Capital Markets Rule 5.55.6.

The Principal authorised to sign on behalf of KPMG on the audit resulting in this independent auditors’

report is Thane Micallef.

KPMG                                                                                24 March 2026

Registered Auditors

KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of

organisation of independent member firms affiliated with KPMGpartnership of Certified Publicthe firm is available at Portico

International Limited, a private English company limited guarantee.Accountants in terms of theBuilding, Marina Street, Pietà,

Accountancy Profession ActPTA9044, Malta.