middlesea-2023-12-31-en

MAPFRE MIDDLESEA p.l.c.

Annual Report

31 December 2023

Company Registration Number: C 5553

Contents


	Page		Page
Chairman's Statement	i.	7. Segment information	154
President & Chief Executive Officer's Statement	vii.	8. Investment return	157
Directors’ Report	1	9. Other income	159
Corporate Governance Statement	16	10. Profit before tax	159
Remuneration Statement and Report of the Remuneration Committee to the Shareholders	36	11. Employee compensation	160
Statement of profit or loss	47	12. Income tax expense	161
Statement of profit or loss and other comprehensive income	48	13. Directors’ emoluments	161
Statement of financial position	49	14. Earnings per share	162
Statement of changes in equity	50	15. Dividends	162
Statement of cash flows	54	16. Intangible assets	163
Notes to the financial statements	55	17. Leases	165
1. Basis of preparation	55	18. Property, plant and equipment	169
2. Accounting policies	62	19. Investment property	173
2.1 Consolidation	62	20. Investment in subsidiary undertakings	181
2.2 Segment reporting	64	21. Investment in associated undertakings	184
2.3 Foreign currency translation	64	22. Other investments	186
2.4 Intangible assets	65	23. Deferred income tax	193
2.5 Property, plant and equipment	65	24. Insurance contract liabilities, reinsurance contract assets and investment contract liabilities	195
2.6 Investment property	66	24.1 Composition of statement of financial position	195
2.7 Investments in subsidiary undertakings	67	24.2 Short-term insurance contracts under PAA model	196
2.8 Investments in associated undertakings	68	24.3 Long-term insurance contracts - Life risk	205
2.9 Financial instruments	68	24.4 Life risk - Reinsurance contracts held	210
2.10 Insurance and investment contracts issued and reinsurance contracts held	82	24.5 Investment contracts with DPF	214
2.11 Current and deferred income tax	106	24.6 Long term contracts - inputs assumptions and estimation techniques	217
2.12 Provisions for pension obligations	107	25. Investment contract liabilities	224
2.13 Revenue recognition	107	26. Trade and other receivables	224
2.14 Investment return	108	27. Cash and cash equivalents	225
2.15 Leases	109	28. Share capital	225
2.16 Impairment of non-financial assets	111	29. Other reserves	226
2.17 Offsetting	111	30. Provision for other liabilities and charges	227
2.18 Dividend distribution	112	31. Other payables	229
2.19 Share capital	112	32. Cash generated from operations	230
2.20 Methods and judgements applied in determining the IFRS 17 transition amount	112	33. Commitments	231
3. Use of accounting estimates and judgements in applying accounting policies	114	34. Contingencies	232
4. Management of risk		35. Related party transactions	232
4.1 Insurance risk	116	36. Statutory information	236
4.2 Financial risk	125	Independent Auditors’ report	238
4.3 Fair values	146	Independent Assurance Report	251
5. Capital management	150
6. Amounts determined in transition to IFRS 17	151

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Chairman’s Statement

As the reporting obligations become ever more extensive and voluminous, I feel an

obligation to be more succinct in my report to help the shareholders and any other user of the

financial statements focus on some key messages I should like to get across.

IFRS 17 - new method of reporting profits

In 2023 the financial statements have been prepared under International Financial Reporting

Standard (IFRS) 17 adopted by the local Group in line with MAPFRE Group guidelines.

Previously the accounts were under IFRS 4. The change in accounting standard has had far

reaching implications as to how assets and liabilities as well as profit is calculated and

reported. The Group has engaged local and foreign consultants to ensure adequate adaptation

to the local insurance contracts issued and reinsurance contracts held. The first year

implementation processes involved adequate monitoring to ensure the restated financial

statements being published in this Annual Report are true and fair to the best knowledge of

management and those charged with governance. It is not my intention to go into the details

as to how the changes have impacted the financial statements, but to inform you that last

year’s consolidated results after tax have been restated from €14.6 million to €5.6 million

whilst at the same time the retained earnings attributable to owners of the Company have

been increased to €59.9 million from €52.9 million.

The new method of accounting is intended to have a more consistent and transparent

treatment of insurance contract accounting across the industry.

Results

The Group registered a profit before tax of €24.0 million compared to a restated profit for

2022 of €8.3 million. With MAPFRE Middlesea p.l.c. ("MAPFRE Middlesea", "MMS" or

"Company"), which deals principally in general insurance, the profit before tax is €9.9

million compared to last year’s restated €6.6 million. The President and CEO will go into

some detail as to how we achieved this excellent result, but I would say, chiefly this is due to

a more scientific approach in assessing our risks, and pricing accordingly, as well as a better

than expected claims performance, with an overall net combined ratio of 85.6% compared to

last year’s restated 90.2%.

The Company continues to have a balanced portfolio with Motor taking up 46% of the

business, Health 17% and the remainder 37%. This remains very much in line with our target

which allows us to spread our risk base.

MAPFRE MSV Life p.l.c. ("MAPFRE MSV", "MMSV"), deals with life protection as well

as insurance-based investment products. In fact, MMSV manages the largest with-profits

investment fund on the island with approximately €1.91 billion in assets under management.

MMSV’s profit for the year was recorded at €14.6 million compared to a restated €2.5

million. The main net insurance and investment result profit drivers remain the annual

management fee derived from the assets under management (AUM) and the underwriting

performance on life protection business. In 2023, MMSV also benefited from the positive

interest rates.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Chairman’s Statement - continued

Results - continued

MMSV is continuing to make headway in pensions and unit liked products. These are a key

component in its strategic plan. Over time, these lines of business are expected to become

more material. I am pleased to say that we have a leadership position in the pensions market.

This market is still in its infancy but expected to continue growing over the next years. The

growth and development of pensions will also continue to depend on the Government’s

policy and fiscal incentives being provided. We continue to urge government to provide

incentives to encourage individuals to take up pension schemes which will provide a secure

and adequate income for them later in life.

The With Profits investment fund has generally provided policyholders’ with stable and

satisfactory returns when compared with other similar investment products while having the

peace of mind that the capital is guaranteed at policy maturity or earlier in case of death.

Whilst I reported last year that the unusual concurrent fall in prices in equity markets and

bonds led to a negative return on investments of 13.1%, this year we were able to achieve a

very strong return of 8.64%. This allowed us to declare a 2.0% - 2.5% return to policyholders

compared to the 0.9% – 1.0% we declared last year. It should be noted that the bonus is tax

free and therefore represents an even more attractive return in these uncertain times where the

markets have remained volatile, and where the policyholder‘s capital remains guaranteed at

maturity.

Solvency

It has been recognised that a key indicator as to an insurance company’s health is its level of

solvency. Both MAPFRE Middlesea and MAPFRE MSV Life retain high solvency ratios,

with both expected to be higher than the 2022 ratio of 232.1% for the former and 161.6% for

the Life company. The board of directors, through the relevant Risk and Compliance

Committees reviews solvency on an ongoing basis, whilst maintaining a prudent risk

appetite. Recent volatility in the markets, partly due to geopolitical events have made the

Group's prudence an imperative and contributed to its strong solvency ratio.

Dividends

MAPFRE Middlesea is declaring a net dividend of €4.5 million (2022 €3.5 million). This

translates into a net dividend per share of €0.048913.

Last year we did not receive a dividend from MAPFRE MSV Life in order to maintain our

strong solvency ratios in the face of volatile markets and the poor performance of the fund

which is backed by a capital guarantee for the investors. I am pleased to report that in 2024

we will be receiving a net dividend of €1.0 million which we expect to be in a position to

distribute to our shareholders next year.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Chairman’s Statement - continued

Regulation

The welter of legislation and regulation continues to bear down on the industry. We have

been concentrating on the implementation of IFRS 17, which came into force this year and

under which regime the accounts are prepared. This has been a costly and complex exercise

which has taxed the accounting and actuarial departments heavily. We have had to bring in

consultants, and also use group expertise, a MAPFRE resource we are able to tap into. I am

grateful to our staff involved for the effort they have put in successfully implementing this

new accounting standard. It truly was a herculean effort.

Unfortunately, there does not seem to be any let up in new regulations set to come in over the

next few years. We have ESG (Environmental, Social and Governance) reporting coming in

2025, DORA (Digital Operational Resilience) regulations and others which will continue to

take up resources and effort, and of course add costs to our operation.

Whilst I can understand the need for these regulations and new reporting requirements, we do

need time to settle down having come through an unprecedented period of new laws and

regulations which we have had to implement.

Operational Developments

Whist I shall leave it to the President and CEO to detail the operational developments for the

year, I have had occasion to mention the IT developments which have taken an inordinately

long time to be implemented at MAPFRE Middlesea and at immense cost. Whilst we are

slightly behind target, we should soon have the majority of our operations fully integrated on

the new system. This has been largely rolled out to our Tied Insurance Intermediaries and

most of our Agents. The benefits of this system will start being felt in 2024.

The Life company have also transformed their IT system, migrating to a new platform which

is now virtually complete. The welter of new regulation as well as the IT transformation have

taken up huge resources and effort, as well as of course cost. In the meantime, we need to

continue with our main business of managing our customers risks, expanding our market, and

looking after our shareholders. These reforms continue apace as they do in any organisation,

and as can be seen from the results, have had the desired effect.

Corporate Social Responsibility

Our values and commitment drive us to actively contribute to the communities we operate in.

Our Group's ultimate mission is to create shared value with society, working towards a better

world for everyone.

As part of our social commitment, Fundación MAPFRE continued supporting organizations

in Malta, focusing on training for the youth and playing a vital role in road safety.

Fundación MAPFRE's Logging Off campaign raises awareness about internet addiction

among school children, offering live workshops for a healthy online interaction experience.

In 2023, Fundación MAPFRE also extended its support to Caritas Malta and Jesuit Refugee

Service Malta (JRS).

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

iii

Chairman’s Statement - continued

Corporate Social Responsibility - continued

Our MAPFRE Malta volunteers actively participated in various activities, extending a

helping hand to those in need and contributing to environmental conservation, organizing

activities such as food and blood donations, and contributing to various charitable

organisations and NGOs.

MAPFRE is a dedicated company, mindful of its social impact, fostering economic and social

development in the countries it operates in. We believe in a business approach that includes a

rigorous commitment to social, environmental, and governance responsibilities for the well-

being of future generations.

Distribution

Mapfre Middlesea business model is somewhat different from our competitors, we rely on 6

agents, over 60 Tied Insurance Intermediaries and Brokers to bring in the bulk of our

insurance premium. Only 9.4% of our business is written directly by us. We depend on these

sources of business and do our best to provide the support, professional guidance as well as

competitive and relevant products required by the market. Our agents and Tied Insurance

Intermediaries have responded magnificently and have contributed to the successful results

we have achieved.

I would like to place the great thanks of the board and staff of the Company to our

distributers for their loyalty, professionalism and dedication to their work.

With MAPFRE MSV Life, Bank of Valletta remains by far the single largest producer for the

company, both in terms of term assurance as well as investment products. The bank has

proved to be an excellent partner, as well as shareholder in the group. I cannot emphasise the

importance of the bank to the Malta group, which has in no small way contributed to the

results reported here. This is a partnership which has stood the test of time and has delivered

results for customers and shareholders alike.

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. 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 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 not only input and insight at board

level but is the main generator of turnover in MMSV. The commercial relationship between

the Bank and MMSV remains very strong and is critical to its evolution. 13.09% of the

shareholding in MAPFRE Middlesea is held by the so-called smaller shareholders, of which

we have some 3,700.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Chairman’s Statement - continued

Directors and shareholders - continued

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

direction and support to the Company’s executives. Jose Luis Jimenes, Jose del Pozo, Etienne

Sciberras, and Jose Ramon Alegre represent MAPFRE. I should particularly like to thank

Jose Ramon Alegre who retired from the board last month to take up new responsibilities in

the group elsewhere. I particularly appreciated his energy and erudite advice which he

brought to the board. I welcome Eduardo Perez de Lema, CEO International Insurance at

MAPFRE S.A. who has been appointed to replace Jose Ramon Alegre. His appointment is

still pending regulatory approval. 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 can only record my sincere thanks

for the highest level of professional input given by the directors at the board.

Javier Moreno at MAPFRE Middlesea and Etienne Sciberras at MAPFRE MSV Life remain

the Chief Executive Officers tasked with running those companies. They are supported by

dedicated staff who work in an increasingly technical and regulated environment. On behalf

of the Board I thank them for their hard work and dedication, and for their achievements in

the year under review.

Signed by Martin Galea (Chairman) on the 25 March 2024

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

President & Chief Executive Officer’s Statement

MAPFRE Middlesea Group highlights

This is the third year running that I am writing this report on behalf of MAPFRE Malta

management, and I must say that regrettably most of the situations described for the year

2022 still remain in 2023.

The uncertainty caused by global political instability has not only diminished but on the

contrary due to the recent conflict between Palestine and Israel has become even more

complex. We are certainly living in turbulent times that make us consistently on the verge of

suffering a very relevant deterioration in global stability. Fortunately, these conflicts are still

under some level of control although the risk remains.

Because of this situation, global financial markets have become volatile and interest rates

remain on the high side to contain inflation which also remains high although it has

moderated when compared with the view in 2022.

In Malta we have seen how fundamentally it is inflation that is the main problem we have to

deal with, as we are primarily importers of goods and services from abroad.

Fortunately, the pandemic has become just another seasonal illness, which although it

impacts on our health portfolio, it does not limit the normal performance of our activity.

Due to this uncertain and changing environment, once again our focus as MAPFRE Malta has

been on how to improve our relationship with clients, strategic partners, intermediaries,

providers and other stakeholders in order to continue being the leading insurance group in

Malta, highlighting our wide range of products and service quality as our hallmark.

In this sense, we have continued to implement our strategy, facing challenges and developing

very specific projects that allow us to continue making a difference when compared with our

competitors. This strategy must always be adjusted to the reality of each moment and

therefore we have activated specific plans that have allowed us to mitigate the adverse effects

caused by the complex international environment. The results for the 2023 financial year

confirm that the decisions and measures taken have been appropriate to guarantee sustainable

development over time, while generating profitability and value creation for our shareholders.

Once again, it is important to mention that the contribution of our team has been key to the

excellent results achieved. It continues to be one of our priorities to take care of all our

employees and develop the talent that makes us better.

Going into an assessment of our results, I must emphasize that we have been able to obtain

magnificent results in circumstances which were not easy, consolidating our leadership not

only in Non-Life, where we have positively developed all lines of business, but also in Life,

promoting an important transformation in our offer of savings and investment solutions.

First of all, I would like to point out that the commercial activity in both companies has been

very remarkable, the positive evolution of the Maltese economy has certainly helped us, but

good sales figures cannot be achieved if there is no clear commercial vocation. We have

launched different campaigns and products to promote a good commercial dynamic.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

President & Chief Executive Officer’s Statement - continued

MAPFRE Middlesea Group highlights - continued

Although it may come as a shock with my comment in the previous paragraph, our total

turnover as MAPFRE Malta has been reduced compared to 2022, but it is appropriate to

explain this situation in more detail and we do so later in this report. However, I should stress

that this performance is in response to the approach taken by the Group in Malta and also

reflects a financial market situation which has primarily affected one of our investment

products.

The total business written has been €297.0 million (2022: €342.0 million), with a different

evolution if we consider the different classes. In the case of general insurance, our

performance has been excellent, as we have achieved a growth in premiums in all lines of

business, thus maintaining a balance that allows us to give our clients a good offer and at the

same time diversifying the activity.

Regarding the life business, we should mention that the total volume reached €201.3 million,

representing a decrease compared to the €254.9 million in 2022 but with a greater

diversification, focusing on developing more regular premiums, pensions, protection and

capital light solutions (Unit linked) in contrast with our classic With Profits, a product that

continues to be very important in our strategy.

Regarding the Group's result in Malta, we are very proud to share an excellent performance,

which has led us to obtain a consolidated pre-tax result of €24.0 million, a figure that

improves on the already good result we obtained in 2022 which has now been restated to €8.3

million under IFRS17. There are many reasons that have led us to obtain this figure. More

details for each company will be provided later in this report.

The Premium written figure for MAPFRE Middlesea p.l.c. (“MAPFRE Middlesea”, “MMS”,

“Company”) including group life reached a total of €95.7 million at the end of 2023,

generating an increase of 9.9% over 2022, undoubtedly a relevant growth in another

uncertain year. The result was also very positive and remarkable, with a profit before tax of

€9.9 million, clearly better than the restated €6.6 million obtained in 2022.

Insurance service results remained resilient, with a Net Combined Ratio for non-life business

of 85.6%, with a clear improvement over the restated 90.2% ratio obtained in 2022. The

diversification of our business helps in obtaining a good technical performance, it is good to

highlight that the motor business has improved notably this year when compared to the

previous two years.

Regarding the long-term business, volatility remained in 2023, with very challenging

international and local financial markets, creating a strong competition for our savings

products. These are disclosed in a specific section within this report.

On balance, this year has been very positive in terms of results for both companies, and

adequate in terms of the growth of the business lines that contribute most to the future

sustainability of the group in Malta and consistent with our strategy of sustainable and

profitable development.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

vii

President & Chief Executive Officer’s Statement - continued

MAPFRE Middlesea Group highlights - continued

We have once again experienced challenging circumstances and we need to start considering

this as the new normality. But our resilience and determination in our capabilities have led us

to navigate properly in these choppy waters, providing an excellent performance.

As we said in 2022, we reassert our commitment to strong sustainable development and value

creation for our shareholders.

It is important to note that despite the difficult labour market, once again we have managed to

maintain great stability in our management teams, as well as in our governing bodies. We

have been able to reinforce certain key areas. Undoubtedly, a critical asset for the

achievement of our objectives.

Finally, we must mention the immense work involved in the adoption of the new IFRS 17

Insurance contracts reporting standard, which replaces the previous IFRS 4 Insurance

contracts.

The challenge has been immense given the complexity of the change and it is important to

recognize the effort made by the MAPFRE Malta organisation, but we must expressly thank

the Finance and Actuarial teams for their great performance in such stressful circumstances.

General Business

Premiums in 2023 reached €93.0 million, representing an increase of 10.1% over 2022.

This year we are particularly proud to have had a significant increase in premiums in all lines

of business, accelerating the growth we already had in 2022.

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

with a market share of 31.9% in 2023, which is a slight drop from the 32.6% we had in 2022.

We maintain proportionate leadership in most business lines.

Within the different business lines, we should particularly highlight the growth of the

personal lines with the health business leading the way. Motor has also shown a positive

evolution, with the increase in premium rate contributing favourably.

Commercial lines have also been very solid throughout the year, with all classes growing in

premiums over 2022.

With just over 125,000 customers and more than 260,000 policies, we remain the major

player in the market. These figures are undoubtedly very important for MAPFRE as they

show that we continue to have the support and trust of our clients. Having said that, it is true

that we have decreased the total number of clients when compared with previous year mainly

coming from a small reduction on the motor portfolio, so we are fully determined to recover a

positive growth of clients for 2024.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

viii

President & Chief Executive Officer’s Statement - continued

General Business - continued

Commercial activity has been intense and 65,820 new policies have been issued, a significant

figure that has been possible thanks to our large distribution network and the attractive value

proposition that the Company offers to its clients.

Our policy retention ratio is 78% and our client retention ratio, above 87%, remain in a high

standard in general terms although not enough for us as we see some clients leaving the

Company. Our ambition and business culture must drive us to consistently keep our

customers satisfied, loyal and open to placing greater trust in us with more insurance

products.

Regarding our product offering, MMS has continued working in developing interesting

special offers for our clients. We reiterate MMS has the widest coverage of insurance

solutions that allow our intermediaries and sales force to meet the needs of each family,

company or organisation.

On distribution, this year we have considered to adjust the commercial setup for MAPFRE

Malta, looking for a better specialisation across the different distribution channels, with the

aim of gaining efficiency and focus on each one. In fact, we have improved the level of

interaction with all our intermediaries, acting with all of them in a very proactive approach to

better fit client’s needs.

Our partners, Brokers, Agents and TIIs have demonstrated once again that a relationship

based on mutual trust and commitment is the basis for excellent service to our clients,

offering agile and personalised attention.

On top of this, as part of our value proposition, clients who bundle their insurance

requirements with MMS will not only get a cost saving but also enjoy additional benefits and

services. In this regard we have been working strongly on a new value proposition for motor

insurance.

Our agents had an excellent year, showing that this model generates profitable and

sustainable growth. They have increased premium by 15.5%, a remarkable figure, and a

significant contribution to the diversification that is always part of our strategy. It is worth

mentioning the formidable performance achieved by Laferla Insurance Agency.

MMS continues to maintain an excellent professional relationship with brokers and the strong

figures show this year has been a good one. Considering Commercial lines, reinsurance

restrictions and higher costs are generating more complexity as this type of business requires

more protection capacity to meet concrete customer´s needs.

Our direct business, consisting of our regional offices and TIIs, has also performed very

positively. As a Company, we want to continue to promote this channel further as we still see

more potential. MMS continues to develop this channel and during 2023 we have been

simplifying the current model to gain efficiency and working with the right plans for

delivering higher sales figures in the coming years.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

President & Chief Executive Officer’s Statement - continued

General Business - continued

Motor business evolution this year was much better than in 2022. There are several factors

impacting favorably, mainly a combination of an increase on the average premium, revised

underwriting guidelines, reduction in the frequency of claims, moderated increase on claim

costs and a lower number of large losses. In addition, the good work on the run-off gave us a

better technical performance.

As a result of all this, the net Combined Ratio (COR) reached 90.2%, far better than the one

achieved in 2022 of 99.5%.

The successful motor plan executed during the year will still be in action and its development

will be monitored closely in 2024. Further analytical capabilities have been improved during

this year together with improved skills from the team.

Health business performed very well with net COR holding at a very positive 87.6%, higher

than last year but still very profitable. We saw a growth in both individual and group lines.

The rest of the business lines had a net COR of 72.2%, again a clear improvement over 2022

(79.4%), in the main delivered by a an improved General Liability net combined ratio which

in 2022 was impacted by various large losses partly offset by a deteriorating loss ratio from

Marine Hull due to a current year large loss.

With Motor business amounting to 47.9% of the non-life portfolio, the diversification of

businesses ensures greater stability in our technical performance.

Control of management expenses, inflation costs and additional projects impacted negatively

the evolution of costs. Principal drivers on this come from staff costs and IT projects and also

non-technical costs as a result of IFRS17 Insurance contracts project.

With a headcount at the end of 2023 of 184 employees, MMS has suffered a variation of

4.0%, with a turnover of 11.9%. This is a very good outcome when compared to the market

for financial institutions to which the turnover rate is around 20%. The commitment to our

employees and society remains unchanged and embedded in our corporate culture and this is

a strategic pillar for the coming years as we face a difficult labour market, with very low

levels of unemployment, rising wage pressure and high mobility in the market. We have

initiated a very ambitious program on transformational leadership that will continue in 2024.

We are preparing our teams to accelerate the transformation of the Company.

The solvency of MMS as provisionally determined by Management, continues to be very

high, and although expected to be better than that for 2022 will remain more than double the

minimum legal requirement. On top of this, the reinsurance protection offered to the

Company by MAPFRE Re, the MAPFRE Group reinsurance company, ensures an adequate

cover for significant losses that guarantees that our Solvency is not negatively impacted by

such occurrences. Taking advantage of the MAPFRE Group purchasing power makes sure

that such cover is obtained at an optimal cost for the Company, especially when the

reinsurance market hardens due to big losses happening worldwide.

This year we have completely reviewed our reinsurance program to be sure we are well

protected against catastrophic risks.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

President & Chief Executive Officer’s Statement - continued

General Business - continued

Investment return behaved completely opposite to 2022, at a very positive €2.0 million,

provided by an excellent performance on all asset classes. The valuation of our main real

estate investment, Development House, showed a negligible change.

Long Term Business

MMSV offers a wide range of protection, savings, investments and retirement solutions

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

2023 presented a challenging economic and financial landscape. The first half witnessed the

US regional banking crisis and the subsequent takeover of Credit Suisse by UBS.

Geopolitical anxieties remained elevated due to the ongoing war in Ukraine and the eruption

of the Hamas-Israel conflict. Despite these headwinds, the global economy, particularly the

US, demonstrated remarkable resilience. Growing confidence in central banks’ ability to curb

inflation, fuelled expectations of interest rate cuts in 2024, spurred a recovery in equity

markets. Notably, benchmark yields closed the year near their previous year-end levels,

underscoring the market’s cautious optimism.

Total business written for financial year 2023 totaled €201.3 million, a decrease of 21.0%

over the prior year €254.9 million, driven mainly by a lower, albeit, expected demand from

single premium With-Profits business. This was mainly the result of a lower re-investment

rate on maturing policies as increased competition from bank deposits persisted.

On the other hand, the prevailing interest rate scenario was an opportunity to accelerate

MMSV’s product diversification strategy with the launch of short-term Unit Linked

campaign products. These proved to be extremely popular with the retail investors looking

for short-term guaranteed income and capital products. Regular premium business results

were also satisfactorily. The resiliency of the local economy was reflected across several

economic sectors particularly in terms of a heightened activity in the property market leading

to a robust demand in mortgage loans, which loans, are positively correlated with the demand

in life insurance protection. Long-term regular savings, primarily retirement savings

continued to exhibit a sustained demand through personal pension plans and also, but to a

lesser degree through voluntary occupational pensions schemes.

The With-Profits funds under management increased to €1,910 million from €1,895 million

in 2022, mainly driven by positive investment gains of €165.84 million, representing a

positive net investment return of 8.64%.

Operating expenses were 5.4% below 2022. This was mainly due to the lower acquisition

expenses from new business which compensated for the increase in internal expenses.

MAPFRE MSV Life registered a profit before tax of €14.6 million for the year ended 31

December 2023, compared to a restated €2.5 million registered for the previous year. Profit

after tax is at €9.6 million, compared to a €2.1 million restated for the previous year.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

President & Chief Executive Officer’s Statement - continued

Long Term Business - continued

On the 1st January 2023, MMSV adopted IFRS 17 Insurance contracts and IFRS 9 Financial

instruments. These new accounting standards, particularly IFRS 17 is of significant

relevance. While the standard does not change the economic reality nor the underlying

profitability of the Company, it does represent a material change in terms of accounting

recognition, measurement, and disclosures.

The adoption of IFRS 17 necessitated the restatement of the 2022 comparative figures. The

restated 2022 comparative figures have to be read in the context of a Day 1 transitional gain

reported directly into the Retained Earnings on the statement of financial position, the impact

of interest rates hedging on the term book, and the timing differences in the accounting profit

recognition, which gave rise to different accounting results when measured under IFRS 17

rules as opposed to IFRS 4.

The financial performance in 2023 was characterized by a positive technical and non-

technical contribution towards the reported results. While the technical performance

benefited, amongst other things, from the recovery of asset prices and favourable

underwriting performance, the higher market yields served as a tailwind to the non-technical

results.

Total shareholders’ funds at the close of 2023 amounted to €165.4 million (2022 restated:

€155.8 million), an increase of 6.1% over the previous year and well ahead of minimum

solvency guidelines.

The end of year Solvency Capital Requirement ratio is expected to improve compared to the

corresponding 2022 figure. Through its risk management framework, the company actively

manages its insurance, market and operational risks to preserve its financial stability and

maintain its solvency ratio within its defined risk tolerance.

Consolidated Results

In 2023, the Group registered a profit before tax of €24.0 million, 189.6% higher compared to

the restated previous year result under IFRS17. After tax, the Group generated a profit of

€15.8 million or 181.4% higher than the restated previous year results. The tax expense of

2023 is less than the 35% corporate rates closing at 34.2% compared to 32.3% in the previous

year due to a lower impact of Property losses that are taxed at 10%. Earnings per share

attributable to shareholders have increased to 12c1. The profit attributable to shareholders

increased from a better net insurance and investment result from both MMS and MMSV.

MMS is committed to returning value to its shareholders and will continue to dedicate an

important part of its profit to remunerate the shareholder.

Whilst still maintaining a prudent policy in line with discussions with our regulator, MMS

will propose to the board of directors to pay a net dividend of €0.048913 per share. The

Company's payout will be 68.7% of this year’s profit after tax of the Company.

In parallel, we continue to increase the value through both companies’ capitalisation to

manage stressed scenarios as we still face complex years with significant levels of

uncertainty.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

xii

President & Chief Executive Officer’s Statement - continued

Statement of Financial Position

The group's total assets increased by 1.8% and totalled €2.41 billion. More than 95.7% of

them are return-seeking assets (investments and cash and cash equivalents) mostly within

MMSV’s funds under management that regained from the sharp drop suffered in 2022.

These funds are invested in diversified securities (local and foreign) and are managed in-

house or externally by highly reputable entities. The Group also has a portfolio of rented

property investments and property-related shares.

On the liabilities side, 98.2% of the balance pertains to Insurance, investment and reinsurance

contracts liabilities. MMSV’s Insurance contract liabilities marginally increased as

investment values rallied back but reinvestment rates were subdued. On the other hand,

investment contract liabilities increased significantly following the issue of unit linked

products during the year. MMS’s insurance contracts liabilities registered a drop of 12.7%

with an increase in the liabilities for remaining coverage, reflecting the higher premium

written, and a drop in the liability for incurred claims following the settlement or release of

large loss reserves.

Total equity increased by €12.5 million or 7.9% including the minority with the profit for the

year partly mitigated by the dividends paid.

Review of operations

2023 has also been an important year from an operations point of view.

Following the strategy defined by MAPFRE Malta, we have worked intensively in different

areas.

The first task was the organisation of the teams that manage operations in both companies,

both in MMS and MMSV.

In the first case, some of the most relevant changes and achievements are listed below:

• Reorganisation of the operations team and better utilisation of existing heads, creation

of Quality and Control area to focus on quality of service and control of claims

operations;

• Health: gained operational efficiency and very improved speed of settlement;

• Motor: better information to our clients, improved inhouse surveys, sms touchpoints

for spare parts;

• Processes: total revision of Contact Centre services with Middle Sea Assist, Robotic

Process Automation;

• Quality and Control: better dashboards and introduction of transactional Net Promoter

Score with the customer at the centre of our activity;

• Policy operations unit: absorbing the administration task from commercial;

• New App for claims.

Regarding MMSV, it is important to mention the creation of the Customer Experience

department, part of the operations area, whose mission is to optimize customer service in the

Life business through a one stop shop concept.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

xiii

President & Chief Executive Officer’s Statement - continued

Review of operations - continued

During 2023, MAPFRE Malta has continued to drive forward its omni channel approach,

introducing improvements across the board. At MAPFRE, we want to accompany clients and

engage with them based on their preferences. This is a reality as we provide attention and

services through our website, contact center, direct offices, TIIs, agents and brokers.

Our integrated website, www.mapfre.com.mt, provides the customer with a global vision of

the products and services that our Group offers in both Life and Non-Life, undoubtedly the

widest insurance offer in the country. We continue to promote direct services to

policyholders to make regular processes, such as quotations, renewals, electronic payments,

and notification of claims, easier and simpler. An additional level of functionalities from our

client portal, https://myinsurance.middlesea.com/, will be deployed during 2024.

We cannot forget our loyalty program, Insure&Save (https://www.mapfre.com.mt/insure-

and-save/), created solely for the benefit of our clients, definitively delivers additional value

for money when one decides to be part of the MAPFRE community. We have enhanced the

program by constantly adding new partners to ensure that our customers are provided with a

greater choice.

The MAPFRE Contact Centre performed through our associate company MAPFRE

Middlesea Assist Limited, has been already fully digitalized and it´s our flagship service on

behalf of the customers to deliver all kind of services related to their policies, as the roadside

assistance or the home assistance.

The experience of our customers is always key for us, that is why we have turned to our Net

Promoter Score (NPS) survey where, despite the good results obtained, we have analyzed

those points that obtained a lower score in order to implement specific action plans to

improve. This year we have started to also evaluate different specific transactions with our

clients and consider exactly what they want us to deliver in order to increase their satisfaction

level.

Furthermore, during 2023, with reference to digital transformation we made significant

progress in completing the complex process of transforming our IT systems.

Our employees and intermediaries are now operating with the new systems for the vast

majority of both companies' operations. We continue to build new functionalities that make

up MAPFRE Malta's new technological ecosystem, a 360º approach that integrates all

processes, seeking a permanent level of automation and the generation of operational

synergies.

We must also highlight the development of greater operational efficiencies, which is why

more operational processes have been optimized this year with an additional two Robotic

Process Automation technology in the pipeline.

Last but not least, in 2023 we continued executing organisational adjustments recruiting new

employees with special skills to strengthen the technical functions and those that are shared

between MMS and MMSV. We firmly believe in Talent Development as one of the main

assets for the future of our organisation and have therefore reinforced positions in different

key areas of MAPFRE Malta.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

xiv

President & Chief Executive Officer’s Statement - continued

Subsidiaries and Associates

BEE Insurance Management Limited and Euromed Risk Solutions Ltd

BEE Insurance Management Limited (“BEE”) and Euromed Risk Solutions Limited, our

subsidiaries dedicated to the provision of insurance services to third-party companies, have

managed to maintain business with their existing clients, with a good progress in terms of

new clients.

Apart from third-party business, BEE also provides IT services to the MAPFRE Malta Group

insurance companies, gaining more competences as a unique qualified team.

During 2023 we have discussed the strategy we need to develop for the third-party business

and we already have a plan in execution for 2024.

Middlesea Assist Limited

MAPFRE Middlesea Assist Ltd, our joint venture between MMS and MAPFRE Asistencia,

generated a profit after tax of €0.22 million, an increase of 14.9% compared to 2022.

Its principal role is to be MAPFRE Malta's arm in developing services for our clients. As a

leader in roadside and home assistance services, it is perfectly aligned with our service ethos:

we prefer to solve our clients' problems rather than pursue a compensation process.

Definitively, MSA is our best strategic partner for fostering services on behalf of our clients.

The evaluation of these services has been highly rated by our customers, in fact our Roadside

Assistance service is the best in its class in Malta.

As mentioned earlier, we are optimizing the Contact Centre services within our insurance

companies to enhance the final client experience and take it to the next level.

When people come first

We stand by you, supporting your journey towards progress and contributing to the creation

of a more sustainable and compassionate society. Our focus is on what matters to you.

Our purpose is to give our best every day, always close to our clients, ready to provide

support for their current needs and future challenges. In an uncertain world, our strength lies

in the capabilities of our employees, collaborators, and suppliers to deliver excellent service,

innovate, adapt to customer needs, and be there when they need us.

Trust is the foundation of our relationships with customers and stakeholders. At MAPFRE,

we aim to instil confidence, providing security, strength, and the ability to achieve goals. We

are dedicated to offering peace of mind, leveraging our knowledge, experience, innovation,

and capacity to help clients move forward and enjoy life to the fullest.

Our approach is unique; our values and commitment manifest in a continuous effort to

contribute to the development of the communities where we operate. The core mission of our

Company is to generate shared value with society, working towards long-term improvements

for society as a whole. Our commitment to a more sustainable and compassionate world is

intrinsic to our business activity.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

President & Chief Executive Officer’s Statement - continued

When people come first - continued

Through Fundación MAPFRE activities, we actively engage in social responsibility. We

support various organisations in Malta, focusing on aiding those in need. Key priorities

include providing training for the younger generation and playing a significant role in road

safety for all road users. Noteworthy initiatives include the Street Smart campaigns in schools

and the Logging Off campaign, addressing internet addiction among school children.

In 2023, Fundación MAPFRE also continued its support to individuals in need, and this time

the beneficiaries were Caritas Malta and JRS Foundation.

MAPFRE Malta collaborates with diverse entities, organizing activities such as food and

blood donations, environmental initiatives, and donations to charitable organisations and

NGOs. Our commitment extends to fostering economic and social development in the

countries where we operate, recognizing that business development requires a comprehensive

social, environmental, and governance commitment for the benefit of future generations.

ESG is high on everyone’s agenda. It is a framework that facilitates the understanding of how

an organisation is managing risks related thereto. Good practice from an ESG point of view,

contributes to overall sustainability. At MAPFRE Malta this is already embedded in our

strategy through a specific sustainability plan. Our plan envisages specific action on each of

environmental, social and governance matters. We are not starting from scratch; these

activities were already part of the corporate DNA of the Group and were already present in

our daily business.

The plan goes hand in hand with our business strategy in a fully integrated manner, especially

in the development of products and services, and it determines the responsible management

of our assets and investments.

The continued presence of significant inequality gaps in society requires us to broaden our

perspective, to continue advancing towards a better model that guarantees equal opportunities

to all, without exclusion. Through this vision, we are working to make quality employment,

inclusion, financial education, and the sustainability of our value chain the drivers of

transformation.

We are pursuing the implementation of MAPFRE's ambition and commitment to the

decarbonisation of the economy, as well as helping our clients and providers to transition to

more sustainable practices.

We are aligned with MAPFRE Group’s sustainability plans such as 100% carbon neutral by

2030, policies which ensure people with disabilities make up at least 3.5% of the workforce,

eliminating the gender pay gap, working towards provider sustainability through agreed

transformation plans, and refraining from investing in, or insuring, fossil fuel risks that do not

have an energy transition plan in place.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

xvi

President & Chief Executive Officer’s Statement - continued

When people come first - continued

We regularly review ESG requirements based on what is expected of us, and on what we

believe ourselves to be capable of achieving. At MAPFRE Malta, we are working towards

aligning our services and products with these aims. We achieve this through transitioning

gradually towards improved sustainability in our products and investments as well as our

underwriting. In 2022, MAPFRE Middlesea launched the first electric vehicle insurance

policy on the island and MAPFRE MSV Life was the first company to launch ESG funds

linked to its investment portfolio.

In July 2022 we joined MESGA, the Malta ESG Alliance, to become an active player in

conjunction with other leading companies in the country, fostering initiatives driven by the

private sector that should accelerate the sustainability of Malta.

MAPFRE remains fully committed to the 2030 Agenda. We know that the response to global

challenges can only be collective. The opportunity for transformation that lies before us, and

the vision of what we want to achieve, inspire us to be ambitious. One of the main excuses

for doing nothing is the belief that individual actions do not bring about change. We are

convinced that change is possible, and we want to be part of it.

Looking forward

2023 has once again been a very challenging year, although MAPFRE Malta has managed to

cope with all these changes in a way that has generated a positive return for our clients and

also for our stakeholders and shareholders.

When we defined the strategy for 2022-2024 we did not imagine that the economic

uncertainty and instability would be even greater than that experienced in the times of Covid.

We have completed two of the three years of this strategic cycle, and we are satisfied with the

progress made, although we are still working hard to finish 2024 with our main challenges

and projects duly executed. It has not been an easy road because the scenario is so changing

and uncertain that certain decisions must be taken with prudence and sufficient room for

manoeuvre.

Our ambition for this period still remains strong and we want to continue to be the referred to

insurance group in Malta, both in Life and Non-Life. Our change agenda is based on

sustainable, balanced and profitable growth; on the continuous improvement of internal

efficiency; and further accelerating the transformation already underway.

We continued moving forward in our three major areas in our new strategy based on the

Group Pillars:

Customer focus. We will continue to create new products and solutions adapted to both

families and corporate clients.

We will insist on promoting a differential value proposition where insurance is only a part of

what we offer. We want to reinforce our customer experience.

Our newly created Client Area, a shared function for MMS and MMSV, has the ultimate goal

of understanding and satisfying the different needs of families and companies, both for Life

and Non-Life.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

xvii

President & Chief Executive Officer’s Statement - continued

Looking forward - continued

Distribution and diversification. We remain committed to a multi-channel distribution

model, adapted to the needs of our customers and we must continue to strengthen the direct

relationship with our customers when they require it, either in person or digitally. We shall

continue to offer the widest range of insurance products, diversifying towards those insurance

solutions that best suit our customers and which are also aligned from a technical and capital

management point of view.

Gaining efficiency. We are optimizing and simplifying processes. Agility has become an

essential objective. Our technological transformation will allow us to do things faster and

more directly, adjusting operating costs that will enable us to compete better.

The regulatory environment will continue to be very intense in the coming years and as

MAPFRE Malta we welcome all these changes. We will maintain the same fluid, transparent

and cooperative relationship with the different bodies that regulate our activity, mainly the

Malta Financial Services Authority. We always aim to strike the balance between proper

control and business development on behalf of our intermediaries, providers and other

stakeholders. We must all cooperate to achieve full regulatory compliance without affecting

commercial and competitive activity.

Any business strategy requires a favorable and predictable environment to be successful and

we must defend Malta's excellent prospects. We must also find solutions to the growing

shortage of qualified professionals in a market of full employment.

Road safety. In 2023 there were some positive movements, but we cannot let our guard

down. As an insurance Group, we reiterate our total commitment to collaborating with other

institutions in the promotion of road safety. We do it with Fundación MAPFRE. As a society,

we cannot accept that serious avoidable accidents continue to occur. We must raise

awareness of the risks of alcohol and drug consumption, the use of mobile phones and

inappropriate speed. We must act holistically in all relevant areas as education, legislation,

scoring of irresponsible drivers, ensuring compliance with the law, improving infrastructures

and black points and vehicle fleets to rise to the challenge of Zero Fatalities on the roads. All

the stakeholders need to act in a coordinated manner to change this situation and MAPFRE

will be there.

At MAPFRE, we are an insurance Group committed to our shareholders, customers,

distributors, employees and Maltese society and we will continue to work hard every day to

be Your Trustworthy Company.

Signed by Javier Moreno Gonzalez (President & CEO) on 25 March 2024

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

xviii

Directors’ Report

The Directors present their annual report for the year ended 31 December 2023.

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 €9.9 million

during the financial year ended 31 December 2023 (“FY 2023”) compared to the restated

€6.6 million registered in the previous financial year (“FY 2022”) with post-tax profits of

€6.7 million, compared to the restated €4.2 million in FY 2022.

On 1 January 2023, the Company adopted two new accounting standards, IFRS 17 Insurance

Contracts and IFRS 9 Financial Instruments. IFRS 17 as adopted by the EU, became effective

for annual periods beginning on or after 1 January 2023, whilst in the case of IFRS 9,

although effective for years beginning on or after 1 January 2018, the Company applied the

temporary exemption for qualifying insurers to apply such standard together with IFRS 17.

While IFRS 17 does not change the economic reality nor the underlying profitability of the

Company, over the lifetime of the contracts, it resulted in significant changes in accounting

recognition, measurement, and disclosures.

The adoption of IFRS 17 necessitated the restatement of the 2022 comparative figures which

also implied the restatement of the opening Statement of Financial Position as at 31

December 2021. The restated 2022 did not significantly vary from those reported the

previous year with a further Day 1 transitional gain reported directly into the Retained

Earnings resulting from the changes arising out of the projection of all claims incurred

liabilities discounted to net present value together with a risk adjustment.

Premiums written by the Company reached €95.72 million (2022: €87.1 million), an 9.9%

increase over FY2022, with growth in all classes of business but notably in Motor, Health and

Property. MAPFRE Middlesea p.l.c. remained the leader of the non-life market although the

Company’s market share reduced marginally from the previous year following the receipt of

provisional market data as the market registered a growth above that of the Company's.

Technical performance in the non-life business improved compared to the previous year with

a reduction in frequency and number of reported claims in Motor and a significant release in

previous years losses particularly from Motor, Marine Hull and Liability portfolios. Group

life business, though returning a satisfactory result, yielded a lower return as compared to the

comparative figures as net claims incurred almost doubled.

The insurance service result increased to €12.2 million from the restated €5.9 million of FY

2022, a 104.8% growth. Insurance revenue grew by 10.1% reflecting the growth in premium

written. Claims frequency improved in Motor as did the number of claims reported and

projected for the current year, which management concurs to have been likely derived from

an improved enforcement of road regulations throughout the year.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Directors’ Report - continued

Review of business - continued

The Company - continued

On the other hand, the number of claims in Health and Travel increased significantly when

compared to FY 2022 with the latter reflecting the return to full normality following the

pandemic. Ensuring premium adequacy was high on the agenda and tariffs adjustments were

made particular in Motor to mitigate the increasing cost of repairs and vehicle parts due to

inflation and rising shipping costs. The impact of large losses was higher in Motor compared

to 2022 which were however offset by favourable run-offs. The net combined ratio in Motor

improved marginally to 90.2% from the 99.5% registered in FY 2022, which is a significant

improvement and a step towards ensuring that the Motor portfolio gives an adequate return

for years to come, although the ratio needs to be read in the light of the improved frequency

that is not guaranteed for the coming year and the improved run-off that goes through

fluctuations over the years. The whole non-life portfolio closed with a net combined ratio of

85.6% up from the 90.5% registered the previous year again due to a significant improved

run-off and a lower overall impact from large losses.

As the economy continued to grow above the Eurozone average, the impacts of the ongoing

Ukrainian war and the recent Hamas-Israeli conflict on the world economy, inflation still

keeping its head up worldwide, and interest rates not easing, all had an impact on Company

expenses. Margins continue to be squeezed and in particular in non-life business the rising

claim costs has required close monitoring of each line of business, ensuring pricing adequacy

whilst introducing changes in the products offered, taking on risk that is within the

Company’s risk appetite to maximise profit.

Business and client retention remains a major challenge as clients seek insurance cover that

suits their needs at the right price. The Company remains focused on offering its clients a

better service directly or through its numerous intermediaries, even if remotely. The

Company continues to roll-out its implementation of its new insurance IT system, now also

including Agents, heading towards the critical migration stage that would see the new system

being the main underwriting system for the Company. This together with upgrading its

technological platforms will bring the Company closer to its clients. As progress is made in

rolling further products onto the new system, the Company is aware of the inherent risks that

an overhaul of the core IT system brings about both to resources and operations and

Management plans to ensure transition is done in a way to mitigate such risks.

The Company’s net investment return amounted to €2.0 million compared to the €1.1 million

in FY 2022 with a significant improvement emanating from fair value movements on Equity

portfolio which in FY 2022 had sustained losses. No dividend was received from MAPFRE

MSV Life p.l.c. during 2023 whilst in 2022 a contained dividend to its shareholders after an

absence of two years was made of which the Company received a net 1.00 million. Due

consideration is taken of the Solvency position of MAPFRE MSV Life p.l.c. in determining

the level of dividend to be paid. The economic environment last year and the significant fair

value losses in 2022 had put a strain on the Solvency of the life company and management

continued to take all necessary actions during 2023 to maintain the Solvency position in an

adequate level in line with its risk appetite. Revaluation of investment property held by the

Company rendered a marginal gain of €0.1 million against a loss of €0.6 million for 2022.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Directors’ Report - continued

Review of business - continued

The Company - continued

Comparative Company results also included a €0.5 million recovery from the liquidation of

Progress Assicurazioni S.p.A. equivalent to 6.35% of a subordinated loan that the Group had

given to the then Italian group undertaking.

The Shareholder’s Funds of the Company at €81.7 million saw an increase of 4.3% during

FY 2023 resulting from the profit for the year exceeding the payment of dividend for FY

2022 and positive investment value movements in equity. Net Asset Value per share as at 31

December 2023 amounted to €0.89.

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.

MAPFRE MSV Life p.l.c.

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

tax of €14.6 million for FY 2023, up compared to a restated €2.5 million registered for the

previous year. Profit after tax is recorded at €9.6 million, compared to a €2.1 million in the

previous year.

Similar to the Company, MAPFRE MSV Life also adopted the new accounting standards.

IFRS 17 ‘Insurance Contracts’ and IFRS 9 ‘Financial Instruments’ and also applied the

temporary exemption for qualifying insurers to apply IFRS 9 together with IFRS 17. While

IFRS 17 does not change the economic reality nor the underlying profitability of MAPFRE

MSV Life over the lifetime of the contracts, it resulted in significant changes in accounting

recognition, measurement, and disclosures.

The adoption of IFRS 17 necessitated the restatement of the 2022 comparative figures. The

restated 2022 comparative figures have to be read in the context of a Day 1 transitional gain

reported directly into the Retained Earnings on the Statement of Financial Position, the

derecognition of the Value of In-Force Business, the impact of interest rates on the assets

matching the term business, and the timing differences in the accounting profit recognition.

The financial performance in 2023 was characterised by positive contributions from

insurance activities and income generated from higher interest rates, in spite of the

challenging economic and financial landscape during the year.

The first half witnessed the US regional banking crisis and the subsequent takeover of Credit

Suisse by UBS. Geopolitical anxieties remained elevated due to the ongoing war in Ukraine

and the eruption of the Hamas-Israel conflict. Despite these headwinds, the global economy,

particularly the US, demonstrated remarkable resilience. Growing confidence in central

banks’ ability to curb inflation, fuelled expectations of interest rate cuts in 2024, spurred a

recovery in equity markets. Notably, bond benchmark yields closed the year near their

previous year-end levels, underscoring the market’s cautious optimism.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Directors’ Report - continued

Review of business - continued

MAPFRE MSV Life p.l.c. - continued

Total business written for financial year 2023 totaled €201.3 million, a decrease of 21.0%

over the prior year, on account of lower demand for single premium With-Profits business,

which was in line with expectations. Competition from bank deposits and government debt

issues affected adversely the re-investment of maturing policies.

On the other hand, MMSV met the challenges associated with the prevailing interest rate

scenario by taking the opportunity to accelerate its product diversification efforts with the

launch of short-term Unit Linked campaign products. These proved to be extremely popular

with the retail investors looking for short term guaranteed income and capital products.

Regular premium business results were also satisfactory.

The resilience of the local economy was reflected across several economic sectors

particularly in terms of a heightened activity in the property market leading to a robust

demand in mortgage loans, which generate demand opportunities in life insurance protection.

Long-term regular savings, primarily retirement savings, continued to exhibit a sustained

demand through personal pension plans and to a lesser degree, through voluntary

occupational pensions schemes.

Net claims incurred decreased to €261.6 million through the year compared to a prior year

€289.7 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 2.1% to stand at €2,319.7 million by the end of 2023.

Total shareholders’ funds at the close of 2023 amounted to €165.4 million (2022 restated:

€155.8 million), an increase of 6.1% over the previous year and above the minimum solvency

guidelines. The end of year Solvency Capital Requirement ratio is expected to improve

compared to the corresponding 2022 figure. Through its risk management framework, the

company actively manages its insurance, market and operational risks to preserve its financial

stability and maintain its solvency ratio within its defined risk tolerance.

The shareholders of MMSV are wholly committed to ensure that the company remains

adequately capitalised at all times to sustain business growth and to meet Solvency Capital

Requirements in line with the Solvency II framework.

The MMSV With Profits Fund stood at €1.91 billion at 31 December 2023 (2022: €1.89

billion). The fund registered a marginal growth as the positive price movement and the

income generated was contrasted by net fund outflows through an excess of claims, mainly

maturities, over premia.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Directors’ Report - continued

Review of business - continued

MAPFRE MSV Life p.l.c. - continued

The investment strategy of 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.

As financial assets recovered from the 2022 market lows, the With-Profits Fund registered a

total investment gain of €165.84 million generating a positive return of 8.64%. This

performance still did not manage to recoup the investment losses incurred in 2022, which had

amounted to €270.4 million. All asset classes, with one exception, contributed positively to

the overall investment return, particularly the equity allocation. Notwithstanding this positive

investment result, the unprecedented steep price falls in fixed income securities in 2022

remain largely unrecovered as interest rates remained high.

In March 2024, the Board of Directors of MAPFRE MSV Group approved a resolution

whereby differential rates of Regular Bonuses were declared in respect of With-Profits plans

held with MAPFRE MSV Life for the year ended 31 December 2023. These amounted to

2.40% for the Comprehensive Life Plan (regular and single premium policies), 2.50% in

respect of the Comprehensive Flexi Plan (regular and single premium policies), 2.50% under

the Single Premium Plan and 2.50% under the With-Profits options of the Investment Bond,

Retirement Plan and of the Personal Pension Plan. On the ‘Old Series’ Endowment and

Whole Life policies, a Regular Bonus of 2.00% of the basic sum assured plus bonuses was

declared.

In addition, the Board also announced the declaration of a Final Bonus for plans in force for

more than 10 years in respect of Regular Premium Comprehensive Life Plans and

Comprehensive Flexi Plans and Single Premium Plans. A Final Bonus was also declared for

additional top-up premiums on these plans provided where top-up contributions where made

at least 10 years before Maturity. For Regular Premium policies, the Final Bonus is expressed

as a flat percentage plus a percentage for every year in force after a specified number of years

in force as shown in the table below. Final Bonuses will be paid on the value of the Policy

Account as at the date of death or maturity between 1 May 2024 and the next bonus

declaration in accordance with the following table:


Product	Final Bonus Flat Rate %	Rate per Year in Force	After Years in Force
Comprehensive Life Plan ( Regular Premium)	4.00%	1.30%	23
Comprehensive Flexi Plan (Regular Premium)	Nil	1.00%	20
Single Premium Plan	4.00%	2.50% (capped at 15.00%)	10
Comprehensive Life Plan (Single Premium)	4.00%	2.50% (capped at 15.00%)	10
Comprehensive Flexi Plan (Single Premium)	4.00%	2.50% (capped at 15.00%)	10

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Directors’ Report - continued

Review of business - continued

MAPFRE MSV Life p.l.c. - continued

The Board of MAPFRE MSV Life also approved a Regular Bonus of 2.40% on those Secure

Growth policies which formed part of the portfolio of business transferred to MAPFRE MSV

Life from Assicurazioni Generali S.p.A. during 2000. Finally the Board also approved a

Regular Bonus of 2.00% on the ALICO 78 policies and a Regular Bonus of 2.00% on the

ALICO 66 polices which formed part of the portfolio of business transferred to MAPFRE

MSV Life in 2011 from American Life Insurance Company (“ALICO”).

Notwithstanding the prudent investment policy adopted by MAPFRE MSV Life, past

performance is no guarantee for the future. Although MAPFRE MSV Life’s With-Profits

investments have generally provided policyholders with stable and satisfactory returns when

compared with other similar investment products, in the light of the current uncertainty in the

capital markets, investment returns could fluctuate further. Fair value movements and

investment returns impinge directly on the rates of bonuses declared by the company. Regular

Bonuses are therefore expected to vary over the lifetime of the policy whilst Final Bonuses

are likely to be highly volatile and very dependent on the investment performance of the

company.

In 2023, the life insurance market in Malta saw a further contraction as inflation remained

elevated and a proportion of maturing insurance saving policies migrated to other financial

sectors.

The 2023 regular bonus rates on core products represent an increase of 1.50% from the 2022

declaration. This reflects the improved investment performance of 2023.

The 2022-2024 Strategic Plan execution remains our top priority in ensuring the present and

future success of the company. Good progress continues being made along the three main

strategic pillars of; revenue streams diversification; data and digital transformation and

excellence in customer service. Together with these three pillars, sustainability has also

featured prominently on the company’s agenda.

In 2023, MAPFRE MSV Life launched three single premium Unit-Linked campaign

products. This is in line with our revenue streams diversification strategy. Unit-Linked

products can continue to further enhance our value proposition in the savings and investment

space. Unit-linked products also represent an opportunity to broaden our customer base by

appealing to other segments of the market. Gradual but sustained growth continues to be

registered in pension savings.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Directors’ Report - continued

Review of business - continued

MAPFRE MSV Life p.l.c. - continued

Private pensions savings remains significantly underdeveloped and underfunded, and thus

represent a significant growth opportunity over the coming years, providing the economy

with a much-needed elements of strengthening and diversification of pension incomes. Apart

from the pension sustainability challenges, the projected country’s economic growth

trajectory, opens a pensions adequacy reality for future generations as the gap between the

state pension provided and the employment income before retirement continues to widen. The

company continues to invest in product development, IT systems and processes to offer

solutions which are more accessible to policyholders to help them save and invest for their

financial wellbeing along the different stages of their lifecycle including the retirement phase.

There were no significant insurance risks impacting the portfolios of business during the year,

and actuarial assumptions used in the valuation of policyholder obligations are regularly

updated to reflect our experience and in conformity with the relevant reporting standards.

Demand for life protection was in line with expectations. Locally, demand for life protection

continues to be strongly correlated with the demand for home loans. The need to have life

protection as a basic element of financial planning remains underappreciated. Promoting the

importance of having adequate levels of insurance is also part of our responsibilities to build

more financially secure and resilient communities.

The demand for With-Profits single premium contracts remained muted when compared to

previous years. A lower demand for this line of business was expected given the prevailing

financial and competitive landscape. On the positive side, a better-than-expected performance

was registered in terms of Unit Linked single premium business. The launch of short-term,

guaranteed Unit-Linked products proved very attractive to the retail investor.

Regular savings business remains a core component of our business strategy. Through our

regular savings products we aim to serve the need of the broader market through long-term,

accessible, flexible and efficient solutions. While, pensions savings is seen as a growth area,

promoting savings for retirement is also an obligation and responsibility. We want to support

our future generations of pensioners in building and maintaining their financial wellbeing and

aspirations.

The life protection line of business demand was in line with expectations. Locally, demand

for life protection continues to be strongly correlated with the demand for home loans. The

need to have life protection as a basic element of financial planning remains

underappreciated. The company feels that promoting the importance of having adequate

levels of insurance is also part of its responsibilities to build more financially secure and

resilient communities.

There were no significant insurance or financial risks impacting the portfolios of business,

during the year, and mortality assumptions used in the valuation of policyholder obligations

remained appropriate.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Directors’ Report - continued

Review of business - continued

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.

BEE Insurance Management Limited (‘BEE’) and its subsidiary Euro Med Risk Solutions

Limited which offer Insurance and Non-Insurance management services saw a pick-up in

third-party revenue due to fee revision to reflect rising personnel cost. During FY2022 BEE

commenced servicing the Group’s insurance entities in the Information Technology sphere. A

combined profit of €0.2 million was registered in line with the €0.2 million in the

comparative period.

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

Harbour Area. A loss of €0.4 million was recorded in the year, compared to negligible gain

registered at the end of 2022, resulting from a change in methodology applied for the

valuation of property. The directors continue to monitor the evolution of this project which

gives a potential future increase in value of this investment.

The Group

The Group registered a profit before tax of €24.0 million in FY 2023 compared to a restated

€8.3 million achieved in FY 2022. Profit after tax for FY 2023 closed at €15.9 million as

compared to the restated €5.6 million achieved in FY 2022. Group business written reaching

€297.0 million saw a drop of 13.2% against that registered in FY 2022, with both insurance

companies remaining leaders in their respective markets.

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

December 2023 amounted to €88.2 million (2022 restated: €80.2 million) on a consolidated

basis with a net asset value per share of €0.96 as at 31 December 2023 mainly as the result

for the year outweighed the payment of dividend by MAPFRE Middlesea.

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 are being implemented and more will be formulated as we move

towards this important goal. Good progress is also being registered in terms of the

environment, social and governance (ESG) dimensions.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Directors’ Report - continued

Review of business - continued

The Group - continued

As a financial institution, we are aware of our responsibility and contribution towards

sustainability and that this will primarily depend on how the Group allocates capital through

its investing decisions. In terms of the Sustainable Financial Disclosure Requirements

(SFDR), our With-Profits Fund, is currently classified as Article 6. The intention is to

transition this Fund to an Article 8 classification. Our Unit-Linked fund choice provides a

wide array of Article 8 funds. The Group obtained ISO 14001 Environment Management

Systems certification. We have developed a set of key performance indicators which help us

to gauge our pace and level of progress in achieving our sustainability goals.

Other initiatives like remote working, files digitilisation, electronic communication and

promotion of hybrid and electric vehicles, and the installation of photovoltaic panels on the

roofs of both Head Offices, lower our carbon footprint and move us closer to our goal of

becoming carbon neutral. The Group can also boast to have a diverse multinational workforce

with high levels of female participation in senior management positions. We are also proud to

have achieved the target set in terms of the gender pay gap metric. In 2022 the Company has

also joined the MESGA, the Malta ESG Alliance that brings together the main private

companies on the island that foster ESG initiative and can accelerate the sustainability of

Malta.

Our people are our most valued asset. During the year, training and development continued to

feature high on our agenda. Strategic key performance indicators have been set to ensure that

employees achieve their full potential while the customer benefits from the competence and

professionalism of our staff. We are committed to provide our employees with internal and

external training opportunities in Malta as well as overseas. We are very pleased with the

Employees Net Promoter Score (ENPS) results being obtain. Our human resource strategy is

based on recruiting the best talent, retaining talent and retraining to ensure we have the right

skill set for the present and future needs of the Company.

The Board expresses its gratitude and appreciation to the management and staff of all the

Group companies for their commitment and contribution to another satisfactory year, to

intermediaries for their continued support and to the many loyal customers for placing their

trust in MAPFRE Middlesea p.l.c. and MAPFRE MSV Life p.l.c..

Going forward we will maintain strong focus on our customers by continuously assessing our

business processes and operations in order to provide good value and excellent service. To

this end, we will continue to invest and innovate in information technology. During 2023 we

progressed on our major IT programmes in both insurance companies. MAPFRE Middlesea,

whilst still suffering some delays, achieved a number of goals in its plan for the year,

including the launch of further Motor products and the roll-out to a number of Agents

following the roll-out to Tied Insurance Intermediaries and Brokers the previous year, and is

heading for critical milestones in its roll-out of further products and policy and claim

migration from the legacy system in the coming months. MAPFRE MSV Life has in essence

completed the shift to the new system and moved to a support and maintenance phase. Over

the next year, the Group looks forward to consolidate on these achievements and to further

deliver in terms of the customer journey experience and its digital transformation.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Directors’ Report - continued

Review of business - continued

The Group - continued

Data and Digital remain cornerstones of our strategic plan. We are living in an era where the

pace of technological development is unprecedented. Developments in Artificial Intelligence

(AI) and generative AI dominated 2023. In the years to come this new technology is expected

to change the way people interact and work. This reinforces our conviction that the

investment in our core system and the digital ecosystem around it remains fundamental to

compete in this data driven and digital future. Increased automation is key to improved

efficiencies, scaling up to increased volumes without incurring a corresponding increase in

cost and to be able to deploy human capital towards higher value-added functions. Ambitious

key performance indicators have been set in terms of straight through processing and

automation.

We consider our distribution footprint in Malta to be one of our key strengths. We are going

to persist on the multichannel approach, we want the client to receive the same price from the

Company whatever channel he chooses to approach the Company: Direct, Agents, Tied

Insurance Intermediaries or Brokers. In MAPFRE MSV Life, whilst bancassurance remains

the most important distribution channel, we continue to invest in our TII network and direct

distribution channels to ensure that our customers benefit from the widest possible

accessibility and improved level of service. This is also another dimension to the MAPFRE

Group strategic pillar of distribution and diversification.

Customer experience remained central to our strategy. In 2023, we have re-organised its

commercial structure in order to enhance the overall client experience across all channels and

to gain operational efficiency, a holistic commercial strategy focused on the respective

individual distribution channels covering MAPFRE Malta’s value proposition across life and

non-life. As a consequence of this initiative, our front office personnel at Regional offices,

can now dedicate more time to look after our clients’ needs when they visit our office without

increasing waiting time. This is an overall improvement in the service level we are offering to

our customers which is confirmed by the regular customer satisfaction surveys conducted.

Outlook

The outlook of the Board of Directors for 2024 remains one of cautious optimism. The local

economy is expected to remain resilient in the context of a continued challenging

environment as inflationary pressures persist for most of the year. The global capital markets

outlook is mixed, with many experts predicting the global economy to grow moderately and

markets to remain volatile. In 2024, the world will go through 40 elections including four of

the world’s five most populous countries. Inflation and geopolitical risks remain the main

sources of uncertainty.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Directors’ Report - continued

Review of business - continued

Outlook - continued

Within this context, inflation will have an impact on all the services that the Group receives

both in running its operations and also from a claims perspective. Correct pricing will be key

to ensure that the demand for general business products grows sustainably yielding an

adequate return. Demand for the regular protection and savings business are expected to be

sustained. On the other hand, demand for lump sum investments should improve as inflation

subsides and central bank start to ease monetary policy. However, competition for liquidity

from financial institutions and local government debt issuance to finance its borrowing needs

are expected to persist.

The demand for non-life insurance cover is expected to remain strong as the economy grows

and lifestyle and spending patterns change. Addressing the customer needs whilst ensuring

price adequacy will be critical to the growth of our business written volumes. The Company

will need to adapt to be able to position itself to exploit the many opportunities that will

certainly arise. The Maltese life insurance market has, for a number of years, registered

growth that is significantly above the average in Europe but remains a relatively underinsured

market. Although life insurance companies are playing an increasingly important role in

Maltese household savings, comparative studies with other European life insurance markets

continue to show that whilst the Maltese life insurance market has grown significantly over

previous decades, the life insurance density and life insurance penetration remain below the

European average. We therefore continue to see attractive potential for an uplift in life

protection and in long-term and retirement savings in the local life insurance market.

On the regulatory front, the landscape continues to experience important developments.

Digital Operational Resilience Act (DORA) will take center stage, with 2024 expected to be

the year of implementation by the Group in preparation for its effective date in 2025. The

adoption of the ambitious Retail Investment Package by the European Commission in May

2023 marks a significant regulatory milestone that calls for an in-depth impact assessment.

Sustainability regulatory developments maintain their pace of development, featuring new

European Sustainability Reporting Standards, the impending transposition of the Corporate

Sustainability Reporting Directive (CSRD) into national law and the review of the

Sustainable Finance Disclosure Regulation (SFDR), amongst others. Agreement was reached

on amendments to the Solvency II Directive and new rules on insurance recovery and

resolution (IRRD). The Insurance Distribution Directive and the Packaged Retail and

Insurance-Based Investment Products (PRIIPs) Regulation remain the subject of reviews.

Purely at the local level, the New Regime regulating Insurance Undertakings carrying Long-

Term Business and the distribution of contracts of insurance as Retirement Products being

proposed by the Malta Financial Services Authority will continue to be discussed and

debated, shaping the future regulatory framework under which these products will eventually

operate.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Directors’ Report - continued

Review of business - 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 47. A gross dividend in respect of

year ended 31 December 2023 of €0.073057 per share amounting to a total dividend of

€6,721,231 is to be proposed by the Directors at the forthcoming annual general meeting.

This is equivalent to a net dividend of €0.048913 per share amounting to a total net dividend

of €4,500,000 (2022: €3,500,000).

Directors

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

Martin Galea

Jose Ramon Alegre (resigned as from 1 January 2024)

Antoinette Caruana

Gordon Cordina

Jose Maria del Pozo

Jose-Luis Jimenez

Etienne Sciberras

Robert Suban (appointed until 28 April 2023)

Godfrey Swain (appointed from 28 April 2023)

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.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

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 2022

are included in the Annual Report 2022, 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 2023, 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.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

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 2023, 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 2022, 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.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

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 25 March 2024 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 2023

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

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’)

acknowledges that compliance with the said Code is not mandatory, however notes 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 its stakeholders.

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

required standards of accountability, transparency and integrity. The Board continues to

strive to adhere to the Code as well as 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 believes 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 good oversight, challenging the Management and Internal

Control Functions where necessary to this end.

As at 31 December 2023 the Board was composed of a non-executive Chairman and eight

non-executive Directors. The Directors, appointed in terms of the Memorandum and Articles

of Association of the Company, are all competent, trustworthy and solvent individuals and

thus fit and proper to direct the business of the Company. The maximum number of Directors

pursuant to the Memorandum and Articles of Association is ten. Martin Galea was re-

appointed as a non-executive Chairman during the Board meeting held on the 28 April 2023,

which followed the Annual General Meeting (AGM) held on the same day.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 1 – The Board - continued

During the said AGM the two institutional shareholders re-appointed the retiring Directors

Jose Ramon Alegre, Gordon Cordina, Martin Galea, Jose-Luis Jimenez, Jose Maria del Pozo

and Etienne Sciberras, while the other shareholders re-appointed the retiring Directors

Antoinette Caruana and Paul Testaferrata Moroni Viani during the election for directors.

Godfrey Swain was newly appointed by the shareholder Bank of Valletta p.l.c in order to

bring the total number of Directors to nine.

All of the Directors of the Company are approved by the Regulator 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 level and collectively, the Members of the

Board are deemed to possess the necessary skills and experience to make effective

contribution to the leadership and decision-making processes of the Company as reflected

within the Company’s strategy and policies. The Board moreover exercises prudent and

effective controls in order to achieve both 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 Company operates with a clear sense of purpose and

collective vision and the Board liaises closely with the President and Chief Executive Officer

(‘CEO’) of the Company in a consistent manner in order to ensure that the Board receives

timely and complete information in relation to the business of the Company and management

performance. This enables the Board to maintain effective oversight of the decision-making

process and to exercise the aforementioned controls. Javier Moreno, appointed CEO on the

31 March 2021, continued to hold the position of CEO throughout 2023.

As was 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.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 2 – Chairman and CEO

The positions of Chairman and CEO are held by different individuals with a clear

demarcation between the leading of the Board by the former and the CEO’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. He sets the Board's 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 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 informs and makes recommendations to the Board. Within this context, 2023 was the

second year of the Company's three-year Strategic Plan as developed by Management,

discussed with the Chairman and approved by the Board.

Within the Strategy as approved by the Board, the CEO develops and drives performance and

leads the decisions on all matters affecting the operations, technical performance and

stakeholders of the business 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, bringing together the Chief Officers within MMS under the Chairmanship of the

CEO on a monthly basis.

The positions of the Chairman of the Board and CEO are distinguished accordingly within

the Terms of Reference of the Board of Directors and in practice, there is also a clear division

of responsibility between the former who oversees the Board and the latter's responsibility in

managing the daily business of the Company. Thus the positions remain completely

independent from one another to avoid concentration of authority and power 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.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Corporate Governance Statement - continued

2.Compliance with the Code - continued

Principle 3 – Composition of the Board - continued

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 competences, 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 officials, 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 2023 the Board was composed exclusively of non-executive Directors, of which eight

were male and one was female. Although not a Director of MMS, the CEO is invited to

attend Board meetings with a view to ensuring a full understanding and appreciation of the

Company's policies and strategy and to provide direct input as may be required for the

Board’s deliberations. In addition, certain members of Senior Management are 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 (as indicated on page 21 of the Annual

Report) as defined by the Code.

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”.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Corporate Governance Statement - continued

2.Compliance with the Code - continued

Principle 3 – Composition of the Board - continued

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.

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.

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, specific 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.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 5 – Board Meetings - continued

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. An update is also provided at every Board Meeting

in terms of the various Company projects and accomplishments by Area, as well as on

regulatory and other relevant events amongst others.

Apart from setting the strategy and collectively promoting the success of the Company, the

Board is 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. Notice of the dates of forthcoming Board meetings together with

all relevant documentation are circulated in advance to all Directors in order to give them

opportunity to consider the information and prepare well ahead of each Board meeting.

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, prior to sign off by the Chairman.

Decisions of the Board are taken by majority of those present subject to the Chairman’s

casting vote as may be necessary.

During financial year 2023, the Board of Directors of the Company held seven Board

Meetings which were attended as per below.

Martin Galea (Chairman) (NED, I)7

Jose Ramon Alegre (NED)6

Antoinette Caruana (NED, I)6

Gordon Cordina (NED , I)7

Jose Maria del Pozo (NED)6

Jose-Luis Jimenez (NED)5

Etienne Sciberras (NED)7

Robert Suban (NED, I - appointed until 28 April 2023)2

Godrey Swain (NED, I - appointed on 28 April 2023)*5

Paul Testaferrata Moroni Viani (NED, I)7

NED – Non-executive Director

I – Independent

* With regulatory approval as from 13 July 2023;

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 5 – Board Meetings - continued

The MMS CEO attended all the Board meetings by invitation.

Moreover, during 2023 two Board Briefings were 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 June was to review the draft Own Risk and Solvency Assessment prior to

submission to the Regulator including the appropriateness of the Standard Formula approach,

the extent of the Company's solvency, the Own View solvency calculations and the outcome

of the Stress Tests. The second part of the June Briefing was a review of the draft

Methodology Papers being proposed in relation to the implementation of IFRS 17, as

delivered by representatives of Price Waterhouse Cooper in their capacity as external

consultants to the Company.

During the second Briefing held in October the Board carried out an in-depth review of the

developments in the Strategic projects during 2023, being the second year of the three-year

Strategic Plan including the proposed amendments as to the way forward in 2024 and the

relative Budget requirements. In addition, a presentation was delivered by the Chief Actuarial

Officer, Amanda Brown, on the Annual Actuarial Function Report. This detailed presentation

included, amongst others, details of progress achieved on the prior year recommendations, an

actuarial opinion on the Underwriting Policy and on Reinsurance, as well as

recommendations for 2024.

Notices of meeting dates were circulated well in advance of the relative meetings and

meeting packs containing all relevant information, including the minutes of the previous

Board Meeting, were circulated to the Directors ahead of each meeting by the Company

Secretary. Each communication allowed ample opportunity for the Directors to review the

information and prepare for the next scheduled Board or Committee meeting.

Principle 6 – Information and Professional Development

Although no Induction Briefing was delivered in 2023 as the only Director newly appointed

to the Company's Board was already a Director of the subsidiary company MAPFRE MSV

Life plc and thus familiar with the strategy and operations of the MAPFRE Group in Malta,

this was an exception to the general rule. In all other cases 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. New Directors also receive a MAPFRE Corporate comprehensive guide that

includes, amongst others, Directors’ duties and responsibilities.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 6 – Information and Professional Development - continued

During 2023 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 twelve sections with 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.

Moreover, Directors are 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 they 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 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 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 2023 including on Cyber

Security, Inclusion, Mental Health and Environmental, Social and Governance (ESG)

Awareness.

Indeed during 2023 the Company kicked off an intense and specialised training initiative for

the CEO, Chief Officers and Heads in conjunction with external specialists on Leadership

and Personal Development. 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 set to run over a period of eighteen months.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

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 off-site meeting amongst the Directors and the Company

Secretary and an action plan developed and committed to.

No requirement for material changes in the governance structure or processes resulted from

this evaluation exercise, however, the emerging action points and recommendations were

implemented within 2023 as co-ordinated by the Company Secretary and overseen by the

Chairman.

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 so 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:

• monitoring of the financial reporting process

• monitoring of the independence and effectiveness of the Company’s internal control,

internal audit and risk management systems

• monitoring of the audit of the annual and consolidated accounts

• maintenance of communication on such matters between the Board, management, the

external Auditors and the internal Auditors

• 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

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 8 – Committees - continued

Audit Committee - continued

• monitoring and reviewing of the external Auditor’s independence and in particular the

provision of additional services

• development and implementation of a policy on the engagement of the external

Auditor to supply non-audit services

• reviewing of actuarial reports

• management of financial risks

• analysis and endorsement of the Annual Internal Audit Plan

• arm’s length nature of related party transactions and

• oversight over the statutory audit process including recommendations to the selection

of the statutory auditor and the setting of the relative fees in accordance with the

provisions of the Statutory Regulations governing statutory audits of public interest

entities within the European Union.

The Committee generally protects the interests of the stakeholders and the shareholders in

particular and assists Directors in ensuring the accuracy of the Company’s financial results

and reporting. It ensures that the Company’s accounting and finance function are robust and

transparent, advises the Board on financial reporting in terms of both the financial statements

and announcements relative to performance and also has oversight of the Internal Audit

Function to ensure adequate resources, independence and follow up on any 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 2023, 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 Whistleblower

Policy.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

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 appointed Chairman of the Audit Committee by the Board of Directors in

accordance with Capital Markets Rule 5.117.4 as of 28 April 2023, taking over from Gordon

Cordina. 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 2023. 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. These are Godfrey Swain (replacing Gordon Cordina

as aforementioned), Antoinette Caruana and Martin Galea. The Audit Committee members

and relative attendance at meetings is listed below.

Godfrey Swain (Chairman, appointed on 28 April 2023) 3

Antoinette Caruana 7

Gordon Cordina (appointed until 28 April 2023) 3

Martin Galea 6

Jose Maria del Pozo 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 the financial sector, as

well as in other sectors, including the insurance sector, at both national and international

level.

The CEO, the Chief Financial Officer and the 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.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

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 thus

ensuring good 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, codes,

rules and regulations, relevant to the Company and its business; and it maintains oversight for

review and proper implementation of the Company’s Risk policies and 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 Company’s Regulator.

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 companies Bee Insurance Management Ltd. and

EuroMed Risk Solutions Ltd. also report to this Committee at every meeting.

The Risk and Compliance Committee held five meetings during 2023. The Committee

members and relative attendance to meetings is listed below.

Martin Galea (Chairman) 5

Diane Bugeja 4

Jose Maria del Pozo 5

Etienne Sciberras 5

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 8 – Committees - continued

Risk and Compliance Committee - continued

The CEO, the Chief Financial Officer, 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 and Compliance Committee reports to the Board at every Board

meeting thus ensuring good 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 on a monthly basis the business of the Company

was discussed at three meetings during 2023. The Committee members and relative

attendance to meetings is listed below.


Simon Azzopardi	3
Romeo Cutajar (Chairman)	3
Jose-Luis Jimenez	3
Jose Maria del Pozo	3
Javier Moreno	3
Patrick Spiteri Swain	3
Paul Testaferrata Moroni Viani	2

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.

Remuneration Committee

The Board of Directors approves the remuneration of Directors and Chief Officers on the

recommendation of the Remuneration Committee. The maximum aggregate directors’

emoluments are established and approved by the shareholders during General Meetings as

and when required.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 8 – Committees - continued

Remuneration Committee - continued

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 2023 are considered

in the Remuneration Statement and Report to the Shareholders.

The Remuneration Committee held three meetings during the period under review and the

attendance was as follows:


Jose Ramon Alegre (Chairman)	3
Antoinette Caruana	3
Gordon Cordina (appointed on 28 April 2023)	2
Robert Suban (appointed until 28 April 2023)	1

The CEO for MAPFRE Middlesea p.l.c., the CEO for MAPFRE MSV Life p.l.c., the Chief

Officer, Human Resources for MAPFRE Middlesea p.l.c., amongst others as may be

required, attend the Remuneration Committee meetings by invitation. The Company

Secretary also acts as Secretary to the Committee.

The 2023 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 well

understood. The Board is of the view that during the period under review the Company has

communicated effectively with the market through a number of 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.

Apart from the AGM, the Company communicates with its shareholders through the Annual

Report, as available for review and downloading from the Company’s website. 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.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 9 – Relations with Shareholders and with the Market - continued

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 CEO maintain open

dialogue with the major shareholders and the Chairman, 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 and press releases. During the year

under review, the Company issued various press releases related to the controlling

shareholder, namely MAPFRE S.A, in connection with the latter’s 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 through

company announcements and press releases. In addition, the six monthly and annual results

include a section on the insurance interests of institutional shareholders.

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 would include a record of

such declarations and of the action taken by the individual director concerned as and when

required.

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.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Corporate Governance Statement - continued

2. Compliance with the Code - continued

Principle 11 – Conflicts of Interest - continued

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 2023 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

During 2023, MAPFRE Malta once again met its CSR objectives collaborating with a

number of different entities to organize several activities, ranging from food and blood

donations, environmental activities and donations to various charitable organisations and

NGOs. Malta Community Chest Fund, Malta Trust Foundation, Majistral Park, Malta Red

Cross Foundation, Fondazzjoni Patrimonju Malti and Down Syndrome Association were

some of the beneficiaries of these donations to mention a few.

Fundación MAPFRE once again allocated over €160,000 for projects in Malta across

different areas including road safety awareness, health campaigns and social actions.

Moreover, the Foundation has collaborated with Caritas Malta, supporting an Adventure

Therapy Cycling Project, providing therapeutic outdoor activities for adolescents dealing

with substance abuse issues. Throughout 2023, Fundación MAPFRE also continued in their

efforts to generate awareness towards road safety measures by educating young adults and

the public in general on road safety measures. Besides its ongoing campaign in collaboration

with Malta Public Transport, Ministry of Education and the Road Safety Council, Fundación

MAPFRE teamed-up with Doctors for Road Safety (D4RS), who also share the same concern

on this important immediate national issue.

MAPFRE Malta also joined the fight against breast cancer with a variety of awareness-

raising activities through their #ThinkPink campaign, as well as by collaborating with the

Action for Breast Cancer Foundation as per previous years.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Corporate Governance Statement - continued

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 exclusively of non-

executive Directors. 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) and each Director retires from office at the AGM. Therefore, the composition of the

Board of Directors is determined by the shareholders during the AGM. Moreover the CEO of

the Company attends and reports during all meetings of the Board 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 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 and its Board remain

mindful of the recommendation and this view would potentially be re-visited in the event of a

change in Board composition or other circumstances.

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.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

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. In 2023 a group discussion of the

final report was facilitated by a specific off-site meeting presided over by the Chairman and

recommendations were noted for implementation by the Company Secretary.

For these reasons the process is deemed to be comprehensive and sufficient to meet the

intended aims.

Principle 8A – Remuneration Committee: Code Provision 8.A.1

Code Provision 8.A.1 recommends that the Board of Directors: “should establish a

Remuneration Committee composed of non-executive Directors with no personal financial

interest other than as shareholders in the Company, one of whom shall be independent and

shall chair the Committee”.

As detailed further in the Directors' Remuneration Report, up until 28 April 2023, the

Remuneration Committee was composed of Jose Ramon Alegre (Chairman and Non-

Independent Director), Antoinette Caruana and Robert Suban. The composition saw a

reshuffle relative to the previous year and was once again re-composed at the AGM held on

the 28 April 2023 to comprise Jose Ramon Alegre as Chairman, Antoinette Caruana and

Gordon Cordina. This to continue to foster open dialogue and to ensure that all shareholders

are represented contributing to independence and objectivity in the functioning of the

Committee.

Although the Director holding the Chair of the Committee was not an independent non-

executive Director as recommended, Committee decisions are reached on the basis of the

consensus of all members present. This fact, coupled with open discussion, ensures that final

decisions taken are not swayed in any way by the Director holding the Chair.

Moreover, Committee document packs are circulated to all Members well in advance of the

meeting allowing all Members ample opportunity to informally discuss any matters in

anticipation of the Meeting and / or to represent their views.

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, in line with the

general commercial practice in Malta. 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.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Corporate Governance Statement - continued

3.Non-compliance with the code - continued

Principle 8B – Nomination Committee - continued

Thus the Company considers that the procedure is already 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.

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 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.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Corporate Governance Statement - continued

3.Non-compliance with the code - continued

Internal Control and Risk Management System - continued

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 regulator

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 are as follows:

Organisation - The Company has clear reporting lines from the Boards of Directors of

subsidiary and associated companies. The MMS Chairman is also kept informed as to the

operations of the subsidiary companies either by sitting directly on the respective Boards or

through the other Company Directors and Senior Management who sit on the Company and

subsidiary boards, Management and Operational Committees.

Risk Identification - The respective Management of each of the Group companies is

responsible for the identification and evaluation of key risks applicable to their areas of

business. The Board reviews its Risk Management policies and strategies and oversees their

implementation to ensure that identified key risks are properly assessed and managed. 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 approval of the Risk and Compliance Committee and ultimately of the Board of

Directors.

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.

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

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Corporate Governance Statement - continued

General Meetings - continued

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 accordance with the declaration made in the Corporate Governance Statement for

Financial Year 2022, in 2023 the Company reverted to hosting a physical AGM 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.

After an absence of two years, a physical AGM was again held on 28 April 2023.

Signed by Martin Galea (Chairman) and Antoinette Caruana (Director) on the 25 March

2024.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

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 2023, the Committee Members were Jose Ramon Alegre (Chairman),

Antoinette Caruana and Robert Suban. Robert Suban did not submit his nomination to the

Board of Directors for re-election at the Company's Annual General Meeting ("AGM") held

on the 28 April 2023, and thus, at the Board meeting held directly after the AGM, Jose

Ramon Alegre, Antoinette Caruana and Gordon Cordina were appointed as the members of

the Remuneration Committee. Jose Ramon Alegre was once again appointed Chairman.

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 & CEO, Javier

Moreno, the MAPFRE MSV Life p.l.c (MMSV) CEO, Etienne Sciberras and other members

of senior management, including Ines Silva in her capacity as Chief Officer Human

Resources for both companies, were invited to attend the Committee meetings held

throughout the year as and when required. 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 chair the

Committee. The Committee takes decisions by the unanimous agreement of its Members.

Therefore, even though the Committee is not chaired by an independent non-Executive

Director (the aforementioned Jose Ramon Alegre being a non-Executive but non-Independent

Director), the Chair's vote does not sway the decisions taken by the Committee consequent to

the open and transparent discussions.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

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

Jose Ramon Alegre (Chairman) 3

Antoinette Caruana 3

Gordon Cordina (Member as from 28 April 2023) 2

Robert Suban (Member until 28 April 2023) 1

The Committee determined and/or discussed the following matters:

• Senior Management Appointments:

• HR Reports;

• Proposed Performance Bonus Pay-Out for FY2022 & Salary increase for 2023;

• Amendments to the Remuneration (Compensation) Policy;

• 2023 Management by Objectives Variable remuneration framework;

• Collective Agreement Amendments:

• Succession Planning

• Outcome of the eNPS 2023 employee Survey

• MAPFRE Malta Mental Health & Well-being Strategy

• Remuneration Statement for the Annual Report

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 28 April 2023.

The Committee reviews and approves the individual remuneration arrangements for Senior

Management, namely, the President & 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.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

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.

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 and completed a full year in 2023.

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. 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 below for further information with regard to the contribution made by the

Company for Financial Year 2023 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 2023, 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. 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 a lot more holistic.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

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 President & 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.

Both in the case of the MMS President & CEO and for Senior Management, the

Remuneration Committee is of the view that the proportion of fixed remuneration to

performance bonus is also reasonable and appropriate.

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 received by Senior Management during Financial Year 2023 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

As at 31 December 2023, the Board of Directors of MAPFRE Middlesea p.l.c. was composed

of nine non-Executive directors. Three Directors, namely Jose Ramon Alegre, 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.

Etienne Sciberras also did not receive a fee since during Financial Year 2023 he occupied the

position of Chief Executive Officer of MAPFRE MSV Life p.l.c. (a subsidiary of MMS).

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Remuneration Statement and Report of the Remuneration Committee to

the shareholders - continued

3. Remuneration Statement - continued

b. Remuneration Policy – Directors - continued

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 (2022: €60,000)

Other Directors (per Director)€40,000 per annum (2022: €40,000)

Audit Committee Fees

Chairman€7,000 per annum (2022: €7,000)

Member (per member)€5,000 per annum (2022: €5,000)

Subsidiary Fees

Chairman€7,000 per annum (2022: €7,000)

Member (per member)€5,000 per annum (2022: €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.

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Remuneration Statement and Report of the Remuneration Committee to

the Shareholders - continued

3. Remuneration Statement - continued

c.Code Provision 8.A.5

Directors' Emoluments 2023


Fixed Remuneration	Variable Remuneration	Share Options	Others
€264,083	None	None	None

Fees payable to directors in respect of 2023 amounted in total to €264,083 (2022: €307,350).

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 that may

be paid to the Directors 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 non-

Executive 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-second Annual General

Meeting held on the 28 April 2023, 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:

MAPFRE MIDDLESEA p.l.c.

Annual Report - 31 December 2023

Remuneration Statement and Report of the Remuneration Committee to

the Shareholders - continued

3. Remuneration Statement - continued

d.Code Provision 12.26K - continued


Director	2023 Fees €	2022 Fees €	Percentage Annual Change of Remuneration %
			2022-2023	2021-2022	2020-2021
Jose Ramon Alegre (NED)	nil	nil	n/a	n/a	n/a
Antoinette Caruana (NED)	45,000	45,000	0.00	4.65	0.00
John Cassar White (NED until 29 April 2022)	nil	13,333	n/a	(55.56)	n/a
Gordon Cordina (NED from 29 April 2022)1	52,333	54,683	<