When HighDome met REI

Insight, Knowledge-Center

Jacqueline Legrand of MDS Holdings and Paula Rios of HighDome PCC give us an example of the opportunities for PCCs in niche markets.

Read the full cover in FullCover  or click here. 

Ports: Risks and Market Solutions

Insight, Knowledge-Center

With the globalization of the economy, international trade and sea transportation are increasing at a fast pace. As a result, port operations are becoming a critical component of national economies. In terms of risk management, port operations pose specific challenges, to which the insurance industry provides appropriate solutions.

As a first step, it is fundamental to identify the risks and exposures involved in port operations. Victor Garibaldi’s article gives a strong contribution for this aim. The following article, authored by Mike Fountaine, assists in getting to know some of the solutions that the international insurance market has to offer towards covering these risks.

Read the full article.

Why Insurance Demand Varies Across Countries?

Insight, Knowledge-Center

MDS is pleased to share Grupo Actuarial (specialized services in insurance and pensions) latest study on the topic “Why Insurance Demand Varies Across Countries?”

To read the study, click HERE.

More information on this and other studies, can be obtained in Group ACTUARIAL, www.actuarial.pt

Malta – An International Finance Centre

Insight, Knowledge-Center

Malta, a small island state at the heart of the Mediterranean, has quietly emerged as one of Europe’s most stable and innovative finance domiciles. Malta’s decision to join the European Union in 2004 and the Eurozone in 2008 have proved pivotal to its development as a significant finance and business centre. Today, Malta has strong banking, insurance, fund and wealth managements sectors that have attracted investment from the world’s leading financial institutions, blue-chip multinationals and high-net-worth individuals.
(in Finance Malta investor guide series – insurance & pensions, 2013-2014 edition)

An English speaking nation, Malta has been, in recent years, ranked among the strongest EU economies in terms of GDP growth. Services account for 75% of GDP, industry for 23% and agriculture 2%. In 2012, the services sectors pushed up economic growth by 3.2% in nominal terms. Tourism plays an important role too, a 5.8% increase in tourist arrivals was registered 2012, a year when record arrival figures were registered. In addition, Malta has invested in becoming a knowledge based economy, in areas such as ICT, life sciences, education and financial services.

Malta’s economy has been one of the least affected by the recent financial crisis, with an unemployment figure of only 6.7%. It has experienced one of the shortest recession periods in the EU, having grown steadily since the 2nd quarter of 2009 (2012 estimated GDP growth in constant prices is forecast to read 1.9%). Actually, one might say that Malta’s resilience in the face of financial turmoil, economic recession and debt crisis has positioned it as a strong financial services centre, while its state of the art legislation, namely in the insurance sector, has contributed to Malta being considered innovative, while at the same time being totally compliant with EU legislation..

The financial regulator, the Malta Financial Services Authority, whilst being very approachable and flexible, adopts a professional approach in its outlook. This helps provide added assurance and comfort as to the quality of organizations that are licensed locally.

The recent turmoil associated with Cyprus’s banking difficulties raised comparisons with Malta in certain sectors of the press. There is an element of confusion, because both countries have financial services industries, both are islands in the Mediterranean and both have strong historical links to Great Britain. However, this is where the similarity ends, as Malta’s situation is considered very different to Cyprus’s .The Maltese Ministry for Finance issued a press statement on 28th March 2013, attesting for the good health of its banking sector. While saying that Malta, as a full EU member, subscribes the measures undertaken with regard to Cyprus, it stresses that “the Euro Group’s statement of 25 March concerning Cyprus calls for the downsizing of its domestic banking sector to reach the euro area average by 2018. The size of Malta’s domestic banking system is at present below the euro area average. The five domestically-oriented banks have total assets of 218% of GDP, while the eight banks with limited links to the domestic market have assets totaling 77% of GDP…moreover, the asset holding of the total banking sector is well diversified and with very limited exposure to the programme countries. The World Economic Forum ranks Malta 13th out of 144 countries in terms of soundness of its banking sector. The banking system has strong solvency ratios. It is also well capitalized with an overall capital adequacy ratio above 50%, exceeding significantly the minimum regulatory requirement of 8% under the Capital requirement Directive)…”.

Following the Cypriot bailout agreement, several articles have been written by well known financial specialists. They have consistently repeated that “Malta is not Cyprus”, claiming the models adopted by each country are totally different. An article by Lino Spiteri (former Ministry for Finance in Malta ) says that “Malta has enacted legislation…intended to ensure that Malta was not viewed as some brass plate tax haven. Its structured statutory provisions rest on very strict regulation by the Malta Financial Services Authority”. Mr. Spiteri adds that the two largest Maltese banks (Bank of Valetta and HSBC Malta) have a “very extensive deposit and asset base”, with an overall conservative philosophy, while “the Cyprus financial model…is dangerously concentrated on Russian investors”, with a “sensitive concentration”.

In addition, Cyprus’s banking system was heavily exposed to Greece’s financial troubles. Cyprus’s banks suffered very substantial losses when owners of Greek Government debt were forced to take “haircuts” of as much as 70% of the nominal value of the debt that they owned. The Maltese banking sector has had insignificant exposure to Greece’s financial troubles.

To quote Mario Mallia, Chief Risk Officer at Bank of Valetta, “it is a pity that an article in a foreign newspaper questioning the sustainability of the Maltese banking industry grabs immediate media attention, while official statistics that give witness to the strength of the local sector, and which are published on a regular basis, are largely ignored”. Mr. Mallia also mentions that “Statistics published by the European Central Bank consistently place the Maltese banking system as the most solvent in the entire European Union”.

We tend to agree with his final comment: “It is important that we base our opinions on authoritative and official data, which abounds and is readily available online, rather than on the musings of commentators who may not be sufficiently qualified or well informed to do justice to the subject.

Acknowledgement: the above mentioned articles by Lino Spiteri and Mario Mallia were written in The Times of Malta.