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Statement by the Ministry of Finance and Commerce regarding Banks' involvement in Life Insurance Business
02/05/1997
| The Ministry of Finance and Commerce informs the public that the | Malta Financial Services Centre was advised as a matter of policy by the Ministry of Finance on 9th December, 1993 that banks could henceforth carry on life insurance business through a subsidiary in terms of the Insurance Business Act, 1981, and as such to act as principals or as agents. The MFSC has never been advised alternatively by the Ministry of Finance and neither has the Board of the MFSC considered or is considering any change in this policy. Furthermore the MFSC has not received any applications from the banks that may necessitate a change in policy. |
| The current situation regarding the involvement of the banks in | life assurance is as follows: |
| Bank of Valletta Ltd. is an authorised salesman of Middle Sea | Valletta Life Assurance Co. Ltd. while Mid-Med Bank Ltd, Lohombus Bank Ltd. and APS Bank Ltd. are authorised salesman of Mid-Med Life Assurance Co. Ltd. |
| The equity involvement of the banks in the business of insurance is | as follows: |
- Mid-Med Life Assurance Co. Ltd. is owned by Mid-Med Bank Ltd. (87.5%) and APS Bank Ltd. (12.5%)
| - Bank of Valletta Ltd. owns 39% of Middle Sea Valletta Life | Assurance Co. Ltd. |
| - Middle Sea Insurance Co. Ltd., Mid-Med Bank Ltd. and Bank of | Valletta Ltd. are all public companies quoted on the Stock Exchange and have cross shareholding interests, the amounts of which is limited by the respective companies' Articles of Association. |
- Mid-Med Bank Ltd. holds 29% of the shares of MIB Holdings Ltd. which in turn owns 100% of Bain Hogg Malta Ltd., an authorised insurance broking company.
In recent weeks both the Bank of Valletta Ltd and Mid-Med Bank Ltd. have started taking certain steps to change their shareholding position. Mid-Med Bank Ltd. have asked the Central Bank of Malta for permission in terms of Section 15 of the Banking Act, 1994 to hold a 40% shareholding in General Insurance Co. Ltd. (company in formation). The Central Bank asked for the views of the MFSC, however, the MFSC could not provide any comments because General Insurance Co. Ltd. had not provided any proposals to the MFSC nor had it written to the MFSC about its intentions.
| The situation regarding the Bank of Valletta Ltd. is the following; | at a recent extraordinary general meeting, a resolution was debated to amend the Articles of Association to carry out the business of insurance in all its forms and aspects, whether as principal, agent or in any other capacity. However, the MFSC has neither received an application from the Bank of Valletta Ltd. to carry out the business of general insurance nor has the Bank of Valletta informed the MFSC of its intention to carry out general insurance business. |
| While the MFSC is not in a position to dictate to the banks what | strategies they should be developing for their insurance business, it does regulate the type of business they conduct and as stated above there has been no change in policy regarding the type of business banks can conduct in the insurance sector. |
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