213800KY94NQYH4IZU83 2023-01-01 2023-12-31 iso4217:EUR 213800KY94NQYH4IZU83 2022-01-01 2022-12-31 ifrs-full:IFRS17Member ifrs-full:OpeningBalanceAfterAdjustmentCumulativeEffectAtDateOfInitialApplicationMember 213800KY94NQYH4IZU83 2022-01-01 2022-12-31 213800KY94NQYH4IZU83 2023-12-31 213800KY94NQYH4IZU83 2022-12-31 ifrs-full:IFRS17Member 213800KY94NQYH4IZU83 2021-12-31 ifrs-full:IFRS17Member ifrs-full:OpeningBalanceAfterAdjustmentCumulativeEffectAtDateOfInitialApplicationMember 213800KY94NQYH4IZU83 2021-12-31 ifrs-full:IssuedCapitalMember 213800KY94NQYH4IZU83 2021-12-31 ifrs-full:SharePremiumMember 213800KY94NQYH4IZU83 2021-12-31 ifrs-full:OtherReservesMember 213800KY94NQYH4IZU83 2021-12-31 ifrs-full:RetainedEarningsMember 213800KY94NQYH4IZU83 2021-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 213800KY94NQYH4IZU83 2021-12-31 ifrs-full:NoncontrollingInterestsMember 213800KY94NQYH4IZU83 2021-12-31 213800KY94NQYH4IZU83 2021-12-31 ifrs-full:IFRS17Member ifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyRequiredByIFRSsCumulativeEffectAtDateOfInitialApplicationMember ifrs-full:IssuedCapitalMember 213800KY94NQYH4IZU83 2021-12-31 ifrs-full:SharePremiumMember ifrs-full:IFRS17Member ifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyRequiredByIFRSsCumulativeEffectAtDateOfInitialApplicationMember 213800KY94NQYH4IZU83 2021-12-31 ifrs-full:IFRS17Member ifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyRequiredByIFRSsCumulativeEffectAtDateOfInitialApplicationMember ifrs-full:OtherReservesMember 213800KY94NQYH4IZU83 2021-12-31 ifrs-full:IFRS17Member ifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyRequiredByIFRSsCumulativeEffectAtDateOfInitialApplicationMember ifrs-full:RetainedEarningsMember 213800KY94NQYH4IZU83 2021-12-31 ifrs-full:IFRS17Member ifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyRequiredByIFRSsCumulativeEffectAtDateOfInitialApplicationMember ifrs-full:EquityAttributableToOwnersOfParentMember 213800KY94NQYH4IZU83 2021-12-31 ifrs-full:IFRS17Member ifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyRequiredByIFRSsCumulativeEffectAtDateOfInitialApplicationMember ifrs-full:NoncontrollingInterestsMember 213800KY94NQYH4IZU83 2021-12-31 ifrs-full:IFRS17Member ifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyRequiredByIFRSsCumulativeEffectAtDateOfInitialApplicationMember 213800KY94NQYH4IZU83 2021-12-31 ifrs-full:IFRS17Member ifrs-full:OpeningBalanceAfterAdjustmentCumulativeEffectAtDateOfInitialApplicationMember ifrs-full:IssuedCapitalMember 213800KY94NQYH4IZU83 2021-12-31 ifrs-full:SharePremiumMember ifrs-full:IFRS17Member ifrs-full:OpeningBalanceAfterAdjustmentCumulativeEffectAtDateOfInitialApplicationMember 213800KY94NQYH4IZU83 2021-12-31 ifrs-full:IFRS17Member ifrs-full:OpeningBalanceAfterAdjustmentCumulativeEffectAtDateOfInitialApplicationMember ifrs-full:OtherReservesMember 213800KY94NQYH4IZU83 2021-12-31 ifrs-full:IFRS17Member ifrs-full:OpeningBalanceAfterAdjustmentCumulativeEffectAtDateOfInitialApplicationMember ifrs-full:RetainedEarningsMember 213800KY94NQYH4IZU83 2021-12-31 ifrs-full:IFRS17Member ifrs-full:OpeningBalanceAfterAdjustmentCumulativeEffectAtDateOfInitialApplicationMember ifrs-full:EquityAttributableToOwnersOfParentMember 213800KY94NQYH4IZU83 2021-12-31 ifrs-full:IFRS17Member ifrs-full:OpeningBalanceAfterAdjustmentCumulativeEffectAtDateOfInitialApplicationMember ifrs-full:NoncontrollingInterestsMember 213800KY94NQYH4IZU83 2022-01-01 2022-12-31 ifrs-full:IssuedCapitalMember 213800KY94NQYH4IZU83 2022-01-01 2022-12-31 ifrs-full:SharePremiumMember 213800KY94NQYH4IZU83 2022-01-01 2022-12-31 ifrs-full:OtherReservesMember 213800KY94NQYH4IZU83 2022-01-01 2022-12-31 ifrs-full:RetainedEarningsMember 213800KY94NQYH4IZU83 2022-01-01 2022-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 213800KY94NQYH4IZU83 2022-01-01 2022-12-31 ifrs-full:NoncontrollingInterestsMember 213800KY94NQYH4IZU83 2022-12-31 ifrs-full:IFRS17Member ifrs-full:IssuedCapitalMember 213800KY94NQYH4IZU83 2022-12-31 ifrs-full:SharePremiumMember ifrs-full:IFRS17Member 213800KY94NQYH4IZU83 2022-12-31 ifrs-full:IFRS17Member ifrs-full:OtherReservesMember 213800KY94NQYH4IZU83 2022-12-31 ifrs-full:IFRS17Member ifrs-full:RetainedEarningsMember 213800KY94NQYH4IZU83 2022-12-31 ifrs-full:IFRS17Member ifrs-full:EquityAttributableToOwnersOfParentMember 213800KY94NQYH4IZU83 2022-12-31 ifrs-full:IFRS17Member ifrs-full:NoncontrollingInterestsMember 213800KY94NQYH4IZU83 2023-01-01 ifrs-full:IFRS9Member ifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyRequiredByIFRSsCumulativeEffectAtDateOfInitialApplicationMember ifrs-full:IssuedCapitalMember 213800KY94NQYH4IZU83 2023-01-01 ifrs-full:SharePremiumMember ifrs-full:IFRS9Member ifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyRequiredByIFRSsCumulativeEffectAtDateOfInitialApplicationMember 213800KY94NQYH4IZU83 2023-01-01 ifrs-full:IFRS9Member ifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyRequiredByIFRSsCumulativeEffectAtDateOfInitialApplicationMember ifrs-full:OtherReservesMember 213800KY94NQYH4IZU83 2023-01-01 ifrs-full:IFRS9Member ifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyRequiredByIFRSsCumulativeEffectAtDateOfInitialApplicationMember ifrs-full:RetainedEarningsMember 213800KY94NQYH4IZU83 2023-01-01 ifrs-full:IFRS9Member ifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyRequiredByIFRSsCumulativeEffectAtDateOfInitialApplicationMember ifrs-full:EquityAttributableToOwnersOfParentMember 213800KY94NQYH4IZU83 2023-01-01 ifrs-full:IFRS9Member ifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyRequiredByIFRSsCumulativeEffectAtDateOfInitialApplicationMember ifrs-full:NoncontrollingInterestsMember 213800KY94NQYH4IZU83 2023-01-01 ifrs-full:IFRS9Member ifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyRequiredByIFRSsCumulativeEffectAtDateOfInitialApplicationMember 213800KY94NQYH4IZU83 2023-01-01 ifrs-full:OpeningBalanceAfterAdjustmentCumulativeEffectAtDateOfInitialApplicationMember ifrs-full:IFRS9Member ifrs-full:IssuedCapitalMember 213800KY94NQYH4IZU83 2023-01-01 ifrs-full:SharePremiumMember ifrs-full:OpeningBalanceAfterAdjustmentCumulativeEffectAtDateOfInitialApplicationMember ifrs-full:IFRS9Member 213800KY94NQYH4IZU83 2023-01-01 ifrs-full:OpeningBalanceAfterAdjustmentCumulativeEffectAtDateOfInitialApplicationMember ifrs-full:IFRS9Member ifrs-full:OtherReservesMember 213800KY94NQYH4IZU83 2023-01-01 ifrs-full:OpeningBalanceAfterAdjustmentCumulativeEffectAtDateOfInitialApplicationMember ifrs-full:IFRS9Member ifrs-full:RetainedEarningsMember 213800KY94NQYH4IZU83 2023-01-01 ifrs-full:OpeningBalanceAfterAdjustmentCumulativeEffectAtDateOfInitialApplicationMember ifrs-full:IFRS9Member ifrs-full:EquityAttributableToOwnersOfParentMember 213800KY94NQYH4IZU83 2023-01-01 ifrs-full:OpeningBalanceAfterAdjustmentCumulativeEffectAtDateOfInitialApplicationMember ifrs-full:IFRS9Member ifrs-full:NoncontrollingInterestsMember 213800KY94NQYH4IZU83 2023-01-01 ifrs-full:OpeningBalanceAfterAdjustmentCumulativeEffectAtDateOfInitialApplicationMember ifrs-full:IFRS9Member 213800KY94NQYH4IZU83 2023-01-01 2023-12-31 ifrs-full:IssuedCapitalMember 213800KY94NQYH4IZU83 2023-01-01 2023-12-31 ifrs-full:SharePremiumMember 213800KY94NQYH4IZU83 2023-01-01 2023-12-31 ifrs-full:OtherReservesMember 213800KY94NQYH4IZU83 2023-01-01 2023-12-31 ifrs-full:RetainedEarningsMember 213800KY94NQYH4IZU83 2023-01-01 2023-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 213800KY94NQYH4IZU83 2023-01-01 2023-12-31 ifrs-full:NoncontrollingInterestsMember 213800KY94NQYH4IZU83 2023-12-31 ifrs-full:IssuedCapitalMember 213800KY94NQYH4IZU83 2023-12-31 ifrs-full:SharePremiumMember 213800KY94NQYH4IZU83 2023-12-31 ifrs-full:OtherReservesMember 213800KY94NQYH4IZU83 2023-12-31 ifrs-full:RetainedEarningsMember 213800KY94NQYH4IZU83 2023-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 213800KY94NQYH4IZU83 2023-12-31 ifrs-full:NoncontrollingInterestsMember 213800KY94NQYH4IZU83 2022-12-31 iso4217:EUR xbrli:shares
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 p ayables | 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
i
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
ii
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
iv
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 th e 25 March 2024
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
v
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
vi
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
ix
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
x
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
xi
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
xv
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
1
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
2
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
3
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
4
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
5
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
6
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
7
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
8
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
9
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
10
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
11
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
12
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
13
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
14
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
15
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
16
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
17
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
18
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
19
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
20
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
21
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
22
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
23
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
24
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
25
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
26
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
27
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
28
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
29
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
30
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
31
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
32
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
33
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
34
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
35
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
36
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
37
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:
Member Attended
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
38
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
39
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
40
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
41
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
42
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 | 0.00 | n/a | n/a
Jose Maria del Pozo (NED) | nil | nil | n/a | n/a | n/a
Martin Galea (NED)2 | 65,000 | 68,000 | (10.55) | 4.81 | 1.96
Jose Luis Jimenez (NED) | nil | nil | n/a | n/a | n/a
Taddeo Scerri (NED until 29 April 2022) | nil | 15,000 | n/a | 4.65 | 5.00
Etienne Sciberras (NED from 29 April 2022)5 | nil | nil | n/a | n/a | n/a
Robert Suban (NED from 29 April 2022 until 28 April 2023) | 13,333 | 26,667 | 0.00 | n/a | n/a
Godfrey Swain (NED from 28 April 2023) | 48,417 | nil | n/a | n/a | n/a
Paul Testaferrata Moroni Viani (NED) | 40,000 | 40,000 | 0.00 | 0.00 | (6.98)
Joseph F.X. Zahra (NED until 29 April 2022)4 | nil | 44,667 | n/a | 17.50 | 0.00
Total | 264,083 | 307,350 |  |  |

1 The amount includes €50,000 paid to Dr Gordon Cordina as Chairman of the subsidiary
Board. In 2022, from the whole amount €22,349 was paid to Bank of Valletta p.l.c. as Dr
Cordina’s employer based on a separate agreement for services rendered.
2 The amount includes €2,333 paid to Martin Galea in 2022 for the position as Chairman of
the subsidiary’s Audit Committee.
3 Total emoluments for 2023 paid to Mr Etienne Scbiberras as CEO of MAPFRE MSV Life
amounted to €239,530 (2022: €211,444).
4 The amount includes €31,333 paid to Joseph F X Zahra for the position as Director of the
subsidiary's Board and Chairman of the subsidiary's Audit Commitee as from 30 April 2022.
* Percentage annual change of remuneration were based on annualised remuneration for
two years being compared to allow for a meaningful comparison.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
43
Remuneration Statement and Report of the Remuneration Committee to
the Shareholders - continued
3. Remuneration Statement - continued
d.Code Provision 12.26K - continued
Remuneration paid to Directors as shown in the above table are all fixed in nature and thus
the ratio of fixed and variable remuneration was 100%-0% for both years being reported. The
changes in the total remuneration of Non-Executive Directors is to be considered with the
information included in the table, further down in this report, showing a comparison between
the percentage annual change of remuneration of President & CEO against company
performance metrics and percentage annual change of the Company’s employees’ average
remuneration employed on a full-time basis equivalent.
None of the Directors and Members of the Board Committees held any service contracts with
the Company or any of its subsidiary undertakings and no Director is entitled to share
options, profit sharing, pension benefits or any other type of emoluments save for the
provision of cover under a Group Life scheme. It is also confirmed that no other fees were
payable or paid to any of the Directors or Committee Members during the financial year
under review.
By reference to Capital Markets Rule 12.2A no other person is deemed to be in charge of the
operations or the activities of the Company, and thus fall within the definition of director,
beyond the members of the Board and the Chief Executive Officer.
In this respect and relative to Appendix 12.1 the total emoluments paid by the Company to
the Chief Executive Officer in office during Financial Year 2023 were as follows:

| Financial Year
| 2023 | 2022 | 2021
| € | € | €
President & CEO |  |  |
Javier Moreno Gonzalez |  |  |
Fixed Salary | 191,880 | 184,500 | 135,000
Defined pension contribution | 58,601 | 41,985 | 30,375
Other fringe benefits | 102,551 | 106,644 | 84,262
Total Fixed remuneration | 353,032 | 333,129 | 249,637
Variable remuneration | 135,674 | 116,320 | 97,817
Total remuneration | 488,706 | 449,449 | 347,454
Fixed Variable Proportion | 72%-28% | 74%-26% | 72%-28%

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
44
Remuneration Statement and Report of the Remuneration Committee to
the Shareholders - continued
3. Remuneration Statement - continued
d.Code Provision 12.26K - continued
In respect of Variable Remuneration, deferred or otherwise, paid or pending payment, a
partial or total reduction is possible if particular circumstances arise including in the event of
a restatement of annual accounts other than resulting from a change in legislation and in the
event of fraud. No such occurrence took place in 2023.
Variable remuneration for the President & CEO is based on Global, Regional and Country
results together with Country premium written targets, with the highest weighting given to
the Country results and premiums respectively. The main objective of the Group is profitable
Growth and the targets are aligned with such objectives. As part of a Global Group it is
expected that as a Country we contribute towards the profitability of both the Region and the
Global Group results and accordingly part of the variable remuneration is attached to the
achievement of the higher Group results. The achievement percentage follows a set scale
going from complete non-achievement, to pro-rata if not fully achieved, to accelerated
achievement if targets are exceeded. These scales are in line with the Remuneration Policy
and approved accordingly by the Remuneration Committee.
In terms of the requirements within Appendix 12.1 of the Capital Markets Rules, the
following table presents the annual change of remuneration of the President & CEO, of the
Company’s performance, and of average remuneration on a full-time equivalent basis of the
Company’s employees over the two most recent financial years:

Performance indicators | % Difference FY2023-FY2022 | % Difference FY2022-FY2021 | % Difference FY2021-FY2020
Company's profit after tax | 59.86%* | 45.3%** | (36.64)%
Company's gross premium written | 9.88% | 8.75% | 6.64%
Remuneration of Company's President & CEO | 8.73% | (2.98)%*** | 1.90%
Company's employees' average remuneration on full time equivalent | 1.34% | 3.39% | 6.44%
Group's employees' average remuneration on full time equivalent | 2.90% | 3.01% | 5.54%

* The increase arose mainly from 2023 being favourably impacted by an improved technical
result, lower Motor claims frequency and higher favourable claims run-off together with an
uplift from fair value gains on Equities and Property compared to losses in 2022.
** The increase arose mainly from 2022 being favourably impacted by the receipt of a net
€1.00 million in dividend from MAPFRE MSV Life p.l.c. and a €0.54 million recovery of an
amount previously impaired in relation to Progress Assicurazioni S.p.A. The percentage is in
line with prior year financial statements prior to IFRS 17 implementation.
*** For comparison purpose, since Javier Moreno Gonzalez's appointment began on 1 April
2021, his 2021 remuneration has been annualised.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
45
Remuneration Statement and Report of the Remuneration Committee to
the Shareholders - continued
3. Remuneration Statement - continued
d.Code Provision 12.26K - continued
In terms of the requirements within Appendix 12.1 (f) there has been no deviation from the
procedure for the implementation of the remuneration policy as defined in Chapter 12 of the
Capital Markets Rules.
As required by provision 12.26N of the Capital Markets Rules the Company’s auditors have
verified that the information that needs to be included in the Remuneration Report as per
Chapter 12 and Appendix 12.1 of the Capital Markets Rules, has been included.
Signed by Antoinette Caruana (Director and Remuneration Committee Member) on 25
March 2024.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
46
Statement of profit or loss

|  | Year ended 31 December
|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  |  | Restated |  | Restated
| Notes | €’000 | €’000 | €’000 | €’000
Insurance revenue | 7 | 140,580 | 131,408 | 92,869 | 84,350
Insurance service expenses | 7 | (91,444) | (98,556) | (68,455) | (72,683)
Net expenses from reinsurance contracts held | 7 | (15,844) | (7,872) | (12,247) | (5,727)
Insurance service result | 7 | 33,292 | 24,980 | 12,167 | 5,940
Interest revenue calculated using the effective interest method |  | 5,222 | 1,501 | 221 | 74
Other investment revenue/(losses) |  | 176,758 | (296,719) | 1,742 | 1,019
Net credit impairment losses |  | (22) | — | — | —
Net investment return/ (loss) | 8 | 181,958 | (295,218) | 1,963 | 1,093
Net change in investment contract liabilities | 8 | (8,194) | 10,353 | — | —
Finance (expense)/income from insurance contracts issued | 8 | (176,871) | 264,695 | (1,320) | 2,604
Finance (expense)/income from reinsurance contracts held | 8 | (2,227) | 5,935 | 486 | (1,059)
Net financial result |  | (187,292) | 280,983 | (834) | 1,545
Net insurance and investment results |  | 27,958 | 10,745 | 13,296 | 8,578
Other income | 9 | 1,903 | 1,373 | — | —
Other operating expenses |  | (5,842) | (4,366) | (3,432) | (2,522)
Recovery of impairment in group undertaking |  | — | 540 | — | 540
Profit before tax |  | 24,019 | 8,292 | 9,864 | 6,596
Tax expense | 12 | (8,076) | (2,677) | (3,176) | (2,413)
Profit for the year |  | 15,943 | 5,615 | 6,688 | 4,183
Attributable to: |  |  |  |  |
- owners of the Company |  | 11,309 | 4,476 | 6,688 | 4,183
- non-controlling interests |  | 4,634 | 1,139 | — | —
|  | 15,943 | 5,615 | 6,688 | 4,183

The Notes on pages 55 to 237 are an integral part of these financial statements.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
47

Statement of profit or loss and other comprehensive income
|  | Year ended 31 December
|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  |  | Restated |  | Restated
| Notes | €’000 | €’000 | €’000 | €’000
Profit for the financial year |  | 15,943 | 5,615 | 6,688 | 4,183
Other comprehensive income: |  |  |  |  |
Items that are or may be reclassified subsequently to profit or loss |  |  |  |  |
Change in fair value of available-for sale investments | 29 | — | (770) | — | (764)
Net gains on investments in debt securities measured at FVOCI | 29 | 273 | — | 287 | —
Debt securities measured at FVOCI reclassified to profit or loss on disposal | 29 | 14 | — | 14 | —
Items that will not be reclassified to profit or loss |  |  |  |  |
Re-measurement actuarial (loss)/gain on provision for other liabilities and charges |  | (68) | 57 | (68) | 57
Total other comprehensive income, net of tax |  | 219 | (713) | 233 | (707)
Total comprehensive income for the year |  | 16,162 | 4,902 | 6,921 | 3,476
Attributable to: |  |  |  |  |
- owners of the Company |  | 11,528 | 3,763 |  |
- non-controlling interests |  | 4,634 | 1,139 |  |
Total comprehensive income for the year |  | 16,162 | 4,902 |  |

Items disclosed in the statement above are disclosed net of tax.
The Notes on pages 55 to 237 are an integral part of these financial statements.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
48
Statement of financial position

| Notes | Group | Company
|  | As at 31 December | 1 January | As at 31 December | 1 January
|  | 2023 | 2022 | 2022 | 2023 | 2022 | 2022
|  |  | Restated | Restated |  | Restated | Restated
|  | €’000 | €’000 | €’000 | €’000 | €’000 | €’000
ASSETS |  |  |  |  |  |  |
Intangible assets | 16 | 30,732 | 28,149 | 22,625 | 10,391 | 9,967 | 9,146
Property and equipment | 18 | 17,183 | 17,626 | 17,657 | 4,209 | 4,480 | 4,542
Right-of-use assets | 17 | 1,601 | 1,461 | 1,802 | 1,509 | 1,378 | 1,685
Investment properties | 19 | 105,619 | 108,278 | 110,016 | 13,809 | 13,404 | 13,529
Investment in associated undertakings | 21 | 23,923 | 23,027 | 22,831 | 403 | 389 | 383
Investment in subsidiary undertakings | 20 | — | — | — | 77,214 | 77,214 | 77,214
Other investments | 22 | 2,136,313 | 1,983,770 | 2,413,876 | 16,290 | 12,097 | 8,382
Deferred income tax asset | 23 | 2,118 | 8,750 | 2,313 | 1,260 | 1,292 | 1,268
Insurance contract assets | 24 | 8,945 | 8,400 | 17,986 | — | — | —
Reinsurance contract assets | 24 | 13,359 | 23,590 | 25,959 | 13,359 | 23,590 | 25,959
Trade and other receivables | 26 | 25,490 | 29,968 | 28,489 | 21,189 | 18,918 | 18,297
Current income tax receivable |  | 7 | 42 | 308 | — | — | —
Cash and cash equivalents | 27 | 47,975 | 137,286 | 71,443 | 10,780 | 11,130 | 11,575
Total assets |  | 2,413,265 | 2,370,347 | 2,735,305 | 170,413 | 173,859 | 171,980
EQUITY |  |  |  |  |  |  |
Capital and reserves attributable to owners of the Company |  |  |  |  |  |  |
Share capital | 28 | 19,320 | 19,320 | 19,320 | 19,320 | 19,320 | 19,320
Share premium account |  | 688 | 688 | 688 | 688 | 688 | 688
Other reserves | 29 | 637 | 269 | 1,264 | 34,553 | 34,171 | 34,935
Retained earnings |  | 67,524 | 59,945 | 57,587 | 27,108 | 24,106 | 22,266
|  | 88,169 | 80,222 | 78,859 | 81,669 | 78,285 | 77,209
Non-Controlling Interest |  | 82,694 | 78,103 | 77,964 | — | — | —
Total equity |  | 170,863 | 158,325 | 156,823 | 81,669 | 78,285 | 77,209
LIABILITIES |  |  |  |  |  |  |
Deferred income tax liabilities | 23 | 14,079 | 18,788 | 54,426 | 2,447 | 2,936 | 2,418
Provisions for other liabilities and charges | 30 | 923 | 854 | 997 | 923 | 854 | 997
Insurance contract liabilities | 24 | 2,063,844 | 2,050,773 | 2,405,572 | 72,467 | 82,964 | 82,070
Investment contract liabilities | 2 5 | 123,253 | 69,054 | 75,922 | — | — | —
Reinsurance contracts liabilities | 24 | 15,493 | 10,750 | 19,971 | — | — | —
Derivative financial instruments |  | — | — | 775 | — | — | —
Lease liabilities |  | 1,661 | 1,530 | 1,866 | 1,575 | 1,449 | 1,745
Other payables | 31 | 19,349 | 17,703 | 18,115 | 9,314 | 7,288 | 7,402
Current income tax liabilities |  | 3,800 | 42,570 | 838 | 2,018 | 83 | 139
Total Liabilities |  | 2,242,402 | 2,212,022 | 2,578,482 | 88,744 | 95,574 | 94,771
Total equity and liabilities |  | 2,413,265 | 2,370,347 | 2,735,305 | 170,413 | 173,859 | 171,980

The Notes are an integral part of these financial statements.
These financial statements on pages 47 to 237 were approved by the Board of Directors and
authorised for issue on 25 March 2024 and signed on its behalf by Martin Galea (Chairman) and
Godfrey Swain (Director) as per the Directors' Declaration on ESEF Annual Financial report
submitted in conjunction with the Annual Report 2023.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
49
Statement of changes in equity

Group |  |  |  |  |
|  | Attributable to owners of the Company |  |
|  | Share capital | Share premium account | Other reserves | Retained earnings | Total | Non- controlling interests | Total equity
| Notes | €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000
Balance as at 1 January 2022 as previously stated |  | 19,320 | 688 | 44,817 | 46,211 | 111,036 | 110,932 | 221,968
Adjustment on initial application of IFRS 17 net of tax |  | — | — | (43,553) | 11,376 | (32,177) | (32,968) | (65,145)
Balance as at 1 January 2022 as restated |  | 19,320 | 688 | 1,264 | 57,587 | 78,859 | 77,964 | 156,823
Comprehensive income |  |  |  |  |  |  |  |
Profit for the financial year |  | — | — | — | 4,476 | 4,476 | 1,139 | 5,615
Other comprehensive income: |  |  |  |  |  |  |  |
Change in available-for-sale investments' fair value at FVOCI | 29 | — | — | (770) | — | (770) | — | (770)
Revaluation gain on freehold land and buildings reclassified to retained earnings | 29 | — | — | (225) | 225 | — | — | —
Re-measurement actuarial gain on provision for other liabilities and charges |  | — | — | — | 57 | 57 | — | 57
Total other comprehensive income, net of tax |  | — | — | (995) | 282 | (713) | — | (713)
Total comprehensive income |  | — | — | (995) | 4,758 | 3,763 | 1,139 | 4,902
Transactions with owners |  |  |  |  |  |  |  |
Dividends for 2021 |  | — | — | — | (2,400) | (2,400) | (1,000) | (3,400)
Total transactions with owners |  | — | — | — | (2,400) | (2,400) | (1,000) | (3,400)
Balance as at 31 December 2022 |  | 19,320 | 688 | 269 | 59,945 | 80,222 | 78,103 | 158,325

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
50
Statement of changes in equity - continued

Group - continued |  |  |  |  |
|  | Attributable to owners of the Company |  |
|  | Share capital | Share premium account | Other reserves | Retained earnings | Total | Non- controlling interests | Total equity
| Notes | €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000
Balance as at 1 January 2023 |  | 19,320 | 688 | 269 | 59,945 | 80,222 | 78,103 | 158,325
Adjustment on initial application of IFRS9 net of tax |  | — | — | 81 | (162) | (81) | (43) | (124)
Balance as at 1 January 2023 as restated |  | 19,320 | 688 | 350 | 59,783 | 80,141 | 78,060 | 158,201
Comprehensive income |  |  |  |  |  |  |  |
Profit for the year |  | — | — | — | 11,309 | 11,309 | 4,634 | 15,943
Other comprehensive income: |  |  |  |  |  |  |  |
Net change in fair value of debt securities measured at FVOCI | 29 | — | — | 273 | — | 273 | — | 273
FVOCI investments - reclassified to profit or loss | 29 | — | — | 14 | — | 14 | — | 14
Re-measurement actuarial loss on provision for other liabilities and charges |  | — | — | — | (68) | (68) | — | (68)
Total other comprehensive income, net of tax |  | — | — | 287 | (68) | 219 | — | 219
Total comprehensive income |  | — | — | 287 | 11,241 | 11,528 | 4,634 | 16,162
Transactions with owners |  |  |  |  |  |  |  |
Dividends for 2022 |  | — | — | — | (3,500) | (3,500) | — | (3,500)
Total transactions with owners |  | — | — | — | (3,500) | (3,500) | — | (3,500)
Balance as at 31 December 2023 |  | 19,320 | 688 | 637 | 67,524 | 88,169 | 82,694 | 170,863

The Notes on pages 55 to 237 are an integral part of these financial statements.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
51
Statement of changes in equity - continued

Company |  |  |  |  |  |
|  |  | Share |  |  |
|  | Share | premium | Other | Retained |
|  | capital | account | reserves | earnings | Total
| Notes | €’000 | €’000 | €’000 | €’000 | €’000
Balance as at 1 January 2022 as previously stated |  | 19,320 | 688 | 34,935 | 21,468 | 76,411
Adjustment on initial application of IFRS17 net of tax |  | — | — | — | 798 | 798
Balance as at 1 January 2022 as restated |  | 19,320 | 688 | 34,935 | 22,266 | 77,209
Comprehensive income |  |  |  |  |  |
Profit for the financial year |  | — | — | — | 4,183 | 4,183
Other comprehensive income: |  |  |  |  |  |
Change in available-for-sale investments' fair values | 29 | — | — | (764) | — | (764)
Re-measurement actuarial gain on provision for other liabilities and charges |  | — | — | — | 57 | 57
Total other comprehensive income, net of tax |  | — | — | (764) | 57 | (707)
Total comprehensive income |  | — | — | (764) | 4,240 | 3,476
Transactions with owners |  |  |  |  |  |
Dividend for 2021 |  | — | — | — | (2,400) | (2,400)
Balance as at 31 December 2022 |  | 19,320 | 688 | 34,171 | 24,106 | 78,285

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
52
Statement of changes in equity - continued

Company - continued |  |  |  |  |  |
|  |  | Share |  |  |
|  | Share | premium | Other | Retained |
|  | capital | account | reserves | earnings | Total
| Notes | €’000 | €’000 | €’000 | €’000 | €’000
Balance as at 1 January 2023 |  | 19,320 | 688 | 34,171 | 24,106 | 78,285
Adjustment on initial application of IFRS 9, net of tax |  | — | — | 81 | (118) | (37)
Balance as at 1 January 2023 |  | 19,320 | 688 | 34,252 | 23,988 | 78,248
Comprehensive income |  |  |  |  |  |
Profit for the financial year |  | — | — | — | 6,688 | 6,688
Other comprehensive income: |  |  |  |  |  |
Net change in fair value of debt securities measured at FVOCI | 29 | — | — | 287 | — | 287
FVOCI investments - reclassified to profit or loss | 29 | — | — | 14 | — | 14
Re-measurement actuarial loss on provision for other liabilities and charges |  | — | — | — | (68) | (68)
Total other comprehensive income, net of tax |  | — | — | 301 | (68) | 233
Total comprehensive income |  | — | — | 301 | 6,620 | 6,921
Transactions with owners |  |  |  |  |  |
Dividend for 2022 | 15 | — | — | — | (3,500) | (3,500)
Total transactions with owners of the Company |  | — | — | — | (3,500) | (3,500)
Balance as at 31 December 2023 |  | 19,320 | 688 | 34,553 | 27,108 | 81,669

The Notes on pages 55 to 237 are an integral part of these financial statements.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
53
Statement of cash flows

|  | Year ended 31 December
|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  |  | Restated |  | Restated
| Notes | €’000 | €’000 | €’000 | €’000
Cash flows from operating activities |  |  |  |  |
Cash (used in)/generated from operations | 32 | (75,143) | (65,460) | 10,779 | 11,262
Dividends received |  | 12,131 | 10,519 | 229 | 1,347
Interest received |  | 20,805 | 17,729 | 205 | 97
Interest paid |  | — | (27) | — | (27)
Income tax paid |  | (44,892) | (2,770) | (1,653) | (1,944)
Net cash (used in)/generated from operating activities |  | (87,099) | (40,009) | 9,560 | 10,735
Cashflow from investing activities |  |  |  |  |
Purchase of investment property | 19 | (1,614) | (936) | (344) | (76)
Disposal of investment property |  | — | 113 | — | 9
Purchase of financial investments |  | (1,767,486) | (1,317,159) | (3,531) | (5,135)
Disposal of financial investments |  | 1,778,156 | 1,436,826 | 381 | 183
Purchase of property, plant and equipment and intangible assets |  | (7,768) | (9,592) | (2,916) | (3,761)
Net cash generated from/(used in) investing activities |  | 1,288 | 109,252 | (6,410) | (8,780)
Cash flows from financing activities |  |  |  |  |
Dividends paid to owners of the Company |  | (3,500) | (2,400) | (3,500) | (2,400)
Dividends paid to minority interests |  | — | (1,000) | — | —
Cash used in financing activities |  | (3,500) | (3,400) | (3,500) | (2,400)
Net movement in cash and cash equivalents |  | (89,311) | 65,843 | (350) | (445)
Movement in cash and cash equivalents |  |  |  |  |
Cash and cash equivalents at beginning of year |  | 137,286 | 71,443 | 11,130 | 11,575
Cash and cash equivalents at end of year | 27 | 47,975 | 137,286 | 10,780 | 11,130

The Notes on pages 55 to 237 are an integral part of these financial statements.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
54
Notes to the financial statements
1. Basis of preparation
The financial statements of MAPFRE Middlesea p.l.c. are prepared in accordance with
International Financial Reporting Standards as adopted for use in the European Union
and the Companies Act, 1995. The financial statements of the Group to which the
Company is parent are prepared in accordance with Article 4 of Regulation (EC)
1606/2002 on the application of international accounting standards (the “Regulation”)
which requires that, for each financial period starting on or after 1 January 2005,
companies governed by the law of an EU Member State shall prepare their consolidated
financial statements in conformity with IFRS as adopted by the EU if, at their reporting
date, their securities are admitted to trading on a regulated market of any EU Member
State. The Regulation prevails over the provisions of the Companies Act, 1995 to the
extent that the said provisions of the Companies Act, 1995 are incompatible with the
provisions of the Regulation. Both sets of financial statements as referred to in the
Annual Report relate to both those of the Company and the Group and have also been
prepared in accordance with the Insurance Business Act, 1998.
The financial statements are prepared under the historical cost convention as modified
by the measurement at fair value of: investment property, financial assets and financial
liabilities (including derivatives) at fair value through profit or loss, and at fair value
through other comprehensive income (FVOCI). Investment in associated undertaking
is measured using equity method, that is, cost plus or minus net income or loss of
associate.
This is the first set of the Group's financial statements in which IFRS 17 Insurance
Contracts and IFRS 9 Financial Instruments have been applied. The related changes in
material accounting policies are described further on in this Note.
The preparation of financial statements in conformity with the above reporting
framework requires the use of certain accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group’s
accounting policies. The areas involving a higher degree of judgement or complexity,
or areas where assumptions and estimates are significant to the consolidated financial
statements, are disclosed in Note 3.
The statement of financial position are organised in increasing order of liquidity, with
additional disclosures on the maturity analysis of the Group’s assets and liabilities
provided within the Notes to the financial statements. All amounts in the Notes are
shown in thousands of euro, rounded to the nearest thousand, unless otherwise stated.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
55
1. Basis of preparation - continued
Standards, interpretations and amendments to published standards effective in 2023
In 2023, the Group adopted new standards, amendments and interpretations to existing
standards that are mandatory for the Group’s accounting period beginning on 1 January
2023. The adoption of IFRS 17 and IFRS 9 as adopted by the EU had a significant
impact on the Group’s accounting policies. Other standards per the requirements of
IFRSs as adopted by the EU did not result in material changes.
Standards, interpretations and amendments to published standards that are not yet
effective
A number of amendments to existing standards are effective for annual periods
beginning on or after 1 January 2024. However, the Group has not early adopted these
amendments in preparing these financial statements and management are of the opinion
that there are no requirements that are expected to have a material impact on the
Group’s financial statements in the period of initial application.
Changes in material accounting policies
(a) IFRS 17 ‘Insurance Contracts’
The Group has adopted IFRS 17 ‘Insurance Contracts’ as adopted by the EU with a date
of transition 1 January 2022, which resulted in changes in accounting policies and
adjustments to the amounts previously recognised in the financial statements. The
Group did not early adopt IFRS 17 in previous periods.
The adoption of IFRS 17 has resulted in significant changes in the Group’s accounting
policies for recognition, classification and measurement of insurance contracts,
reinsurance contracts held and investment contracts with discretionary participation
features. It introduces a model that measures groups of contracts based on the Group’s
estimates of the present value of future cash flows that are expected to arise as the
Group fulfils the contracts, an explicit risk adjustment for non-financial risk and a
Contractual Service Margin (‘CSM').
Under IFRS 17, insurance revenue in each reporting period represents the changes in
the liabilities for remaining coverage that relate to services for which the Group expects
to receive consideration and an allocation of premiums that relate to recovering
insurance acquisition cash flows. In addition, investment components are no longer
included in insurance revenue and insurance service expenses.
Insurance finance income and expenses, are presented separately from insurance
revenue and insurance service expenses.
Income and expenses from reinsurance contracts held other than reinsurance finance
income and expenses are now presented as a single net amount in profit or loss.
Previously, amounts recovered from reinsurers and reinsurance expenses were
presented separately.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
56
1. Basis of preparation - continued
Changes in material accounting policies - continued
(a) IFRS 17 ‘Insurance Contracts’ - continued
Set out below are disclosures relating to the impact of the adoption of IFRS 17 on the
Group. Further details of the specific IFRS 17 accounting policies applied are described
in more detail in Note 2.
At the transition date (i.e. 1 January 2022), the Group has:
– identified, recognised and measured each group of insurance contracts,
reinsurance contracts held and investment contracts with DPF as if IFRS 17 had
always been applied;
– derecognised previously reported balance that would not have existed if IFRS 17
had always been applied including Value of in-force business and the
corresponding reserves in equity; and
– recognised in equity, on a net basis, any differences between amounts recognised
under IFRS 4 and other applicable standards and IFRS 17.
Given the long-term nature of life insurance contracts and investment contracts with
discretionary participation features (‘DPF’), it was not deemed to be practicable for the
fully retrospective approach to be adopted for all cohorts. Refer to Note 2.20 – Methods
used and judgements applied in determining IFRS 17 transition amounts. The Group
has applied the full retrospective approach on transition to all contracts measured under
the Premium Allocation Approach (PAA) to the extent practicable.
The Group has applied the transition provisions in IFRS 17 and has not disclosed the
impact of the adoption of IFRS 17 on each financial statement line item. The effects of
adopting IFRS 17 on the financial statements at 1 January 2022 are presented in the
statement of changes in equity.
(b) IFRS 9 ‘Financial Instruments’
The Group has adopted IFRS 9 as adopted by the EU. IFRS 9 replaces IAS 39
‘Financial Instruments: Recognition and Measurement’ and became effective for annual
periods beginning on or after 1 January 2018 with early adoption permitted. However,
in September 2016, the International Accounting Standards Board issued amendments
to IFRS 4 'Insurance Contracts' which provide optional relief to eligible insurers in
respect of IFRS 9. The option permitted entities whose predominant activity is issuing
insurance contracts within the scope of IFRS 4, a temporary exemption to defer the
implementation of IFRS 9. IFRS 17, published on 18 May 2017, and amended on 25
June 2020, supersedes IFRS 4 and is applicable for annual periods beginning on or after
1 January 2023, with early adoption permitted. IFRS 17 was adopted by the European
Union (‘EU’) on 19 November 2021, extending to 2023 the temporary exemption for
qualifying insurers to apply IFRS 9. The Group has met the relevant criteria and has
applied the temporary exemption from IFRS 9 for annual periods before 1 January
2023.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
57
1. Basis of preparation - continued
Changes in material accounting policies - continued
(b) IFRS 9 ‘Financial Instruments’ - continued
The general requirement in IFRS 9 is that an entity must apply IFRS 9 at the date of
initial adoption retrospectively (i.e., as if the new requirements had always been in
effect) in accordance with IAS 8, Accounting Policies, Changes in Accounting
Estimates and Errors. However, IFRS 9 includes certain special transition provisions
designed to make the crossover to IFRS 9 easier.
IFRS 9 contains exemptions from full retrospective application for its classification and
measurement requirements, including impairment. These include an exception from the
requirement to restate comparative information. An entity may restate prior periods
only if it is possible without the use of hindsight. If an entity does not restate
comparatives, it should adjust the opening balance of its retained earnings to take
account of the effect of applying the new standard in the year of initial application.
As permitted by the transitional provisions of IFRS 9, the Group did not restate
comparative figures. Any adjustments to the carrying amounts of financial assets and
financial liabilities at the date of transition were recognised in the opening retained
earnings of the current period.
The adoption of IFRS 9 has resulted in changes to the Group’s accounting policies for
recognition, classification and measurement of financial assets, financial liabilities and
impairment of financial assets as further described in the sections below.
Effect of initial application
Classification of financial assets and financial liabilities
IFRS 9 includes three principal classification categories for financial assets: measured
at amortised cost ('AC'), fair value through other comprehensive income ('FVOCI') and
fair value through profit or loss ('FVTPL'). The classification of financial assets under
IFRS 9 is generally based on the business model in which a financial asset is managed
and its contractual cash flow characteristics. IFRS 9 eliminates the previous IAS 39
categories of held-to-maturity investments, loans and receivables, and available-for-sale
financial assets.
There are no significant changes in the measurement categories for financial liabilities
under IFRS 9 when compared to IAS 39.
Further, IFRS 9 replaces the incurred loss model in IAS 39 with a forward-looking
'expected credit loss' ('ECL') model. The new model applies to financial assets
measured at amortised costs including deposits with banks or credit institutions of the
Group. The Group has recognised an ECL of €134 thousand on its deposits with banks
or credit institutions at transition.
The following table below explains the original measurement categories under IAS 39
and the new measurement categories under IFRS 9 for each class of the Group’s and
Company's financial assets and financial liabilities as at 1 January 2023.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
58
1. Basis of preparation - continued
Changes in material accounting policies - continued
(b) IFRS 9 ‘Financial Instruments’ - continued
Effect of initial application - continued
Classification of financial assets and financial liabilities - continued

|  | Original classification under IAS 39 | New classification under IFRS 9 | Original carrying amount under IAS 39 | New carrying amount under IFRS 9
|  |  |  | €'000 | €'000
| Group |  |  |  |
| Financial assets |  |  |  |
| Cash and cash equivalents | Loans and receivables | Amortised cost | 137,286 | 137,284
| Financial investments - Other |  |  |  |
| Government bonds | Available for sale | FVOCI | 5,045 | 5,045
| Other debt securities | Available for sale | FVOCI | 4,693 | 4,693
| Equity securities | Available for sale | FVTPL (Mandatory) | 570 | 570
| Equity securities | FVTPL (designated) | FVTPL (Mandatory) | 1,186 | 1,186
| Government bonds | FVTPL (designated) | FVOCI | 603 | 603
| Equity securities and units in unit trusts | FVTPL (held for trading) | FVTPL (Mandatory) | 972,740 | 972,740
| Debt securities | FVTPL (held for trading) | FVTPL (Mandatory) | 777,251 | 783,205
| Collective investment schemes | FVTPL (held for trading) | FVTPL (Mandatory) | 102,256 | 102,256
| Forward foreign exchange contracts and swaps | FVTPL (held for trading) | FVTPL (Mandatory) | 2,698 | 2,698
| Deposits with banks or credit institutions | Loans and receivables | Amortised cost | 116,728 | 116,988
| Trade and other receivables (excluding prepayments) | Loans and receivables | Amortised cost | 28,305 | 21,903
| Total financial assets |  |  | 2,149,361 | 2,149,171
| Financial liabilities |  |  |  |
| Payables | Amortised cost | Amortised cost | 17,702 | 17,702
| Investment contracts liabilities | FVTPL | FVTPL | 69,054 | 69,054
| Total financial liabilities |  |  | 86,756 | 86,756

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
59
1. Basis of preparation - continued
Changes in material accounting policies - continued
(b) IFRS 9 ‘Financial Instruments’ - continued
Effect of initial application - continued
Classification of financial assets and financial liabilities - continued

|  | Original classification under IAS 39 | New classification under IFRS 9 | Original carrying amount under IAS 39 | New carrying amount under IFRS 9
|  |  |  | €'000 | €'000
| Company |  |  |  |
| Financial assets |  |  |  |
| Cash and cash equivalents | Loans and receivables | Amortised cost | 11,130 | 11,128
| Financial investments - Other |  |  |  |
| Government bonds | Available for sale | FVOCI | 5,045 | 5,045
| Other debt securities | Available for sale | FVOCI | 4,693 | 4,693
| Equity securities | Available for sale | FVTPL (Mandatory) | 570 | 570
| Equity securities | FVTPL (designated) | FVTPL (Mandatory) | 1,186 | 1,186
| Government bonds | FVTPL (designated) | FVOCI | 603 | 603
| Trade and other receivables (excluding prepayments) | Loans and receivables | Amortised cost | 17,255 | 17,201
| Total financial assets |  |  | 40,482 | 40,426
| Financial liabilities |  |  |  |
| Payables | Amortised cost | Amortised cost | 7,288 | 7,288
| Total financial liabilities |  |  | 7,288 | 7,288

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
60
1. Basis of preparation - continued
Changes in material accounting policies - continued
(b) IFRS 9 ‘Financial Instruments’ - continued
Effect of initial application - continued
Classification of financial assets and financial liabilities - continued
The Group’s material accounting policies on the classification of financial instruments
under IFRS 9 are set out in Note 2. The application of these policies resulted in the
reclassifications set out in the table above and explained below.
a. Cash and cash equivalents consist of deposits with banks or credit institutions.
The Group's ultimate objective with regards to deposits with banks or credit
institutions is that of collecting contractual cash flows that solely represent
payments of principal and interest. On this basis, such financial assets are
classified and measured at amortised cost and are subject to expected credit losses
(ECL) under IFRS 9.
b. The Company’s ultimate objective with regards to its debt securities and
government bonds portfolio is that of collecting contractual cash flows that solely
represent payments of principal and interest and sell. The Company has limited
history of sales and its intention to conduct any sales of investments in the future
is not as a result of an active trading intent. On this basis, the Company considers
that under IFRS 9 these portfolios are held within a business model whose
objective is achieved by collecting contractual cash flows and selling financial
assets. The contractual terms of these financial assets give rise on specified dates
to cash flows that are "solely payments of principal and interest" (SPPI). These
assets have therefore been classified as financial assets at FVOCI under IFRS 9.
c. Receivables other than operating lease receivables are measured at amortised cost
using the effective interest method. Interest income and impairment are
recognised in profit or loss. Any gain or loss on derecognition is also recognised
in profit or loss.
d. Under IAS 39, investments in equity securities that were not designated as at
FVTPL were classified as available-for-sale financial assets. Under IFRS 9, these
assets are mandatorily measured at FVTPL because they do not give rise to cash
flows that are SPPI.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
61
2.Accounting policies
The material accounting policies adopted in the preparation of these financial
statements are set out below. These policies have been consistently applied to all the
years presented, unless otherwise stated.
In addition, the Group adopted Disclosure of Accounting Policies (Amendments to IAS
1 and IFRS Practice Statement 2) from 1 January 2023. The amendments require the
disclosure of ‘material’, rather than ‘significant’, accounting policies. Although the
amendments did not result in any changes to the accounting policies themselves, they
impacted the accounting policy information disclosed in the below sections.
2.1 Consolidation
(a) Subsidiary undertakings
The consolidated financial statements incorporate the assets, liabilities and results of
the Company and its subsidiary (or group) undertakings drawn up to 31 December each
year. Subsidiary undertakings are those companies over which the Group has control,
either by way of majority shareholding, through contractual agreements with the other
vote holders of the investee or rights arising from other contractual agreements, giving
it the power to govern the financial and operating policies of the investee. Specifically,
the Group controls an investee if and only if the Group has:
– Power over the investee (i.e. existing rights that give it the current ability to direct
the relevant activities of the investee);
– Exposure, or rights, to variable returns from its involvement with the investee; and
– The ability to use its power over the investee to affect its returns.
The Group re-assesses whether or not it controls an investee if facts and circumstances
indicate that there are changes to one or more of the three elements of control.
Consolidation of a subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities,
income and expenses of a subsidiary acquired or disposed of during the year are
included in the statement of financial position and the statement of comprehensive
income from the date the Group gains control until the date the Group ceases to control
the subsidiary.
The Group applies the acquisition method to account for business combinations. The
consideration transferred for the acquisition of a subsidiary is the fair value of the assets
transferred, the liabilities incurred to the former owners of the acquiree and the equity
interests issued by the Group. The consideration tr ansferred includes the fair value of
any asset or liability resulting from a contingent consideration arrangement. Identifiable
assets acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the acquisition date. The Group
recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition
basis, either at fair value or at the non-controlling interest’s proportionate share of the
recognised amounts of acquiree’s identifiable net assets.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
62
2.Accounting policies - continued
2.1 Consolidation - continued
(a) Subsidiary undertakings - continued
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date fair value of the
acquirer’s previously held equity interest in the acquiree is re-measured to fair value at
the acquisition date through profit or loss.
Goodwill is initially measured as the excess of the aggregate of the consideration
transferred and the fair value of non-controlling interest over the net identifiable assets
acquired and liabilities assumed. If this consideration is lower than the fair value of the
net assets of the subsidiary acquired, the difference is recognised in profit or loss.
Profit or loss and each component of other comprehensive income are attributed to the
equity holders of the parent of the Group and to the non-controlling interests, even if
this results in the non-controlling interests having a deficit balance. When necessary,
adjustments are made to the financial statements of subsidiaries to bring their
accounting policies in line with the Group’s accounting policies. All intra-group assets
and liabilities, equity, income, expenses and cash flows relating to transactions between
members of the Group are eliminated in full on consolidation. A list of the Group’s
subsidiaries is set out in Note 20.
(b) Associated undertakings
An associate is an entity over which the Group has significant influence. Significant
influence is the power to participate in the financial and operating policy decisions of
the investee, but is not control or joint control over those policies. The considerations
made in determining significant influence are similar to those necessary to determine
control over subsidiaries. Except for investment-linked insurance funds, interests in
associated undertakings are accounted for by the equity method of accounting and are
initially recognised at cost and the carrying amount is increased or decreased to
recognise the investor’s share of profit or loss of the investee after the date of
acquisition.
The Group’s investment in associates includes goodwill (net of any accumulated
impairment loss) identified on acquisition. Equity accounting involves recognising in
the profit or loss the share of the associated undertaking’s post-acquisition profits or
losses. The interest in the associated undertaking is carried in the statement of financial
position at an amount that reflects the share of the net assets of the associated
undertaking. When the Group’s share of losses in an associate equals or exceeds its
interest in the associate, including any other unsecured receivables, the Group does not
recognise further losses, unless it has incurred obligations or made payments on behalf
of the associate.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
63
2. Accounting policies - continued
2.1 Consolidation - continued
(b) Associated undertakings - continued
Intra-group gains on transactions between the Group and its associates are eliminated to
the extent of the Group’s interest in the associates. Intra-group losses are also
eliminated unless the transaction provides evidence of an impairment of the asset
transferred. Accounting policies for associated undertakings are changed where
necessary to ensure consistency with the policies adopted by the Group. A list of the
Group’s associated undertakings is set out in Note 21.
Interests in associated undertakings that are allocated to the insurance fund are
designated as financial assets at fair value through profit or loss. They are accounted
for in accordance with the recognition and measurement principles described in Note
2.9.
2.2 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting
provided to the chief operating decision-maker. The chief operating decision-maker,
responsible for allocating resources and assessing performance of the operating
segments, has been identified as the executive management which implements the
strategic decisions taken by the Board. In identifying the Group’s business segments,
the chief operating decision-maker has considered the different categories of insurance
classes of business.
2.3 Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured
using the currency of the primary economic environment in which the entity operates
(the ‘functional currency’). The euro is the Group’s and Company’s functional and
presentation currency.
Transactions and balances
Transactions in foreign currencies have been converted into the functional currency at
the rates of exchange ruling on the date of the transaction or valuation where items are
re-measured. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the profit or loss account.
All other foreign exchange gains and losses are presented in the profit or loss account
within ‘Other investment revenue/(losses)’.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
64
2.Accounting policies - continued
2.3 Foreign currency translation - continued
Transactions and balances - continued
Translation differences on non-monetary items, mainly arising on equities held at fair
value through profit or loss, are reported as part of 'Other investment revenue/(losses)'.
2.4 Intangible assets
(a)Computer software
Acquired computer software licences are measured at cost less any accumulated
amortization and any accumulated impairment losses. Acquired computer software
licenses are capitalised on the basis of the costs incurred to acquire and bring to use the
specific software. These costs are amortised using the straight-line method over their
useful lives, not exceeding a period of ten years. All costs associated with maintaining
computer software programmes are recognised as an expense as incurred.
(b) Deferred policy acquisition costs
Incremental costs that are incurred in acquiring new investment contracts without DPF
are capitalised as deferred acquisition costs (DAC).
The DAC is subsequently amortised over the life of the contracts as follows:
– For long-term investment contracts with a fixed maturity date, DAC is amortised
over the life of the contract.
– For long term investment contracts with no fixed date of maturity, DAC is
amortised over the estimated life of the contract. This basis is reviewed periodically
with reference to the historical experience of surrenders for these contracts.
2.5 Property, plant and equipmen t
All property, plant and equipment is initially recorded at historical cost. Freehold land
and buildings are subsequently shown at fair value based on periodic valuations by
external independent valuers, less subsequent depreciation for buildings. Valuations are
carried out on a regular basis such that the carrying amount of property does not differ
materially from that which would be determined using fair values at the end of the
reporting period. Any accumulated depreciation at the date of revaluation is eliminated
against the gross carrying amount of the asset, and the net amount is restated to the re-
valued amount of the asset. All other property, plant and equipment is stated at
historical cost less depreciation and impairment losses. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
65
2. Accounting policies - continued
2.5 Property, plant and equipment - continued
Subsequent costs are included in the asset’s carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits associated
with the item will flow to the Group and the cost of the item can be measured reliably.
The carrying amount of the replaced part is derecognised. All other repairs and
maintenance costs are charged to the profit or loss account during the financial period
in which they are incurred.
Increases in the carrying amount arising on revaluation of land and buildings are
credited to other comprehensive income as other reserves in shareholders’ equity.
Decreases that offset previous increases of the same asset are charged against other
comprehensive income as other reserves directly in equity; all other decreases are
charged to the profit or loss account. Each year the difference between depreciation
based on the revalued carrying amount of the asset charged to the profit or loss account
and depreciation based on the asset’s original cost is transferred from ‘other reserves’ to
‘retained earnings’.
Freehold land is not depreciated as it is deemed to have an indefinite life. Depreciation
on other assets is calculated using the straight-line method to allocate their cost or
revalued amounts to their residual values over their estimated useful lives as follows:

| Buildings | 100 years
| Leasehold improvements | 10 - 40 years
| Motor vehicles | 5 years
| Furniture, fittings and equipment | 3 - 10 years

The assets’ residual values and useful lives are reviewed at the end of each reporting
period and adjusted if appropriate.
An asset’s carrying amount is written down immediately to its recoverable amount if
the asset’s carrying amount is greater than its estimated recoverable amount (accounting
policy 2.16).
Gains and losses on disposals are determined by comparing proceeds with carrying
amounts and are included in the profit or loss account. When revalued assets are sold,
the amounts included in other reserves relating to the assets are transferred to retained
earnings.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
66
2. Accounting policies - continued
2.6 Investment property
Freehold and leasehold properties treated as investment property principally comprise
office and other commercial buildings that are held for long term rental yields and that
are not occupied by the Group or Company respectively. Investment property is initially
measured at cost and subsequently carried at fair value. Fair value is based on active
market prices, adjusted, if necessary for any difference in the nature, location or
condition of the specific asset. If this information is not available, the Group uses
alternative valuation methods such as discounted cash flow projections or recent prices
in less active markets. These valuations are prepared annually by a qualified valuation
expert. Investment property that is being redeveloped for continuing use as investment
property, or for which the market has become less active, continues to be measured at
fair value. Changes in fair values are reported in the profit or loss account.
If an investment property becomes owner-occupied, it is reclassified as property, plant
and equipment, and its fair value at the date of reclassification becomes its cost for
subsequent accounting purposes.
2.7 Investments in subsidiary undertakings
In the Company’s financial statements, investments in subsidiary undertakings are
accounted for by the cost method of accounting less impairment.
Provisions are recorded where, in the opinion of the directors, at the end of a reporting
period, there is an impairment in value. Where there has been an impairment in the
value of an investment, it is recognised as an expense in the period in which the
impairment is identified or has occurred. If in a subsequent period, the amount of the
impairment loss decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised, the previously recognised impairment
loss is reversed by adjusting the allowance account. The amount of the reversal is
recognised in the profit or loss account.
The dividend income from such investments is included in the profit or loss account in
the accounting year in which the Company’s rights to receive payment of any dividend
is established.
On disposal of an investment, the difference between the net disposal proceeds and the
carrying amount is charged or credited to the profit or loss account and included within
'Other investment revenue/(losses)'.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
67
2. Accounting policies - continued
2.8 Investments in associated undertakings
In the Company’s financial statements, investments in associated undertakings are
accounted using the equity method. They are initially recognised at cost which includes
transaction costs. Subsequent to initial recognition the carrying amount is increased or
decreased to recognise the investor’s share of profit or loss. Distributions received from
an investee reduce the carrying amount of the investment. The changes in the investee’s
proportionate interest arising from changes in the investee’s other comprehensive
income, such as those arising from revaluation of property, plant and equipment and
from exchange translation differences are recognised in the other comprehensive
income.
2.9 Financial instruments
Policy applicable as from 1 January 2023
(a) Summary of measurement categories
The Group classifies its financial assets and financial liabilities into the following
categories:

|  | Classification | Reason
| Cash and cash equivalents | Amortised Cost | SPPI, hold to collect business model
| Other investments | FVTPL | Trading or portfolio managed at FV
| Other investments | FVOCI | SPPI, hold to collect and sell business model
| Other investments | Amortised Cost | SPPI, hold to collect business model
| Trade and other receivables | Amortised Cost | SPPI, hold to collect business model
| Other payables | Amortised Cost | Not managed at FV
| Investment contract liabilities | FVTPL | Managed at FV

The Group does not apply hedge accounting.
(b)Initial recognition and measurement
Financial assets and financial liabilities are recognised when the Group becomes a party
to the contractual provisions of the instrument. Regular way purchases and sales of
financial assets are recognised on the trade date (that is, the date on which the Group
commits to purchase or sell the asset).
At initial recognition, the Group measures a financial asset or financial liability at its
fair value, plus or minus, in the case of a financial asset or financial liability not at
FVTPL, transaction costs that are incremental and directly attributable to the acquisition
or issue of the financial asset or financial liability, such as fees and commissions.
Transaction costs of financial assets and financial liabilities carried at FVTPL are
expensed in profit or loss. Immediately after initial recognition, an ECL allowance is
recognised for financial assets measured at AC and investments in debt instruments
measured at FVOCI.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
68
2. Accounting policies - continued
2.9 Financial instruments - continued
Policy applicable as from 1 January 2023 - continued
(b)Initial recognition and measurement - continued
For financial instruments traded in active markets, the determination of fair values of
financial assets and financial liabilities is based on quoted market prices or dealer price
quotations. This includes listed equity securities and quoted debt instruments on major
exchanges. The quoted market price used for financial assets held by the Group is the
current bid price or closing price as appropriate. A financial instrument is regarded as
quoted in an active market if quoted prices are readily and regularly available from an
exchange, dealer, broker, industry group, pricing service or regulatory agency, and
those prices represent actual and regularly occurring market transactions on an arm’s
length basis. If the market for a financial asset is not active, the Group establishes fair
value by using valuation techniques. These include the use of recent arm’s length
transactions, reference to other instruments that are substantially the same or valued by
reference to the net assets of the underlying investment.
When the fair value of financial assets and liabilities differs from the transaction price
on initial recognition, the entity recognises the difference as follows:
a. When the fair value is evidenced by a quoted price in an active market for an
identical asset or liability (that is, a Level 1 input) or based on a valuation technique
that uses only data from observable markets, the difference is recognised as a gain
or loss.
b. In all other cases, the difference is deferred and the timing of recognition of
deferred day one profit or loss is determined individually. It is either amortised over
the life of the instrument, deferred until the instrument’s fair value can be
determined using market observable inputs, or realised through settlement.
(c) Amortised cost and effective interest rate
Amortised cost (AC) is the amount at which the financial asset or financial liability is
measured at initial recognition minus the principal repayments, plus or minus the
cumulative amortisation using the effective interest method for any difference between
the initial amount and the maturity amount and, for financial assets, adjusted for any
loss allowance.
The effective interest rate (EIR) is the rate that exactly discounts estimated future cash
payments or receipts through the expected life of the financial asset or financial liability
to the gross carrying amount of a financial asset (that is, its AC before any impairment
allowance) or to the AC of a financial liability. The calculation does not consider the
ECL and includes transaction costs, premiums or discounts and fees and points paid or
received that are integral to the EIR.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
69
2. Accounting policies - continued
2.9 Financial instruments - continued
Policy applicable as from 1 January 2023 - continued
(c) Amortised cost and effective interest rate - continued
When the Group revises the estimates of future cash flows, the carrying amount of the
respective financial asset or financial liability is adjusted to reflect the new estimate
discounted using the original EIR. Any changes are recognised in profit or loss.
Interest revenue is calculated by applying the EIR to the gross carrying amount of
financial assets recognised at AC or FVOCI.
2.9.1 Financial assets
Policy applicable as from 1 January 2023
(a) Business model
The business model reflects how the Group manages assets in order to generate cash
flows. That is, it reflects whether the Group’s objective is solely to collect the
contractual cash flows from assets or to collect both the contractual cash flows and cash
flows arising from the sale of assets. If neither of these is applicable (for example,
financial assets are held for trading purposes), the financial assets are classified as part
of the other business model and measured at FVTPL.
Factors considered by the Group in determining the business model for a group of
assets include past experience on how the cash flows for these assets were collected,
how the asset’s performance is evaluated and reported to key management personnel,
how risks are assessed and managed, and how managers are compensated. For example,
the business model for the investments underlying investment contracts with DPF is to
hold to collect and sell contractual cash flows. The proceeds from the contractual cash
flows of the financial assets are used to settle insurance contract liabilities as they
become due.
(b) Solely payments of principal and interest ('SPPI')
Where the business model is to hold assets to collect contractual cash flows or to collect
contractual cash flows and sell, the Group assesses whether the financial instruments’
cash flows represent SPPI (the SPPI test). In making this assessment, the Group
considers whether the contractual cash flows are consistent with a basic lending
arrangement (that is, interest includes only consideration or the time value of money,
credit risk, other basic lending risks and a profit margin that is consistent with a basic
lending arrangement). Where the contractual terms introduce exposure to risk or
volatility that is inconsistent with a basic lending arrangement, the related financial
asset is classified and measured at FVTPL.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
70
2. Accounting policies - continued
2.9 Financial instruments - continued
2.9.1 Financial assets - continued
Policy applicable as from 1 January 2023 - continued
(c) Debt instruments
Debt instruments are those instruments that meet the definition of a financial liability
from the issuer’s perspective, such as government and corporate bonds.
The classification and subsequent measurement of debt instruments depend on:
– the Group’s business model for managing the asset; and
– the cash flow characteristics of the asset (represented by SPPI).
Based on these factors, the Group classifies its debt instruments into one of the
following three measurement categories:
a. AC: Assets that are held for collection of contractual cash flows where those
cash flows represent SPPI, and that are not designated at FVTPL, are measured
at AC. The carrying amount of these assets is adjusted by any ECL allowance
recognised and measured, as described further below. Interest revenue from
these financial assets is included in the profit or loss under interest revenue
calculated using the effective interest method.
b. FVOCI: Financial assets that are held for collection of contractual cash flows
and for selling the assets, where the assets’ cash flows represent SPPI, and that
are not designated at FVTPL, are measured at FVOCI. Movements in the
carrying amount are taken through OCI, except for the recognition of
impairment gains or losses, interest revenue and foreign exchange gains and
losses on the instrument’s AC, which are recognised in profit or loss. When the
financial asset is derecognised, the cumulative gain or loss previously
recognised in OCI is reclassified from equity to profit or loss and recognised in
other investment revenue/losses. Interest revenue from these financial assets is
included in interest revenue calculated using the effective interest method.
c. FVTPL: Assets that do not meet the criteria for AC or FVOCI are measured at
FVTPL. Also, some assets are voluntarily measured at FVTPL, because this
significantly reduces an accounting mismatch. A gain or loss on a debt
investment that is subsequently measured at FVTPL is recognised and presented
in the consolidated statement of profit or loss within other investment revenue/
losses in the period in which it arises.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
71
2. Accounting policies - continued
2.9 Financial instruments - continued
2.9.1 Financial assets - continued
Policy applicable as from 1 January 2023 - continued
(c) Debt instruments - continued
The Group reclassifies debt instruments only when its business model for managing
those assets changes. The reclassification takes place from the start of the first reporting
period following the change. Such changes are expected to be very infrequent, and none
occurred during the period.
(d) Equity instruments
Equity instruments are instruments that meet the definition of equity from the issuer’s
perspective (that is, instruments that do not contain a contractual obligation to pay and
that evidence a residual interest in the issuer’s net assets). Examples of equity
instruments include basic ordinary shares.
The Group subsequently measures all equity investments at FVTPL . Gains and losses
on equity investments at FVTPL are included in the line ‘Other investment revenue/
losses’ in the consolidated statement of profit or loss.
(e) Cash and cash equivalents
Cash and cash equivalents include cash balances and financial instruments with original
maturities of three months or less from the date of acquisition that are subject to an
insignificant risk of changes in their fair value, and are used by the Group in the
management of its short-term commitments. Cash and cash equivalents are carried in
the statement of financial position at AC net of ECL.
(f) Impairment
(i) Debt instruments and cash and cash equivalents
The Group assesses the ECL associated with its debt instruments measured at AC and
debt instrument assets carried at FVOCI. The Group recognises a loss allowance for
such losses at each reporting date. The measurement of the ECL reflects:
a. an unbiased evaluation of a range of possible outcomes and their probabilities of
occurrence;
b. discounting for the time value of money; and
c. reasonable and supportable information that is available without undue cost or effort
at the reporting date about past events, current conditions and forecasts of future
economic conditions
72
2. Accounting policies - continued
2.9 Financial instruments - continued
2.9.1 Financial assets - continued
Policy applicable as from 1 January 2023 - continued
(f) Impairment - continued
(i) Debt instruments and cash and cash equivalents- continued
However, IFRS 9 emphasises that estimating ECL may not necessarily need to be a
complex process and that an entity need not identify every possible scenario. In some
cases, relatively simple modelling may be sufficient without the need for many detailed
simulations or scenarios.
The Group calculates the ECL at an instrument level, using three main components:
– a probability of default (‘PD’),
– a loss given default (‘LGD’),
– and the exposure at default (‘EAD’).
At initial recognition, an allowance is required for ECL resulting from default events
that are possible within the next 12 months, or less, where the remaining life is less than
12 months (‘12-month ECL’).
In the event of a ‘significant increase in credit risk’ (SICR), an allowance is required for
ECL resulting from all possible default events over the expected life of the financial
instrument (‘Lifetime ECL’). In the case of a non-maturity deposit, the Group assumes
a lifetime of 1 month.
Financial assets where 12-month ECL is recognised are considered to be ‘stage 1’;
financial assets which are considered to have experienced a SICR are classified as
‘stage 2’; and financial assets for which there is objective evidence of impairment, and
which are so considered to be in default or otherwise credit impaired, are classified as
‘stage 3’.
The ECL allowance and any changes to it are recognised by recognising impairment
gains and losses in profit or loss.
73
2. Accounting policies - continued
2.9 Financial instruments - continued
2.9.1 Financial assets - continued
Policy applicable as from 1 January 2023 - continued
(f) Impairment - continued
(ii) Trade receivables
For trade receivables, the Company applies the simplified approach required by IFRS 9,
which requires expected lifetime losses to be recognised from initial recognition of the
receivables. An impairment analysis is performed at each reporting date using a
provision matrix to measure expected credit losses. The provision rates are based on
days past due for groupings of various customer segments with similar loss patterns.
The Company considers trade receivables in default when contractual payments are past
their credit terms of 90 days to be in default.
Trade receivables are written off when there is no reasonable expectation of recovery.
Indicators that there is no reasonable expectation of recovery include, among others, the
probability of insolvency or significant financial difficulties of the debtor.
(g) Derecognition
Financial assets, or a portion thereof, are derecognised when the contractual rights to
receive the cash flows from the assets have expired, or when they have been transferred
and either (i) the Group transfers substantially all of the risks and rewards of ownership;
or (ii) the Group neither transfers nor retains substantially all of the risks and rewards of
ownership and the Group has not retained control.
The Group enters into transactions where it retains the contractual rights to receive cash
flows from assets but assumes a contractual obligation to pay those cash flows to other
entities and transfers substantially all of the risks and rewards. These transactions are
accounted for as pass-through transfers that result in derecognition if the Group:
a. has no obligation to make payments unless it collects equivalent amounts from the
assets;
b. is prohibited from selling or pledging the assets; and
c. has an obligation to remit any cash that it collects from the assets without material
delay
74
2. Accounting policies - continued
2.9 Financial instruments - continued
2.9.1 Financial assets - continued
Policy applicable as from 1 January 2023 - continued
(h) Modification
If cash flows are modified when the debtor is in financial difficulties, then the objective
of the modification is usually to maximise recovery of the original contractual cash
flows rather than to originate a new asset with substantially different terms. If the
Group plans to modify a financial asset in a way that would result in forgiveness of cash
flows, then it first considers whether a portion of the asset should be written off before
the modification takes place.
2.9.2 Financial liabilities
Policy applicable as from 1 January 2023
(a) Classification and subsequent measurement
In both the current and prior periods, financial liabilities were and remain classified and
subsequently measured at AC, except for derivatives and investment contracts without
DPF, which were and remain measured at FVTPL.
Investment contracts without DPF are financial liabilities whose fair value is dependent
on the fair value of underlying financial assets and are designated at inception at
FVTPL. The Group designates these investment contracts to be measured at FVTPL,
because it eliminates or significantly reduces a measurement or recognition
inconsistency (that is, an accounting mismatch) that would otherwise arise from
measuring assets or liabilities or recognising the gains and losses on them on different
bases.
The Group’s main valuation techniques incorporate all factors that market participants
would consider and make maximum use of observable market data. The fair value of
financial liabilities for investment contracts without DPF is determined using the
current unit values in which the contractual benefits are denominated. These unit values
reflect the fair values of the financial assets contained within the Group’s unitised
investment funds linked to the financial liability. The fair value of the financial
liabilities is obtained by multiplying the number of units attributed to each contract
holder at the end of the reporting period by the unit value for the same date.
When the investment contract has a surrender option, the fair value of the financial
liability is never less than the amount payable on surrender.
Changes in the fair value of financial liabilities measured at FVTPL are presented in the
statement of profit or loss.
75
2. Accounting policies - continued
2.9 Financial instruments - continued
2.9.2 Financial liabilities - continued
Policy applicable as from 1 January 2023 - continued
(b) Derecognition
Financial liabilities are derecognised when they are extinguished (that is, when the
obligation specified in the contract is discharged, is cancelled or expires). The Group
also derecognises a financial liability when its terms are modified and the cash flows of
the modified liability are substantially different, in which case a new financial liability
based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying amount
extinguished and the consideration paid (including any non-cash assets transferred or
liabilities assumed) is recognised in profit or loss.
(c) Modification
If a financial liability measured at amortised cost is modified but not substantially, then
it is not derecognised.
(d) Derivatives
Derivatives are initially recognised at fair value on the date on which the derivative
contract is entered into and are subsequently remeasured at fair value. All derivatives
are carried as assets when fair value is positive and as liabilities when fair value is
negative. Fair values are obtained from quoted market prices in active markets, and
other valuation techniques, as appropriate. Subsequent changes in the fair value of any
derivative instruments are recognised immediately in profit or loss.
76
2. Accounting policies - continued
2.9 Financial instruments - continued
2.9.3 Financial assets
Policy applicable before 1 January 2023
The Group classifies its financial assets (other than its investment in subsidiaries) into
the following categories: financial assets at fair value through profit or loss, other
available-for-sale investments and loans and receivables. The directors determine the
appropriate classification of financial assets at the time of purchase and re-evaluate such
designation at every reporting date.
(a) Classification
• Financial assets at fair value through profit or loss are part of a group of investments
that is managed on a portfolio basis and whose performance is evaluated and
reported internally on a fair value basis to the Board and relevant key management
personnel in accordance with a documented investment strategy. Assets that are part
of these portfolios are designated upon initial recognition at fair value through profit
or loss. Financial assets that are held to match insurance and investment contracts
liabilities are also designated at inception as fair value through profit or loss to
eliminate or significantly reduce the accounting mismatch that would otherwise
arise from measuring insurance contract assets or liabilities, or recognising the gains
and losses on them on different basis.
• Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market, other than those that the Group
has designated at fair value through profit or loss. They include, inter alia,
reinsurance contract assets, other assets, cash and cash equivalents in the statement
of financial position as well as other financial investments (comprising deposits
with credit institutions, and loans) classified as financial assets at amortised cost
within Note 22.
• Available-for-sale investments are those non-derivative financial assets that are
designated as available-for-sale or are not classified as (a) loans and receivables, (b)
held-to-maturity or (c) financial assets at fair value through profit or loss.
(b) Recognition and measurement
All purchases and sales of investments are recognised on the trade date, which is the
date that the Group commits to purchase or sell the assets. All investments are initially
recognised at fair value plus, in the case of all financial assets not carried at fair value
through profit or loss, transaction costs that are directly attributable to their acquisition.
77
2. Accounting policies - continued
2.9 Financial instruments - continued
2.9.3 Financial assets - continued
Policy applicable before 1 January 2023 - continued
(b) Recognition and measurement - continued
Financial assets are de-recognised when the rights to receive cash flows from them have
expired or where they have been transferred and the Group has also transferred
substantially all risks and rewards of ownership.
Financial assets at fair value through profit or loss and other available-for-sale
investments are subsequently re-measured at fair value. Loans and receivables are
carried at amortised cost using the effective interest method, less any provision for
impairment. Realised and unrealised gains and losses arising from changes in the value
of the ‘financial assets at fair value through profit or loss’ category are presented in the
profit or loss account in the period in which they arise.
Changes in the fair value of monetary and non-monetary securities classified as
available-for-sale are recognised in other comprehensive income. When securities
classified as available-for-sale are sold or impaired, the accumulated fair value
adjustments recognised in other comprehensive income are included in the profit or loss
account within other investment revenue/losses.
For financial instruments traded in active markets, the determination of fair values of
financial assets and financial liabilities is based on quoted market prices or dealer price
quotations. This includes listed equity securities and quoted debt instruments on major
exchanges. The quoted market price used for financial assets held by the Group is the
current bid price. A financial instrument is regarded as quoted in an active market if
quoted prices are readily and regularly available from an exchange, dealer, broker,
industry group, pricing service or regulatory agency, and those prices represent actual
and regularly occurring market transactions on an arm’s length basis. If the market for a
financial asset is not active, the Group establishes fair value by using valuation
techniques. These include the use of recent arm’s length transactions, reference to other
instruments that are substantially the same and discounted cash flow analysis.
Derivatives are recognised at fair value on the date on which a derivative contract is
entered into and are subsequently re-measured at their fair value. Fair values are
obtained from quoted market prices in active markets and other valuation techniques, as
appropriate. Subsequent changes in the fair value of any derivative instruments are
recognised immediately in the profit or loss account. All derivatives are carried as
assets when fair value is positive, and as liabilities when fair value is negative.
The Group enters into currency forward contracts to hedge the foreign exchange risk
arising on its investments denominated in a foreign currency. These transactions
provide effective economic hedges under the Group’s risk management policies.
However, hedge accounting under the specific rules in IAS 39 is not required because
the change in the value of the hedged financial instrument is recognised in profit or
loss.
78
2. Accounting policies - continued
2.9 Financial instruments - continued
2.9.3 Financial assets - continued
Policy applicable before 1 January 2023 - continued
(c) Impairment of financial assets at amortised cost
The Group assesses at the end of each reporting period whether there is objective
evidence that a financial asset or group of financial assets is impaired. A financial asset
or group of financial assets is impaired and impairment losses are incurred only if there
is objective evidence of impairment as a result of one or more events that have occurred
after the initial recognition of the asset (“a loss event”) and that loss event (or events)
has an impact on the estimated future cash flows of the financial asset or group of
financial assets that can be reliably estimated.
Objective evidence that a financial asset or group of assets is impaired includes
observable data that comes to the attention of the Group about the following events:
a. significant financial difficulty of the issuer or debtor;
b. a breach of contract, such as a default or delinquency in payments;
c.it becoming probable that the issuer or debtor will enter bankruptcy or other
financial reorganisation;
d. the disappearance of an active market for that financial asset because of financial
difficulties; or
e. observable data indicating that there is a measurable decrease in the estimated future
cash flow from a group of financial assets since the initial recognition of those
assets, although the decrease cannot yet be identified with the individual financial
assets in the Group.
The Group first assesses whether objective evidence of impairment exists individually
for financial assets that are individually significant. If the Group determines that no
objective evidence of impairment exists for an individually assessed financial asset,
whether significant or not, it includes the asset in a group of financial assets with
similar credit risk characteristics and collectively assesses them for impairment. Assets
that are individually assessed for impairment and for which an impairment loss is or
continues to be recognised are not included in a collective assessment of impairment.
If there is objective evidence that an impairment loss has been incurred on loans and
receivables carried at amortised cost, the amount of the loss is measured as the
difference between the asset’s carrying amount and the present value of estimated future
cash flows discounted at the financial asset’s original effective interest rate. The
carrying amount of the asset is reduced through the use of an allowance account and the
amount of the loss is recognised in the profit or loss account.
79
2. Accounting policies - continued
2.9 Financial instruments - continued
2.9.3 Financial assets - continued
Policy applicable before 1 January 2023 - continued
(c) Impairment of financial assets at amortised cost - continued
If in a subsequent period, the amount of the impairment loss decreases and the decrease
can be related objectively to an event occurring after the impairment was recognised
(such as improved credit rating), the previously recognised impairment loss is reversed
by adjusting the allowance account. The amount of the reversal is recognised in the
profit or loss account.
(d) Assets classified as investments in associated undertakings/other available-for-sale
investments
The Group assesses at end of the reporting period whether there is objective evidence
that an available-for-sale financial asset is impaired, including in the case of equity
investments classified as available-for-sale, a significant or prolonged decline in the fair
value of the security below its cost. ‘Significant’ is evaluated against the original cost
of the investment and ‘prolonged’ against the period in which the fair value has been
below its original cost. If any such evidence exists for available-for-sale financial assets,
the cumulative loss – measured as the difference between the acquisition cost and
current fair value, less any impairment loss on the financial asset previously recognised
in the profit or loss – is removed from equity and recognised in the profit or loss
account. Impairment losses recognised in the profit or loss account on equity
instruments are not subsequently reversed through the profit or loss account but through
other comprehensive income as other reserves.
80
2. Accounting policies - continued
2.9 Financial instruments - continued
2.9.4 Financial liabilities
Policy applicable before 1 January 2023
Financial liabilities are initially recognised on the trade date, which is the date the
Group becomes a party to the contractual provisions of the instruments and
derecognises a financial liability when its contractual obligations are discharged,
cancelled or expire.
Borrowings are recognised initially at their fair value, net of incremental direct
transaction costs incurred. Borrowings are subsequently stated at amortised cost; any
difference between the proceeds (net of incremental direct transaction costs) and the
redemption value is recognised in the profit or loss account over the period of the
borrowings using the effective interest method. Borrowings are classified as current
liabilities unless the Group has an unconditional right to defer settlement of the liability
for at least 12 months after the end of the reporting year.
81
2.Accounting policies - continued
2.10 Insurance and investment contracts issued and reinsurance contracts held
The Group issues contracts that transfer insurance risk or financial risk or both.
(a)Definition and classification
The following table provides an overview of the Group’s assessment of its products
and whether these fall in scope of IFRS 17:

| Type of contract | Contracts issued | Within scope of IFRS 17 | Measurement model | Description of benefit
| Short-term insurance contracts | Insurance contracts - Non-Life and Group Life contracts | Yes | PAA | Pure insurance contracts carrying significant insurance risk where the obligation of the Group towards the insured is the payment for loss incurred if the insured event occurs whilst the policy is in force.
| Long-term insurance contracts - Life risk | Insurance contracts - Term assurance including term riders | Yes | General Measurement Model ('GMM') | Pure insurance contracts carrying significant insurance risk where the obligation of the Group towards the insured is the payment of a death benefit, if the death occurs whilst the policy is in force.
| Long-term insurance contracts - Life risk | Unit-linked – Maximum Investment Plan | Yes | GMM | A unit-linked contract with significant insurance risk is one that incorporates a material sum assured within the contract (i.e. the sum assured/minimum death benefit provided, exceeds the investment value of the product).

| Direct participating contracts | With-profits (Investment contracts with DPF) | Yes | Variable Fee Approach ('VFA') | Investment contracts with DPF where the obligation of the Group towards the insured also includes an annual discretionary investment return (declared bonus rate).
| Direct participating contracts | Hybrids (Investment contracts with DPF) | Yes | VFA | These are mainly unit-linked products including with-profits components (investment contract with DPF).
| Investment contracts | Unit-linked - others (Investment contracts without DPF) | No | FVTPL | Investment contracts which pays the policyholder 1% of the fund value at the time of death, this component is deemed to be immaterial to the overall value of the fund and therefore, no significant insurance risk is deemed to arise from it. Therefore, these contracts will be valued in line with IFRS 9 with effect from 1 January 2023 and IAS 39 prior to 1 January 2023.

82
2.Accounting policies - continued
2.10 Insurance and investment contracts issued and reinsurance contracts held
- continued
(a)Definition and classification - continued
Insurance contracts are contracts under which the Group accepts significant insurance
risk from a policyholder by agreeing to compensate the policyholder if a specified
uncertain future event adversely affects the policyholder. In making this assessment, all
substantive rights and obligations, including those arising from law or regulation, are
considered on a contract by contract basis. Judgement is used to assess whether a
contract transfers insurance risk and whether the accepted insurance risk is significant.
Generally, the Group defines as significant insurance risk the possibility of having to
pay benefits on the occurrence of an insured event that at least 5% more than the
benefits payable (on a present value basis) if the sum insured event did not occur. The
Group accounts for these contracts under IFRS 17.
The Group also issues term riders which represent an add-on to a basic policy that
provides additional benefits to policy holders (at additional cost). They can be
purchased by a policy holder concurrently to a basic policy or at a subsequent date, i.e.
a date after the inception of the basic policy. The addition of a term rider triggers
medical underwriting at the point in time the rider is added, giving the Group the
ability to reprice the policy at that point in time. The Group has concluded that term
riders are to be separated from the host contract and will form part of the term
portfolio.
Contracts that have a legal form of insurance but do not transfer significant insurance
risk and expose the Group to financial risk are classified as investment contracts, and
they follow financial instruments accounting under IFRS 9. Investment contracts
without DPF issued by the Group fall under this category.
A number of investment contracts contain a DPF. This feature entitles the holder to
receive, as a supplement to guaranteed benefits, additional benefits or bonuses:
– that are likely to be a significant portion of the total contractual benefits;
– whose amount or timing is contractually at the discretion of the Group; and
– that are based on realised and/or unrealised investment returns on underlying assets
held by the Group.
The Group also issues a ‘hybrid’ product which is a unit-linked product that gives
policyholders the possibility to initially allocate, and subsequently switch, a portion of
the premium to a ‘with-profits’ DPF holding as well as a unit-linked (investment
without DPF) holding. This product was deemed to fall within scope of IFRS 17 when
the policyholder allocates a percentage holding in the with-profits fund as at inception
or transition date. Furthermore, management concluded that the unit-linked component
of the product does not constitute a distinct investment component, given that both
elements of the ‘hybrid’ product cannot be measured and presented separately and are
interdependent on each other.
83
2.Accounting policies - continued
2.10 Insurance and investment contracts issued and reinsurance contracts held
- continued
(a)Definition and classification - continued
Since this product is primarily a unit-linked product with the option to hold a
percentage of the holding in the with-profits fund, management has determined that for
such a contract to be in scope of IFRS 17, it needs to hold a 5% level of significant
discretionary benefit.
Local statutory regulations and the terms and conditions of these contracts set out the
basis for the determination of the amounts on which the additional discretionary
benefits are based (the DPF eligible surplus), and within which the Group may exercise
its discretion as to the quantum and timing of their payment to contract holders, also
considering the advice of the Approved Actuary. The Group accounts for these
contracts under IFRS 17.
The Group assessed investment contracts that qualify as having direct participation
features as a result of the nature of their design (i.e. they are primarily investment
related contracts where the investment risk is substantially borne by the policyholder) to
ascertain whether or not they meet the VFA eligibility criteria.
IFRS 17 requires these criteria to be assessed at the individual contract level. The
Group assessed the criteria at the product level. The assessment is carried out based on
the Group's expectations at inception, and is not reassessed subsequently, unless the
product is modified.
The with-profits policies are ring fenced, meaning, a barrier clearly segregates the
policyholder assets participating in the fund from the shareholders’ ones. Therefore, the
pool of assets is clearly identifiable. The ‘underlying items’ in this case would be the
with-profits assets.
Investment contracts with direct participation features are viewed as creating an
obligation to pay policyholders an amount that is equal to the fair value of the
underlying items, less a variable fee for service. The variable fee comprises the amount
of the Group’s share of the fair value of the underlying items less the fulfilment cash
flows ('FCF') that do not vary based on the returns on underlying items. Therefore, on
an average probability-weighted basis, the Group considers that the amount it expects to
pay to policyholders comprises a substantial portion of the fair value returns on
underlying items.
The variability in cash flows is assessed over the duration of the insurance contracts and
on the basis of the average of the probability-weighted present value. The duration of
the contract takes into account all the cash flows in the contract boundary. The major
component of the liability (the present value of the future net cash outflows) is made up
of claims which vary substantially with the underlying items.
84
2.Accounting policies - continued
2.10 Insurance and investment contracts issued and reinsurance contracts held
- continued
(a)Definition and classification - continued
In the normal course of business, the Group uses reinsurance to mitigate its risk
exposures. A reinsurance contract transfers significant risk if it transfers substantially
all of the insurance risk resulting from the insured portion of the underlying insurance
contracts, even if it does not expose the reinsurer to the possibility of a significant loss.
For short-term insurance contracts, the Group uses the PAA simplified method to
measure groups of contracts. All short-term insurance contracts originated by the
Group, are without direct participation features.
All references to insurance contracts in these consolidated financial statements apply to
insurance contracts issued or acquired, reinsurance contracts held and investment
contracts with DPF, unless specifically stated otherwise.
85
2.Accounting policies - continued
2.10 Insurance and investment contracts issued and reinsurance contracts held
- continued
(b) Unit of account
The Group manages insurance contracts issued by product type, where each product
type includes contracts which are subject to similar risks and are managed together. The
Group has determined that contracts have similar risk and are managed together if they
are priced together, have the same underwriting process, have common reporting, and
claims and risks underlying the contracts are managed together. All insurance contracts
of the same product type represent a portfolio. Each portfolio is further disaggregated
into groups of contracts that are issued within a calendar year (annual cohorts) and are
at initial recognition:
– contracts that are onerous; or
– all remaining contracts.
In variation to the above, as further described below, in contrast with all other contracts
in scope of IFRS 17, investment contracts with DPF are not grouped by annual cohort.
As per Article 2 of the Commission Regulation (EU) 2021/2036 (the ‘Regulation’), a
Group may choose not to apply the annual cohorting requirement to groups of
investment contracts with discretionary participation features and with cash flows that
affect or are affected by cash flows to policyholders of other contracts.
The Group’s with-profits fund is a pool of policies sharing in the same pool of
underlying items. Therefore, the risk that a particular policy becomes onerous (i.e. the
possibility of the with-profits fund assets being lower than the present value of its future
liabilities) is shared between the policyholders within this pool. In such instances,
policies, which do not exhibit such onerosity, will make good for those policies which
are onerous.
Given that the Group’s with-profits fund has all mutualisation features described above,
the Group has chosen to apply the option to avoid allocating policies to annual cohorts
as per the Regulation as these are groups of investment contracts with DPF and with
cash flows that affect or are affected by cash flows to policyholders of other contracts.
All with-profits and hybrid policies will therefore be allocated to a single cohort.
86
2.Accounting policies - continued
2.10 Insurance and investment contracts issued and reinsurance contracts held
- continued
(b) Unit of account - continued
Portfolios of reinsurance contracts held are assessed for aggregation separately from
portfolios of insurance contracts issued. Separate portfolios for reinsurance contracts
held were therefore established and the Group has a number of reinsurance portfolios.
In groups of reinsurance contracts held, the amount an entity pays generally exceeds the
expected present value of the cash flows generated by that reinsurance contract plus the
risk adjustment for non-financial risk and thus the Group is usually in a net cost
position. The Group has determined that the reinsurance contracts held will be grouped
by calendar or underwriting year (annual cohorts) depending whether they are loss
occurring or risk attaching under the category ‘all remaining contracts’ which includes
reinsurance contracts held with an initial net cost but with a possibility of a future net
gain.
Transition approaches that were applied by the Group on adoption of IFRS 17 with
respect to contracts aggregation requirements are included in Note 2.20.
Before the Group accounts for an insurance contract based on the guidance in IFRS 17,
it analyses whether the contract contains components that should be separated. IFRS 17
distinguishes three categories of components that have to be accounted for separately:
- cash flows relating to embedded derivatives that are required to be separated;
- cash flows relating to distinct investment components; and
- promises to transfer distinct goods or distinct services other than insurance contract
services.
The Group applies IFRS 17 to all remaining components of the contract. The Group
does not have any contracts that require further separation (except for term riders – refer
to note 2.10(a). The Group also does not have any contracts that require combination.
87
2. Accounting policies - continued
2.10 Insurance and investment contracts issued and reinsurance contracts held
- continued
(c) Recognition, modification and derecognition
Recognition
Groups of insurance contracts issued are initially recognised from the earliest of the
following:
- the beginning of the coverage period;
- the date when the first payment from the policyholder is due or actually received, if
there is no due date; and
- when the Group determines that a group of contracts becomes onerous.
Investment contracts with DPF are initially recognised at the date when the Group
becomes a party to the contract.
Reinsurance contracts held are recognised from the later of the following:
- the beginning of the coverage period of the group; and
- the initial recognition of any underlying insurance contract;
Unless the Group entered into the reinsurance contract held at or before the date when
an onerous group of underlying contracts is recognised prior to the beginning of the
coverage period of the group of reinsurance contracts held, in which case the
reinsurance contract held is recognised at the same time as the group of underlying
insurance contracts is recognised.
Only contracts that individually meet the recognition criteria by the end of the reporting
period are included in the groups. When contracts meet the recognition criteria in the
groups after the reporting date, they are added to the groups in the reporting period in
which they meet the recognition criteria, subject to the annual cohorts restriction.
Composition of the groups is not reassessed in subsequent periods.
Modification and derecognition
An insurance contract is derecognised when it is extinguished (that is, when the
obligation specified in the insurance contract expires or is discharged or cancelled), or
when the contractual terms are modified in a way that would have changed the
accounting for the contract significantly had the new terms always existed, in which
case a new insurance contract is recognised.
If a contract modification is not significant, the changes in cash flows caused by the
modification are treated as changes in estimates of FCF.
88
2. Accounting policies - continued
2.10 Insurance and investment contracts issued and reinsurance contracts held
- continued
(c) Recognition, modification and derecognition - continued
Modification and derecognition - continued
When an insurance contract is derecognised from within a group of insurance contracts, the
Group:
– adjusts the FCF to eliminate the present value of future cash flows and risk adjustment
for non-financial risk relating to the rights and obligations removed from the group;
– adjusts the CSM; and
– adjusts the number of coverage units for the expected remaining insurance contract
services, to reflect the number of coverage units removed.
On the other hand, when an insurance contract accounted for under the PAA is
derecognised, adjustments to the future cash flows to remove related rights and
obligations to account for the effect of the derecognition result in the following amounts
being charged immediately to profit or loss:
a. if the contract is extinguished, any net difference between the derecognised part of
the Liability for Remaining Coverage (LRC) of the original contract and any other
cash flows arising from extinguishment.
b. if the contract is transferred to the third party, any net difference between the
derecognised part of the LRC of the original contract and the premium charged by
the third party; or
c. if the original contract is modified resulting in its derecognition, any net difference
between the derecognised part of the LRC and the hypothetical premium that the
entity would have charged if it had entered into a contract with equivalent terms as
the new contract at the date of the contract modification, less any additional
premium charged for the modification.
(d)Measurement
Fulfilment cash flows
Fulfilment cash flows (‘FCF’) are the current estimates of the future cash flows within
the contract boundary of a group of contracts that the Group expects to collect from
premiums and pay out for claims, benefits and expenses, adjusted to reflect the timing
and the uncertainty of those amounts.
Estimates of future cash flows:
a. are based on a probability-weighted mean of all possible outcomes;
b. are reflective of the Group’s perspective, provided estimates of any relevant market
variables are consistent with observable market prices for those variables; and
c. are reflective of conditions existing at measurement date.
89
2. Accounting policies - continued
2.10 Insurance and investment contracts issued and reinsurance contracts held
- continued
(d)Measurement - continued
Fulfilment cash flows - continued
An explicit risk adjustment for non-financial risk is estimated separately from the other
estimates for Assets for Remaining Coverages ('ARC') and Liability for Remaining
Coverage ('LRC'). For contracts measured under the PAA, unless the contracts are
onerous, the explicit risk adjustment for non-financial risk is only estimated for the
measurement of the Liability for Incurred Claims ('LIC').
The estimates of future cash flows are also adjusted using current discount rates to
reflect the time value of money and financial risks relating to these cash flows. The
discount rates reflect the characteristics of the cash flows arising from the groups of
insurance contracts, including timing, currency and liquidity of cash flows. The
determination of the discount rate that reflects the characteristics of the cash flows and
liquidity characteristics of the insurance contracts requires judgement and estimation.
Risk of the Group’s non-performance is not included in the measurement of groups of
insurance contracts issued. In the measurement of reinsurance contracts held, the
probability-weighted estimates of the present value of future cash flows include the
potential credit losses and other disputes of the reinsurer to reflect the non-performance
risk of the reinsurer.
The Group estimates certain FCF at the portfolio level or higher and then allocates such
estimates to groups of contracts.
The Group uses consistent assumptions to measure the estimates of the present value of
future cash flows for the group of reinsurance contracts held and such estimates for the
groups of underlying insurance contracts.
Contract boundary
The Group uses the concept of contract boundary to determine what cash flows should
be considered in the measurement of groups of insurance contracts.
Cash flows are within the boundary of an insurance contract if they arise from
substantive rights and obligations that exist during the reporting period in which the
Group can compel the policyholder to pay the premiums or in which the Group has a
substantive obligation to provide the policyholder with insurance contract services.
90
2. Accounting policies - continued
2.10 Insurance and investment contracts issued and reinsurance contracts held
- continued
(d)Measurement - continued
Contract boundary - continued
A substantive obligation lasts until:
a) the Group has the practical ability to reassess the risks of a particular policyholder,
and hence, can set a price to fully reflect those risks; or
b) both of the following criteria are satisfied:
i. the Group has a practical ability to reassess the risks of the portfolio of insurance
contracts, as a result of which it can set a price to fully reflect those risks; and
ii. the pricing of premiums up to the date when the risks are reassessed does not take
into account the risks that relate to periods after the reassessment date.
In assessing the practical ability to reprice, risks transferred from the policyholder to the
Group, such as insurance risk and financial risk, are considered; other risks, such as
lapse or surrender and expense risk, are not included.
For contracts issued under the PAA, riders, representing add-on provisions to a basic
insurance policy that provide additional benefits to the policyholder at additional cost,
that are issued together with the main insurance contracts form part of a single
insurance contract with all the cash flows within its boundary.
Cash flows outside the insurance contracts boundary relate to future insurance contracts
and are recognised when those contracts meet the recognition criteria.
Cash flows are within the boundaries of investment contracts with DPF if they result
from a substantive obligation of the Group to deliver cash at a present or future date.
For groups of reinsurance contracts held, cash flows are within the contract boundary if
they arise from substantive rights and obligations of the Group that exist during the
reporting period in which the Group is compelled to pay amounts to the reinsurer or in
which the Group has a substantive right to receive insurance contract services from the
reinsurer.
91
2. Accounting policies - continued
2.10 Insurance and investment contracts issued and reinsurance contracts held
- continued
(d)Measurement - continued
Contract boundary - continued
The Group's quota share, surplus and facultative reinsurance contracts have an annual
term and cover underlying contracts issued within the term on a risk-attaching basis.
Meaning that they cover policies ceded for the entire duration of the contract, even if
this duration exceeds that of the reinsurance contract itself. The Group treats such
reinsurance contracts as a series of annual contracts that cover underlying business
issued within a year. Estimates of future cash flows arising from all underlying
contracts issued and expected to be issued within the reinsurance contracts’ one-year
boundary are included in the measurement of the reinsurance contracts.
The excess of loss contracts held provide coverage for claims incurred during an
accident year. Thus, all cash flows arising from claims incurred and expected to be
incurred in the accident year are included in the measurement of the reinsurance
contracts held. Some of these contracts include mandatory reinstatement reinsurance
premiums, which are included within the respective reinsurance contracts’ boundaries.
Cash flows that are not directly attributable to a portfolio of insurance contracts are
recognised in other operating expenses as incurred.
Insurance acquisition costs
Insurance acquisition cash flows are cash flows arising from the costs of selling,
underwriting and starting a group of insurance contracts that are directly attributable to
the portfolio of insurance contracts to which the group belongs. Insurance acquisition
cash flows for the Group comprise commission paid to intermediaries for new business
and salaries of employees whose efforts are directly related to the acquisition of new
insurance business.
Insurance acquisition cash flows that are directly attributable to a group of insurance
contracts shall be allocated to that group.
Insurance acquisition cash flows not directly attributable to a group of contracts but
directly attributable to a portfolio of contracts are allocated to groups of contracts in the
portfolio.
The Group does not incur any material directly attributable acquisition cash flows, or
other inflows or outflows, before a group of insurance contracts is recognised.
Consequently, it does not recognise any ‘pre-recognition cash flows’.
92
2. Accounting policies - continued
2.10 Insurance and investment contracts issued and reinsurance contracts held
- continued
(d)Measurement - continued
Risk adjustment for non-financial risk
The risk adjustment for non-financial risk is applied to the present value of the
estimated future cash flows, and it reflects the compensation that the Group requires for
bearing the uncertainty about the amount and timing of the cash flows from non-
financial risk as the Group fulfils insurance contracts.
For reinsurance contracts held, the risk adjustment for non-financial risk represents the
amount of risk being transferred by the Group to the reinsurer.
Methods and assumptions used to determine the risk adjustment for non-financial risks
are discussed in Note 24.
Contracts not measured under the PAA
Initial measurement and CSM
The CSM is a component of the carrying amount of the asset or liability for a group of
insurance contracts issued representing the unearned profit that the Group will
recognise as it provides insurance contract services in the future. At initial recognition,
the CSM is an amount that results in no income or expenses arising from:
- the initial recognition of the FCF;
- cash flows arising from the contracts in the group at that date;
When the above calculation results in a net outflow, the group of insurance contracts
would be onerous. A loss arising from onerous insurance contracts is recognised
immediately in profit or loss, with no CSM recognised in the statement of financial
position and a loss component is established in the amount of loss recognised.
No onerous contracts have been identified by the Group.
For groups of reinsurance contracts held, any net gain or loss at initial recognition is
recognised as the CSM unless the net cost of purchasing reinsurance relates to past
events, in which case the Group recognises the net cost immediately in profit or loss.
For reinsurance contracts held, the CSM represents a deferred gain or loss that the
Group will recognise as a reinsurance expense as it receives insurance contract services
from the reinsurer in the future.
93
2. Accounting policies - continued
2.10 Insurance and investment contracts issued and reinsurance contracts held
- continued
(d)Measurement - continued
Contracts not measured under the PAA - continued
Subsequent measurement
The carrying amount at the end of each reporting period of a group of insurance contracts
issued is the sum of:
– the LRC, comprising:
– the FCF related to future service allocated to the group at that date; and
– the CSM of the group at that date; and
– the liability for incurred claims ('LIC'), comprising the FCF related to past service
allocated to the group at the reporting date.
The carrying amount at the end of each reporting period of a group of reinsurance contracts
held is the sum of:
– the remaining coverage, comprising:
– the FCF related to future service allocated to the group at that date; and
– the CSM of the group at that date; and
– the incurred claims, comprising the FCF related to past service allocated to the group at
the reporting date.
i. Changes in fulfilment cash flows
The FCF are updated by the Group for current assumptions at the end of every reporting
period, using the current estimates of the amount, timing and uncertainty of future cash
flows and of discount rates.
The way in which the changes in estimates of the FCF are treated depends on which
estimate is being updated:
– changes that relate to current or past service are recognised in profit or loss; and
– changes that relate to future service are recognised by adjusting the CSM or the loss
component within the LRC as per the policy below.
94
2. Accounting policies - continued
2.10 Insurance and investment contracts issued and reinsurance contracts held
- continued
(d)Measurement - continued
Contracts not measured under the PAA - continued
Subsequent measurement - continued
i. Changes in fulfilment cash flows - continued
For insurance contracts measured under the General Measurement Model (‘GMM’), the
following adjustments relate to future service and thus adjust the CSM:
a. experience adjustments – arising from premiums received in the period that relate to
future service and related cash flows such as insurance acquisition cash flows and
premium-based taxes;
b. changes in estimates of the present value of future cash flows in the LRC, except
those described in the following paragraph;
c. differences between any investment component expected to become payable in the
period and the actual investment component that becomes payable in the period; and
d. changes in the risk adjustment for non-financial risk that relate to future service.
Adjustments a. and b. above are measured using discount rates determined on initial
recognition (the locked in discount rates).
For insurance contracts under the GMM, the following adjustments do not adjust the
CSM:
a. changes in the FCF for the effect of the time value of money and the effect of
financial risk and changes thereof;
b. changes in the FCF relating to the LIC;
c. experience adjustments arising from premiums received in the period that do not
relate to future service and related cash flows; and
d. experience adjustments relating to insurance service expenses (excluding insurance
acquisition cash flows).
When measuring a group of investment contracts with DPF, the Group adjusts the
fulfilment cash flows for the whole of the changes in the obligation to pay policyholders
an amount equal to the fair value of the underlying items. These changes do not relate
to future services and are recognised in profit or loss. The Group then adjusts any CSM
for changes in the amount of the Group’s share of the fair value of the underlying items,
which relate to future services, as explained below.
95
2. Accounting policies - continued
2.10 Insurance and investment contracts issued and reinsurance contracts held
- continued
(d)Measurement - continued
Contracts not measured under the PAA - continued
Subsequent measurement - continued
i. Changes in fulfilment cash flows - continued
For contracts measured under the VFA, the following adjustments relate to future
service and thus adjust the CSM:
– changes in the amount of the Group’s share of the fair value of the underlying
items; and
– changes in the FCF that do not vary based on the returns of underlying items:
a. changes in the effect of the time value of money and financial risks including the
effect of financial guarantees;
b. experience adjustments arising from premiums received in the period that relate to
future service and related cash flows, such as insurance acquisition cash flows and
premium-based taxes;
c. changes in estimates of the present value of future cash flows in the LRC, except
those described in the following paragraph;
d.differences between any investment component expected to become payable in the
period and the actual investment component that becomes payable in the period;
and
e. changes in the risk adjustment for non-financial risk that relate to future service.
Adjustments b. to e. are measured using the current discount rates.
For contracts under the VFA, the following adjustments do not adjust the CSM:
– changes in the obligation to pay the policyholder the amount equal to the fair value
of the underlying items;
– changes in the FCF that do not vary based on the returns of underlying items:
– changes in the FCF relating to the LIC; and
– experience adjustments arising from premiums received in the period that do not
relate to future service and related cash flows, such as insurance acquisition cash
flows and premium-based taxes; and
– experience adjustments relating to insurance service expenses (excluding
insurance acquisition cash flows)
The Group does not have any products with complex guarantees and does not use
derivatives as economic hedges of the risks.
96
2. Accounting policies - continued
2.10 Insurance and investment contracts issued and reinsurance contracts held
- continued
(d)Measurement - continued
Contracts not measured under the PAA - continued
Subsequent measurement - continued
ii Changes to the contractual service margin
For insurance contracts issued, at the end of each reporting period the carrying amount
of the CSM is adjusted by the Group to reflect the effect of the following changes:
a. The effect of any new contracts added to the group.
b. For contracts measured under the GMM, interest accreted on the carrying amount of
the CSM.
c. Changes in the FCF relating to future service are recognised by adjusting the CSM.
Changes in the FCF are recognised in the CSM to the extent that the CSM is
available. When an increase in the FCF exceeds the carrying amount of the CSM,
the CSM is reduced to zero, the excess is recognised in insurance service expenses
and a loss component is recognised within the LRC. When the CSM is zero,
changes in the FCF adjust the loss component within the LRC with correspondence
to insurance service expenses. The excess of any decrease in the FCF over the loss
component reduces the loss component to zero and reinstates the CSM.
d. The effect of any currency exchange differences.
e. The amount recognised as insurance revenue for insurance contract services
provided during the period, determined after all other adjustments above.
For a group of reinsurance contracts held, the carrying amount of the CSM at the end of
each reporting period is adjusted to reflect changes in the FCF in the same manner as a
group of underlying insurance contracts issued.
iii. Interest accretion on the CSM
Under the GMM, interest is accreted on the CSM using discount rates determined at
initial recognition that are applied to nominal cash flows that do not vary based on the
returns of underlying items. The Group uses the discount curves at the middle of each
quarter during the year. MMSV will be assuming equal weighting per quarter given the
stability of new business written.
97
2. Accounting policies - continued
2.10 Insurance and investment contracts issued and reinsurance contracts held
- continued
(d)Measurement - continued
Contracts not measured under the PAA - continued
Subsequent measurement - continued
iv. Adjusting the CSM for changes in the FCF relating to future service
The CSM is adjusted for changes in the FCF, measured applying the discount rates as
specified in the Changes in fulfilment cash flows section above.
v. Release of the CSM to profit or loss
The amount of the CSM recognised in profit or loss for insurance contract services in
the period is determined by the allocation of the CSM remaining at the end of the
reporting period over the current and remaining expected coverage period of the group
of insurance contracts based on coverage units.
The coverage period is defined as a period during which the entity provides insurance
contract services. Insurance contract services include coverage for an insured event
(insurance coverage), the generation of an investment return for the policyholder, if
applicable (investment-return service) for the contracts under the GMM, and the
management of underlying items on behalf of the policyholder (investment-related
service) for the contracts under the VFA. The period of investment-return service or
investment-related service ends at or before the date when all amounts due to current
policyholders relating to those services have been paid. Investment-return services are
provided only when an investment component exists in insurance contracts or the
policyholder has a right to withdraw an amount, and the Group expects these amounts
to include an investment return that is achieved by the Group by performing investment
activities to generate that investment return.
For contracts issued, the Group determines the coverage period for the CSM
recognition as follows:
- for investment contracts with DPF (including hybrids), the coverage period
corresponds to the period in which investment-return services are expected to be
provided; and
- for term life risk contracts, no investment-return services are provided and, thus, the
coverage period is determined by insurance coverage;
98
2. Accounting policies - continued
2.10 Insurance and investment contracts issued and reinsurance contracts held
- continued
(d)Measurement - continued
Contracts not measured under the PAA - continued
Subsequent measurement - continued
v. Release of the CSM to profit or loss - continued
The total number of coverage units in a group is the quantity of service provided by the
contracts in the group over the expected coverage period. The coverage units are
determined at each reporting period-end prospectively by considering:
– the quantity of benefits provided by contracts in the group;
– the expected coverage period of contracts in the group; and
– the likelihood of insured events occurring, only to the extent that they affect the
expected coverage period of contracts in the group.
The Group determines coverage units as follows:
– for term life insurance contracts, coverage units are determined based on the
policies’ face values that are equal to the fixed death benefit amounts in force;
– for investment contracts with DPF, including with-profits and unit-linked hybrids,
coverage units are based on fund assets and value of the fund.
The Group does not reflect the time value of money in the allocation of the CSM to
coverage units.
For reinsurance contracts held, the CSM is released to profit or loss as insurance
contract services are received from the reinsurer in the period.
Coverage units for the proportionate term life reinsurance contracts held are based on
the insurance coverage provided by the reinsurer, and they are determined by the ceded
policies’ fixed face values in force, taking into account new business projected within
the reinsurance contract boundary.
The coverage period for these contracts is determined based on the coverage period of
all underlying contracts whose cash flows are included in the reinsurance contract
boundary.
99
2. Accounting policies - continued
2.10 Insurance and investment contracts issued and reinsurance contracts held
- continued
(d)Measurement - continued
Contracts measured under the PAA
The Group uses the PAA for measuring contracts with a coverage period of one year or
less. In addition to the contracts with coverage of less than one year, the PAA can be
used for measurement of groups of contracts where the entity reasonably expects that
such a simplification would produce a measurement of the LRC that would not differ
materially from the one that would be produced by applying the GMM.
For insurance contracts issued, insurance acquisition cash flows allocated to a group are
deferred and recognised over the coverage period of contracts in a group.
For insurance contracts issued, on initial recognition, the Group measures the LRC at
the amount of premiums received, less any acquisition cash flows paid.
For reinsurance contracts held, on initial recognition, the Group measures the remaining
coverage at the amount of ceding premiums paid.
The carrying amount of a group of insurance contracts issued at the end of each
reporting period is the sum of:
a. the LRC; and
b. the LIC, comprising the FCF related to past service allocated to the group at the
reporting date.
The carrying amount of a group of reinsurance contracts held at the end of each
reporting period is the sum of:
a. the remaining coverage; and
b. the incurred claims, comprising the FCF related to past service allocated to the
group at the reporting date.
For insurance contracts issued, at each of the subsequent reporting dates, the LRC is:
a. increased for premiums received in the period;
b. decreased for insurance acquisition cash flows paid in the period;
c. decreased for the amounts of expected premium receipts recognised as insurance
revenue for the services provided in the period; and
d.increased for the amortisation of insurance acquisition cash flows in the period
recognised as insurance service expenses.
100
2.Accounting policies - continued
2.10 Insurance and investment contracts issued and reinsurance contracts held
- continued
(d)Measurement - continued
Contracts measured under the PAA - continued
For reinsurance contracts held, at each of the subsequent reporting dates, the remaining
coverage is:
a. increased for ceding premiums paid in the period;
b. decreased for the expected amounts of ceding premiums, net of reinsurance
commissions, recognised as reinsurance expenses for the services received in the
period.
The Group does not adjust the LRC for insurance contracts issued and the remaining
coverage for reinsurance contracts held for the effect of the time value of money,
because insurance premiums are due within the coverage period of contracts, which is
one year or less.
For contracts measured under the PAA, the LIC is measured similarly to the LIC’s
measurement under the GMM. Future cash flows are adjusted for the time value of
money, since insurance contracts issued by the Group and measured under the PAA
may have a settlement period of over one year.
If facts and circumstances indicate that a group of insurance contracts measured under
the PAA is onerous on initial recognition or becomes onerous subsequently, the
Company increases the carrying amount of the LRC by the loss component which is
determined by the percentage of onerosity as a function of the LRC for the remaining
period. Subsequently, the loss component is remeasured at each reporting date as the
change in the percentage of onerosity as a function of the LRC for the remaining period.
Movements in the loss component are recorded in the insurance service expenses.
Onerosity of a group of insurance contracts does not automatically indicate that a
reinsurance contract held, protecting such onerous underlying group of contracts will
result in a net gain at initial recognition. However, for reinsurance contract held for
which there is a net gain at initial recognition or becomes so subsequently, the carrying
amount of the asset for remaining coverage (ARC) for reinsurance contracts held
measured under the PAA is increased by the amount of loss-recovery component. The
loss-recovery component is calculated by multiplying the percentage of onerosity as a
function of reinsurance ARC for the remaining period. Movements in the loss-recovery
component are recorded in the net reinsurance expenses.
The Company does not have any reinsurance contracts held measured under the PAA
with underlying contracts measured under the GMM.
101
2.Accounting policies - continued
2.10 Insurance and investment contracts issued and reinsurance contracts held
- continued
(e) Amounts recognised in profit or loss
Insurance revenue
As the Group provides insurance contract services under the group of insurance
contracts, it reduces the LRC and recognises insurance revenue. The amount of
insurance revenue recognised in the reporting period depicts the transfer of promised
services at an amount that reflects the portion of consideration that the Group expects to
be entitled to in exchange for those services.
For contracts not measured under the PAA, insurance revenue comprises the following:
• Amounts relating to the changes in the LRC:
a. claims and other directly attributable expenses incurred in the period measured
at the amounts expected at the beginning of the period, excluding:
– amounts allocated to the loss component;
– repayments of investment components and policyholder rights to withdraw an
amount;
– amounts of transaction-based taxes collected in a fiduciary capacity; -
insurance acquisition expenses; and
– amounts related to the risk adjustment for non-financial risk (see (b));
b. changes in the risk adjustment for non-financial risk, excluding:
– changes included in insurance finance income (expenses);
– changes that relate to future coverage (which adjust the CSM); and
– amounts allocated to the loss component;
c. amounts of the CSM recognised for the services provided in the period;
d. experience adjustments – arising from premiums received in the period other
than those that relate to future service; and
e. other amounts.
• Insurance acquisition cash flows recovery is determined by allocating the portion of
premiums related to the recovery of those cash flows on the basis of the passage of
time over the expected coverage of a group of contracts.
For groups of insurance contracts measured under the PAA, the Group recognises
insurance revenue based on the passage of time over the coverage period of a group of
contracts.
102
2.Accounting policies - continued
2.10 Insurance and investment contracts issued and reinsurance contracts held -
continued
(e) Amounts recognised in profit or loss - continued
Insurance service expense
Insurance service expenses include the following:
a. incurred claims and benefits, excluding investment components;
b. other incurred directly attributable expenses;
c.insurance acquisition cash flows amortisation;
d. changes that relate to past service – changes in the FCF relating to the LIC; and
e. onerous contract losses or reversals of those losses.
For contracts measured under the PAA, amortisation of insurance acquisition cash
flows is based on the passage of time.
Other expenses that do not meet the above criteria are included as other operating
expenses in the consolidated statement of profit or loss.
Net income (expenses) from reinsurance contracts held
The Group presents financial performance of groups of reinsurance contracts held on a
net basis in net income (expenses) from reinsurance contracts held, comprising the
following amounts:
a. rei nsurance expenses;
b. incurred claims recovery;
c. other incurred directly attributable expenses;
d. changes that relate to past service i.e. changes in the FCF relating to incurred
claims recovery; and
e. effect of changes in the risk of reinsurers’ non-performance.
Reinsurance expenses are recognised similarly to insurance revenue. The amount of
reinsurance expenses recognised in the reporting period depicts the transfer of received
insurance contract services at an amount that reflects the portion of ceding premiums
that the Group expects to pay in exchange for those services.
103
2.Accounting policies - continued
2.10 Insurance and investment contracts issued and reinsurance contracts held -
continued
(e)Amounts recognised in profit or loss - continued
Net income (expenses) from reinsurance contracts held - continued
For contracts not measured under PAA, reinsurance expenses comprise the following
amounts relating to the changes in the remaining coverage:
a. claims and other directly attributable expenses recovery in the period, measured at
the amounts expected to be incurred at the beginning of the period, excluding
amounts related to the risk adjustment for non-financial risk (see (b));
b. changes in the risk adjustment for non-financial risk, excluding:
– changes included in finance income (expenses) from reinsurance contracts held;
and
– changes that relate to future coverage (which adjust the CSM);
c. amounts of the CSM recognised for the services received in the period; and
d. experience adjustments arising from premiums paid in the period other than those
relating to future service.
For groups of reinsurance contracts held measured under the PAA, the Group
recognises reinsurance expenses based on the passage of time over the coverage period
of a group of contracts.
Ceding commissions that are not contingent on claims of the underlying contracts issued
reduce ceding premiums and are accounted for as part of reinsurance expenses. Ceding
commissions that are contingent on claims of the underlying contracts issued reduce
incurred claims recovery.
104
2.Accounting policies - continued
2.10 Insurance and investment contracts - continued
(e)Amounts recognised in profit or loss - continued
Insurance finance income or expenses
Insurance finance income or expenses comprise the change in the carrying amount of
the group of insurance contracts arising from:
a. the effect of the time value of money and changes in the time value of money; and
b. the effect of financial risk and changes in financial risk.
For contracts measured under the PAA, the main amounts within insurance finance
income or expenses are:
a. interest accreted on the LIC; and
b. the effect of changes in interest rates and other financial assumptions.
The Group disaggregates changes in the risk adjustment for non-financial risk between
insurance service result and insurance finance income or expenses.
For contracts measured under the GMM, the main amounts within insurance finance
income or expenses are:
a. interest accreted on the FCF and the CSM; and
b. the effect of changes in interest rates and other financial assumptions.
For contracts measured under the VFA, insurance finance income or expenses comprise
changes in the value of underlying items (excluding additions and withdrawals).
The Group has opted to include all its insurance finance income and expenses in profit
or loss for all of its insurance contracts. The Group does not issue insurance contracts
that generate cash flows in a foreign currency.
105
2.Accounting policies - continued
2.11 Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in
the profit or loss account, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. The amount of current tax payable or
receivable is the best estimate of the tax amount expected to be paid or received that
reflects uncertainty related to income taxes, if any.
The current income tax charge is calculated on the basis of the tax laws enacted or
substantively enacted at the statement of financial position date in the countries where
the Company’s subsidiaries and associates operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation and establishes
provision where appropriate.
Deferred income tax is recognised in respect of temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the financial
statements. However, if the deferred income tax arises from initial recognition of an
asset or liability in a transaction other than a business combination that at the time of
the transaction affects neither accounting nor taxable profit or loss, it is not accounted
for. Deferred income tax is measured at the tax rates that are expected to be applied to
temporary differences when they reverse, using tax rates (and laws) that have been
enacted or substantively enacted at the reporting date and reflect uncertainty relating to
income taxes, if any. Deferred tax is expected to apply when the related deferred tax
asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised only to the extent that future taxable profit or taxable
capital gains will be available such that realisation of the related tax benefit is probable.
Deferred income tax is provided on temporary differences arising on investments in
subsidiaries and associates, except where the Group controls the timing of the reversal
of the temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
If the amount of taxable temporary differences is insufficient to recognise a deferred
tax asset in full, then future taxable profits, adjusted for reversals of existing temporary
differences are considered. Deferred tax assets are reviewed at each reporting date and
are reduced to the extent that it is no longer probable that the related tax benefit will be
realised; such reductions are reversed when the probability of future taxable profit
improves.
Deferred income tax assets and liabilities are offset when there is a legally enforceable
right to offset current tax assets against current tax liabilities and when the deferred
income tax assets and liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable entities where there is an
intention to settle the balance on a net basis.
106
2.Accounting policies - continued
2.11 Current and deferred income tax - continued
Deferred tax related to fair value re-measurements charged or credited directly in other
comprehensive income or to equity, is also credited or charged directly to equity and
subsequently recognised in the profit or loss account together with the deferred gain or loss.
2.12 Provisions for pension obligations
Provisions are recognised when the Group has a present legal or constructive obligation as
a result of past events, it is probable that an outflow of resources will be required to settle
the obligation, and a reliable estimate of the amount can be made.
A defined benefit plan defines an amount of pension that an employee will receive on
retirement. In the Group’s case, this amount is dependent upon an employee’s final
compensation upon retirement.
The liability recognised in the statement of financial position is the present value of the
defined benefit obligation at the end of the reporting period. The present value of a defined
benefit obligation is determined by discounting the estimated future cash outflows using
interest rate yields of government or high-quality corporate bonds that are denominated in
the currency in which the benefits will be paid, and that have terms to maturity
approximating to the terms of the related pension liability.
Actuarial gains and losses arising from experience adjustments and changes in assumptions
are charged or credited to other comprehensive income in the period in which they arise.
2.13 Revenue recognition
R evenue comprises the fair value of the consideration received or receivable for the sale of
services in the ordinary course of the Group’s activities. The Group recognises revenue
when the amount of revenue can be reliably measured, it is probable that future economic
benefits will flow to the entity and when specific criteria have been met as described
below.
Rendering of services
Insurance revenue recognition is described in Note 2.10 dealing with insurance contracts
and investment contracts with DPF.
Revenue arising from the issue of investment contracts without DPF and other related
services offered by the Group, is recognised in the accounting period in which the services
are rendered.
Fees include investment management fees arising from services rendered in conjunction
with the issue and management of investment contracts where the Group actively manages
the consideration received from its customers to fund a return that is based on the
investment profile that the customer selected on origination of the instrument. The Group
recognises these fees on a straight-line basis over the estimated life of the contract.
107
2.Accounting policies - continued
2.13 Revenue recognition - continued
Rendering of services - continued
The Group charges its customers for management and other related services using the
following different approaches:
– Front-end fees are charged to the client on inception. The consideration received is
deferred as a liability and recognised over the life of the contract on a straight-line
basis.
– Regular fees are charged to the customer periodically (monthly, quarterly, half
yearly or annually) either directly or by making a deduction from invested funds.
Regular charges billed in advance are recognised on a straight-line basis over the
billing period.
Other revenue receivable by the Group mainly comprises commission or trailer fees
receivable on account of investment or other services provided in an intermediary
capacity which is accounted for on an accruals basis.
2.14 Investment return
Investment return includes dividend income, net gains or losses on financial assets at
fair value through profit or loss, interest income from financial assets not classified as
fair value through profit or loss, rental income receivable, share of associated
undertaking’s result, and other fair value movements of investment properties, and is
net of other investment expenses.
(a) Dividend income
Dividend income from group undertakings is recognised in the profit or loss account as
part of investment income when the right to receive payment is established.
(b) Net fair value gains/(losses) from financial assets at fair value through profit or
loss
This category includes gains or losses arising from changes in the fair value of the
financial assets at fair value through profit or loss in the year in which they arise,
dividend income recognised when the right to receive payment is established and
interest income received on financial assets at fair value through profit or loss.
(c) Interest income
Interest income from financial assets not classified as fair value through profit or loss is
recognised using the effective interest method.
108
2.Accounting policies - continued
2.14 Investment return - continued
(d) Investment income from investment properties
Rental income from investment property is accounted for on an accruals basis in
accordance with the substance of the relevant lease agreements.
2.15 Leases
At inception of a contract, the Group assess whether a contract is, or contains, a lease.
A contract is or contains a lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration. To assess whether a
contract conveys the right to control the use of an identified asset, the Group uses the
definition of a lease in IFRS 16.
At commencement or on modification of a contract that contains a lease component, the
Group allocates the consideration in the contract to each lease component on the basis
of its relative stand-alone price.
(a) As a lessor
When the Group acts as a lessor, it determines at lease inception whether each lease is a
finance lease or an operating lease.
To classify each lease, the Group makes an overall assessment of whether the lease
transfers substantially all of the risks and rewards incidental to ownership of the
underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an
operating lease. As part of this assessment, the Group considers certain indicators such
as whether the lease is for the major part of the economic life of the asset.
The Group recognises lease payments received under operating leases as income on a
straight-line basis over the lease term as part of ‘other income’ – Note 9.
(b) As a lessee
A lessee recognises a right-of-use asset representing its right to use the underlying asset
and a lease liability representing its obligation to make lease payments. As described
later in this note there are recognition exemptions for short-term leases and leases of
low-value items.
The Group recognises a right-of-use asset and a lease liability at the lease
commencement date. The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for any lease payments made
at or before the commencement date, plus any initial direct costs incurred and an
estimate of costs to dismantle and remove the underlying asset or to restore the
underlying asset or the site on which it is located, less any lease incentives received.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
109
2.Accounting policies - continued
2.15 Leases - continued
(b) As a lessee - continued
The right-of-use asset is subsequently depreciated using the straight-line method from
the commencement date to the end of the lease term, unless the lease transfers
ownership of the underlying asset of the Group by the end of the lease term or the cost
of the right-of-use asset reflects that the Group will exercise a purchase option. In that
case the right-of-use asset will be depreciated over the useful life of the underlying
asset, which is determined on the same basis as those of property and equipment. In
addition, the right-of-use asset is periodically reduced by impairment losses, if any, and
adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that
are not paid at the commencement date, discounted using the interest rate implicit in the
lease or, if that rate cannot be readily determined, the Group’s incremental borrowing
rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
The Group determines its incremental borrowing rate by using interest rate curves by
country and termination dates, coordinated in a centralized manner, in which the
interest rate calculation is obtained by adding the differential related to the asset’s
nature. Interest rate curves are reviewed twice a year.
Lease payments included in the measurement of the lease liability comprise the
following:
– fixed payments (including payments which are essentially fixed), minus any
incentive to lease to be paid;
– the price for exercising a purchase option which the lessee is reasonably certain to
exercise; and
– payments for early cancellation.
The lease liability is measured at amortised cost using the effective interest method. It is
remeasured when there is a change in future lease payments arising from a change in
rate, if there is a change in the Group’s estimate of the amount expected to be payable
under a residual value guarantee, if the Group changes its assessment of whether it will
exercise a purchase, extension or termination option or if there is a revised in-substance
fixed lease payment.
When the lease liability is remeasured in this way, a corresponding adjustment is made
to the carrying amount of the right-of-use asset or is recorded in profit or loss if the
carrying amount of the right-of-use asset has been reduced to zero.
The Group presents right-of-use asset that do not meet the definition of investment
property in ‘Right-of-use assets’.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
110
2.Accounting policies - continued
2.15 Leases - continued
(b) As a lessee - continued
The Group has elected not to recognise right-of-use assets and lease liabilities for leases
of low-value assets and short-term leases. The Group recognises the lease payments
associated with these leases as an expense on a straight-line basis over the lease term.
A lease modification is defined as a change in the scope of a lease, or the consideration
for a lease, that was not part of the original terms and conditions of the lease. A lease
modification includes adding or terminating the right to use one or more underlying
assets, or extending or shortening the contractual lease term.
A lease modification is accounted for in one of two ways;
• It is treated as a separate lease; or
• It is not treated as a separate lease.
A modification will only be treated as a separate lease if it involves the addition of one
or more underlying assets at a price that is commensurate with the standalone price of
the increase in scope. All other modifications are not treated as a separate lease.
Modifications, taking place during 2023 include changes in lease consideration and
extension of lease term all of which do not constitute a separate lease.
2.16 Impairment of non-financial assets
Assets that have an indefinite useful life and are not subject to amortisation, or assets not yet
available for use, are tested annually for impairment. Assets that are subject to amortisation
or depreciation are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised
for the amount by which the asset’s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable and independent cash flows (cash-generating units).
2.17 Offsetting
Financial assets and liabilities are offset and the net amount reported in the statement of
financial position when, and only when the Group currently has a legally enforceable right to
set-off the recognised amounts and it intends to settle them on a net basis, or to realise the
asset and settle the liability simultaneously. Income and expenses are presented on a net basis
only when it is required or permitted by a standard – e.g. gains and losses arising from a
group of similar transactions such as the gains and losses on financial assets measured at
FVTPL.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
111
2.Accounting policies - continued
2.18 Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the
period in which an obligation to pay a dividend is established.
2.19 Share capital
Shares are classified as equity when there is no obligation to transfer cash or other
assets. Incremental costs directly attributable to the issue of new shares are shown in
equity as a deduction from the proceeds net of tax.
2.20 Methods and judgements applied in determining the IFRS 17 transition amounts
At 1 January 2022, the Group applied the following approaches to identify and measure
certain groups of contracts on transition to IFRS 17.

Year of issue of contracts | Transition approach
Short-term non-life and life | Full retrospective approach
After 2016 – term business including reinsurance | Full retrospective approach
Before 2016 – term business including reinsurance | Fair value approach
All with-profits and unit-linked business | Fair value approach

The transition approach was determined at the level of a group of insurance contracts
and affected the approach to calculating the CSM on initial adoption of IFRS 17.
Full retrospective approach
The Group has applied the full retrospective approach on transition to all contracts
measured under the Premium Allocation Approach (PAA) albeit with some
simplifications.
The Group has determined that reasonable and supportable information was available
for all contracts in force at the transition date for the term portfolio and reinsurance
thereon that were issued after 1 January 2016. For these contracts, the Group had
enough data available to perform a reasonable calculation of the transitional value of
the CSM under FRA, albeit with some simplifications. The CSM at initial recognition
was based on initial assumptions when groups of contracts were recognised and rolled
forward to the date of transition as if IFRS 17 had always been applied.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
112
2.Accounting policies - continued
2.20 Methods and judgements applied in determining the IFRS 17 transition amounts -
continued
Full retrospective approach - continued
Accordingly, the Group has: identified, recognised and measured each group of
insurance contracts in this category as if IFRS 17 had always applied ; derecognised any
existing balances that would not exist if IFRS 17 had always applied; and recognised
any resulting net difference in equity.
Fair value approach
The Group applied judgement in determining the transition amounts and the pre-
transition FCF and experience were not considered under this approach.
The Group was required to comply with Solvency II requirements in 2016. Prior to
2016, it was impracticable to obtain realistic cash flow data without the use of
hindsight. Thus, the Group could not obtain the necessary reasonable and supportable
information to apply the FRA for the term cohorts pre-2016, thus the fair value
approach was applied to these cohorts.
Further, given the mechanics of the Group's with-profits fund (which have changed
over time) regarding the sharing of surpluses and cost of guarantees throughout the
different generations in the portfolio at a particular time, applying FRA as if IFRS 17
always applied was impracticable.
Applying the fair value approach, the Group determined the CSM to be the difference
between the fair value of a group of insurance contracts, measured in accordance with
IFRS 13, ‘Fair Value Measurement’, and its FCF at the transition date.
The fair value of an insurance liability is the price that a market participant would be
willing to pay to assume the obligation and the remaining risks of the in force contracts
as at the transition date. A present value technique was used to value groups of
contracts.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
113
2. Accounting policies - continued
2.20 Methods and judgements applied in determining the IFRS 17 transition amounts -
continued
Fair value approach - continued
In estimating the fair value of groups of insurance contracts, the following
considerations were applied:
– only future cash flows within the boundaries of the insurance contracts were
included in the fair value estimation, excluding future renewals and new business
that would be outside the contract boundary of the contracts under IFRS 17;
– assumptions about expected future cash flows and risk allowances, including
operational risk were adjusted for the market participant’s view, as required by
IFRS 13;
– profit margins were included to reflect what a market participant would require for
accepting obligations under insurance contracts, beyond the risk adjustment for non-
financial risk; and
– diversification between market risk and life risk. Although market risk is considered
as a hedgeable risk, it was assumed that a buyer will be able to capture this
diversification from its other own modules.
3.Use of accounting estimates and judgements in applying accounting policies
The Group makes estimates and assumptions concerning the future. Estimates and
judgements are continually evaluated and are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under
the circumstances.
Information about judgements made in applying accounting policies that have the most
significant effects on the amounts recognised in the financial statements is included in
the following notes, which also include information about assumptions and
uncertainties at 31 December 2023 that have a significant risk of resulting in a material
adjustment in the carrying amounts of assets and liabilities in the next financial year.
(a) Long-term contracts - insurance contract assets, insurance contract liabilities and
reinsurance contract liabilities
Insurance contract assets, insurance contract liabilities and reinsurance contract
liabilities are subject to an annual valuation using generally accepted accounting and
actuarial practice.
Different principles and valuation methodologies are adopted depending on the type
and generation of products. The key assumptions used in determining the measurement
of insurance contract assets, insurance contract liabilities and reinsurance contract
liabilities are described in Note 24.6 to the financial statements.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
114
3.Use of accounting estimates and judgements in applying accounting policies -
continued
(b) Short-term insurance contracts under PAA - liability for incurred claims
Liability of incurred claims (LIC) of short-term business insurance contracts, measured
under the PAA, comprise of the estimates of future cash flows. The estimates of future
cash flows is derived using a standard actuarial claims projection technique, the Chain
Ladder method, other than for the claims reserves as explained below. The key
assumptions underlying this technique is that past claims development experience can
be used to project future claims development.
Claims reserves which are not projected using actuarial techniques, particularly those
involving fatalities and/or serious bodily injuries, are reserved at the case-by-case
reserve estimate. The measurement of claim payments due by the Group involves the
assessment of future settlements and is therefore dependent on assumptions around
determining such reserves based on, among others, legal precedent and current trends in
compensation awards.
More detail on the key assumptions used in determining the LIC in respect of short-
term insurance contracts under PAA are described in Note 24 to the financial
statements.
(c) Consolidation of entities in which the Group holds less than majority of voting rights
The Group considers that it controls MAPFRE MSV Life p.l.c. (‘MMSV’) even though
it does not own more than 50% of the voting rights. This is because strategic, operating
and financing policies of MMSV are directed by means of shareholders’ agreement
which provides MAPFRE Middlesea p.l.c. with the right to select, appoint and remove
the key management personnel of MMSV and approve its business plan and capital
expenditure.
For all the financial years up to 31 December 2010, MMSV was considered to be an
associate and was accounted for using the equity method. Following the shareholders’
agreement, on 29 July 2011, MAPFRE Middlesea p.l.c. acquired control over MMSV
based on the factors explained in this note and started consolidating MMSV as from
that date.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
115
4. Management of risk
The Group is a party to contracts that transfer insurance risk and/or financial risk. This
section summarises these risks and the way that the Group manages them.
The following table describes the composition of the underlying items for long-term
contracts with direct participation features:

Group | 2023 | 2022
| €000s | €000s
Cash at bank and in hand | 8,910 | 11,891
Deposits with banks or credit institutions | — | 51,502
Debts securities | 844,145 | 762,579
Equity securities and units in unit trusts | 926,282 | 931,605
Assets held to cover linked liabilities - collective investment schemes | 31,762 | 27,796
Investments in associated undertakings | 24,508 | 23,809
Investment property | 92,844 | 95,504
Foward foreign exchange contracts and swaps | 1,970 | 2,698
Other assets | — | 6,068
Total investment assets and cash and cash equivalents | 1,930,421 | 1,913,452
Insurance contract liabilities | (1,984,889) | (1,961,452)

4.1 Insurance risk
The risk under any one insurance contract is the possibility that the insured event occurs
and the uncertainty of the amount of the resulting claim. By the very nature of an
insurance contract, this risk is fortuitous, however, it can be predicted with a certain
disclosed level of reliability.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
116
4. Management of risk - continued
4.1 Insurance risk
For a portfolio of insurance contracts where the theory of probability is applied to
pricing and provisioning, the principal risk that the Group faces under its insurance
contracts is that the actual claims and benefit payments are significantly different to the
amounts included within insurance/reinsurance contract liabilities and assets. This
could occur because the frequency or severity of claims and benefits are greater or
lower than estimated. Insurance events are fortuitous and the actual number and
amount of claims and benefits may vary from year to year from the estimate established
using statistical and actuarial techniques.
Experience shows that the larger the portfolio of similar insurance contracts, the smaller
the relative variability of the expected outcome will be. In addition, a more diversified
portfolio is less likely to be affected across the board by a change in any subset of the
portfolio. The Group has developed its insurance underwriting strategy to diversify the
type of insurance risk accepted and within each of these categories to achieve a
sufficiently large population of risks to reduce the potential variability of the expected
outcome. The objective of the underwriting strategy is to ensure that the underwritten
risks are well diversified in terms of type and amount of risk. The variability of risks is
improved by the careful selection and implementation of underwriting strategies, which
are designed to ensure that risks are diversified in terms of type of risk and level of
insured benefits.
Key risks arising from insurance contracts issued:

| Contract | Key risks | Risk mitigation
| Short-term contracts | Insurance risk – frequency and severity of claims | Underwriting strategy, adequate reinsurance arrangements and proactive claim handling
| Life risk - Term | Mortality risk: death of policyholder earlier than expected | Reinsurance with financially strong reinsurer and adequate underwriting
| Investment contracts with DPF | Market risk: investment return on underlying items falling below guaranteed minimum rates | Management discretion to determine amount and timing of policyholder bonus rates
|  | Interest rate risk: difference in duration and yield of assets and liabilities | Matching of asset and liability cash flows
| Unit-linked | Lapse risk: insufficient charges to cover acquisition expenses | Surrender penalties and review of charges

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
117
4.Management of risk - continued
4.1 Insurance risk - continued
Factors that aggravate insurance risk include lack of risk diversification in terms of type
and amount of risk and geographical location. The Group is largely exposed to
insurance risk in one geographical area, Malta and in one currency, the Euro.
(a) Short-term business insurance contracts
Frequency and severity of claims
The terms and conditions of the contracts set out the bases for the determination of the
Group’s liability should the insured event occur. The risks underwritten include motor
(including third party liability), health, fire and other damage to property, other classes
and group life. Details of insurance revenue as well as insurance service expenses
analysed by segment are provided in the “Segment informatio n” (Note 7).
The frequency and severity of claims can be affected by several factors. The following
are considered by the Group to be the most significant:
-The increasing levels of court awards in cases where damages are suffered as a
result of injuries, the divergence of awards that is dependent on the territory of the
claim and the jurisdiction of the court, the effect of inflation due to the prolonged
period typically required to settle such cases; and
- The risk of a single event that can extensively affect a multiple of individual risks
to which the Group is exposed.
The Group manages these risks through its underwriting strategy, adequate reinsurance
arrangements and proactive claims handling.
The underwriting strategy ensures that the risks underwritten are well diversified in
terms of type and amount of risk. The Group follows strict underwriting guidelines and
sets limits on the overall retention of risk that it carries. Any risk in excess of this limit
is either reinsured under a facultative cover note or is declined. Underwriting limits are
in place to enforce appropriate risk selection criteria. In certain circumstances, certain
exclusions to risks are included within these guidelines. For example, the Group does
not insure US risks unless they are incidental. The Group can impose deductibles to
help manage its costs. It also uses its experience and expertise to mitigate the risk of
fraudulent claims. Insurance contracts also entitle the Group to pursue third parties for
payment of some or all of the costs (i.e. subrogation). A significant portion of the
Group’s business is underwritten through an agency distribution network.
Underwriting authority limits are set for individual agencies or branches, and any
contracts through which the Group is committed to cover risks in excess of these
authority limits require head office approval.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
118
4.Management of risk - continued
4.1 Insurance risk - continued
(a) Short-term business insurance contracts - continued
Frequency and severity of claims - continued
The Group has reinsurance protection in place for all classes of business. The type of
reinsurance cover, and the level of retention, is based on the Group’s internal risk
management assessment which takes into account the risk being covered, the sums
assured and the geographical location of the risk. The Board approves each reinsurance
programme on an annual basis. The reinsurance arrangements include a mix of
proportional, facultative and non-proportional covers, which limit the liability of the
Group to any one individual claim or event. Generally, the Group’s policy is to place
reinsurance with listed multinational reinsurance companies whose credit rating is not
less than BBB. No rating limitation shall apply to treaty placements with MAPFRE Re
or any MAPFRE Group company designated to write any or all of the MAPFRE Group
Reinsurance treaties. At 31 December 2023, MAPFRE Re’s rating stood at A. The
Board monitors the security rating of MAPFRE on a periodic basis.
The Group has specialised claims units dealing with the mitigation of risks surrounding
known claims. These units investigate and adjust claims as appropriate. Claims are
individually reviewed regularly, and are adjusted to reflect the latest information on the
underlying facts, current law, jurisdiction, contractual terms and conditions and other
factors. The Group actively manages and pursues early settlement of claims to reduce
its exposure to unpredictable developments. Authority limits are set for the settlement
of claims through the individual agents. Any claims incurred above these limits are
referred to head office for handling. In addition, all claims involving bodily injury are
referred to head office irrespective of their amount.
Concentration of insurance risk
Up until 31 December 2023, 100% of the Group’s business was written in Malta (2022:
100%). The portfolio is diversified in terms of type of business written, with motor
business comprising 46% (2022: 46%) and health comprising 17% (2022: 17%) and fire
and other property damage 18% (2022: 18%) of the total portfolio (including Group
Life business). The remaining 19% (2022: 19%) of premium revenue is generated
across a spread of classes including marine, income protection, general liability, travel
and short-term group life. Further information on insurance revenue, and insurance
service expenses by insurance business class is provided in Note 7 to these financial
statements.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
119
4.Management of risk - continued
4.1 Insurance risk - continued
(a) Short-term business insurance contracts - continued
Sources of uncertainty in the estimation of future claim developments and payments
Claims on contracts are accounted for on a claims-occurrence basis. The Group is
liable for all insured events that occurred during the term of the contract, even if the
loss is discovered after the end of the contract term. Certain classes of business, most
notably those exposed to liability, can take several years to develop and are therefore
subject to a greater degree of uncertainty than other classes of business which are
typically settled in a shorter period of time.
The estimated cost of claims includes direct expenses to be incurred in settling claims,
net of the expected subrogation value and recoveries. The Group takes all reasonable
steps to ensure that it has appropriate information regarding its claims exposures.
However, given the uncertainty in establishing the liability for incurred claims, it is
possible that the final outcome will prove to be different from the original liability
established.
In calculating the estimated cost of unpaid claims, the Group considers the results of
estimation techniques that are based partly on known information at year-end and partly
on statistical analysis of historical experience.
Further details on the process of estimation is provided in Note 24.2 which also presents
the development of the estimate of future cash flows for claims incurred in a gi ven year.
Sensitivity analysis to underwriting risk variables
The following tables present information on how reasonably possible changes in
assumptions made by the Company with regard to underwriting risk variables impact
product line insurance liabilities and profit or loss and equity before and after risk
mitigation by reinsurance contracts held. The analysis is based on a 5% upwards and
downwards change in the ultimate loss amount while holding all other assumptions
constant. In practice, this is unlikely to occur, and changes in some of the assumptions
might be correlated.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
120
4.Management of risk - continued
4.1 Insurance risk - continued
(a) Short-term business insurance contracts - continued
Sensitivity analysis to underwriting risk variables - continued

| 31 December 2023 | Impact on profit before income tax | Impact on equity
|  | Gross | Net | Gross | Net
|  | €'000 | €'000 | €'000 | €'000
| Non-life |  |  |  |
| Ultimate loss – 5% increase | (427) | (379) | (278) | (246)
| Ultimate loss – 5% decrease | 427 | 379 | 278 | 246
| 31 December 2022 | Impact on profit before income tax | Impact on equity
|  | Gross | Net | Gross | Net
|  | €'000 | €'000 | €'000 | €'000
| Non-life |  |  |  |
| Ultimate loss – 5% increase | (346) | (300) | (225) | (195)
| Ultimate loss – 5% decrease | 346 | 300 | 225 | 195

(b) Long term business insurance contracts
Frequency and severity of claims (Mortality risk)
For contracts where death is the insured risk, the most significant factor that could
increase the overall frequency of claims are epidemics or wide spread changes in
lifestyle resulting in earlier or more claims than expected.
At present these risks do not vary significantly in relation to the location of the risk
insured by the Group. However, undue concentration by amounts could have an impact
on the severity of benefit payments on a portfolio basis.
For contracts with fixed and guaranteed benefits and fixed future premiums, there are
no mitigating terms and conditions that reduce the insurance risk accepted. For
investment contracts with DPF, the participating nature of the contracts results in a
portion of the insurance risk being reduced over the term of policy. Investment
contracts with DPF carry negligible insurance risk.
The Group manages these risks through its underwriting strategy and reinsurance
arrangements. The underwriting strategy is intended to ensure that the risks
underwritten are well diversified in terms of type of risk and level of insured benefits.
Medical selection is also included in the Group’s underwriting procedures with
premiums varied to reflect the health condition and life expectancy of the applicants.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
121
4.Management of risk - continued
4.1 Insurance risk - continued
(b) Long term business insurance contract s - continued
Frequency and severity of claims (Mortality risk) - continued
The Group has reinsurance protection in place to cover death claims. The type of
reinsurance cover and the level of retention for each risk are based on the Group’s
internal risk management assessment, which takes account of the nature of the risk
covered and the sum assured. The reinsurance programme is approved by the Board of
Directors ("the Board") annually. The reinsurance arrangements in place include a mix
of quota share, facultative, excess of loss and catastrophe protection, which limits the
liability of the Group to any one individual life or event. The Group’s reinsurance is
placed with listed multinational reinsurance companies whose rating is not less than A.
The mortality assumptions applied are disclosed in Note 24.
Policyholder lapse risk
Higher lapses than expected cause a loss of future profits and possibility of non-
recovery of sales expenses.
The amount of insurance risk is also subject to contract holder behaviour. On the
assumption that policyholders will make decisions rationally overall underwriting risk
can be assumed to be aggravated by such behaviour. For example, it is likely that
contract holders whose health has deteriorated significantly will be less inclined to
terminate contracts insuring death benefits than those contract holders remaining in
good health. This results in an increasing trend of expected mortality as the portfolio of
insurance contracts reduces due to voluntary terminations.
Unit-linked and with-profit policies issued, can be surrendered before maturity for a
cash surrender value specified in the contractual terms. Cash surrender value equals the
policyholder account/investment value at the time of termination, less any surrender
penalties. Through these penalties, policyholders are discouraged from surrendering
contracts earlier than policy maturity. As such, penalties mitigate the expense risk
arising from acquisition and other costs incurred when policies were issued, because
such costs were originally assumed to be spread over a longer period, since early
surrender was not expected.
The lapse assumptions applied are disclosed in Note 24.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
122
4.Management of risk - continued
4.1 Insurance risk - continued
(b) Long term business insurance contracts - continued
Expense Risk
Expense risk is the risk of unexpected increases in policy maintenance, claim handling
and other costs relating to fulfilment of insurance contracts. The risk is managed
through budgeting and periodic cost evaluations. Investment contracts with DPF carry
negligible expense risk.
The expense assumptions applied are disclosed in Note 24.
Market Risk
The risk is covered in Note 4.2 (a) below. The investment assets return and discount
rate assumptions are disclosed in Note 24.
Sensitivity analysis to underwriting risk variables
The following tables present information on how reasonably possible changes in
assumptions made by the Group with regard to underwriting risk variables impact
product line insurance liabilities and profit or loss and equity before and after risk
mitigation by reinsurance contracts held. The analysis is based on a change in an
assumption while holding all other assumptions constant. In practice, this is unlikely to
occur, and changes in some of the assumptions might be correlated.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
123
4.Management of risk - continued
4.1 Insurance risk - continued
(b) Long term business insurance contracts - continued
Sensitivity analysis to underwriting risk variables - continued

| 31 December 2023 | Impact on CSM | Impact on profit before income tax | Impact on equity
|  | Gross | Net | Gross | Net | Gross | Net
|  | €'000 | €'000 | €'000 | €'000 | €'000 | €'000
| Life Risk (Net) |  |  |  |  |  |
| Mortality rate – 10% increase | (4,155) | (1,852) | (59) | (15) | (39) | (10)
| Mortality rate – 10% decrease | 4,151 | 1,854 | 57 | 14 | 37 | 9
| Lapse rates – 10% increase | (1,775) | (288) | 192 | 124 | 125 | 80
| Lapse rates – 10% decrease | 1,775 | 288 | (192) | (124) | (125) | (80)
| Expenses – 10% increase | (1,566) | (1,812) | (48) | (57) | (31) | (37)
| Expenses – 10% decrease | 1,566 | 1,812 | 48 | 57 | 31 | 37
| Investment contracts with DPF |  |  |  |  |  |
| Mortality rate – 10% increase | (391) | (391) | 3 | 3 | 2 | 2
| Mortality rate – 10% decrease | 391 | 391 | (3) | (3) | (2) | (2)
| Lapse rates – 10% increase | 123 | 123 | 93 | 93 | 60 | 60
| Lapse rates – 10% decrease | (178) | (178) | (89) | (89) | (58) | (58)
| Expenses – 10% increase | (1,179) | (1,179) | (71) | (71) | (46) | (46)
| Expenses – 10% decrease | 1,179 | 1,179 | 71 | 71 | 46 | 46
| 31 December 2022 | Impact on CSM | Impact on profit before tax | Impact on equity
|  | Gross | Net | Gross | Net | Gross | Net
|  | €'000 | €'000 | €'000 | €'000 | €'000 | €'000
| Life Risk (Net) |  |  |  |  |  |
| Mortality rate – 10% increase | (5,030) | (2,257) | 589 | 279 | 383 | 182
| Mortality rate – 10% decrease | 5,030 | 2,257 | (589) | (279) | (383) | (182)
| Lapse rates – 10% increase | (1,413) | (103) | 324 | 52 | 211 | 34
| Lapse rates – 10% decrease | 1,413 | 103 | (324) | (52) | (211) | (34)
| Expenses – 10% increase | (1,678) | (1,891) | 130 | 145 | 85 | 95
| Expenses – 10% decrease | 1,678 | 1,891 | (130) | (145) | (85) | (95)
| Investment contracts with DPF |  |  |  |  |  |
| Mortality rate – 10% increase | (295) | (295) | (6) | (6) | (4) | (4)
| Mortality rate – 10% decrease | 295 | 295 | 6 | 6 | 4 | 4
| Lapse rates – 10% increase | 531 | 531 | 82 | 82 | 53 | 53
| Lapse rates – 10% decrease | (531) | (531) | (82) | (82) | (53) | (53)
| Expenses – 10% increase | (1,338) | (1,338) | (123) | (123) | (80) | (80)
| Expenses – 10% decrease | 1338 | 1338 | 123 | 123 | 80 | 80

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
124
4.Management of risk - continued
4.1 Insurance risk - continued
Changes in underwriting risk variables mainly affect the CSM, profit or loss and equity
as follows.

|  | GMM | VFA
| a. CSM | Changes in fulfilment cash flows, other than those recognised as insurance finance income or expenses | Changes in fulfilment cash flows
| b. Profit or loss | Changes in fulfilment cash flows that are recognised as insurance finance income or expenses in profit or loss and change in CSM release and /or coverage units | Changes in CSM release and /or coverage units
| c. Equity | The effect on profit or loss under (b) after tax | The effect on profit or loss under (b) after tax

4.2 Financial risk
The Group is exposed to financial risks through its financial assets, financial liabilities
and insurance contract assets and liabilities and reinsurance contracts assets and
liabilities. In particular, the key risk is that in the long term, the proceeds from its
financial assets are not sufficient to fund the obligations arising from its insurance and
investment contracts. The components of financial risks for the Group are market risk
(including cash flow and fair value interest rate risk, equity price risk and currency
risk), credit risk and liquidity risk. These risks arise from open positions in interest rate,
currency and equity products, all of which are exposed to general and specific market
movements. The risks that the Group primarily faces due to the nature of its assets and
liabilities are interest rate risk and equity price risk.
The Group has developed its Asset/Liability management framework to further support
the manner in which these risk positions are managed. It actively manages its assets to
achieve a competitive rate of return within risk objectives delineated by asset liquidity
measures, duration targets and credit quality parameters. The respective Investment
Committees review and approve investment strategies on a periodic basis ensuring that
assets are managed efficiently and within approved risk mandates.
(a) Market risk
Market risk comprises interest rate, equity price and foreign currency risks. These risks
arise from variability in fair values of financial instruments or related future cash flows,
as well as from variability of the FCF of insurance contracts due to variability in market
risk variables.
(i) Cash flow and fair value interest rate risk
Other payables are not directly sensitive to the level of market interest rates, as they are
not discounted.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
125
4.Management of risk - continued
4.2 Financial risk - continued
(a) Market risk - continued
(i) Cash flow and fair value interest rate risk - continued
Insurance and investment contracts with DPF at Group level have benefit payments that
are fixed and guaranteed at the inception of the contract (for example, sum assured), or
as annual discretionary bonuses are declared. The Group’s primary financial risk on
these contracts is the risk that interest income and capital redemptions from the
financial assets backing the liabilities are insufficient to fund the guaranteed benefits
payable.
The Group does not guarantee a positive fixed rate of return to its long-term contract
policyholders at the inception of a contract. The declaration of discretionary bonuses is
guided by the bonus philosophy of the Board. Once a reversionary bonus is declared, it
is guaranteed to be paid in full at maturity or on the prior death of the life assured. Also
policyholders have the option to withdraw their current year’s bonus without any
charges following the date the bonus is declared.
The bonus philosophy considers historic and current rates of return generated by the
Group’s investment portfolio as well as the Group’s expectations for future investment
returns. The impact of interest rate risk is mitigated by the presence of the DPF. These
guaranteed benefits increase as discretionary benefits are declared and allocated to
contract holders. The current rates of regular and final bonuses are determined by the
Board in consultation with the Approved Actuary. Different bonus rates are declared
on different generations of contracts depending on the type of product, cost structure,
past investment performance and premium rates. Different bonuses are declared to
maintain equity between different generations of contract holders and products with
different characteristics. Future bonus rates are not guaranteed and the assumptions are
set to allow for a fair and orderly run-off of the fund.
All unit-linked and investment contracts with a DPF feature can be surrendered before
maturity for a cash surrender value that is always less than the actual contract liability.
Cash surrender values are determined at the discretion of the Group, and can be varied
from time to time.
The primary factor affecting the level of cash surrender value is the investment return
earned on the assets of the Group. In addition, the cash surrender value is affected by
the expenses, tax and the cost of risk benefits (such as life cover) borne by the Group,
deductions to provide a return to shareholders, as well as profits and losses arising on
other contracts. The expenses include payment of commission, medical report expenses,
office administration costs and other expenses incurred in the setting up and
maintenance of the contract. At most, the cash surrender value will be the amount of the
actual liability reduced by the surrender charge (where applicable).
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
126
4. Management of risk - continued
4.2 Financial risk - continued
(a) Market risk - continued
(i) Cash flow and fair value interest rate risk - continued
Furthermore, in respect of all with-profits (with the exception of some contracts that
have been in force more than a certain number of years), the Group reserves the right to
increase the level of the surrender charge and, if necessary, to apply a Market Value
Reduction (‘MVR’). A MVR is a deduction which the Group may make on surrender of
a contract with DPF. For example, if the underlying investment return, after allowing
for expenses, tax, risk benefits, shareholder returns and adjustment for profits or losses
on other contracts is less than the return already provided for in the form of
reversionary bonuses, the Group may decide to apply a MVR.
The MVR serves to protect the interests of remaining investors and the Group, who
would otherwise have to subsidise the amount paid on surrendering contracts. The
Group does not apply a standard percentage deduction on all contracts but determines
the deduction to apply to each individual surrender at the time the surrender is made.
The amount depends on a number of factors including the length of time the contract
has been in force and the underlying investment return over the same time period. There
will be no MVR at maturity or on death. This means that at maturity or on death the
payment of the actual contract liability is guaranteed.
The cash surrender value may also be less than the total amount of premiums paid up to
the date of surrender. The Group is not required to, and does not, measure the effect of
the above embedded derivative at fair value.
The Group matches its insurance contract liabilities with a diversified portfolio of assets
which includes equity, debt securities and property. The return from debt and cash-
based securities is subject to interest rate risk.
In general, the Group is exposed to risk associated with the effects of fluctuations in the
prevailing levels of market interest rates. Assets/liabilities issued at variable rates
generally expose the Group to cash flow interest risk. Assets/liabilities issued at fixed
rates generally expose the Group to fair value interest rate risk. Group investment
parameters exist to limit exposure to any one particular issuer and any one particular
security. Periodic reports are prepared at portfolio, legal entity and asset class level that
are circulated to the Group’s key management personnel. Note 22 incorporates maturity
information with respect to the Group's investments.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
127
4. Management of risk - continued
4.2 Financial risk - continued
(a) Market risk - continued
(i) Cash flow and fair value interest rate risk - continued
The total assets and liabilities exposed to interest rate risk are the following:

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  |  | Restated |  |
|  | €’000 | €’000 | €’000 | €’000
| Assets at floating interest rates | 70,570 | 68,536 | — | —
| Assets at fixed interest rates | 1,306,182 | 1,079,838 | 15,804 | 10,341
|  | 1,376,752 | 1,148,374 | 15,804 | 10,341

Reconciled to the notes to the financial statements as follows:

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  |  | Restated |  |
|  | €’000 | €’000 | €'000 | €'000
| Loans and receivables (Note 22) | — | 116,728 | — | —
| Debt securities (Note 22) | 937,669 | 787,592 | 13,804 | 10,341
| Deposits with banks and credit institutions (Note 22) | 75,977 | — | — | —
| A component of equity securities and units in unit trusts | 360,935 | 243,126 | — | —
| Interest bearing cash and cash equivalents | 2,171 | 928 | 2,000 | —
|  | 1,376,752 | 1,148,374 | 15,804 | 10,341

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  |  | Restated |  | Restated
|  | €’000 | €’000 | €'000 | €'000
| Insurance and reinsurance contracts |  |  |  |
| Liabilities | (1,969,216) | (1,959,723) | (40,446) | (52,773)
| Assets | 22,024 | 32,343 | 10,734 | 22,340
|  | (1,947,192) | (1,927,380) | (29,712) | (30,433)

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
128
4. Management of risk - continued
4.2 Financial risk - continued
(a) Market risk - continued
(i) Cash flow and fair value interest rate risk - continued
Interest rate risk in relation to hybrid contracts, amounting to €30.6 million (2022
restated: €26.60 million) has been excluded as the directors consider the exposure to be
insignificant.
In managing its portfolio, the Group entered into fixed income security futures
contracts. Accordingly, it is exposed to movements in interest rates in the respective
markets of the underlying, which comprise short, medium and long-term sovereign
debt. The notional amount of futures contracts outstanding at 31 December is shown
below:

| Group
| 2023 | 2022
| €’000 | €’000
Long positions |  |
- Federal Republic of Germany | 23,146 | 69,704
- United States Government | 25,155 | —
| 48,301 | 69,704
Short positions |  |
- Federal Republic of Germany | 90,016 | 76,362
- United States Government | 18,352 | 2,730
| 108,368 | 79,092

Up to the reporting date, the Group did not have any hedging policy with respect to
interest rate risk other than as described in note 2.9.
Managing interest rate benchmark reform
A fundamental reform of major interest rate benchmarks is being undertaken globally,
including the replacement of some interbank offered rates (IBORs) with alternative
nearly risk-free rates (referred to as ‘IBOR reform’). Currently, the Group has no
exposures to IBORs on its financial instruments.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
129
4. Management of risk - continued
4.2 Financial risk - continued
(a) Market risk - continued
(i) Cash flow and fair value interest rate risk - continued
Sensitivity analysis – interest rate risk
An analysis of the Group’s sensitivity to a 1% increase or decrease in market interest rates
at the reporting date, assuming that all other variables remain constant, is presented below.
A n explanation of the method used in preparing such sensitivity analysis and the main
parameters and assumptions underlying the information provided is found in Note 4.1.
Group

|  | CSM | Profit or loss before tax | Equity
|  | Increase | Decrease | Increase | Decrease | Increase | Decrease
|  | €’000 | €’000 | €’000 | €’000 | €’000 | €’000
| 31 December2023 |  |  |  |  |  |
| Insurance and reinsurance contracts (net) | 370 | (408) | (40) | (104) | (26) | (68)
| Investment contracts with DPF | 11,131 | (27,317) | 952 | (2,363) | 618 | (1,536)
| Other investments | — | — | — | — | (289) | 268
|  | 11,501 | (27,725) | 912 | (2,467) | 303 | (1,336)
| 31 December 2022 (restated) |  |  |  |  |  |
| Insurance and reinsurance contracts (net) | 370 | (406) | (1,760) | 2,071 | (1,143) | 1,346
| Investment contracts with DPF | 12,238 | (25,601) | 1,845 | (3,318) | 1,199 | (2,156)
| Other investments | — | — | (37) | 40 | (354) | 341
|  | 12,608 | (26,007) | 48 | (1,207) | (298) | (469)

Company

|  | Profit or loss before tax | Equity
|  | Increase | Decrease | Increase | Decrease
|  | €’000 | €’000 | €’000 | €’000
| 31 December 2023 |  |  |  |
| Insurance and reinsurance contracts (net) | 362 | (372) | 235 | (242)
| Other investments | — | — | (289) | 268
|  | 362 | (372) | (54) | 26
| 31 December 2022 (restated) |  |  |  |
| Insurance and reinsurance contracts (net) | 464 | (360) | 302 | (234)
| Other investments | (37) | 40 | (354) | 341
|  | 427 | (320) | (52) | 107

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
130
4. Management of risk - continued
4.2 Financial risk - continued
(a) Market risk - continued
(ii) Equity price risks
The Group’s financial assets are susceptible to the risk of decreases in value due to
changes in the prices of equities. The directors manage this risk of price volatility by
entering into a diverse range of investments including equities and collective
investment schemes. In addition, the Group’s investments are spread geographically in
a diverse number of different countries. The Group has active Investment Committees
that have established a set of investment guidelines that are also approved by the Board
of Directors. Investments over prescribed limits are directly approved by the respective
Boards. These guidelines provide parameters for investment management, including
contracts with external portfolio managers. They include, inter alia, reference to an
optimal spread of the investment portfolio, assessment of equity issuers and maximum
exposures by the Group to any one issuer and its connected parties (with the exception
of investments in Government paper). These parameters also consider solvency
restrictions imposed by the Regulator.
Management structures are in place to monitor all the Group’s overall market positions
on a frequent basis. Reports are prepared at portfolio, legal entity and asset and liability
class level that are circulated to the Group’s relevant key management personnel. These
are also reviewed by the respective Investment Committees and Boards.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
131
4. Management of risk - continued
4.2 Financial risk - continued
(a) Market risk - continued
(ii) Equity price risks - continued
The total assets subject to equity price risk are the following:

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  | €’000 | €’000 | €’000 | €’000
| Assets subject to equity price risk | 622,434 | 753,882 | 2,486 | 1,756
| The above includes: |  |  |  |
| Component of investments in associated undertakings (Note 21)* | 23,212 | 22,512 | — | —
| A component of equity securities and units in unit trusts | 599,222 | 731,370 | 2,486 | 1,756
|  | 622,434 | 753,882 | 2,486 | 1,756

*Investments in associates (Note 21) amounting to €0.40 million (2022:€0.39 million)
for the Group and €0.40 million (2022: €0.39 million) for the Company have been
excluded from equity price risk since they are accounted for under the equity method.
In the case of assets held to cover unit-linked liabilities the exposure is carried by the
contract holder. In the case of capital guaranteed products any shortfalls guaranteed
upon maturity are mitigated by a back-to-back guarantee with international financial
service providers as further referred in 4.2 (a) (i).
The sensitivity for equity price risk illustrates how changes in the fair value of equity
securities (excluding investments in associated undertakings) will fluctuate because of
changes in market prices, whether those changes are caused by factors specific to the
individual equity issuer, or factors affecting all similar equity traded in the market.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
132
4. Management of risk - continued
4.2 Financial risk - continued
(a) Market risk - continued
(ii) Equity price risks - continued
An analysis of the Group’s sensitivity to a 10% decrease in equity prices at the reporting
date, assuming that all other variables remain constant, is presented below. An explanation
of the method used in preparing such a sensitivity analysis and the main parameters and
assumptions underlying the information provided is found in Note 4.1.
Group

|  | CSM | Profit or loss before tax | Equity
|  | €’000 | €’000 | €’000
| 31 December 2023 |  |  |
| Investment contracts with DPF | (3,869) | (353) | (229)
| Other investments | — | (249) | (211)
|  | (3,869) | (602) | (440)
| 31 December 2022 (restated) |  |  |
| Investment contracts with DPF | (7,692) | (543) | (353)
| Other investments | — | (119) | (143)
|  | (7,692) | (662) | (496)

Company

|  |  | Profit or loss before tax | Equity
|  |  | €’000 | €’000
| 31 December 2023 |  |  |
| Other investments |  | (249) | (211)
| 31 December 2022 |  |  |
| Other investments |  | (119) | (143)

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
133
4. Management of risk - continued
4.2 Financial risk - continued
(a) Market risk - continued
(iii) Currency risk
The Group’s and Company’s liabilities are substantially denominated in euro. The
Group’s foreign currency risk arises primarily from equity securities denominated in
major foreign currencies. The Group hedges its foreign currency denominated debt
securities using foreign exchange forward contracts in order to mitigate the risk that
principal cash flows for these investments fluctuate as a result of changes in foreign
exchange rates. At 31 December 2023 foreign currency exposure amounted to €223.98
million (2022: €263.00 million).
The table below summarises the Group’s exposure to foreign currencies other than
euro.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
134
4. Management of risk - continued
4.2 Financial risk - continued
(a) Market risk - continued
(iii) Currency risk - continued
Group

| 31 December 2023 | Net exposure before hedging | Notional amount of currency derivatives | Net exposure after hedging
|  | €’000 | €’000 | €’000
| Currency of exposure: |  |  |
| USD | 255,326 | 101,730 | 153,596
| CHF | 18,203 | — | 18,203
| GBP | 10,236 | 805 | 9,431
| SEK | 37,777 | 24,421 | 13,356
| DKK | 13,166 | 30 | 13,136
| HKD | 3,456 | — | 3,456
| Others | 12,786 | (15) | 12,801
|  | 350,950 | 126,971 | 223,979

Group

| 31 December 2022 | Net exposure before hedging | Notional amount of currency derivatives | Net exposure after hedging
|  | €’000 | €’000 | €’000
| Currency of exposure: |  |  |
| USD | 194,131 | 2,325 | 191,806
| CHF | 19,762 | — | 19,762
| GBP | 6,679 | 901 | 5,778
| SEK | 11,932 | — | 11,932
| DKK | 13,378 | — | 13,378
| HKD | 7,454 | — | 7,454
| Others | 19,687 | 6,801 | 12,886
|  | 273,023 | 10,027 | 262,996

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
135
4. Management of risk - continued
4.2 Financial risk - continued
(a) Market risk - continued
(iii) Currency risk - continued
Within the table above, €190.90 million of the unhedged exposure relates to equity
investments (2022: €238.20 million). Due to an increasingly globalised economy, the
Group’s equity investments are diversified across various currencies. The directors
consider that the exposure to currency risk is appropriately captured in the equity price
risk sensitivity (Note 4.2(a)(ii)). Any residual currency exposure relating to non-equity
investments is not considered to be significant.
The table below summarises the Company’s exposure to foreign currencies other than
euro.
Company

| 31 December 2023 | Net exposure before hedging | Notional amount of currency derivates | Net exposure after hedging
|  | €’000 | €’000 | €’000
| Currency of exposure: |  |  |
| USD | (155) | — | (155)
| GBP | (33) | — | (33)
| Other | 2 | — | 2
|  | (186) | — | (186)

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
136
4. Management of risk - continued
4.2 Financial risk - continued
(a) Market risk - continued
(iii) Currency risk - continued
Company

| 31 December 2022 | Net exposure before hedging | Notional amount of currency derivates | Net exposure after hedging
|  | €’000 | €’000 | €’000
| Currency of exposure: |  |  |
| USD | (155) | — | (155)
| GBP | (33) | — | (33)
| Others | 2 | — | 2
|  | (186) | — | (186)

The Company’s foreign exposure relates to foreign operations now in run-off.
(b) Credit risk
Credit risk is the risk of decreases in value when counterparties are not capable of
fulfilling their obligations or when a change in their credit status takes place. The Group
has exposure to credit risk, which is the risk that a counterparty will be unable to pay
amounts in full when due. Key areas where the Group is exposed to credit risk are:
• Investments and cash and cash equivalents
• Reinsurance contract assets
• Amounts due from insurance intermediaries
• Counterparty risk with respect to forward foreign exchange contracts
The Group places limits on the level of credit risk undertaken from the main categories
of financial instruments. These limits also take due consideration of the solvency
restrictions imposed by the relevant Insurance Regulations. The investment strategy of
the Group considers the credit standing of the counterparty and control structures are in
place to assess and monitor these risk thresholds.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
137
4. Management of risk - continued
4.2 Financial risk - continued
(b) Credit risk - continued
The Group structures the levels of credit risk it accepts by limiting as far as possible its
exposure to a single counterparty or groups of counterparties. The Group has in place
internal control structures to assess and monitor credit exposures and risk thresholds.
The Group’s cash is placed with a number of core domestic credit institutions and
investment grade international banks, thereby reducing the concentration of
counterparty credit risk to an acceptable level.
Reinsurance is used to manage insurance risk. This does not, however, discharge the
Group’s liability as primary insurer. If a reinsurer fails to pay a claim for any reason,
the Group remains liable for the payment to the policyholder. The creditworthiness of
reinsurers is monitored on a quarterly basis by reviewing credit grades provided by
rating agencies and other publicly available financial information, thereby ensuring the
continuous financial strength of the reinsurer. At the same time as the Board approves
the overall reinsurance protection of the Group, it ensures that the reinsurers’ credit
rating (either Standard & Poor’s or equivalent) is within the parameters set by it.
The Group is exposed to contract holders and intermediaries for insurance revenue.
Credit agreements are in place in all cases where credit is granted, and in the case of
certain larger risks, premium payment warranties are in place. This limits the liability
of the Group towards the insured or any third party if the premium remains unsettled
after the credit period granted and allows the Group to cancel the policy ab initio, if
considered necessary. Records are kept of the payment history for significant contract
holders and intermediaries with whom regular business is conducted. Credit is not
granted to contract holders whose payment history is not satisfactory. Credit risk with
respect to debtors is further limited due to the large number of customers comprising
the Group’s debtor base.
The exposure to individual counterparties is also managed by other mechanisms, such
as the right to offset where counterparties are both debtors and creditors of the Group.
Management information reported to the Group includes details of provisions for
impairment on receivables and subsequent write-offs. The Company performs risk-
based reviews to assess the degree of compliance with the Group’s procedures on credit
and take action accordingly. In the case of MMSV, it is not normal for credit to be
extended to insurance policyholders due to the nature of their business, unless
automatic policy loans are advanced up to the surrender value of the contract.
The Group does not trade in derivative contracts, with the exception of forward
contracts and exchange traded futures. All derivative contracts are placed with quality
financial institutions within the parameters of a hedging policy approved by the Board.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
138
4. Management of risk - continued
4.2 Financial risk - continued
(b) Credit risk - continued
The total assets bearing credit risk are the following:

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  |  | Restated |  | Restated
|  | €'000 | €'000 | €'000 | €'000
| Debt securities | 937,669 | 787,592 | 13,804 | 10,341
| Deposits with banks and credit institutions | 75,977 | 116,728 | — | —
| Forward foreign exchange contracts and swaps | 1,970 | 2,698 | — | —
| A component of reinsurance contract assets | 9,701 | 19,511 | 9,701 | 19,511
| Trade and other receivables (excluding prepayments) | 22,362 | 25,882 | 19,645 | 17,254
| Cash and cash equivalents | 47,975 | 137,286 | 10,780 | 11,130
| Total | 1,095,654 | 1,089,697 | 53,930 | 58,236

The carrying amounts disclosed above represent the maximum exposure to credit risk.
The component of reinsurance contract assets exposed to credit risk is analysed in the
table below using Standard & Poor’s rating (or equivalent).

|  |  | Group and Company
|  |  |  | 2023 | 2022
|  |  |  |  | Restated
|  |  |  | €’000 | €’000
| AA |  |  | 385 | 1,820
| A |  |  | 9,293 | 17,640
| Below BBB or not rated |  |  | 23 | 51
|  |  |  | 9,701 | 19,511

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
139
4. Management of risk - continued
4.2 Financial risk - continued
(b) Credit risk - continued
These assets other than the reinsurance contract assets are analysed in the table below
using Standard & Poor’s rating (or equivalent).

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  |  | Restated |  | Restated
|  | €'000 | €'000 | €'000 | €'000
| AAA | 109,154 | 115,968 | 1,383 | 1,976
| AA | 188,328 | 177,241 | 2,824 | 766
| A | 412,833 | 253,553 | 7,764 | 3,991
| BBB | 248,171 | 386,998 | 8,790 | 9,542
| Below BBB or not rated | 127,467 | 136,426 | 23,467 | 22,450
|  | 1,085,953 | 1,070,186 | 44,228 | 38,725

Debt securities, receivables and cash and cash equivalents that are not rated are
primarily held with highly reputable financial institutions.
The Group does not hold any collateral as security to its credit risk.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
140
4. Management of risk - continued
4.2 Financial risk - continued
(b) Credit risk - continued
Financial assets that are past due but not impaired
The following other assets are classified as past due but not impaired:

|  |  | Group and Company
|  |  |  | 2023 | 2022
|  |  |  |  | Restated
|  |  |  | €’000 | €’000
| Within credit terms |  |  | 10,501 | 9,779
| Not more than three months |  |  | 4,100 | 2,952
| Within three to twelve months |  |  | 2,442 | 2,130
| Over twelve months |  |  | 762 | 224
|  |  |  | 17,805 | 15,085

IFRS 7 defines a financial asset as being past due when the counterparty has failed to
make a payment when contractually due. It goes further to stipulate that full disclosure
must be made of all balances due from this particular counterparty, including those,
which are still within credit terms and therefore not contractually due.
The overall exposure of the Group and Company in terms of IFRS 7 is €17.81 million
(2022: €15.09 million), of which €10.50 million (2022: €9.78 million) is not
contractually due. It is the view of the directors that no impairment charge is necessary,
due to the following reasons:
1. Settlements after year-end.
2. In cases where the amount has not been settled, agreement for settlement has been
reached or is being negotiated.
Trade receivables at 31 December 2023 did not comprise any amounts (2022: nil)
whose terms had been renegotiated from the original terms and which were classified as
fully performing.
Financial assets that are impaired
Within trade receivables are the following receivables that are classified as impaired
against which a provision for impairment has been provided as per Note 26:

|  |  | Group and Company
|  |  |  | 2023 | 2022
|  |  |  | €’000 | €’000
| Over twelve months (Note 26) |  |  | 535 | 440

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
141
4. Management of risk - continued
4.2 Financial risk - continued
(b) Credit risk - continued
A decision to impair an asset is based on the following information that comes to the
attention of the Group:
• Significant financial difficulty of the debtor.
• It becoming probable that the debtor will enter bankruptcy or other financial
reorganisation.
• A breach of contract, such as protracted default in payments
• The debtor has been referred to the in-house legal office.
(c) Liquidity risk
The Group is exposed to daily calls on its available cash resources mainly from claims
and benefits arising from insurance contracts. Liquidity risk is the risk that cash may
not be available to pay obligations when due at a reasonable cost. The Group manages
its funds in such a manner as to ensure an adequate portion of available funds to meet
such calls. With respect to life insurance contracts this is principally managed through
limits set by the Board of MMSV on the minimum proportion of maturing funds
available to meet such calls. Furthermore, the Group invests a majority of its assets in
listed investments that can be readily disposed of.
The following table indicates the expected timing of cash flows arising from the
maturity or settlement of Group’s liabilities. The expected cash flows do not consider
the impact of early surrenders on life insurance contracts.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
142
4. Management of risk - continued
4.2 Financial risk - continued
(c) Liquidity risk - continued

|  | Group expected cash flows (€ millions) 2023
|  | Payable on demand | 0-1 yr | 1-2 yrs | 2-3 yrs | 3-4 yrs | 4-5 yrs | >5 yrs | Total
|  | Undiscounted | Discounted | Discounted | Discounted | Discounted | Discounted | Discounted | Discounted
| Insurance contract assets - Life insurance contracts | 2.0 | (8.0) | (7.0) | (6.0) | (6.0) | (5.0) | (26.0) | (56.0)
| Insurance contract liabilities - Life insurance contracts | 50.0 | 199.0 | 169.0 | 156.0 | 124.0 | 145.0 | 1,039.0 | 1,882.0
| Reinsurance contract liabilities | 5.0 | 2.0 | 2.0 | 2.0 | 2.0 | 2.0 | 19.0 | 34.0
| Insurance contract liabilities – liabilities for incurred claims short- term contracts under PAA | — | 27.8 | 5.3 | 1.2 | 3.1 | 0.6 | 1.4 | 39.4
| Lease liabilities | — | 0.4 | 0.4 | 0.3 | 0.3 | 0.2 | 0.4 | 2.0
| Other payables | 18.0 | — | — | — | — | — | — | 18.0

|  | Group expected cash flows (€ millions) 2022
|  | Payable on demand | 0-1 yr | 1-2 yrs | 2-3 yrs | 3-4 yrs | 4-5 yrs | >5 yrs | Total
|  | Undiscounted | Discounted | Discounted | Discounted | Discounted | Discounted | Discounted | Discounted
| Insurance contract assets - Life insurance contracts | 2.0 | (8.0) | (7.0) | (6.0) | (5.0) | (4.0) | (18.0) | (46.0)
| Insurance contract liabilities - Life insurance contracts | 48.0 | 211.0 | 183.0 | 155.0 | 143.0 | 113.0 | 1,027.0 | 1,880.0
| Reinsurance contract liabilities | 2.0 | 2.0 | 2.0 | 1.0 | 2.0 | 1.0 | 15.0 | 25.0
| Insurance contract liabilities – liabilities for incurred claims short-term contracts under PAA | — | 33.9 | 8.0 | 1.3 | 4.3 | 1.3 | 2.6 | 51.4
| Lease liabilities | — | 0.4 | 0.4 | 0.3 | 0.2 | 0.2 | 0.2 | 1.7
| Other payables | 17.7 | — | — | — | — | — | — | 17.7

Expected cash flows on unit linked liabilities, presented under investment contract
liabilities amounting €123.3m (2022: €69.1m) and as part of insurance contract
liabilities €34.8m (2022: €31.2m), have not been included as the directors consider that
there is limited exposure to liquidity risk given that these are principally backed by unit
linked assets.
The amounts which are undiscounted and payable on demand mainly consist of long-
term contracts claims outstanding.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
143
4. Management of risk - continued
4.2 Financial risk - continued
(c) Liquidity risk - continued

|  | Company expected cash flows (€ millions) 2023
|  | Payable on demand | 0-1 yr | 1-2 yrs | 2-3 yrs | 3-4 yrs | 4-5 yrs | >5 yrs | Total
|  | Undiscounted | Discounted | Discounted | Discounted | Discounted | Discounted | Discounted | Discounted
| Insurance contract liabilities – liabilities for incurred claims short-term contracts under PAA | — | 27.8 | 5.3 | 1.2 | 3.1 | 0.6 | 1.4 | 39.4
| Lease liabilities | — | 0.4 | 0.4 | 0.3 | 0.3 | 0.2 | 0.4 | 2.0
| Other payables | 9.3 | — | — | — | — | — | — | 9.3

|  | Company expected cash flows (€ millions) 2022
|  | Payable on demand | 0-1 yr | 1-2 yrs | 2-3 yrs | 3-4 yrs | 4-5 yrs | >5 yrs | Total
|  | Undiscounted | Discounted | Discounted | Discounted | Discounted | Discounted | Discounted | Discounted
| Insurance contract liabilities – liabilities for incurred claims short-term contracts under PAA | — | 33.9 | 8.0 | 1.3 | 4.3 | 1.3 | 2.6 | 51.4
| Lease liabilities | — | 0.4 | 0.3 | 0.3 | 0.2 | 0.2 | 0.2 | 1.6
| Other payables | 7.3 | — | — | — | — | — | — | 7.3

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
144
4. Management of risk - continued
4.2 Financial risk - continued
(c) Liquidity risk - continued
The table below analyses the Group’s derivative financial instruments that will be
settled on a gross basis. The amounts disclosed in the table are the contractual
undiscounted cash flows. Balances due within 12 months equal their carrying balances,
as the impact of discounting is not significant.

|  | Group
|  | 2023 | 2022
|  | €’000 | €’000
| At 31 December |  |
| Foreign exchange contracts |  |
| - outflow | (140,177) | (97,745)
| - inflow | 142,147 | 100,443

At 31 December 2023 and 2022, the above derivatives were due to be settled within
three months after year end.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
145
4.Management of risk - continued
4.3 Fair values
The following table presents the assets measured in the statement of financial position
at fair value by level of the following fair value measurement hierarchy at 31 December
2023:
• Quoted prices (unadjusted) in active markets for identical assets or liabilities
(Level 1);
• Inputs other than quoted prices included within Level 1 that are observable for
the asset or liability, either directly (that is, as prices) or indirectly (that is,
derived from prices) (Level 2); and
• Inputs for the asset or liability that are not based on observable market data
(that is, unobservable inputs) (Level 3).
The Group recognises transfers between levels of the fair value hierarchy at the end of
the reporting period during which the change has occurred.
The following tables present the assets and liabilities measured at fair value at 31
December 2023.

| Group |  |  |  |
|  | Level 1 | Level 2 | Level 3 | Total
|  | €'000 | €'000 | €'000 | €'000
| Assets |  |  |  |
| Financial assets at fair value through profit or loss |  |  |  |
| - Equity Securities, units in unit trusts and collective investment schemes | 934,308 | 91,550 | 94,839 | 1,120,697
| - Debt Securities | 532,525 | 316,536 | — | 849,061
| Debt securities at FVOCI | 7,204 | 6,600 | — | 13,804
| Forward foreign exchange contracts and swaps | — | 1,970 | — | 1,970
| Investment in associated undertakings | — | 23,346 | — | 23,346
| Total assets | 1,474,037 | 440,002 | 94,839 | 2,008,878

| Liabilities |  |  |  |
| Investment Contract Liabilities | — | 123,253 | — | 123,253
| Total liabilities | — | 123,253 | — | 123,253

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
146
4.Management of risk - continued
4.3 Fair values - continued

| Company |  |  |
|  | Level 1 | Level 2 | Total
|  | €'000 | €'000 | €'000
| Assets |  |  |
| Financial assets at fair value through profit or loss |  |  |
| - Equity securities, units in unit trusts and collective investment schemes | 667 | 1,819 | 2,486
| Debt securities at FVOCI | 7,204 | 6,600 | 13,804
| Total assets | 7,871 | 8,419 | 16,290

The following tables present the assets measured at fair value at 31 December 2022.

| Group |  |  |  |
|  | Level 1 | Level 2 | Level 3 | Total
|  | €'000 | €'000 | €'000 | €'000
| Assets |  |  |  |
| Financial assets at fair value through profit or loss |  |  |  |
| - Equity securities, units in unit trusts and collective investment schemes | 973,661 | 40,912 | 61,609 | 1,076,182
| - Debt securities | 529,741 | 248,113 | — | 777,854
| Other available-for-sale investments | 5,605 | 4,703 | — | 10,308
| Forward foreign exchange contracts and swaps | — | 2,698 | — | 2,698
| Investment in associated undertakings | — | 22,647 | — | 22,647
| Total assets | 1,509,007 | 319,073 | 61,609 | 1,889,689

| Liabilities |  |  |  |
| Investment contract liabilities (restated) | — | 69,054 | — | 69,054
| Total liabilities | — | 69,054 | — | 69,054

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
147
4.Management of risk - continued
4.3 Fair values - continued

| Company | Level 1 | Level 2 | Total
|  | €'000 | €'000 | €'000
| Assets |  |  |
| Financial assets at fair value through profit or loss |  |  |
| - Equity securities, units in unit trusts and collective investment schemes | — | 1,186 | 1,186
| - Debt securities | 603 | — | 603
| Other available-for-sale investments | 5,605 | 4,703 | 10,308
| Total assets | 6,208 | 5,889 | 12,097

Fair value measurements classified as Level 1 include government debt securities, units
in unit trusts and collective investments schemes and foreign listed equities.
Corporate debt securities are classified as Level 2 in view of their trading
characteristics. The financial liabilities for unit-linked contracts were classified as
Level 2. The fair value of these contracts is determined using the current unit values
that reflect the fair values of the financial assets (classified as Level 1) linked to the
financial liability. D erivative foreign exchange forward contracts have been classified
as Level 2. The fair value of these instruments is determined by reference to market
observable forward currency rates and interest rates. Domestic equities are classified as
Level 2 in view of their trading characteristics.
At 31 December 2023, 4.7% (2022:3.3%) of the financial assets measured at fair value
on a recurring basis were classified as Level 3. They constitute investment in unlisted
equities. The Group has €94.80 m (2022:€61.60 m) assets classified as Level 3, the
valuation of which has been determined by reference to the latest available net asset
values of the underlying investment or the latest transaction price.
The analysis of investment property is included w ithin Note 19.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
148
4.Management of risk - continued
4.3 Fair values - continued
The following table presents the changes in Level 3 instruments for the year ended 31
December:

| Group |
|  | 2022
|  | Equity securities
|  | €'000
| Opening balance | 18,756
| Additions | 38,363
| Total gains recognised in profit or loss | 4,490
| Closing balance | 61,609
|  | 2023
|  | Equity securities
|  | €'000
| Opening balance | 61,609
| Additions | 30,252
| Total gains recognised in profit or loss | 2,978
| Closing balance | 94,839

At 31 December 2023 and 2022, the carrying amount of the Group’s and Company’s
other financial assets and liabilities approximated their fair values.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
149
5.Capital management
The Group’s policy is to maintain a strong capital base to support its business growth
plans and comply with all regulatory requirements on an ongoing basis whilst assessing
the impact of shareholder returns on its capital employed. The Group defines capital as
shareholders’ equity.
The Group’s objectives when managing capital are to:
• comply with the obligations to hold Eligible Own Funds to cover the Solvency
Capital Requirement and Minimum Capital Requirement in terms of the Insurance
Business Act, 1998, (Chapter 403, Laws of Malta) and the applicable Insurance
Rules issued under the Insurance Business Act (‘Insurance Rules’) by the Malta
Financial Services Authority (‘MFSA’);
• provide for the capital requirements of the companies within the Group;
• safeguard the Group’s and individual component companies’ ability to continue as a
going concern and provide returns for shareholders and benefits for other
stakeholders; and
• to provide an adequate return to shareholders by pricing insurance contracts
commensurate with the level of risk.
The individual insurance Group companies are required to hold regulatory capital for
their non-life and life assurance business in compliance with the Insurance Rules issued
by the MFSA. The minimum capital requirements must be maintained at all times
throughout the period. The individual Group companies monitor the level of their own
funds on a regular basis. Any transactions that may potentially affect the individual
company’s own funds and solvency position are immediately reported to their
respective directors and shareholders for resolution.
The Company’s Minimum Capital Requirement Absolute Floor stands at €8,000,000 as
per paragraph 5.6.4 of Chapter 5 (‘Valuation of assets and liabilities, technical
provisions, own funds, Solvency Capital Requirement, Minimum Capital Requirement
and investment rules’) of Part B of the Insurance Rules.
Based on management calculations to date, the Company is sufficiently capitalised and
was compliant at all times with the regulatory capital requirements as stipulated by the
MFSA which are in line with the Solvency II requirements. All other companies within
the Group were also compliant with the respective minimum regulatory requirements
throughout the financial period as per management calculations to date.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
150
6. Amounts determined on transition to IFRS 17
For insurance contracts issued by the Group and reinsurance contracts held, an analysis
of insurance revenue for insurance contracts issued and the CSM by transition method
is included in the following tables.

| 31 December 2023 | Life Risk | Investment contracts with DPF | Total
|  | €’000 | €’000 | €’000
| Insurance contracts issued |  |  |
| Insurance revenue |  |  |
| New contracts and contracts measured under the full retrospective approach at transition | (12,905) | (3,241) | (16,146)
| Contracts measured under the fair value approach at transition | (138) | (31,427) | (31,565)
|  | (13,043) | (34,668) | (47,711)
| CSM |  |  |
| New contracts and contracts measured under the full retrospective approach at transition | 24,909 | 8,770 | 33,679
| Contracts measured under the fair value approach at transition | 7,285 | 62,957 | 70,242
|  | 32,194 | 71,727 | 103,921

| 31 December 2023 |  | Life Risk
|  |  | €’000
| Reinsurance contracts held |  |
| CSM |  |
| New contracts and contracts measured under the full retrospective approach at transition |  | (8,806)
| Contracts measured under the fair value approach at transition |  | (4,157)
|  |  | (12,963)

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
151
6. Amounts determined on transition to IFRS 17 - continued

| 31 December 2022 | Life Risk | Investment contracts with DPF | Total
|  | €’000 | €’000 | €’000
| Insurance contracts issued |  |  |
| Insurance revenue |  |  |
| New contracts and contracts measured under the full retrospective approach at transition | (11,714) | — | (11,714)
| Contracts measured under the fair value approach at transition | (157) | (35,187) | (35,344)
|  | (11,871) | (35,187) | (47,058)
| CSM |  |  |
| New contracts and contracts measured under the full retrospective approach at transition | 19,868 | — | 19,868
| Contracts measured under the fair value approach at transition | 4,607 | 54,709 | 59,316
|  | 24,475 | 54,709 | 79,184

| 31 December 2022 | Life Risk
|  | €’000
| Reinsurance contracts held |
| CSM |
| New contracts and contracts measured under the full retrospective approach at transition | (6,441)
| Contracts measured under the fair value approach at transition | (3,413)
|  | (9,854)

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
152
6. Amounts determined on transition to IFRS 17 - continued
Expected recognition of the contractual service margin
An analysis of the expected recognition of the CSM remaining at the end of the
reporting period in profit or loss is provided in the following table:

| As at 31 December 2023 | Insurance contracts issued | Reinsurance contracts held
|  | Life Risk | Investment contracts with DPF | Total CSM for insurance contracts issued | Life Risk | Total CSM for reinsurance contracts held
|  | €’000 | €’000 | €’000 | €’000 | €’000
| 1 | (3,418) | (6,027) | (9,445) | 1,421 | 1,421
| 2 | (3,144) | (5,560) | (8,704) | 1,302 | 1,302
| 3 | (2,888) | (5,120) | (8,008) | 1,193 | 1,193
| 4 | (2,645) | (4,704) | (7,349) | 1,089 | 1,089
| 5 | (2,424) | (4,374) | (6,798) | 994 | 994
| 6 – 10 | (9,400) | (15,485) | (24,885) | 3,823 | 3,823
| > 10 | (13,994) | (30,457) | (44,451) | 5,394 | 5,394
| Total | (37,913) | (71,727) | (109,640) | 15,216 | 15,216

| As at 31 December 2022 | Insurance contracts issued | Reinsurance contracts held
|  | Life Risk | Investment contracts with DPF | Total CSM for insurance contracts issued | Life Risk | Total CSM for reinsurance contracts held
|  | €’000 | €’000 | €’000 | €’000 | €’000
| 1 | (2,526) | (6,606) | (9,132) | 1,055 | 1,055
| 2 | (2,325) | (5,817) | (8,142) | 967 | 967
| 3 | (2,134) | (5,150) | (7,284) | 883 | 883
| 4 | (1,957) | (4,587) | (6,544) | 809 | 809
| 5 | (1,791) | (4,069) | (5,860) | 739 | 739
| 6 – 10 | (6,967) | (13,659) | (20,626) | 2,850 | 2,850
| > 10 | (11,031) | (14,821) | (25,852) | 4,244 | 4,244
| Total | (28,731) | (54,709) | (83,440) | 11,547 | 11,547

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
153
7.Segment information
Management has determined the operating segments based on the reports reviewed by
the Executive Management team that are used to make strategic decisions.
The segment results for the years ended 31 December 2023 and 2022 are indicated
below.
(i) Insurance revenue and insurance service result
Short-term insurance contracts under PAA
Group and Company

| At 31 December 2023 | Motor | Fire and other property damages | Health | Other classes | Group Life | Total
|  | €’000 | €’000 | €’000 | €’000 | €’000 | €’000
| Insurance revenue | 42,997 | 16,830 | 15,808 | 14,522 | 2,712 | 92,869
| Insurance service expenses | (35,577) | (10,255) | (14,012) | (6,578) | (2,033) | (68,455)
| Net expenses from reinsurance contracts held | (2,742) | (5,721) | 143 | (3,913) | (14) | (12,247)
| Insurance service result | 4,678 | 854 | 1,939 | 4,031 | 665 | 12,167
| At 31 December 2022 | Motor | Fire and other property damages | Health | Other classes | Life | Total
|  | Restated | Restated | Restated | Restated | Restated | Restated
|  | €’000 | €’000 | €’000 | €’000 | €’000 | €’000
| Insurance revenue | 39,180 | 15,333 | 13,960 | 13,208 | 2,669 | 84,350
| Insurance service expenses | (40,861) | (10,937) | (10,803) | (8,814) | (1,268) | (72,683)
| Net expenses from reinsurance contracts held | 778 | (4,085) | (79) | (2,117) | (224) | (5,727)
| Insurance service result | (903) | 311 | 3,078 | 2,277 | 1,177 | 5,940

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
154
7.Segment information - continued
(i) Insurance revenue and insurance service result - continued
Long-term and linked long-term business
In the opinion of the directors, the subsidiary MAPFRE MSV Life p.l.c. primarily
operates in a single business segment being that of long-term and linked long-term
insurance business.
An analysis of insurance revenue, insurance service expenses and net expenses from
reinsurance contracts held by contract type for 2023 and 2022 is included in the
following tables.

| 2023 | Life Risk | Investment contracts with DPF | Total
|  | €’000 | €’000 | €’000
| Insurance revenue |  |  |
| Amounts relating to change in the LRC |  |  |
| - Expected incurred claims and other directly attributable expenses | 7,945 | 24,576 | 32,521
| - Changes in risk adjustment for non-financial risk for the risk expired | 1,397 | 140 | 1,537
| - CSM recognised for the services provided | 3,589 | 6,178 | 9,767
| - Experience adjustments – arising from premiums received in the period other than those that relate to future service | 61 | 18 | 79
| Insurance acquisition cash flows recovery | 51 | 3,756 | 3,807
|  | 13,043 | 34,668 | 47,711
| Insurance service expenses |  |  |
| Incurred claims and other directly attributable expenses | (5,471) | (13,711) | (19,182)
| Insurance acquisition cash flows amortization | (51) | (3,756) | (3,807)
|  | (5,522) | (17,467) | (22,989)
| Net income (expenses) from reinsurance contracts held |  |  |
| Amounts relating to the changes in the remaining coverage |  |  |
| - Expected incurred claims and other directly attributable expenses recovery | (2,309) | — | (2,309)
| - Change in the risk adjustment for non-financial risk for the risk expired | (242) | — | (242)
| - CSM recognised for the services provided | (1,516) | — | (1,516)
| - Experience adjustments – arising from ceded premiums paid in the period other than those that relate to future service | (122) | — | (122)
| Reinsurance expenses | (4,189) | — | (4,189)
| Other incurred directly attributable expenses | (382) | — | (382)
| Incurred claims recovery | 974 | — | 974
|  | (3,597) | — | (3,597)
| Total insurance service result | 3,924 | 17,201 | 21,125

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
155
7.Segment information - continued
(i) Insurance revenue and insurance service result - continued
Long-term and linked long-term business - continued

| 2022 | Life Risk | Investment contracts with DPF | Total
|  | €’000 | €’000 | €’000
| Insurance revenue |  |  |
| Amounts relating to change in the LRC |  |  |
| - Expected incurred claims and other directly attributable expenses | 7,393 | 21,791 | 29,184
| - Changes in risk adjustment for non-financial risk for the risk expired | 1,783 | 259 | 2,042
| - CSM recognised for the services provided | 2,624 | 6,754 | 9,378
| - Experience adjustments – arising from premiums received in the period other than those that relate to future service | 4 | 32 | 36
| Insurance acquisition cash flows recovery | 67 | 6,351 | 6,418
|  | 11,871 | 35,187 | 47,058
| Insurance service expenses |  |  |
| Incurred claims and other directly attributable expenses | (4,538) | (14,919) | (19,457)
| Changes that relate to past service – changes in the FCF relating to the LIC | 2 | — | 2
| Insurance acquisition cash flows amortization | (67) | (6,351) | (6,418)
|  | (4,603) | (21,270) | (25,873)
| Net expenses from reinsurance contracts held |  |  |
| Amounts relating to the changes in the remaining coverage |  |  |
| - Expected incurred claims and other directly attributable expenses recovery | (2,177) | — | (2,177)
| - Change in the risk adjustment for non-financial risk for the risk expired | (355) | — | (355)
| - CSM recognised for the services provided | (1,141) | — | (1,141)
| - Experience adjustments – arising from ceded premiums paid in the period other than those that relate to future service | 781 | — | 781
| Reinsurance expenses | (2,892) | — | (2,892)
| Other incurred directly attributable expenses | (303) | — | (303)
| Effect of changes in the risk of reinsurers’ non-performance | — | — | —
| Incurred claims recovery | 1,050 | — | 1,050
|  | (2,145) | — | (2,145)
| Total insurance service result | 5,123 | 13,917 | 19,040

100% (2022: 100%) of consolidated insurance revenue emanate from contracts
concluded in or from Malta. All premiums emanate from external customers and there
is no business transacted between segments other than as disclosed i n Note 35.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
156
8.Investment return
An analysis of net investment return and net financial result by product line is
presented below:

| Group | Company
31 December 2023 | Life Risk | Investment contracts with DPF | Investment contracts without DPF | Short- Term contracts measured under the PAA | Other | Total | Short- Term contracts measured under the PAA
| €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000
Net investment income/(expenses) |  |  |  |  |  |  |
Share of profit of other associated undertaking, net of tax | — | — | — | — | 110 | 110 | —
Dividend income from group companies | — | — | — | — | — | — | 147
Interest revenue from financial assets not measured at FVTPL | — | 1,257 | — | 221 | 3,744 | 5,222 | 221
Interest expenses from financial assets not measured at FVTPL | — | — | — | (32) | — | (32) | (32)
Net gains on FVTPL instruments | 500 | 170,178 | 8,194 | 812 | 714 | 180,398 | 812
Other investment income | — | 425 | — | 9 | — | 434 | 9
Net (losses)/gains from fair value adjustments to investment properties | — | (3,925) | — | 61 | (409) | (4,273) | 61
Investment income from investment properties | — | 5,698 | — | 817 | — | 6,515 | 817
Expenses arising from investment properties | — | (368) | — | — | — | (368) | —
Other investment expenses | — | (5,927) | — | (23) | (27) | (5,977) | (23)
Net credit impairment losses | — | (37) | — | — | 15 | (22) | —
Interest on lease liabilities | — | — | — | (49) | — | (49) | (49)
Net investment income | 500 | 167,301 | 8,194 | 1,816 | 4,147 | 181,958 | 1,963
Finance income/(expenses) from insurance contracts issued |  |  |  |  |  |  |
Changes in value of underlying assets of contracts measured under VFA | — | (178,200) | — | — | — | (178,200) | —
Interest accreted | 1,542 | — | — | — | — | 1,542 | —
Effect of changes in interest rates and other financial assumptions | 2,871 | — | — | (1,320) | — | 1,551 | (1,320)
Effect of changes in FCF at current rates when CSM is unlocked at locked-in rates | (1,764) | — | — | — | — | (1,764) | —
Finance expense from insurance contracts issued | 2,649 | (178,200) | — | (1,320) | — | (176,871) | (1,320)
Finance income/(expenses) from reinsurance contracts held |  |  |  |  |  |  |
Interest accreted | (752) | — | — | — | — | (752) | —
Effect of changes in interest rates and other financial assumptions | (2,680) | — | — | 486 | — | (2,194) | 486
Effect of changes in FCF at current rates when CSM is unlocked at locked-in rates | 719 | — | — | — | — | 719 | —
Finance (expense)/income from reinsurance contracts held | (2,713) | — | — | 486 | — | (2,227) | 486
Net change in investment contract liabilities | — | — | (8,194) | — | — | (8,194) | —
Net investment return and net financial result | 436 | (10,899) | — | 982 | 4,147 | (5,334) | 1,129

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
157
8.Investment return - continued

|  | Group | Company
| 31 December 2022 | Life Risk | Investment contracts with DPF | Investment contracts without DPF | Short- Term contracts measured under the PAA | Other | Total | Short- Term contracts measured under the PAA
| (Restated) | €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000
| Net investment income/(expenses) |  |  |  |  |  |  |
| Share of profit of other associated undertaking, net of tax | — | — | — | — | 95 | 95 | —
| Dividend income from group companies | — | — | — | — | — | — | 1,313
| Interest revenue from financial assets not measured at FVTPL | — | 1,306 | — | 74 | 121 | 1,501 | 74
| Interest expenses from financial assets not measured at FVTPL | — | — | — | (53) | — | (53) | (53)
| Net gains on FVTPL instruments | (8,931) | (274,027) | (10,353) | (300) | (253) | (293,864) | (300)
| Other investment income | — | 992 | — | 7 | — | 999 | 7
| Net (losses)/gains from fair value adjustments to investment properties | — | (2,461) | — | (642) | 56 | (3,047) | (642)
| Investment income from investment properties | — | 5,420 | — | 776 | — | 6,196 | 776
| Expenses arising from investment properties | — | (328) | — | (13) | — | (341) | (13)
| Other investment expenses | — | (6,621) | — | (18) | (14) | (6,653) | (18)
| Net credit impairment losses | — | — | — | — | — | — | —
| Interest on lease liabilities | — | — | — | (51) | — | (51) | (51)
| Net investment (expense)/income | (8,931) | (275,719) | (10,353) | (220) | (90) | (295,218) | 1,093
| Finance income/(expenses) from insurance contracts issued |  |  |  |  |  |  |
| Changes in value of underlying assets of contracts measured under VFA | — | 268,747 | — | — | — | 268,747 | —
| Interest accreted | (213) | — | — | — | — | (213) | —
| Effect of changes in interest rates and other financial assumptions | (6,433) | — | — | 2,604 | — | (3,829) | 2,604
| Effect of changes in FCF at current rates when CSM is unlocked at locked-in rates | (10) | — | — | — | — | (10) | —
| Finance (expense)/income from insurance contracts issued | (6,656) | 268,747 | — | 2,604 | — | 264,695 | 2,604
| Finance income/(expenses) from reinsurance contracts held |  |  |  |  |  |  |
| Interest accreted | 124 | — | — | — | — | 124 | —
| Effect of changes in interest rates and other financial assumptions | 6,881 | — | — | (1,059) | — | 5,822 | (1,059)
| Effect of changes in FCF at current rates when CSM is unlocked at locked-in rates | (11) | — | — | — | — | (11) | —
| Finance income/(expense) from reinsurance contracts held | 6,994 | — | — | (1,059) | — | 5,935 | (1,059)
| Net change in investment contract liabilities | — | — | 10,353 | — | — | 10,353 | —
| Net investment (losses)/return and net financial result | (8,593) | (6,972) | — | 1,325 | 5 | (14,235) | 2,638

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
158
9. Other income

|  | Group
|  | 2023 | 2022
|  | €'000 | €'000
| Investment management fees | 1,222 | 203
| Management fees | 644 | 603
| Other income | 37 | 567
|  | 1,903 | 1,373

10.Profit before tax
The profit before tax is stated after charging/(crediting):

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  | €’000 | €’000 | €’000 | €’000
| Employee compensation (Note 11) | 15,218 | 13,709 | 8,295 | 7,553
| Depreciation/amortisation: |  |  |  |
| - intangible assets (Note 16) | 4,549 | 2,575 | 2,147 | 1,973
| - property, plant and equipment (Note 18) | 1,079 | 1,071 | 616 | 579
| Release of provision for impairment on receivables (Note 26) | — | (135) | — | (135)
| Impairment of receivables | 61 | 29 | 61 | 29
| Increase in provision for impairment on receivables (Note 26) | 41 | 188 | 41 | 188

The financial statements include fees, exclusive of VAT, charged by the Company's
auditors for services rendered during the financial years ended 31 December 2023 and
2022, relating to entities that are included in the consolidation amounting to:
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
159
10.Profit before tax - continued

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  | €’000 | €’000 | €’000 | €’000
| Annual statutory audit | 741 | 599 | 320 | 271
| IFRS 17 Transition Audit | 810 | — | 300 | —
| Solvency II audit | 113 | 105 | 49 | 45
| Non-audit services | — | 2 | — | —
| Paid during the year: |  |  |  |
| for financial year 2022 | 160 | 296 | — | 136
| for financial year 2021 | 410 | 276 | 181 | 127
| for financial year 2020 | — | — | — | —

11. Employee compensation

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  | €'000 | €'000 | €'000 | €'000
| Salaries | 14,332 | 12,908 | 7,799 | 7,098
| Social security costs | 726 | 667 | 420 | 395
| Contributions to Employee Voluntary Occupational Pension Scheme | 160 | 134 | 76 | 60
|  | 15,218 | 13,709 | 8,295 | 7,553

The average number of persons employed during the year was:

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  | No. | No. | No. | No.
| Key management personnel | 27 | 27 | 14 | 14
| Managerial | 34 | 41 | 20 | 19
| Technical | 232 | 213 | 142 | 139
| Administrative | 15 | 9 | 9 | 5
|  | 308 | 290 | 185 | 177

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
160
12. Income tax expense

|  | Group | Company
|  |  | Restated |  | Restated
|  | 2023 | 2022 | 2023 | 2022
|  | €'000 | €'000 | €'000 | €'000
| Current tax expense | 6,061 | 44,721 | 3,588 | 1,888
| Deferred tax expense (Note 23) | 2,015 | (42,044) | (412) | 525
| Income tax expense | 8,076 | 2,677 | 3,176 | 2,413

The tax on the Group’s and Company’s profit before tax differs from the theoretical
amount that would arise using the basic tax rate as follows:

|  | Group | Company
|  |  | Restated |  | Restated
|  | 2023 | 2022 | 2023 | 2022
|  | €’000 | €’000 | €’000 | €’000
| Profit before tax | 24,019 | 8,292 | 9,864 | 6,596
| Tax at 35% | 8,407 | 2,902 | 3,452 | 2,309
| Adjusted for tax effect of : |  |  |  |
| Net exempt income and disallowed expenses | (410) | (17) | (118) | 306
| Property withholding tax at 8% or10% | 321 | (97) | 20 | 170
| Other | (242) | (111) | (178) | (372)
| Income tax expense | 8,076 | 2,677 | 3,176 | 2,413

13. Directors’ emoluments

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  | €'000 | €'000 | €'000 | €'000
| Directors' fees | 264 | 307 | 170 | 224

Group Directors’ fees include fees payable to the Company’s directors both from the
Company and from other Group Companies where applicable.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
161
14.Earnings per share
Earnings per share are based on the net profit for the year divided by the weighted
average number of ordinary shares in issue during the year.

|  | Group
|  |  | Restated
|  | 2023 | 2022
|  | €'000 | €'000
| Profit attributable to owners of the Company | 11,309 | 4,476
| Number of ordinary shares in issue (Note 28) | 92,000 | 92,000
| Basic and diluted earnings per share attributable to owners of the Company (€) | 0.123 | 0.049

15.Dividends
A final gross dividend in respect of year ended 31 December 2023 of €0.073057
(2022: €0.054617) per share amounting to a total dividend of €6,721,231 (2022:
€5,024,817) is to be proposed by the directors at the forthcoming annual general
meeting. This is equivalent to a net dividend of €0.048913 (2022: €0.038043) per
share amounting to a total net dividend of €4,500,000 (2022: €3,500,000).
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
162
16.Intangible assets

| Group |  |  |
|  | Computer Software | Deferred Acquisition cost (i) | Total (ii)
|  | €'000's | €'000's | €'000's
| At 1 January 2022 |  |  |
| Cost or valuation | 43,805 | 3,719 | 47,524
| Accumulated amortisation and impairment | (21,345) | (3,554) | (24,899)
| Net book amount | 22,460 | 165 | 22,625
| Year ended 31 December 2022 |  |  |
| Opening net book amount | 22,460 | 165 | 22,625
| Additions | 7,946 | 155 | 8,101
| Disposals | (2) | — | (2)
| Amortisation charge | (2,563) | (12) | (2,575)
| Closing net book amount | 27,841 | 308 | 28,149
| At 31 December 2022 |  |  |
| Cost or valuation | 51,749 | 3,874 | 55,623
| Accumulated amortisation and impairment | (23,908) | (3,566) | (27,474)
| Net book amount | 27,841 | 308 | 28,149
| Year ended 31 December 2023 |  |  |
| Opening net book amount | 27,841 | 308 | 28,149
| Additions | 6,581 | 551 | 7,132
| Amortisation charge | (4,502) | (47) | (4,549)
| Closing net book amount | 29,920 | 812 | 30,732
| At 31 December 2023 |  |  |
| Cost or valuation | 58,330 | 4,425 | 62,755
| Accumulated amortisation and impairment | (28,410) | (3,613) | (32,023)
| Net book amount | 29,920 | 812 | 30,732

(i) This intangible asset relates to investment contracts without DPF only.
(ii) The amount presented is after the derecognition of the previously reported balance
of value of in-force business as explained in Note 1.1 (a).
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
163
16.Intangible assets - continued

| Company | Computer Software
|  | €'000
| At 1 January 2022 |
| Cost | 18,238
| Accumulated amortisation | (9,092)
| Net book amount | 9,146
| Year ended 31 December 2022 |
| Opening net book amount | 9,146
| Additions | 2,794
| Amortisation charge | (1,973)
| Closing net book amount | 9,967
| At 31 December 2022 |
| Cost | 21,032
| Accumulated amortisation | (11,065)
| Net book value | 9,967
| Year ended 31 December 2023 |
| Opening net book amount | 9,967
| Additions | 2,571
| Amortisation charge | (2,147)
| Closing net book amount | 10,391
| At 31 December 2023 |
| Cost | 23,603
| Accumulated amortisation | (13,212)
| Net book amount | 10,391

No amortisation (2022: nil) is included in acquisition costs and €2.15 million (2022:
€1.97 million) is included in administrative expenses.
Computer software mainly represents amounts capitalised relating to the development
of the Group and Company’s IT system by related companies forming part of the
MAPFRE S.A. Group.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
164
17. Leases
(a)Leases as the lessee
The Group leases property and motor vehicles. Property leases generally run for a
period of five to seven years without the option to renew, whilst motor vehicle leases
typically run for a period of seven years. Lease payments are subsequently renegotiated
to reflect market rates.
i. Right-of-use assets
Right-of-use assets related to leased motor vehicles and properties that do not meet the
definition of investment property are presented as a separate line item on the face of the
Statement of Financial Position.

| 2022 | Group
|  | Property | Motor vehicles | Total
|  | €’000 | €’000 | €’000
| Balance on 01 January | 1,204 | 598 | 1,802
| Derecognition of right-of-use assets | — | (46) | (46)
| Depreciation charge for the year | (212) | (129) | (341)
| Depreciation released on derecognition | — | 46 | 46
| Balance on 31 December | 992 | 469 | 1,461

2023 | Group
| Property | Motor vehicles | Total
| €’000 | €’000 | €’000
Balance on 01 January | 992 | 469 | 1,461
Additions | 437 | 40 | 477
Derecognition of right-of-use assets | — | (29) | (29)
Depreciation charge for the year | (219) | (118) | (337)
Depreciation released on derecognition | — | 29 | 29
Balance on 31 December | 1,210 | 391 | 1,601

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
165
17. Leases - continued
(a)Leases as the lessee - continued
i. Right-of-use assets - continued

| 2022 | Company
|  | Property | Motor vehicles | Total
|  | €’000 | €’000 | €’000
| Balance on 1 January | 1,204 | 481 | 1,685
| Depreciation charge for the year | (212) | (95) | (307)
| Balance on 31 December | 992 | 386 | 1,378

| 2023 | Company
|  | Property | Motor vehicles | Total
|  | €’000 | €’000 | €’000
| Balance on 1 January | 992 | 386 | 1,378
| Additions | 437 | — | 437
| Depreciation charge for the year | (219) | (87) | (306)
| Balance on 31 December | 1,210 | 299 | 1,509

ii.Amounts recognised in profit or loss

| 2022 | Group
|  | Property | Motor vehicles | Total
|  | €’000 | €’000 | €’000
| Depreciation of right-of-use assets | 212 | 129 | 341
| Interest expense on lease liabilities | 27 | 28 | 55

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
166
17. Leases - continued
(a)Leases as the lessee - continued
ii.Amounts recognised in profit or loss - continued

| 2023 | Group
|  | Property | Motor vehicles | Total
|  | €’000 | €’000 | €’000
| Depreciation of right-of-use assets | 219 | 118 | 337
| Interest expense on lease liabilities | 30 | 24 | 54

| 2022 | Company
|  | Property | Motor vehicles | Total
|  | €’000 | €’000 | €’000
| Depreciation of right-of-use assets | 212 | 95 | 307
| Interest expense on lease liabilities | 27 | 24 | 51

| 2023 | Company
|  | Property | Motor vehicles | Total
|  | €’000 | €’000 | €’000
| Depreciation of right-of-use assets | 219 | 87 | 306
| Interest expense on lease liabilities | 30 | 19 | 49

In 2023, the Company recognised €29,431 (2022: €28,119), relating to short-term
leases, as lease expense in the statement of profit or loss and other comprehensive
income.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
167
17. Leases - continued
(b) Leases as the lessor
The Group and the Company lease out certain property. Note 19 s ets out information
about investment property. The Group has classified these leases as operating leases
because they do not transfer substantially all the risks and rewards incidental to the
ownership of the assets.
The following table sets out a maturity analysis of lease payments receivable, showing
the undiscounted lease payments to be received after the reporting date.
Operating leases

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  | €’000 | €’000 | €’000 | €’000
| Less than one year | 5,815 | 5,530 | 660 | 654
| One to two years | 4,079 | 4,309 | 445 | 510
| Two to three years | 2,000 | 3,229 | 386 | 314
| Three to four years | 1,401 | 1,578 | 38 | 274
| Four to five years | 1,052 | 1,217 | — | 38
| More than five years | 3,113 | 3,726 | — | —
| Total | 17,460 | 19,589 | 1,529 | 1,790

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
168
18.Property, plant and equipment
Group

|  | Freehold |  | Furniture |
|  | land and | Leasehold | fittings and |
|  | buildings | improvements | equipment | Total
|  | €’000 | €’000 | €’000 | €'000
| At 1 January 2022 |  |  |  |
| Cost | 14,201 | 3,643 | 8,388 | 26,232
| Accumulated depreciation | (171) | (2,152) | (6,252) | (8,575)
| Closing net book amount | 14,030 | 1,491 | 2,136 | 17,657
| Year ended 31 December 2022 |  |  |  |
| Opening net book amount | 14,030 | 1,491 | 2,136 | 17,657
| Additions | 156 | 580 | 754 | 1,490
| Amount transferred to investment property (Note 19) | (457) | — | — | (457)
| Depreciation charge | (89) | (238) | (744) | (1,071)
| Depreciation on amount transferred to investment property (Note 19) | 7 | — | — | 7
| Closing net book amount | 13,647 | 1,833 | 2,146 | 17,626
| At 31 December 2022 |  |  |  |
| Cost | 13,900 | 4,223 | 9,142 | 27,265
| Accumulated depreciation | (253) | (2,390) | (6,996) | (9,639)
| Net book amount | 13,647 | 1,833 | 2,146 | 17,626

| Year ended 31 December 2023 |  |  |  |
| Opening net book amount | 13,647 | 1,833 | 2,146 | 17,626
| Additions | 170 | 158 | 308 | 636
| Depreciation charge | (104) | (230) | (745) | (1,079)
| Closing net book amount | 13,713 | 1,761 | 1,709 | 17,183
| At 31 December 2023 |  |  |  |
| Cost | 14,070 | 4,381 | 9,450 | 27,901
| Accumulated depreciation | (357) | (2,620) | (7,741) | (10,718)
| Net book amount | 13,713 | 1,761 | 1,709 | 17,183

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
169
18.Property, plant and equipment - continued
Company

|  | Freehold |  | Furniture |
|  | land and | Leasehold | fittings and |
|  | buildings | improvements | equipment | Total
|  | €'000 | €'000 | €'000 | €'000
| At 1 January 2022 |  |  |  |
| Cost | 2,191 | 3,056 | 3,347 | 8,594
| Accumulated depreciation | (18) | (1,597) | (2,437) | (4,052)
| Net book amount | 2,173 | 1,459 | 910 | 4,542
| Year ended 31 December 2022 |  |  |  |
| Opening net book amount | 2,173 | 1,459 | 910 | 4,542
| Transfer to investment property (Note 19) | (457) | — | — | (457)
| Additions | — | 579 | 388 | 967
| Depreciation Charge | (21) | (212) | (346) | (579)
| Depreciation released on transfer to investment property (Note 19) | 7 | — | — | 7
| Closing net book amount | 1,702 | 1,826 | 952 | 4,480
| At 31 December 2022 |  |  |  |
| Cost | 1,734 | 3,635 | 3,735 | 9,104
| Accumulated depreciation | (32) | (1,809) | (2,783) | (4,624)
| Net book amount | 1,702 | 1,826 | 952 | 4,480

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
170
18.Property, plant and equipment - continued

| Company - continued |  |  |  |
|  | Freehold |  | Furniture |
|  | land and | Leasehold | fittings and |
|  | buildings | improvements | equipment | Total
|  | €’000 | €’000 | €’000 | €’000
| Year ended 31 December 2023 |  |  |  |
| Opening net book amount | 1,702 | 1,826 | 952 | 4,480
| Additions | — | 158 | 187 | 345
| Depreciation charge | (17) | (228) | (371) | (616)
| Closing net book amount | 1,685 | 1,756 | 768 | 4,209
| At 31 December 2023 |  |  |  |
| Cost or valuation | 1,734 | 3,793 | 3,922 | 9,449
| Accumulated depreciation | (49) | (2,037) | (3,154) | (5,240)
| Net book amount | 1,685 | 1,756 | 768 | 4,209

Freehold land and buildings transferred from investment property are transferred at the
fair value at the point of transfer and are subsequently depreciated. Transfers to
investment property are made at the depreciated value at the point of transfer. If the fair
value of the freehold land and buildings is significantly different as compared to its
carrying amount then a revaluation adjustment is recorded.
Depreciation charge has been included in administrative expenses.
The Group’s and Company’s Land and buildings are shown at fair value (level 3).
A valuation of land and buildings was carried out by external qualified valuers during
2021. The fair value movements were debited to profit or loss. The carrying amount of
land and buildings that would have been included in the financial statements had these
assets been carried at cost less accumulated depreciation for the Group is €13.7 million
(2022: €13.6 million) and for the Company €0.8 million (2022: €0.8 million).
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
171
18. Property, plant and equipment - continued
Valuation processes
Periodically, the Group engages qualified valuers to determine the fair value of the
Group’s land and buildings. As at 31 December 2021, the fair value of the land and
buildings of the subsidiary was determined by PwC Malta. No valuation was performed
in 2022 and 2023 on the land and building of the subsidiary. The Company’s land and
buildings were revalued by PwC Malta in 2023 with no significant change to the
carrying amount.
Whenever a valuation is carried out the finance department:
• verifies all major inputs to the valuation report prepared by the qualified valuer;
• assesses property valuation movements when compared to the prior valuation
report; and
• holds discussions with the qualified valuer.
Valuation techniques
The fair value of the Group’s and the Company’s land and buildings, with a total
carrying amount of €13.70 million and €1.70 million respectively (2022: €13.60
million and €1.7 0 million respectively), was determined by capitalizing future net
income streams based on significant unobservable inputs. These inputs include:

Valuation technique | Significant unobservable inputs | Inter-relationship between key unobservable inputs and fair value measurement
Discounted cash flows: The valuation model considers the present value of net cash flows potentially generated from the property, taking into account the expected rental growth rate, void periods and costs not paid for by the tenants. The expected net cash flows are discounted using the risk-adjusted discount rates. Among other factors, the discount rate estimation considers the quality of a building and its location (prime vs secondary), lease terms, property risk premium and inflation. | – Risk-adjusted discount rate varying between 6.2% and 7.9% (2022: 6.2% and 6.8%) – The valuation provides for a void factor varying between 2.5% and 4.5% (2022: 2.5% and 4.5%) on rental income. – A benchmark lease market rate was applied once current lease terms expired. – Expected market rental growth rate of 2.0% (2022: 2.0%) in line with the implied inflation rate IRR (Internal Rate of Return). | The estimated fair value would increase/(decrease) if: – The risk-adjusted discount rate were lower/(higher); – Void factor were lower/(higher) – The market rate were higher/(lower); – Expected market rental growth were higher/(lower).

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
172
18. Property, plant and equipment - continued
Valuation techniques - continued
Although the properties are currently being used by MMS as its Floriana Regional
Office and MMSV as its head office, for the purpose of the valuation, it was assumed
that the property’s highest and best use would be rental to a third party, assuming same
use. Although the Market Approach was considered, its applicability is limited, due to
the illiquidity of the commercial property market in Malta and therefore, the limited
number of transactions available. Moreover, it is inherently difficult to find
transactions including office blocks that are directly comparable to the property.
19. Investment property

| Group | Company
| €’000 | €’000
At 1 January 2022 |  |
Cost | 65,116 | 7,022
Accumulated fair value gains | 44,900 | 6,507
Net book amount | 110,016 | 13,529
Year ended 31 December 2022 |  |
Opening net book amount | 110,016 | 13,529
Transfer from property, plant & equipment (Note 18) | 450 | 450
Additions | 936 | 76
Disposals | (90) | (7)
Net fair value losses | (3,034) | (644)
Net book amount | 108,278 | 13,404
At 31 December 2022 |  |
Cost | 66,412 | 7,541
Accumulated fair value gains | 41,866 | 5,863
Net book amount | 108,278 | 13,404

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
173
19. Investment property - continued

|  | Group | Company
|  | €’000 | €’000
| Year ended 31 December 2023 |  |
| Opening net book amount | 108,278 | 13,404
| Additions | 1,614 | 344
| Net fair value losses | (4,273) | 61
| Net book amount | 105,619 | 13,809
| At 31 December 2023 |  |
| Cost | 68,026 | 7,885
| Accumulated fair value gains | 37,593 | 5,924
| Net book amount | 105,619 | 13,809

Transfers to or from property, plant & equipment and disposals are inclusive of
accumulated fair value gains at the point of transfer.
Fair value of land and buildings
A valuation of the Group’s and Company’s land and buildings was performed by
external qualified valuers to determine the fair value of the land and buildings as at 31
December 2023 and 2022. The fair value movements were credited to profit or loss and
are presented within ‘investment return’ (Note 8).
The Group’s and the Company’s investment property, comprising mainly office
buildings, have been determined to fall within level 3 of the fair valuation hierarchy.
The different levels in the fair value hierarchy have been defined in Note 4.3.
The Group’s and the Company’s policy is to recognise transfers into and out of fair
value hierarchy levels as of the date of the event or change in circumstances that caused
the transfer. There were no transfers between levels during the year.
Valuation processes
On an annual basis, the Group and Company engage external, independent property
valuers, having appropriate recognised professional qualifications and recent
experience in the location and category of the properties being valued to determine the
fair value of the land and buildings. As at 31 December 2023, the fair values of the land
and buildings have been determined by PwC Malta and DHI Periti.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
174
19. Investment property - continued
Valuation processes - continued
At each financial year end the investments department:
• verifies all major inputs to the valuation report prepared by the qualified valuer;
• assesses property valuation movements when compared to the prior year valuation
report; and
• holds discussions with the qualified valuer.
The valuation techniques used for investment properties were the discounted cash flow
valuation and market approach to provide accuracy and consistency in arriving at a fair
value that reflects a price that would be reasonably expected to be received in an
orderly transaction between market participants at the measurement date.
Valuation technique - Discounted cash flow
The following tables shows the valuation technique used in measuring the fair value of
investment property using the discounted cash flow technique, as well as the significant
unobservable inputs used. These inputs include:
Group

| Valuation technique | Significant unobservable inputs | Inter-relationship between key unobservable inputs and fair value measurement
| Discounted cash flows: The valuation model considers the present value of net cash flows generated from the property, taking into account the expected rental growth rate, void periods and costs not paid for by the tenants. The expected net cash flows are discounted using the risk- adjusted discount rates. Among other factors, the discount rate estimation considers the quality of a building and its location (prime vs secondary), lease terms, property risk premium and inflation. | – Risk-adjusted discount rate varying be tween 7.0%% and 8.6%% (2022: 5.7% and 8.1%%). – A void factor varying betw een 1.0% to 5.0% (2022: 1.5% and 6.5%) on rental income. – Lease market rate was applied once current lease terms expired. – Expected market rental growth rate of 2.0% (2022: 2.0%) in line with the general inflation rate – Construction costs for undeveloped airspace and re-developable land varying between €671/sqm and €1,592/sqm (2022: €656/ sqm and €1,535/sqm) | The estimated fair value would increase/(decrease) if: – The risk-adjusted discount rate were lower/ (higher); – Void factor were lower/ (higher); – The market rate were higher/(lower); – Expected market rental growth were higher/ (lower). – Constructions costs were lower/(higher).

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
175
19. Investment property - continued
Valuation technique - Discounted cash flow - continued
Company

| Valuation technique | Significant unobservable inputs | Inter-relationship between key unobservable inputs and fair value measurement
| Discounted cash flows: The valuation model considers the present value of net cash flows generated from the property, taking into account the expected rental growth rate, void periods and costs not paid for by the tenants. The expected net cash flows are discounted using the risk- adjusted discount rates. Among other factors, the discount rate estimation considers the quality of a building and its location (prime vs secondary), lease terms, property risk premium and inflation. | – Risk-adjusted discount rate varying between 7.9% and 8.4% (2022: 7.1% and 7.9%). – A void factor of 4.5% (2022: 4.5%) on rental income. – Lease market rate was applied once current lease terms expired. – Expected market rental growth rate of 2.0% (2022: 1.6%) in line with general inflation rate. | The estimated fair value would increase/(decrease) if: – The risk-adjusted discount rate were lower/(higher); – Void factor were lower/ (higher); – The market rate were higher/(lower); – Expected market rental growth were higher/ (lower).

The fair value of investment property determined by external, qualified property
valuers on the basis of the discounted cash flow method amounted to €101.24 million
(2022: €103.64 million) for the Group and €12.47 million (2022: €12.13 million) for
the Company.
In 2022 the Company transferred back Property, plant and equipment having a value of
€0.45 million to Investment Property. During 2023, there were no transfers to or from
Investment Property.
Valuation technique – Residual and Market approach
One property held by the Group situated within the Grand Harbour Local Plan has been
valued using the Residual Method for the comparative period and the Market Approach
for the current year. The resultant value in 2023, based on the Residual Method, was
not reflective of the current real estate market given the market data available.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
176
19. Investment property - continued
Valuation technique – Residual and Market approach - continued
Consequently, in 2023, the property is valued with reference to parameters for
comparable properties in terms of either actual prices from recent transactions or
advertised prices for properties currently available for sale. Through the Market
Approach, the property is valued in its existing state.
The following table shows the valuation technique used in measuring the fair value of
this investment property using the residual value approach. These inputs include:
Residual Value Technique - 2022

| Valuation technique | Significant unobservable inputs | Inter-relationship between key unobservable inputs and fair value measurement
| Residual method: The valuation model comprises: (a) the estimation of the gross development value of the property in a redeveloped form by applying the investment method (income approach), on the basis of potential developed area on completion and a market rent (net of non-recoverable expenses) per square metre (sq.m.), capitalised using an equivalent yield; and deducting (b) estimated development costs incurred in relation to the demolition of existing buildings, design costs, infrastructure works, construction costs, professional fees and costs of letting and sale; and (c) a ‘developer’s profit’ representing an allowance for the risk of undertaking the development. | – Offices net internal area on completion 7,130 sq.m. – Annual net rental rate per sq.m. of office space €141 – Number of car spaces on completion 159 – Annual net rental rate per car space €816 – Capitalisation rate 6.4% – Net development costs €10.0m – Developer’s profit 15% – Planning uncertainty discount 10% | The estimated fair value would increase/(decrease) if: – Offices net internal area on completion were higher/ (lower); – Annual net rental rate per sqm of office space were higher/(lower); – Number of car spaces on completion were higher/ (lower); – Net rental rate per car space were higher/(lower); – Capitalisation rate were lower/ (higher); – Net development costs were lower/(higher); – Developer’s profit were lower/(higher); and – Planning uncertainty discount were lower/ (higher).

The fair value of investment property determined by external, qualified property
valuers on the basis of residual method amounted to €2.67 million for the Group in
2022.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
177
19. Investment property - continued
Valuation technique – Residual and Market approach - continued
Market Value Technique - 2023

Valuation technique | Significant unobservable inputs | Inter-relationship between key unobservable inputs and fair value measurement
Market value : The valuation model comprises: (a) the estimation of an average sales rate based on information obtained from either actual prices of recent transactions or advertised prices for properties currently available for sale. | – Average sales rate of €1,355/ sqm – Reduction in average sales rate of 70% to allow for potential negotiation in rates between what is being advertised to what is actually contracted. | The estimated fair value would increase/(decrease) if: – The average sale rate were higher/(lower); – The reduction in average sales rate were higher/ (lower);

The fair value of investment property determined by external, qualified property
valuers on the basis of market approach method amounted to €2.30 million for the
Group in 2023.
Valuation technique - Comparative transactions method
The fair value of the Group’s investment properties determined on the basis of the
market comparison method amounted to €0.7 million in 2023 and 2022. The
comparative method is based on an expected sales value per square metre based on an
average/ median of values derived from observable market transactions for comparable
properties.
Valuation technique - Income Capitalisation Method
The valuation for all other investment property with a total carrying amount of €1.34
million (2022: €1.27 million) for the Group and Company, was determined by
capitalising future net income streams based on significant unobservable inputs. These
inputs include:

| Future rental cash inflows | based on the actual location, type and quality of the properties and supported by the terms of any existing lease, other contracts or external evidence such as current market rents for similar properties;
| Capitalisation rates | based on actual location, size and quality of the properties and taking into account market data at the valuation date.

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
178
19. Investment property - continued
Valuation technique - Income Capitalisation Method - continued
Information about fair value measurements using significant unobservable inputs (level
3)
Group & Company

|  |  |  | Significant unobservable Inputs
|  | Fair value at 31 December 2023 | Valuation technique | Rental value | Capitalisation rate
| Description | € |  | € | %
| Office buildings | 1.34m | Capitalisation of future net income streams | 0.05m | 3.25-5.00

Group & Company

|  |  |  | Significant unobservable Inputs
| Description | Fair value at 31 December 2022 | Valuation technique | Rental value | Capitalisation rate
|  | € |  | € | %
| Office buildings | 1.27m | Capitalisation of future net income streams | 0.05m | 3.50-5.00

For each valuation for which rental value and capitalisation rate have been determined
to be the significant unobservable inputs, the higher the rental value and the lower the
capitalisation rate, the higher the fair value. Conversely, the lower the rental value and
the higher the capitalisation rate, the lower the fair value.
In the absence of future rental cash inflows, fair value is based on active market prices,
adjusted, if necessary for any difference in the nature, location or condition of the
specific asset.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
179
19. Investment property - continued
Sensitivity analysis
Sensitivity analysis was carried out to assess the impact of changing the risk-adjusted
discount rate (0.5 percentage point increase/decrease), or the market rental rate growth
(5.0 percentage point increase/decrease) in the case of the discounted cash flow,
residual method and market approach (5.0 percentage point increase/decrease), and the
capitalisation rate for the income capitalisation method. The tables below show the
changes in the valuation arising from such changes:
Group

| 2023 | 2023 | 2022 | 2022
| -0.5% | +0.5% | -0.5% | +0.5%
| € million | € million | € million | € million
Discount rates | 8.3 | (7.3) | 9.3 | (8.0)
| 2023 | 2023 | 2022 | 2022
| -5% | +5% | -5% | +5%
| € million | € million | € million | € million
Market rates | (5.4) | 5.1 | (5.4) | 5.3

Company

| 2023 | 2023 | 2022 | 2022
| -0.5% | +0.5% | -0.5% | +0.5%
| € million | € million | € million | € million
Discount rates | 0.9 | (0.9) | 1.1 | (0.9)
| 2023 | 2023 | 2022 | 2022
| -5% | +5% | -5% | +5%
| € million | € million | € million | € million
Market rates | (0.6) | 0.5 | (0.5) | 0.5

The impact on profit or loss would be a maximum increase of €8.3 million (2022: €9.3
million) or a maximum decrease of €7.3 million (2022: €8.0 million) for the Group and
a maximum increase of €0.9 million (2022: €1.1 million) or a maximum decrease of
€0.9 million (2022: €0.9 million) for the Company.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
180
20.Investment in subsidiary undertakings

|  | Company
|  | €’000
| Year ended 31 December 2023 |
| Opening net book amount | 77,214
| Closing net book amount | 77,214
| Year ended 31 December 2022 |
| Opening net book amount | 77,214
| Closing net book amount | 77,214

The subsidiary undertakings at 31 December are shown below:

| Subsidiary undertakings | Registered office | Class of shares held | Percentage of shares held
|  |  |  | 2023 | 2022
| Euro Globe Holdings Limited (Company in liquidation) | Middle Sea House Floriana | Ordinary shares | 100% | 100%
| Euromed Risk Solutions Limited | Development House Floriana | Ordinary shares | 100% | 100%
| Bee Insurance Management Limited | Development House Floriana | Ordinary shares | 100% | 100%
| MAPFRE MSV Life plc | Level 7 The Mall Floriana | Ordinary shares | 50% | 50%
| Church Wharf Properties Limited | Middle Sea House Floriana | Ordinary shares | 75% | 75%

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
181
20.Investment in subsidiary undertakings - continued
The Group’s aggregated assets and liabilities and the results of its subsidiary
undertakings that have non-controlling interest, before elimination entries, are as
follows:

| 2023 | % Held by non- controlling interests | Assets | Liabilities | Revenues | Profit before tax | Net cash
|  |  | €’000 | €’000 | €’000 | €’000 | €’000
| MAPFRE MSV Life p.l.c. | 50% | 2,319,702 | 2,154,321 | 201,271 | 14,572 | (88,713)
| Church Wharf |  |  |  |  |  |
| Properties Limited | 25% | 2,301 | 325 | — | (400) | —

| 2022 | % Held by non- controlling interests | Assets | Liabilities | Revenues | Profit before tax | Net cash
|  |  | €’000 | €’000 | €’000 | €’000 | €’000
| MAPFRE MSV Life p.l.c. |  |  |  |  |  |
| (consolidated results) |  |  |  |  |  |
| restated | 50% | 2,273,409 | 2,117,206 | 254,910 | 2,673 | 65,934
| Church Wharf |  |  |  |  |  |
| Properties Limited | 25% | 2,674 | 333 | — | 8 | (1)

The amount of dividends that can be distributed in cash by MAPFRE MSV Life p.l.c. is
restricted by the solvency requirements imposed by the MFSA Regulations.
In addition to the subsidiary undertakings above, MAPFRE MSV Life p.l.c. also held
the following investments in subsidiary undertakings:

| Subsidiary undertakings | Registered office | Class of shares held | Percentage of shares held
|  |  |  | 2023 | 2022
| Growth Investment Limited (held indirectly by MAPFRE MSV Life p.l.c.) | Pjazza Papa Giovanni XXIII Floriana | Ordinary shares | 50% | 50%

During 2023 Growth Investments Limited was wound down and struck off.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
182
20.Investment in subsidiary undertakings - continued
During 2011, the Company acquired control of MAPFRE MSV Life p.l.c. following a
shareholders’ agreement. MAPFRE MSV Life p.l.c. had previously been accounted for
as an associated undertaking.
As a result of this business combination, Church Wharf Properties Limited, which was
previously classified as an associated undertaking, also became a subsidiary in view of
the fact that the remaining interest in this company is held by MAPFRE MSV Life
p.l.c.
As disclosed in prior years’ financial statements, the Company’s 100% holding in
Progress Assicurazioni S.p.A. (‘Progress’) was derecognised in 2009. This was due to
Progress being put into compulsory administrative liquidation. Subsequent bankruptcy
procedures were also initiated and accordingly, the investment was fully written off in
previous years. A subordinated loan receivable from Progress by a Group company
amounting to €8.50 million has also been fully provided for in previous years. A
scheme of distribution was communicated by the liquidator in 2021 which was
executed during 2022. A final payment of 6.35% of the subordinated loan receivable
was received by MAPFRE Middlesea p.l.c. amounting to €0.54 million. The Directors
are not aware of any developments that could have an impact on the Company’s
obligations attached to this investment.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
183
21. Investment in associated undertakings

|  | Group | Company
|  | €’000 | €’000
| At 1 January 2022 |  |
| Cost | 14,480 | 294
| Accumulated share of associated undertaking's equity | 89 | 89
| Accumulated fair value movements | 8,262 | —
| Net book amount | 22,831 | 383
| 2022 |  |
| Opening net book amount | 22,831 | 383
| Share of associated undertaking's movement in equity | 6 | 6
| Fair value movement | 190 | —
| Closing net book amount | 23,027 | 389
| At 31 December 2022 |  |
| Cost | 14,480 | 294
| Accumulated share of associated undertaking's equity | 95 | 95
| Accumulated fair value movements | 8,452 | —
| Net book amount | 23,027 | 389

| Year ended 31 December 2023 |  |
| Opening net book amount | 23,027 | 389
| Share of associated undertaking's movement in equity | 14 | 14
| Fair value movement | 882 | —
| Closing net book amount | 23,923 | 403
| At 31 December 2023 |  |
| Cost | 14,480 | 294
| Accumulated share of associated undertaking's equity | 109 | 109
| Accumulated fair value movements | 9,334 | —
| Net book amount | 23,923 | 403

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
184
21. Investment in associated undertakings - continued
The Group’s aggregated assets and liabilities and the share of the results of its
associated undertaking, which is unlisted is as follows:

| 2023 | Registered office | Assets | Liabilities | Revenues | Profit | % of interest held
|  |  | €’000 | €’000 | €’000 | €’000 |
| Middlesea Assist Limited | 4D, Development House, |  |  |  |  |
|  | St. Anne Street, |  |  |  |  |
|  | Floriana | 1,423 | 600 | 3,063 | 224 | 49%

| 2022 | Registered office | Assets | Liabilities | Revenues | Profit | % of interest held
|  |  | €’000 | €’000 | €’000 | €’000 |
| Middlesea Assist Limited | 4D, Development House, |  |  |  |  |
|  | St. Anne Street, |  |  |  |  |
|  | Floriana | 1,456 | 662 | 2,863 | 195 | 49%

In addition to the associated undertakings above, MAPFRE MSV Life p.l.c. also held
the following investments in associated undertakings:

| Associated undertakings | Registered office | Class of shares held | Percentage of shares held
|  |  |  | MSV | Group
|  |  |  | 2023 | 2022 | 2023 | 2022
| Plaza Centres p.l.c. | The Plaza Commercial Centre |  |  |  |  |
|  | Bisazza Street Sliema | Ordinary shares | 31.42% | 31.42% | 31.42% | 31.42%
| Tigne Mall | The PointShoppin g Mall |  |  |  |  |
|  | Tigne Point Sliema | Ordinary shares | 35.46% | 35.46% | 35.46% | 35.46%

Plaza Centres p.l.c. and Tigne Mall p.l.c. are listed on the Malta Stock Exchange and
their share price as at 31 December 2023 was €0.68 and €0.90 respectively (31
December 2022: €0.73 and €0.84 respectively).
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
185
22. Other investments
The investments are summarised by measurement category in the table below.

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  |  | Restated |  | Restated
|  | €’000 | €’000 | €’000 | €’000
| Fair value through profit or loss | 1,971,728 | 1,856,734 | 2,486 | 1,789
| Other available-for-sale | — | 10,308 | — | 10,308
| Fair value through OCI | 13,804 | — | 13,804 | —
| Loans and receivables | — | 116,728 | — | —
| Amortised Cost | 150,781 | — | — | —
|  | 2,136,313 | 1,983,770 | 16,290 | 12,097

(a) Investments at fair value through profit or loss
Analysed by type of investment as follows:

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  | €’000 | €’000 | €’000 | €’000
| Equity securities, and units in unit trusts | 960,157 | 973,927 | 2,486 | 1,186
| Debt securities | 849,061 | 777,854 | — | 603
| Assets held to cover linked liabilities |  |  |  |
| - collective investment schemes | 160,540 | 102,255 | — | —
| Forward foreign exchange contracts | 1,970 | 2,698 | — | —
| Total investments at fair value through profit or loss | 1,971,728 | 1,856,734 | 2,486 | 1,789

At 31 December 2023, the Group had €35.8 million financial commitments in respect
of uncalled capital (2022: €66.1 million).
Equity securities and collective investment schemes are considered to be substantially
non-current assets in nature.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
186
22. Other investments - continued
(a) Investments at fair value through profit or loss - continued
The movements for the year are summarised as follows:

|  | Group | Company
|  | Fair value through profit & loss | Fair value through profit & loss
|  | €’000 | €’000
| Year ended 31 December 2022 |  |
| Opening net book amount | 2,201,982 | 2,151
| Additions | 1,312,024 | —
| Disposals | (1,452,223) | —
| Net fair value losses | (205,049) | (362)
| Closing net book amount | 1,856,734 | 1,789
| Year ended 31 December 2023 |  |
| Opening net book amount | 1,856,734 | 1,789
| Reclassified from AFS | 570 | 570
| Reclassified to FVOCI | (603) | (603)
| Additions | 1,499,134 | —
| Disposals | (1,514,034) | —
| Net fair value gains (excluding net realised gains) | 122,094 | 730
| Movement in accrued interest receivable | 1,879 | —
| Accrued interest on initial application of IFRS 9 | 5,954 | —
| Closing net book amount | 1,971,728 | 2,486

The maturity of fixed income debt securities is detailed below;

| Group | Company
| 2023 | 2022 | 2023 | 2022
| €'000 | €'000 | €'000 | €'000
Within one year | 25,650 | 58,337 | — | —
Between 1 and 2 years | 50,064 | 76,751 | — | —
Between 2 and 5 years | 238,481 | 194,953 | — | —
Over 5 years | 534,866 | 447,813 | — | 603
| 849,061 | 777,854 | — | 603

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
187
22. Other investments - continued
(b) Other available-for-sale

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  | €’000 | €’000 | €’000 | €’000
| Listed debt securities: | — | 9,738 | — | 9,738
| Listed equity securities: | — | 570 | — | 570
|  | — | 10,308 | — | 10,308

The movement for the year is summarised as follows:

| Fixed income securities |  |  |  |
|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  | €’000 | €’000 | €’000 | €’000
| Year ended 31 December |  |  |  |
| Opening net book amount | 9,738 | 5,579 | 9,738 | 5,579
| Reclassified to FVOCI | (9,738) | — | (9,738) | —
| Additions | — | 5,135 | — | 5,135
| Disposals | — | (203) | — | (203)
| Net fair value losses | — | (773) | — | (773)
| Closing net book amount | — | 9,738 | — | 9,738

| Equity |  |  |  |
|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  | €’000 | €’000 | €’000 | €’000
| Year ended 31 December |  |  |  |
| Opening net book amount | 570 | 652 | 570 | 652
| Reclassified to FVTPL | (570) | — | (570) | —
| Net fair value losses | — | (82) | — | (82)
| Closing net book amount | — | 570 | — | 570

Equity and debt securities are classified as non-current. The maturity of fixed income
debt securities is summarised below:
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
188
22. Other investments - continued
(b) Other available for sale - continued

| Group | Company
| 2023 | 2022 | 2023 | 2022
| €'000 | €'000 | €'000 | €'000
Within one year | — | — | — | —
Between 1 and 2 years | — | 854 | — | 854
Between 2 and 5 years | — | 6,962 | — | 6,962
Over 5 years | — | 1,922 | — | 1,922
| — | 9,738 | — | 9,738

(c)Fair value through OCI

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  | €'000 | €'000 | €'000 | €'000
| Listed debt securities | 13,804 | — | 13,804 | —
|  | 13,804 | — | 13,804 | —

The movement for the year is summarised as follows:

| Listed debt securities |  |  |  |
|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  | €'000 | €'000 | €'000 | €'000
| Year ended 31 December |  |  |  |
| Reclassified from AFS | 9,738 | — | 9,738 | —
| Reclassified from FVTPL | 603 | — | 603 | —
| Additions | 3,530 | — | 3,530 | —
| Disposals | (379) | — | (379) | —
| Net fair value gains | 312 | — | 312 | —
| Closing net book amount | 13,804 | — | 13,804 | —

Debt securities are classified as non-current. The maturity of fixed income debt
securities is summarised below:
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
189
22. Other investments - continued
(c)Fair value through OCI - continued

| Group | Company
| 2023 | 2022 | 2023 | 2022
| €'000 | €'000 | €'000 | €'000
Within one year | 3,847 | — | 3,847 | —
Between 1 and 2 years | 4,668 | — | 4,668 | —
Between 2 and 5 years | 2,772 | — | 2,772 | —
Over 5 years | 2,517 | — | 2,517 | —
| 13,804 | — | 13,804 | —

| Rating of fixed income debt securities |  |  |  |
|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  | €’000 | €’000 | €’000 | €’000
| AAA | 1,366 | — | 1,366 | —
| AA | 2,821 | — | 2,821 | —
| A | 5,541 | — | 5,541 | —
| BBB | 4,076 | — | 4,076 | —
| BB or lower | — | — | — | —
|  | 13,804 | — | 13,804 | —

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
190
22.Other investments - continued
(d)Loans and receivables

|  | Group
|  | 2023 | 2022
|  |  | Restated
|  | €'000 | €'000
| Deposits with banks or credit institutions | — | 116,728
|  | — | 116,728
| Maturity of deposits with banks or credit institutions: |  |
|  | Group
|  | 2023 | 2022
|  | €'000 | €'000
| Within 3 months | — | 19,564
| Within 1 year but exceeding 3 months | — | 76,527
| Between 1 and 5 years | — | 20,637
|  | — | 116,728
| The above deposits earn interest as follows: |  |
|  | Group
|  | 2023 | 2022
|  | €'000 | €'000
| At fixed rates | — | 116,728
|  | — | 116,728

(e)Amortised cost
Analysed by type of investment as follows:

|  | Group
|  | 2023
|  | €'000
| Deposits with banks or credit institutions | 75,977
| Debt securities | 74,804
|  | 150,781

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
191
22.Other investments - continued
(e)Amortised cost
Analysed by type of investment as follows:

|  | Group
|  | 2023
|  | €'000
| The movements for the year are summarised as follows: |
| Opening reclassification from loans and receivables (Note 22 (d)) | 116,728
| ECL on initial application of IFRS 9 | (134)
| Accrued interest on initial application of IFRS 9 | 394
| Interest income earned | 4,818
| Interest income collected | (3,032)
| Additions | 264,821
| Redemptions and disposals | (232,792)
| ECL | (22)
| Closing net book amount | 150,781

| Maturity of investments at amortised cost: |
|  | Group
|  | 2023
|  | €'000
| Within 3 months | 61,159
| Within 1 year but exceeding 3 months | 10,009
| Between 1 and 5 years | 71,431
| Over 5 years | 8,182
|  | 150,781

| The above investments earn interest as follows: | Group
|  | 2023
|  | €'000
| At fixed rates | 150,781
|  | 150,781

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
192
23. Deferred income tax

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  |  | Restated |  | Restated
|  | €’000 | €’000 | €’000 | €’000
| Balance at 1 January | 10,038 | 40,286 | 1,644 | 721
| Initial application of IFRS 17 | — | 11,827 | — | 429
| Initial application of IFRS 9 | (66) | — | (19) | —
| Movements during the year: |  |  |  |
| Profit or loss account (Note 12) | 2,015 | (42,044) | (412) | 525
| Other comprehensive income | (26) | (31) | (26) | (31)
| Balance at 31 December - net | 11,961 | 10,038 | 1,187 | 1,644

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
193
2 3.Deferred income tax - continued
Deferred income taxes are calculated on all temporary differences using a principal tax
rate of 35% (2022: 35%) with the exception of investment property and freehold and
other property, for which deferred income taxes may be calculated using a principal tax
rate of 8% or 10% of the carrying amount (2022: 8% or 10%), if appropriate. The
analysis of deferred tax (assets)/liabilities is as follows:

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  |  | Restated |  | Restated
|  | €’000 | €’000 | €’000 | €’000
| Temporary differences on property, plant and equipment | 5,627 | 4,365 | 1,127 | 991
| Temporary differences attributable to investment property, unrealised capital losses and fair value adjustments on financial assets | 10,455 | 752 | 1,182 | 1,082
| Temporary differences attributable to unabsorbed tax losses and allowances carried forward | (3,878) | (1,908) | (933) | (933)
| Temporary differences attributable to other provisions | (243) | (137) | (189) | (138)
| Initial application of IFRS 17 | — | 6,966 | — | 642
| Balance at 31 December - net | 11,961 | 10,038 | 1,187 | 1,644

Deferred income tax assets and liabilities are offset when there is a legally enforceable
right to set off a current tax asset against a current tax liability. The following amounts
determined after appropriate offsetting are shown in the statement of financial position:

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  |  | Restated |  | Restated
|  | €’000 | €’000 | €’000 | €’000
| Deferred tax asset | (2,118) | (8,750) | (1,260) | (1,292)
| Deferred tax liability | 14,079 | 18,788 | 2,447 | 2,936
|  | 11,961 | 10,038 | 1,187 | 1,644

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
194
23.Deferred income tax - continued
The deferred income tax assets and liabilities are, principally, recoverable after more
than 12 months.
Deferred income tax assets are recognised for tax loss carry-forwards to the extent that
the realisation of the related tax benefit through future taxable profits is probable.
The Group and Company have unutilised capital gains of €23.22 million (2022: €27.93
million), which give rise to a deferred tax asset of €8.13 million (2022: €9.78 million)
that has not been recognised in these financial statements. The Group also has
unutilised trading losses of €2.48 million (2022: €2.48 million) giving rise to a deferred
tax asset of €0.87 million (2022: €0.87 million) which has not been recognised in these
financial statements.
The Group’s and Company’s deferred tax asset and liability were established on the
basis of tax rates that were substantively enacted as at the financial year en d.
24. Insurance contract assets, insurance contract liabilities, reinsurance contract assets
and reinsurance contract liabilities
24.1 Composition of statement of financial position
An analysis of the amounts presented on the statement of financial position for
insurance contracts assets, insurance contract liabilities, reinsurance contract assets and
reinsurance contract liabilities, is shown in the table below:

| Group | Life Risk | Investment Contracts with DPF | Total long- term business | Short-term Under PAA | Total
|  | €’000 | €’000 | €’000 | €’000 | €’000
| As at 31 December 2023 |  |  |  |  |
| Insurance contract assets | 8,945 | — | 8,945 | — | 8,945
| Insurance contract liabilities | 6,488 | 1,984,889 | 1,991,377 | 72,467 | 2,063,844
| Reinsurance contract assets | — | — | — | 13,359 | 13,359
| Reinsurance contract liabilities | 15,493 | — | 15,493 | — | 15,493

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
195
24. Insurance contract assets, insurance contract liabilities, reinsurance contract assets
and reinsurance contract liabilities - continued
24.1 Composition of statement of financial position - continued

| Group | Life Risk | Investments Contracts with DPF | Total long- term business | Short-term Under PAA | Total
|  | €’000 | €’000 | €’000 | €’000 | €’000
| As at 31 December 2022 |  |  |  |  |
| Insurance contract assets | 8,400 | — | 8,400 | — | 8,400
| Insurance contract liabilities | 6,357 | 1,961,452 | 1,967,809 | 82,964 | 2,050,773
| Reinsurance contract assets | — | — | — | 23,590 | 23,590
| Reinsurance contract liabilities | 10,750 | — | 10,750 | — | 10,750

| Company |
|  | 2023 | 2022
|  | €’000 | €’000
| Insurance contract liabilities | 72,467 | 82,964
| Reinsurance contract assets | 13,359 | 23,590

Insurance liabilities and reinsurance assets in relation to short-term insurance contracts
are classified as current liabilities, in that, liability for incurred claims represent events
that happened and which would normally be settled within the normal operating cycle.
The timing of payment can be dependent on factors, like court cases, that could defer
such payment to beyond a year from the reporting date. Insurance and investment
contract liabilities in relation to long-term contracts are substantially non-current.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
196
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.2 Short-term insurance contracts under PAA
Reconciliation of the liability for remaining coverage and the liability for incurred claims
The following tables present reconciliations from the opening to the closing balances of the
liability for remaining coverage (LRC) and liability for incurred claims (LIC).

| Group and Company | 2023
|  | LRC | LIC |
|  | Excluding loss component | Loss component | Present value of future cash flows | Risk adjustment for non- financial risk | Total
|  | €’000 | €’000 | €’000 | €’000 | €’000
| Insurance contracts liabilities at 1 January | 29,789 | 402 | 51,374 | 1,399 | 82,964
| Insurance revenue | (92,869) | — | — | — | (92,869)
| Insurance service expenses |  |  |  |  |
| Incurred claims and other directly attributable expenses | — | — | 50,008 | 445 | 50,453
| Changes that relate to past service - changes in FCF relating to the LIC | — | — | (8,121) | (869) | (8,990)
| Losses on onerous contracts and reversals of those losses | — | (402) | — | — | (402)
| Insurance acquisition cash flows amortisation | 27,394 | — | — | — | 27,394
| Insurance service expenses | 27,394 | (402) | 41,887 | (424) | 68,455
| Insurance service result | (65,475) | (402) | 41,887 | (424) | (24,414)
| Finance expenses from insurance contracts issued | — | — | 1,285 | 35 | 1,320
| Total amount recognised in comprehensive income | (65,475) | (402) | 43,172 | (389) | (23,094)
| Cash flows |  |  |  |  |
| Premiums received | 95,723 | — | — | — | 95,723
| Claims and other directly attributable expenses paid | — | — | (55,110) | — | (55,110)
| Insurance acquisition cash flows | (28,016) | — | — | — | (28,016)
| Total cash flows | 67,707 | — | (55,110) | — | 12,597
| Insurance contracts liabilities at 31 December | 32,021 | — | 39,436 | 1,010 | 72,467
| Insurance contracts liabilities at 31 December | 32,021 | 40,446 | 72,467

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
197
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.2 Short-term insurance contracts under PAA - continued
Reconciliation of the liability for remaining coverage and the liability for incurred
claims - continued

| Group and Company | 2022
|  | LRC | LIC |
|  | Excluding loss component | Loss component | Present value of future cash flows | Risk adjustment for non- financial risk | Total
|  | €’000 | €’000 | €’000 | €’000 | €’000
| Insurance contracts liabilities at 1 January | 28,589 | 447 | 51,585 | 1,449 | 82,070
| Insurance revenue | (84,350) | — | — | — | (84,350)
| Insurance service expenses |  |  |  |  |
| Incurred claims and other directly attributable expenses | — | — | 46,735 | 513 | 47,248
| Changes that relate to past service - changes in FCF relating to the LIC | — | — | 1,891 | (490) | 1,401
| Losses on onerous contracts and reversals of those losses | — | (45) | — | — | (45)
| Insurance acquisition cash flows amortisation | 24,079 | — | — | — | 24,079
| Insurance service expenses | 24,079 | (45) | 48,626 | 23 | 72,683
| Insurance service result | (60,271) | (45) | 48,626 | 23 | (11,667)
| Finance expenses from insurance contracts issued | — | — | (2,531) | (73) | (2,604)
| Total amount recognised in comprehensive income | (60,271) | (45) | 46,095 | (50) | (14,271)
| Cash flows |  |  |  |  |
| Premiums received | 86,824 | — | — | — | 86,824
| Claims and other directly attributable expenses paid | — | — | (46,306) | — | (46,306)
| Insurance acquisition cash flows | (25,353) | — |  | — | (25,353)
| Total cash flows | 61,471 | — | (46,306) | — | 15,165
| Insurance contracts liabilities at 31 December | 29,789 | 402 | 51,374 | 1,399 | 82,964
| Insurance contracts liabilities at 31 December | 30,191 | 52,773 | 82,964

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
198
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.2 Short-term insurance contracts under PAA - continued
Reconciliation of the asset for remaining coverage and the asset for incurred claims
The following tables present reconciliations from the opening to the closing balances of the
asset for remaining coverage (ARC) and asset for incurred claims (AIC).
Group and Company

|  | 2023
|  | ARC | AIC |
| Remaining coverage excluding loss component | Present value of future cash flows | Risk adjustment for non- financial risk | Total
|  | €’000 | €’000 | €’000 | €’000
| Reinsurance contracts assets at 1 January | 1,250 | 21,683 | 657 | 23,590
| Net income/(expense) from reinsurance contracts held |  |  |  |
| Reinsurance expenses | (11,326) | — | — | (11,326)
| Incurred claims recovery | — | 4,635 | 127 | 4,762
| Changes that relate to past service - changes in FCF relating to the LIC | — | (5,202) | (532) | (5,734)
| Effect of changes in the risk of reinsurers' non- performance | — | 51 | — | 51
| Net expense from reinsurance contracts held | (11,326) | (516) | (405) | (12,247)
| Finance income from reinsurance contracts held | — | 471 | 15 | 486
| Total amount recognised in comprehensive income | (11,326) | (45) | (390) | (11,761)
| Cash flows |  |  |  |
| Premiums paid net of ceding commissions and other directly attributable expenses paid | 12,701 | — | — | 12,701
| Recoveries from reinsurance | — | (11,171) | — | (11,171)
| Total cash flows | 12,701 | (11,171) | — | 1,530
| Reinsurance contracts assets at 31 December | 2,625 | 10,467 | 267 | 13,359

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
199
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.2 Short-term insurance contracts under PAA - continued
Reconciliation of the asset for remaining coverage and the asset for incurred claims -
continued

| Group and Company | 2022
|  | ARC | AIC |
|  | Remaining coverage excluding loss component | Present value of future cash flows | Risk adjustment for non- financial risk | Total
|  | €’000 | €’000 | €’000 | €’000
| Reinsurance contracts assets at 1 January | 297 | 24,883 | 779 | 25,959
| Net income/(expense) from reinsurance contracts held |  |  |  |
| Reinsurance expenses | (10,964) | — | — | (10,964)
| Incurred claims recovery | — | 8,220 | 198 | 8,418
| Changes that relate to past service - changes in FCF relating to the LIC | — | (3,027) | (286) | (3,313)
| Effect of changes in the risk of reinsurers' non- performance | — | 133 | — | 133
| Net income/(expense) from reinsurance contracts held | (10,964) | 5,326 | (88) | (5,726)
| Finance expense from reinsurance contracts held | — | (1,025) | (34) | (1,059)
| Total amount recognised in comprehensive income | (10,964) | 4,301 | (122) | (6,785)
| Cash flows |  |  |  |
| Premiums paid net of ceding commissions and other directly attributable expenses paid | 11,917 | — | — | 11,917
| Recoveries from reinsurance | — | (7,501) | — | (7,501)
| Total cash flows | 11,917 | (7,501) | — | 4,416
| Reinsurance contracts assets at 31 December | 1,250 | 21,683 | 657 | 23,590

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
200
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.2 Short-term insurance contracts under PAA - continued
Short-term insurance contracts – liability for incurred claims
The gross claims reported are net of expected recoveries from salvage and subrogation.
The liability for incurred claims are largely based on claims incurred data. A Chain
Ladder approach using the Development Factor Method has been used projecting
separately each portfolio of contracts. In choosing the development factors, outliers that
would unrealistically favourably or adversely impact the estimation of the ultimate cost
are excluded. Large losses within each portfolio other than for Motor have not been
projected given the small and infrequent number of such claims over time and have
been taken at the case reserve. In the case of Motor, large losses, in the main involving
fatalities or serious bodily injury, are projected separately from attritional claims given
their severity and different development patterns.
The development tables in this note give an indication of the time it takes to settle
certain claims. This is attributable to certain classes of business taking several years to
develop and is also due to the length of time it takes for the respective cases to be
resolved in court.
The top half of the tables below illustrates how the Company’s estimate of the ultimate
total undiscounted claims cost for each accident year has changed at successive year-
ends on a gross and net basis. The bottom half of the table reconciles the cumulative
claims to the amount appearing in the statement of financial position on a gross and net
basis. The accident-year basis is the most appropriate for the general business written
by the Company.
The Group provides separately information on the gross and net basis the claims
development for the current reporting period and nine years prior to it. The diagonals
for financial years 2021, 2022 and 2023 show the undiscounted projected ultimate
claims incurred inclusive of claims related expenses as restated upon implementation of
IFRS 17. The directors have considered that this does not detract the user from adequate
information as to how the claims have evolved from the particular accident year to the
current reporting period.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
201
24.Insurance contract assets, insurance contract liabilities, reinsurance contract assets and reinsurance contract liabilities -
continued
24.2 Short-term insurance contracts under PAA - continued
Insurance contracts under the PAA – gross liability for incurred claims

| Group and Company |  |  |  |  |  |  |  |  |  |  |
| Accident Year | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | TOTAL
|  | €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000
| Estimate of ultimate claims cost:(undiscounted, inclusive of other directly attributable expenses) |  |  |  |  |  |  |  |  |  |  |
| - at end of accident year | 22,779 | 26,677 | 34,704 | 38,545 | 43,006 | 43,700 | 32,634 | 37,770 | 42,727 | 44,496 |
| - one year later | 20,198 | 26,748 | 35,127 | 39,334 | 44,264 | 47,172 | 32,240 | 37,618 | 41,788 | — |
| - two years later | 19,500 | 27,591 | 33,780 | 39,377 | 44,724 | 47,326 | 32,727 | 35,321 | — | — |
| - three years later | 19,430 | 27,946 | 33,211 | 39,741 | 45,831 | 49,511 | 32,333 | — | — | — |
| - four years later | 19,322 | 27,665 | 33,159 | 38,328 | 46,109 | 48,483 | — | — | — | — |
| - five years later | 19,284 | 27,605 | 33,045 | 38,099 | 46,392 | — | — | — | — | — |
| - six years later | 19,092 | 27,908 | 32,750 | 37,715 | — | — | — | — | — | — |
| - seven years later | 19,112 | 27,789 | 31,792 | — | — | — | — | — | — | — |
| - eight years later | 19,776 | 25,413 | — | — | — | — | — | — | — | — |
| - nine years later | 19,684 | — | — | — | — | — | — | — | — | — |
| Current estimate of cumulative claims | 19,684 | 25,413 | 31,792 | 37,715 | 46,392 | 48,483 | 32,333 | 35,321 | 41,788 | 44,496 | 363,417
| Cumulative payments to date | (18,474) | (24,967) | (31,545) | (36,651) | (42,287) | (46,046) | (30,627) | (32,570) | (36,116) | (25,657) | (324,940)
| Cumulative claims liabilities – accident years from 2014 to 2023 | 1,210 | 446 | 247 | 1,064 | 4,105 | 2,437 | 1,706 | 2,751 | 5,672 | 18,839 | 38,477
| Claims liabilities – prior accident years |  |  |  |  |  |  |  |  |  |  | 1,419
| Claims liabilities – Group life |  |  |  |  |  |  |  |  |  |  | 866
| Effect of discounting |  |  |  |  |  |  |  |  |  |  | (1,326)
| Liability for incurred claims for the contracts originated |  |  |  |  |  |  |  |  |  |  | 39,436

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
202
24.Insurance contract assets, insurance contract liabilities, reinsurance contract assets and reinsurance contract liabilities -
continued
24.2 Short-term insurance contracts under PAA - continued
Insurance contracts net of reinsurance contracts assets under the PAA – net liability for incurred claims

| Group and Company |  |  |  |  |  |  |  |  |  |  |
| Accident year | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | TOTAL
|  | €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000 | €’000
| Estimate of ultimate claims cost:(undiscounted, inclusive of other directly attributable expenses) |  |  |  |  |  |  |  |  |  |  |
| - at end of accident year | 17,776 | 23,216 | 30,079 | 33,106 | 33,539 | 33,848 | 28,126 | 34,463 | 39,334 | 40,287 |
| - one year later | 16,060 | 23,350 | 30,320 | 33,951 | 33,645 | 35,714 | 27,881 | 34,094 | 38,818 | — |
| - two years later | 15,565 | 22,442 | 29,171 | 33,638 | 33,846 | 36,367 | 28,372 | 32,035 | — | — |
| - three years later | 15,608 | 22,786 | 28,863 | 33,325 | 32,704 | 37,032 | 28,358 | — | — | — |
| - four years later | 15,611 | 22,551 | 29,038 | 32,961 | 32,524 | 36,587 | — | — | — | — |
| - five years later | 15,420 | 22,489 | 28,994 | 32,732 | 33,182 | — | — | — | — | — |
| - six years later | 15,247 | 22,596 | 28,746 | 32,680 | — | — | — | — | — | — |
| - seven years later | 15,220 | 22,707 | 28,382 | — | — | — | — | — | — | — |
| - eight years later | 15,388 | 22,420 | — | — | — | — | — | — | — | — |
| - nine years later | 15,392 | — | — | — | — | — | — | — | — | — |
| Current estimate of cumulative claims | 15,392 | 22,420 | 28,382 | 32,680 | 33,182 | 36,587 | 28,358 | 32,035 | 38,818 | 40,287 | 308,141
| Cumulative payments to date | (14,992) | (22,076) | (28,204) | (31,902) | (32,917) | (35,694) | (26,774) | (29,628) | (33,615) | (24,316) | (280,118)
| Cumulative claims liabilities – accident years from 2014 to 2023 | 400 | 344 | 178 | 778 | 265 | 893 | 1,584 | 2,407 | 5,203 | 15,971 | 28,023
| Claims liabilities – prior accident years |  |  |  |  |  |  |  |  |  |  | 1,195
| Claims liabilities – Group life |  |  |  |  |  |  |  |  |  |  | 730
| Effect of discounting |  |  |  |  |  |  |  |  |  |  | (979)
| Liability for incurred claims for the contracts originated |  |  |  |  |  |  |  |  |  |  | 28,969

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
203
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.2 Short-term insurance contracts under PAA - continued
(a) Assumptions
Discount rates
The bottom-up approach was adopted by the Group in determining a suitable discount
rate. Under this approach, the discount rate is determined as the risk-free yield. Given
the short-term nature of its insurance contracts liabilities and liquidity of cash flows, the
Group has selected the risk-free rates as published by EIOPA as appropriate for the
nature of its liabilities taking a zero illiquidity premium.
The yield curves used to discount the estimates of future cash flows that do not vary
based on the returns of the underlying items are as follows:

|  | 2023 | 2022
|  | No. of years | No. of years
|  | 1 | 5 | 10 | 1 | 5 | 10
| Short term insurance contracts issued and reinsurance contracts held | 3.4% | 2.3% | 2.4% | 3.2% | 3.1% | 3.1%

Risk adjustment for non-financial risk
Non-financial risk adjustment valuation reflects the compensation that the Group needs
to manage uncertainty regarding the amount and timing of future cash outflows, which
arise from non-financial risks from fulfilling insurance contract obligations.
Underwriting risks as well as other non-financial risks like portfolio expenses and
lapses are taken into consideration when determining this.
The non-financial risk adjustment has been estimated using a confidence-interval-based
approach, using Value at Risk (VaR) metrics for the probability distribution of the
current value of future cash flows, in line with Solvency II capital requirements, and
calibrating the target percentile confidence interval to 65 percentile. The Group
estimates an adjustment for non-financial risk separately from all other estimates.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
204
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.2 Short-term insurance contracts under PAA - continued
(a) Assumptions - continued
Estimates of future cash flows to fulfil insurance contracts
LIC of short-term business insurance contracts, measured under the PAA, comprise of
the estimates of future cash flows. The estimates of future cash flows is derived using a
standard actuarial claims projection technique, the Chain Ladder method, other than for
the claims reserves as explained below. The key assumptions underlying this technique
is that past claims development experience can be used to project future claims
development.
Claims reserves which are not projected using actuarial techniques, particularly those
involving fatalities and/or serious bodily injuries, are reserved at the case-by-case
reserve estimate. The measurement of claim payments due by the Group involves the
assessment of future settlements and is therefore dependent on assumptions around
determining such reserves based on, among others, legal precedent and current trends in
compensation awards.
(b) Sensitivity analysis
The directors have considered the sensitivity of the key variables underlying the liability
for short-term contracts. The most sensitive assumptions are the development factors
and discount rate changes. Development factors can be impacted by claims inflation,
increase in claims frequency and severity. Sensitivity analysis for insurance risk has
been disclosed in Note 4. Sensitivity analysis for interest rate risk has also been
disclosed in Note 4.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
205
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.3 Long-term insurance contracts - Life risk
Reconciliation of the liability for remaining coverage and the liability for incurred
claims
The following tables present reconciliations from the opening to the closing balances of
the LRC and LIC excluding any insurance acquisition cash flows assets and other pre-
recognition cash flows.

| Group | 2023
|  | LRC excluding Loss component | LIC | Total
|  | €’000 | €’000 | €’000
| Insurance Contracts assets at 1 January | (9,423) | 1,023 | (8,400)
| Insurance Contract liabilities at 1 January | 6,281 | 76 | 6,357
| Insurance revenue | (13,043) | — | (13,043)
| Insurance service expenses |  |  |
| Incurred claims and other directly attributable expenses | — | 5,471 | 5,471
| Insurance acquisition cash flows amortization | 51 | — | 51
| Insurance service expenses | 51 | 5,471 | 5,522
| Insurance service result | (12,992) | 5,471 | (7,521)
| Finance expenses from insurance contracts issued | (2,648) | — | (2,648)
| Total amounts recognised in profit and loss | (15,640) | 5,471 | (10,169)
| Investment components | (575) | 575 | —
| Cash flows |  |  |
| Premium received | 15,510 | — | 15,510
| Claims and other directly attributable expenses | — | (5,357) | (5,357)
| Insurance acquisition cash flows | (398) | — | (398)
| Total cash flows | 15,112 | (5,357) | 9,755
| Insurance Contract assets at 31 December | (10,686) | 1,741 | (8,945)
| Insurance Contract liabilities at 31 December | 6,441 | 47 | 6,488

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
206
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.3 Long-term insurance contracts - Life risk - continued
Reconciliation of the liability for remaining coverage and the liability for incurred
claims - continued

| Group | 2022
|  | LRC excluding Loss component | LIC | Total
|  | €’000 | €’000 | €’000
| Insurance Contract assets at 1 January | (19,822) | 1,836 | (17,986)
| Insurance Contract liabilities at 1 January | 7,553 | 244 | 7,797
| Insurance revenue | (11,871) | — | (11,871)
| Insurance service expenses |  |  |
| Incurred claims and other directly attributable expenses | — | 4,538 | 4,538
| Changes that relate to past service – changes in the FCF relating to the LIC | — | (2) | (2)
| Insurance acquisition cash flows amortization | 67 | — | 67
| Insurance service expenses | 67 | 4,536 | 4,603
| Insurance service result | (11,804) | 4,536 | (7,268)
| Finance income from insurance contracts issued | 6,656 | — | 6,656
| Total amounts recognised in comprehensive income | (5,148) | 4,536 | (612)
| Investment components | (502) | 502 | —
| Cash flows |  |  |
| Premium received | 15,128 | — | 15,128
| Claims and other directly attributable expenses | — | (6,019) | (6,019)
| Insurance acquisition cash flows | (351) | — | (351)
| Total cash flows | 14,777 | (6,019) | 8,758
| Insurance Contracts assets at 31 December | (9,423) | 1,023 | (8,400)
| Insurance Contract liabilities at 31 December | 6,281 | 76 | 6,357

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
207
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.3 Long-term insurance contracts - Life risk - continued
Reconciliation of the measurement components of insurance contract balances

| Group | 2023
| Life Risk – Insurance contracts issued | Present value of future cash flows | Risk adjustment for non- financial risk | CSM | Total
|  | €’000 | €’000 | €’000 | €’000
| Insurance Contracts assets at January | (46,144) | 13,269 | 24,475 | (8,400)
| Insurance Contract liabilities at January | 6,357 | — | — | 6,357
| Changes that relate to current service |  |  |  |
| CSM recognised for the services provided | — | — | (3,589) | (3,589)
| Change in the risk adjustment for non- financial risk for risk expired | — | (1,397) | — | (1,397)
| Experience adjustment | (2,535) | — | — | (2,535)
|  | (2,535) | (1,397) | (3,589) | (7,521)
| Changes that relate to future service |  |  |  |
| Changes in estimates that adjust the CSM | (11,341) | 1,872 | 9,469 | —
| Contracts initially recognised in the period | (2,695) | 1,161 | 1,534 | —
|  | (14,036) | 3,033 | 11,003 | —
| Insurance service result | (16,571) | 1,636 | 7,414 | (7,521)
| Finance income from insurance contracts issued | (2,953) | — | 305 | (2,648)
| Total amounts recognised in comprehensive income | (19,524) | 1,636 | 7,719 | (10,169)
| Cash flows |  |  |  |
| Premium received | 15,510 | — | — | 15,510
| Claims and other directly attributable expenses paid | (5,357) | — | — | (5,357)
| Insurance acquisition cash flows | (398) | — | — | (398)
| Total cash flows | 9,755 | — | — | 9,755
| Insurance Contract assets at 31 December | (56,044) | 14,905 | 32,194 | (8,945)
| Insurance Contract liabilities at 31 December | 6,488 | — | — | 6,488

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
208
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.3 Long-term insurance contracts - Life risk - continued
Reconciliation of the measurement components of insurance contract balances - continued

| Group | 2022
| Life Risk – Insurance contracts issued | Present value of future cash flows | Risk adjustment for non- financial risk | CSM | Total
|  | €’000 | €’000 | €’000 | €’000
| Insurance Contract assets at 1 January | (56,783) | 15,883 | 22,914 | (17,986)
| Insurance Contract liabilities at 1 January | 7,797 | — | — | 7,797
| Changes that relate to current service |  |  |  |
| CSM recognised for the services provided | — | — | (2,624) | (2,624)
| Change in the risk adjustment for non- financial risk for risk expired | — | (1,783) | — | (1,783)
| Experience adjustment | (2,859) | — | — | (2,859)
|  | (2,859) | (1,783) | (2,624) | (7,266)
| Changes that relate to future service |  |  |  |
| Changes in estimates that adjust the CSM | 181 | (1,957) | 1,776 | —
| Contracts initially recognised in the period | (3,345) | 1,126 | 2,219 | —
|  | (3,164) | (831) | 3,995 | —
| Changes that relate to past service |  |  |  |
| Changes that relate to past service – changes in FCF relating to LIC | (2) | — | — | (2)
| Insurance service result | (6,025) | (2,614) | 1,371 | (7,268)
| Finance income/ (expense) from insurance contracts issued | 6,466 | — | 190 | 6,656
| Total amounts recognised in comprehensive income | 441 | (2,614) | 1,561 | (612)
| Cash flows |  |  |  |
| Premium received | 15,128 | — | — | 15,128
| Claims and other directly attributable expenses paid | (6,019) | — | — | (6,019)
| Insurance acquisition cash flows | (351) | — | — | (351)
| Total cash flows | 8,758 | — | — | 8,758
| Insurance Contract assets at 31 December | (46,144) | 13,269 | 24,475 | (8,400)
| Insurance Contract liabilities at 31 December | 6,357 | — | — | 6,357

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
209
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.3 Long-term insurance contracts - Life risk - continued
Impact of contracts recognised in the year

| Group | 2023 | 2022
|  | Non-onerous contracts originated | Non-onerous contracts originated
|  | €’000 | €’000
| Estimates of present value of future cash outflows |  |
| - Insurance acquisition cash flows | 383 | 324
| - Claims and other directly attributable expense | 7,088 | 6,617
|  | 7,471 | 6,941
| Estimates of the present value of future cash inflows | (10,166) | (10,286)
| Risk adjustment for non-financial risk adjustment | 1,161 | 1,126
| CSM | 1,534 | 2,219
| Increase in insurance contract liabilities from contracts recognised in the period | — | —

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
210
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.4 Life risk - Reinsurance contracts held
Reconciliation of the remaining coverage and incurred claims

| Group | 2023 | 2022
|  | Remaining coverage |  |  | Remaining coverage |  |
| Excluding Loss- Recovery Component | Incurred Claims | Total | Excluding Loss- Recovery Component | Incurred Claims | Total
|  | €’000 | €’000 | €’000 | €’000 | €’000 | €’000
| Reinsurance contract liabilities at 1 January | 14,239 | (3,489) | 10,750 | 25,377 | (5,406) | 19,971
| Net expenses from reinsurance contracts held |  |  |  |  |  |
| Reinsurance expenses | 4,189 | — | 4,189 | 2,892 | — | 2,892
| Other directly attributable expenses | — | 382 | 382 | — | 303 | 303
| Incurred claims recovery | — | (974) | (974) | — | (1,050) | (1,050)
| Net income (expenses) from reinsurance contracts held | 4,189 | (592) | 3,597 | 2,892 | (747) | 2,145
| Finance expenses/ (income) from reinsurance contracts held | 2,713 | — | 2,713 | (6,994) | — | (6,994)
| Total amounts recognised in comprehensive income | 6,902 | (592) | 6,310 | (4,102) | (747) | (4,849)
| Cash flows |  |  |  |  |  |
| Premium paid net of ceding commission and other directly attributable expenses paid | (1,970) | (382) | (2,352) | (7,036) | (303) | (7,339)
| Recoveries from reinsurance | — | 785 | 785 | — | 2,967 | 2,967
| Total cash flows | (1,970) | 403 | (1,567) | (7,036) | 2,664 | (4,372)
| Reinsuance contract liabilities at 31 December | 19,171 | (3,678) | 15,493 | 14,239 | (3,489) | 10,750

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
211
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.4 Life risk - Reinsurance contracts held - continued
Reconciliation of the measurement components of reinsurance contract balances

| Group | 2023
|  | Present value of future cash flows | Risk adjustment for non- financial risk | CSM | Total
|  | €’000 | €’000 | €’000 | €’000
| Reinsurance contract liabilities at 1 January | 25,404 | (4,800) | (9,854) | 10,750
| Changes that relate to current service |  |  |  |
| CSM recognised for the services received | — | — | 1,516 | 1,516
| Change in the risk adjustment for non- financial risk for risk expired | — | 242 | — | 242
| Experience adjustment – relating to incurred claims and other directly attributable expenses recovery and reinsurance premium | 1,839 | — | — | 1,839
|  | 1,839 | 242 | 1,516 | 3,597
| Changes that relate to future service |  |  |  |
| Changes in estimates that adjust the CSM | 5,186 | (841) | (4,345) | —
| Contracts initially recognised in the period | 400 | (227) | (173) | —
|  | 5,586 | (1,068) | (4,518) | —
| Finance expenses/(income) from reinsurance contracts held | 2,819 | — | (106) | 2,713
| Total amounts recognised in comprehensive income | 10,244 | (826) | (3,108) | 6,310
| Cash flows |  |  |  |
| Premium paid net of ceding commission and other directly attributable expenses paid | (2,352) | — | — | (2,352)
| Recoveries from insurance | 785 | — | — | 785
| Total cash flows | (1,567) | — | — | (1,567)
| Reinsurance contract liabilities at 31 December | 34,081 | (5,626) | (12,962) | 15,493

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
212
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.4 Life risk - Reinsurance contracts held - continued
Reconciliation of the measurement components of reinsurance contract balances -
continued

| Group | 2022
|  | Present value of future cash flows | Risk adjustment for non- financial risk | CSM | Total
|  | €’000 | €’000 | €’000 | €’000
| Reinsurance contract liabilities at 1 January | 35,704 | (5,947) | (9,786) | 19,971
| Changes that relate to current service |  |  |  |
| CSM recognised for the services received | — | — | 1,141 | 1,141
| Change in the risk adjustment for non- financial risk for risk expired | — | 355 | — | 355
| Experience adjustment – relating to incurred claims and other directly attributable expenses recovery and reinsurance premium | 649 | — | — | 649
|  | 649 | 355 | 1,141 | 2,145
| Changes that relate to future service |  |  |  |
| Changes in estimates that adjust the CSM | (37) | 979 | (942) | —
| Contracts initially recognised in the period | 379 | (187) | (192) | —
|  | 342 | 792 | (1,134) | —
| Finance income from reinsurance contracts held | (6,919) | — | (75) | (6,994)
| Total amounts recognised in comprehensive income | (5,928) | 1,147 | (68) | (4,849)
| Cash flows |  |  |  |
| Premium paid net of ceding commission and other directly attributable expenses paid | (7,339) | — | — | (7,339)
| Recoveries from insurance | 2,967 | — | — | 2,967
| Total cash flows | (4,372) | — | — | (4,372)
| Reinsurance contract liabilities at 31 December | 25,404 | (4,800) | (9,854) | 10,750

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
213
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.4 Life risk - Reinsurance contracts held - continued
Impact of contracts recognised in the year

| Group | 2023 | 2022
|  | Contracts originated not in a net gain | Contracts originated in a net gain
|  | €’000 | €’000
| Estimates of the present value of future cash inflows | (2,860) | (2,661)
| Estimates of the present value of future cash outflows | 3,260 | 3,040
| Risk adjustment for non-financial risk | (227) | (187)
| CSM | (173) | (192)
| Increase in reinsurance contract assets from contracts recognised in the period | — | —

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
214
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.5 Investment contracts with DPF
Reconciliation of the liability for remaining coverage and the liability for incurred
claims

| Group | 2023 | 2022
|  | LRC Excluding Loss Component | LIC | Total | LRC Excluding Loss Component | LIC | Total
|  | €’000 | €’000 | €’000 | €’000 | €’000 | €’000
| Insurance contract liabilities at 1 January | 1,914,851 | 46,601 | 1,961,452 | 2,271,573 | 44,132 | 2,315,705
| Insurance revenue | (34,668) | — | (34,668) | (35,187) | — | (35,187)
| Insurance service expenses |  |  |  |  |  |
| Incurred claims and other directly attributable expenses | — | 13,711 | 13,711 | — | 14,919 | 14,919
| Insurance acquisition cash flows amortization | 3,756 | — | 3,756 | 6,351 | — | 6,351
| Insurance service expenses | 3,756 | 13,711 | 17,467 | 6,351 | 14,919 | 21,270
| Insurance service result | (30,912) | 13,711 | (17,201) | (28,836) | 14,919 | (13,917)
| Finance expenses/(income) from insurance contracts issued | 178,200 | — | 178,200 | (268,747) | — | (268,747)
| Total amounts recognised in comprehensive income | 147,288 | 13,711 | 160,999 | (297,583) | 14,919 | (282,664)
| Investment components | (255,819) | 255,819 | — | (285,217) | 285,217 | —
| Cash flows |  |  |  |  |  |
| Premium received | 135,175 | — | 135,175 | 233,775 | — | 233,775
| Claims and other directly attributable expenses | — | (267,212) | (267,212) | — | (297,667) | (297,667)
| Insurance acquisition cash flows | (3,721) | — | (3,721) | (6,661) | — | (6,661)
| increase in policy loans | (1,804) | — | (1,804) | (1,036) | — | (1,036)
| Total cash flows | 129,650 | (267,212) | (137,562) | 226,078 | (297,667) | (71,589)
| Insurance contract liabilities at 31 December | 1,935,970 | 48,919 | 1,984,889 | 1,914,851 | 46,601 | 1,961,452

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
215
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.5 Investment contracts with DPF - continued
Reconciliation of the measurement components of contract balances

| Group | 2023
|  | Present value of future cash flows | Risk adjustment for non- financial risk | CSM | Total
|  | €’000 | €’000 | €’000 | €’000
| Insurance contract liabilities at 1 January | 1,904,544 | 2,199 | 54,709 | 1,961,452
| Changes that relate to current service |  |  |  |
| CSM recognised for the services provided | — | — | (6,178) | (6,178)
| Change in the risk adjustment for non-financial risk for risk expired | — | (140) | — | (140)
| Experience adjustment | (10,883) | — | — | (10,883)
|  | (10,883) | (140) | (6,178) | (17,201)
| Changes that relate to future service |  |  |  |
| Changes in estimates that adjust the CSM | (18,202) | 612 | 17,590 | —
| Contracts initially recognised in the period | (2,489) | 144 | 2,345 | —
| Experience adjustments - arising from premiums received in the period that relate to future service | (3,261) | — | 3,261 | —
|  | (23,952) | 756 | 23,196 | —
| Insurance service result | (34,835) | 616 | 17,018 | (17,201)
| Finance income from insurance contracts issued | 178,200 | — | — | 178,200
| Total amounts recognised in comprehensive income | 143,365 | 616 | 17,018 | 160,999
| Cash flows |  |  |  |
| Premium received | 135,175 | — | — | 135,175
| Claims and other directly attributable expenses paid | (267,212) | — | — | (267,212)
| Insurance acquisition cash flows | (3,721) | — | — | (3,721)
| Increase in policy loans | (1,804) | — | — | (1,804)
| Total cash flows | (137,562) | — | — | (137,562)
| Insurance contract liabilities at 31 December | 1,910,347 | 2,815 | 71,727 | 1,984,889

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
216
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.5 Investment contracts with DPF - continued
Reconciliation of the measurement components of contract balances - continued

| Group | 2022
|  | Present value of future cash flows | Risk adjustment for non- financial risk | CSM | Total
|  | €’000 | €’000 | €’000 | €’000
| Insurance contract liabilities at 1 January | 2,244,713 | 3,688 | 67,304 | 2,315,705
| Changes that relate to current service |  |  |  |
| CSM recognised for the services provided | — | — | (6,754) | (6,754)
| Change in the risk adjustment for non-financial risk for risk expired | — | (259) | — | (259)
| Experience adjustment | (6,904) | — | — | (6,904)
|  | (6,904) | (259) | (6,754) | (13,917)
| Changes that relate to future service |  |  |  |
| Changes in estimates that adjust the CSM | 14,213 | (1,799) | (12,414) | —
| Contracts initially recognised in the period | (5,656) | 569 | 5,087 | —
| Experience adjustments - arising from premiums received in the period that relate to future service | (1,486) | — | 1,486 | —
|  | 7,071 | (1,230) | (5,841) | —
| Insurance service result | 167 | (1,489) | (12,595) | (13,917)
| Finance income from insurance contracts issued | (268,747) | — | — | (268,747)
| Total amounts recognised in comprehensive income | (268,580) | (1,489) | (12,595) | (282,664)
| Cash flows |  |  |  |
| Premium received | 233,775 | — | — | 233,775
| Claims and other directly attributable expenses paid | (297,667) | — | — | (297,667)
| Insurance acquisition cash flows | (6,661) | — | — | (6,661)
| Increase in policy loans | (1,036) | — | — | (1,036)
| Total cash flows | (71,589) | — | — | (71,589)
| Insurance contract liabilities at 31 December | 1,904,544 | 2,199 | 54,709 | 1,961,452

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
217
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.5 Investment contracts with DPF - continued
Impact of contracts recognised in the year

| Group | 2023 | 2022
| Direct participating contracts issued | Non-onerous contracts originated | Non-onerous contracts originated
|  | €’000 | €’000
| Estimates of present value of future cash outflows |  |
| - Insurance acquisition cash flows | 4,001 | 6,379
| - Claims and other directly attributable expense | 144,823 | 247,931
|  | 148,824 | 254,310
| Estimates of the present value of future cash inflows | (151,313) | (259,966)
| Risk adjustment for non-financial risk adjustment | 144 | 569
| CSM | 2,345 | 5,087
| Increase in insurance contract liabilities from contracts recognised in the period | — | —

24.6 Long term contracts - inputs, assumptions and estimation techniques
In applying IFRS 17 measurement requirements, the below inputs, assumptions and
estimation techniques were used.
(a)Estimation techniques
Best estimate of future cash flows
The best estimate liability is the present value of expected future cash flows, discounted
using a yield curve (i.e. interest rates at different maturities at a given point in time).
The estimates of these future cash flows are based on probability-weighted expected
future cash flows. The Group estimates which cash flows are expected and the
probability that they will occur as at the measurement date. The projections allow for all
expected decrements and policyholder actions, including lapses. Future premiums are
taken into account up to the contract boundary. Allowance for future expenses take into
account both overheads and directly attributable expenses, and future expense inflation.
The cash flow projections is performed on a policy by policy basis.
Investment contracts with DPF liabilities include the cost of financial guarantees and
options. A market consistent stochastic valuation is used to calculate these costs.
Representative model pointing is used in these stochastic runs. For such contracts,
discretionary benefits are allowed for separately in the investment contract liabilities.
The calculations reflect a pre-defined set of realistic management actions and
policyholder behaviour. The best estimate liability does not include the value of
shareholder transfers.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
218
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.6 Long term contracts - inputs, assumptions and estimation techniques - continued
(a)Estimation techniques - continued
Best estimate of future cash flows - continued
For unit-linked business, the unit and non-unit components are unbundled for the
purposes of determining the best estimate liability.
Risk adjustment for non-financial risk
The risk adjustment for non-financial risk is the compensation that is required for
bearing the uncertainty about the amount and timing of cash flows that arises from non-
financial risk as the insurance contract is fulfilled. Because the risk adjustment
represents compensation for uncertainty, estimates are made on the degree of
diversification benefits and expected favourable and unfavourable outcomes in a way
that reflects the Group’s degree of risk aversion. The Group estimates an adjustment for
non-financial risk separately from all other estimates. The Group considers separately
the effect of reinsurance in the risk adjustment for non-financial risk of the underlying
insurance contracts. The risk adjustment applied by the Group only includes mortality
risk, lapse risk, and expenses risk and catastrophic risk.
The risk adjustment was calculated at the issuing entity level and then allocated down to
each group of contracts in accordance with their risk profiles. The value at risk (‘VaR’)
method was used to derive the overall risk adjustment for non-financial risk, whereby
the maximum loss that a portfolio can experience within a one year time horizon at a
confidence level of 85 percent is determined. This technique discounts future cash flows
of the best estimate liabilities under different possible scenarios to produce a risk
distribution. The risk adjustment is taken to be equal to the VaR with that confidence
interval less the value of the best estimate of the discounted cash flows.
(b) Assumptions
All assumptions are best estimate, with no prudential margins. The Group takes into
account all relevant available data, both internal and external, when arriving at
assumptions that best reflect the characteristics of the underlying insurance portfolio.
In calculating estimates of fulfilment cash flows, the Group uses information about past
events, current conditions and forecasts of future conditions. The Group’s estimate of
future cash flows is the mean of a range of scenarios that reflect the full range of
possible outcomes. Each scenario specifies the amount, timing and probability of cash
flows.
Assumptions used to develop estimates about future cash flows are reassessed at each
reporting date and adjusted where required.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
219
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.6 Long term contracts - inputs, assumptions and estimation techniques - continued
(b)Assumptions - continued
Investment assets returns
For with-profits contracts, assumptions about future underlying investment returns are
made. Due to the measurement models applied and the nature of the products,
particularly the determination of the discount rates used to discount future estimates of
cash flows that vary with returns on underlying items, assumptions about future
underlying investment returns do not impact contract measurement significantly. There
are limited financial guarantees in these products. The liabilities associated with these
guarantees are measured using a market-consistent stochastic model. The interest rate
guarantee embedded in investment contracts with DPF was measured using stochastic
modelling, because the guarantee does not move symmetrically with different interest
rate scenarios. The guarantee was measured using a full range of scenarios representing
possible future risk-free interest rate environments published by European Insurance
and Occupational Pensions Authority (‘EIOPA’). Stochastic investment returns reflect
the volatility of the underlying assets.
For a sensitivity analysis, refer to Note 4.2(a).
Discount rates
The bottom-up approach was adopted by the Group in determining a suitable discount
rate. This approach was used to derive the discount rate for the cash flows that do not
vary based on the returns on underlying items in the investment contracts with DPF.
Under this approach, the discount rate is determined as the risk-free yield, adjusted for
differences in liquidity characteristics between the financial assets used to derive the
risk-free yield and the relevant liability cash flows (known as an ‘illiquidity premium’).
The risk-free rates used were as published by EIOPA and the Group evaluates the
illiquidity premium on a yearly basis.
Management uses judgement to assess liquidity characteristics of the liability cash
flows. The Group’s insurance contracts do not have a cash surrender value and hence,
its liabilities can be considered as illiquid which allows the Group to reflect the
illiquidity characteristics of these products via the illiquidity premium. The Group
decided to use a reference portfolio as an appropriate proxy for the term liabilities.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
220
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.6 Long term contracts - inputs, assumptions and estimation techniques - continued
(b)Assumptions - continued
Discount rates - continued
On the other hand, the Group’s investment contracts with DPF have surrender value and
therefore, liabilities can be considered highly liquid. Thus, these are discounted using
the risk-free rates without applying any illiquidity adjustment. Cash flows varying based
on underlying items are discounted using a discount rate that reflects the volatility of the
underlying assets.
For a sensitivity analysis, refer to Note 4.2(a).
The yield curves used to discount the estimates of future cash flows that do not vary
based on the returns of the underlying items are as follows:

|  | 2023 | 2022
|  | No. of years | No. of years
| Product | 5 | 10 | 5 | 10
| Life risk (issued and reinsurance held) | 2.4% | 2.5% | 3.8% | 3.8%
| Investment contracts with DPF | 2.3% | 2.4% | 3.1% | 3.1%

Policy acquisition and maintenance expenses
The Group projects estimates of future expenses relating to fulfilment of contracts
within the scope of IFRS 17 using current expense levels adjusted for inflation, non-
recurring expenses and new budgeted expenses that the Group is expected to incur in
the future. Expenses comprise expenses directly attributable to the groups of contracts,
including an allocation of fixed and variable overheads.
The short-term expense inflation assumption is based on forecasts issued by the Central
Bank of Malta, adjusted for the Group’s own experience. The long-term expense
inflation assumption is based on the Central Bank of Malta long-term inflation target.
Expense inflation is considered to be a non-financial risk.
Where estimates of indirect expenses-related cash flows are determined at the portfolio
level or higher, they are allocated to groups of contracts on a systematic basis, such as
number of policies in force. A renewal per policy maintenance expense including
claims is derived for all portfolios.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
221
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.6 Long term contracts - inputs, assumptions and estimation techniques - continued
(b)Assumptions - continued
Policy acquisition and maintenance expenses - continued

| 2023 | 2022
Life Risk | 41.7 | 40.7
Investment contracts with DPF | 50.7 - 86.6 | 42.2 - 75.4

Acquisition cash flows are typically allocated to the groups of contracts from which
they arise or to which they relate. This includes an allocation of acquisition cash flows
among existing new business. An acquisition expense per new business policy is
derived for all portfolios.
The Group provides investment-return services for the investment contracts with DPF
to manage assets in policyholder accounts and investment-related services for the
contracts measured under the VFA. An investment expense per asset under management
is derived.
For a sensitivity analysis, refer to Note 4.1.
Mortality rates
Mortality experience is reviewed annually and assumptions are set separately for term
and investment contracts with DPF having regard to past experience, events not in data
and future expected mortality trends. The Group makes reference to the following
standard mortality table. This UK mortality table is based on male assured lives of
combined smoker status

|  | 2023 | 2022
| Life Risk | 44% AMC00 | 52% AMC00
| Investment contracts with DPF | 50% AMC00 | 54% AMC00

The Group fits its own experience as a percentage of the AMC00 mortality table and
uses this as a basis for its mortality assumption.
For a sensitivity analysis, refer to Note 4.1.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
222
24.Insurance contract assets, insurance contract liabilities, reinsurance contract
assets and reinsurance contract liabilities - continued
24.6 Long term contracts - inputs, assumptions and estimation techniques - continued
(b)Assumptions - continued
Lapse rates
The Group derives assumptions about lapse and surrender rates based on the Group's
own experience. Historical lapse and surrender rates are derived from the Group’s
policy administration data. An analysis is then performed of the Group’s historical rates
in comparison to the assumptions previously used. Statistical methods are used to derive
adjustments to reflect the Group’s own experience and any trends in the data, to arrive
at the probability-weighted expected lapse and surrender rates. Analysis is performed
and assumptions are set by major product lines.
For investment contracts with DPF, the Group incorporates dynamic lapsing. For these
products lapse experience also vary by market conditions and outlook.
The following assumptions about lapse and surrender rates were used. Methods used to
derive these assumptions have not changed in 2023.

| 2023 | 2022
Life Risk | 3.0% - 7.0% | 3.0% - 7.0%
Investment contracts with DPF | 0.5% - 7.0% | 0.5% - 7.0%

For a sensitivity analysis, refer to note 4.1.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
223
25.Investment contract liabilities
The table shows a reconciliation of the opening to closing balance for the investment
contract liabilities.

|  | Group
|  | 2023 | 2022
|  | €’000 | €’000
| Opening balance – 1 January | 69,054 | 75,922
| Contributions received | 50,266 | 6,594
| Benefits paid | (3,582) | (3,173)
| Investment return from underlying assets | 8,194 | (10,353)
| Asset management fees charged | (679) | 64
| Closing balance – 31 December | 123,253 | 69,054

In the above reconciliation, the investment return from the underlying assets represents
changes in the fair value of the investment contract liabilities due to changes in market
conditions. Asset management services revenue of €1.2m (2022: €0.2m) in the profit or
loss also includes the asset management fees charged and income trailer fees.
The above liabilities are substantially non-current in nature.
26. Trade and other receivables

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  |  | Restated |  | Restated
|  | €’000 | €’000 | €’000 | €’000
| Receivables from intermediaries | 19,410 | 16,715 | 19,410 | 16,715
| Other prepayments and receivables: |  |  |  |
| - prepayments and other receivables | 5,635 | 5,441 | 1,544 | 1,663
| - accrued interest and rent | 758 | 8,003 | 179 | 377
| - receivables from group undertakings | 48 | — | 532 | 420
| - receivables from associated undertaking | 59 | 183 | 59 | 183
| - other debtors | 115 | 66 | — | —
| Provision for impairment of receivables | (535) | (440) | (535) | (440)
|  | 25,490 | 29,968 | 21,189 | 18,918
| Current portion | 25,490 | 29,968 | 21,189 | 18,918

Balances due from group undertakings, associated undertaking and other receivables
are unsecured and non-interest bearing.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
224
26.Trade and other receivables - continued
Movements in the provision for impairment of receivables are as follows:

|  | Group and Company
|  | 2023 | 2022
|  | €’000 | €’000
| Balance as at 1 January | 440 | 387
| Adjustment on initial application of IFRS 9 for impairment losses | 54 | —
| Movement in expected credit loss | — | 41
| Increase in provision for impairment | 41 | 147
| Release of provision for impairment during the year | — | (135)
| Balance as at 31 December | 535 | 440

27.Cash and cash equivalents
For the purpose of the statement of cash flows, the year-end cash and cash equivalents
comprise the following:

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  | €’000 | €’000 | €’000 | €’000
| Cash at bank and in hand | 45,975 | 137,286 | 8,780 | 11,130
| T-Bills | 2,000 | — | 2,000 | —
|  | 47,975 | 137,286 | 10,780 | 11,130

As at 31 December 2023 an amount of €2.76 million ( 2022: €2.16 million) within
deposits with banks or credit institutions, was held in a margin account as collateral
against exchange traded futures.
28.Share capital

|  |  | Group and Company
|  |  |  | 2023 | 2022
|  |  |  | €’000 | €’000
| Authorised |  |  |  |
| 150 million ordinary shares of €0.21 each |  | 31,500 | 31,500
| Issued and fully paid |  |  |  |
| 92 million ordinary shares of €0.21 each |  | 19,320 | 19,320

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
225
29. Other reserves
Group

|  | Freehold land and buildings | Available- for-sale investments | Total
|  | €'000 | €'000 | €'000
| Balance at 1 January 2022 | 1,081 | 183 | 1,264
| Fair value movements -gross | — | (831) | (831)
| Fair value movements -tax | — | 61 | 61
| Revaluation gain on freehold land and buildings | (225) | — | (225)
| Balance at 31 December 2022 | 856 | (587) | 269
| Balance at 1 January 2023 | 856 | (587) | 269
| Initial Application of IFRS9 | — | 81 | 81
| Fair value movements -gross | — | 284 | 284
| Fair value movements -tax | — | (11) | (11)
| FVOCI investment reclassified to profit or loss | — | 14 | 14
| Balance at 31 December 2023 | 856 | (219) | 637

The above reserves are not distributable reserves.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
226
29.Other reserves - continued
Company

|  | Investment in subsidiary undertakings | Investment in associated undertakings | Available for-sale investments | Total
|  | €’000 | €’000 | €’000 | €’000
| Balance at 1 January 2022 | 34,663 | 89 | 183 | 34,935
| Fair value movements -gross | — | — | (831) | (831)
| Fair value movements -tax | — | — | 61 | 61
| Other | — | 6 | — | 6
| Balance at 31 December 2022 | 34,663 | 95 | (587) | 34,171
| Balance at 1 January 2023 | 34,663 | 95 | (587) | 34,171
| Net effect of initial application of IFRS 9 | — | — | 81 | 81
| Fair value movements -gross | — | — | 284 | 284
| Fair value movements -tax | — | — | (11) | (11)
| FVOCI investment reclassified to profit or loss | — | — | 14 | 14
| Other | — | 14 | — | 14
| Balance at 31 December 2023 | 34,663 | 109 | (219) | 34,553

The above reserves are not distributable reserves.
30. Provision for other liabilities and charges
The Group and Company operate a defined benefit plan in favour of a former Executive
Chairman. The pension plan defines an amount of pension benefit that he receives on
retirement. The liability recognised in the statement of financial position is the present
value of the obligation determined by discounting estimated future cash outflows.
The following table shows the changes in the present value of the pension obligation
and amounts shown in the profit or loss and other comprehensive income:
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
227
30. Provision for other liabilities and charges - continued

|  | Group and Company
|  | 2023 | 2022
|  | €’000 | €’000
| At 1 January | 854 | 997
| Interest expense - profit or loss | 32 | 7
| Settlements | (67) | (62)
| Re-measurement actuarial loss - other comprehensive income | 104 | (88)
| At 31 December | 923 | 854

The following payments as expected in the future years:

|  | Group and Company
|  | 2023 | 2022
|  | €’000 | €’000
| Within one year | 66 | 65
| After more than one year | 857 | 789
|  | 923 | 854

The significant assumptions used in determining the pension obligation are shown
below:

|  | Group and Company
|  | 2023 | 2022
| Mortality | AMC00 | AMC00
| Discount rate | 3.1% | 3.8%
| Inflation rate | 2.4% | 2.1%

A quantitative analysis of the impact on the pension obligation for the significant
assumptions is shown below:

|  | Group and Company
|  | 2023 | 2022
|  | €000 | €000
| Discount Rate - 1% point increase | (69) | (64)
| Discount Rate - 1% point decrease | 79 | 72
| Inflation Rate - 1% point increase | 73 | 68
| Inflation Rate - 1% point decrease | (66) | (61)

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
228
31.Other payables

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  |  | Restated |  | Restated
|  | €’000 | €’000 | €’000 | €’000
| Creditors arising out of insurance operations | 260 | 255 | 260 | 255
| Amount owed to associated undertakings | 242 | 264 | 242 | 257
| Amount owed to group undertakings | — | — | 999 | 1,012
| Social security and other tax payables | 5,293 | 4,295 | 1,765 | 1,711
| Accruals and other payables | 11,760 | 9,175 | 6,008 | 3,964
| Deferred income | 1,366 | 799 | 40 | 89
| Other creditors | 428 | 2,915 | — | —
|  | 19,349 | 17,703 | 9,314 | 7,288

| Current | 19,094 | 17,488 | 9,314 | 7,288
| Non-current | 255 | 215 | — | —
|  | 19,349 | 17,703 | 9,314 | 7,288

Balances due to group undertakings are unsecured and non-interest bearing.
Deferred income for the Group includes front-end fees received from holders of
investment contracts without DPF as a prepayment for asset management and related
services and rental income received in advance. These amounts are non-refundable and
are released to income as the services are rendered.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
229
32.Cash generated from operations
Reconciliation of profit before tax to cash (used in)/ generated from operations:

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  |  | Restated |  | Restated
|  | €’000 | €’000 | €’000 | €’000
| Profit before tax | 24,019 | 8,292 | 9,864 | 6,596
| Adjustments for: |  |  |  |
| Depreciation (Note 18) | 1,079 | 1,071 | 616 | 579
| Adjustment on initial application of IFRS 9 for impairment losses | (55) | — | (55) | —
| Increase in provision for impairment of receivables (Note 26) | 41 | 53 | 41 | 53
| Settlement of provision for liabilities and charges (Note 30) | (67) | (62) | (67) | (62)
| Amortisation (Note 16) | 4,549 | 2,575 | 2,147 | 1,973
| Depreciation of right-of-use assets | 334 | 337 | 306 | 307
| Lease payments against lease liabilities | (398) | (386) | (359) | (347)
| Loss on disposal of intangible asset | — | 2 | — | —
| Investment return adjustments | (185,695) | 283,604 | (1,160) | (342)
| Movements in: |  |  |  |
| Trade and other receivables | (2,410) | (1,538) | (2,303) | (644)
| Insurance and reinsurance contracts | 27,497 | (352,064) | (267) | 3,264
| Investment contract liabilities | 54,199 | (6,868) | — | —
| Other payables | 1,764 | (476) | 2,016 | (115)
| Cash (used in)/generated from operations | (75,143) | (65,460) | 10,779 | 11,262

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
230
33.Commitments
Capital commitments
Commitments for capital expenditure not provided for in these financial statements are
as follows:

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  | €’000 | €’000 | €’000 | €’000
| Authorised and not contracted for |  |  |  |
| - property, plant and equipment | 629 | 1,354 | — | 707
| - intangible assets | 4,485 | 3,517 | 528 | 1,326
| - investment property | 853 | — | — | —
|  | 5,967 | 4,871 | 528 | 2,033

| Authorised and contracted for |  |  |  |
| - property, plant and equipment | 182 | 132 | 140 | 110
| - intangible assets | 3,273 | 1,984 | 2,340 | 1,386
| - investment property | 1,219 | 1,427 | 50 | —
| - other investments | 35,835 | 47,937 | — | —
|  | 40,509 | 51,480 | 2,530 | 1,496

Operating lease commitments – where a Group company is a lessor
The Group and the Company lease out certain premises under operating leases. The
future minimum lease payments receivable under non-cancellable operating leases are
as follows:

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  | €’000 | €’000 | €’000 | €’000
| Not later than 1 year | 5,815 | 5,530 | 660 | 654
| Later than 1 year and not later than 5 years | 8,531 | 10,333 | 869 | 1,136
| Later than 5 years | 3,113 | 3,726 | — | —
|  | 17,459 | 19,589 | 1,529 | 1,790

Rental income from operating leases recognised in profit or loss during the year is
disclosed in Note 8.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
231
3 4.Contingencies
The Group and Company have given guarantees to third parties amounting to €4,600
(2022: €0.14 million) not arising under contracts of insurance.
35.Related party transaction s
In the normal course of business, the Group enters into various transactions with related
parties. Related parties are defined as those that have an ability to control or exercise
significant influence over the other party in making financial and operational decisions.
These include directors, key management personnel and shareholders, and their close
family members, who hold a substantial amount of the votes able to cast at general
meetings. Parent undertaking refers to MAPFRE S.A. and/or companies owned by
MAPFRE S.A.. Bank of Valletta p.l.c. is a related undertaking in light of its
shareholding in the Company and in MAPFRE MSV Life p.l.c.. Subsidiary
undertakings and associated undertakings refer to the companies listed in Notes 20 and
21 respectively.
Relevant particulars of related party transactions are as follows:
Group

|  | 2023 | 2022
|  | €’000 | €’000
| Sales of insurance contracts and other services |  |
| Transactions with a parent undertaking: |  |
| Commission received | 5,328 | 4,849
| Claims recoverable | 12,377 | 7,560
| Transactions with related undertaking: |  |
| Trailer fees receivable | 1 | 4
| Sale of insurance contracts | 1,086 | 1,039
| Dividends received and interest income | 637 | 1,221
| Rental income on investment property | 248 | 230
| Transactions with associated undertaking: |  |
| Sale of insurance contracts | 20 | 25
| Dividends received | 147 | 137
| Rental income on investment property | 44 | 43
| Reimbursement of expenses for back office support services | 19 | 19

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
232
35.Related party transactions - continued
Group - continued

|  | 2023 | 2022
|  | €’000 | €’000
| Purchase of products and services |  |
| Transactions with a parent undertaking: |  |
| Reinsurance premium ceded | 17,997 | 15,325
| Staff development training & Fringe Benefits | 4 | 5
| Expat staff benefits and services | 105 | 127
| Computer maintenance, Group IT shared services | 1,920 | 1,558
| Capitalisation of software development | 9 | 28
| Other back office support services | 647 | 802
| Investment management services | 20 | 16
| Commission payable | 82 | 120
| Transactions with other related undertaking: |  |
| Acquisition costs payable | 2,638 | 4,304
| Bank charges | 207 | 207
| Bank interest payable | — | 197
| Investment management services | 49 | 64
| Claims paid | 148 | 335
| Transactions with associates undertaking: |  |
| Road side assistance and other back office support services | 2,856 | 2,750
| Claims paid | 4 | 11

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
233
35.Related party transactions - continued
Company

|  | 2023 | 2022
|  | €’000 | €’000
| Sales of insurance contracts and other services |  |
| Transactions with a parent undertaking: |  |
| Commission received | 5,328 | 4,849
| Claims recoverable | 11,075 | 6,918
| Transactions with related undertaking: |  |
| Sale of insurance contracts | 1,086 | 1,039
| Dividends received and interest income | 26 | 15
| Trailer fees receivable | 1 | 1
| Transactions with subsidiary undertaking: |  |
| Sale of insurance contracts | 190 | 294
| Dividends received | — | 1,176
| Rental income on investment property | 52 | 52
| Rental income from sub-letting of shared premises | 32 | 37
| Reimbursement of expenses for back office support services | 1,013 | 798
| Transactions with associated undertaking: |  |
| Sale of insurance contracts | 20 | 25
| Dividends received | 147 | 137
| Rental income on investment property | 44 | 43
| Reimbursement of expenses for back office support services | 19 | 19

MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
234
35.Related party transactions - continued
Company - continued

|  | 2023 | 2022
|  | €’000 | €’000
| Purchase of products and services |  |
| Transactions with a parent undertaking: |  |
| Reinsurance premium ceded | 15,860 | 14,992
| Staff development training & fringe benefits | 4 | 5
| Expat staff benefits and services | 105 | 127
| Computer maintenance, Group IT shared services | 824 | 564
| Capitalisation of software development | 9 | 28
| Other back office support services | 458 | 453
| Investment management services | 20 | 16
| Transactions with other related parties: |  |
| Bank charges | 111 | 119
| Bank interest payable | — | 20
| Claims paid | 148 | 335
| Transactions with subsidiaries |  |
| Reimbursement of expenses for back office support services | 2,490 | 1,886
| Claims paid | 135 | 165
| Employer's contribution to defined contribution work pension scheme | 76 | 60
| Transactions with associates |  |
| Road side assistance and other back office support services | 2,856 | 2,750
| Claims paid | 4 | 11

Key management personnel during 2023 and 2022 comprised the President & Chief
Executive Officer, Chief Executive Officers, Assistant General Managers, General
Manager, Chief Financial Officer, Chief Officers and Chief Underwriters. Total
remuneration paid by the Group to key management personnel amounted to €3.63
million (Company: €1.78 million). Corresponding figures for 2022 were €3.43 million
paid by the Group and €1.70 million paid by the Company.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
235
35.Related party transactions - continued
Year-end balances arising from the above transactions:

|  | Group | Company
|  | 2023 | 2022 | 2023 | 2022
|  | €’000 | €’000 | €’000 | €’000
| Financial assets at amortised cost |  |  |  |
| -Related undertaking | 244 | 156 | 244 | 156
| -Parent undertaking | 128 | 148 | 128 | 148
| Financial liabilities at amortised cost |  |  |  |
| -Parent undertaking | 738 | 1,263 | 337 | 894
| -Related undertaking | 160 | 171 | — | —
| Amounts owed to |  |  |  |
| -Associated undertaking | 245 | 257 | 245 | 257
| -Subsidiary undertaking | — | — | 1,011 | 1,029
| Amounts owed by |  |  |  |
| -Associated undertaking | 59 | 183 | 59 | 183
| -Subsidiary undertaking | — | — | 545 | 500
| -Parent undertaking | — | 191 | — | 1
| Accruals - Parent undertaking | 378 | 277 | 268 | 163
| Reinsurance contract assets |  |  |  |
| -Parent undertaking | 17,867 | 27,299 | 17,183 | 27,105
| -Related undertaking | 476 | 55 | 476 | 55
| -Subsidiary undertaking | — | — | — | 156
| -Associated undertaking | 10 | 6 | 10 | 6
| Investment in related undertakings | 14,088 | 59,128 | 800 | 456
| Cash and cash equivalents with related undertakings | 31,085 | 111,723 | 4,828 | 5,513

All balances above have arisen in the course of the Group’s and Company’s normal
operations. Balances due from/to group undertakings are unsecured and non-interest
bearing.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
236
36. Statutory information
MAPFRE Middlesea p.l.c. is a public limited company and is incorporated in Malta.
The Group is 55.83% owned by MAPFRE Internaciona l S.A. (the “immediate parent”),
a company registered in Spain, the registered office of which is situated at Carretera de
Pozuelo 52, Majadahonda 28222, Madrid, Spain.
The Group’s ultimate parent is Fundación MAPFRE, the registered office of which is
situated at Paseo de Recoletos 23, 28004, Madrid, Spain.
The Group’s results are consolidated at MAPFRE S.A. level of which Fundación
MAPFRE is the parent and MAPFRE Internacional S.A. is the subsidiary. MAPFRE
S.A. is a company the registered office of which is situated at Carretera de Pozuelo 52,
Majadahonda 28222, Madrid, Spain.
MAPFRE MIDDLESEA p.l.c.
Annual Report - 31 December 2023
237
KPMG
92, Marina Street
Pietà, PTA 9044
Malta
Telephone(+356) 2563 1000
Fax (+356) 2566 1000
Website www.kpmg.com.mt
Independent Auditors’ Report
To the Shareholders of MAPFRE Middlesea p.l.c.
1 Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of MAPFRE Middlesea p.l.c. (the “Company”) and of the
Group of which the Company is the parent, which comprise the statements of financial position as at
31 December 2023, the statements of profit or loss and other comprehensive income, changes in
equity and cash flows for the year then ended, and notes, comprising material accounting policies and
other explanatory information.
In our opinion, the accompanying financial statements:
a. give a true and fair view of the financial position of the Company and of the Group as at 31
December 2023, and of their financial performance and their cash flows for the year then
ended in accordance with International Financial Reporting Standards (“IFRS”) as adopted by
the EU; and
b. have been properly prepared in accordance with the provisions of the Companies Act, 1995
(Chapter 386, Laws of Malta) (the “Act”) and the Insurance Business Act, 1998 (Chapter 403,
Laws of Malta) (the “Insurance Business Act”) and, additionally, specifically in relation to those
of the Group, with the requirements of Article 4 of Regulation (EC) 1606/2002 on the
application of international accounting standards (the “Regulation”).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our
responsibilities under those standards are further described in the Auditors’ responsibilities for the
audit of the financial statements section of our report. We are independent of the Company and the
Group in accordance with the International Ethics Standards Board for Accountants’ International
Code of Ethics for Professional Accountants (including International Independence Standards)
(“IESBA Code”), together with the ethical requirements that are relevant to our audit of the financial
statements in accordance with the Accountancy Profession (Code of Ethics for Warrant Holders)
Directive issued in terms of the Accountancy Profession Act (Chapter 281, Laws of Malta) (“APA”),
and we have fulfilled our other ethical responsibilities in accordance with these requirements and the
IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of
organisation of independent member firms affiliated with KPMG partnership of Certified Public the firm is available at Portico
International Limited, a private English company limited guarantee.Accountants in terms of the Building, Marina Street, Pietà,
Accountancy Profession Act PTA9044, Malta.
KPMG
92, Marina Street
Pietà, PTA 9044
Malta
Telephone(+356) 2563 1000
Fax (+356) 2566 1000
Website www.kpmg.com.mt
Independent Auditors’ Report (continued)
To the Shareholders of MAPFRE Middlesea p.l.c.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial statements of the current year (as communicated to the audit committee),
and include a description of the most significant assessed risks of material misstatement (whether or
not due to fraud) identified by us, including those which had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We summarise below the key audit matters, together with our response by way of the audit
procedures we performed to address those matters in our audit, and key observations arising with
respect to such risks of material misstatement.
Estimates of the liability for incurred claims (“LIC”) with respect to short-term contracts
Accounting policy note 2.10 to the financial statements and notes 3 and 24 for further disclosures
LIC for short-term contracts (€40,446 thousand) within ‘Insurance Contract Liabilities’
The Liability for incurred claims is measured as the total of the expected fulfilment cash flows relating
to insurance events that occurred by the financial reporting date, which comprise estimates of future
cash flows, adjusted to reflect the time value of money and a risk adjustment for non-financial risks.
We have considered the estimate of future cash flows as a key audit matter in view of the subjectivity
surrounding the determination of the estimate, that is based on claims data and an actuarial
methodology which involves significant assumptions.
Due to the degree of such inherent estimation uncertainty underlying the estimate of future cash
flows, the amounts recognised in the statement of financial position may be different to those
eventually settled. Those differences may be material.
KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of
organisation of independent member firms affiliated with KPMG partnership of Certified Public the firm is available at Portico
International Limited, a private English company limited guarantee.Accountants in terms of the Building, Marina Street, Pietà,
Accountancy Profession Act PTA9044, Malta.
KPMG
92, Marina Street
Pietà, PTA 9044
Malta
Telephone(+356) 2563 1000
Fax (+356) 2566 1000
Website www.kpmg.com.mt
Independent Auditors’ Report (continued)
To the Shareholders of MAPFRE Middlesea p.l.c.
Key audit matters (continued)
Estimates of the liability for incurred claims (“LIC”) with respect to short-term contracts
(continued)
Our response
As part of our procedures, with the assistance of our actuarial specialist, we evaluated the
appropriateness of the Company’s assumptions applied in estimating the future cash flows and the
resulting estimate, for substantially all the liability for incurred claims. The estimate includes
assumptions related to the amount of the expected settlement and claims development patterns. We
considered industry norms, as well as our industry knowledge and experience, in performing our
substantive procedures. In relation to claims data used in the estimate, we evaluated a sample to
assess its relevance and reliability based on the information available to the Company at the financial
reporting date.
Key observation
We have no key observations to report, specific to this matter.
KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of
organisation of independent member firms affiliated with KPMG partnership of Certified Public the firm is available at Portico
International Limited, a private English company limited guarantee.Accountants in terms of the Building, Marina Street, Pietà,
Accountancy Profession Act PTA9044, Malta.
KPMG
92, Marina Street
Pietà, PTA 9044
Malta
Telephone(+356) 2563 1000
Fax (+356) 2566 1000
Website www.kpmg.com.mt
Independent Auditors’ Report (continued)
To the Shareholders of MAPFRE Middlesea p.l.c.
Key audit matters (continued)
Measurement of assets and liabilities for remaining coverage (“ARC” and “LRC”) for
insurance contracts and reinsurance contracts held in relation to long-term contracts carried
out by the main subsidiary of the Group, MAPFRE MSV Life p.l.c. (MMSV)
Accounting policy note 2.10 to the financial statements and notes 3 and 24 for further disclosures
ARC and LRC for long-term contracts within the 'Insurance contract assets' (€8,945 thousand),
'Insurance contract liabilities’ (€1,991,377 thousand) and 'Reinsurer’s contract liabilities’ (€15,493
thousand)
MMSV enters into insurance contracts which comprise term and unit-linked contracts with significant
insurance risk and investment contracts with discretionary participation features (“DPF”). MMSV also
holds reinsurance contracts to cover its term business.
MMSV applies the general measurement model on its insurance contracts and reinsurance contracts
held, and the variable fee approach on investment contracts with DPF.
ARC and LRC are measured as the total of (i) the expected fulfilment cash flows (“FCF”), which
comprise estimates of future cash flows within the contract boundary, adjusted to reflect the time
value of money and the associated financial risks, and a risk adjustment for non-financial risks; and
(ii) the contractual service margin (“CSM”), which represents the unearned profit that MMSV will
recognise as it provides insurance contract services in the future. The measurement of ARC and LRC
involves use of current and historic data, actuarial methods and models, and significant assumptions
for the estimation of future cash flows.
We have considered the measurement of ARC and LRC as a key audit matter in view of the nature
and subjectivity of the estimate, and its overall inherent estimation uncertainty. The subjectivity
involved relates mainly to the judgement involved in the selection of actuarial assumptions. Due to the
degree of such inherent estimation uncertainty, the ultimate total settlement value may be different
from the amounts provided, and the amount of CSM may be different from the amounts recognised as
profit in the future. Those differences may be material.
KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of
organisation of independent member firms affiliated with KPMG partnership of Certified Public the firm is available at Portico
International Limited, a private English company limited guarantee.Accountants in terms of the Building, Marina Street, Pietà,
Accountancy Profession Act PTA9044, Malta.
KPMG
92, Marina Street
Pietà, PTA 9044
Malta
Telephone(+356) 2563 1000
Fax (+356) 2566 1000
Website www.kpmg.com.mt
Independent Auditors’ Report (continued)
To the Shareholders of MAPFRE Middlesea p.l.c.
Key audit matters (continued)
Measurement of assets and liabilities for remaining coverage (“ARC” and “LRC”) for
insurance contracts and reinsurance contracts held in relation to long-term contracts carried
out by the main subsidiary of the Group, MAPFRE MSV Life p.l.c. (MMSV) (continued)
Our response
As part of our procedures, we evaluated the ARC and LRC by performing audit procedures which
included:
• the involvement of our actuarial specialist to assist us in:
◦ assessing and challenging the significant assumptions selected by applying our
experience, industry knowledge, and reference to the related accounting standards; and
◦ evaluating MMSV’s estimate of ARC and LRC by assessing the overall liability
movements based on the assumptions and data applied;
• testing of the underlying data elements by reference to MMSV’s actual cash flows and policy
data; and
• considering the adequacy of the related disclosures to the financial statements.
Key observation
We have no key observations to report, specific to this matter.
KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of
organisation of independent member firms affiliated with KPMG partnership of Certified Public the firm is available at Portico
International Limited, a private English company limited guarantee.Accountants in terms of the Building, Marina Street, Pietà,
Accountancy Profession Act PTA9044, Malta.
KPMG
92 Marina Street
Pietà, PTA 9044
Malta
Telephone(+356) 2563 1000
Fax (+356) 2566 1000
Website www.kpmg.com.mt
Independent Auditors’ Report (continued)
To the Shareholders of MAPFRE Middlesea p.l.c.
Other information
The directors are responsible for the other information. The other information comprises of:
• the ‘Chairman’s Statement’;
• the ‘President & Chief Executive Officer’s Statement’;
• the ‘Directors’ Report’;
• the ‘Corporate Governance Statement; and
• the ‘Remuneration Statement and Report of the Remuneration Committee to the Shareholders’,
but does not include the financial statements and our auditors’ report thereon.
Our opinion on the financial statements does not cover the other information and, other than in the
case of the directors’ report on which we report separately below in our ‘Opinion on the Directors’
Report’, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information, and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report
in this regard.
KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of
organisation of independent member firms affiliated with KPMG partnership of Certified Public the firm is available at Portico
International Limited, a private English company limited guarantee.Accountants in terms of the Building, Marina Street, Pietà,
Accountancy Profession Act PTA9044, Malta.
KPMG
92, Marina Street
Pietà, PTA 9044
Malta
Telephone(+356) 2563 1000
Fax (+356) 2566 1000
Website www.kpmg.com.mt
Independent Auditors’ Report (continued)
To the Shareholders of MAPFRE Middlesea p.l.c.
Responsibilities of the directors for the financial statements
The directors are responsible for the preparation of financial statements that (a) give a true and fair
view in accordance with IFRS as adopted by the EU, and (b) are properly prepared in accordance
with the provisions of the Act, and the Insurance Business Act, and, additionally, specifically in relation
to those of the Group, with the requirements of Article 4 of the Regulation. The directors are also
responsible for such internal control as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company’s and
the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate
the Company and/or the Group or to cease operations, or have no realistic alternative but to do so.
The directors are also responsible for overseeing the financial reporting process.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report
that includes our opinion. ‘Reasonable assurance’ is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain
professional scepticism throughout the audit.
KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of
organisation of independent member firms affiliated with KPMG partnership of Certified Public the firm is available at Portico
International Limited, a private English company limited guarantee.Accountants in terms of the Building, Marina Street, Pietà,
Accountancy Profession Act PTA9044, Malta.
KPMG
Portico Building
Marina Street
Pietà
PTA 9044
Malta
Telephone(+356) 2563 1000
Fax (+356) 2566 1000
Website www.kpmg.com.mt
Independent Auditors’ Report (continued)
To the Shareholders of MAPFRE Middlesea p.l.c.
Auditors’ responsibilities for the audit of the financial statements (continued)
We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
• Consider the extent of compliance with those laws and regulations that directly affect the financial
statements, as part of our procedures on the related financial statement items. For the remaining
laws and regulations, we make enquiries of directors and other management, and inspect
correspondence with the regulatory authority, as well as legal correspondence. As with fraud,
there remains a higher risk of non-detection of other irregularities (whether or not these relate to
an area of law directly related to the financial statements), as these may likewise involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s and the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Company's and the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditors’ report to the related disclosures in the financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditors’ report. However, future events or conditions
may cause the Company and/or the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of
organisation of independent member firms affiliated with KPMG partnership of Certified Public the firm is available at Portico
International Limited, a private English company limited guarantee.Accountants in terms of the Building, Marina Street, Pietà,
Accountancy Profession Act PTA9044, Malta.
KPMG
Portico Building
Marina Street
Pietà
PTA 9044
Malta
Telephone(+356) 2563 1000
Fax (+356) 2566 1000
Website www.kpmg.com.mt
Independent Auditors’ Report (continued)
To the Shareholders of MAPFRE Middlesea p.l.c.
Auditors’ responsibilities for the audit of the financial statements (continued)
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the Group
audit. We remain solely responsible for our audit opinion.
We communicate with the audit committee regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the audit committee with a statement that we have complied with relevant ethical
requirements regarding independence, and communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated with the audit committee, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditors’ report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the adverse consequences of doing
so would reasonably be expected to outweigh the public interest benefits of such communication.
KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of
organisation of independent member firms affiliated with KPMG partnership of Certified Public the firm is available at Portico
International Limited, a private English company limited guarantee.Accountants in terms of the Building, Marina Street, Pietà,
Accountancy Profession Act PTA9044, Malta.
KPMG
92, Marina Street
Pietà, PTA 9044
Malta
Telephone(+356) 2563 1000
Fax (+356) 2566 1000
Website www.kpmg.com.mt
Independent Auditors’ Report (continued)
To the Shareholders of MAPFRE Middlesea p.l.c.
2 Opinion on the Directors’ Report
The directors are responsible for preparing a directors’ report in accordance with the provisions of
article 177 of the Act and other applicable legal requirements, and is to include a statement that the
Company is a going concern with supporting assumptions or qualifications as necessary, as required
by Rule 5.62 of the Capital Markets Rules issued by the Malta Financial Services Authority (the
“Capital Market Rules”).
We are required to consider whether the information given in the directors’ report for the accounting
period for which the financial statements are prepared is consistent with those financial statements;
and, if we are of the opinion that it is not, we shall state that fact in our report. We have nothing to
report in this regard.
Pursuant to article 179(3) of the Act, we are also required to:
• express an opinion on whether the directors’ report has been prepared in accordance with the
applicable legal requirements; and
• state whether, in the light of the knowledge and understanding of the entity and its environment
obtained in the course of our audit of the financial statements, we have identified material
misstatements in the directors’ report, giving an indication of the nature of any such
misstatements.
Pursuant to Rule 5.62 of the Capital Markets Rules, we are required to review the directors’ statement
in relation to going concern.
In such regards:
• in our opinion, the Directors’ Report has been prepared in accordance with the applicable legal
requirements;
• we have not identified material misstatements in the Directors’ Report; and
• we have nothing to report in relation to the statement on going concern.
KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of
organisation of independent member firms affiliated with KPMG partnership of Certified Public the firm is available at Portico
International Limited, a private English company limited guarantee.Accountants in terms of the Building, Marina Street, Pietà,
Accountancy Profession Act PTA9044, Malta.
KPMG
92, Marina Street
Pietà, PTA 9044
Malta
Telephone(+356) 2563 1000
Fax (+356) 2566 1000
Website www.kpmg.com.mt
Independent Auditors’ Report (continued)
To the Shareholders of MAPFRE Middlesea p.l.c.
3 Report on Other Legal and Regulatory Requirements
Matters on which we are required to report by the Act, specific to public interest entities
Pursuant to article 179B(1) of the Act, we report as under matters not already reported upon in our
‘Report on the Audit of the Financial Statements’:
• we were first appointed as auditors by the shareholders on 15 July 2015, and subsequently
reappointed at the Company’s general meetings for each financial year thereafter. The period of
total uninterrupted engagement is nine years;
• our opinion on our audit of the financial statements is consistent with the additional report to the
audit committee required to be issued by the Audit Regulation (as referred to in the Act); and
• we have not provided any of the prohibited services as set out in the APA.
Matters on which we are required to report by exception by the Act
Pursuant to articles 179(10) and 179(11) of the Act, we have nothing to report to you with respect to
the following matters:
• proper accounting records have not been kept; or
• the financial statements are not in agreement with the accounting records; or
• we have not obtained all the information and explanations which, to the best of our knowledge
and belief, we require for the purpose of our audit.
KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of
organisation of independent member firms affiliated with KPMG partnership of Certified Public the firm is available at Portico
International Limited, a private English company limited guarantee.Accountants in terms of the Building, Marina Street, Pietà,
Accountancy Profession Act PTA9044, Malta.
KPMG
92, Marina Street
Pietà, PTA 9044
Malta
Telephone(+356) 2563 1000
Fax (+356) 2566 1000
Website www.kpmg.com.mt
Independent Auditors’ Report (continued)
To the Shareholders of MAPFRE Middlesea p.l.c.
Report on compliance of the Annual Report with the requirements of the Commission
Delegated Regulation (EU) 2018/815 supplementing Directive 2004/109/EC (the “European
Single Electronic Format Regulatory Technical Standard” or “ESEF Regulation”), by reference
to Capital Markets Rule 5.55.6 issued by the Malta Financial Services Authority
We have undertaken a reasonable assurance engagement in accordance with the requirements of
Directive 6 issued by the Accountancy Board in terms of the Accountancy Profession Act, 1979
(Chapter 281, Laws of Malta), the Accountancy Profession (European Single Electronic Format)
Assurance Directive, on the Annual Report for the year ended 31 December 2023, prepared in a
single electronic reporting format.
Responsibilities of the directors for compliance with the requirements of the ESEF Regulation
As required by Capital Markets Rule 5.56A, the directors are responsible for the preparation of the
Annual Report in XHTML format, including the relevant mark-ups, in accordance with the
requirements of the ESEF Regulation.
In addition, the directors are responsible for such internal control as they determine is necessary to
enable the preparation of the Annual Report that is in compliance with the requirements of the ESEF
Regulation.
Auditors’ responsibilities to report on compliance with the requirements of the ESEF Regulation
Our responsibility is to obtain reasonable assurance about whether the Annual Report in XHTML
format, including the relevant mark-ups, comply in all material respects with the ESEF Regulation
based on the evidence we have obtained. As part of our work, we obtain an understanding of the
Company’s controls relevant to the preparation of the Annual Report in compliance with the said
requirements, but not for the purpose of expressing an opinion on the effectiveness of the controls in
place.
KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of
organisation of independent member firms affiliated with KPMG partnership of Certified Public the firm is available at Portico
International Limited, a private English company limited guarantee.Accountants in terms of the Building, Marina Street, Pietà,
Accountancy Profession Act PTA9044, Malta.
KPMG
92, Marina Street
Pietà, PTA 9044
Malta
Telephone(+356) 2563 1000
Fax (+356) 2566 1000
Website www.kpmg.com.mt
Independent Auditors’ Report (continued)
To the Shareholders of MAPFRE Middlesea p.l.c.
Report on compliance of the Annual Report with the requirements of the Commission
Delegated Regulation (EU) 2018/815 supplementing Directive 2004/109/EC (the “European
Single Electronic Format Regulatory Technical Standard” or “ESEF Regulation”), by reference
to Capital Markets Rule 5.55.6 issued by the Malta Financial Services Authority (continued)
Auditors’ responsibilities to report on compliance with the requirements of the ESEF Regulation
(continued)
In discharging that responsibility, we:
• obtain an understanding of the entity's financial reporting process, including the preparation of the
Annual Report, in accordance with the requirements of the ESEF Regulation;
• perform validations to determine whether the Annual Report has been prepared in accordance
with the requirements of the technical specifications of the ESEF Regulation; and
• examine the information in the Annual Report to determine whether all the required mark-ups
therein have been applied and whether, in all material respects, they are in accordance with the
requirements of the ESEF Regulation.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our
conclusion.
Conclusion
In our opinion, the Annual Report for the year ended 31 December 2023 has been prepared, in all
material respects, in accordance with the requirements of the ESEF Regulation, by reference to
Capital Markets Rule 5.55.6.
The Principal authorised to sign on behalf of KPMG on the audit resulting in this independent auditors’
report is Claude Ellul.
KPMG 25 March 2024
Registered Auditors
KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of
organisation of independent member firms affiliated with KPMG partnership of Certified Public the firm is available at Portico
International Limited, a private English company limited guarantee.Accountants in terms of the Building, Marina Street, Pietà,
Accountancy Profession Act PTA9044, Malta.
KPMG
92, Marina Street
Pietà, PTA 9044
Malta
Telephone(+356) 2563 1000
Fax (+356) 2566 1000
Website www.kpmg.com.mt
Independent Assurance Report
To the Shareholders of MAPFRE Middlesea p.l.c.
Report required by Capital Markets Rules 5.98 and 12.26N issued by the Malta Financial
Services Authority (the “MFSA”)
We were engaged by the Directors of MAPFRE Middlesea p.l.c.(the “Company”) to report on the
disclosures of specific elements in the Corporate Governance Statement and the Remuneration
Report (the “Disclosures”) as at 31 December 2023, in the form of an independent reasonable
assurance conclusion, as to whether they are, in all material respects, in compliance with the
corporate governance regulations and information to be provided in the Remuneration Report set out
in the Capital Markets Rules issued by the MFSA (the “Capital Market Rules”). More specifically, we
are required to report on the Disclosures in the form of an independent reasonable assurance
conclusion about whether:
a. in light of our knowledge and understanding of the Company and its environment obtained in the
course of the statutory audit, we have identified material misstatements with respect to the
information referred to in Capital Markets Rules 5.97.4 (dealing with the Company’s internal
control and risk management systems in relation to the financial reporting process) and 5.97.5
(where a takeover bid applies). Where material misstatements are identified in relation to those
requirements, we shall, in addition to our conclusion, provide an indication of the nature of such
misstatements;
b. the Disclosures include the other information required by Capital Markets Rule 5.97, insofar as it
is applicable to the Company; and
c. the Disclosures include the information required by Appendix 12.1, ‘Information to be provided in
the Remuneration Report’, to Chapter 12 of the Capital Markets Rules (as applicable).
Responsibilities of the Directors
The Directors are responsible for preparing and presenting the Disclosures that are free from material
misstatement in accordance with the requirements of the Capital Market Rules and for the information
contained therein.
This responsibility includes designing, implementing and maintaining internal control as they
determine is necessary to enable the preparation and presentation of the Disclosures that are free
from misstatement, whether due to fraud or error.
The Directors are also responsible for preventing and detecting fraud and for identifying and ensuring
that the Company complies with laws and regulations applicable to its activities. The Directors are
responsible for ensuring that personnel involved in the preparation and presentation of the
Disclosures are properly trained, systems are properly updated and that any changes in reporting
relevant to the Disclosures encompass all significant business units.
KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of
organisation of independent member firms affiliated with KPMG partnership of Certified Public the firm is available at Portico
International Limited, a private English company limited guarantee.Accountants in terms of the Building, Marina Street, Pietà,
Accountancy Profession Act PTA9044, Malta.
KPMG
92, Marina Street
Pietà, PTA 9044
Malta
Telephone(+356) 2563 1000
Fax (+356) 2566 1000
Website www.kpmg.com.mt
Independent Assurance Report (continued)
To the Shareholders of MAPFRE Middlesea p.l.c.
Our Responsibilities
Our responsibility is to examine the Disclosures prepared by the Company and to report thereon in
the form of an independent reasonable assurance conclusion based on the evidence obtained. We
conducted our engagement in accordance with International Standard on Assurance Engagements
3000 (Revised), Assurance Engagements Other Than Audits or Reviews of Historical Financial
Information (“ISAE 3000”) issued by the International Auditing and Assurance Standards Board. That
standard requires that we plan and perform our procedures to obtain reasonable assurance about
whether the Disclosures are properly prepared and presented, in all material respects, in accordance
with the requirements set out in the relevant Capital Markets Rules.
The firm applies International Standard on Quality Management 1, which requires the firm to design,
implement and operate a system of quality management including policies or procedures regarding
compliance with ethical requirements, professional standards and applicable legal and regulatory
requirements.
We have complied with the independence and other ethical requirements of the International Ethics
Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including
International Independence Standards) (IESBA Code), together with the ethical requirements that are
relevant to our assurance engagement in accordance with the Accountancy Profession (Code of
Ethics for Warrant Holders) Directive issued in terms of the Accountancy Profession Act (Chapter 281,
Laws of Malta), and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the IESBA Code. The IESBA Code is founded on fundamental principles of integrity,
objectivity, professional competence and due care, confidentiality and professional behavior.
The procedures selected and our determination of the nature, timing and extent of those procedures,
will depend on our judgment, including the assessment of the risks of material misstatement of the
preparation and presentation of the Disclosures whether due to fraud or error.
In making those risk assessments, we have considered internal control relevant to the preparation
and presentation of the Disclosures in order to design assurance procedures that are appropriate in
the circumstances, but not for the purposes of expressing a conclusion as to the effectiveness of the
Company’s internal control over the preparation and presentation of the Disclosures. Reasonable
assurance is less than absolute assurance.
KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of
organisation of independent member firms affiliated with KPMG partnership of Certified Public the firm is available at Portico
International Limited, a private English company limited guarantee.Accountants in terms of the Building, Marina Street, Pietà,
Accountancy Profession Act PTA9044, Malta.
KPMG
92, Marina Street
Pietà, PTA 9044
Malta
Telephone(+356) 2563 1000
Fax (+356) 2566 1000
Website www.kpmg.com.mt
Independent Assurance Report (continued)
To the Shareholders of MAPFRE Middlesea p.l.c.
Our Responsibilities (continued)
We are not required to, and we do not, consider whether the Directors’ statements on internal control
and risk management systems cover all the risks and controls in relation to the financial reporting
process or form an opinion on the effectiveness of the Company’s corporate governance procedures
or its risks and control procedures, nor on the ability of the Company to continue in operational
existence. Our opinion in relation to the disclosures pursuant to Capital Markets Rules 5.97.4 and
5.97.5 (as appropriate) is based solely on our knowledge and understanding of the Company and its
environment obtained in forming our opinion on the audit of the financial statements.
As part of this engagement, we have not performed any procedures by way of audit, review or
verification of the Disclosures nor of the underlying records or other sources from which the
Disclosures were extracted.
Other Information
We also read the other information included in the Annual Report that contains the Disclosures, and
our report thereon, in order to identify material inconsistencies, if any, with the Disclosures. We have
nothing to report in this regard.
Conclusion
Our conclusion has been formed on the basis of, and is subject to, the matters outlined in this report.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our
conclusion.
KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of
organisation of independent member firms affiliated with KPMG partnership of Certified Public the firm is available at Portico
International Limited, a private English company limited guarantee.Accountants in terms of the Building, Marina Street, Pietà,
Accountancy Profession Act PTA9044, Malta.
KPMG
92, Marina Street
Pietà, PTA 9044
Malta
Telephone(+356) 2563 1000
Fax (+356) 2566 1000
Website www.kpmg.com.mt
Independent Assurance Report (continued)
To the Shareholders of MAPFRE Middlesea p.l.c.
Conclusion (continued)
In our opinion:
a. in light of our knowledge and understanding of the Company and its environment obtained in the
course of the statutory audit, we have not identified material misstatements with respect to the
information requirements referred to in Capital Markets Rules 5.97.4 and 5.97.5;
b. the Disclosures include the other information required by Capital Markets Rule 5.97; and,
c. the Disclosures include the information required by Appendix 12.1 to Chapter 12 of the Capital
Markets Rules.
The Principal authorised to sign on behalf of KPMG on the work resulting in this assurance report is
Claude Ellul.
KPMG 25 March 2024
Registered Auditors
KPMG, a Maltese civil partnershipand a member firm of the KPMG global The firm is registered as a A list of partners and directors of
organisation of independent member firms affiliated with KPMG partnership of Certified Public the firm is available at Portico
International Limited, a private English company limited guarantee.Accountants in terms of the Building, Marina Street, Pietà,
Accountancy Profession Act PTA9044, Malta.