Following a series of delays, LifeStar Insurance Group on Tuesday (today) published its Annual Report for the financial year ended 31st December 2023, during which it reported a pre-tax profit of €1.6 million.
LifeStar Insurance Group, formerly Global Capital, is a group of companies which provide insurance products in Malta, offering a range of protection, savings, investment, and retirement life insurance products. It is comprised of LifeStar Insurance plc and LifeStar Health Limited.
Earlier this year, LifeStar Insurance announced that there were technical delays in the implementation and integration of third-party software for the computation of financial statements under the IFRS 17 standard. The publication of the report had to be pushed back twice.
This new standard, which came into effect at the start of 2023, details how insurance contracts items should be reported, how to measure them, and how to present information.
As a result of these changes, LifeStar Insurance had to reassess its 2022 results to be aligned with IFRS 17.
These issues have now been resolved, prompting LifeStar Insurance to publish its Annual Report for the year, over two months later than is usually the case for companies which have their financial year coinciding with the calendar year.
At group level, LifeStar Insurance Group faced a challenging year due to the introduction of new accounting standards, yet still recorded positive results.
Insurance revenue remained strong at €5.6 million, increasing marginally from 2022’s €5.5 million. When deducting service expenses, insurance service results closed off 2023 at €2.3 million, up from the €1.4 million in 2022.
One of the main drivers for profitability was net investment income, which went from a negative €11.2 million in 2022 to a positive €7.9 million in 2023. This was mainly a result of a change of net fair value from a loss in 2022 of €12.2 million to a gain of €6.3 million on investments.
Administrative expenses were also on the rise, going up by 29.1 per cent to €5.8 million (2022: €4.6 million). This was primarily down to higher administrative and shared service fees.
As a result, LifeStar Insurance Group posted a pre-tax profit at the end of 2023 of €1.6 million, a substantial improvement from the €4 million pre-tax loss in 2022.
The IFRS 17 had a substantial impact on LifeStar Insurance Group’s retained earnings which increased to €14.5 million in 2023 from an IFRS 4 position in 2022 of €5.8 million. This change is significant because most of the retained earnings are distributable reserves as these are mainly due to releases from the technical provisions that existed under the IFRS 4 standard.
LifeStar Insurance Group’s total assets as at the end of 2023 amounted to €145.2 million, expanding steadily from the €135.5 million reported at the end of 2022. Total liabilities also increased by €7.9 million in 2023, mainly a result of the increase in insurance contract liabilities which rose by €8 million.
Commenting on the results through a joint statement, Chairman Paolo Catalfamo and Acting CEO Roberto Apap Bologna stated that 2023 proved to be “both a successful and a challenging year” for LifeStar Insurance Group.
The pair said that the mandated changes in reporting standards to IFRS 17 were a particular challenge, with the company having to restate 2022 under this new standard.
“The company planned the move well in advance and, in 2021 it purchased the best-in-class software system: the IFRS 17 Analyser from Oracle. Unfortunately, we suffered a vendor failure after one year and we had to engage another Oracle Partner to proceed with the implementation,” they said.
They added that due to this provider change and technical challenges due to the volume of data having to be reconfigured in a new and untested environment, “a series of delays were cumulated,” resulting in the late publication of the financial statements.
LifeStar Insurance Group Acting CEO Roberto Apap Bologna
“The management is now confident that such delays will not be experienced in the future,” Prof. Catalfamo and Mr Apap Bologna stated.
They clarified that the new standard saw the elimination of the value of in-force business, the technical provisions and the re-insurance’s share of technical provisions, being replaced by reinsurance contracts assets, insurance contract liabilities, and investment contract liabilities. This resulted in the aforementioned notable increase in retained earnings.
A number of challenges brought by complex geopolitical scenarios such as conflicts in Ukraine and the Middle East were also noted, particularly given different monetary policies applied across Europe to curb rising inflation.
“Acknowledging the economic headwinds, LifeStar continued to overcome the challenges and fostered growth in the different areas of the business. The company also confirms that it has met its solvency capital requirements throughout the year under review,” the pair continued.
Looking ahead, Prof. Catalfamo and Mr Apap Bologna said that 2024 is expected to be “another very promising year” that is set to see the company’s “expansion to other markets and a substantial growth in revenue.”
“LifeStar Insurance remains an attractive and reliable investment, even in times of great uncertainty and change,” they concluded.
On her part, LifeStar Health Limited Managing Director Adriana Zarb Adami said that 2023 proved to be “another good year” for the health insurance firm and she is very proud of the performance.
2023 was the first year where total commissions earned from the firm’s normal operations exceeded the €1 million mark, driving earnings before interest, tax and amortisation (EBITA) for the year to rise by 33 per cent to €491,000 (2022: €370,000).
“We look at 2024 with cautious optimism. The current sentiment is that inflation has been brought under control and it is expected that within 2024, we will start seeing a reduction in the various reference interest rates. This could be an opportunity to further increases in business,” she said.
“The Bupa brand has been in Malta for over 50 years which is something we are very proud of and treasure. We were the pioneers of health insurance in Malta,” Ms Zarb Adami continued.
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