Chairman's Statement & Enhanced Review of the Business

 

During 2006 we have continued to develop our business in Middle Eastern countries other than Libya and Algeria, which for many years had been our sole source of premium.  Our gross premiums written of £10,071,848 (23005 £7,850,288) in percentage terms comprises 30% Algerian business, 16% Libyan business and 54% other Middle Eastern companies (2005 48% Algerian business, 19% Libyan business and 33% other Middle Eastern companies).  The loss on our Profit and Loss Account Technical Account is £723,679 (2005 £1,170,637).  As shown in our Profit and Loss Account Non Technical Account, the loss on our activities before tax is £684,286 (2005 £322,075) whilst the loss after tax is £749,304 (2005 £223,730).  These results include a loss on foreign exchange of £439,709 (2005 profit £405,306).

Within our Libyan and Algerian markets there have been significant changes over the last few years in which more competitive markets are being actively encouraged.  For example in 2006 we accepted business from fourteen companies whereas in 2005 the number of companies was ten.  Whilst this change in number does not provide us with more premium the benefits of competition will eventually materialise.

With regard to our employees we are very conscious of our responsibilities under the Health and Safety legislation and aim to provide safe and healthy working conditions, equipment and systems of work for all our staff and visitors.  The Company is an equal opportunity employer.  We are committed to ensuring within the framework of the law that our workplace is free from unlawful discrimination on the grounds of colour, race, nationality, ethnic or national origin, sex (including gender reassignment), marital status, sexual orientation, disability or religion/belief.  We aim to ensure that our staff can achieve their full potential and that all employment decisions are taken without reference to irrelevant or discriminatory criteria.

With regard to the Company’s reserving process and its reserves we are confident that our methods are consistent with best practice and procedure.  Our solvency margins are set out in our Financial Services Act return and demonstrate this prudence.  During the year we have conducted a comprehensive exercise with external actuaries to comply with the FSA ECR requirements.  We are confident that the FSA will be satisfied with the results shown within our submitted report and look forward to meeting with the FSA to discuss the report.

However with regard to the issue of compliance in particular with the FSA we are increasingly concerned with the allocation of resources and costs incurred in keeping abreast of compliance.  In addition we recognise that despite the very positive response from many companies in many countries our future development is heavily reliant on being able to gain a secure rating from a recognised rating agency.  We are working very closely with our shareholders to discuss and implement plans to address that particular issue but also to adopt strategies which will enable the company to return to profitability.

Shareholders’ funds have decreased to £20,390,434 (2005 £21,139,738).

Finally I should like to express my sincere thanks to the Company’s employees for their continued efforts throughout the year.

 

A BELBAY

28th March 2007