Issue link: https://maltatoday.uberflip.com/i/1472631
4 NEWS 7.7.2022 What prompted you to invest here in Malta? 2015 was a very interesting year. I had just completed my three years of profes- sorship at Villanova University in Phila- delphia — it was very nice, very relax- ing and a great experience — but I felt I was too young for full-time academic life. I'd been always involved in the as- set management business, so I felt the attraction to go back into business. e asset management business I'd done a lot: for a number of years, I'd worked for Franklin Templeton — one of the largest companies in the world in mu- tual funds — then I had my own hedge fund business, so I felt I'd done pretty much anything I needed to do in asset management. I felt very intrigued by the world of life insurance, which I felt had a lot of potential and could develop in a number of ways, and, starting from a European platform, could really grow in niche ways in Europe. It was indicated that there was this company for sale in Malta, this attracted my attention and the company had been established for a number of years. It had life insurance, asset management and some other properties, so I thought it was a base to get started and build up from this into the European market. In terms of your client base, you have a product that is recognisable in Malta. How important was that? Absolutely very important. I have done different start-ups in my career, and start-ups are very exciting but also very difficult because you have a very long time of investment before you start really creating cash flow and profits. Additionally, especially in the insurance business, it takes five to seven years to build a stable business, because you need to create a market and add assets. Don't forget that when you sell a life in- surance policy, it's on a timespan of 20 years, so the numbers are smaller but keep growing. ere are big benefits in taking over an existing company. In this case it was very well established in the Maltese market as you've mentioned: we had over 30,000 clients, which now we have increased to 40,000, which is a big growth. It was very well rooted in the Maltese society, but also had some problems. e previous shareholders and management ran into some issues and, in fact, at the time of the acqui- sition, the majority shareholder went bankrupt in Mauritius. Some other shareholders had some issues, and, in general, the company didn't enjoy a very good reputation in the market. But, at the time I didn't know it — I thought it was a good opportunity and base to build on, and that was the main reason we decided to go ahead with invest- ment. What did you do to upgrade the efficacy and quality of the company, and to improve its credentials and visibility? It was a lot of work. Initially, as I men- tioned, I thought the base was good but just needed some restructuring. It turned out that the restructuring was much more drastic than we had im- agined, primarily because the reputa- tion of the company wasn't good. We had a pretty complete overhaul of the top-level management and decided to completely separate the activities of the group, focusing primarily on the life and health insurance business. We emphasise the health insurance busi- ness, which is sold under license by BUPA, and we leverage on the great reputation and brand that BUPA enjoys in Malta. But most of all, it was a lot of work creating the new corporate gov- ernance, adapting to the new rules and regulations that the European Directive requires in life and health insurance as well as in asset management, and streamlining the processes — cutting off where the business was not prof- itable or had created problems in the past. So, after six years, I would say that the process was completed. e results have been very positive, especially in the insurance business. We've also de- cided to move out of the retail business in the financial products, which was the area that really created most of the is- sues for the reputation of the company in the past. We also created some syn- ergies around the company so that the process is now very much focused on insurance with very good support for investment services. Arguably, one of the most important things was rebranding the company under a different name, something which also supports potential growth beyond Malta. Was this accidental, or part of your vision for future expansion? It was part of the plan from the very beginning. e reason we decided to make this investment was to use the company and its structures as a base and a platform to grow the business in Europe, and maybe even beyond. As such, the rebranding was a very strate- gic decision. To tell you the truth, I liked Global Capital — I think it was a great SAVIOUR BALZAN sits down with Professor Paolo Catalfamo, Chairman of LifeStar Insurance PLC, to discuss the company's recent challenges, successes and plans for the future 'Live life to the fullest DURING the period January to March 2022, total revenue stood at €1,290.0 million, an increase of €141.4 million when compared to the corresponding quarter in 2021. Almost all components of General Government revenue recorded an increase, with Current taxes on in- come and wealth registering an in- crease of €86.1 million over the same period in 2021. is was followed by Taxes on production and imports (€63.8 million), Market output (€31.9 million), Net social contributions re- ceivable (€20.3 million), and Current transfers receivable (€0.7 million). In contrast, Capital transfers re- ceivable and Property income receiv- able decreased by €54.8 million and €6.6 million, respectively. Total expenditure in the first quar- ter of 2022 amounted to €1,692.0 million, an increase of €178.2 mil- lion over the corresponding quarter in 2021. e largest increase was recorded in Social benefits and so- cial transfers in kind (€71.8 million), followed by Current transfers paya- ble (€51.9 million) and Intermediate consumption (€45.8 million). Other increases were registered in Capital transfers payable (€8.1 mil- lion), Compensation of employees (€5.2 million) and Subsidies payable (€2.0 million). ese increases were partially offset by decreases in Gross capital formation (€3.5 million) and Property income payable (€3.1 mil- lion). To achieve compliance with the provisions of ESA 2010, adjustments to the Consolidated Fund data were made. In the first quarter of 2022, these adjustments brought about an increase of €30.5 million to the Con- solidated Fund deficit. Quarterly financial accounts In relation to financial transactions in assets, during the first quarter, Other accounts receivable and Cur- rency and deposits registered an in- crease of €115.1 million and €40.7 million, respectively. On the other hand, Equity and investment fund shares recorded a decrease of €3.1 million, while Long-term loans de- clined by €0.6 million. Considering the financial trans- actions in liabilities, the highest in- crease was recorded in Long-term debt securities (€229.7 million), fol- lowed by Other accounts payable (€177.0 million), Short-term debt securities (€161.4 million) and Long- term loans (€1.6 million). In contrast the only decrease was registered in Currency and deposits (€1.9 million). Quarterly debt At the end of March, General Gov- ernment debt stood at €8,672.2 mil- lion, or 57.6 per cent of Gross Do- mestic Product (GDP)1. is equates to an increase of €1,175.0 million over the corresponding quarter in 2021, largely reflected in Central Government Debt, which amounted to €8,669.9 million. Currency and deposits stood at €567.3 million, an increase of €98.0 million over March of 2021. is in- cludes euro coins issued in the name of the Treasury, considered a liability of Central Government, and the 62+ Malta Government Savings Bond, the latter amounting to €376.7 mil- lion. Long-term debt securities and Long-term loans increased by €863.2 million and €186.0 million, respec- tively. Short-term debt securities increased by €27.2 million, while Short-term loans increased by €0.5 million. Local Government debt stood at €2.3 million. General Government guaranteed debt amounted to €1,151.3 million at the end of March 2022, equivalent to 8.0 per cent of GDP1. ere was a decrease of €33.4 million when com- pared to the first quarter of 2021. General Government recorded a deficit of €402.1 million in Q1 2022