| Notes forming part of accounts [line items] | | |
| Disclosure of notes and other explanatory information [text block] | | |
| Disclosure of general information about reporting entity [abstract] | | |
| Disclosure of general information about reporting entity [text block] | 1. GENERALThe Company for Cooperative Insurance (the “Company”) is a Saudi joint stock Company established in Riyadh, Kingdom of Saudi Arabia by Royal Decree Number M/5 and incorporated on January 18, 1986 corresponding to Jumada Al-Awal 8, 1406H under Commercial Registration No. 1010061695. The Company’s head office is located on Thumamah Road (At Takhassusi) ArRabi District, P.O. Box 86959, Riyadh 11632, Kingdom of Saudi Arabia.The purpose of the Company is to transact cooperative insurance operations and all related activities including reinsurance and agency activities. Its principal lines of business include medical, motor, marine, fire, engineering, energy, aviation, takaful and casualty insurance.On July 31, 2003 corresponding to Jumada Thani 2, 1424H the Law on the Supervision of Cooperative Insurance Companies (“Insurance Law”) was promulgated by Royal Decree Number (M/32). On December 1, 2004 corresponding to Shawwal 18, 1425H, the Saudi Arabian Monetary Authority (“SAMA”) as the principal authority responsible for the application and administration of the Insurance Law and its implementing regulations, granted the Company a license to transact insurance activities in Saudi Arabia.The Company conducts the business and advances funds to the insurance operations as required. On January 20, 2004 the Company amended its Articles of Association giving authority to the Board of Directors to determine the disposition of the surplus from insurance operations.On March 20, 2004, the Board of Directors approved the distribution of the surplus from insurance operations in accordance with the Implementing Regulations issued by SAMA, whereby the shareholders of the Company are to receive 90% of the annual surplus from insurance operations and the policyholders are to receive the remaining 10%. Any deficit arising on insurance operations is transferred to the shareholders’ operations in full. | 1 |
| Disclosure of basis of preparation of financial statements [text block] | 2. BASIS OF PREPARATIONa) Statement of complianceThese financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as modified by Saudi Arabian Monetary Authority (SAMA) for the accounting of zakat and income tax, which requires, adoption of all IFRSs as issued by the International Accounting Standards Board (“IASB”) except for the application of International Accounting Standard (IAS) 12 - “Income Taxes” and IFRIC 21 - “Levies” so far as these relate to zakat and income tax. As per the SAMA Circular no. 381000074519 dated April 11, 2017 and subsequent amendments through certain clarifications relating to the accounting for zakat and income tax (“SAMA Circular”), the zakat and income tax are to be accrued on a quarterly basis through equity under retained earnings.The financial statement is prepared under the going concern basis and the historical cost convention, except for the measurement at fair value of available for sale investments, investment in associates which is accounted for under the equity method and end of service benefits based on actuarial valuation techniques. The Company’s statement of financial position is not presented using a current/non-current classification. However, the following balances would generally be classified as non-current: statutory deposit, accrued income on statutory deposit, property and equipment, intangible assets, investment property, investments in associates, available for sale investments, reserve for discontinued operations, end-of-service indemnities and return payable on statutory deposit. All other financial statement line items would generally be classified as current.The Company presents its statement of financial position in order of liquidity. As required by the Saudi Arabian Insurance Regulations, the Company maintains separate books of accounts for Insurance Operations and Shareholders’ Operations and presents the financial statements accordingly (Note 30). Assets, liabilities, revenues and expenses clearly attributable to either activity are recorded in the respective accounts. The basis of allocation of expenses from joint operations is determined and approved by the management and the Board of Directors.The statement of financial position, statements of income, comprehensive income and cash flows of the insurance operations and shareholders operations which are presented in Note 30 of the financial statements have been provided as supplementary financial information to comply with the requirements of the guidelines issued by SAMA implementing regulations and is not required under IFRSs. SAMA implementing regulations requires the clear segregation of the assets, liabilities, income and expenses of the insurance operations and the shareholders operations. Accordingly, the statements of financial position, statements of income, comprehensive income and cash flows prepared for the insurance operations and shareholders operations as referred to above, reflect only the assets, liabilities, income, expenses and comprehensive gains or losses of the respective operations.In preparing the Company-level financial statements in compliance with IFRS, the balances and transactions of the insurance operations are amalgamated and combined with those of the shareholders’ operations. Inter-operation balances, transactions and unrealised gains or losses, if any, are eliminated in full during amalgamation. The accounting policies adopted for the insurance operations and shareholders operations are uniform for like transactions and events in similar circumstances.2. BASIS OF PREPARATION (Continued)b) Basis of measurement These financial statements are prepared under the historical cost basis except for the measurement at fair value of available-for-sale investments, investment in associates which is accounted for under the equity method and end of service benefits based on actuarial valuation techniques.c) Functional and presentation currencyThese financial statements have been presented in Saudi Arabian Riyals (SAR), which is also the functional currency of the Company. All financial information presented in Saudi Arabian Riyal has been rounded to the nearest thousand, except where otherwise indicated.d) Fiscal yearThe Company follows a fiscal year ending December 31.e) Critical accounting judgments, estimates and assumptionsThe preparation of the financial statements requires the use of estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. Although these estimates and judgments are based on management’s best knowledge of current events and actions, actual results ultimately may differ from those estimates. Estimates and judgments are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimate and judgments used by management in the preparation of the financial statements are consistent with those followed in the preparation of the Company’s annual financial statements for the year ended December 31, 2017.Following are the accounting judgments and estimates that are critical in preparation of these financial statements:i) The ultimate liability arising from claims made under insurance contractsThe estimation of the ultimate liability arising from claims made under insurance contracts is the Company’s most critical accounting estimate. There are several sources of uncertainty that need to be considered in the estimate of the liability that the Company will ultimately pay for such claims. Estimates are made at the end of the reporting period both for the expected ultimate cost of claim reported and for the expected ultimate costs of claims incurred but not reported (“IBNR”). Liabilities for unpaid reported claims are estimated using the input of assessments for individual cases reported to the Company. At the end of each reporting period, prior year claims estimates are reassessed for adequacy and changes are made to the provision.The provision for claims incurred but not reported (IBNR) is an estimation of claims which are expected to be reported subsequent to the date of statement of financial position, for which the insured event has occurred prior to the date of statement of financial position. The primary technique adopted by management in estimating the cost of notified and IBNR claims, is that of using the past claims settlement trends to predict future claims settlement trends. A range of methods such as Chain Ladder Method, Bornhuetter-Ferguson Method and Expected Loss Ratio Method are used by the actuaries to determine these provisions. Actuary had also used a segmentation approach including analyzing cost per member per year for medical line of business. Underlying these methods are a number of explicit or implicit assumptions relating to the expected settlement amount and settlement patterns of claims.ii) Impairment of available-for-sale financial assetsThe Company determines that available-for-sale financial assets are impaired when there has been a significant or prolonged decline in the fair value of the available-for-sale financial assets below its cost. The determination of what is significant or prolonged requires judgment. For equity and mutual funds, a period of 12 months or longer is considered to be prolonged and a decline of 30% from original cost is considered significant as per Company policy. In making this judgment, the Company also evaluates among other factors, the normal volatility in share price, the financial health of the investee, industry and sector performance, changes in technology, and operational and financing cash flows. iii) Impairment of receivablesA provision for impairment of receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or delinquency in payments are considered indicators that the receivable is impaired.2. BASIS OF PREPARATION (Continued)iv) Fair value of financial instrumentsFair values of available-for-sale investments are based on quoted prices for marketable securities or estimated fair values. The fair value of commission-bearing items is estimated based on discounted cash flows using commission for items with similar terms and risk characteristics.The fair value of financial instruments where no active market exists or where quoted prices are not otherwise available are determined by using valuation techniques. In these cases the fair values are estimated from observable data in respect of similar financial instruments or using models. Where market observable inputs are not available, they are estimated based on appropriate assumptions. Where valuation techniques (for example, models) are used to determine fair values, they are validated and periodically reviewed. All models are calibrated to ensure that outputs reflect actual data and comparative market prices. To the extent practical, models use only observable data; however, areas such as credit risk (both own credit risk and counterparty risk), volatilities and correlations require management to make estimates. Please refer fair value of financial instruments disclosure in note 28. | 2 |
| Disclosure of issued IFRS not yet adopted [text block] | Standards issued but not yet effectiveIn addition to the above mentioned standards, the following standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company’s financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective. Further, the Company has chosen not to early adopt the amendments and revisions to the International Financial Reporting Standards which have been published and are mandatory for compliance for the Company with effect from future dates.- IFRS 9 - “Financial Instruments”, (including amendments to IFRS 4, Insurance Contracts) In July 2014, the IASB published IFRS 9 Financial Instruments which will replace IAS 39 Financial Instruments: Recognition and Measurement. The standard incorporates new classification and measurements requirements for financial assets, the introduction of an expected credit loss impairment model which will replace the incurred loss model of IAS 39, and new hedge accounting requirements. Under IFRS 9, all financial assets will be measured at either amortised cost or fair value. The basis of classification will depend on the business model and the contractual cash flow characteristics of the financial assets. The standard retains most of IAS 39's requirements for financial liabilities except for those designated at fair value through profit or loss whereby that part of the fair value changes attributable to own credit is to be recognised in other comprehensive income instead of the income statement. The hedge accounting requirements are more closely aligned with risk management practices and follow a more principle based approach.In September 2016, the IASB published amendments to IFRS 4 to address issues arising from the different effective dates of IFRS 9 and the new insurance contracts standard (IFRS 17). The amendments introduce two alternative options of applying IFRS 9 for entities issuing contracts within the scope of IFRS 4: a temporary exemption; and an overlay approach. The temporary exemption enables eligible entities to defer the implementation date of IFRS 9 for annual periods beginning before 1 January 2022 and continue to apply IAS 39 to financial assets and liabilities. An entity may apply the temporary exemption from IFRS 9 if: (i) it has not previously applied any version of IFRS 9, other than only the requirements for the presentation of gains and losses on financial liabilities designated as FVPL; and (ii) its activities are predominantly connected with insurance on its annual reporting date that immediately precedes 1 April 2016.The overlay approach allows an entity applying IFRS 9 to reclassify between profit or loss and other comprehensive income an amount that results in the profit or loss at the end of the reporting period for certain designated financial assets being the same as if an entity had applied IAS 39 to these designated financial assets.An entity can apply the temporary exemption from IFRS 9 for annual periods beginning on or after 1 January 2018. An entity may start applying the overlay approach when it applies IFRS 9 for the first time.3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)During 2018, the Company performed an assessment of the amendments and reached the conclusion that its activities are predominantly connected with insurance. The Company intends to apply the temporary exemption from IFRS 9 and, therefore, continue to apply IAS 39 to its financial assets and liabilities in its reporting period starting on 1 January 2018 and through the year ended 31 December 2018.The Company is eligible and have chosen to apply the temporary exemption under the amendments to IFRS 4. The impact of the adoption of IFRS 9 on the Company's financial information will, to a large extent, have to take into account the interaction with the forthcoming insurance contracts standard. IASB through its amendments to IFRS 4 issued in September 2016 had allowed temporary exemption if a Company meets the following criteria:a) the Company has not previously applied any version of IFRS 9; and b) its activities are predominantly connected with insurance that is defined as total percentage of carrying amount of insurance liabilities is greater than 90% of its total liabilities.During 2018, the Company performed a high-level impact assessment of IFRS 9. This preliminary assessment is based on currently available information and may be subject to changes arising from further detailed analyses or additional reasonable and supportable information being made available to the Company in the future. Overall, the Company expects no significant impact on its statement of financial position and equity, except for the effect of applying the impairment requirements of IFRS 9. However, the impact of the same is not expected to be significant. Further, the Company believes that IFRS 9 would have an impact on the classification of financial instruments required to be mandatorily mentioned at fair value i.e investments classified under available for sale investments in Note 7. Credit quality of the financial instruments are disclosed in Note 31(d) to the financial statements. At present it is not possible to provide reasonable estimate of the effects of application of this new standard as the Company is yet to perform a detailed review.- IFRS 16 - “Leases”, applicable for the period beginning on or after 1 January 2019. The new standard eliminates the current dual accounting model for lessees under IAS 17, which distinguishes between on-balance sheet finance leases and off-balance sheet operating leases. Instead, IFRS 16 proposes on-balance sheet accounting model. The Company has decided not to early adopt this new standard. Management believes that the impact of this new standard is not expected to be significant due to limited lease contracts.- IFRS 17 - “Insurance Contracts”, applicable for the period beginning on or after 1 January 2022, and will supersede IFRS 4 “Insurance Contracts”. Earlier adoption permitted if both IFRS 15 “Revenue from Contracts with Customers” and IFRS 9 “Financial Instruments” have also been applied. The Company expects a material impact on measurement and disclosure of insurance and reinsurance that will affect both the statement of income and the statement of financial position. The Company has decided not to early adopt this new standard. | 3 |
| Disclosure of summary of significant accounting policies [abstract] | | |
| Disclosure of summary of significant accounting policies, general comment [text block] | 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe significant accounting policies used in the preparation of these financial statements are consistent with those used in the preparation of the previous financial year, except for the adoption of the following new standards and other amendments to existing standards mentioned below which have had no significant financial impact on the financial statements of the Company on the current year or prior year and is expected to have no significant effect in future years: | 3 |
| Description of accounting policy for cash and cash equivalents [text block] | y) Cash and cash equivalentsCash and cash equivalents comprise cash in hand and balances with banks including murabaha deposits with less than three months maturity from the date of acquisition. | 3 |
| Description of accounting policy for investment properties [text block] | q) Investment propertyInvestment property represents land that is held for capital appreciation purposes. Land is stated at cost less recognized impairment loss, if any. | 3 |
| Description of accounting policy for investment in associates and joint ventures [text block] | j) Investments in associatesAn associate is an entity in which the Company has significant influence (but not control), over financial and operating policies and which is neither a subsidiary nor a joint venture. Investments in associates are carried in the statement of financial position at cost, plus post acquisition changes in the Company’s share of net assets of the associate, less any impairment in the value of individual investments. | 3 |
| Description of accounting policy for premiums/ contributions and insurance/ reinsurance or takaful/ retakaful balance receivables [text block] | h) ReceivablesPremiums and reinsurance balances receivable are recognised when due and measured on initial recognition at the fair value of the consideration received or receivable. Premiums receivable are stated at gross written premiums receivable from insurance contracts, less an allowance for any uncollectible amounts. The carrying value of receivable is reviewed for impairment and whenever events or circumstances indicate that the carrying amount may not be recoverable, the impairment loss is recorded in “Other general and administrative expenses” in the statement of income. Receivable balances are derecognised when the Company no longer controls the contractual rights that comprise the receivable balance, which is normally the case when the receivable balance is sold, or all the cash flows attributable to the balance are passed through to an independent third party. Receivables disclosed in note 12 fall under the scope of IFRS 4 “Insurance contracts”. | 3 |
| Description of accounting policy for receivables [text block] | h) ReceivablesPremiums and reinsurance balances receivable are recognised when due and measured on initial recognition at the fair value of the consideration received or receivable. Premiums receivable are stated at gross written premiums receivable from insurance contracts, less an allowance for any uncollectible amounts. The carrying value of receivable is reviewed for impairment and whenever events or circumstances indicate that the carrying amount may not be recoverable, the impairment loss is recorded in “Other general and administrative expenses” in the statement of income. Receivable balances are derecognised when the Company no longer controls the contractual rights that comprise the receivable balance, which is normally the case when the receivable balance is sold, or all the cash flows attributable to the balance are passed through to an independent third party. Receivables disclosed in note 12 fall under the scope of IFRS 4 “Insurance contracts”. | 3 |
| Description of accounting policy for deferred policy acquisition costs [text block] | f) Deferred policy acquisition costsCommissions and other costs directly related to the acquisition and renewal of insurance contracts are deferred and amortized over the terms of the insurance contracts to which they relate, similar to premiums earned. All other acquisition costs are recognized as an expense when incurred. Amortization is recorded in the “Policy acquisition costs” in the statement of income. | 3 |
| Description of accounting policy for insurance/ takaful contract with discretionary participation features [text block] | b) Insurance contractsThe Company issues insurance contracts that transfer insurance risk. Insurance contracts are those contracts where the insurer accepts significant insurance risk from the policyholder by agreeing to compensate the policyholder if a specified uncertain future event adversely affects the policyholder. As a general guideline, the Company defines significant insurance risk as the possibility of having to pay benefits on the occurrence of an insured event that are at least 10% more than the benefits payable if the insured event did not occur. | 3 |
| Description of accounting policy for property and equipment [text block] | o) Property and equipmentProperty and equipment are stated at cost less accumulated depreciation and any impairment losses. 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 Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of income - insurance operations and accumulated surplus during the financial period in which they are incurred. Land is not depreciated. The cost of other items of property and equipment is depreciated on the straight line method to allocate the cost over estimated useful lives, as follows: YearsBuildings 40-48Furniture and fixtures 10Computer equipment 4Vehicles 4The assets’ residual values and useful lives are reviewed at each reporting date and adjusted if appropriate. The carrying values of these assets are reviewed for impairment when event or changes in circumstances indicate that the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are included in “Other income, net” in the statement of income. | 3 |
| Description of accounting policy for liability adequacy test [text block] | g) Liability adequacy testAt each statement of financial position date, liability adequacy tests are performed to ensure the adequacy of the insurance contracts liabilities net of related deferred policy acquisition costs. In performing these tests management uses current best estimates of future contractual cash flows and claims handling and administration expenses. Any deficiency in the carrying amounts is immediately charged to the statement of income by establishing a provision for losses arising from liability adequacy tests accordingly. | 3 |
| Description of accounting policy for accounts payable and accruals [text block] | v) Provisions, accrued expenses and other liabilitiesProvisions are recognised when the Company has an obligation (legal or constructive) arising from past events, and the costs to settle the obligation are both probable and may be measured reliably. Provisions are not recognised for future operating losses. Liabilities are recognised for amounts to be paid in the future for goods or services received, whether billed by the supplier or not. | 3 |
| Description of accounting policy for settlement and trade date accounting [text block] | m) Trade date accountingAll regular way purchases and sales of financial assets are recognized / derecognized on the trade date (i.e. the date that the Company commits to purchase or sell the assets). Regular way purchases or sales are purchases or sales of financial assets that require settlement of assets within the time frame generally established by regulation or convention in the market place. | 3 |
| Description of accounting policy for provisions [text block] | v) Provisions, accrued expenses and other liabilitiesProvisions are recognised when the Company has an obligation (legal or constructive) arising from past events, and the costs to settle the obligation are both probable and may be measured reliably. Provisions are not recognised for future operating losses. Liabilities are recognised for amounts to be paid in the future for goods or services received, whether billed by the supplier or not. | 3 |
| Description of accounting policy for statutory reserve [text block] | dd) Legal reserveIn accordance with the Company’s Articles of Association, the Company shall allocate 20% of its net income from shareholders operations each year to the legal reserve until it has built up a reserve equal to the share capital. The reserve is not available for distribution. | 3 |
| Description of accounting policy for employees end of service benefits [text block] | u) Employees’ end-of-service benefitsThe Company operates an end of service benefit plan for its employees based on the prevailing Saudi Labor Laws. Accruals are made at the present value of expected future payments in respect of services provided by the employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the end of the reporting period of high-quality corporate bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows. The benefit payments obligation is discharged as and when it falls due. Remeasurements (actuarial gains/ losses) as a result of experience adjustments and changes in actuarial assumptions are recognised in statement of comprehensive income. | 3 |
| Description of accounting policy for zakat [text block] | w) ZakatThe Company is subject to zakat in accordance with the regulations of the General Authority of Zakat and Tax (“GAZT”). Zakat is computed on the Saudi shareholders’ share of equity or net income using the basis defined under the Zakat regulations. Zakat is accrued on a quarterly basis and charge zakat directly into retained earnings in the statement of changes in equity. | 3 |
| Description of accounting policy for impairment and uncollectibiity of financial assets [text block] | t) Impairment of non-financial assetsAssets that have an indefinite useful life – for example, land – are not subject to depreciation and are tested annually for impairment. Assets that are subject to depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized 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 purpose of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash flows (cash-generating units).u) Employees’ end-of-service benefits | 3 |
| Description of accounting policy for fair value measurement [text block] | ee) Fair valuesThe fair value of financial assets are based on quoted prices for marketable securities or estimated fair values. The fair value of commission-bearing items is estimated based on discounted cash flow using commission for items with similar terms and risk characteristics. For financial assets where there is no active market, fair value is determined by reference to the market value of a similar financial assets or where the fair values cannot be derived from active market, they are determined using a variety of valuation techniques. The inputs of this models is taken from observable market where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. | 3 |
| Description of accounting policy for cash dividend and non-cash distribution to equity holders [text block] | x) Dividend distributionDividend distribution to the Company’s shareholders is recognised as a liability in the Company’s financial statements in the period in which the dividends are approved by the Company’s shareholders. | 3 |
| Description of accounting policy for claims/ benefits [text block] | c) ClaimsClaims consist of amounts payable to policyholders and third parties and related loss adjustment expenses, net of salvage and other recoveries, and is charged to “Changes in outstanding claims and reserves” in the statement of income as incurred.Gross outstanding claims comprise the gross estimated cost of claims incurred but not settled at the statement of financial position date together with related claims handling costs, whether reported by the insured or not. Provisions for reported claims not paid as of the statement of financial position date are made on the basis of individual case estimates. In addition, a provision based on management’s judgment and the Company’s prior experience is maintained for the cost of settling claims incurred but not reported including related claims handling costs at the statement of financial position date. The outstanding claims are shown on a gross basis and the related share of the reinsurers is shown separately. Further, the Company does not discount its liability for unpaid claims as substantially all claims are expected to be paid within one year of the statement of financial position date. | 3 |
| Description of accounting policy for other revenue recognition [text block] | a) Revenue RecognitionRecognition of premium and commission revenuePremiums and commission are recorded in the statement of income – insurance operations and accumulated surplus based on straight line method over the insurance policy coverage period except for long term polices (construction and engineering) and marine cargo. Unearned premiums are calculated on a straight line method over the insurance policy coverage except for: Last three months premium at a reporting date is considered as unearned in respect of marine cargo; Pre-defined calculation for Engineering class of business for risks undertaken that extend beyond a single year. In accordance with this calculation, lower premiums are earned in the first year which gradually increases towards the end of the tenure of the policy; andUnearned premiums represent the portion of premiums written relating to the unexpired period of coverage. The change in the provision for unearned premium is taken to the statement of income in the same order that revenue is recognised over the period of risk.Investment incomeInvestment income on debt instruments classified under available-for-sale investments and murabaha deposits are accounted for on an effective interest basis. Dividend incomeDividend income on equity instruments classified under available-for-sale investments is recognized when the right to receive payment is established. | 3 |
| Description of accounting policy for segment reporting [text block] | bb) Operating segmentsA segment is a distinguishable component of the Company that is engaged in providing products or services (a business segment), which is subject to risk and rewards that are different from those of other segments. For management purposes, the Company is organized into business units based on their products and services and has four reportable segments as follows: Medical - coverage for health insurance. Motor insurance. Property and Casualty - coverage for property, engineering, marine, aviation, energy and general accidents insurance. Manafeth – third party liability insurance for foreign vehicles and the profit of this segment is shared with other insurance companies. Shareholders’ segment - reporting shareholder operations of the Company. Income earned from investments is the only revenue generating activity. Certain direct operating expenses and other overhead expenses are allocated to this segment on an appropriate basis. The surplus or loss from the insurance operations is allocated to this segment on an appropriate basis.Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the chief executive officer that makes strategic decisions. No inter-segment transactions occurred during the year. | 3 |
| Description of accounting policy for accounting of leases [text block] | s) LeasesLeases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to statement of income with in operating expenses on a straight-line basis over the period of the lease. | 3 |
| Description of accounting policy for foreign currencies [text block] | aa) Foreign currenciesTransactions in foreign currencies are recorded in Saudi Riyals at the exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated to Saudi Riyals at the rate of exchange prevailing at the statement of financial position date. All differences are taken to the statements of income. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction and are not subsequently restated. Foreign exchange gains or losses on available-for-sale investments are recognized in “Other income, net” in the statement of income. As the Company’s foreign currency transactions are primarily in US dollars, foreign exchange gains and losses are not significant. | 3 |
| Description of accounting policy for off setting financial assets and liabilities [text block] | l) OffsettingFinancial assets and financial liabilities are offset and the net amount reported in the statement of financial position only when there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liability simultaneously. Income and expense is not offset unless required or permitted by any accounting standard or interpretation. | 3 |
| Description of accounting policy for time (murabaha) deposit [text block] | r) Mudaraba/ Murabaha depositsMudaraba/ Murabaha deposits, with original maturity of more than three months, having fixed or determinable payments and fixed maturity that the Company has the positive intention and ability to hold to maturity are classified as held to maturity. Held to maturity investments are initially recognised at fair value including direct and incremental transaction costs and subsequently measured at amortised cost, less provision for impairment in value. Amortised cost is calculated by taking into account any discount or premium on acquisition using an effective yield basis. Any gain or loss on such investments is recognised in the statement of income when the investment is derecognised or impaired. | 3 |
| Description of other accounting policies relevant to understanding of financial statements [text block] | cc) Manafeth shared agreementAs described in note 23, the Manafeth shared agreement is an insurance pooling arrangement related to motor insurers in KSA. This is an arrangement between 25 insurance companies of KSA where the entity is the leader in providing Manafeth (Insurance coverage for motor vehicles entering in KSA). The entity does not act as an agent on behalf of the other insurers in agreement. Therefore the Company accounts for manafeth shared agreement by recording the premiums under the gross written premium and claims under gross claims paid. The relevant assets and liabilities are also recorded as a separate operating segment along with the assets and liabilities of other operating segments. The distribution of share of income to other participating insurance companies is recorded as an expense in “Manafeth insurance share distribution” in the statement of income. | 3 |
| Disclosure of notes forming part of accounts [abstract] | | |
| Disclosure of property and equipment [text block] | 4. PROPERTY AND EQUIPMENT, NET Land Buildings Furniture and fixtures Computerequipment Vehicles Total2018 Total2017 SAR'000Cost: January 1 53,036 199,926 65,620 130,633 456 449,671 446,187Additions - - 304 9,191 - 9,495 4,487 Disposals - - - - - - (1,003)December 31 53,036 199,926 65,924 139,824 456 459,166 449,671 Accumulated Depreciation: January 1 - 19,976 54,877 95,523 244 170,620 147,781 Charge for the year - 4,851 2,370 15,015 77 22,313 23,728 Disposals - - - - - - (889)December 31 - 24,827 57,247 110,538 321 192,933 170,620 Net book value December 31, 2018 53,036 175,099 8,677 29,286 135 266,233 -December 31, 2017 53,036 179,950 10,743 35,110 212 - 279,051 | 4 |
| Disclosure of investments [text block] | . INVESTMENTS IN ASSOCIATES 2018 2017 SAR’000Insurance Operations Balance, January 1 7,021 12,691 Share of profit/ (loss) (Note 24) 900 (5,670)Balance, December 31 7,921 7,021 Shareholders Operations Balance, January 1 88,447 94,958Share of profit 28,798 19,418 Dividends received (30,441) (26,969)Unrealized gain on investments 391 1,040 Balance, December 31 87,195 88,447 Total Investments in associates 95,116 95,468The Company’s interest in associate, which is unquoted, is as follows along with summarized financial information:i) Insurance Operations:Najm Insurance ServicesAs of Country of Incorporation Assets Liabilities Revenue Profit % Interest Held SAR’000December 31, 2018 * Saudi Arabia 357,979 128,411 389,615 15,989 3.45%September 30, 2017 * Saudi Arabia 292,010 88,494 260,479 28,063 3.45%* Based on latest available management accounts.The Company has significant influence over the financial and operating policy decision of the associate by way of representation on its board of directors. 6. INVESTMENTS IN ASSOCIATES (Continued)ii) Shareholders Operations:a) United Insurance CompanyAs of Country of Incorporation Assets Liabilities Revenue Profit % Interest Held SAR’000December 31, 2018 * Bahrain 265,546 132,783 90,455 33,701 50%November 30, 2017 * Bahrain 250,989 111,082 80,864 29,502 50%* Based on latest available management accounts.b) Waseel Application Services ProviderAs of Country of Incorporation Assets Liabilities Revenue Profit % Interest Held SAR’000December 31, 2018 * Saudi Arabia 57,000 10,590 38,500 19,000 45%November 30, 2017 * Saudi Arabia 81,744 8,330 33,895 16,973 45%* Based on latest available management accounts.7. AVAILABLE-FOR-SALE INVESTMENTSi) Insurance operations:Available-for-sale investments of the insurance operations comprise the following: 2018 2017 SAR’000Insurance Operations Local funds 94,549 371,365Local fixed income investments 330,726 281,860 Regional/ foreign funds 96,855 2,291,921Regional/ foreign fixed income investments 684,718 -Funds with portfolio manager 28,059 -Foreign equity - 15,284Total 1,234,907 2,960,430 Shareholders Operations Local funds 305,026 308,645Local fixed income investments 146,913 100,000 Regional/ foreign funds* 905,872 2,156,134Regional/ foreign fixed income investments 301,644 -Funds with portfolio manager 10,768 -Total 1,670,223 2,564,779 Total available-for-sale investments 2,905,130 5,525,209As at December 31, 2018 the Company invested in Shraiah Notes amounting to SAR 2.3 billion. The Shraiah Notes are issued by a special purpose vehicle “SPV” established in Cayman Islands. The administrator of these Shariah Notes is a Company registered in Dubai International Financial Center in Dubai. The underlying investments of Shariah Notes include mutual funds, private equity funds and fixed income portfolios. The legal ownership of these underlying investments is not with the Company, however, the Company is the ultimate beneficial owner of the underlying investments while having control over the Shariah Notes and underlying investments. The custody of the underlying investments is in the custody account of the SPV or its nominee entity opened with fund and portfolio managers.* This includes investment in foreign funds amounting to SR 306 million invested through Discretionary Portfolio Management agreement with Saudi based authorised persons registered with CMA. 7. AVAILABLE-FOR-SALE INVESTMENTS (Continued)Movements in available-for-sale investments are as follows: 2018 2017 Quoted securities Unquoted securities Total Quoted securities Unquoted securities Total SAR’000Insurance operations Balance, January 1 41,245 2,919,185 2,960,430 402,628 2,752,958 3,155,586 Purchases - 1,784,785 1,784,785 43,806 1,453,478 1,497,284 Disposals (42,932) (3,436,511) (3,479,443) (402,628) (1,213,533) (1,616,161)Changes in fair value of investments 1,687 (32,552) (30,865) (2,561) (73,718) (76,279)Balance, December 31 - 1,234,907 1,234,907 41,245 2,919,185 2,960,430 Shareholders’ operations Balance, January 1 39,340 2,525,439 2,564,779 58,065 1,320,966 1,379,031Purchases - 2,076,116 2,076,116 40,007 4,179,252 4,219,259 Disposals (40,007) (2,952,467) (2,992,474) (66,480) (2,950,426) (3,016,906)Changes in fair value of investments 667 21,135 21,802 7,748 (24,353) (16,605)Balance, December 31 - 1,670,223 1,670,223 39,340 2,525,439 2,564,779 Total - 2,905,130 2,905,130 80,585 5,444,624 5,525,209The movement of changes in fair value of investments is as follows: 2018 2017 SAR’000Insurance operations Change in fair value (30,865) (76,279)Net amount transferred to statement of income 32,764 (13,255) 1,899 (89,534) Shareholders’ operations Change in fair value 21,802 (16,605)Net amount transferred to statement of income (56,572) 1,008 (34,770) (15,597) Total (32,871) (105,131)The cumulative unrealised loss in fair value of available for sale investments amounts to SR 198,724 thousand (31 December 2017: gain SR 166,244 thousand).8. MUDARABA/ MURABAHA DEPOSITSThe deposits are held with banks and financial institution registered with Capital Market Authority in the Kingdom of Saudi Arabia. These deposits are predominately in Mudaraba structures. These deposits are denominated in US Dollars and have an original maturity of more than three months to one year and yield on average financial incomes at rates 4.08%. (2017: 2.25%).The movements in deposits during the year ended December 31, 2018 and 2017, are as follows: 2018 2017 SAR’000Insurance Operations Balance, December 31 - -Placed during the year 1,387,500 -Balance, December 31 1,387,500 - Shareholders Operations Balance, December 31 82,035 -Placed during the year 851,625 82,035Matured during the year (82,035) Balance, December 31 851,625 82,035 Total 2,239,125 82,035 | 6-7-8 |
| Disclosure of deferred policy acquisition costs [text block] | 10. MOVEMENTS IN DEFERRED POLICY ACQUISITION COSTS, UNEARNED COMMISSION INCOME, UNEARNED PREMIUMS AND OUTSTANDING CLAIMS a) Deferred policy acquisition costs 2018 2017 SAR’000Balance, January 1 170,790 218,100 Incurred during the year 350,402 445,462 Amortized during the year (390,541) (492,772)Balance, December 31 130,651 170,790 b) Unearned commission income 2018 2017 SAR’000Balance, January 1 53,661 54,439 Commission received during the year 97,301 112,990 Commission earned during the year (111,663) (113,768)Balance, December 31 39,299 53,661 c) Unearned premiums 2018 2017 Gross Reinsurers’ share Net Gross Reinsurers’ share Net SAR'000Balance, January 1 4,405,244 (591,125) 3,814,119 4,390,229 (553,813) 3,836,416 Premiums written during the year 7,641,245 (1,098,103) 6,543,142 8,406,669 (1,091,407) 7,315,262 Premiums earned during the year (8,226,196) 1,144,389 (7,081,807) (8,391,654) 1,054,095 (7,337,559)Balance, December 31 3,820,293 (544,839) 3,275,454 4,405,244 (591,125) 3,814,119 10. MOVEMENTS IN DEFERRED POLICY ACQUISITION COSTS, UNEARNED COMMISSION INCOME, UNEARNED PREMIUMS AND OUTSTANDING CLAIMS (Continued)d) Outstanding claims and reserves 2018 2017 Gross Reinsurers share Net Gross Reinsurers share Net SAR'000Balance, January 1 4,212,281 (1,766,484) 2,445,797 3,592,698 (2,118,754) 1,473,944 Claims paid (7,819,527) 847,028 (6,972,499) (6,690,256) 848,579 (5,841,677)Claims incurred 8,569,857 (1,998,190) 6,571,667 7,309,839 (496,309) 6,813,530Balance, December 31 4,962,611 (2,917,646) 2,044,965 4,212,281 (1,766,484) 2,445,797 Outstanding claims 3,330,828 (2,725,809) 605,019 2,483,435 (1,375,277) 1,108,158 Salvage and subrogation (59,672) - (59,672) (108,671) - (108,671)Gross outstanding claims 3,271,156 (2,725,809) 545,347 2,374,764 (1,375,277) 999,487Incurred but not reported claims and other reserves 1,684,183 (191,837) 1,492,346 1,700,269 (391,207) 1,309,062 Premium deficiency reserve 7,272 - 7,272 137,248 - 137,248 Balance, December 31 4,962,611 (2,917,646) 2,044,965 4,212,281 (1,766,484) 2,445,797 There are several sources of uncertainty that need to be considered in the estimate of the liability that the Company will ultimately pay for such claims. The management and external actuary had made a detailed assessment of technical reserves and the various parameters in the valuation of technical liabilities.As at December 31, 2018, based on the recommendations of external actuary, management had recorded technical reserves (Gross outstanding claims and reserves) which amounted to SAR 4.9 billion (2017: SAR 4.2 billion). Significant portion of reserves relates to medical line of business. As at December 31, 2018 the Company booked a significant outstanding claim amounting to SAR 1.4 billion with a reinsurance share of outstanding claim at 99% relating to property and casualty line of business. | 10 |
| Disclosure of other receivables, net [text block] | 12. RECEIVABLES, NETReceivables comprise net amounts due from the following: 2018 2017 SAR’000 Policyholders 778,456 1,200,264Brokers and agents 757,943 908,273Related parties (Note 27) 55,506 155,600 1,591,905 2,264,137 Receivables from reinsurers 62,517 110,677 Administrative service plan 23,105 22,169 1,677,527 2,396,983 Provision for doubtful receivables (159,540) (139,305)Receivables, net 1,517,987 2,257,678 Movement in provision for doubtful debts during the year was as follows: 2018 2017 SAR’000Balance, January 1 139,305 103,760 Provision for the year 20,235 35,545 Balance, December 31 159,540 139,305 As at December 31, the ageing of receivables is as follows: Neither past due nor impaired Past due but not impaired Past due and impaired Total Less than 30 days 31 – 60 days 61 - 90 days 91 - 180 days 181 - 360 days More than 360 days SAR’0002018 Premium and reinsurance receivables - Policyholders’ 778,456 572,378 9,273 33,812 27,270 34,066 63,544 38,113 - Brokers and agents 757,943 439,035 54,301 28,208 101,593 81,644 35,962 17,200 - Due from related parties 55,506 34,289 7,666 5,152 294 2,950 3,752 1,403 - Receivable from reinsurers 62,517 - 5,063 13,272 5,825 16,613 15,460 6,284 - Administrative service plan 23,105 - 9,821 - - - - 13,284 Total 1,677,527 1,045,702 86,124 80,444 134,982 135,273 118,718 76,284 Neither past due nor impaired Past due but not impaired Past due and impaired Total Less than 30 days 31 – 60 days 61 - 90 days 91 - 180 days 181 - 360 days More than 360 days SAR’0002017 Premium and reinsurance receivables - Policyholders’ 1,200,264 778,254 29,719 35,888 242,345 32,213 48,870 32,975 - Brokers and agents 908,273 564,225 100,220 34,690 19,607 35,669 126,286 27,576 - Due from related parties 155,600 17,314 128,266 891 188 2,285 3,418 3,238 - Receivable from reinsurers 110,677 - 25,397 43,057 8,939 16,083 1,022 16,179 - Administrative service plan 22,169 - 1,599 3,522 3,764 - - 13,284 Total 2,396,983 1,359,793 285,201 118,048 274,843 86,250 179,596 93,252 The Company only enters into insurance and reinsurance contracts with recognized, creditworthy third parties. It is the Company’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivables are monitored on an ongoing basis in order to reduce the Company’s exposure to bad debts.Receivables comprise a large number of customers mainly within the Kingdom of Saudi Arabia and reinsurance companies mainly outside the Kingdom of Saudi Arabia. Receivables include an amount of SAR 166 million (2017: SAR 221 million) due in foreign currencies, mainly in US dollars. The Company’s terms of business require amounts to be paid within 30 to 90 days of the date of the transaction. Arrangements with reinsurers normally require settlement within a certain agreed period.The five largest customers accounts for 28% (December 31, 2017: 38%) of the premiums receivable as at December 31, 2018. | 12 |
| Disclosure of due from related parties [text block] | 27. RELATED PARTY TRANSACTIONS AND BALANCESRelated parties represent major shareholders, directors and key management personnel of the Company, and companies of which they are principal owners and any other entities controlled, jointly controlled or significantly influenced by them. Pricing policies and terms of these transactions are approved by the Company’s management and Board of Directors. The following are the details of the major related party transactions during the year and the related balances at December 31: Amount of transactions for the year endedSAR’000 Balance receivable / (payable) as atSAR’000 2018 2017 2018 2017Major shareholders Insurance premiums written 45,016 28,164 4,091 3,631 General Organization for Social Insurance - Other services 140 100 - - Associates Insurance premium written 33,874 9,756 210 (40)Najm fees paid 38,012 46,680 - (7,883)Waseel fees paid 17,289 17,744 - - United Insurance Co. fees and claims, net 11,814 15,016 3,712 3,393 Entities controlled, jointly controlled or significantly influenced by related parties Insurance premiums written 168,110 480,378 51,205 152,009Rent expenses paid 620 1,020 - (56)Amount of claims paid to hospitals 63,341 74,421 (12,088) 10,216 In accordance with the Company’s Articles of Association, the Board of Directors is entitled each year to remuneration up to 10% of the remaining profit from Shareholders’ operations, as defined, based on a decision by the General Assembly.Remuneration and compensation of BOD Members and Top ExecutivesThe following table shows the annual salaries, remuneration and allowances obtained by the Board members and five top executives for the year ended December 31, 2018 and 2017:2018 BOD members (Executives) BOD members (Non-Executive) Top Executives including the CEO and CFO SAR’000Salaries and compensation - - 6,513 Allowances - 750 2,989 Motivational plans - - 2,506 Annual remuneration - 1,300 903 End of service indemnities - - 1,681 Total - 2,050 14,592 27. RELATED PARTY TRANSACTIONS AND BALANCES (Continued)2017 BOD members (Executives) BOD members (Non-Executive) Top Executives including the CEO and CFO SAR’000Salaries and compensation - - 6,001 Allowances - 858 3,093 Motivational plans - - 447 Annual remuneration - 1,800 3,627 End of service indemnities - - 2,897 Total - 2,658 16,065 | 27 |
| Disclosure of cash and cash equivalents [text block] | 14. CASH AND CASH EQUIVALENTS 2018 2017 SAR’000Insurance operations Mudaraba deposits 210,000 -Murabaha deposits - 200,133 Banks balances and cash 907,258 915,011Total 1,117,258 1,115,144 Shareholders Operations Mudaraba deposits 400,000 -Murabaha deposits - 100,000 Banks balances and cash 82,982 182,059 Total 482,982 282,059 Total cash and cash equivalents 1,600,240 1,397,203Mudaraba deposits are maintained with banks and financial institutions and have a maturity of three months or less from the date of acquisition. These earn commission at an average rate of 3.99% per annum as at December 31, 2018 (2017: 2.2% per annum).Bank balances and cash includes call account balance of SAR 65 million (December 31, 2017: SAR 188 million). Both bank balances and mudaraba deposits (including off-balance sheet exposures) are placed with counterparties with sound credit ratings under Standard and Poor's and Moody’s ratings methodology. | 14 |
| Disclosure of statutory deposit [text block] | 13. STATUTORY DEPOSITIn compliance with Article 58 of the Insurance Implementing Regulations of SAMA, the Company has deposited 10 percent of its share capital, amounting to SAR 125 million (December 31, 2017: SAR 125 million), in a bank designated by SAMA. The statutory deposit is maintained with the National Commercial Bank and can be withdrawn only with the consent of SAMA. | 13 |
| Disclosure of employees' end of service benefits [text block] | 17. EMPLOYEE END OF SERVICE BENEFITSThe Company operates an end of service benefit plan for its employees based on the prevailing Saudi Labor Laws. Accruals are made in accordance with the actuarial valuation under projected unit credit method while the benefit payments obligation is discharged as and when it falls due. The amounts recognized in the statement of financial position and movement in the obligation during the year based on its present value are as follows:17.1 The amounts recognized in the statement of financial position and movement in the obligation during the year based on its present value are as follows: 2018 2017 SAR’000Present value of defined benefit obligation 133,276 119,242Fair value of plan assets - - 133,276 119,24217.2 Movement of defined benefit obligation 2018 2017 SAR’000Opening balance 119,242 98,677Charge to statement of income 16,466 26,731Charge to statement of comprehensive income 6,347 5,879Payment of benefits during the year (8,779) (12,045)Closing balance 133,276 119,24217.3 Reconciliation of present value of defined benefit obligation 2018 2017 SAR’000Present value of defined benefit obligation as at January 1 119,242 98,677Current service costs 12,690 22,129Financial costs 3,776 4,602Actuarial loss from experience adjustments 6,347 5,879Benefits paid during the year (8,779) (12,045)Present value of defined benefit obligation as at December 31 133,276 119,24217.4 Principal actuarial assumptionsThe following range of significant actuarial assumptions was used by the Company for the valuation of post-employment benefit liability: 2018 2017Valuation discount rate 3% 4.6%Expected rate of increase in salary level across different age bands 0.5% - 6% 4.5% - 8.8%17. EMPLOYEE END OF SERVICE BENEFITS (Continued)17.5 Sensitivity analysis of actuarial assumptionsThe impact of changes in sensitivities on present value of defined benefit obligation is as follows: 2018 2017 SAR '000 Impact on defined benefit obligationValuation discount rate - Increase by 0.5% (4,599) (4,094)- Decrease by 0.5% 4,911 4,376Expected rate of increase in salary level across different age bands - Increase by 0.5% 4,707 4,326- Decrease by 0.5% (4,458) (4,086) | 17 |
| Disclosure of gross unearned premiums/ contributions [text block] | 10. MOVEMENTS IN DEFERRED POLICY ACQUISITION COSTS, UNEARNED COMMISSION INCOME, UNEARNED PREMIUMS AND OUTSTANDING CLAIMS a) Deferred policy acquisition costs 2018 2017 SAR’000Balance, January 1 170,790 218,100 Incurred during the year 350,402 445,462 Amortized during the year (390,541) (492,772)Balance, December 31 130,651 170,790 b) Unearned commission income 2018 2017 SAR’000Balance, January 1 53,661 54,439 Commission received during the year 97,301 112,990 Commission earned during the year (111,663) (113,768)Balance, December 31 39,299 53,661 c) Unearned premiums 2018 2017 Gross Reinsurers’ share Net Gross Reinsurers’ share Net SAR'000Balance, January 1 4,405,244 (591,125) 3,814,119 4,390,229 (553,813) 3,836,416 Premiums written during the year 7,641,245 (1,098,103) 6,543,142 8,406,669 (1,091,407) 7,315,262 Premiums earned during the year (8,226,196) 1,144,389 (7,081,807) (8,391,654) 1,054,095 (7,337,559)Balance, December 31 3,820,293 (544,839) 3,275,454 4,405,244 (591,125) 3,814,119 10. MOVEMENTS IN DEFERRED POLICY ACQUISITION COSTS, UNEARNED COMMISSION INCOME, UNEARNED PREMIUMS AND OUTSTANDING CLAIMS (Continued)d) Outstanding claims and reserves 2018 2017 Gross Reinsurers share Net Gross Reinsurers share Net SAR'000Balance, January 1 4,212,281 (1,766,484) 2,445,797 3,592,698 (2,118,754) 1,473,944 Claims paid (7,819,527) 847,028 (6,972,499) (6,690,256) 848,579 (5,841,677)Claims incurred 8,569,857 (1,998,190) 6,571,667 7,309,839 (496,309) 6,813,530Balance, December 31 4,962,611 (2,917,646) 2,044,965 4,212,281 (1,766,484) 2,445,797 Outstanding claims 3,330,828 (2,725,809) 605,019 2,483,435 (1,375,277) 1,108,158 Salvage and subrogation (59,672) - (59,672) (108,671) - (108,671)Gross outstanding claims 3,271,156 (2,725,809) 545,347 2,374,764 (1,375,277) 999,487Incurred but not reported claims and other reserves 1,684,183 (191,837) 1,492,346 1,700,269 (391,207) 1,309,062 Premium deficiency reserve 7,272 - 7,272 137,248 - 137,248 Balance, December 31 4,962,611 (2,917,646) 2,044,965 4,212,281 (1,766,484) 2,445,797 There are several sources of uncertainty that need to be considered in the estimate of the liability that the Company will ultimately pay for such claims. The management and external actuary had made a detailed assessment of technical reserves and the various parameters in the valuation of technical liabilities.As at December 31, 2018, based on the recommendations of external actuary, management had recorded technical reserves (Gross outstanding claims and reserves) which amounted to SAR 4.9 billion (2017: SAR 4.2 billion). Significant portion of reserves relates to medical line of business. As at December 31, 2018 the Company booked a significant outstanding claim amounting to SAR 1.4 billion with a reinsurance share of outstanding claim at 99% relating to property and casualty line of business. | 10 |
| Disclosure of gross outstanding claims/ benefits [text block] | 10. MOVEMENTS IN DEFERRED POLICY ACQUISITION COSTS, UNEARNED COMMISSION INCOME, UNEARNED PREMIUMS AND OUTSTANDING CLAIMS a) Deferred policy acquisition costs 2018 2017 SAR’000Balance, January 1 170,790 218,100 Incurred during the year 350,402 445,462 Amortized during the year (390,541) (492,772)Balance, December 31 130,651 170,790 b) Unearned commission income 2018 2017 SAR’000Balance, January 1 53,661 54,439 Commission received during the year 97,301 112,990 Commission earned during the year (111,663) (113,768)Balance, December 31 39,299 53,661 c) Unearned premiums 2018 2017 Gross Reinsurers’ share Net Gross Reinsurers’ share Net SAR'000Balance, January 1 4,405,244 (591,125) 3,814,119 4,390,229 (553,813) 3,836,416 Premiums written during the year 7,641,245 (1,098,103) 6,543,142 8,406,669 (1,091,407) 7,315,262 Premiums earned during the year (8,226,196) 1,144,389 (7,081,807) (8,391,654) 1,054,095 (7,337,559)Balance, December 31 3,820,293 (544,839) 3,275,454 4,405,244 (591,125) 3,814,119 10. MOVEMENTS IN DEFERRED POLICY ACQUISITION COSTS, UNEARNED COMMISSION INCOME, UNEARNED PREMIUMS AND OUTSTANDING CLAIMS (Continued)d) Outstanding claims and reserves 2018 2017 Gross Reinsurers share Net Gross Reinsurers share Net SAR'000Balance, January 1 4,212,281 (1,766,484) 2,445,797 3,592,698 (2,118,754) 1,473,944 Claims paid (7,819,527) 847,028 (6,972,499) (6,690,256) 848,579 (5,841,677)Claims incurred 8,569,857 (1,998,190) 6,571,667 7,309,839 (496,309) 6,813,530Balance, December 31 4,962,611 (2,917,646) 2,044,965 4,212,281 (1,766,484) 2,445,797 Outstanding claims 3,330,828 (2,725,809) 605,019 2,483,435 (1,375,277) 1,108,158 Salvage and subrogation (59,672) - (59,672) (108,671) - (108,671)Gross outstanding claims 3,271,156 (2,725,809) 545,347 2,374,764 (1,375,277) 999,487Incurred but not reported claims and other reserves 1,684,183 (191,837) 1,492,346 1,700,269 (391,207) 1,309,062 Premium deficiency reserve 7,272 - 7,272 137,248 - 137,248 Balance, December 31 4,962,611 (2,917,646) 2,044,965 4,212,281 (1,766,484) 2,445,797 There are several sources of uncertainty that need to be considered in the estimate of the liability that the Company will ultimately pay for such claims. The management and external actuary had made a detailed assessment of technical reserves and the various parameters in the valuation of technical liabilities.As at December 31, 2018, based on the recommendations of external actuary, management had recorded technical reserves (Gross outstanding claims and reserves) which amounted to SAR 4.9 billion (2017: SAR 4.2 billion). Significant portion of reserves relates to medical line of business. As at December 31, 2018 the Company booked a significant outstanding claim amounting to SAR 1.4 billion with a reinsurance share of outstanding claim at 99% relating to property and casualty line of business. | 10 |
| Disclosure of unearned commission income [text block] | 10. MOVEMENTS IN DEFERRED POLICY ACQUISITION COSTS, UNEARNED COMMISSION INCOME, UNEARNED PREMIUMS AND OUTSTANDING CLAIMS a) Deferred policy acquisition costs 2018 2017 SAR’000Balance, January 1 170,790 218,100 Incurred during the year 350,402 445,462 Amortized during the year (390,541) (492,772)Balance, December 31 130,651 170,790 b) Unearned commission income 2018 2017 SAR’000Balance, January 1 53,661 54,439 Commission received during the year 97,301 112,990 Commission earned during the year (111,663) (113,768)Balance, December 31 39,299 53,661 c) Unearned premiums 2018 2017 Gross Reinsurers’ share Net Gross Reinsurers’ share Net SAR'000Balance, January 1 4,405,244 (591,125) 3,814,119 4,390,229 (553,813) 3,836,416 Premiums written during the year 7,641,245 (1,098,103) 6,543,142 8,406,669 (1,091,407) 7,315,262 Premiums earned during the year (8,226,196) 1,144,389 (7,081,807) (8,391,654) 1,054,095 (7,337,559)Balance, December 31 3,820,293 (544,839) 3,275,454 4,405,244 (591,125) 3,814,119 10. MOVEMENTS IN DEFERRED POLICY ACQUISITION COSTS, UNEARNED COMMISSION INCOME, UNEARNED PREMIUMS AND OUTSTANDING CLAIMS (Continued)d) Outstanding claims and reserves 2018 2017 Gross Reinsurers share Net Gross Reinsurers share Net SAR'000Balance, January 1 4,212,281 (1,766,484) 2,445,797 3,592,698 (2,118,754) 1,473,944 Claims paid (7,819,527) 847,028 (6,972,499) (6,690,256) 848,579 (5,841,677)Claims incurred 8,569,857 (1,998,190) 6,571,667 7,309,839 (496,309) 6,813,530Balance, December 31 4,962,611 (2,917,646) 2,044,965 4,212,281 (1,766,484) 2,445,797 Outstanding claims 3,330,828 (2,725,809) 605,019 2,483,435 (1,375,277) 1,108,158 Salvage and subrogation (59,672) - (59,672) (108,671) - (108,671)Gross outstanding claims 3,271,156 (2,725,809) 545,347 2,374,764 (1,375,277) 999,487Incurred but not reported claims and other reserves 1,684,183 (191,837) 1,492,346 1,700,269 (391,207) 1,309,062 Premium deficiency reserve 7,272 - 7,272 137,248 - 137,248 Balance, December 31 4,962,611 (2,917,646) 2,044,965 4,212,281 (1,766,484) 2,445,797 There are several sources of uncertainty that need to be considered in the estimate of the liability that the Company will ultimately pay for such claims. The management and external actuary had made a detailed assessment of technical reserves and the various parameters in the valuation of technical liabilities.As at December 31, 2018, based on the recommendations of external actuary, management had recorded technical reserves (Gross outstanding claims and reserves) which amounted to SAR 4.9 billion (2017: SAR 4.2 billion). Significant portion of reserves relates to medical line of business. As at December 31, 2018 the Company booked a significant outstanding claim amounting to SAR 1.4 billion with a reinsurance share of outstanding claim at 99% relating to property and casualty line of business. | 10 |
| Disclosure of accrued expenses and other liabilities [text block] | 16. CLAIMS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES 2018 2017 SAR’000Payables to policyholders 833,110 577,233Payable - General Authority of Zakat and Tax 365,462 369,015 Accrued expenses 167,568 123,659Marketing representative commissions 42,682 74,626 Manafeth share of profit distribution payable 56,939 83,335 Provision for leave encashment 13,341 12,365 Employees’ savings plan 26,551 25,339 Other liabilities 7,449 26,080 1,513,102 1,291,652 | 16 |
| Disclosure of zakat [text block] | 20. ZAKATThe current year’s provision is based on the following: 2018 2017 SAR’000Share capital 1,250,000 1,000,000 Reserves, opening provisions and other adjustments 1,979,831 1,872,365Book value of long term assets (403,407) (653,677) 2,826,424 2,218,688Zakatable loss for the year (186,682) (72,324)Zakat base 2,639,742 2,146,364Zakat due at 2.5% 65,994 53,659As the zakat base for the year is higher than the zakatable income, the zakat for the year is calculated at 2.5% on the zakat base for the year.The movement in the zakat provision for the year was as follows: 2018 2017 SAR’000Balance, January 1 233,318 200,443 Provided during the year 65,994 53,659Payments during the year (62,232) (20,784)Balance, December 31 237,080 233,318Status of AssessmentsThe Company had filed Zakat returns with the General Authority of Zakat and Tax (“GAZT”) for the years from 2005 to 2017. In relation to 2005 and 2006, the final assessments had been finalized and the Company had filed an appeal against the assessments of GAZT which is raised to Board of Grievances. During the year GAZT, based on letter dated 6/2/1440H corresponding to 15/10/2018, demanded Zakat amounting to SR 53 million in relation to assessment years 2005 and 2006. The Company responded to GAZT that in relation to 2005 and 2006, the final assessments had been finalized and the Company had filed an appeal against the assessments of GAZT which is raised to Board of Grievances. The Company paid the assessed amount of SAR 53 million from the zakat provision. In relation to 2007 to 2013, GAZT had raised assessments and management had subsequently filed their response. Further, GAZT has yet to commence its review for the years 2014 and 2017. Based on advice from zakat consultant, appropriate provisions have been made and management believes that finalization of the above mentioned assessments is not expected to have a material impact on the financial statements. | 20 |
| Disclosure of statutory reserve [text block] | 22. LEGAL RESERVEIn accordance with the Articles of Association of the Company and in compliance with Article 70(2)(g) of the Insurance Implementing Regulations issued by SAMA, the Company is required to allocate 20% of its net income for the year to the legal reserve until it equals the value of share capital. This transfer is only made at the year end. The legal reserve is not available for distribution to the shareholders until the liquidation of the Company. | 22 |
| Disclosure of general and administrative expense [text block] | 25. GENERAL AND ADMINISTRATIVE EXPENSES 2018 2017 SAR’000Salaries and benefits 333,708 308,864Advertising 9,704 13,831Insurance, utilities and maintenance 10,976 18,252Rent 5,217 8,064Depreciation (Note 4) 22,313 23,728Communications 9,415 11,004Office supplies and printing 1,131 2,305Training and education 2,857 4,065Professional fees 11,159 16,217Indirect cost charge of Manafeth 6,119 7,965License and other charges 20,077 20,215Others 65,436 40,411 498,112 474,921 | 25 |
| Disclosure of investments income [text block] | 24. INVESTMENT INCOME, NET 2018 2017 SAR'000Insurance Operations Available-for-sale: - Dividend income 48,761 163,201 - Commission income 11,503 53,212 - Realized (loss)/ gain on sale (Note 7) (32,764) 13,255 - Investment fees - (2,449)Investment income, net 27,500 227,219 Shareholders Operations Available-for-sale: - Dividend income 129,800 197,899 - Commission income 2,929 11,630 - Realized gain/ (loss) on sale (Note 7) 56,572 (1,008)- Investment fees - (1,417)Investment income, net 189,301 207,104 Total investment income, net 216,801 434,323 | 24 |
| Disclosure of compensation to key management personnel [text block] | 27. RELATED PARTY TRANSACTIONS AND BALANCESRelated parties represent major shareholders, directors and key management personnel of the Company, and companies of which they are principal owners and any other entities controlled, jointly controlled or significantly influenced by them. Pricing policies and terms of these transactions are approved by the Company’s management and Board of Directors. The following are the details of the major related party transactions during the year and the related balances at December 31: Amount of transactions for the year endedSAR’000 Balance receivable / (payable) as atSAR’000 2018 2017 2018 2017Major shareholders Insurance premiums written 45,016 28,164 4,091 3,631 General Organization for Social Insurance - Other services 140 100 - - Associates Insurance premium written 33,874 9,756 210 (40)Najm fees paid 38,012 46,680 - (7,883)Waseel fees paid 17,289 17,744 - - United Insurance Co. fees and claims, net 11,814 15,016 3,712 3,393 Entities controlled, jointly controlled or significantly influenced by related parties Insurance premiums written 168,110 480,378 51,205 152,009Rent expenses paid 620 1,020 - (56)Amount of claims paid to hospitals 63,341 74,421 (12,088) 10,216 In accordance with the Company’s Articles of Association, the Board of Directors is entitled each year to remuneration up to 10% of the remaining profit from Shareholders’ operations, as defined, based on a decision by the General Assembly.Remuneration and compensation of BOD Members and Top ExecutivesThe following table shows the annual salaries, remuneration and allowances obtained by the Board members and five top executives for the year ended December 31, 2018 and 2017:2018 BOD members (Executives) BOD members (Non-Executive) Top Executives including the CEO and CFO SAR’000Salaries and compensation - - 6,513 Allowances - 750 2,989 Motivational plans - - 2,506 Annual remuneration - 1,300 903 End of service indemnities - - 1,681 Total - 2,050 14,592 27. RELATED PARTY TRANSACTIONS AND BALANCES (Continued)2017 BOD members (Executives) BOD members (Non-Executive) Top Executives including the CEO and CFO SAR’000Salaries and compensation - - 6,001 Allowances - 858 3,093 Motivational plans - - 447 Annual remuneration - 1,800 3,627 End of service indemnities - - 2,897 Total - 2,658 16,065 | 27 |
| Disclosure of earnings per share [text block] | 26. (LOSS)/ EARNINGS PER SHAREBasic and diluted (loss)/ earnings per share have been calculated by dividing the (loss)/ income for the year by 125 million shares. | 26 |
| Disclosure of investments held at fair value through statement of income [text block] | 28. FAIR VALUES OF FINANCIAL INSTRUMENTSFair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or the most advantageous) market between market participants at the measurement date under current market conditions regardless of whether that price is directly observable or estimated using another valuation technique. The fair values of recognised financial instruments are not significantly different from the carrying values included in the financial information. The estimated fair values of financial instruments are based on quoted market prices, when available. Determination of fair value and fair value hierarchyThe Company uses the following hierarchy for determining and disclosing the fair value of financial instruments: - Level 1: quoted market price: financial instruments with quoted unadjusted prices for identical instruments in active markets. - Level 2: quoted prices in active markets for similar assets and liabilities or other valuation techniques for which all significant inputs are based on observable market data.- Level 3: valuation techniques for which any significant input is not based on observable market data. The following table shows the carrying amount and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy for financial instruments measured at fair value. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation to fair value. SAR’000 2018 Level 1 Level 2 Level 3 TotalAvailable-for- sale investments Insurance operations Funds - 191,404 - 191,404Fixed income portfolio - 790,304 - 790,304Sukuks - - 225,140 225,140Funds placed with portfolio manager 28,059 - - 28,059 28,059 981,708 225,140 1,234,907 Shareholders operations Funds - 609,270 601,629 1,210,899Fixed income portfolio - 358,556 - 358,556Sukuks - - 90,000 90,000Funds placed with portfolio manager 10,768 - - 10,768 10,768 967,826 691,629 1,670,223 Total 38,827 1,949,534 916,769 2,905,130 28. FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued) SAR’0002017 Level 1 Level 2 Level 3 TotalAvailable-for- sale investments Insurance operations Mutual funds 25,961 - 2,637,325 2,663,286Equity shares 15,284 - - 15,284Sukuks - - 281,860 281,860 41,245 - 2,919,185 2,960,430 Shareholders operations Mutual funds 39,340 - 2,425,439 2,464,779Sukuks - - 100,000 100,000 39,340 - 2,525,439 2,564,779 Total 80,585 - 5,444,624 5,525,209The valuation of each publicly traded investment classified under level 1 is based upon the closing market price of that stock as of the valuation date, less a discount if the security is restricted. Fair values of private equity funds and mutual funds classified in Level 3 are determined based on the investees’ latest reported net assets values as at the date of statement of financial position taking into account the fair value of underlying investments by the fund. As at December 31, 2018 the Company has invested an amount of SAR 2.3 billion from available for sale investments in Shariah Notes issued by Cayman Sharia Vehicle. The underlying investments such as private equity funds are classified under Level 3, valued based on latest reported net assets values and fund administrator reports whereas, the fair value of Level 2 fixed income investments and funds are taken from reliable and third party sources including Reuters, Bloomberg, etc. Fair values of other investments (including sukuks) classified in Level 3 are determined based on discounted cash flows, which incorporate assumptions regarding an appropriate credit spread. There were no transfers in between levels during the year ended December 31, 2018 and 2017.The fair values of statutory deposits, accrued investment income on statutory deposit, mudaraba/ murabaha deposits, bank balances and other financial assets in statement of financial position which are carried at amortized cost, are not significantly different from the carrying values included in the financial statements due to the short term nature of balances.Reconciliation of recurring fair value measurements categorized within Level 3 of the fair value hierarchy SAR’000 Total gain or loss recognized in December 31, 2018 Balance January 1 Purchases Sales Statement of income Other comprehensive income Balance December 31Insurance operations Mutual funds 2,637,325 928,066 (3,667,918) 16,318 86,209 - Sukuks 281,860 - (56,720) - - 225,140 2,919,185 928,066 (3,724,638) 16,318 86,209 225,140 Shareholders operations Mutual funds 2,425,439 937,028 (3,005,602) 185,388 59,376 601,629Sukuks 100,000 - (10,000) - - 90,000 2,525,439 937,028 (3,015,602) 185,388 59,376 691,629 Total 5,444,624 1,865,094 (6,740,240) 201,706 145,585 916,76928. FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued) SAR’000 Total gain or loss recognized in December 31, 2017 Balance January 1 Purchases Sales Statement of income Other comprehensive income Balance December 31Insurance operations Mutual fund 2,448,388 1,546,680 (1,433,630) 162,860 (86,973) 2,637,325Sukuks 304,570 - (22,710) - - 281,860 2,752,958 1,546,680 (1,456,340) 162,860 (86,973) 2,919,185 Shareholders operations Mutual funds 890,076 3,823,681 (2,347,066) 81,053 (22,305) 2,425,439Sukuks 100,000 - - - - 100,000 990,076 3,823,681 (2,347,066) 81,053 (22,305) 2,525,439 Total 3,743,034 5,370,361 (3,803,406) 243,913 (109,278) 5,444,624The below table shows significant unobservable inputs used in the valuation of level 3 investments.Description Fair value as at UnobservableInputs Range of inputs Relationships of unobservable inputs to fair value Dec 31, 2018 (SR) 2018 Unquoted Bonds and Sukuks 315,140 Assumption of credit spreads, rates, etc. +/- 0.5% Increased risk premium of 10 bps will have a change in fair value of these debt securities of SR 1.2 million.Mutual funds 601,629 Fund administrator report based on NAV N/A N/ASensitivity analysis of Level 3 investmentsDecember 31, 2018 Sensitivity factor Impact on fair value due to increase in sensitivity factor Impact on fair value due to decrease in sensitivity factor SAR’000Insurance Operations Sukuks +/- 10% change in credit spread 22,514(22,514) Shareholders operations Mutual funds +/- 2% change in NAV per unit 12,033 (12,033)Sukuks +/- 10% change in credit spread 9,000(9,000)December 31, 2017 Sensitivity factor Impact on fair value due to increase in sensitivity factor Impact on fair value due to decrease in sensitivity factor SAR’000Insurance Operations Mutual funds +/- 2% change in NAV per unit 53,684 (53,631) Sukuks +/- 10% change in credit spread 33,894 (32,190) Shareholders operations Mutual funds +/- 2% change in NAV per unit 47,620 (48,446)Sukuks +/- 5% change in credit spread 10,000 (10,000) | 28 |
| Disclosure of related party transactions [text block] | 27. RELATED PARTY TRANSACTIONS AND BALANCESRelated parties represent major shareholders, directors and key management personnel of the Company, and companies of which they are principal owners and any other entities controlled, jointly controlled or significantly influenced by them. Pricing policies and terms of these transactions are approved by the Company’s management and Board of Directors. The following are the details of the major related party transactions during the year and the related balances at December 31: Amount of transactions for the year endedSAR’000 Balance receivable / (payable) as atSAR’000 2018 2017 2018 2017Major shareholders Insurance premiums written 45,016 28,164 4,091 3,631 General Organization for Social Insurance - Other services 140 100 - - Associates Insurance premium written 33,874 9,756 210 (40)Najm fees paid 38,012 46,680 - (7,883)Waseel fees paid 17,289 17,744 - - United Insurance Co. fees and claims, net 11,814 15,016 3,712 3,393 Entities controlled, jointly controlled or significantly influenced by related parties Insurance premiums written 168,110 480,378 51,205 152,009Rent expenses paid 620 1,020 - (56)Amount of claims paid to hospitals 63,341 74,421 (12,088) 10,216 In accordance with the Company’s Articles of Association, the Board of Directors is entitled each year to remuneration up to 10% of the remaining profit from Shareholders’ operations, as defined, based on a decision by the General Assembly.Remuneration and compensation of BOD Members and Top ExecutivesThe following table shows the annual salaries, remuneration and allowances obtained by the Board members and five top executives for the year ended December 31, 2018 and 2017:2018 BOD members (Executives) BOD members (Non-Executive) Top Executives including the CEO and CFO SAR’000Salaries and compensation - - 6,513 Allowances - 750 2,989 Motivational plans - - 2,506 Annual remuneration - 1,300 903 End of service indemnities - - 1,681 Total - 2,050 14,592 27. RELATED PARTY TRANSACTIONS AND BALANCES (Continued)2017 BOD members (Executives) BOD members (Non-Executive) Top Executives including the CEO and CFO SAR’000Salaries and compensation - - 6,001 Allowances - 858 3,093 Motivational plans - - 447 Annual remuneration - 1,800 3,627 End of service indemnities - - 2,897 Total - 2,658 16,065 | 27 |
| Disclosure of entity's operating segments [text block] | 29. OPERATING SEGMENTS Consistent with the Company’s internal reporting process; operating segments have been approved by management in respect of the Company’s activities, assets and liabilities. Information disclosed in the note is based on current reporting to the chief operating decision maker.Segment assets do not include insurance operations’ property and equipment, prepayments and other assets, receivables, net and cash and cash equivalents. Accordingly, they are included in unallocated assets. Segment liabilities do not include reserve for discontinued operations, surplus distribution payable, due to shareholders operations, reinsurance balances payable, claims payable, accrued expenses and other liabilities and fair value reserve for available-for-sale investments. Accordingly, they are included in unallocated liabilities.These unallocated assets and liabilities (including the related charges for provision for doubtful debts on premiums receivable and depreciation on the property and equipments) are not reported to chief operating decision maker under related segments and are monitored on a centralized basis. 2018Operating Segments Medical Motor Manafeth Property & casualty Total Insurance operations Total Share-holders’ operations Total SAR’000REVENUES Gross premiums written 5,756,882 672,110 143,985 1,068,268 7,641,245 7,641,245 Reinsurance ceded - local - - - (45,160) (45,160) (45,160)Reinsurance ceded - international (118,447) - - (934,496) (1,052,943) (1,052,943)Fees income from takaful 8,534 - - - 8,534 8,534 Excess of loss premiums - (18,054) (2,935) (3,598) (24,587) (24,587)Net premiums written 5,646,969 654,056 141,050 85,014 6,527,089 6,527,089 Changes in unearned premiums, net 163,529 346,495 2,919 25,722 538,665 538,665 Net premiums earned 5,810,498 1,000,551 143,969 110,736 7,065,754 7,065,754 Reinsurance commissions 2,545 135 - 108,983 111,663 111,663 Other underwriting income - 10,435 - - 10,435 10,435 TOTAL REVENUES 5,813,043 1,011,121 143,969 219,719 7,187,852 7,187,852 UNDERWRITING COSTS AND EXPENSES Gross claims paid and related expenses 6,381,019 647,299 29,035 762,174 7,819,527 7,819,527 Reinsurers’ share of claims paid (111,495) (10,297) - (725,236) (847,028) (847,028)Net claims paid 6,269,524 637,002 29,035 36,938 6,972,499 6,972,499 Changes in outstanding claims, net (474,225) 11,845 6,284 1,956 (454,140) (454,140)Changes in incurred but not reported claims reserve, net 227,440 (24,255) (9,546) (10,355) 183,284 183,284 Changes in premium deficiency reserves (132,738) - - 2,762 (129,976) (129,976)Net claims and other benefits incurred 5,890,001 624,592 25,773 31,301 6,571,667 6,571,667 Changes in reserve for takaful activities (1,886) - - - (1,886) (1,886)Policy acquisition costs 209,798 102,865 31,892 45,986 390,541 390,541 Other underwriting expenses 94,031 3,788 11,155 28,890 137,864 137,864 Manafeth Insurance share - - 56,939 - 56,939 56,939 TOTAL UNDERWRITING COSTS AND EXPENSES 6,191,944 731,245 125,759 106,177 7,155,125 7,155,125 NET UNDERWRITING (LOSS)/ INCOME (378,901) 279,876 18,210 113,542 32,727 32,727General and administrative expenses (493,483) (4,629) (498,112)Allowance for doubtful debts (20,235) - (20,235)Dividend and realized gain on investments, net 27,500 189,301 216,801Share of profit from investments in associates, net 900 28,798 29,698Other income 25,782 - 25,782NET (LOSS)/ INCOME FOR THE YEAR (426,809) 213,470 (213,339)29. OPERATING SEGMENTS (Continued) 2017Operating Segments Medical Motor Manafeth Property & casualty Total Insurance operations Total Share-holders’ operations Total SAR’000REVENUES Gross premiums written 5,746,778 1,388,860 187,417 1,083,614 8,406,669 8,406,669 Reinsurance ceded - local - - - (257,097) (257,097) (257,097)Reinsurance ceded - international (124,052) 2 - (710,260) (834,310) (834,310)Fees income from takaful 5,423 - - - 5,423 5,423 Excess of loss premiums - (22,046) (2,937) (15,392) (40,375) (40,375)Net premiums written 5,628,149 1,366,816 184,480 100,865 7,280,310 7,280,310 Changes in unearned premiums (47,749) 46,951 12,885 10,210 22,297 22,297 Net premiums earned 5,580,400 1,413,767 197,365 111,075 7,302,607 7,302,607 Reinsurance commissions 1,472 4 - 112,292 113,768 113,768 Other underwriting income 7 15,294 - - 15,301 15,301 TOTAL REVENUES 5,581,879 1,429,065 197,365 223,367 7,431,676 7,431,676 UNDERWRITING COSTS AND EXPENSES Gross claims paid and related expenses 4,810,238 1,027,406 42,733 809,879 6,690,256 6,690,256 Reinsurers’ share of claims paid (57,723) (17,917) (1,232) (771,707) (848,579) (848,579)Net claims paid 4,752,515 1,009,489 41,501 38,172 5,841,677 5,841,677 Changes in outstanding claims, net 673,396 (37,120) 1,364 (4,852) 632,788 632,788 Changes in incurred but not reported claims reserve, net 199,262 (1,566) 468 3,653 201,817 201,817 Changes in premium deficiency reserves 137,248 - - - 137,248 137,248 Net claims and other benefits incurred 5,762,421 970,803 43,333 36,973 6,813,530 6,813,530 Changes in reserve for takaful activities (2,326) - - - (2,326) (2,326)Policy acquisition costs 232,268 177,390 32,685 50,429 492,772 492,772 Other underwriting expenses 110,358 15,021 16,231 17,809 159,419 159,419 Manafeth insurance share - - 83,335 - 83,335 83,335 TOTAL UNDERWRITING COSTS AND EXPENSES 6,102,721 1,163,214 175,584 105,211 7,546,730 7,546,730 NET UNDERWRITING (LOSS)/ INCOME (520,842) 265,851 21,781 118,156 (115,054) (115,054)General and administrative expenses (470,041) (4,880) (474,921)Allowance for doubtful debts (35,545) - (35,545)Dividend and realized gain on investments, net 227,219 207,104 434,323Share of profit from investments in associates, net (5,670) 19,418 13,748Other income 30,905 - 30,905 NET (LOSS)/ INCOME FOR THE YEAR (368,186) 221,642 (146,544)29. OPERATING SEGMENTS (Continued) As at December 31, 2018Operating Segments Medical Motor Manafeth Property & casualty Total Insurance operations Total Shareholders’ operations Total SAR’000Assets Reinsurer’s share of unearned premiums 59,626 - - 485,213 544,839 544,839 Reinsurer’s share of incurred but not reported claims 25,624 - - 166,213 191,837 191,837 Reinsurer’s share of outstanding claims 24,664 18,382 2,000 2,680,763 2,725,809 2,725,809 Deferred excess of loss premiums - 6,123 - 2,652 8,775 8,775 Deferred policy acquisition costs 94,026 22,520 1,312 12,793 130,651 130,651 Investments (including investment property) 1,252,689 1,757,4183,010,107Receivables, net 1,517,987 1,517,987 Cash and cash equivalents 1,117,258 482,982 1,600,240 Unallocated assets 1,918,454 978,879 2,897,333Total assets 203,940 47,025 3,312 3,347,634 9,408,299 3,219,279 12,627,578 Liabilities Gross unearned premiums 2,917,798 327,510 24,063 550,922 3,820,293 3,820,293 Gross outstanding claims 282,516 152,625 14,092 2,821,923 3,271,156 3,271,156 Incurred but not reported claims reserve 1,284,346 194,701 13,922 191,214 1,684,183 1,684,183 Premium deficiency reserve 4,510 - - 2,762 7,272 7,272 Unearned commission income 3,034 - - 36,265 39,299 39,299 Reserve for takaful activities 8,690 - - - 8,690 8,690 Reinsurers’ balances payable 94,720 94,720 Unallocated liabilities 1,640,177 253,567 1,893,744Total liabilities 4,500,894 674,836 52,077 3,603,086 10,565,790 253,567 10,819,357 As at December 31, 2017Operating Segments Medical Motor Manafeth Property & casualty Total Insurance operations Total Shareholders’ operations Total SAR’000Assets Reinsurer’s share of unearned premiums 62,909 6 - 528,210 591,125 591,125 Reinsurer’s share of incurred but not reported claims 28,142 14,987 1,141 346,937 391,207 391,207 Reinsurer’s share of outstanding claims 25,547 19,753 - 1,329,977 1,375,277 1,375,277 Deferred excess of loss premiums - 6,595 - 4,698 11,293 11,293Deferred policy acquisition costs 99,636 47,306 1,822 22,026 170,790 170,790 Investments (including investment property) 3,049,051 2,739,580 5,788,631Receivables, net 2,257,678 2,257,678 Cash and cash equivalents 1,115,144 282,059 1,397,203 Unallocated assets 476,323 210,782 687,105Total assets 216,234 88,647 2,963 2,231,848 9,437,888 3,232,421 12,670,309 Liabilities Gross unearned premiums 3,084,610 674,011 26,982 619,641 4,405,244 4,405,244 Gross outstanding claims 757,624 142,151 5,808 1,469,181 2,374,764 2,374,764 Incurred but not reported claims reserve 1,059,424 233,943 24,609 382,293 1,700,269 1,700,269 Premium deficiency reserve 137,248 - - - 137,248 137,248 Unearned commission income 5,346 1 - 48,314 53,661 53,661 Reserve for takaful activities 10,576 - - - 10,576 10,576 Reinsurers’ balances payable 207,922 207,922 Unallocated liabilities 1,408,515 245,729 1,654,244Total liabilities 5,054,828 1,050,106 57,399 2,519,429 10,298,199 245,729 10,543,928 | 29 |
| Disclosure of capital management [text block] | 31. RISK MANAGEMENT(a) Insurance riskThe risk under an insurance contract is the risk that an insured event will occur including the uncertainty of the amount and timing of any resulting claim. The principal risk the Company faces under such contracts is that the actual claims and benefit payments exceed the carrying amount of insurance liabilities. This is influenced by the frequency of claims, severity of claims, actual benefits paid being greater than originally estimated and subsequent development of long-term claims.The variability of risks is improved by diversification of risk of loss to a large portfolio of insurance contracts as a more diversified portfolio is less likely to be affected across the board by change in any subset of the portfolio, as well as unexpected outcomes. The variability of risks is also improved by careful selection and implementation of underwriting strategy and guidelines as well as the use of reinsurance arrangements.Significant portion of reinsurance business ceded is placed on treaty and facultative basis with retention limits varying by product lines. Amounts recoverable from reinsurers are estimated in a manner consistent with the assumptions used for ascertaining the underlying policy benefits and are presented in the statement of financial position as reinsurance assets.Although the Company has reinsurance arrangements, it is not relieved of its direct obligations to its policyholders and thus a credit exposure exists with respect to reinsurance ceded, to the extent that any reinsurer is unable to meet its obligations assumed under such reinsurance arrangements.Frequency and severity of claimsThe frequency and severity of claims can be affected by several factors like natural disasters, flood, environmental and economical, atmospheric disturbances, concentration of risks, civil riots etc. The Company manages these risk through the measures described above. The company has limited its risk by imposing maximum claim amounts on certain contracts as well as the use of reinsurance arrangements in order to limit exposure to catastrophic events (e.g., hurricanes, earthquakes and flood damage). The purpose of these underwriting and reinsurance strategies is to limit exposure to catastrophes based on the Company’s risk appetite as decided by management. Concentration of insurance riskThe Company monitors concentration of insurance risks primarily by class of business. The major concentration lies in medical segment.The Company also monitors concentration of risk by evaluating multiple risks covered in the same geographical location. For flood or earthquake risk, a complete city is classified as a single location. For fire and property risk a particular building and neighboring buildings, which could be affected by a single claim incident, are considered as a single location. Similarly, for marine risk, multiple risks covered in a single vessel voyage are considered as a single risk while assessing concentration of risk. The Company evaluates the concentration of exposures to individual and cumulative insurance risks and establishes its reinsurance policy to reduce such exposures to levels acceptable to the Company.Since the Company operates majorly in Saudi Arabia, hence, all the insurance risks relate to policies written in Saudi Arabia.Sources of uncertainty in estimation of future claim paymentsThe key source of estimation uncertainty at the statement of financial position date relates to valuation of outstanding claims, whether reported or not, and includes expected claims settlement costs. Considerable judgment by management is required in the estimation of amounts due to policyholders arising from claims made under insurance contracts. Such estimates are necessarily based on assumptions about several factors involving varying and possibly significant degrees of judgment and uncertainty and actual results may differ from management’s estimates resulting in future changes in estimated liabilities. Qualitative judgments are used to assess the extent to which past trends may not apply in the future, for example one-off occurrence, changes in market factors such as public attitude to claiming and economic conditions. Judgment is further used to assess the extent to which external factors such as judicial decisions and government legislation affect the estimates.In particular, estimates have to be made both for the expected ultimate cost of claims reported at the statement of financial position date and for the expected ultimate cost of claims incurred but not reported (IBNR) at the statement of financial position date. 31. RISK MANAGEMENT (Continued)Process used to decide on assumptionsThe process used to determine the assumptions for calculating the outstanding claim reserve is intended to result in neutral reasonable estimates of the most likely or expected outcome. The nature of the business makes it very difficult to predict with certainty the likely outcome of any particular claim and the ultimate cost of notified claims. Each notified claim is assessed on a separate, case by case basis with due regard to claim circumstances, information available from surveyors and historical evidence of the size of similar claims. Case estimates are reviewed regularly and are updated as and when new information is available.(a) Insurance risk (Continued)The estimation of IBNR is generally subject to a greater degree of uncertainty than the estimation of the cost of settling claims already notified to the Company, in which case information about the claim event is available. The estimation process takes into account the past claims reporting pattern and details of reinsurance programs. The premium liabilities have been determined such that the total premium liability provisions (unearned premium reserve and premium deficiency reserve in result of liability adequacy test) would be sufficient to service the future expected claims and expenses likely to occur on the unexpired policies as at the statement of financial position date. The expected future liability is determined using estimates and assumptions based on the experience during the expired period of the contracts and expectations of future events that are believed to be reasonable. Sensitivity analysisThe Company believes that the claim liabilities under insurance contracts outstanding at the year end are adequate. However, these amounts are not certain and actual payments may differ from the claims liabilities provided in the financial statements. The insurance claim liabilities are sensitive to the various assumptions. It has not been possible to quantify the sensitivity of specific variable such as legislative changes or uncertainty in the estimation process. A hypothetical 10% change in the claim ratio, net of reinsurance, would impact income from insurance operations as follows; Surplus from insurance operations Impact of change in claim ratio by + / - 10% 2018 2017 SAR’000Medical 152,108 116,853 Motor 35,496 21,895 Manafeth 2,601 2,347 Property and casualty 16,892 3,170 207,097 144,265 (b) Reinsurance riskIn order to minimize financial exposure arising from large claims, the Company, in the normal course of business, enters into agreements with other parties for reinsurance purposes.To minimize its exposure to significant losses from reinsurer insolvencies, the Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities or economic characteristics of the reinsurers.Reinsurers are selected using the following parameters and guidelines set by the Company’s Board of Directors and Reinsurance Committee. The criteria may be summarized as follows:- Minimum acceptable credit rating by recognized rating agencies (e.g. S&P) that is not lower than BBB or equivalent- Reputation of particular reinsurance companies- Existing or past business relationship with the reinsurer.Furthermore, the financial strength and managerial and technical expertise as well as historical performance of the reinsurers, wherever applicable, are thoroughly reviewed by the Company and agreed to pre-set requirements of the Company’s Board of Directors and Reinsurance Committee before approving them for exchange of reinsurance business. As at December 31, 2018 and 2017, there is no significant concentration of reinsurance balances.Reinsurance ceded contracts do not relieve the Company from its obligations to policyholders and as a result the Company remains liable for the portion of outstanding claims reinsured to the extent that the reinsurer fails to meet the obligations under the reinsurance agreements. 31. RISK MANAGEMENT (Continued)(c) Market Risk Market risk is the risk that the value of the financial instrument may fluctuate as a result of changes in market commission rates or the market price of securities or the instrument, change in market sentiments, speculative activities, supply and demand for securities and liquidity in the market.The Board of Directors of the Company ensure that the overall market risk exposure is maintained at prudent levels and is consistent with the available capital. While the Board gives a strategic direction and goals, risk management function related to market risk is mainly the responsibility of Investment Committee team. The team prepares forecasts showing the effects of various possible changes in market conditions related to risk exposures. This risk is being mitigated through the proper selection of securities. Company maintains diversified portfolio and performs regular monitoring of developments in related markets. In addition, the key factors that affect stock and sukuk market movements are monitored, including analysis of the operational and financial performance of investees.Market risk comprises of three types of risk: currency risk, commission rate risk and other price risk.Currency RiskCurrency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.The currency exposures of available-for-sale investments are set out below:Insurance Operations 2018 2017 SAR’000Saudi Arabian Riyals and GCC currencies 226,013 612,300US Dollars 2,396,394 2,291,921 Other currencies - 56,209 2,622,407 2,960,430Shareholders Operations 2018 2017 SAR’000Saudi Arabian Riyals and GCC currencies 305,652 97,077US Dollars 2,216,196 2,090,531 Euros - - Other currencies - 377,171 2,521,848 2,564,779The Company’s transactions are principally in Saudi Arabian Riyals and US Dollar. Management monitors the fluctuations in currency exchange rates and acts accordingly and believes that the foreign currency risk is not significant. Commission Rate RiskThe Company invests in securities and has deposits that are subject to commission rate risk. Commission rate risk to the Company is the risk of changes in commission rates reducing the overall return on its fixed commission rate bearing securities. The Commission rate risk is limited by monitoring changes in commission rates and by investing in floating rate instruments. 31. RISK MANAGEMENT (Continued)(c) Market risk (Continued)An increase or decrease of 100 basis points in interest yields would result in a change in the loss for the year of SAR 3.6 million (2017: SAR 3.8 million).The commission and non-commission bearing investments of the Company and their maturities as at December 31, 2018 and 2017 are as follows: Less than 1 year More than 1 year Non-commission bearing TotalInsurance Operations SAR’0002018 Mudaraba/ Murabaha deposits 1,387,500 - - 1,387,500Available for sale investments - 1,015,444 219,463 1,234,907Cash and cash equivalent 210,000 - 907,258 1,117,258Total 1,597,500 1,015,444 1,126,721 3,739,665 2017 Available for sale investments 329,570 2,630,860 2,960,430Cash and cash equivalent 200,133 - 915,011 1,115,144Total 200,133 329,570 3,545,871 4,075,574 Shareholders Operations 2018 Mudaraba/ Murabaha deposits 851,625 - - 851,625Available for sale investments - 448,556 1,221,667 1,670,223Cash and cash equivalent 400,000 - 82,982 482,982Total 1,251,625448,5561,304,6493,004,830 2017 Mudaraba/ Murabaha deposits 82,035 - - 82,035Available for sale investments 2,464,779 2,464,779Cash and cash equivalent 100,000 - 182,059 182,059Total 182,035 - 2,646,838 2,828,873 Other Price RiskOther price risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in market prices (other than those arising from commission rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The Company's investments amounting nil (2017: SAR 107.25 million) are susceptible to market price risk arising from uncertainty about the future value of invested securities. The Company limits this nature of market risk by diversifying its invested portfolio and by actively monitoring the developments in markets.The impact of hypothetical change of a 10% increase and 10% decrease in the market prices of investments on Company's profit would be as follows: Fair value change Effect on Company’s loss SAR’000December 31, 2018 + / - 10% -December 31, 2017 + / - 10% +/- 7,636The sensitivity analysis presented is based upon the portfolio position as at December 31, 2018 and 2017. Accordingly, the sensitivity analysis prepared is not necessarily indicative of the effect on the Company's assets of future movements in the value of investments held by the Company. The sensitivity of level 3 investments is disclosed in note 28. 31. RISK MANAGEMENT (Continued)(d) Credit RiskCredit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. For all classes of financial instruments held by the Company, the maximum credit risk exposure to the Company is the carrying value as disclosed in the statement of financial position. The table below shows the maximum exposure to credit risk for the relevant components of the statement of financial position: 2018 2017 SAR’000ASSETS - INSURANCE OPERATIONS Cash and cash equivalents 1,117,258 1,115,144Receivables, net 1,517,987 2,257,678 Available-for-sale investments 1,234,907 2,960,430Mudaraba/ Murabaha deposits 1,387,500 -Accrued investment income - 71,739Investment in associates 7,921 7,021Other assets 261,088 189,619Reinsurers’ share of outstanding claims, net (including IBNR) 2,917,646 1,766,484Total 8,444,307 8,368,115(d) Credit risk (Continued) 2018 2017 SAR’000ASSETS - SHAREHOLDERS OPERATIONS Cash and cash equivalents (Note 13) 482,982 282,059 Available-for-sale investments 1,670,223 2,564,779Investment in associates 87,195 88,447Other assets - 1,750Murabaha deposits 851,625 82,035Accrued investment income - 86,354Statutory deposit (including accrued income) 127,254 126,997 Total 3,219,279 3,232,421Concentration of credit riskConcentration of credit risk exists when changes in economic or industry factors similarly affect groups of counterparties whose aggregate credit exposure is significant in relation to the Company’s total credit exposure. Approximately 99% (2017: approximately 99%) of the Company’s underwriting activities are carried out in Saudi Arabia. The Company’s portfolio of financial instruments is broadly diversified and transactions are entered into with diverse credit-worthy counterparties thereby mitigating any significant concentrations of credit risk. Also refer Note 11 for details. The Company has significant exposure amounting to SAR 2.3 billion classified as available for sale investments in Shariah Notes issued by Castle Investments Limited (Refer Note 7).31. RISK MANAGEMENT (Continued)(e) Liquidity risk (Continued)Credit risk exposure investments 2018 2017 SAR '000 SAR '000ASSETS INSURANCE OPERATIONS Investment Grade Non-investment Grade Unrated Investment Grade Non-investment Grade UnratedAvailable-for-sale investments 1,234,907 - - 2,960,430 - -Mudaraba/ Murabaha deposits 1,387,500 - - - - -Receivables, net 1,517,987 - - 2,257,678 -Cash and cash equivalents 1,117,258 - - 1,115,144 - -Total 3,739,665 1,517,987 - 4,075,574 2,257,678 - 2018 2017 SAR '000 SAR '000ASSETSSHAREHOLDERS OPERATIONS Investment Grade Non-investment Grade Unrated Investment Grade Non-investment Grade UnratedAvailable-for-sale investments 1,670,223 - - 2,564,779 - -Mudaraba/ Murabaha deposits 851,625 - - 82,035 Accrued investment income - - - 86,354 - -Cash and cash equivalents 482,982 - - 282,059 - -Total 3,004,830 - - 3,015,227 - - 31. RISK MANAGEMENT (Continued)(e) Liquidity risk (Continued)Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet obligations and commitments associated with financial liabilities. The Company has a proper cash management system, where daily cash collections and payments are strictly monitored and reconciled on regular basis. The Company manages liquidity risk by maintaining maturities of financial assets and financial liabilities and investing in liquid financial assets.The table below summarizes the maturities of the Company's undiscounted contractual obligations relating to financial liabilities: Maturity Profile 2018 2017 SAR '000 SAR '000ASSETS INSURANCE OPERATIONS Less than one year More than one year Total Less than one year More than one year TotalAvailable-for-sale investments 1,234,907 - 1,234,907 2,960,430 - 2,960,430Investments in associates 7,921 - 7,921 7,021 - 7,021Mudaraba/ Murabaha deposits 1,387,500 - 1,387,500 - - -Receivables, net 1,517,987 - 1,517,987 2,257,678 - 2,257,678Prepaid expenses and other assets 261,088 - 261,088 189,619 - 189,619Accrued investment income - - - 71,739 - 71,739Cash and cash equivalents 1,117,258 - 1,117,258 1,115,144 - 1,115,144Reinsurers’ share of outstanding claims 2,725,809 - 2,725,809 1,375,277 - 1,375,277 Reinsurers’ share of Incurred but not reported claims 191,837 - 191,837 391,207 - 391,207 Total 8,444,307 - 8,444,307 8,368,115 - 8,368,115 LIABILITIES INSURANCE OPERATIONS Reinsurers’ balances payable 94,720 - 94,720 207,922 - 207,922 Gross outstanding claims 3,271,156 - 3,271,156 2,374,764 - 2,374,764 Incurred but not reported claims reserve 1,684,183 - 1,684,183 1,700,269 - 1,700,269 Premium deficiency reserve 7,272 - 7,272 137,248 - 137,248 Reserve for discontinued operations 1,621 - 1,621 1,621 - 1,621 Reserve for takaful activities 8,690 - 8,690 10,576 - 10,576 Claims payable, accrued expenses and other liabilities 1,505,280 - 1,505,280 1,287,652 - 1,287,652End-of-service indemnities - 133,276 133,276 - 119,242 119,242 6,572,922 133,276 6,706,198 5,720,052 119,242 5,839,294 Total liquidity gap 1,871,385 (133,276) 1,738,109 2,648,063 (119,242) 2,528,82131. RISK MANAGEMENT (Continued)(e) Liquidity risk (Continued) 2018 2017 SAR '000 SAR '000ASSETSSHAREHOLDERS OPERATIONS Less than one year More than one year Total Less than one year More than one year TotalAvailable-for-sale investments 1,670,223 - 1,670,223 2,564,779 - 2,564,779Investments in associates 87,195 - 87,195 88,447 - 88,447Prepaid expenses and other assets - - - 1,750 - 1,750Accrued investment income - - - 86,354 - 86,354Murabaha/ Murabaha deposits 851,625 - 851,625 82,035 - 82,035Cash and cash equivalents 482,982 - 482,982 282,059 - 282,059Total 3,092,025 - 3,092,025 3,105,424 - 3,105,424 LIABILITIES SHAREHOLDERS OPERATIONS Dividends payable 6,411 - 6,411 6,414 - 6,414 Accrued expenses and other liabilities 7,822 - 7,822 4,000 - 4,000 14,233 - 14,233 10,414 - 10,414 Total liquidity gap 3,077,792 - 3,077,792 3,095,010 - 3,095,010To manage the liquidity risk arising from financial liabilities mentioned above, the Company holds liquid assets comprising cash and cash equivalents and investment securities. These assets can be readily sold to meet liquidity requirements.The assets with maturity less than one year are expected to realize as follows: Available for sale investments include investments in mutual funds and sukuks and are held for cash management purposes and expected to be matured/ settled within 12 months from the balance sheet date. Accrued investment income is expected to be realized within 1 to 3 months from statement of financial position’s date. Mudaraba/ Murabaha deposits classified as ‘cash and cash equivalents’ are deposits placed with high credit rating financial institutions with maturity of less than three months from the date of placement. Other mudaraba/ murabaha deposits are expected to be matured within six months from the date of placement. Cash and bank balances are available on demand. Reinsurers share of outstanding claims majorly pertain to property and casualty segment and are generally realized within three to six months based on settlement of balances with reinsurers.The liabilities with maturity less than one year are expected to settle as follows: Reinsurers’ balances payable are settled on a quarterly basis as per terms of reinsurance agreements. Majority of gross outstanding claims are expected to settled within two months in accordance with statutory timelines for payment. Property and casualty policies due to the inherent nature are generally settled within one month from the date of receipt of loss adjustor report. The claims payable, accrued expenses and other liabilities are expected to settle within a period of three months from the period end date. Surplus distribution payable is to be settled within six months of annual general meeting in which financial statements are approved.31. RISK MANAGEMENT (Continued)(e) Operational RiskOperational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the processes, technology and infrastructure supporting the Company’s operations either internally within the Company or externally at the Company’s service providers, and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of investment management behavior. Operational risks arise from all of the Company’s activities.The Company’s objective is to manage operational risk so as to balance limiting of financial losses and damage to its reputation with achieving its investment objective of generating returns for investors. The primary responsibility for the development and implementation of controls over operational risk rests with the Board of Directors. This responsibility encompasses the controls in the following areas:- Requirements for appropriate segregation of duties between various functions, roles and responsibilities;- Requirements for the reconciliation and monitoring of transactions;- Compliance with regulatory and other legal requirements;- Documentation of controls and procedures;- Requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures to address the risks identified;- Ethical and business standards; and- Risk mitigation policies and procedures.Senior Management ensures that the Company's staff has adequate training and experience and fosters effective communication related to operational risk management.32. CAPITAL MANAGEMENTThe Company manages its capital to ensure that it is able to continue as going concern and comply with the regulators’ capital requirements of the markets in which the Company operates while maximizing the return to stakeholders through the optimization of the debt and equity balance. The capital structure of the Company consists of equity attributable to equity holders comprising paid share capital, reserves and retained earnings. As per guidelines laid out by SAMA in Article 66 of the Implementing Regulations of the Cooperative Insurance Companies Control Law detailing the solvency margin required to be maintained, the Company shall maintain solvency margin equivalent to the highest of the following three methods as per SAMA Implementing Regulations: Minimum Capital Requirement of SAR 200 million Premium Solvency Margin Claims Solvency MarginAs at December 31, 2018 the Company’s solvency level is less than the minimum solvency margin required by the Implementing Regulations of the Cooperative Insurance Companies Control Law. The Company expects to meet the solvency margin requirement in the future. The capital structure of the Company as at December 31, 2018 consists of paid-up share capital of SAR 1,250 million, legal reserves of SAR 1,000 million and accumulated losses of SAR 230.8 million (December 31, 2017: paid-up share capital of SAR 1,250 million, legal reserves of SAR 1,000 million and retained earnings of SAR 48.5 million.) in the statement of financial position.33. REALIZED GAINS / (LOSS) ON FINANCIAL ASSETS, NET 2018 2017INSURANCE OPERATIONS SAR'000 Realized (loss)/ gain on available-for-sale financial assets (32,764) 13,255Realized (loss)/ gain on financial assets, net (32,764) 13,255 SHAREHOLDERS OPERATIONS Realized gain/ (loss) on available-for-sale financial assets 56,572 (1,008)Realized gain/ (loss) on financial assets, net 56,572 (1,008) | 31 |
| Disclosure of comparative figures [text block] | RECLASSIFICATION OF COMPARATIVE FIGURESCertain of the prior year amounts have been reclassified to conform with the presentation in the current year. These changes were made for better presentation of balances and transactions in the statement of financial information of the Company and does not have a material impact on the financial statements.- Prepaid expenses and other assets amounting to SAR 7.6 million and SAR 11.2 million have been reclassified as “Intangible assets” and ‘Deferred excess of loss premiums” respectively. - Reinsurance share of gross outstanding claims amounting to SAR 391.2 million has been reclassified as “Reinsurance share of incurred but not reported claims”.- Gross outstanding claims and reserves amounting to SAR 1.7 billion and SAR 137 million have been reclassified as “Incurred but not reported claims” and “Premium deficiency reserve” respectively.- Claims payable, accrued expenses and other liabilities amounting to SAR 119 million has been reclassified as “End-of-service indemnities”.Further, refer note 2 for the changes in the primary statements | 35 |
| Disclosure of board of director's approval of the financial statements [text block] | . APPROVAL OF THE FINANCIAL STATEMENTSThe financial information have been approved by the Audit Committee on behalf of the Board of Directors, on Rajab 14, 1440H, corresponding to March 20, 2019. | 37 |
| Disclosure of other notes relevant to understanding of financial statements [text block] | 23. MANAFETH SHARED AGREEMENT On January 13, 2015 together with 25 related insurance companies, the Company signed the Manafeth shared agreement relating to third party liability motor insurance which is effective from 1 January 2015. The agreement relates to motor insurance for vehicles entering the Kingdom of Saudi Arabia. The agreement was subsequently renewed for year starting from January 1, 2018 to December 31, 2018 with 26 related insurance companies. The main terms of the above mentioned agreement are as follows:- The Company obtains 15% management fee of the net result of the Manafeth portfolio;- The Company obtains 4.25% of Manafeth’s gross premiums written to cover the related indirect expenses; and- The net result of the Manafeth portfolio after deducting the two above mentioned items is due to be shared equally by the Company and its related insurers. | 23 |
