| 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. GENERAL The 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 PREPARATION(a) Statement of complianceThe interim condensed financial information of the Company as at and for the period ended June 30, 2020 have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting (“IAS 34”) as endorsed in the Kingdom of Saudi Arabia and other standards and pronouncements issued by Saudi Organization for Certified Public Accountants (“SOCPA”)The interim condensed financial information is prepared under the going concern basis and the historical cost convention, except for the measurement at fair value of available for sale investments and investment in associates which is accounted for under the equity method and end of service benefits based on actuarial valuation techniques. The Company’s interim condensed 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, 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 18). 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 interim statement of financial position, statement of income, comprehensive income and cash flows of the insurance operations and shareholders operations which are presented in Note 18 of the financial statement 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 interim 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 income or losses of the respective operations.In preparing the Company-level financial statement 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.The interim condensed financial information does not include all of the information required for full annual financial information and should be read in conjunction with the annual financial statement as of and for the year ended December 31, 2019. This interim condensed financial information is expressed in Saudi Arabian Riyals (SAR) and is rounded off to the nearest thousands.(b) Critical accounting judgments, estimates and assumptionsThe preparation of the interim condensed 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 interim condensed financial statements and the reported amounts of revenues and expenses during the reporting period. 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.In preparing this interim condensed financial information, the significant judgments made by the management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements for the year ended 31 December 2019. However, the Company has reviewed the key sources of estimation uncertainties disclosed in the last annual financial statements against the backdrop of the COVID-19 pandemic. Management will continue to assess the situation and reflect any required changes in future reporting periods.Following are the accounting judgments and estimates that are critical in preparation of this interim condensed financial information: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 analysing 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.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 14. v) Impact of Covid-19 on technical reserves On 11 March 2020, the World Health Organisation (“WHO”) declared the Coronavirus (“Covid-19”) outbreak as a pandemic in recognition of its rapid spread across the globe. This outbreak has also affected the GCC region including the Kingdom of Saudi Arabia. Governments all over the world took steps to contain the spread of the virus. Saudi Arabia in particular has implemented closure of borders, released social distancing guidelines and enforced country wide lockdowns and curfews. In response to the spread of the Covid-19 virus in the Kingdom of Saudi Arabia including the GCC region, where the Company operates and its consequential disruption to the social and economic activities in those markets, the Company’s management has proactively assessed its impacts on its operations and has taken a series of proactive and preventative measures and processes to ensure:- the health and safety of its employees and the wider community where it is operating- the continuity of its business throughout the Kingdom is protected and kept intact. The major impact of Covid-19 pandemic is seen in medical and motor line of business as explained below. As with any estimate, the projections and likelihoods of occurrence are underpinned by significant judgment and rapidly evolving situation and uncertainties surrounding the duration and severity of the pandemic, and therefore, the actual outcomes may be different to those projected. The impact of such uncertain economic environment is judgmental, and the Company will continue to reassess its position and the related impact on a regular basis.Medical technical reservesBased on the management’s assessment, the management believes that the Government’s decision to assume the medical treatment costs for both Saudi citizens and expatriates has helped in reducing any unfavourable impact. During the lockdown, the Company saw a decline in medical reported claims (majorly elective and non-chronic treatment claims) which resulted in a drop in claimsexperience. However, subsequent to the lifting of lockdown since June 21, 2020, the Company is experiencing a surge in claims which is in line with the expectations of the Company’s management. The Company’s management has duly considered the impact of surge in claims in the current estimate of future contractual cashflows of the insurance contracts in force as at June 30, 2020 for its liability adequacy test. Based on the results, the Company has booked an amount of SR 193.8 mn (December 31, 2019: Nil ; March 31, 2020: Nil) as a premium deficiency reserve.Motor technical reservesIn response to the Covid-19 pandemic, SAMA issued a circular 189 (the “circular”) dated 08 May 2020 to all insurance companies in the Kingdom of Saudi Arabia. Amongst other things, the circular instructed insurance companies to extend the period of validity of all existing retail motor insurance policies by further two months as well as providing a two-month additional coverage for all new retail motor policies written within one month of this circular.The Management, in conjunction with its appointed actuary, deliberated on a variety of internal factors and concluded, that the Company considers the extension of two months in exiting motor policies as new policy and record a premium deficiency reserve based on the expected claims for the extended 2 months period. The Company’s actuary has performed a liability adequacy test using current estimates of future cash flows under its insurance contracts at a segmented level for motor line of business and no additional liability recorded as premium deficiency reserve as at June 30, 2020.For new policies written as per above circular, the premium is earned over the period of coverage i.e 14 month as per the Company accounting policy. There is no significant impact of two month extension in earned premium as of June 30, 2020 as no material amounts of premium have been written during the one month period.Other financial assetsTo cater for any potential impacts, the Covid-19 pandemic may have had on the financial assets of the Company, the Company has performed an assessment in accordance with its accounting policy, to determine whether there is an objective evidence that a financial asset or a group of financial assets has been impaired. For debt financial assets, these include factors such as, significant financial difficulties of issuers or debtors, default or delinquency in payments, probability that the issuer or debtor will enter bankruptcy or other financial reorganization, etc. In case of equities classified under available-for-sale, the Company has performed an assessment to determine whether there is a significant or prolonged decline in the fair value of financial assets below their cost. Based on these assessments, the Company’s management believes that the Covid-19 pandemic has had no material effects on Company’s reported results for the three and six-month periods ended 30 June 2020. The Company’s management continues to monitor the situation closely.(c) Significant accounting policiesThe accounting and risk management policies adopted in the preparation of these condensed interim financial information are consistent with the Company’s audited financial statements for the year ended December 31, 2019, except for adoption of the amendments to existing standards which has had no material impact on the financial information of the Company.d) Standards issued but not yet effectiveThe 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”This standard was published on July 24, 2014 and has replaced IAS 39. The new standard addresses the following items related to financial instruments:Classification and measurement:IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost, at fair value through other comprehensive income or at fair value through profit or loss. A financial asset is measured at amortized cost if both: the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding (“SPPI”).The financial asset is measured at fair value through other comprehensive income and realized gains or losses are recycled through profit or loss upon sale, if both conditions are met: the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows and for sale; and the contractual terms of cash flows are SPPI,Assets not meeting either of these categories are measured at fair value through profit or loss. Additionally, at initial recognition, an entity can use the option to designate a financial asset at fair value through profit or loss if doing so eliminates or significantly reduces an accounting mismatch.For equity instruments that are not held for trading, an entity can also make an irrevocable election to present in other comprehensive income subsequent changes in the fair value of the instruments (including realized gains and losses), dividends being recognized in profit or loss.Additionally, for financial liabilities that are designated as at fair value through profit or loss, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognized in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss.ii) Impairment:The impairment model under IFRS 9 reflects expected credit losses, as opposed to incurred credit losses under IAS 39. Under the IFRS 9 approach, it is no longer necessary for a credit event to have occurred before credit losses are recognized. Instead, an entity always accounts for expected credit losses and changes in those expected credit losses. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition.iii) Hedge accounting:IFRS 9 introduces new requirements for hedge accounting that align hedge accounting more closely with Risk Management. The requirements establish a more principles-based approach to the general hedge accounting model. The amendments apply to all hedge accounting with the exception of portfolio fair value hedges of interest rate risk (commonly referred to as “fair value macro hedges”). For these, an entity may continue to apply the hedge accounting requirements currently in IAS 39. This exception was granted largely because the IASB is addressing macro hedge accounting as a separate project.iv) Effective dateThe published effective date of IFRS 9 was 1st January 2018. However, amendments to IFRS 4 – Insurance Contracts: Applying IFRS 9 – Financial Instruments with IFRS 4 – Insurance Contracts, published on 12th September 2016, changes the existing IFRS 4 to allow entities issuing insurance contracts within the scope of IFRS 4 to mitigate certain effects of applying IFRS 9 before the IASB’s new insurance contract standard (IFRS 17 – Insurance Contracts) becomes effective. The amendments introduce two alternative options:- Apply a temporary exemption from implementing IFRS 9 until the earlier of: the effective date of a new insurance contract standard; or annual reporting periods beginning on or after January 1, 2023. On 17 March 2020, the International Accounting Standards Board (“IASB”) decided to extend the effective date of IFRS 17 and the IFRS 9 temporary exemption in IFRS 4 from January 1, 2021 to January 1, 2023. . Additional disclosures related to financial assets are required during the deferral period. This option is only available to entities whose activities are predominately connected with insurance and have not applied IFRS 9 previously; or- Adopt IFRS 9 but, for designated financial assets, remove from profit or loss the effects of some of the accounting mismatches that may occur before the new insurance contract standard is implemented. During the interim period, additional disclosures are required.The Company has performed a detailed assessment beginning 1 January 2018: (1) The carrying amount of the Company’s liabilities arising from contracts within the scope of IFRS 4 (including deposit components or embedded derivatives unbundled from insurance contracts) were compared to the total carrying amount of all its liabilities; and (2) the total carrying amount of the company’s liabilities connected with insurance were compared to the total carrying amount of all its liabilities. Based on these assessments the Company determined that it is eligible for the temporary exemption. Consequently, the Company has decided to defer the implementation of IFRS 9 until the effective date of the new insurance contracts standard. Disclosures related to financial assets required during the deferral period are included in the Company’s financial statements.IFRS 17 - “Insurance Contracts”, the effective date of IFRS 17 and the deferral of the IFRS 9 temporary exemption in IFRS 4, is currently 1 January 2023, 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. (e) Segmental reportingA 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 eight reportable segments as follows: Medical - coverage for health insurance. Medical Umrah - coverage for health insurance for pilgrims. Motor insurance. Manafeth - third party liability insurance for foreign vehicles and the profit of this segment is shared with other insurance companies. Property and Casualty - coverage for property, engineering, marine, aviation, energy and general accidents insurance.General accidents insurance - coverage for pilgrims. Protection & Savings. 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 period. (f) Seasonality of operationsOther than normal seasonality in Medical Insurance Business in the Kingdom of Saudi Arabia, there are no seasonal changes that may affect insurance operations of the Company. | 2 |
| Disclosure of statement of compliance [text block] | 2. BASIS OF PREPARATION(a) Statement of complianceThe interim condensed financial information of the Company as at and for the period ended June 30, 2020 have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting (“IAS 34”) as endorsed in the Kingdom of Saudi Arabia and other standards and pronouncements issued by Saudi Organization for Certified Public Accountants (“SOCPA”)The interim condensed financial information is prepared under the going concern basis and the historical cost convention, except for the measurement at fair value of available for sale investments and investment in associates which is accounted for under the equity method and end of service benefits based on actuarial valuation techniques. The Company’s interim condensed 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, 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 18). 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 interim statement of financial position, statement of income, comprehensive income and cash flows of the insurance operations and shareholders operations which are presented in Note 18 of the financial statement 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 interim 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 income or losses of the respective operations.In preparing the Company-level financial statement 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.The interim condensed financial information does not include all of the information required for full annual financial information and should be read in conjunction with the annual financial statement as of and for the year ended December 31, 2019. This interim condensed financial information is expressed in Saudi Arabian Riyals (SAR) and is rounded off to the nearest thousands. | 2 (a) |
| Disclosure of issued IFRS not yet adopted [text block] | d) Standards issued but not yet effectiveThe 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”This standard was published on July 24, 2014 and has replaced IAS 39. The new standard addresses the following items related to financial instruments:Classification and measurement:IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost, at fair value through other comprehensive income or at fair value through profit or loss. A financial asset is measured at amortized cost if both: the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding (“SPPI”).The financial asset is measured at fair value through other comprehensive income and realized gains or losses are recycled through profit or loss upon sale, if both conditions are met: the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows and for sale; and the contractual terms of cash flows are SPPI,Assets not meeting either of these categories are measured at fair value through profit or loss. Additionally, at initial recognition, an entity can use the option to designate a financial asset at fair value through profit or loss if doing so eliminates or significantly reduces an accounting mismatch.For equity instruments that are not held for trading, an entity can also make an irrevocable election to present in other comprehensive income subsequent changes in the fair value of the instruments (including realized gains and losses), dividends being recognized in profit or loss.Additionally, for financial liabilities that are designated as at fair value through profit or loss, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognized in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss.ii) Impairment:The impairment model under IFRS 9 reflects expected credit losses, as opposed to incurred credit losses under IAS 39. Under the IFRS 9 approach, it is no longer necessary for a credit event to have occurred before credit losses are recognized. Instead, an entity always accounts for expected credit losses and changes in those expected credit losses. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition.iii) Hedge accounting:IFRS 9 introduces new requirements for hedge accounting that align hedge accounting more closely with Risk Management. The requirements establish a more principles-based approach to the general hedge accounting model. The amendments apply to all hedge accounting with the exception of portfolio fair value hedges of interest rate risk (commonly referred to as “fair value macro hedges”). For these, an entity may continue to apply the hedge accounting requirements currently in IAS 39. This exception was granted largely because the IASB is addressing macro hedge accounting as a separate project.iv) Effective dateThe published effective date of IFRS 9 was 1st January 2018. However, amendments to IFRS 4 – Insurance Contracts: Applying IFRS 9 – Financial Instruments with IFRS 4 – Insurance Contracts, published on 12th September 2016, changes the existing IFRS 4 to allow entities issuing insurance contracts within the scope of IFRS 4 to mitigate certain effects of applying IFRS 9 before the IASB’s new insurance contract standard (IFRS 17 – Insurance Contracts) becomes effective. The amendments introduce two alternative options:- Apply a temporary exemption from implementing IFRS 9 until the earlier of: the effective date of a new insurance contract standard; or annual reporting periods beginning on or after January 1, 2023. On 17 March 2020, the International Accounting Standards Board (“IASB”) decided to extend the effective date of IFRS 17 and the IFRS 9 temporary exemption in IFRS 4 from January 1, 2021 to January 1, 2023. . Additional disclosures related to financial assets are required during the deferral period. This option is only available to entities whose activities are predominately connected with insurance and have not applied IFRS 9 previously; or- Adopt IFRS 9 but, for designated financial assets, remove from profit or loss the effects of some of the accounting mismatches that may occur before the new insurance contract standard is implemented. During the interim period, additional disclosures are required.The Company has performed a detailed assessment beginning 1 January 2018: (1) The carrying amount of the Company’s liabilities arising from contracts within the scope of IFRS 4 (including deposit components or embedded derivatives unbundled from insurance contracts) were compared to the total carrying amount of all its liabilities; and (2) the total carrying amount of the company’s liabilities connected with insurance were compared to the total carrying amount of all its liabilities. Based on these assessments the Company determined that it is eligible for the temporary exemption. Consequently, the Company has decided to defer the implementation of IFRS 9 until the effective date of the new insurance contracts standard. Disclosures related to financial assets required during the deferral period are included in the Company’s financial statements.IFRS 17 - “Insurance Contracts”, the effective date of IFRS 17 and the deferral of the IFRS 9 temporary exemption in IFRS 4, is currently 1 January 2023, 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. | 2 (d) |
| Disclosure of critical accounting judgements, estimates and assumptions, general [text block] | (b) Critical accounting judgments, estimates and assumptionsThe preparation of the interim condensed 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 interim condensed financial statements and the reported amounts of revenues and expenses during the reporting period. 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.In preparing this interim condensed financial information, the significant judgments made by the management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements for the year ended 31 December 2019. However, the Company has reviewed the key sources of estimation uncertainties disclosed in the last annual financial statements against the backdrop of the COVID-19 pandemic. Management will continue to assess the situation and reflect any required changes in future reporting periods.Following are the accounting judgments and estimates that are critical in preparation of this interim condensed financial information: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 analysing 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.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 14. v) Impact of Covid-19 on technical reserves On 11 March 2020, the World Health Organisation (“WHO”) declared the Coronavirus (“Covid-19”) outbreak as a pandemic in recognition of its rapid spread across the globe. This outbreak has also affected the GCC region including the Kingdom of Saudi Arabia. Governments all over the world took steps to contain the spread of the virus. Saudi Arabia in particular has implemented closure of borders, released social distancing guidelines and enforced country wide lockdowns and curfews. In response to the spread of the Covid-19 virus in the Kingdom of Saudi Arabia including the GCC region, where the Company operates and its consequential disruption to the social and economic activities in those markets, the Company’s management has proactively assessed its impacts on its operations and has taken a series of proactive and preventative measures and processes to ensure:- the health and safety of its employees and the wider community where it is operating- the continuity of its business throughout the Kingdom is protected and kept intact. The major impact of Covid-19 pandemic is seen in medical and motor line of business as explained below. As with any estimate, the projections and likelihoods of occurrence are underpinned by significant judgment and rapidly evolving situation and uncertainties surrounding the duration and severity of the pandemic, and therefore, the actual outcomes may be different to those projected. The impact of such uncertain economic environment is judgmental, and the Company will continue to reassess its position and the related impact on a regular basis.Medical technical reservesBased on the management’s assessment, the management believes that the Government’s decision to assume the medical treatment costs for both Saudi citizens and expatriates has helped in reducing any unfavourable impact. During the lockdown, the Company saw a decline in medical reported claims (majorly elective and non-chronic treatment claims) which resulted in a drop in claimsexperience. However, subsequent to the lifting of lockdown since June 21, 2020, the Company is experiencing a surge in claims which is in line with the expectations of the Company’s management. The Company’s management has duly considered the impact of surge in claims in the current estimate of future contractual cashflows of the insurance contracts in force as at June 30, 2020 for its liability adequacy test. Based on the results, the Company has booked an amount of SR 193.8 mn (December 31, 2019: Nil ; March 31, 2020: Nil) as a premium deficiency reserve.Motor technical reservesIn response to the Covid-19 pandemic, SAMA issued a circular 189 (the “circular”) dated 08 May 2020 to all insurance companies in the Kingdom of Saudi Arabia. Amongst other things, the circular instructed insurance companies to extend the period of validity of all existing retail motor insurance policies by further two months as well as providing a two-month additional coverage for all new retail motor policies written within one month of this circular.The Management, in conjunction with its appointed actuary, deliberated on a variety of internal factors and concluded, that the Company considers the extension of two months in exiting motor policies as new policy and record a premium deficiency reserve based on the expected claims for the extended 2 months period. The Company’s actuary has performed a liability adequacy test using current estimates of future cash flows under its insurance contracts at a segmented level for motor line of business and no additional liability recorded as premium deficiency reserve as at June 30, 2020.For new policies written as per above circular, the premium is earned over the period of coverage i.e 14 month as per the Company accounting policy. There is no significant impact of two month extension in earned premium as of June 30, 2020 as no material amounts of premium have been written during the one month period.Other financial assetsTo cater for any potential impacts, the Covid-19 pandemic may have had on the financial assets of the Company, the Company has performed an assessment in accordance with its accounting policy, to determine whether there is an objective evidence that a financial asset or a group of financial assets has been impaired. For debt financial assets, these include factors such as, significant financial difficulties of issuers or debtors, default or delinquency in payments, probability that the issuer or debtor will enter bankruptcy or other financial reorganization, etc. In case of equities classified under available-for-sale, the Company has performed an assessment to determine whether there is a significant or prolonged decline in the fair value of financial assets below their cost. Based on these assessments, the Company’s management believes that the Covid-19 pandemic has had no material effects on Company’s reported results for the three and six-month periods ended 30 June 2020. The Company’s management continues to monitor the situation closely. | 2 (b) |
| Disclosure of summary of significant accounting policies [abstract] | | |
| Disclosure of summary of significant accounting policies, general comment [text block] | (c) Significant accounting policiesThe accounting and risk management policies adopted in the preparation of these condensed interim financial information are consistent with the Company’s audited financial statements for the year ended December 31, 2019, except for adoption of the amendments to existing standards which has had no material impact on the financial information of the Company. | 2 (c) |
| Description of accounting policy for segment reporting [text block] | (e) Segmental reportingA 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 eight reportable segments as follows: Medical - coverage for health insurance. Medical Umrah - coverage for health insurance for pilgrims. Motor insurance. Manafeth - third party liability insurance for foreign vehicles and the profit of this segment is shared with other insurance companies. Property and Casualty - coverage for property, engineering, marine, aviation, energy and general accidents insurance.General accidents insurance - coverage for pilgrims. Protection & Savings. 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 period. | 2 (e) |
| Description of accounting policy for seasonality of operations [text block] | (f) Seasonality of operationsOther than normal seasonality in Medical Insurance Business in the Kingdom of Saudi Arabia, there are no seasonal changes that may affect insurance operations of the Company. | 2 (f) |
| Disclosure of notes forming part of accounts [abstract] | | |
| Disclosure of reinsurers/ retakaful share of outstanding claims, net [text block] | 7. UNEARNED PREMIUM AND GROSS OUTSTANDING CLAIMS AND RESERVES, NET (continued)(ii) Gross outstanding claims and reserves, net comprise of the following: June 30, December 31, 2020 2019 (Unaudited) (Audited) SAR’000Gross outstanding claims 2,897,682 3,717,931Less: Realizable value of salvage and subrogation (33,066) (33,040) 2,864,616 3,684,891Add: Incurred but not reported claims reserve 1,572,479 1,925,584Add: Premium deficiency reserve 209,165 2,830Gross outstanding claims and reserves 4,646,260 5,613,305 Less: Reinsurers’ share of gross outstanding claims (2,310,131) (3,100,446)Less: Reinsurers’ share of incurred but not reported claims (288,507) (327,724)Reinsurers’ share of outstanding claims and reserves (2,598,638) (3,428,170) Net outstanding claims and reserves 2,047,622 2,185,135There 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 June 30, 2020, based on the recommendations of external actuary, management had recorded technical reserves (Gross outstanding claims and reserves including premium deficiency reserves) which amounted to SAR 4.65 billion (December 31, 2019: SAR 5.61 billion). Significant portion of reserves relates to medical and property and casualty line of business which are a best-estimate of the expected ultimate claim trends as at June 30, 2020. | 7 (ii) |
| Disclosure of reinsurers/ retakaful share of unearned premium/ contributions, net [text block] | 7. UNEARNED PREMIUM AND GROSS OUTSTANDING CLAIMS AND RESERVES, NET(i) The movement in unearned premiums is as follows: June 30, 2020 December 31, 2019 (Unaudited) (Audited) Gross Due from reinsurers Net Gross Due from reinsurers Net SAR’000Balance as at the beginning of the period / year 3,826,119 (715,959) 3,110,160 3,820,293 (544,839) 3,275,454Premiums written during the period / year 5,042,534 (735,826) 4,306,708 8,375,860 (1,650,188) 6,725,672Premiums earned during the period / year (4,298,587) 758,416 (3,540,171) (8,370,034) 1,479,068 (6,890,966)Balance as at the end of the period / year 4,570,066 (693,369) 3,876,697 3,826,119 (715,959) 3,110,160 | 7 (i) |
| Disclosure of investments held-to-maturity [text block] | 5. 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 SAR and have an original maturity of more than three months to one year and yield on average financial incomes at rates 2.6% (31 December 2019: 2.24%). The movements in deposits during the period/ year is as follows: June 30, 2020(Unaudited) December 31,2019(Audited) SAR’000Insurance Operations Balance at the beginning of the period/ year 1,577,912 1,387,500Placed during the period/ year 3,244,764 5,534,846Proceeds during the period/ year (3,450,720) (5,344,434) Balance at the end of the period/ year 1,371,956 1,577,912Shareholders’ Operations Balance at the beginning of the period/ year 1,961,464 851,625Placed during the period/ year 3,700,338 5,362,907Matured during the period/ year (3,944,409) (4,253,068)Balance at the end of the period/ year 1,717,393 1,961,464 Total 3,089,349 3,539,376 | 5 |
| Disclosure of investments in available-for-sale investments [text block] | 4. AVAILABLE-FOR-SALE INVESTMENTSAvailable-for-sale investments comprise the following: Note June 30, 2020(Unaudited) December 31,2019(Audited) SAR’000Insurance Operations Mutual funds 173,369 53,165Fixed income portfolio (Governments and corporations securities) 1,520,403 1,213,310Discretionary Portfolio Management – Equity shares 318,813 157,084Private equity investment 4.1 10,250 -Sukuks - 6,341Funds placed with portfolio manager - 81,624Total 2,022,835 1,511,524 Shareholders’ Operations Mutual funds 321,919 651,917Fixed income portfolio (Governments and corporations securities) 275,194 388,344Discretionary Portfolio Management – Equity shares 274,384 122,723Funds placed with portfolio manager - 72,240Total 871,497 1,235,224 Total available-for-sale investments 2,894,332 2,746,748Movements in available-for-sale investments are as follows: June 30, 2020(Unaudited) December 31, 2019(Audited) Quoted securities Unquoted securities Total Quoted securities Unquoted securities Total SAR’000Insurance Operations Balance at the beginning of the period / year 162,837 1,348,687 1,511,524 - 1,234,907 1,234,907Purchases 299,470 1,032,135 1,331,605 153,750 360,277 514,027Reclassification from investment in associates - 10,250 10,250 Disposals (150,000) (482,628) (632,628) - (430,787) (430,787)Changes in fair value of Investments 6,506 (204,422) (197,916) 9,087 184,290 193,377Balance as at the end of the period/ year 318,813 1,704,022 2,022,835 162,837 1,348,687 1,511,524 Shareholders’ Operations Balance at the beginning of the period/ year 194,980 1,040,244 1,235,224 - 1,670,223 1,670,223Purchases 134,165 240,682 374,847 179,939 234,552 414,491Disposals (106,808) (561,217) (668,025) - (992,865) (992,865)Changes in fair value of Investments (11,657) (58,892) (70,549) 15,041 128,334 143,375Balance as at the end of the period/ year 210,680 660,817 871,497 194,980 1,040,244 1,235,224 Total 529,493 2,364,839 2,894,332 357,817 2,388,931 2,746,748As at June 30, 2020 the Company investment in Shraiah Notes amounting to SAR 2.8 billion (2019: SAR 2.5 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, discretionary portfolio management – equity shares 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.The movement of changes in fair value of investments is as follows: Three months ended June 30, 2020 (Unaudited) Three months ended June 30, 2019(Unaudited) Six months ended June 30, 2020 (Unaudited) Six months ended June 30, 2019(Unaudited) SAR’000Insurance Operations Change in fair value (202,494) 45,457 (197,916) 126,044Net amount recycled to interim statement of income (22,581) - (22,581) -Impairment on available-for-sale investments - - 2,637 - (225,075) 45,457 (217,860) 126,044Shareholders’ Operations Change in fair value (55,253) 31,106 (70,549) 131,645Net amount recycled to interim statement of income 41,066 - 22,850 1,145Impairment on available-for-sale investments - - 2,175 - (14,187) 31,106 (45,524) 132,790 Total (239,262) 76,563 (263,384) 258,8344.1 This represents the Company’s 3.85% holding in Najm for Insurance Services Company (“Najm”), a Saudi Closed Joint Stock Company. Due to change in board structure of Najm, the Company lost significant influence and resultantly classified as available for sale investments. These shares are unquoted and carried at cost. In the absence of reliable financial information, management believe that the fair values cannot be measures reliabily. | 4 |
| Disclosure of premiums/ contributions and insurance/ reinsurance or takaful/ retakaful balance receivables [text block] | 3. RECEIVABLES, NETReceivables comprise net amounts due from the following: June 30, 2020(Unaudited) December 31,2019(Audited) SAR’000Policyholders 2,638,998 668,599Brokers and agents 423,624 806,205Related parties (note 13) 50,333 122,283 3,112,955 1,597,087Receivables from reinsurers 112,502 45,015Administrative service plan 5,763 5,434 3,231,220 1,647,536Provision for doubtful receivables (184,252) (151,642)Receivables, net 3,046,968 1,495,894 | 3 |
| Disclosure of cash and cash equivalents [text block] | 6. CASH AND CASH EQUIVALENTS June 30, 2020(Unaudited) December 31,2019(Audited) SAR’000Insurance Operations Bank balances and cash 707,706 1,297,401 707,706 1,297,401Shareholders’ Operations Bank balances and cash 120,922 9,149 120,922 9,149 Total cash and cash equivalents 828,628 1,306,550Bank balances and cash includes call account balance of SAR 113 million (December 31, 2019: SAR 1.2 million). Bank balances (including off-balance sheet exposures) are placed with counterparties with sound credit ratings under Standard and Poor's and Moody’s ratings methodology. | 6 |
| Disclosure of statutory deposit [text block] | 10. 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, 2019: 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. | 10 |
| Disclosure of gross unearned premiums/ contributions [text block] | 7. UNEARNED PREMIUM AND GROSS OUTSTANDING CLAIMS AND RESERVES, NET(i) The movement in unearned premiums is as follows: June 30, 2020 December 31, 2019 (Unaudited) (Audited) Gross Due from reinsurers Net Gross Due from reinsurers Net SAR’000Balance as at the beginning of the period / year 3,826,119 (715,959) 3,110,160 3,820,293 (544,839) 3,275,454Premiums written during the period / year 5,042,534 (735,826) 4,306,708 8,375,860 (1,650,188) 6,725,672Premiums earned during the period / year (4,298,587) 758,416 (3,540,171) (8,370,034) 1,479,068 (6,890,966)Balance as at the end of the period / year 4,570,066 (693,369) 3,876,697 3,826,119 (715,959) 3,110,160 | 7 (i) |
| Disclosure of gross outstanding claims/ benefits [text block] | 7. UNEARNED PREMIUM AND GROSS OUTSTANDING CLAIMS AND RESERVES, NET (continued)(ii) Gross outstanding claims and reserves, net comprise of the following: June 30, December 31, 2020 2019 (Unaudited) (Audited) SAR’000Gross outstanding claims 2,897,682 3,717,931Less: Realizable value of salvage and subrogation (33,066) (33,040) 2,864,616 3,684,891Add: Incurred but not reported claims reserve 1,572,479 1,925,584Add: Premium deficiency reserve 209,165 2,830Gross outstanding claims and reserves 4,646,260 5,613,305 Less: Reinsurers’ share of gross outstanding claims (2,310,131) (3,100,446)Less: Reinsurers’ share of incurred but not reported claims (288,507) (327,724)Reinsurers’ share of outstanding claims and reserves (2,598,638) (3,428,170) Net outstanding claims and reserves 2,047,622 2,185,135There 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 June 30, 2020, based on the recommendations of external actuary, management had recorded technical reserves (Gross outstanding claims and reserves including premium deficiency reserves) which amounted to SAR 4.65 billion (December 31, 2019: SAR 5.61 billion). Significant portion of reserves relates to medical and property and casualty line of business which are a best-estimate of the expected ultimate claim trends as at June 30, 2020. | 7 (ii) |
| Disclosure of zakat [text block] | 17. ZAKAT Status of assessmentsThe Company had filed Zakat returns with the General Authority of Zakat and Tax (“GAZT”) for the years till 2019. The Company filed Zakat returns with the General Authority of Zakat and Tax ("GAZT'') for the years 2014 through 2019. The GAZT raised queries for the years 2014 through 2018 and the Company submitted response, the GAZT’s review and assessment for these years are awaited. The Zakat return for the year 2019 awaits GAZT’s review. Management believes that, appropriate provisions have been created that finalization of the above mentioned assessments is not expected to have a material impact on the financial statements for the year ended 2019. | 17 |
| Disclosure of classes of share capital [text block] | 8. SHARE CAPITALThe authorized, issued and paid up capital of the Company was SAR 1.25 billion at June 30, 2020 (December 31, 2019: SAR 1.25 billion) consisting of 125 million shares (December 31, 2019: 125 million shares) of SAR 10 each. Shareholding structure of the Company is as below. The shareholders of the Company are subject to zakat. June 30, 2020 Authorized and issued Paid up No. of Shares SAR’000Held by the public 79,025,509 790,255 790,255Public Pension Agency 23,612,685 236,127 236,127General Organization for Social Insurance 22,361,806 223,618 223,618 125,000,000 1,250,000 1,250,000 December 31, 2019 Authorized and issued Paid up No. of Shares SAR’000Held by the public 79,025,509 790,255 790,255Public Pension Agency 23,612,685 236,127 236,127General Organization for Social Insurance 22,361,806 223,618 223,618 125,000,000 1,250,000 1,250,000 | 8 |
| Disclosure of statutory reserve [text block] | 11. STATUTORY 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 statutory reserve until it equals the value of share capital. This transfer is only made at the year end. The statutory reserve is not available for distribution to the shareholders until the liquidation of the Company. | 11 |
| Disclosure of fair value reserve on investments [text block] | 14. 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 fair values of bank balances, cash 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. The table below presents the available-for-sale investments based on the fair value hierarchy: SAR’000June 30, 2020 (Unaudited) Level 1 Level 2 Level 3 TotalAvailable-for- sale investments Insurance Operations Mutual funds - 173,369 - 173,369Fixed income portfolio (Governments and corporations securities ) - 1,520,403 - 1,520,403Discretionary Portfolio Management – Equities 318,813 - - 318,813Private equity investment - - 10,250 10,250 318,813 1,693,772 10,250 2,022,835 Shareholders’ Operations Mutual funds - - 321,919 321,919Fixed income portfolio (Governments and corporations securities ) - 275,194 - 275,194Discretionary Portfolio Management – Equities 210,680 - 63,704 274,384 210,680 275,194 385,623 871,497 Total 529,493 1,968,966 395,873 2,894,332 SAR’000December 31, 2019 (Audited) Level 1 Level 2 Level 3 TotalAvailable-for-sale investments Insurance Operations Mutual funds - 53,165 - 53,165Fixed income portfolio (Governments and corporations securities ) - 1,213,310 - 1,213,310Discretionary Portfolio Management – Equities 157,084 - - 157,084Sukuks - - 6,341 6,341Funds placed with portfolio manager 81,624 - - 81,624 238,708 1,266,475 6,341 1,511,524 Shareholders’ Operations Mutual funds - - 651,917 651,917Fixed income portfolio (Governments and corporations securities ) - 388,344 - 388,344Discretionary Portfolio Management – Equities 122,723 - - 122,723Funds placed with portfolio manager 72,240 - - 72,240 194,963 388,344 651,917 1,235,224 Total 433,671 1,654,819 658,258 2,746,748Reconciliation of recurring fair value measurements categorized within Level 3 of the fair value hierarchy: SAR’000 Total gain or loss recognized in June 30, 2020 (Unaudited) Balance January 1 Purchases Reclassification from investment in associates (Note 4.1) DisposalsStatement of income Other comprehensive income Balance June 30Insurance Operations Sukuks 6,341 - - (6,341) - - - Private equity investment - - 10,250 - - - 10,250 6,341 - 10,250 (6,341) - - 10,250Shareholders’ operations Mutual funds 651,917 128,181 - (439,169) (46,751)27,741321,919 Discretionary Portfolio Management – Equities - 63,704 - - - - 63,704 651,917 191,885 - (439,169) (46,751)27,741385,623 Total 658,258 191,885 10,250 (445,510) (46,751)27,741395,873 SAR’000 Total gain or loss recognized in December 31, 2019 (Audited) Balance January 1 Purchases DisposalsStatement of income Other comprehensive income Balance December 31Insurance Operations Sukuks 225,140 - (218,799) - - 6,341 225,140 - (218,799) - - 6,341Shareholders’ operations Mutual funds 601,629 37,500 (55,154) (26,846) 94,788 651,917Sukuks 90,000 - (90,000) - - - 691,629 37,500 (145,154) (26,846) 94,788 651,917 Total 916,769 37,500 (363,953) (26,846) 94,788 658,258 | 14 |
| Disclosure of earnings per share [text block] | 16. EARNINGS PER SHAREBasic and diluted earnings per share for the three and six month periods ended 30 June 2020 and 30 June 2019 have been calculated by dividing the net income for the period attributed to shareholders’ by the weighted average number of ordinary shares issued and outstanding at the end of the period. | 16 |
| Disclosure of related party transactions [text block] | 13. 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 period and the related balances: Transactions for the period ended Balance receivable / (payable) as at June June June December 30, 2020 30, 2019 30, 2020 31, 2019 (Unaudited) (Unaudited) (Unaudited) (Audited) SAR’000Major shareholders Insurance premium written 704 562 3,023 3,862General Organization for Social Insurance - Other services - 45 - - Associates Insurance premium written/ (reversed) 14,624 (52) 15,496 674Najm fees paid - 4,417 - -Waseel fees paid 77 5,150 - -United Insurance Co. fees and claims, net 2,021 2,950 5,431 2,663 Entities controlled, jointly controlled or significantly influenced by related parties Insurance premium written 11,539 9,831 31,814 117,747Rent expenses paid 28 166 561 561Amount of claims paid to hospitals - 12,419 - (4,197)In accordance with the Company’s Articles of Association, the Board of Directors is entitled each year to remuneration of up to 10% of the remaining profit from Shareholders’ operations, as defined, based on a decision by the General Assembly.The compensation of key management personnel during the period is as follows: June 30, 2020 (Unaudited) June 30, 2019 (Unaudited) SAR’000Salaries and other allowances 5,171 5,071End of service indemnities 473 338 | 13 |
| Disclosure of entity's operating segments [text block] | 15. OPERATING SEGMENTSConsistent 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 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 equipment) are not reported to chief operating decision maker under related segments and are monitored on a centralized basis. | 15 |
| Disclosure of commitments and contingencies, general [text block] | 9. CONTINGENT LIABILITIESAs at June 30, 2020, the Company was contingently liable for letters of guarantees, issued on its behalf by the banks, amounting to SAR 218 million (December 31, 2019: SAR 200 million) occurring in the normal course of business.The Company, in common with significant majority of insurers, is subject to litigation in the normal course of its business. Appropriate provisions have been made in relation to pending cases and management believes that finalization of these court cases is not expected to have a material impact on the interim condensed financial information. | 9 |
| Disclosure of risk management [abstract] | | |
| Disclosure of insurance/ takaful risk [text block] | 19. RISK MANAGEMENTThe risk management policies used in the preparation of the interim condensed financial information are consistent with those followed in the preparation of the Company’s annual financial statements for the year ended 31 December 2019 except for the following: | 19 |
| Disclosure of market risk [text block] | Capital risk managementThe Company’s management, through various scenario analysis as required by the regulator, has assessed the potential of the Covid-19 pandemic by performing stress testing for various variables like: gross premium growth, increase in employee cost, YTD loss ratio, outstanding premium provisions etc. and the related impact on the revenue, profitability, loss ratio and solvency ratio. The Company’s management has concluded that based on the stress testing performed the solvency margin of the Company can be reduced from 135% to 75%. As with any forecasts, the projections and likelihoods of occurrence are underpinned by significant judgements and uncertainties and, therefore, the actual outcomes may be different to those projected. As the situation is fluid and rapidly evolving, the Company will continue to reassess its position and the related impact on a regular basis. | 19 |
| Disclosure of credit risk [text block] | Credit risk managementThe Company has strengthened its credit risk management policies to address the fast changing and evolving risks posed by the current circumstances. These include review of credit concentrations at granular economic sector, region, counterparty level and take appropriate action where required. Based on the review, the Company has identified the following major sectors, which are Food, Airlines, Freight Companies, Hotels, Retail, Construction, Entertainment, Tourism etc. being impacted significantly by the Covid-19 pandemic and lower oil prices. | 19 |
| Disclosure of liquidity risk [text block] | Liquidity risk managementThe Company is aware of the need to keep a close focus on liquidity management during this period and has enhanced its monitoring of current liquidity needs as well as the pandemic in its entirety. The Company regularly reviews and updates the liquidity forecast based on the individual liquidity balance as well as the continued development of external economic factors. | 19 |
| Disclosure of comparative figures [text block] | 20. RECLASSIFICATION OF COMPARATIVE FIGURESCertain of other underwriting expenses of the previous quarter have been reclassified to the incurred claims to conform with the presentation in the current period. These changes were made for accurate presentation of transactions in the statement of income of the Company and does not have any financial impact. | 20 |
| Disclosure of board of director's approval of the financial statements [text block] | 21. APPROVAL OF THE INTERIM CONDENSED FINANCIAL INFORMATIONThe interim condensed financial information have been approved by the Audit Committee on behalf the Board of Directors, on Dhuʻl-Hijja 12, 1441H, corresponding to August 12, 2020. | 21 |
| Disclosure of other notes relevant to understanding of financial statements [text block] | 12. INSURANCE SHARED AGREEMENTS(i) 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 has subsequently been renewed for two years from January 1, 2019 to December 31, 2020 with 25 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.(ii) Umrah shared agreement:On January 01, 2020 together with 28 related insurance companies, the Company signed the Umrah shared agreement relating to medical and general accident insurance which is effective from 1 January 2020. The agreement relates to insurance of pilgrims who entering the Kingdom of Saudi Arabia.The main terms of the above mentioned agreement are as follows:- The Company obtains 2% management fee of the net result of the Umrah portfolio;- The Company obtains 2.5% of Umrah’s gross premiums written to cover the related indirect expenses; - The Company obtains 0.3% of investing portfolio funds; - The company pays 7.5% brokerage commission of Umrah’s gross premiums written to broker;- The company pays 10% of Umrah’s portfolio surplus to Ministry of Hajj and Umrah; and- The net result of the Umrah portfolio after deducting all the above mentioned items is due to be shared equally by the Company and its related insurers.22. SUBSEQUENT EVENTSThe Company subsequent to the period ended June 30, 2020 has established a subsidiary named “Teejan Al-Khaleej” incorporated on July 21, 2020 under commercial registration No. 1010644057 with the objectives of developing technology based solutions and extending consultancy services for the insurance and healthcare businesses.The Company also has entered into a credit facility on 30 June 2020 of 400 million with Riyadh Bank for SIBOR 3 months + 0.65%. This has been approved by the board of directors of the Company. | 12, 22 |
