| Notes forming part of accounts [line items] | | |
| Disclosure of notes and other explanatory information [text block] |
1 | ORGANIZATION AND PRINCIPAL ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Malath Cooperative Insurance Company (the “Company”) is a Saudi Joint Stock Company established in Riyadh, Kingdom of Saudi Arabia by Royal Decree Number M/60 and incorporated on 21 Rabi Al-Awal 1428H corresponding to 9 April 2007 under Commercial Registration No. 1010231787. The Company’s head office is situated at Mohammad Bin Abdelaziz Street, P.O. Box 99763, Riyadh 11625, and Kingdom of Saudi Arabia.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The objectives of the Company are to engage in providing insurance and related services in accordance with its by-laws and the applicable regulations in the Kingdom of Saudi Arabia. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2 | BASIS OF PREPARATION |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (a) | Basis of presentation and measurement |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Statement of compliance |
|
|
|
|
|
|
|
|
|
|
|
|
|
| These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as endorsed in Kingdom of Saudi Arabia by Saudi Organization for Certified Public Accountants (SOCPA), other standards and pronouncements issued by SOCPA, Law of Companies and the Company's by-laws. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The financial statements are prepared under the going concern basis and the historical cost convention, except for the measurement at fair value of available-for-sale investments and measurement at present value of employees' end-of-service benefit obligations. 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: Available-for-sale investment, Investment held to maturity, Property and equipment, Statutory deposit, Accrued income on statutory deposit, Employees' end-of-service benefits and Accrued commission income payable to Saudi Central Bank (SAMA). 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 26). 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 26 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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 18 |
| Disclosure of general information about reporting entity [abstract] | | |
| Disclosure of general information about reporting entity [text block] |
1 | ORGANIZATION AND PRINCIPAL ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Malath Cooperative Insurance Company (the “Company”) is a Saudi Joint Stock Company established in Riyadh, Kingdom of Saudi Arabia by Royal Decree Number M/60 and incorporated on 21 Rabi Al-Awal 1428H corresponding to 9 April 2007 under Commercial Registration No. 1010231787. The Company’s head office is situated at Mohammad Bin Abdelaziz Street, P.O. Box 99763, Riyadh 11625, and Kingdom of Saudi Arabia.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The objectives of the Company are to engage in providing insurance and related services in accordance with its by-laws and the applicable regulations in the Kingdom of Saudi Arabia. |
|
|
|
|
|
|
|
|
|
| 1 |
| Disclosure of basis of preparation of financial statements [text block] |
2 | BASIS OF PREPARATION |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (a) | Basis of presentation and measurement |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Statement of compliance |
|
|
|
|
|
|
|
|
|
|
|
|
|
| These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as endorsed in Kingdom of Saudi Arabia by Saudi Organization for Certified Public Accountants (SOCPA), other standards and pronouncements issued by SOCPA, Law of Companies and the Company's by-laws. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The financial statements are prepared under the going concern basis and the historical cost convention, except for the measurement at fair value of available-for-sale investments and measurement at present value of employees' end-of-service benefit obligations. 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: Available-for-sale investment, Investment held to maturity, Property and equipment, Statutory deposit, Accrued income on statutory deposit, Employees' end-of-service benefits and Accrued commission income payable to Saudi Central Bank (SAMA). 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 26). 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 26 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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 | BASIS OF PREPARATION (continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (a) | Basis of presentation and measurement (continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| In preparing the Company-level financial statements in compliance with IFRSs, the balances and transactions of the insurance operations are amalgamated and combined with those of the shareholders’ operations. Inter-operation balances and transactions 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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (b) | Functional and presentation currency |
|
|
|
|
| These financial statements have been presented in Saudi Riyals (SR), which is also the functional currency of the Company. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (c) | Fiscal year |
|
|
|
|
|
|
| The Company follows a fiscal year ending 31 December. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (d) | Critical accounting judgments, estimates and assumptions |
|
|
|
|
| The 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, 2019. 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 contracts |
|
|
|
| The 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. The actuary has 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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 14 |
|
|
|
|
|
|
|
|
| 2 | BASIS OF PREPARATION (continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (d) | Critical accounting judgments, estimates and assumptions (continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ii) | Impairment of available-for-sale financial assets |
|
|
|
|
| The Company determines that financial assets are impaired when there has been a significant or prolonged decline in the fair values of the financial assets below its cost. The determination of what is ‘significant’ or ‘prolonged’ requires judgement. 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 judgement, the Company evaluates, among other factors, the duration or extent to which the fair value of an investment is less than its cost. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| iii) | Impairment of receivables |
|
|
|
|
|
|
| The Company assesses receivables that are individually significant and receivables included in a group of financial assets with similar credit risk characteristics for impairment. Receivables that are individually assessed for impairment and for which an impairment loss is or continues to be recognized are not included in a collective assessment of impairment. This assessment of impairment requires judgment. In making this judgment, the Company evaluates credit risk characteristics that consider past-due status being indicative of the ability to pay all amounts due as per contractual terms (Refer note 6). |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| iv) | Deferred policy acquisition costs |
|
|
|
|
|
|
| Certain acquisition costs related to sale of policies are recorded as deferred acquisition costs and are amortized over the related period of policy coverage. If the assumptions relating to future profitability of these policies are not realized, the amortization of these costs could be accelerated and this may also require additional impairment in statement of income. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| v) | Additional premium reserve |
|
|
|
|
|
|
| Estimation of the premium deficiency reserve is highly sensitive to a number of assumptions as to the future events and conditions. It is based on an expected loss ratio for the unexpired portion of the risks for written policies. To arrive at the estimate of the expected loss ratio, the actuary looks at the claims and premiums relationship which is expected to be realized in the future. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2 |
| Disclosure of summary of significant accounting policies [abstract] | | |
| Disclosure of summary of significant accounting policies, general comment [text block] |
3 | SIGNIFICANT ACCOUNTING POLICIES (continued) |
|
|
|
|
| a. | IFRS 17 - Insurance Contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Overview |
|
|
|
|
|
|
|
| This standard has been published in May, 2017. It establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts and supersedes IFRS 4 – Insurance contracts. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The new standard applies to insurance contracts issued, to all reinsurance contracts and to investment contracts with discretionary participating features, provided the entity also issues insurance contracts. It requires to separate the following components from insurance contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| i- | embedded derivatives, if they meet certain specified criteria; |
|
|
|
|
| ii- | distinct investment components; and |
|
|
|
|
|
| iii- | any promise to transfer distinct goods or non-insurance services. |
|
|
|
|
|
|
|
|
|
|
|
|
|
| These components should be accounted for separately in accordance with the related standards (IFRS 9 and IFRS 15). |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Measurement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| In contrast to the requirements in IFRS 4, which permitted insurers to continue to use the accounting policies for measurement purposes that existed prior to January 2015, IFRS 17 provides the following different measurement models: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The General Measurement Model (GMM) is based on the following “building blocks”: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| a) | the fulfilment cash flows (FCF), which comprise: |
|
|
|
|
| i. | probability-weighted estimates of future cash flows, |
|
|
|
|
| ii. | an adjustment to reflect the time value of money (i.e. discounting) and the financial risks associated with those future cash flows, and |
|
|
|
|
|
|
|
|
|
| iii. | a risk adjustment for non-financial risk; |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| b) | the Contractual Service Margin (CSM) - The CSM represents the unearned profit for a group of insurance contracts and will be recognized as the entity provides services in the future. The CSM cannot be negative at inception; any net negative amount of the fulfilment cash flows at inception will be recorded in profit or loss immediately. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| At the end of each subsequent reporting period, the carrying amount of a group of insurance contracts is re- measured to be the sum of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| i. | the liability for remaining coverage, which comprises the FCF related to future services and the CSM of the group at that date; and |
|
|
|
|
|
|
|
|
|
| ii. | the liability for incurred claims, which is measured as the FCF related to past services allocated to the group at that date. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The CSM is adjusted subsequently for changes in cash flows related to future services. Since the CSM cannot be negative, changes in future cash flows that are greater than the remaining CSM are recognized in profit or loss. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The effect of changes in discount rates will be reported in either profit or loss or other comprehensive income, determined by an accounting policy choice. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3 | SIGNIFICANT ACCOUNTING POLICIES (continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| a. | IFRS 17 - Insurance Contracts (continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The Variable Fee Approach (VFA) is a mandatory model for measuring contracts with direct participation features (also referred to as ‘direct participating contracts’). This assessment of whether the contract meets these criteria is made at inception of the contract and not reassessed subsequently. For these contracts, in addition to the adjustment under GMM, the CSM is also adjusted for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| i. | the entity’s share of the changes in the fair value of underlying items |
|
|
|
| ii. | the effect of changes in the time value of money and in financial risks not relating to the underlying items. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| In addition, a simplified Premium Allocation Approach (PAA) is permitted for the measurement of the liability for remaining coverage if it provides a measurement that is not materially different from the General Measurement Model for the group of contracts or if the coverage period for each contract in the group is one year or less. With the PAA, the liability for remaining coverage corresponds to premiums received at initial recognition less insurance acquisition cash flows. The General Measurement Model remains applicable for the measurement of the liability for incurred claims. However, the entity is not required to adjust future cash flows for the time value of money and the effect of financial risk if those cash flows are expected to be paid/received in one year or less from the date the claims are incurred. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Effective date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The IASB issued an Exposure Draft Amendments to IFRS 17 proposing certain amendments to IFRS 17 during June 2020 and received comments from various stakeholders. The IASB is currently re-deliberating issues raised by stakeholders. For any proposed amendments to IFRS 17, the IASB will follow its normal due process for standard- setting. The effective date of IFRS 17 and the deferral of the IFRS 9 temporary exemption in IFRS 4 is currently January 1, 2021. Under the current exposure draft, it is proposed to amend the IFRS 17 effective date to reporting periods beginning on or after January 1, 2023. This is a deferral of 2 year compared to the previous date of January 1, 2021. Earlier application is permitted if both IFRS 15 – Revenue from Contracts with Customers and IFRS 9 – Financial Instruments have also been applied. The Company intends to apply the Standard on its effective date. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Transition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Retrospective application is required. However, if full retrospective application for a group of insurance contracts is impracticable, then the entity is required to choose either a modified retrospective approach or a fair value approach. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Presentation and Disclosures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The Company expects that the new standard will result in a change to the accounting policies for insurance contracts and reinsurance together with amendments to presentation and disclosures. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3 | SIGNIFICANT ACCOUNTING POLICIES (continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| c. | IFRS 17 - Insurance Contracts (continued) |
|
|
|
|
| Impact |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The Company has completed operational and financial gap analysis and currently is in design phase of IFRS 17 implementation which requires developing and designing new processes and procedures for the business including any system developments required under IFRS 17 and detailed assessment of business requirements. Following are the main areas under design phase and status of the progress made so far by the Company: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Major areas of design phase |
|
| Summary of progress |
|
|
|
|
| Governance and control framework | The Company has put in place a comprehensive IFRS 17 governance program which includes establishing oversight steering committee for monitoring the progress of implementation and assigning roles and responsibilities to various stakeholders. |
| Operational area |
|
| The Company is in progress of designing operational aspects of the design phase which includes establishing comprehensive data policy and data dictionary. Also the Company is finalizing architectural designs for various sub-systems. The Company has progressed through assessment of business requirements and currently working on vendor selection while finalizing various process needed for transition and assessment of new resources needed. |
| Technical and financial area |
|
| The Company has completed various policy papers encompassing various technical and financial matters after concluding on policy decisions required under the IFRS 17 standard. The policy decisions are taken after due deliberations among various stakeholders. Currently majority of policy papers have been approved by the Company's IFRS 17 project steering committee. |
| Assurance plan |
|
| The Company is working along with its other stakeholders to finalize the assurance plan for transitional and post-implementation periods. |
| 3 |
| Disclosure of notes forming part of accounts [abstract] | | |
| Disclosure of property and equipment [text block] |
11 | PROPERTY AND EQUIPMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Leasehold improvements | Computer hardware | Computer software | Furniture and fixtures | Office equipment | Motor vehicles |
| Total 2020 |
|
| ---------------------- SR (000) ---------------------------- |
|
|
|
|
|
|
|
| Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1 January | 15,875 |
| 12,274 |
| 3,681 |
| 3,849 |
| 3,387 |
| 84 |
| 39,150 | Additions | - |
| 260 |
| - |
| 85 |
| 117 |
| - |
| 462 | 31December | 15,875 |
| 12,534 |
| 3,681 |
| 3,934 |
| 3,504 |
| 84 |
| 39,612 | Accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
| 1 January | 14,789 |
| 11,073 |
| 3,330 |
| 3,465 |
| 3,071 |
| 84 |
| 35,812 | Charge for the year | 599 |
| 457 |
| 336 |
| 165 |
| 142 |
| - |
| 1,699 | 31December | 15,388 |
| 11,530 |
| 3,666 |
| 3,630 |
| 3,213 |
| 84 |
| 37,511 | Net book value: |
|
|
|
|
|
|
|
|
|
|
|
|
| 31December | 487 |
| 1,004 |
| 15 |
| 304 |
| 291 |
| - |
| 2,101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Leasehold improvements | Computer hardware | Computer software | Furniture and fixtures | Office equipment | Motor vehicles |
| Total 2019 |
|
| ---------------------- SR (000) ---------------------------- |
|
|
|
|
|
|
|
| Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1 January | 15,752 |
| 11,150 |
| 3,681 |
| 3,848 |
| 3,250 |
| 84 |
| 37,765 | Additions | 123 |
| 1,124 |
| - |
| 1 |
| 137 |
| - |
| 1,385 | 31December | 15,875 |
| 12,274 |
| 3,681 |
| 3,849 |
| 3,387 |
| 84 |
| 39,150 | Accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
| 1 January | 14,123 |
| 10,588 |
| 2,986 |
| 3,226 |
| 2,924 |
| 84 |
| 33,931 | Charge for the year | 666 |
| 485 |
| 344 |
| 239 |
| 147 |
| - |
| 1,881 | 31December | 14,789 |
| 11,073 |
| 3,330 |
| 3,465 |
| 3,071 |
| 84 |
| 35,812 | Net book value: |
|
|
|
|
|
|
|
|
|
|
|
|
| 31December | 1,086 |
| 1,201 |
| 351 |
| 384 |
| 316 |
| - |
| 3,338 |
| |
| Disclosure of reinsurers/ retakaful share of outstanding claims, net [text block] |
8 | TECHNICAL RESERVES |
|
|
|
|
|
|
|
|
|
|
|
|
| a) | Outstanding claims and reserves |
|
|
|
|
|
|
|
|
|
| 2020 |
| 2019 |
|
|
|
|
| SR (000) |
|
| Gross outstanding claims |
|
| 175,410 |
| 219,992 | Less: realizable value of salvage and subrogation |
|
| (81,057) |
| (79,423) | Outstanding claims |
|
| 94,353 |
| 140,569 | Claims incurred but not reported (IBNR) |
|
| 197,889 |
| 177,894 | Additional premium reserves |
|
| 39,637 |
| 17,314 | Other technical reserves |
|
| 3,664 |
| 3,605 |
|
|
|
|
| 335,543 |
| 339,382 |
|
|
|
|
|
|
|
| Reinsurers' share of outstanding claims |
|
| (94,625) |
| (122,227) | Reinsurers' share of claims incurred but not reported |
|
| (20,530) |
| (25,476) |
|
|
|
|
| (115,155) |
| (147,703) | Net outstanding claims and reserves |
|
| 220,388 |
| 191,679 |
|
|
|
|
|
|
|
| b) | Unearned premiums | 2020 |
|
|
|
|
|
|
| Gross |
| Reinsurers' share | Net |
|
|
| SR (000) |
|
|
|
| Unearned premiums at beginning of the year | 348,546 |
| (17,538) |
| 331,008 | Premiums written during the year | 781,568 |
| (78,660) |
| 702,908 | Premiums earned during the year | (799,140) |
| 79,147 |
| (719,993) | Unearned premiums at end of the year | 330,974 |
| (17,051) |
| 313,923 |
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
|
|
|
|
|
| Gross |
| Reinsurers' share | Net |
|
|
| SR (000) |
|
|
|
| Unearned premiums at beginning of the year | 267,020 |
| (19,190) |
| 247,830 | Premiums written during the year | 835,236 |
| (87,698) |
| 747,538 | Premiums earned during the year | (753,710) |
| 89,350 |
| (664,360) | Unearned premiums at end of the year | 348,546 |
| (17,538) |
| 331,008 |
|
|
|
|
|
|
|
| c) | Unearned reinsurance commission |
|
|
|
|
|
|
|
|
|
| 2020 |
| 2019 |
|
|
|
|
| SR (000) |
|
| Balance at beginning of the year |
|
| 4,801 |
| 4,469 | Commission received during the year |
|
| 14,252 |
| 18,118 | Commission earned during the year |
|
| (15,052) |
| (17,786) | Balance at end of the year |
|
| 4,001 |
| 4,801 |
|
|
|
|
|
|
|
| d) | Deferred policy acquisition costs |
|
|
|
|
|
|
|
|
|
| 2020 |
| 2019 |
|
|
|
|
| SR (000) |
|
|
|
|
|
|
|
|
|
| Balance at beginning of the year |
|
| 27,331 |
| 21,058 | Incurred during the year |
|
| 71,716 |
| 77,875 | Amortized during the year |
|
| (78,930) |
| (71,602) | Balance at end of the year |
|
| 20,117 |
| 27,331 |
| |
| Disclosure of investments [text block] |
9 | AVAILABLE-FOR-SALE INVESTMENTS |
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
| 2019 |
|
|
|
|
|
| SR (000) |
|
| Insurance operations |
|
|
|
|
|
| Unquoted |
|
|
|
|
|
|
| Funds |
|
|
|
| 53,976 |
| 3,372 |
|
|
|
|
|
|
|
|
| Shareholders’ operations |
|
|
|
|
|
| Quoted |
|
|
|
|
|
|
| Equity shares |
|
|
| 9,543 |
| 9,380 |
|
|
|
|
|
|
|
|
| Unquoted |
|
|
|
|
|
|
| Funds |
|
|
|
| 49,239 |
| 21,512 | Equity shares |
|
|
| 3,800 |
| 1,923 |
|
|
|
|
|
| 62,582 |
| 32,815 | Total available for sale investments |
|
|
| 116,558 |
| 36,187 | The fair values of the unquoted mutual funds computed above are based on the latest reported net assets as at the reporting date. Unquoted equity shares in shareholders' operations include investment in Najm Company for Insurance Services amounting to SR 1.9 million (2019: 1.9 million) which is carried at cost due to absence of active market or other means of reliably measuring its fair value. An impairment review is performed at each reporting date. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Movement in the investment balance is as follows: |
|
|
|
|
|
|
|
|
|
| Quoted Securities | Unquoted Securities | Total |
|
|
|
| SR (000) |
|
|
|
| Insurance operations |
|
|
|
|
|
| Balance at 01 January 2020 |
| - |
| 3,372 |
| 3,372 | Additions during the year |
| - |
| 50,604 |
| 50,604 | Balance at 31 December 2020 |
| - |
| 53,976 |
| 53,976 |
|
|
|
|
|
|
|
|
| Balance at 01 January 2019 |
| - |
| 3,322 |
| 3,322 | Reversal of impairment during the year |
| - |
| 50 |
| 50 | Balance at 31 December 2019 |
| - |
| 3,372 |
| 3,372 |
|
|
|
|
|
|
|
|
| Shareholders' operations |
|
|
|
|
|
| Balance at 01 January 2020 |
| 9,380 |
| 23,435 |
| 32,815 | Addition during the year |
| 82,855 |
| 31,877 |
| 114,732 | Disposals during the year |
| (81,344) |
| (3,898) |
| (85,242) | Reversal of impairment during the year |
| - |
| 238 |
| 238 | Re-measurement gain during the year |
| 10,175 |
| 1,387 |
| 11,562 | Realized gain on disposal |
| (11,523) |
| - |
| (11,523) | Balance at 31 December 2020 |
| 9,543 |
| 53,039 |
| 62,582 |
|
|
|
|
|
|
|
|
| Balance at 01 January 2019 |
| - |
| 32,300 |
| 32,300 | Addition during the year |
| 8,515 |
| - |
| 8,515 | Disposals during the year |
| - |
| (10,000) |
| (10,000) | Reversal of impairment during the year |
| - |
| 1,135 |
| 1,135 | Re-measurement gain during the year |
| 865 |
| - |
| 865 | Balance at 31 December 2019 |
| 9,380 |
| 23,435 |
| 32,815 |
| |
| Disclosure of premiums/ contributions and insurance/ reinsurance or takaful/ retakaful balance receivables [text block] |
7 | PREMIUMS AND REINSURERS' RECEIVABLE - NET |
|
|
|
| Receivables comprise amounts due from the following: |
|
|
|
|
|
|
|
|
| 31 December |
| 31 December |
|
|
|
|
| 2020 |
| 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
| SR (000) |
|
|
|
|
|
|
|
|
|
| Policyholders |
|
|
| 213,593 |
| 205,100 | Reinsurers |
|
|
| 2,330 |
| 349 | Insurance companies |
|
|
| 10,229 |
| 4,729 | Agents and brokers |
|
|
| 10,600 |
| 7,030 |
|
|
|
|
| 236,752 |
| 217,208 | Less: |
|
|
|
|
|
| Provision for doubtful receivables - policyholders |
|
| (36,274) |
| (33,151) | Provision for doubtful receivables - reinsurers |
|
| (254) |
| (223) |
|
|
|
|
| (36,528) |
| (33,374) | Total premium and reinsurance receivables, net |
|
| 200,224 |
| 183,834 | The movement in the provision for doubtful receivables is as follows: |
|
|
|
|
|
|
|
| 2020 |
| 2019 |
|
|
|
|
| SR (000) |
|
|
|
|
|
|
|
|
|
| Balance at the beginning of the year |
|
| 33,374 |
| 34,449 | Provision / (reversals) for the year |
|
|
| 3,154 |
| (1,075) | Balance at the end of the year |
|
|
| 36,528 |
| 33,374 |
|
|
|
|
|
|
|
| As at 31 December, the aging of receivables were as follows: |
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
| Total | Past due but not impaired | Past due and impaired |
|
|
|
|
| Less than 90 days | 91 - 180 days | 181 - 360 days | More than 360 days |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Policyholders | 213,593 | 142,589 | 14,691 | 29,388 |
| 26,925 | Reinsurers | 2,330 | 1,666 | 319 | 7 |
| 338 | Insurance companies | 10,229 | 1,745 | 1,165 | 3,049 |
| 4,270 | Agents and brokers | 10,600 | 8,007 | 25 | 91 |
| 2,477 |
|
| 236,752 | 154,007 | 16,200 | 32,535 |
| 34,010 | 2019 |
|
|
|
|
|
|
| Policyholders | 205,100 | 120,538 | 38,141 | 23,497 |
| 22,924 | Reinsurers | 349 | 44 | 10 | 295 |
| - | Insurance companies | 4,729 | 2,517 | - | 364 |
| 1,848 | Agents and brokers | 7,030 | 4,572 | - | - |
| 2,458 |
|
| 217,208 | 127,671 | 38,151 | 24,156 |
| 27,230 |
|
|
|
|
|
|
|
|
| 6 |
| Disclosure of prepayments and other assets [text block] |
10 | PREPAYMENTS AND OTHER ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
| 2019 |
|
|
|
| SR (000) |
|
| Advance settlements |
| 13,596 |
| 9,470 | Prepaid employee benefits and others |
| 3,250 |
| 2,879 | Deferred expenses |
| 3,094 |
| 2,851 | Prepaid rent |
| 2,295 |
| 2,478 | Advance to employees |
| 1,562 |
| 1,957 | Accrued commission receivable |
| 1,015 |
| 17,327 | Guarantee deposits (note 23) |
| 300 |
| 300 | Others |
|
| 1,677 |
| 4,486 |
|
|
|
| 26,789 |
| 41,748 |
| |
| Disclosure of due from related parties [text block] |
21 | RELATED PARTY TRANSACTIONS AND BALANCES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Related 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 mutually agreed and are approved by the Company’s management. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the year ended
|
|
|
|
|
|
|
|
| 2020 |
| 2019 | Board of Directors’ and committees meeting fees |
|
|
|
|
| 590 |
| 333 |
|
|
|
|
|
|
|
|
|
|
| Bonus paid to Board of Directors |
|
|
|
|
| 3,150 |
| 1,850 |
|
|
|
|
|
|
|
|
|
|
| Balances due from / (to) related parties comprise the following: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
| 2019 |
|
|
|
|
|
|
|
| SR (000) |
|
|
|
|
|
|
|
|
|
|
|
|
| Claims payable to companies owned by BOD members |
|
|
|
|
| (1) |
| (2) |
|
|
|
|
|
|
|
|
|
|
| Remuneration and compensation of BOD and key management personnel: |
|
|
|
| 2020 |
|
|
| Board members (Non-executives) | Key management personnel including CEO and CFO |
|
|
|
| SR (000) |
|
|
|
|
|
| Salaries and compensation |
| - |
|
|
| 6,330 |
|
| Annual remuneration |
| 3,150 |
|
|
| 1,188 |
|
| End of service indemnities |
| - |
|
|
| 363 |
|
|
|
|
|
| 3,150 |
|
|
| 7,881 |
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
|
| Board members (Non-executives) | Key management personnel including CEO and CFO |
|
|
|
| SR (000) |
|
|
|
|
|
| Salaries and compensation |
| - |
|
|
| 5,868 |
|
| Annual remuneration |
| 1,850 |
|
|
| 592 |
|
| End of service indemnities |
| - |
|
|
| 318 |
|
|
|
|
|
| 1,850 |
|
|
| 6,778 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 16 |
| Disclosure of cash and cash equivalents [text block] |
4 | CASH AND CASH EQUIVALENTS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
| 2019 |
|
|
|
|
|
|
|
| SR (000) |
|
| Insurance operations |
|
|
|
|
|
|
|
| Cash in banks |
|
|
|
|
| 203,447 |
| 48,960 | Cash on hand |
|
|
|
|
| 19 |
| 10 | Short term Murabaha deposits |
|
|
| - |
| 50,000 |
|
|
|
|
|
|
|
| 203,466 |
| 98,970 |
|
|
|
|
|
|
|
|
|
|
| Shareholders' operations |
|
|
|
|
|
|
| Cash in banks |
|
|
|
|
| 356,604 |
| 71,300 |
|
|
|
|
|
|
|
|
|
|
| Total cash and cash equivalent |
|
|
| 560,070 |
| 170,270 |
|
|
|
|
|
|
|
|
|
|
| Short term Murabaha deposits are maintained with financial institutions and have original maturity of less than three months. The short term Murabaha deposits were subject to an average commission rate of 1.73% per annum as at 31 December 2019. |
|
|
|
|
|
|
|
|
|
|
| The carrying amounts disclosed above are not materially different from their fair values at the date of the statement of financial position. |
|
|
|
|
|
|
|
|
|
|
| Bank balances and deposits are placed with counter parties with sound credit ratings under Standard and Poor and Moody's' rating methodology (note 22). |
|
|
|
|
|
|
|
|
|
|
|
| 4 |
| Disclosure of statutory deposit [text block] |
12 | STATUTORY DEPOSIT |
|
|
|
|
|
|
|
| In compliance with Article 58 of the Implementing Regulations issued by the SAMA, the Company has deposited 15 percent (31 December 2019: 15 percent) of its share capital, amounting to SR 75 million (31 December 2019: 75 million), in a bank designated by SAMA. The statutory deposit is maintained with a reputed local bank and can be withdrawn only with the consent of SAMA. The Company is not entitled to receive the investment return on this deposit. This investment return is shown as a separate line item in the Statement of Financial Position. Income is accrued on statutory deposit at rate of 0.55% (per annum). |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Disclosure of employees' end of service benefits [text block] |
14 | EMPLOYEES' END-OF-SERVICE BENEFITS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The Company operates a defined benefit plan for its employees based on the prevailing Saudi Labor Law. Accruals are made in accordance with the actuarial valuation under the 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: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
| 2019 |
|
|
|
|
|
|
|
|
|
|
| Present value of defined benefit obligation |
|
|
|
| 18,209 |
| 14,850 |
|
|
|
|
|
|
|
|
|
|
| Movement of defined benefit obligation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
| 2019 |
|
|
|
|
|
|
|
|
|
|
| At the beginning of the year |
|
|
|
|
| 14,850 |
| 13,852 | Current service cost |
|
|
|
|
| 2,095 |
| 1,936 | Interest cost |
|
|
|
|
|
| 619 |
| 536 | Net benefit expenses |
|
|
|
|
| 2,714 |
| 2,472 | Benefits paid during the year |
|
|
|
|
| (1,305) |
| (1,900) | Actuarial loss from experience adjustments |
|
|
|
| 1,950 |
| 426 | At the end of the year |
|
|
|
|
| 18,209 |
| 14,850 |
|
|
|
|
|
|
|
|
|
|
| Principal actuarial assumptions |
|
|
|
|
| 2020 |
| 2019 |
|
|
|
|
|
|
|
|
|
|
| Valuation discount rate |
|
|
|
|
| 3.75% |
| 3.75% | Salary escalation |
|
|
|
|
|
| 5% |
| 5% | 38 |
|
|
|
|
|
|
|
|
|
| 14 | EMPLOYEES' END-OF-SERVICE BENEFITS (continued) |
|
|
|
| The impact of changes in sensitivities on present value of defined benefit obligation is as follows: |
|
|
|
|
|
|
|
| 2020 |
| 2019 |
|
|
|
|
|
|
|
| SR (000) |
|
| Discount rate |
|
|
|
|
|
|
|
|
| - Increase by 50 basis points |
|
|
|
|
| (771) |
| (330) | - Decrease by 50 basis points |
|
|
|
|
| 844 |
| 347 | Expected rate of increase in salary level across different age bands |
|
|
|
| - Increase by 1% |
|
|
|
|
| 814 |
| 685 | -Decrease by 1% |
|
|
|
|
| (759) |
| (638) |
| |
| Disclosure of gross unearned premiums/ contributions [text block] |
b) | Unearned premiums | 2020 |
|
|
|
|
|
|
| Gross |
| Reinsurers' share | Net |
|
|
| SR (000) |
|
|
|
| Unearned premiums at beginning of the year | 348,546 |
| (17,538) |
| 331,008 | Premiums written during the year | 781,568 |
| (78,660) |
| 702,908 | Premiums earned during the year | (799,140) |
| 79,147 |
| (719,993) | Unearned premiums at end of the year | 330,974 |
| (17,051) |
| 313,923 |
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
|
|
|
|
|
| Gross |
| Reinsurers' share | Net |
|
|
| SR (000) |
|
|
|
| Unearned premiums at beginning of the year | 267,020 |
| (19,190) |
| 247,830 | Premiums written during the year | 835,236 |
| (87,698) |
| 747,538 | Premiums earned during the year | (753,710) |
| 89,350 |
| (664,360) | Unearned premiums at end of the year | 348,546 |
| (17,538) |
| 331,008 |
|
|
|
|
|
|
|
|
| |
| Disclosure of gross outstanding claims/ benefits [text block] |
a) | Outstanding claims and reserves |
|
|
|
|
|
|
|
|
|
| 2020 |
| 2019 |
|
|
|
|
| SR (000) |
|
| Gross outstanding claims |
|
| 175,410 |
| 219,992 | Less: realizable value of salvage and subrogation |
|
| (81,057) |
| (79,423) | Outstanding claims |
|
| 94,353 |
| 140,569 | Claims incurred but not reported (IBNR) |
|
| 197,889 |
| 177,894 | Additional premium reserves |
|
| 39,637 |
| 17,314 | Other technical reserves |
|
| 3,664 |
| 3,605 |
|
|
|
|
| 335,543 |
| 339,382 |
|
|
|
|
|
|
|
| Reinsurers' share of outstanding claims |
|
| (94,625) |
| (122,227) | Reinsurers' share of claims incurred but not reported |
|
| (20,530) |
| (25,476) |
|
|
|
|
| (115,155) |
| (147,703) | Net outstanding claims and reserves |
|
| 220,388 |
| 191,679 |
| |
| Disclosure of accrued expenses and other liabilities [text block] |
13 | ACCRUED AND OTHER LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
| 2019 |
|
|
|
|
|
|
|
| SR (000) |
|
|
|
|
|
|
|
|
|
|
|
|
| Commission payable |
|
|
|
|
| 16,970 |
| 20,856 | Najm uploading fee accrual |
|
|
|
|
| 5,243 |
| - | Accrued vacation allowance |
|
|
|
|
| 3,378 |
| 2,759 | Accrued SAMA inspection fees |
|
|
|
|
| 3,112 |
| 987 | Accrued professional fees |
|
|
|
|
| 2,322 |
| 630 | Accrued CCHI inspection fees |
|
|
|
|
| 1,828 |
| 449 | Accrued employees’ salaries and other benefits |
|
|
|
| 867 |
| 806 | Accounts payable - GOSI and others |
|
|
|
| 745 |
| 1,504 | Provision for withholding tax on reinsurance payments |
|
|
| - |
| 39,379 | Other liabilities |
|
|
|
|
|
| 34,452 |
| 19,730 |
|
|
|
|
|
|
|
| 68,917 |
| 87,100 |
| |
| Disclosure of due to related parties [text block] |
21 | RELATED PARTY TRANSACTIONS AND BALANCES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Related 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 mutually agreed and are approved by the Company’s management. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the year ended
|
|
|
|
|
|
|
|
| 2020 |
| 2019 | Board of Directors’ and committees meeting fees |
|
|
|
|
| 590 |
| 333 |
|
|
|
|
|
|
|
|
|
|
| Bonus paid to Board of Directors |
|
|
|
|
| 3,150 |
| 1,850 |
|
|
|
|
|
|
|
|
|
|
| Balances due from / (to) related parties comprise the following: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
| 2019 |
|
|
|
|
|
|
|
| SR (000) |
|
|
|
|
|
|
|
|
|
|
|
|
| Claims payable to companies owned by BOD members |
|
|
|
|
| (1) |
| (2) |
|
|
|
|
|
|
|
|
|
|
| Remuneration and compensation of BOD and key management personnel: |
|
|
|
| 2020 |
|
|
| Board members (Non-executives) | Key management personnel including CEO and CFO |
|
|
|
| SR (000) |
|
|
|
|
|
| Salaries and compensation |
| - |
|
|
| 6,330 |
|
| Annual remuneration |
| 3,150 |
|
|
| 1,188 |
|
| End of service indemnities |
| - |
|
|
| 363 |
|
|
|
|
|
| 3,150 |
|
|
| 7,881 |
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
|
| Board members (Non-executives) | Key management personnel including CEO and CFO |
|
|
|
| SR (000) |
|
|
|
|
|
| Salaries and compensation |
| - |
|
|
| 5,868 |
|
| Annual remuneration |
| 1,850 |
|
|
| 592 |
|
| End of service indemnities |
| - |
|
|
| 318 |
|
|
|
|
|
| 1,850 |
|
|
| 6,778 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Disclosure of zakat [text block] |
15 | PROVISION FOR ZAKAT |
|
|
|
|
|
|
|
| | a) | Zakat payable |
|
|
|
|
|
|
|
| | The estimated zakat base of the Company, which is subject to adjustments under Zakat regulations, consists of the following: | |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| 2020 |
| 2019 | |
|
|
|
|
|
|
|
| SR (000) |
|
| |
|
|
|
|
|
|
|
|
|
|
| | Share capital |
|
|
|
|
|
| 500,000 |
| 500,000 | | Adjusted income before Zakat |
|
|
|
|
| 32,030 |
| 29,205 | | Property and equipment, net |
|
|
|
|
| (2,101) |
| (3,338) | | Adjusted available-for-sale investments |
|
|
|
| (116,558) |
| (36,187) | | Accumulated losses |
|
|
|
|
| (141,437) |
| (142,844) | | Provision and adjustments |
|
|
|
|
| 283,762 |
| 164,579 | | Estimated Zakat base |
|
|
|
|
| 555,696 |
| 511,415 | | The movement in zakat payable during the year is as follows: |
|
|
|
|
|
| |
|
|
|
|
|
|
|
| 2020 |
| 2019 | |
|
|
|
|
|
|
|
| SR (000) |
|
| | Balance at beginning of the year |
|
|
|
|
| 32,220 |
| 29,866 | | Charge for the year |
|
|
|
|
| 15,125 |
| 13,183 | | Reversal of zakat provision |
|
|
|
|
| (7,635) |
| - | | Payments during the year |
|
|
|
|
| (19,336) |
| (10,829) | | Balance at end of the year |
|
|
|
|
| 20,374 |
| 32,220 | |
|
|
|
|
|
|
|
|
|
|
| | b) | Status of assessments |
|
|
|
|
|
|
|
| | The Company has filed the Zakat return for the year ended December 31, 2019 before the extended deadline of July 29, 2020. | |
|
|
|
|
|
|
|
|
|
|
| | c) | Status of appeals |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| | The years from 2007 to 2010: The General Authority of Zakat and Tax (“GAZT”) raised its assessments for those years claiming additional zakat liability of Saudi Riyals 8.7 million and withholding tax liability of Saudi Riyals 12.2 million in addition to the related delay penalties of 1% for each 30 delay days calculated from the due date till settling such due amounts. The Company has filed an appeal against such additional liabilities to GAZT then the case has been transferred to the Preliminary Appeal Committee ("PAC") which has rejected the major items therefore the Company has submitted a letter of guarantee to GAZT for zakat, withholding tax and related delay penalties amounting to Saudi Riyals 31.81 million and appealed the PAC ruling to the Higher Appeal Committee ("HAC") which has been replaced by the new tax committees under General Secretary of Tax Committees ("GSTC"). | |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| | 15 | PROVISION FOR ZAKAT (continued) |
|
|
|
|
|
|
| Then the company has submitted a request to the settlement committee at GAZT and reached to a settlement agreement for those years to settle an amount of Saudi Riyals 3.3 million for zakat and Saudi Riyals 12.2 million for withholding tax. The company has settled such agreed amounts. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The years from 2011 to 2015: The GAZT raised its assessments for those years claiming additional zakat liability of Saudi Riyals 8 million and withholding tax liability of Saudi Riyals 10.2 million in addition to the related delay penalties of 1% for each 30 delay days calculated from the due date till settling such due amounts. The Company has filed an appeal against such additional liabilities to GAZT then the case has been transferred to the Preliminary Appeal Committee ("PAC") which has been replaced by the new tax committees under General Secretary of Tax Committees ("GSTC"). Then the company has submitted a request to the settlement committee at GAZT and reached to a settlement agreement for those years to settle an amount of Saudi Riyals 4.1 million for zakat and Saudi Riyals 10.2 million for withholding tax. The company has settled such agreed amounts. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The years from 2016 to 2018: On December 27, 2020, the GAZT raised its assessments for those years claiming additional zakat liability of Saudi Riyals 3.3 million, and the company has submitted its appeal against such assessments during the legally prescribed period, the appeal is under review by GAZT. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The year 2019: The Company has filed the Zakat return for the year ended December 31, 2019 before the extended deadline of July 29, 2020. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| | |
| 9 |
| Disclosure of general and administrative expense [text block] |
19 | SALARIES AND STAFF RELATED COSTS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
| 2019 |
|
|
|
|
|
|
|
| SR (000) |
|
| Basic salaries |
|
|
|
|
|
| 37,113 |
| 35,961 | Housing allowances |
|
|
|
|
| 9,244 |
| 8,547 | Staff bonus |
|
|
|
|
|
| 6,177 |
| 5,304 | Insurance |
|
|
|
|
|
| 5,150 |
| 4,803 | Social security charges |
|
|
|
|
| 4,038 |
| 3,643 | Transportation allowances |
|
|
|
|
| 3,786 |
| 3,592 | End-of-service benefits (note 13) |
|
|
|
|
| 2,696 |
| 2,472 | Others |
|
|
|
|
|
| 7,491 |
| 6,829 |
|
|
|
|
|
|
|
| 75,695 |
| 71,151 |
20 | OTHER GENERAL AND ADMINISTRATIVE EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
| 2019 |
|
|
|
|
|
|
|
| SR (000) |
|
| Inspection fees |
|
|
|
|
| 6,634 |
| 8,029 | Occupancy charges |
|
|
|
|
| 4,829 |
| 5,900 | Professional fees |
|
|
|
|
| 4,432 |
| 2,888 | IT expenses |
|
|
|
|
| 3,241 |
| 4,540 | Advertisement and promotion |
|
|
|
|
| 3,067 |
| 5,270 | Depreciation expense (note 10) |
|
|
|
|
| 1,699 |
| 1,881 | Communication expenses |
|
|
|
|
| 1,269 |
| 974 | Withholding tax |
|
|
|
|
| 1,140 |
| 6,786 | Training and development |
|
|
|
|
| 427 |
| 911 | Office supplies |
|
|
|
|
| 333 |
| 471 | Others |
|
|
|
|
|
| 9,651 |
| 8,232 |
|
|
|
|
|
|
|
| 36,722 |
| 45,882 |
| |
| Disclosure of compensation to key management personnel [text block] |
Remuneration and compensation of BOD and key management personnel: |
|
|
|
|
|
| 2020 |
|
|
| Board members (Non-executives) | Key management personnel including CEO and CFO |
|
|
|
| SR (000) |
|
|
|
|
|
| Salaries and compensation |
| - |
|
|
| 6,330 |
|
| Annual remuneration |
| 3,150 |
|
|
| 1,188 |
|
| End of service indemnities |
| - |
|
|
| 363 |
|
|
|
|
|
| 3,150 |
|
|
| 7,881 |
|
|
|
|
|
|
|
|
|
|
|
|
| 2019 |
|
|
| Board members (Non-executives) | Key management personnel including CEO and CFO |
|
|
|
| SR (000) |
|
|
|
|
|
| Salaries and compensation |
| - |
|
|
| 5,868 |
|
| Annual remuneration |
| 1,850 |
|
|
| 592 |
|
| End of service indemnities |
| - |
|
|
| 318 |
|
|
|
|
|
| 1,850 |
|
|
| 6,778 |
|
|
| |
| Disclosure of earnings per share [text block] |
18 | BASIC AND DILUTED EARNINGS PER SHARE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and diluted earnings per share for the year have been calculated by dividing the total net income for the year by the weighted average number of shares in issue throughout the year. |
|
|
|
|
|
|
|
|
|
|
| The basic and diluted earning per share are as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2020 |
| 2019 |
|
|
|
|
|
|
|
|
|
|
| Basic and diluted earnings per share (Saudi Riyals) |
|
|
| 0.15 |
| 0.10 | Weighted average number of shares throughout the year |
|
|
| 50,000 |
| 50,000 |
| 11 |
| Disclosure of capital management [text block] |
h) | Capital management |
|
|
|
|
|
|
|
|
|
| Objectives are set by the Company to maintain healthy capital ratios in order to support its business objectives and maximize shareholders’ value. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The Company manages its capital requirements by assessing shortfalls between reported and required capital levels on a regular basis. Adjustments to current capital levels are made in light of changes in market conditions and risk characteristics of the Company’s activities. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders or issue new shares. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The 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 Insurance Regulations 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 SR 100 million |
|
|
|
|
|
|
| Premium Solvency Margin |
|
|
|
|
|
|
|
|
| Claims Solvency Margin |
|
|
|
|
|
|
|
|
|
| 13 |
| Disclosure of risk management [abstract] | | |
| Disclosure of insurance/ takaful risk [text block] |
22 | RISK MANAGEMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The risks faced by the Company and the way these risks are mitigated by management are summarized below: |
|
|
|
|
|
|
|
|
|
|
| Risk Governance |
|
|
|
|
|
|
| The Company’s risk governance is manifested in a set of established policies, procedures and controls which uses the existing organizational structure to meet strategic targets. The Company’s philosophy revolves on willing and knowledgeable risk acceptance commensurate with the risk appetite and strategic plan approved by the Board of Directors. The Company is exposed to insurance, reinsurance, special commission rate, credit, and liquidity and currency risks. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| a. | Risk management structure - a cohesive organizational structure is established within the Company in order to identify, assess, monitor and control risks. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| b. | Board of directors - the apex of risk governance is the centralized oversight of the Board of Directors providing direction and the necessary approvals of strategies and policies in order to achieve defined corporate goals. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| c. | Senior management - the senior management is responsible for the day to day operations towards achieving the strategic goals within the Company’s pre-defined risk appetite. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| a) | Insurance risk |
|
|
|
|
|
|
| The principal risk the Company faces under insurance contracts is that the actual claims and benefit payments or the timing thereof, differ from expectations. This is influenced by the frequency of claims, severity of claims, actual benefits paid and subsequent development of long–term claims. Therefore, the objective of the Company is to ensure that sufficient reserves are available to cover these liabilities. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The Company purchases reinsurance as part of its risks mitigation programme. Reinsurance ceded is placed on both a proportional and non–proportional basis. The majority of proportional reinsurance is quota–share reinsurance which is taken out to reduce the overall exposure of the Company to certain classes of business. Non–proportional reinsurance is primarily excess–of–loss reinsurance designed to mitigate the Company’s net exposure to catastrophe losses. Retention limits for the excess–of–loss reinsurance vary by product line and territory. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding claims provision and are in accordance with the reinsurance contracts. 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. The Company’s placement of reinsurance is diversified such that it is neither dependent on a single reinsurer nor are the operations of the Company substantially dependent upon any single reinsurance contract. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Frequency and severity of claims |
|
|
|
|
|
|
| The 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. The Board may decide to increase or decrease the maximum tolerances based on market conditions and other factors. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
