18

SUPPLEMENTARY INFORMATION

18.1

Interim condensed statement of financial position

30 September

31 December

30 September

31 December

30 September

31 December

2021

2020

2021

2020

2021

2020

(Unaudited)

(Audited)

(Unaudited)

(Audited)

(Unaudited)

(Audited)

ASSETS

Cash and cash equivalents

157,971

203,466

196,783

356,604

354,754

560,070

Murabaha deposits

139,398

165,284

100,000

-

239,398

165,284

Premiums and reinsurers' receivable - net

329,939

200,224

-

-

329,939

200,224

Reinsurers' share of unearned premiums

19,988

17,051

-

-

19,988

17,051

Reinsurers' share of outstanding claims

89,233

94,625

-

-

89,233

94,625

Reinsurers' share of claims incurred but not reported

18,557

20,530

-

-

18,557

20,530

Deferred policy acquisition costs

30,391

20,117

-

-

30,391

20,117

Deferred excess of loss premiums

83

-

-

-

83

-

Available-for-sale investments

62,169

53,976

108,431

62,582

170,600

116,558

Investment held to maturity

10,000

10,000

9,574

-

19,574

10,000

Prepayments and other assets

58,908

26,339

4,748

450

63,656

26,789

Property and equipment

4,897

2,101

-

-

4,897

2,101

Statutory deposit

-

-

75,000

75,000

75,000

75,000

Accrued commission income from statutory deposit

-

-

10,048

9,695

10,048

9,695

921,534

813,713

504,584

504,331

1,426,118

1,318,044

Due from insurance operations

-

-

(57,643)

(4,769)

(57,643)

(4,769)

TOTAL ASSETS

921,534

813,713

446,941

499,562

1,368,475

1,313,275

29

Insurance Operations

Shareholders' Operations

Total

SR (000)

MALATH COOPERATIVE INSURANCE COMPANY

(A SAUDI JOINT STOCK COMPANY)

NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

For the three-month and nine-month periods ended 30 September 2021

18

SUPPLEMENTARY INFORMATION (continued)

18.1

Interim condensed statement of financial position (continued)

30 September

31 December

30 September

31 December

30 September

31 December

2021

2020

2021

2020

2021

2020

(Unaudited)

(Audited)

(Unaudited)

(Audited)

(Unaudited)

(Audited)

LIABILITIES

Policyholders claims payable

66,055

54,955

-

-

66,055

54,955

Accrued and other liabilities

86,192

67,480

1,816

1,437

88,008

68,917

Reinsurance balances payable

24,085

6,840

-

-

24,085

6,840

Gross unearned premiums

489,932

330,974

-

-

489,932

330,974

Unearned reinsurance commission

4,654

4,001

-

-

4,654

4,001

Gross outstanding claims

50,215

94,353

-

-

50,215

94,353

Gross claims incurred but not reported

199,302

197,889

-

-

199,302

197,889

Additional premium reserve

42,138

39,637

-

-

42,138

39,637

Other technical reserves

3,564

3,664

-

-

3,564

3,664

Accrued reinsurance balance

-

2,409

-

-

-

2,409

Due to related parties

2

1

-

-

2

1

Employees' end-of-service benefits

18,949

18,209

-

2BASIS OF PREPARATION

(a)Basis of presentation and measurement

These interim condensed financial information (interim condensed financial statements) of the Company as at and for the period ended 30 September 2021 have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting (“IAS 34”), as endorsed in the Kingdom of Saudi Arabia by Saudi Organization for Chartered and Professional Accountants (SOCPA).

These interim condensed financial statements are prepared under the going concern concept and the historical cost convention, except for the measurement at fair value of available-for-sale investments and employees' end of service benefits measured at present value of future obligations using projected unit credit method. 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: Available-for-sale investments, 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 balances would generally be classified as current. The Company presents its interim condensed statement of financial position in order of liquidity. As required by the Law on Supervision of Co-operative Insurance Companies, the Company maintains separate books of accounts for Insurance Operations and Shareholders’ Operations and presents the interim condensed 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 condensed statement of financial position, interim condensed statements of income, comprehensive income and cash flows of the insurance operations and shareholders operations which are presented in Note 18 of the interim condensed 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 as endorsed in KSA. 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 condensed statements of financial position, interim condensed statements of income, interim condensed statement of comprehensive income and interim condensed statement of cash flows prepared for the insurance operations and shareholders operations as referred to above, reflect only the assets, liabilities, income, expenses and comprehensive gains or losses of the respective operations.

In preparing the Company-level interim condensed financial statements in compliance with IFRSs as endorsed in KSA, 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.

The interim condensed financial statements does not include all of the information required for full annual financial statements and should be read in conjunction with the audited annual financial statements as at and for the year ended 31 December 2020.

2BASIS OF PREPARATION (continued)

(b)Functional and presentation currency

These interim condensed financial statements have been presented in Saudi Riyals (SR), which is also the functional currency of the Company. All financial information has been rounded off to the nearest thousand, unless otherwise stated.

(c) Critical accounting judgments, estimates and assumptions

The 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.

Following are the accounting judgments and estimates that are critical in preparation of these interim condensed 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 claim estimates are reassessed for adequacy and changes are made to the provision.

The provision for IBNR is an estimation of claims which are expected to be reported subsequent to the date of interim condensed statement of financial position, for which the insured event has occurred prior to the date of interim condensed 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.

ii)Impairment of available-for-sale investments

The Company determines that investments 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.

10

2BASIS OF PREPARATION (continued)

(c) Critical accounting judgments, estimates and assumptions (continued)

iii)Impairment of receivables

A 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 instruments

Fair 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.

v)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.

vi)Premium deficiency 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.

3SIGNIFICANT ACCOUNTING POLICIES

The accounting policies adopted in the preparation of these interim condensed financial statements are consistent with those followed in the preparation of the Company’s annual financial statements for the year ended 31 December 2020, except for the adoption of new standards effective as of 1 January 2021. The Company has not early adopted any standard (interpretation) or amendments that has been issued but which are not yet effective.

a) Amendment to standards and interpretations

There are no new standards issued, however, certain amendments to standards and interpretations which are effective from 1 January 2021 and were listed in the Company's annual financial statements of 31 December 2020, but they do not have any impact on the interim condensed financial statements of the Company.

b)Standards issued but not yet effective

The Company has chosen not to early adopt the amendments and revisions to the IFRSs, which have been published and are mandatory for compliance for the Company with effect from future dates.

"STANDARD/

INTERPRETATION/

AMENDMENTS"DESCRIPTION"EFFECTIVE FROM

PERIODS BEGINNING ON OR AFTER THE

FOLLOWING DATE"

IFRS 16 (amendment)Amendments to IFRS 161-Apr-21

IFRS 9Financial Instruments (refer below)1-Jan-20

IFRS 17Insurance Contracts (refer below)1-Jan-23

11

3SIGNIFICANT ACCOUNTING POLICIES (continued)

a.Amendments to IFRS 16 - COVID-19 Related Rent Concessions

The amendment permits lessees, as a practical expedient, not to assess whether particular rent concessions occurring as a direct consequences of the COVID-19 pandemic are lease modifications and instead to account for those rent concessions as if they are not lease modifications.

b.IFRS 9 - Financial Instruments

The implementation of IFRS 9 is expected to result in a significant portion of financial assets currently classified as available-for-sale being re-classified as at fair value through profit or loss or fair value through other comprehensive income (OCI). Credit allowances for financial assets carried at amortized cost and debt securities measured at fair value, with changes in fair value recognized in OCI, are expected to increase due to the introduction of the expected credit loss methodology. The Company is using the exemptions available to insurers to defer the implementation of IFRS 9 until implementation of IFRS 17. The impact of the adoption of IFRS 9 on the Company’s interim condensed financial statements will, to a large extent, have to take into account the interaction with the IFRS 17 "Insurance contracts". At present the Company has not fully assessed the effects of adoption of IFRS 9.

c.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.

Effective date

The effective date of IFRS 17 and the deferral of the IFRS 9 temporary exemption in IFRS 4 is currently for 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.

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:

12

3SIGNIFICANT ACCOUNTING POLICIES (continued)

b.IFRS 17 - Insurance Contracts (continued)

Major areas of design phaseSummary of progress

Governance and control frameworkThe 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 areaThe 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 areaThe 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 planThe Company is working along with its other stakeholders to finalize the assurance plan for transitional and post-implementation periods.

6 PREMIUMS AND REINSURERS' RECEIVABLE - NET

Receivables comprise amounts due from the following:

30 September31 December

20212020

(Unaudited)(Audited)

SR (000)

Policyholders 321,386 213,593

Receivables from reinsurers 7,872 2,330

Insurance companies 11,767 10,229

Agents and brokers 35,548 10,600

376,573 236,752

Less:

Provision for doubtful receivables - insurance (46,245) (36,274)

Provision for doubtful receivables - reinsurers (389) (254)

(46,634) (36,528)

Premiums and reinsurers' receivable - net 329,939 200,224

The movement in the provision for doubtful receivables is as follows:

30 September31 December

20212020

(Unaudited)(Audited)

SR (000)

Balance at the beginning of the period/year36,528 33,374

Provision made during the period/year10,106 3,154

Balance at the end of the period/year 46,634 36,528

5 MURABAHA DEPOSITS

30 September31 December

20212020

(Unaudited)(Audited)

SR (000)

Insurance operations

Murabaha deposits 139,398165,284

Shareholders' operations

Murabaha deposit100,000 -

Total Murabaha deposits239,398165,284

Murabaha deposits have an original maturity of more than three months from the date of acquisition and are subject to an average commission rate of 4.08% per annum as at 30 September 2021 (31 December 2020: 1.57% per annum).

The carrying amounts disclosed above are not materially different from their fair values at the date of the interim condensed statement of financial position.

AVAILABLE-FOR-SALE INVESTMENTS

30 September 2021 31 December 2020

(Unaudited) (Audited)

SR (000) SR (000)

Insurance operations Shareholders’ operations Insurance operations Shareholders’ operations

Quoted

Equity shares 5,000 56,841 - 9,543

Unquoted

Funds 52,054 47,790 53,976 49,239

Equity shares 5,115 3,800 - 3,800

Total available for sale investments (note 14) 62,169 108,431 53,976 62,582

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 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 investments balance is as follows: 30 September 31 December

2021 2020

(Unaudited) (Audited)

SR (000)

Insurance operations

Balance at beginning of the period/year 53,976 3,372

Addition during the period/year 12,616 50,604

Transfer to shareholder investment during the period/year (1,219) -

Disposals during the period/year (3,881) -

Unrealized gain on available-for-sale investments 677 -

Balance at end of the period/year 62,169 53,976

30 September 31 December

2021 2020

(Unaudited) (Audited)

SR (000)

Shareholders' operations

Balance at beginning of the period/year 62,582 32,815

Addition during the period/year 59,912 114,732

Transfer from policyholder investment during the period/year 1,219 -

Disposals during the period/year (17,222) (85,242)

Reversal of impairment during the period/year - 238

Realized gain/(loss) during the period/year (3,098) (11,523)

Unrealized gain on available-for-sale investments 5,038 11,562

Balance at end of the period/year 108,431 62,582

16

8a INVESTMENT HELD TO MATURITY

Movement in the investments balance is as follows: 30 September 31 December

2021 2020

(Unaudited) (Audited)

SR (000)

Insurance operations

Balance at beginning of the period/year 10,000 -

Addition during the period/year - 10,000

Matured during the period/year - -

Balance at end of the period/year 10,000 10,000

During the year ending 31 December 2020, the Company invested in sukuk of SR 10 million without any premium or discount which was classified as held to maturity. The sukuk is having maturity of 5 years with coupon rate of 4.5%. The sukuk is offered by a local bank having a sound long term credit ratings of BBB+.

30 September 31 December

2021 2020

(Unaudited) (Audited)

Shareholders' operations SR (000)

Balance at beginning of the period/year - -

Addition during the period/year 9,574 -

Matured during the period/year - -

Balance at end of the period/year 9,574 -

During the period ending 30 September 2021, the Company invested in sukuk of SR 9.6 million without any premium or discount which was classified as held to maturity. The sukuk is offered by Local financial institutions having maturity of 5 years and 1 year with coupon rate of 3.5%, 5% and 10% respectively.

4 CASH AND CASH EQUIVALENTS

30 September31 December

20212020

(Unaudited)(Audited)

SR (000)

Insurance operations

Cash in banks 8,620 203,447

Cash on hand 19 19

Short term Murabaha deposits 149,332 -

157,971 203,466

Shareholders' operations

Cash in banks7,112356,604

Short term Murabaha deposits 189,671 -

196,783356,604

Total cash and cash equivalents354,754560,070

Short term Murabaha deposits have original maturity of less than three months from the date of acquisition and are subject to an average commission rate of 3.89% per annum as at 30 September 2021.

The carrying amounts disclosed above are not materially different from their fair values at the date of the interim condensed statement of financial position.

12 STATUTORY RESERVE

In accordance with the Company’s By-Laws 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 and such transfer is only made at year end. The statutory reserve is not available for distribution to shareholders until liquidation of the Company.

9 PROVISION FOR ZAKAT

a)Zakat payable

The movement in zakat payable during the period/year was as follows:

30 September31 December

20212020

(Unaudited)(Audited)

SR (000)

Balance at beginning of the period/year 20,374 32,220

Charge for the period/year 9,733 15,125

Reversal of zakat provision during the period/year (5,388) (7,635)

Payments during the period/year (8,585) (19,336)

Balance at end of the period/year - 16,134 20,374

b) Status

"The Company has filed the Zakat return for the year ended December 31, 2020 on the deadline of May 2, 2021.

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: Zakat, Tax and Customs Authority ("ZATCA") 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 ZATCA 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 ZATCA 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")

Then the company has submitted a request to the settlement committee at ZATCA 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 on 17 December 2020.

The years from 2011 to 2015: The ZATCA 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 ZATCA 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 ZATCA 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 on 17 December 2020.

18

9 PROVISION FOR ZAKAT (continued)

c)Status of appeals (continued)

The years from 2016 to 2018: On December 27, 2020, the ZATCA raised its assessments for those years claiming additional zakat liability of Saudi Riyals 3.3 million, then the company has appealed against such assessment within the legally prescribed period. As result, ZATCA has partially accepted the company’s appeal and issued a revised assessment for the company’s favor which resulted an overpaid amount of Saudi Riyals 1.5 million for the company. However, the company has decided to escalate the case to the GSTC and the case still under the GSTC committee study.

The years 2019 to 2020: On September 30, 2021, the Zakat, Tax and Customs Authority ("ZATCA") (Previously known as General Authority of Zakat and Tax) raised its assessments for those years claiming additional zakat liability of SR 5.2 million, and the company now is in the process of preparing the appeal letter to be submitted within the legally prescribed period (by November 29, 2021).

10 SHARE CAPITAL

As at 30 September 2021 and 31 December 2020, the issued and paid up share capital of the Company amounts to SR 500 million, divided into 50 million ordinary shares of SR 10 each.

On July 02, 2020, the Company announced on Tadawul that it has signed an agreement

on July 02, 2020 with participating insurance companies for Inherent Defects Insurance ("IDI")

product, based on the Saudi Central Bank's (SAMA) approval authorizing Malath as the leading

company, to manage the IDI program on behalf of the participating insurance companies, selling the

product and providing its insurance coverage by creating a joint insurance portfolios. Malath

Cooperative Insurance Company will exclusively manage the portfolio during the period of validity

of the IDI agreement. During the nine months preiod ended September 30, 2021, the Company has

recorded its share in operations of IDI. Due to immateriality of balances of the product, recorded

during the period, the Company has not classified IDI

as seperate segment and has reported its results under property and casualty segment.

7 TECHNICAL RESERVES

a) Net outstanding claims and reserves

30 September31 December

20212020

(Unaudited)(Audited)

SR (000)

Outstanding claims 50,215 94,353

Claims incurred but not reported at end of the period/year 199,302 197,889

Additional premium reserves 42,138 39,637

Other technical reserves 3,564 3,664

295,219 335,543

Reinsurers' share of outstanding claims (89,233) (94,625)

Reinsurers' share of claims incurred but not reported (18,557) (20,530)

(107,790) (115,155)

Net outstanding claims and reserves 187,429 220,388

b) Unearned premiums 30 September 2021 (Unaudited)

Gross Reinsurers' share Net

SR (000)

Unearned premiums at beginning of the period 330,974 (17,051) 313,923

Premium written during the period 771,197 (53,959) 717,238

Premium earned during the period (612,239) 51,023 (561,216)

Unearned premiums at end of the period 489,932 (19,988) 469,944

31 December 2020 (Audited)

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

c) Unearned reinsurance commission

30 September31 December

20212020

(Unaudited)(Audited)

SR (000)

Balance at beginning of the period/year 4,001 4,801

Commission received during the period/year 10,054 14,252

Commission earned during the period/year (9,401) (15,052)

Balance at end of the period/year 4,654 4,001

d) Deferred policy acquisition costs

30 September31 December

20212020

(Unaudited)(Audited)

SR (000)

Balance at beginning of the period/year 20,117 27,331

Incurred during the period/year 57,829 71,716

Amortized during the period/year (47,555) (78,930)

Balance at end of the period/year 30,391 20,117

BASIC AND DILUTED EARNINGS PER SHARE

Basic and diluted earnings per share for the period have been calculated by dividing the total net income for the period by the weighted average number of shares in issue throughout the period.

The basic and diluted earning per share are as follows:

"Nine-months period ended

30 September"

20212020

(Unaudited)(Unaudited)

Basic and diluted (loss)/earnings per share (Saudi Riyals) (1.02) 0.01

Weighted average number of shares throughout the period (thousands) 50,000 50,000

16 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.

The following are the details of the major related party transactions during the period and the related balances:

" Nine-months period ended

30 September "

20212020

(Unaudited)(Unaudited)

SR (000)

Remuneration paid to Board of Directors 3,726 3,210

Board of Directors’ and Committees meeting fees 461 303

Remuneration and compensation of key management personnel:

" Nine-months period ended

30 September "

20212020

(Unaudited)(Unaudited)

SR (000)

Salaries and allowances5,1395,522

End of service indemnities294266

5,433 5,788

Balances due from / (to) related parties comprise the following:

30 September31 December

20212020

(Unaudited)(Audited)

SR (000)

Claims payable to companies owned by BOD members (2) (1)

SEGMENT INFORMATION

Consistent with the Company's internal reporting process, operating segments have been approved by management in respect of the Company's activities, assets and liabilities as stated below. Segment results do not include income from investments, income from Murabaha deposits, other income, general and administrative expenses, and provision for doubtful debts.

Segment results do not include commission on short-term Murabaha deposits. Segment assets do not include insurance operations’ cash and cash equivalents, Murabaha deposits, available for sale investments, investment held to maturity, premium and reinsurers' receivable net, prepayments and other assets and property and equipment. Accordingly, they are included in unallocated assets. Segment liabilities do not include reinsurance balances payable, policyholders claims payable, accrued and other liabilities, accumulated surplus and due to related parties. Accordingly, they are included in unallocated liabilities.

These unallocated assets and liabilities (including the related charges for provision for doubtful debts on premiums and reinsurers’ receivable and depreciation on the property and equipment) are not reported to Chief Executive Officer under related segments and are monitored on a centralized basis.

17 SEGMENT INFORMATION (continued)

Three-months period ended 30 September 2021 (Unaudited)

Property & Protection &

Operating segmentMedical Motor casualty savings Total

SR (000)

Revenues

Gross premiums written -

-Individuals 124 138,975 255 - 139,354

-Very small enterprises 1,483 615 7 - 2,105

-Small enterprises 14,568 6,761 159 - 21,488

-Medium enterprises 18,691 3,384 1,629 - 23,704

-Corporates 61,192 28,270 8,849 - 98,311

96,058 178,005 10,899 - 284,962

Reinsurance premiums ceded

- Local - - (1,004) - (1,004)

- International (1) - (7,508) - (7,509)

(1) - (8,512) - (8,513)

Excess of loss expenses

- Local (125) (98) (61) - (284)

- International (125) (1,242) (343) - (1,710)

(250) (1,340) (404) - (1,994)

Net premiums written 95,807 176,665 1,983 - 274,455

Movement in unearned premiums, net (3,980) (66,084) (126) - (70,190)

Net premiums earned 91,827 110,581 1,857 - 204,265

Reinsurance commissions - - 2,614 - 2,614

Other underwriting income 77 377 (19) - 435

Net revenues 91,904 110,958 4,452 - 207,314

Underwriting costs and expenses

Gross claims paid (51,623) (117,225) (3,819) - (172,667)

Reinsurers' share of claims paid 345 823 3,581 - 4,749

Net claims paid (51,278) (116,402) (238) - (167,918)

Movement in outstanding claims, net (5,251) 5,469 (4) - 214

Movement in IBNR, net (11,183) 283 35 - (10,865)

Movement in additional premium reserve 2,677 (13,887) (206) - (11,416)

Movement in other technical reserve (128) 6 - - (122)

Net claims incurred (65,163) (124,531) (413) - (190,107)

Policy acquisition costs (6,591) (9,585) (1,820) - (17,996)

Other underwriting expense - (7,813) - - (7,813)

Total underwriting costs and expenses (71,754) (141,929) (2,233) - (215,916)

Net underwriting income 20,150 (30,971) 2,219 - (8,602)

Unallocated revenue 7,134

Unallocated expenses (31,957)

Total loss for the period (33,425)

23

17 SEGMENT INFORMATION (Continued)

Three-months period ended 30 September 2020 (Unaudited)

Property & Protection &

Operating segmentMedical Motor casualty savings Total

SR (000)

Revenues

Gross premiums written

-Individuals 46 43,297 90 - 43,433

-Very small enterprises 2,615 93 16 - 2,724

-Small enterprises 6,084 2,195 207 - 8,486

-Medium enterprises 11,857 1,607 1,698 - 15,162

-Corporates 44,971 30,517 8,318 - 83,806

65,573 77,709 10,329 - 153,611

Reinsurance premiums ceded

- Local - - (831) - (831)

- International - - (7,231) - (7,231)

- - (8,062) - (8,062)

Excess of loss expenses

- Local (19) (216) (27) - (262)

- International (231) (2,576) (608) - (3,415)

(250) (2,792) (635) - (3,677)

Net premiums written 65,323 74,917 1,632 - 141,872

Movement in unearned premiums, net 4,838 34,373 911 - 40,122

Net premiums earned 70,161 109,290 2,543 - 181,994

Reinsurance commissions - - 3,731 - 3,731

Other underwriting income 573 340 152 - 1,065

Net revenues 70,734 109,630 6,426 - 186,790

Underwriting costs and expenses

Gross claims paid (76,490) (87,159) (23,216) - (186,865)

Reinsurers' share of claims paid 1,581 - 20,163 - 21,744

Net claims paid (74,909) (87,159) (3,053) - (165,121)

Movement in outstanding claims, net 9,511 5,452 941 - 15,904

Movement in IBNR, net (11,802) (8,476) 37 - (20,241)

Movement in additional premium reserve (8,396) 21,483 206 - 13,293

Movement in other technical reserve (40) (148) 10 - (178)

Net claims incurred (85,636) (68,848) (1,859) - (156,343)

Policy acquisition costs (5,395) (9,104) (1,899) - (16,398)

Total underwriting costs and expenses (91,031) (77,952) (3,758) - (172,741)

Net underwriting income (20,297) 31,678 2,668 - 14,049

Unallocated revenue 10,885

Unallocated expenses (23,630)

Total income for the period 1,304

24

17 SEGMENT INFORMATION (continued)

Nine-months period ended 30 September 2021 (Unaudited)

Property & Protection &

Operating segmentMedical Motor casualty savings Total

SR (000)

Revenues

Gross premiums written 323,265 396,855 51,078 771,198

-Individuals 435 245,628 429 - 246,492

-Very small enterprises 2,588 1,645 40 - 4,273

-Small enterprises 33,089 17,055 572 - 50,716

-Medium enterprises 53,991 11,490 4,961 - 70,442

-Corporates 233,162 121,037 45,075 - 399,274

323,265 396,855 51,077 - 771,197

Reinsurance premiums ceded

- Local - - (4,012) - (4,012)

- International (65) - (39,577) - (39,642)

(65) - (43,589) - (43,654)

Excess of loss expenses

- Local (340) (679) (173) - (1,192)

- International (410) (7,062) (1,641) - (9,113)

(750) (7,741) (1,814) - (10,305)

Net premiums written 322,450 389,114 5,674 - 717,238

Movement in unearned premiums, net (68,115) (87,656) (251) - (156,022)

Net premiums earned 254,335 301,458 5,423 - 561,216

Reinsurance commissions - - 9,401 - 9,401

Other underwriting income 252 464 216 - 932

Net revenues 254,587 301,922 15,040 - 571,549

Underwriting costs and expenses

Gross claims paid (210,782) (304,191) (16,643) - (531,616)

Reinsurers' share of claims paid 1,714 1,696 12,722 - 16,132

Net claims paid (209,068) (302,495) (3,921) - (515,484)

Movement in outstanding claims, net 17,282 17,934 3,530 - 38,746

Movement in IBNR, net 2,664 (6,540) 490 - (3,386)

Movement in additional premium reserve 6,756 (8,506) (751) - (2,501)

Movement in other technical reserve 161 (136) 75 - 100

Net claims incurred (182,205) (299,743) (577) - (482,525)

Policy acquisition costs (18,196) (22,968) (6,391) - (47,555)

Other underwriting expense - (13,492) - - (13,492)

Total underwriting costs and expenses (200,401) (336,203) (6,968) - (543,572)

Net underwriting income 54,186 (34,281) 8,072 - 27,977

Unallocated revenue 31,448

Unallocated expenses (100,745)

Total loss for the period (41,320)

25

17 SEGMENT INFORMATION (Continued)

Nine-months period ended 30 September 2020 (Unaudited)

Property & Protection &

Operating segmentMedical Motor casualty savings Total

SR (000)

Revenues

Gross premiums written

-Individuals 64 192,397 277 - 192,738

-Very small enterprises 4,006 509 53 - 4,568

-Small enterprises 17,119 6,324 1,268 - 24,711

-Medium enterprises 39,456 7,456 8,767 - 55,679

-Corporates 179,618 99,504 60,203 - 339,325

240,263 306,190 70,568 - 617,021

Reinsurance premiums ceded

- Local - - (4,976) - (4,976)

- International - - (53,569) - (53,569)

- - (58,545) - (58,545)

Excess of loss expenses

- Local (346) (620) (136) - (1,102)

- International (4,492) (6,208) (1,586) - (12,286)

(4,838) (6,828) (1,722) - (13,388)

(4,838) (6,828) (60,267)

Net premiums written 235,425 299,362 10,301 - 545,088

Movement in unearned premiums, net (34,478) 24,909 (939) - (10,508)

Net premiums earned 200,947 324,271 9,362 - 534,580

Reinsurance commissions - - 12,756 - 12,756

Other underwriting income 2,134 273 2,165 - 4,572

Net revenues 203,081 324,544 24,283 - 551,908

(151,743) (248,393) (29,504)

Underwriting costs and expenses

Gross claims paid (151,743) (248,393) (29,504) - (429,640)

Reinsurers' share of claims paid 3,521 6,278 24,602 - 34,401

Net claims paid (148,222) (242,115) (4,902) - (395,239)

Movement in outstanding claims, net (1,957) 13,401 (1,043) - 10,401

Movement in IBNR, net (6,615) (12,441) (113) - (19,169)

Movement in additional premium reserve (6,604) (18,109) 103 - (24,610)

Movement in other technical reserve (132) (218) (61) - (411)

Net claims incurred (163,530) (259,482) (6,016) - (429,028)

Policy acquisition costs (14,000) (32,077) (6,927) - (53,004)

Inspection and supervision fees -

Total underwriting costs and expenses (177,530) (291,559) (12,943) - (482,032)

(392,242) (564,764) (72,171)

Net underwriting income 25,551 32,985 11,340 - 69,876

Unallocated revenue 23,801

Unallocated expenses (83,057)

Total income for the period 10,620

26

17 SEGMENT INFORMATION (continued)

As at 30 September 2021 (Unaudited)

Property & Protection &

Operating segmentMedical Motor casualty savings Total

SR (000)

Assets

Reinsurers' share of unearned premiums 77 - 19,911 - 19,988

Reinsurers' share of outstanding claims 1,327 17,941 69,965 - 89,233

Reinsurers' share of IBNR - - 18,557 - 18,557

Deferred policy acquisition costs 11,172 16,096 3,123 - 30,391

Segment assets 12,576 34,037 111,556 - 158,169

Unallocated assets 1,267,949

Total assets 1,426,118

Liabilities

Unearned premiums 183,496 282,632 23,804 - 489,932

Unearned reinsurance commission - - 4,654 - 4,654

Outstanding claims 20,565 (46,525) 76,175 - 50,215

Claims incurred but not reported 35,396 143,999 19,907 - 199,302

Additional premium reserve 427 40,862 849 - - 42,138

Other technical reserves 440 2,974 150 - 3,564

Segment liabilities 240,324 423,942 125,539 - 789,805

Unallocated liabilities 224,289

Total equity 412,024

Total liabilities and equity 1,426,118

27

17 SEGMENT INFORMATION (continued)

As at 31 December 2020 (Audited)

Property & Protection &

Operating segmentMedical Motor casualty savings Total

SR (000)

Assets

Reinsurers' share of unearned premiums 289 - 16,762 - 17,051

Reinsurers' share of outstanding claims 1,044 23,897 69,684 - 94,625

Reinsurers' share of IBNR - - 20,530 - 20,530

Deferred policy acquisition costs 7,774 10,288 2,055 - 20,117

Segment assets 9,107 34,185 109,031 - 152,323

Unallocated assets 1,165,721

Total assets 1,318,044

Liabilities

Unearned premiums 115,592 194,976 20,406 - 330,974

Unearned reinsurance commission - - 4,001 - 4,001

Outstanding claims 37,564 (22,635) 79,424 - 94,353

Claims incurred but not reported 38,060 137,459 22,370 - 197,889

Additional premium reserve 7,183 32,356 98 - - 39,637

Other technical reserves 601 2,838 225 - 3,664

Segment liabilities 199,000 344,994 126,524 - 670,518

Unallocated liabilities and surplus 187,066

Total equity 460,460

Total liabilities and equity 1,318,044

13 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. The capital structure of the Company consists of equity attributable to equity holders comprising paid share capital and reserves.

As per guidelines laid out by SAMA in Article 66 of the Implementing Insurance Regulations detailing the solvency margin requirements, 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

In the opinion of the Board of Directors, the Company has fully complied with the externally imposed capital requirements during the reported financial period.

15 COMMITMENTS AND CONTINGENCIES

a. Legal proceedings and regulations

The Company operates in the insurance industry and is subject to legal proceedings in the normal course of business. While it is not practicable to forecast or determine the final results of all pending or threatened legal proceedings, management does not believe that such proceedings (including litigations) will have a material effect on its results and financial position for the current reporting period.

b. Contingent liabilities

The Company’s contingent liabilities are as follows:

30 September31 December

20212020

(Unaudited)(Audited)

SR (000)

Letters of guarantee 17,700 42,700

14 FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments:

Level 1: Quoted market prices in an active market (that are unadjusted) for identical assets or liabilities.

Level 2: Valuation techniques (for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable), and

Level 3: Valuation techniques (for which the lowest level input that is significant to the fair value measurement is unobservable).

The fair values of all other financial assets and liabilities which are carried at cost, are not significantly different from the carrying values included in these financial statements, since the current market commission rates for similar financial instruments are not significantly different from the contracted rates, and on account of the short duration of the assets and liabilities.

20

14 FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

The following table summarizes the financial assets recorded at fair value as of 30 September 2021 and 31 December 2020 by level of the fair value hierarchy. There are no transfers among the levels during the period. Also refer to note 8.

As at 30 September 2021 (Unaudited)

Carrying valueLevel 1Level 2Level 3Total

SR (000)

Financial assets:

Available-for-sale investments

Insurance operations

Equity securities 10,115 5,000 - 5,115 10,115

Funds 52,054 - 52,054 - 52,054

Shareholders' operations

Equity securities 60,641 56,841 - 3,800 60,641

Funds 47,790 - 47,790 - 47,790

170,600 61,841 99,844 8,915 170,600

As at 31 December 2020 (Audited)

Carrying valueLevel 1Level 2Level 3Total

SR (000)

Financial assets:

Available-for-sale investments

Insurance operations

Funds 53,976 - 53,976 - 53,976

Shareholders' operations

Equity securities 13,343 9,543 - 3,800 13,343

Funds 49,239 - 49,239 - 49,239

116,558 9,543 103,215 3,800 116,558

20

APPROVAL OF INTERIM CONDENSED FINANCIAL STATEMENTS

39

TheinterimcondensedfinancialstatementswereapprovedbytheBoardofDirectorson 28 RabiAl-Awwal,1443H(Corresponding to 03 November,2021).