| Notes forming part of accounts [line items] | | |
| Disclosure of notes and other explanatory information [text block] | | |
| Disclosure of general information about reporting entity [abstract] | | |
| Disclosure of general information about reporting entity [text block] | The Mediterranean and Gulf Cooperative Insurance and Reinsurance Company (the “Company”) is a Saudi Joint Stock Company registered in the Kingdom of Saudi Arabia under Commercial Registration No. 1010231925 dated 8 Rabi Thani 1428H (corresponding to 26 April 2007). The registered address of the Company's head office is as follows: Medgulf Insurance Futuro Tower King Saud Road P.O. Box 2302 Riyadh 11451, Saudi ArabiaThe objectives of the Company are to transact cooperative insurance and reinsurance business and related activities in the Kingdom of Saudi Arabia. Its principal lines of business include all classes of general insurance. The Company was listed on the Saudi Arabian Stock Exchange (Tadawul) on 28 Rabi Al-Awal 1428H (corresponding to 16 April 2007). The Company in its extra-ordinary general meeting held on 22 September 2017 approved the reduction of share capital from Saudi Riyals 1 billion to Saudi Riyals 400 million to absorb the accumulated losses in order to comply with the requirements of the Regulations for Companies. This resulted in the accumulated losses to decline below one-half of the Company’s share capital as at 30 September 2017. The reduction of capital has been approved by the regulatory authorities.As indicated in Note 18, due to the continuous decline in the financial performance of the Company, the Company did not meet the solvency margin requirements as at 31 December 2017 and consequently SAMA issued a letter number 391000054425 dated 29 January 2018, preventing the Company from writing any new policies and renewing the existing policies. SAMA in its aforesaid letter also instructed the Company to increase its share capital before 30 July 2018 to address the issue of its deteriorating solvency margin. The Company’s Board of Directors in their meeting held on 6 February 2018, recommended a rights issue amounting to SAR 400 million in order to improve the solvency margin and the Company’s future business activities. Such rights issue is subject to approval of the regulatory authorities and general assembly of the Company. Subsequent to the period ended 31 March 2018, SAMA issued a letter dated 15 April 2018 allowing the Company to write new policies and renewing the existing policies starting from 17 April 2018 subject to certain conditions. The aforesaid conditions amongst others include, the Company’s commitment to increase its share capital before 31 October 2018. In addition SAMA instructed the Company to take necessary steps for continuous recovery of Company’s receivables, implementation of best governance practices by the Board of Directors and the executive management and submit weekly progress report on the measures taken by the management in this regard and intimated that in case of non compliance of the above, SAMA will take necessary actions as required by the law. These events and conditions indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern.Management has performed an assessment of its going concern assumption under different scenarios. Based on the underlying cash flow projections under the various scenarios, management believes that the Company will be able to continue the business and meet its obligations as and when they fall due over the next 12 months. As a result, the interim condensed financial information have been prepared on a going concern basis. Management`s assessment is based on number of estimates and assumptions including significant recoveries from major policyholders, reinsurers and related parties and other cost saving measuresDuring the year ended 31 December 2016, SAMA issued a letter to the Company that highlighted certain weaknesses in claims processing including non-compliance with legal limits for settling claims and required the submission of a detailed report regarding the corrective actions taken or to be taken by the management. SAMA also prohibited the Company from issuing any new motor insurance policies with effect from 29 November 2016. The Company was however allowed to add vehicles to existing insurance policies and renew insurance policies issued prior to 29 November 2016. On 22 January 2017, SAMA issued another letter that highlighted certain additional matters related to claims including ineffectiveness of system used to handle and process claims and certain actions that needed to be taken by the Company. SAMA also instructed the Company to take serious actions and to provide a detailed plan with procedures and timeframes approved by the Company’s board of directors to address the current situation. The detailed plan was submitted to SAMA after approval by the Company’s Board of Directors. On 2 March 2017, SAMA permitted the Company to issue new motor insurance policies effective 5 March 2017 and instructed the Company to submit a monthly report for the actions taken in regard to the improvement of the current information technology system and the migration process from old information technology system to the new system. The Company has signed up for new ERP system, the update of which has been provided to SAMA. Accordingly, the Company has impaired its ERP system during the year ended 31 December 2017. | |
| Disclosure of basis of preparation of financial statements [text block] | (a) Basis of presentationThe interim condensed financial information has been prepared under the going concern basis on a historical cost basis except for the measurement at fair value of available for sale investments and end of service benefits of present value.The Company’s interim condensed statement of financial position is not presented using a current/non-current classification. The following balances would generally be classified as non-current: available for sale investments, property and equipment, land, intangible assets, statutory deposit, investment in an associate, accrued commission on statutory deposit, good will and employees end of service benefits. All other assets and liabilities are classified as current.Statement of complianceThe interim condensed financial information of the Company ("Company") has been prepared in accordance with International Accounting Standard 34 - Interim Financial Reporting ("IAS 34") as modified by SAMA for the accounting of zakat and income tax’, which requires, adoption of all IFRSs as issued by the International Accounting Standards Board (“IASB”) except for the application of International Accounting Standard (IAS) 12 - “Income Taxes” and IFRIC 21 - “Levies” so far as these relate to zakat and income tax. As per the SAMA Circular no. 381000074519 dated April 11, 2017 and subsequent amendments through certain clarifications relating to the accounting for zakat and income tax (“SAMA Circular”), the Zakat and Income tax are to be accrued on a quarterly basis through shareholders equity under retained earnings. As required by Saudi Arabian insurance regulations, the Company maintains separate accounts for Insurance Operations and Shareholders’ Operations and presents the financial statements accordingly (refer note 21). The physical custody of all assets related to the Insurance Operations and Shareholders’ Operations are held by the Company. Revenues and expenses clearly attributable to either activity are recorded in the respective accounts. The basis of allocation of other revenue and expenses from joint operations is as determined by the management and Board of Directors.The functional and presentational currency of the Company is Saudi Arabian Riyals. The interim condensed financial information is presented in Saudi Riyal rounded to nearest thousand (SAR’000) unless otherwise stated.The Company is required to distribute 10% of the net surplus from insurance operations to policyholders and the remaining 90% to be allocated to the shareholders of the Company in accordance with the Insurance Law and Implementation Regulations issued by the Saudi Arabian Monetary Authority (“SAMA”). In case of losses, losses are absorbed by shareholders.The insurance operations' deficit for the three month period ended 31 March 2018 amounted to SR 22,911 thousand (31 March 2017: deficit of SR 93,571 thousand). Accordingly, full deficit amounting to SR 22,911 thousand for the period ended 31 March 2018 (31 March 2017: SR 93,571 thousand) has been transferred to shareholders’ operations.The interim condensed statement of financial position, statements of income, comprehensive income and cash flows of the insurance operations and shareholders’ operations which are presented in note 21 of the financial information have been provided as supplementary financial information to comply with the requirements of the guidelines issued by SAMA implementing regulations. 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, statements of income, comprehensive income and cash flows prepared for the insurance operations and shareholders operations as referred to above, reflect only the assets, liabilities, income, expenses and comprehensive gains or losses of the respective operations.In preparing the Company-level financial information in compliance with IFRS, the balances and transactions of the insurance operations are amalgamated and combined with those of the shareholders’ operations. Interoperation balances, transactions and unrealised gains or losses, if any, are eliminated in full during amalgamation. The accounting policies adopted for the insurance operations and shareholders’ operations are uniform for like transactions and events in similar circumstances.The accompanying interim condensed financial information do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Company’s annual financial statements as of and for the period ended 31 December 2017. In management’s opinion, the interim condensed financial information reflect all adjustments (which include normal recurring adjustments) necessary to present fairly the results of operations for the interim periods presented. The interim results may not be indicative of the Company’s annual results.2. BASIS OF PREPARATION (Continued)(b) Critical accounting judgments, estimates and assumptionThe preparation of interim financial information requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.Estimates and judgments are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.In preparing this condensed financial information, the significant judgments made by management in applying the Company`s accounting policies and the key sources of estimation uncertainty including the risk management policies were the same as those that applied to the annual financial information as at and for the year ended 31 December 2017.(c) Seasonality of operationThere are no seasonal changes that may affect insurance operations of the Company.3. SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS The preparation of the interim condensed financial information requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these estimates and assumptions could result in an outcome that could require a material adjustment to the carrying amount of the asset or liability affected in the future.The key assumptions concerning the future and other key sources of estimation uncertainty at the date of interim statement of financial position, that have a significant risk of causing a material adjustment to the carrying amounts of the assets and liabilities within the next financial period are discussed below.i) The ultimate liability arising from claims made under insurance contractsThe estimation of the ultimate liability arising from claims made under insurance contracts is the Company’s most critical accounting estimate and involves a significant degree of judgment. There are several sources of uncertainty that needed to be considered in estimating the liability that the Company will ultimately pay for such claims. 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 interim statement of financial position, for which the insured event has occurred prior to the date of interim 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. The liabilities are based on the best-estimate of ultimate cost of all claims incurred but not settled at a given date, whether reported or not, together with the related claims handling costs. 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. Underlying these methods are a number of explicit or implicit assumptions relating to the expected settlement amount and settlement patterns of claims.The Company is exposed to disputes with, and possibility of defaults by, its reinsurers. The Company monitors on a quarterly basis the evolution of disputes with and the strength of its reinsurers. (ii) Premium deficiency reserveEstimation of the premium deficiency for medical and motor business 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 realize in the future. | |
| Disclosure of accounting framework used in preparation of financial statements [text block] | iii) Impairment losses on receivablesThe 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 recognised 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. iv) GoodwillImpairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. Management believes that fair value less cost to sell analysis provides a higher value compared to value in use, and therefore, fair value less cost to sell analyses are used for impairment assessments. The fair value less cost to sell calculation is based on the quoted share price of the Company as of period close and subsequent events that occurred till measurement date. v) ReinsuranceThe Company accounts for its reinsurance transactions based on their understanding of the contractual terms of the reinsurance treaties.4. CHANGE IN ACCOUNTING POLICIES AND RESTATEMENTThe accounting policies and risk management policy used in the preparation of the interim condensed financial information are consistent with those followed in the preparation of the Company’s annual financial statements for the year ended 31 December 2017, except as explained below:IFRS 15 Revenue from contracts with customersThe Company adopted IFRS 15 ‘Revenue from Contracts with Customers’ resulting in a change in the revenue recognition policy of the Company in relation to its contracts with customers. IFRS 15 was issued in May 2014 and is effective for annual periods commencing on or after 1 January 2018. IFRS 15 outlines a single comprehensive model of accounting for revenue arising from contracts with customers and supersedes current revenue guidance, which is found currently across several Standards and Interpretations within IFRS. It established a new five-step model that will apply to revenue arising from contracts with customers. Under IFRS 15, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The Company has opted for the modified retrospective application permitted by IFRS 15 upon adoption of the new standard. Modified retrospective application requires the recognition of the cumulative impact of adoption of IFRS 15 on all contracts as at 1 January 2018 in equity. The impact on opening retained earnings and other account balances as at 1 January 2018 is not significant and therefore adjustments have been reflected in the current period. Standards issued but not yet effectiveIFRS 9, Financial Instruments (including amendments to IFRS 4, Insurance Contracts) In July 2014, the IASB published IFRS 9 Financial Instruments which will replace IAS 39 Financial Instruments: Recognition and Measurement. The standard incorporates new classification and measurements requirements for financial assets, the introduction of an expected credit loss impairment model which will replace the incurred loss model of IAS 39, and new hedge accounting requirements. Under IFRS 9, all financial assets will be measured at either amortised cost or fair value. The basis of classification will depend on the business model and the contractual cash flow characteristics of the financial assets. The standard retains most of IAS 39’s requirements for financial liabilities except for those designated at fair value through profit or loss whereby that part of the fair value changes attributable to own credit is to be recognised in other comprehensive income instead of the income statement. The hedge accounting requirements are more closely aligned with risk management practices and follow a more principle based approach. | |
| Disclosure of new standards and amendments in standards [text block] | In September 2016, the IASB published amendments to IFRS 4 Insurance Contracts that address the accounting consequences of the application of IFRS 9 to insurers prior to the publication of the forthcoming accounting standard for insurance contracts. The amendments introduce two options for insurers: the deferral approach and the overlay approach. The deferral approach provides an entity, if eligible, with a temporary exemption from applying IFRS 9 until the earlier of the effective date of a new insurance contract standard or 2021.The overlay approach allows an entity to remove from profit or loss the effects of some of the accounting mismatches that may occur before the new insurance contracts standard is applied. The Company is eligible and have chosen to apply the deferral approach under the amendments to IFRS 4. The impact of the adoption of IFRS 9 on the Company’s financial information will, to a large extent, have to take into account the interaction with the forthcoming insurance contracts standard. As such, it is not possible to fully assess the effect of the adoption of IFRS 9. IFRS 17 - “Insurance Contracts”, applicable for the period beginning on or after 1 January 2021, and will supersede IFRS 4 “Insurance Contracts”. Earlier adoption permitted if both IFRS 15 'Revenue from Contracts with Customers' and IFRS 9 'Financial Instruments' have also been applied. The Company expects a material impact on measurement and disclosure of insurance and reinsurance that will affect both the income statement and the balance sheet. The Company has decided not to early adopt this new standard.RESTATEMENTEffect of errorDuring the year ended 31 December 2017, the Company restated its retained earnings as at 1 January 2016 and comparative financial statements as of 31 December 2016 as a result of erroneous recording in prior year of transaction amounted to SR 33,070 thousand relating to medical reinsurance treaty managed by Medgulf BSC Bahrain (major shareholder) on behalf of the Company. The restated amount was part of receivable from Medgulf BSC Bahrain and was confirmed by Medgulf BSC Bahrain in earlier years without any differences. Subsequently, as a result of reconciliation of medical reinsurance treaty, an error pertaining to prior year was identified which was ultimately accepted by Medgulf BSC Bahrain and the Company. Also, there are certain amounts reclassified from the previously reported numbers as at 31 December 2016 to conform with the presentation as at 31 December 2017. The reclassifications mainly related to inclusion of TPA, SAMA and CCHI fees in prepayment and other assets and intangible assets which were previously presented in deferred policy acquisition costs and property and equipment respectively in the interim statement of financial position. These changes were made for better presentation of balances in the interim statement of financial position of the Company. Accordingly the above said restatement and reclassifications also have an impact on the previously issued interim condensed financial information for the three month period ended 31 March 2017.The restatement and reclassifications does not have impact on interim condensed statements of financial position, income, comprehensive income and cash flows for the period ended 31 March 2018. | |
| Disclosure of summary of significant accounting policies [abstract] | | |
| Description of accounting policy for statutory reserve [text block] | In accordance with its By-laws, the Company shall allocate 20% of its net income each year to the statutory reserve until it has built up a reserve equal to the share capital. The reserve is not available for distribution. Since there was accumulated deficit for the period ended 31 March 2018 and year ended 31 December 2017, no transfer was made to statutory reserve. | |
| Description of accounting policy for zakat [text block] | The Company has filed its zakat and income tax declarations for the year from 16 April 2007 to 31 December 2017 with the General Authority of Zakat and Income Tax (GAZT). Further, the Company has filed an appeal for zakat, income tax and withholding tax for assessment years 2009 to 2012. The management has made appropriate provisions in this interim condensed financial information based on the advice of the Company’s zakat and tax consultant. | |
| Description of accounting policy for time (murabaha) deposit [text block] | Short term deposits are placed with counterparties that have credit ratings of at least equivalent to A- to BB+ ratings under Standard and Poor's, Fitch and Moody’s ratings methodology.Short term deposits are placed with local and licensed foreign banks’ branches in Kingdom of Saudi Arabia with a maturity of more than three months from the date of original acquisition and earned special commission income at an average rate of 2.2% per annum (31 December 2017: 2.14% per annum).The carrying amounts of the short term deposits reasonably approximate the fair value at the interim statement of financial position date. | |
| Description of accounting policy for statutory deposit [text block] | In accordance with the Law on Supervision of Cooperative Insurance Companies in the Kingdom of Saudi Arabia. The Company is required to maintain a statutory deposit at 10%. Further, SAMA has increased the statutory deposit by 5%, and accordingly, the Company has transferred the same to arrive at 15% statutory deposit. This statutory deposit cannot be withdrawn without the consent of SAMA. During the year ended 31 December 2017, the Company in its extraordinary general meeting held on 22 September 2017 reduced the share capital from Saudi Riyals 1 billion to Saudi Riyals 400 million. (Refer Note 1). The Company is in the process of seeking SAMA’s guidance in respect of effect on statutory deposit for the said reduction in share capital. | |
| Disclosure of notes forming part of accounts [abstract] | | |
| Disclosure of investments in associates and joint ventures [text block] | Investment in an associate comprises of an equity investment in Al-Waseel for Electronic Transportation amounting to SR 9,341 thousand (a 25% equity interest) (2017: SR 9,341), in an unquoted company (the “associate”), registered in the Kingdom of Saudi Arabia. | |
| Disclosure of investments in available-for-sale investments [text block] | Available for sale investments are classified as set out below: SAR’000 Insurance operations 31 March 2018 31 December 2017 (Unaudited) (Audited) Mutual funds 3,369 3,358Sukuk 25,000 25,000 28,369 28,358 SAR’000 Shareholders’ operations 31 March 2018 31 December 2017 (Unaudited) (Audited)Mutual funds 55,679 55,524Bonds 47,375 47,571Sukuk 20,000 20,000Equities 1,923 1,923 124,977 125,018 Total 153,346 153,376Movement in available for sale investments balance is as follows: SAR’000 Insurance operations 31 March 2018 31 December 2017 (Unaudited) (Audited)At the beginning of the period / year 28,358 28,308Net change in fair values 11 50 At the end of the period / year 28,369 28,358 The cumulative change in fair values of available for sale investments for insurance operations amounting to SR 338 thousand (31 December 2017: SR 327 thousand) is presented within insurance operations’ surplus’ in the statement of financial position. The realised gain is transferred to interim statement of income under special commission income. SAR’000 Shareholders’ operations 31 March 2018 31 December 2017 (Unaudited) (Audited)At the beginning of the period / year 125,018 146,076Sold during the period / year - (21,000) 125,018 125,076 Net change in fair values (41) (58) At the end of the period / year 124,977 125,018The cumulative change in fair values of available for sale investments for shareholders’ operations amounting to SR 5,387 thousand (31 December 2017: SR 5,428 thousand) is presented within shareholders’ equity in the statement of financial position.Fair valueFair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or the most advantageous) market between market participants at the measurement date under current market conditions regardless of whether that price is directly observable or estimated using another valuation technique. The fair values of recognised financial instruments are not significantly different from the carrying values included in the interim condensed financial information. The estimated fair values of financial instruments are based on quoted market prices, when available. The fair values of these available for sale investments are disclosed below. For financial instruments that are recognised at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level of input that is significant to the fair value measurement as a whole) at the end of each reporting period.The unlisted security of SR1.92 million (31 December 2017: SR 1.92 million) held as part of Company’s shareholder operations, were stated at cost in the absence of active markets or other means of reliably measuring their fair value.During the three-month periods ended 31 March 2018, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into or out of level 3 fair value measurements.Fair value (continued)The following table shows an analysis of financial instruments recorded at fair value by level of the fair value hierarchy cumulatively for insurance and shareholders operations:Determination of fair value and fair value hierarchyThe Company uses the following hierarchy for determining and disclosing the fair value of financial instruments: Level 1: quoted market price: financial instruments with quoted unadjusted prices for identical instruments in active markets. Level 2: quoted prices in active markets for similar assets and liabilities or other valuation techniques for which all significant inputs are based on observable market data. Level 3: valuation techniques for which any significant input is not based on observable market data SR’000 Insurance operations – Fair Value 31 March 2018 (Unaudited) Level 1 Level 2 Level 3 Total Available for sale investments Mutual funds 3,369 - - 3,369Sukuk - 25,000 - 25,000Total available for sale investments 3,369 25,000 - 28,369 SR’000 31 December 2017 (Audited) Insurance operations – Fair Value Level 1 Level 2 Level 3 Total Available for sale investments Mutual funds 3,358 - - 3,358Sukuk - 25,000 - 25,000Total available for sale investments 3,358 25,000 - 28,358 SR’000 Shareholders’ operations – Fair Value 31 March 2018 (Unaudited) Level 1 Level 2 Level 3 Total Available for sale investments Mutual funds 55,679 - - 55,679Bonds 9,998 37,377 - 47,375Sukuk - 20,000 - 20,000Equities - - 1,923 1,923Total available for sale investments 65,677 57,377 1,923 124,977 SR’000 Shareholders’ operations – Fair Value 31 December 2017 (Audited) Level 1 Level 2 Level 3 Total Available for sale investments Mutual funds 55,524 - - 55,524Bonds 9,998 37,573 - 47,571Sukuk - 20,000 - 20,000Equities - - 1,923 1,923Total available for sale investments 65,522 57,573 1,923 125,018 | |
| Disclosure of premiums/ contributions and insurance/ reinsurance or takaful/ retakaful balance receivables [text block] | Receivables comprise amounts due from the following: SAR’000 31 March 2018 31 December 2017 (Unaudited) (Audited) Premiums receivables 891,801 868,978Less: Allowance for doubtful debts (299,553) (290,942) 592,248 578,036 Reinsurers’ receivable 279,991 302,568Less: Allowance for doubtful debts (201,979) (221,499) 78,012 81,069 Premiums and reinsurers’ receivable – net 670,260 659,105As at 31 March 2018, the movement for provision for doubtful debts of premiums and reinsurers’ receivable was as follows: SAR’000 31 March 2018 31 December 2017 (Unaudited) (Audited) Balance at the beginning of the period 512,441 219,571(Reversal) / Provision for the period / year (36) 292,870Write off during the period (10,873)* -Ending balance 501,532 512,441*During the period ended 31 March 2018, the company has written off against the previously provided amount of SR 10.8 million related to final settlement of reinsurance balance.As disclosed in note 11, the Company, together with Group Corporate Reinsurance Center (“CRC”), have now initiated an exercise to separate the Company’s transactions and balances with the respective reinsurers and brokers from those of other related parties. This exercise is still on-going and on completion certain parties included above in reinsurance balances receivable amounting to Saudi Riyals 109.2 million may be identified as receivable from related parties and therefore may need to be disclosed under due from related parties in note 11. | |
| Disclosure of cash and cash equivalents [text block] | SAR’000 Insurance operations 31 March 2018 31 December 2017 (Unaudited) (Audited) Bank balances and cash 30,584 97,035Deposits maturing within 3 months from the acquisition date 61,807 251,749Cash and cash equivalent on the statement of cash flows 92,391 348,784 Deposit against letter of guarantee 25,811 29,565 118,202 378,349 SAR’000 Shareholders’ operations 31 March 2018 31 December 2017 (Unaudited) (Audited) Bank balances and cash 3,792 5,176Deposits maturing within 3 months from the acquisition date - - 3,792 5,176 Cash and cash equivalent on the statement of cash flows 96,183 353,960Cash and bank balances 121,994 383,525Cash at banks and short-term time deposits maturing within 3 months are placed with counterparties who have credit ratings equivalent to A+ to BBB ratings under Standard and Poor's, Fitch and Moody’s ratings methodology. These time deposits are placed with local and licensed foreign banks’ branches in Kingdom of Saudi Arabia with an original maturity of less than three months from the date of acquisition and earned special commission income at an average rate of 1.6% per annum (2017: 1.7% per annum). The carrying amounts disclosed above reasonably approximate the fair value at the interim statement of financial position date.Deposits against letters of guarantee comprise amounts placed with a local bank against issuance of payment guarantees in favour of the Company’s customers and service providers. As deposits against letters of guarantee cannot be withdrawn before the end of guarantee and are restricted in nature. | |
| Disclosure of classes of share capital [text block] | The authorized and paid up share capital of the Company was SR 1,000 million divided into 100 million shares of SR 10 each. The founding shareholders of the Company have subscribed and paid for 75 million shares (SR 750 million) with a nominal value of SR 10 each, which represent 75% of the shares of the Company and the remaining 25 million shares (SR 250 million) with a nominal value of SR 10 each which represent 25% of the shares of the Company, was subscribed by the general public. The Share capital represents foreign shareholders by 45.5% and Saudi shareholders by 54.5% as at the period end. The Company in its extra ordinary general meeting held on 22 September 2017 approved the reduction of share capital from Saudi Riyals 1 billion to Saudi Riyals 400 million by reducing the number of shares from 100 million to 40 million shares of SR 10 each to comply with the requirements of the Regulations for Companies. This resulted in accumulated losses to decline below one half of Company’s share capital. The reduction of capital has been approved by the regulatory authorities. The Company incurred transaction cost of SR 691 thousand in respect of reduction in share capital, which has been charged directly to the interim statement of changes in shareholders' equity.During the period ended 31 March 2018, the Company’s Board of Directors in their meeting held on 6 February 2018, recommended a rights issue amounting to SAR 400 million. Such rights issue is subject to approval of the regulatory authorities and general assembly of the Company. | |
| Disclosure of retained earnings (accumulated losses) [text block] | Basic and diluted earnings per share for the period was calculated by dividing the net income for the period by the weighted average number of shares issued and outstanding during the three month period ended 31 March 2018 amounting to 40 million shares (31 December 2017: 40 million shares). | |
| Disclosure of technical reserve for insurance/takaful/reinsurance/retakaful operations [text block] | a) Net outstanding claims and reservesNet outstanding claims and reserves comprise of the following: SAR’000 31 March 2018 31 December 2017 (Unaudited) (Audited) Outstanding claims 582,557 499,938Claims incurred but not reported 575,631 594,499Premium deficiency reserve 13,430 15,700Other technical reserves 11,535 10,596 1,183,153 1,120,733 Less: Reinsurers’ share of outstanding claims 464,412 366,647Reinsurers’ share of claims Incurred but not reported 131,300 114,493 595,712 481,140 Net outstanding claims and reserves 587,441 639,593 b) Movement in unearned premiumsMovement in unearned premiums comprise of the following: SAR’000 Three month period ended 31 March 2018 (Unaudited) Gross Reinsurance Net Balance as at the beginning of the period 1,405,228 (464,063) 941,165Premium written during the period 413,616 (64,868) 348,748Premium earned during the period (619,443) 135,772 (483,671)Balance as at the end of the period 1,199,401 (393,159) 806,242 SAR’000 Year ended 31 December 2017 (Audited) Gross Reinsurance NetBalance as at the beginning of the year 1,629,251 (536,383) 1,092,868Premium written during the year 2,665,838 (494,679) 2,171,159Premium earned during the year (2,889,861) 566,999 (2,322,862)Balance as at the end of the year 1,405,228 (464,063) 941,165 | |
| Disclosure of related party transactions [text block] | Related parties Nature of transaction Amount of transaction for the three month period ended Balance SR’000 31 March2018(Unaudited) 31 March2017(Unaudited) 31 March 2018(Unaudited) 31 December 2017(Audited)Due from related parties Medgulf BSC - Head office account (major shareholder) -Claims recoveries on behalf of major shareholder - 325 - - -Balance due from at period / year end - - 2,453 2,453 -Allowance for doubtful debts - - (2,390) (2,390) -Net balance due from at period / year end - - 63 63Total due from related parties 63 63 Due to a related party Medivisa KSA (affiliate) -Insurance premium for employees of fellow subsidiary 2,877 3,566 - - -Third party administration fees 9,340 20,146 - - -Claim incurred 31 8 - - -Payment received 1 5 - - -Premium refundable 192 180 - - -Payment on third party administration fees 9,886 15,000 - - -Balance due to at period / year end (Refer 11.a (iv)) 688 3,886 Total due to related party 688 3,88611. TRANSACTIONS AND BALANCES WITH RELATED PARTIES (Continued)Related parties Nature of transaction Amount of transaction for the three month period ended Balance SR’000 31 March2018(Unaudited) 31 March2017(Unaudited) 31 March 2018(Unaudited) 31 December 2017(Audited)Other related parties transactions and balances – due from / (due to) The Saudi Investment Bank, (Founding shareholder) -Current account and time deposits 1,272 14,928 2,269 997 -Statutory deposit (refer note 11.a (i)) - - 165,546 165,546 -Gross written premiums 4,051 299 - - -Premiums (refundable) - - (1,163) (1,163) -Claims incurred / adjustment 65 (65) - - -Outstanding claims - - (607) (607)Saudi Orix (Shareholder of the Medgulf BSC) -Gross written premiums 27,439 18,372 - - -Premiums receivable - - 774 774 -Allowance for doubtful debts - - (23) (23) -Net Balance receivable at period / year end - - 751 751 -Claims incurred 16,254 6,141 - - -Outstanding claims - - (593) (593)Safari Group of companies (Under common Directorship) -Gross written premiums 9,884 8,173 - - -Premiums receivable - - 1,802 1,802 -Allowance for doubtful debts - - (42) (42) -Net balance receivable at period / year end - - 1,760 1,760 -Claims incurred 10,498 2,896 - - -Claims payable - - (186) (186)11. TRANSACTIONS AND BALANCES WITH RELATED PARTIES (Continued)Related parties Nature of transaction Amount of transaction for the three month period ended Balance SR’000 31 March2018(Unaudited) 31 March2017(Unaudited) 31 March 2018(Unaudited) 31 December 2017(Audited)Other related parties transactions and balances – due from / (due to) Medivisa KSA (affiliate) -Medical claim Jordan / balance 598 40 2,190 1,592 -Medical claim Lebanon / balance 149 135 380 529 -Medical claim Egypt / balance 12 50 12 -Al Istithmar Capital (subsidiary of SIB-founding shareholder) -Discretionary portfolio arrangement (refer 11.a (ii)) 155 864 55,679 55,524 -Current account 18,505 18,945 520 520 -Premiums refundable - - (38) (38)Khalid A. Al Shathry Construction Co. (Under common directorship)(Refer 11.a (iii)) -Gross written premiums 367 249 - - -Premiums receivable - - 259 259 -Allowance for doubtful debts - - (137) (137) -Net balance receivable at period / year end - - 122 122 -Claims incurred 132 - - - - Outstanding recovery - - 1 1Sanaya Dental Care (Under common directorship)(Refer 11.a (xiii)) -Medical claim 19 33 - - -Payment on account 19 28 - - -Balance due to at period / year end - - (1) (1)Saleh Al-Sagri (individual motor policy) (Refer 11.a (xii)) -Gross written premiums 28 9 - - -Claims incurred 34 - - - -Outstanding claims - - 1 1Advanced Petrochemical Company (Under common directorship) (Refer 11.a (xi)) -Premiums receivable - - 166 166 -Allowance for doubtful debts - - (124) (124) -Net balance receivable at period / year end - - 42 42 11. TRANSACTIONS AND BALANCES WITH RELATED PARTIES (Continued)Related parties Nature of transaction Amount of transaction for the three month period ended Balance SR’000 31 March2018(Unaudited) 31 March2017(Unaudited) 31 March 2018(Unaudited) 31 December 2017(Audited)Other related parties transactions and balances – due from / (due to) Medgulf BSC (major shareholder) -Claim recoveries 7 - - - -Reinsurance recovery (refer 11.a(ix)) - - 5,962 5,962 -Allowance for doubtful debts - - (4,471) (5,962) -Net balance receivable at period / year end - - 1,491 - Khalid A. Al Shathry (individual motor policies of director)(Refer 11.a (iii)) -Premiums receivables - - 215 215 -Allowance for doubtful debts - - (169) (169) -Net balance receivable at period / year end - - 46 46 -Outstanding recovery - - 10 10Addison Bradley Overseas / Addison Bradley & Co. (affiliate) -Balance receivable at period / year end - - 3,856 3,856 -Allowance for doubtful debts - - (3,856) (3,856) -Net balance due from at period / year end - - - -Zahrat al Waha plastic Co. (Under common directorship) -Gross written premiums 238 - - - -Balance due from at period / year end - - 199 -11. TRANSACTIONS AND BALANCES WITH RELATED PARTIES (Continued)Related parties Nature of transaction Amount of transaction for the three month period ended Balance SR’000 31 March2018(Unaudited) 31 March2017(Unaudited) 31 March 2018(Unaudited) 31 December 2017(Audited)Other related parties transactions and balances – due from / (due to) Addison Bradley International / Medgulf Lebanon (affiliate) -Balance receivable at period / year end - - 30,242 30,242 -Allowance for doubtful debts - - (30,242) (30,242) -Net balance due from at period/ year end - - - -Addison Bradley Arabia-KSA (affiliate) -Payment received during the period 274 - - -Addison Bradley International (affiliate) -Reinsurance recoveries (Refer 11.a (vii) 349 - - - -Balance due from at period/ year end - - 13,528 13,453 - Allowance for doubtful debts - - (1,318) (10,090) - Net balance due from at period / year end - - 12,210 3,363Addison Bradley Arabia Holding LLC (UAE) (affiliate) -Balance due from at period / year end - - 1,472 1,472 - Allowance for doubtful debts - - (1,472) (1,472) - Net balance due from at period / year end (Refer 11.a (viii) - - - -11.a(i) Statutory deposit is placed with the Saudi Investment Bank, at the commission rate of 0.70% per annum 11.a(ii) Discretionary portfolio management agreement (DPM) was signed on 11 February 2011 and includes a mix of equity and debt investments. 11.a(iii) The board members resigned on 7 February 2018 11. TRANSACTIONS AND BALANCES WITH RELATED PARTIES (Continued)11. a (iv) The balance due from Medgulf BSC (major shareholder) as at 31 December 2016 amounting to SR 165.6 million was after setting off SR 40.5 million due to Medivisa KSA (affiliate), which was withheld by the Company for its dues from Medgulf BSC in accordance with mutual agreement of all the parties. Subsequently, the shareholders of Medivisa KSA had issued a credit note in the first half of 2017 amounting to SR 40.5 million to this effect. Further, the balance was adjusted by SR 43.5 million to reach SR 122 million as a result of the exercise performed by the consultant during June 2017. During the period 31 December 2017, an irrevocable and unconditional bank guarantee was issued in favour of Medgulf KSA by a major shareholder of Medgulf Bahrain BSC amounting to SR 122 million for the settlement of balances due from Medgulf BSC. During the year ended 31 December 2017, the full amount has been collected from the bank guarantee. 11. a (vii) This represent reinsurance claims recoverable from Addison Bradley International. Most of the reinsurance claim recoveries in respect of run-off treaties for the underwriting years up to 2014 have been collected by the related party either directly or through a broker (refer note 11.c).11. a (viii) Reinsurance placement was made by the said related party. There is a claim recovery from the reinsurer which related party needs to recover.11. a (ix) This represent overpayment of premium ceded to Medgulf Bahrain for reinsurance placement.11. a (xi) The board members resigned on 11 December 201711. a (xii) The board members resigned on 27 March 201811. a (xiii) The board members resigned on 7 February 201811. b Compensation of key management personnelThe remuneration of the Board of Directors, committees and other key management personnel during the period/ year is as follows: SR’000 31 March 2018 31 December 2017 (Unaudited) (Audited)Short term benefits 2,493 12,109End of service benefits 366 339 2,859 12,44811. c All reinsurance treaties up to the underwriting year 2014 were managed by the Medgulf Group Corporate Reinsurance Center (“CRC”), a related party, who dealt with the Company’s transactions, along with those of other related parties, on a consolidated basis with the reinsurers and brokers. All transactions with reinsurers and brokers were routed through CRC and the settlement of balances with these reinsurers and brokers were also made by CRC. The Company, together with CRC, have now initiated an exercise to separate the Company’s transactions and balances with the respective reinsurers and brokers from those of other related parties. This exercise is still on-going and on completion certain parties included in the policyholders’ and reinsurance balances receivable under note 7 amounting to Saudi Riyals 109.2 million may be identified as receivable from related parties and therefore may need to be disclosed under due from related parties. The underlying transactions with such related parties will then also require disclosure under related party transactions. | |
| Disclosure of entity's operating segments [text block] | 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 set out below. Segment results do not include allocation of general and administrative expenses, allowance for doubtful debt, special commission income and other income to operating segments as these are reported and monitored on an overall basis.Segment assets do not include allocation of cash and cash equivalents, time deposits, available for sale investments, premiums and reinsurance balances receivable, prepayments and other assets, due from a related party, intangible assets, statutory deposit and property and equipment, net, as these are reported and monitored on a total basis.Segment liabilities do not include allocation of accounts and commission payable, reinsurance balances payable, accrued expenses and other liabilities, surplus distribution payable, end of service benefits, account and commission payable, due to a related party, zakat and tax and payable to SAMA. Shareholders’ operations is a non-operating segment. Certain direct operating expenses, other overhead expenses and surplus from the insurance operations are allocated to this segment on an appropriate basis as approved by management. SAR’000 As at 31 March 2018 (Unaudited) Insurance operations Operating segments Medical Motor Property & casualty Total - Insurance operations Shareholders’ operations TotalAssets Reinsurers’ share of unearned premiums - 62,893 330,266 393,159 - 393,159Reinsurers’ share of outstanding claims - (12,981) 477,393 464,412 - 464,412Reinsurers’ share of claims Incurred but not reported - 55,598 75,702 131,300 - 131,300Deferred policy acquisition costs 29,523 17,586 25,978 73,087 - 73,087Unallocated assets 1,479,436 816,830 2,296,266Total assets 2,541,394 816,830 3,358,224 SAR’000 As at 31 March 2018 (Unaudited) Insurance operations Operating segments Medical Motor Property & casualty Total - Insurance operations Shareholders’ operations TotalLiabilities Gross unearned premiums 590,583 243,020 365,798 1,199,401 - 1,199,401Unearned reinsurance commission - 12,965 16,833 29,798 - 29,798Gross outstanding claims 174,349 (94,636) 502,844 582,557 - 582,557Claims incurred but not reported 264,581 231,181 79,869 575,631 - 575,631Premium Deficiency reserves 13,430 - - 13,430 - 13,430Other technical reserves - 4,710 6,825 11,535 - 11,535Unallocated liabilities and insurance operations` surplus 432,106 40,371 472,477Total liabilities and insurance operations` surplus 2,844,458 40,371 2,884,82913. SEGMENTAL INFORMATION (Continued) SAR’000 As at 31 December 2017 (Audited) Insurance operations Operating segments Medical Motor Property & casualty Total - Insurance operations Shareholders’ operations TotalAssets Reinsurers’ share of unearned premiums - 82,650 381,413 464,063 - 464,063Reinsurers’ share of outstanding claims - (9,819) 376,466 366,647 - 366,647Reinsurers’ share of claims Incurred but not reported - 53,921 60,572 114,493 - 114,493Deferred policy acquisition costs 46,970 22,052 16,043 85,065 - 85,065Unallocated assets 1,730,305 886,508 2,616,813Total assets 2,760,573 886,508 3,647,081 SAR’000 As at 31 December 2017 (Audited) Insurance operations Operating segments Medical Motor Property & casualty Total - Insurance operations Shareholders’ operations TotalLiabilities Gross unearned premiums 683,124 300,279 421,825 1,405,228 - 1,405,228Unearned reinsurance commission - 17,547 17,659 35,206 - 35,206Gross outstanding claims 174,337 (81,946) 407,547 499,938 - 499,938Claims incurred but not reported 301,984 226,911 65,604 594,499 - 594,499Premium Deficiency reserves 15,700 - - 15,700 - 15,700Other technical reserves - 2,505 8,091 10,596 - 10,596Unallocated liabilities and insurance operations` surplus 546,150 41,203 587,353Total liabilities and insurance operations` surplus 3,107,317 41,203 3,148,52013. SEGMENTAL INFORMATION (Continued) SAR 000’s For the three month period ended 31 March 2018 (Unaudited) Insurance operations Operating segments Medical Motor Property & casualty Total Shareholders’ operations TotalRevenues Gross premiums written -Direct 282,656 77,772 51,677 412,105 - 412,105 -Reinsurance - - 1,511 1,511 - 1,511 282,656 77,772 53,188 413,616 - 413,616Reinsurance premiums ceded -Local - - (866) (866) - (866) -Abroad - (18,131) (41,705) (59,836) - (59,836) - (18,131) (42,571) (60,702) - (60,702)Excess of loss premiums - (2,100) (2,066) (4,166) - (4,166)Net Premiums Written 282,656 57,541 8,551 348,748 - 348,748Changes in unearned premiums, net 92,541 37,502 4,880 134,923 - 134,923Net Premiums Earned 375,197 95,043 13,431 483,671 - 483,671Reinsurance commission income - 8,214 7,779 15,993 - 15,993Total Revenues 375,197 103,257 21,210 499,664 - 499,664Underwriting Costs and Expenses Gross claims paid (414,606) (83,343) (37,248) (535,197) - (535,197)Expenses incurred related to claims (12,528) (4,687) (560) (17,775) - (17,775)Reinsurers’ share of claims paid - 23,712 36,069 59,781 - 59,781Net claims and other benefits paid (427,134) (64,318) (1,739) (493,191) - (493,191)Change in outstanding claims, net 13 9,528 5,605 15,146 - 15,146Change in IBNR, net 37,403 (2,592) 864 35,675 - 35,675Net claims and other benefits incurred (389,718) (57,382) 4,730 (442,370) - (442,370)Premium deficiency reserve - - -Other technical reserves 2,270 (2,205) 1,266 1,331 - 1,331Policy acquisition costs (20,774) (9,554) (6,620) (36,948) - (36,948)Total Underwriting Costs and Expenses (408,222) (69,141) (624) (477,987) - (477,987) NET UNDERWRITING INCOME (33,025) 34,116 20,586 21,677 - 21,677 Other Operating (Expenses)/Income Allowance for doubtful debts 36 36General and administrative expenses (59,301) (972) (60,273)Special commission income 3,153 611 3,764Other income 11,524 - 11,524Total Other Operating Expenses, net (44,588) (361) (44,949) Net loss for the period (22,911) (361) (23,272)13. SEGMENTAL INFORMATION (Continued) SAR 000’s For the three month period ended 31 March 2017 (Unaudited) Insurance operations Operating segments Medical Motor Property & casualty Total Shareholders’ operations TotalRevenues Gross premiums written -Direct 604,729 86,300 90,877 781,906 - 781,906 -Reinsurance - - 2,108 2,108 - 2,108 604,729 86,300 92,985 784,014 - 784,014Reinsurance premiums ceded -Local - - (1,800) (1,800) - (1,800) -Abroad - (23,742) (67,911) (91,653) - (91,653) - (23,742) (69,711) (93,453) - (93,453)Excess of loss premiums - (1,552) (1,797) (3,349) - (3,349)Net Premiums Written 604,729 61,006 21,477 687,212 - 687,212Changes in unearned premiums, net (81,390) 14,319 (4,595) (71,666) - (71,666)Net Premiums Earned 523,339 75,325 16,882 615,546 - 615,546Reinsurance commission income - 14,579 9,747 24,326 - 24,326Total Revenues 523,339 89,904 26,629 639,872 - 639,872Underwriting Costs and Expenses Gross claims paid (501,154) (98,352) (39,733) (639,239) - (639,239)Expenses incurred related to claims (17,652) (3,195) (2,437) (23,284) - (23,284)Reinsurers’ share of claims paid - 29,557 39,186 68,743 - 68,743Net claims and other benefits paid (518,806) (71,990) (2,984) (593,780) - (593,780)Change in outstanding claims, net (27,497) 24,436 1,296 (1,765) - (1,765)Change in IBNR, net 43,834 (22,315) 210 21,729 - 21,729Net claims and other benefits incurred (502,469) (69,869) (1,478) (573,816) - (573,816)Premium deficiency reserve 10,902 (3,883) - 7,019 - 7,019Policy acquisition costs (26,184) (6,790) (5,977) (38,951) - (38,951)Total Underwriting Costs and Expenses (517,751) (80,542) (7,455) (605,748) - (605,748) NET UNDERWRITING INCOME 5,588 9,362 19,174 34,124 - 34,124 Other Operating (Expenses)/Income Allowance for doubtful debts (74,500) - (74,500)General and administrative expenses (70,867) (1,116) (71,983)Special commission income 4,194 1,716 5,910Other income 13,478 - 13,478Total Other Operating Expenses, net (127,695) 600 (127,095) Net loss for the period (93,571) 600 (92,971) | |
| Disclosure of capital management [text block] | 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 shares.The company is not in compliance with the solvency margin required by SAMA (refer note 1 and 18). | |
| Disclosure of commitments and contingencies, general [text block] | a) Legal proceedings 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.b) Operating lease commitments The minimum future lease payments for the use of the Company office premises are as follows: SR’000 31 March 2018 31 December 2017 (Unaudited) (Audited)Less than one year - -One to five years 19,061 19,061 19,061 19,061c) Contingencies and capital commitments As at 31 March 2018, the Company’s banker has issued letters of guarantee of SR 25,811 thousand (31 December 2017: SR 29,565 thousand) to various customers, motor agencies and workshops as per the terms of the agreements with them (also see note 5). The Company had no capital commitments during the period ended 31 March 2018 (31 December 2017: nil). | |
| Disclosure of other notes relevant to understanding of financial statements [text block] | During the period ended 31 March 2016, SAMA issued a letter to the Company that highlighted the deteriorating solvency margin of the Company and the rectification measures to be taken by the Company according to Article 68 of the Insurance Implementing Regulations. The Company was not able to meet the solvency margin requirement by 30 September 2016 as instructed by SAMA and had not submitted the final approved plan as required by the aforesaid letter. On 27 December 2016, SAMA issued another letter binding the Company to provide an approved plan to meet the requirement of solvency margin by 18 January 2017 and take necessary measures to ensure the fulfilment of the rights of the policy holders. The detailed plan was subsequently provided to SAMA during the period ended 31 March 2017, after approval by the Company’s Board of Directors. On 2 October 2017, SAMA issued a follow-up letter to the Company to comply with solvency margin requirement by 31 December 2017 and intimated that failure to do so will result in the suspension of the Company’s operations. Further, on 23 October 2017, SAMA issued another letter highlighting the critical financial condition of the Company and significant deterioration in its solvency margin despite repeated follow-ups. SAMA in its aforesaid letter also highlighted the irregularities in governance issues and delays in the collection of long outstanding related parties’ balances. Furthermore, SAMA in its letter urged the Company’s Board of Directors to come up with an urgent and effective solution for its critical financial condition. Moreover, SAMA reiterated that it may suspend the operations of the Company at any time even before 31 December 2017 if no tangible actions are taken to improve the deteriorating solvency margin situation. The Company’s Board of Directors in their meeting held on 2 October 2017 resolved to appoint a new consultant to formulate a new business plan and submit its report to SAMA before 31 December 2017. Accordingly, the plan submitted by the consultant was approved by the Board of Directors in their meeting held on 1 November 2017.18. SOLVENCY MARGIN (Continued) As per the revised business plan, the solvency margin situation is expected to improve gradually after taking certain measures as mentioned in the plan, including, amongst others, exiting unprofitable accounts, reinsurance of medical business, recoveries from policyholders and related parties and finally a capital injection amount that may vary depending on the strategic measures adopted as outlined in the plan in order to be in full compliance with the solvency margin requirement. As explained in Note 1, the Company did not meet the solvency margin requirements as at 31 December 2017 and consequently SAMA issued a letter dated 29 January 2018, preventing the Company from writing any new policies and renewing the existing policies. SAMA also instructed the Company to increase its share capital before 30 July 2018 to address the issue of its deteriorating solvency margin. The Company’s Board of Directors in their meeting held on 6 February 2018, recommended a rights issue amounting to SAR 400 million in order to improve the solvency margin and the Company’s future business activities. Such rights issue is subject to approval of the regulatory authorities and general assembly of the Company. Subsequent to the period ended 31 March 2018, SAMA issued a letter dated 15 April 2018 allowing the Company to write new policies and renewing the existing policies starting from 17 April 2018 subject to certain conditions. The aforesaid conditions amongst others include, the Company’s commitment to increase its share capital before 31 October 2018. The Company has also initiated measures to address the governance issues in light of matters raised by SAMA that includes reconstitution of the Board and Board committees. Subsequent to the period end 31 March 2018, the Company submitted a revise plan to SAMA which was approved by them on 22 April 2018. | |
