| Notes forming part of accounts [line items] | | |
| Disclosure of notes and other explanatory information [text block] | | |
| Disclosure of general information about reporting entity [abstract] | | |
| Disclosure of general information about reporting entity [text block] | 1 ORGANIZATION AND PRINCIPAL ACTIVITIES 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: The objectives of the Company are to transact in cooperative insurance and reinsurance business and related activities in the Kingdom of Saudi Arabia. Its principal lines of business include medical, motor and other general insurance. The Company was listed on the Saudi Arabian Stock Exchange (Tadawul) on 28 Rabi Al-Awal 1428H (corresponding to 16 April 2007). | |
| Disclosure of basis of preparation of financial statements [text block] | 2 BASIS OF PREPARATION (Continued) Going concern 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 right issue amounting to SAR 400 million in order to improve the solvency margin and the Company’s future business activities. Such right issue was subjected to approval of the regulatory authorities and general assembly of the Company. 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. On 17 October 2018 the Company successfully raised capital of SAR 400 million through issuance of right shares. However, the Company is yet to meet its solvency margin requirement (refer note 33 i). Management has performed an assessment of its going concern assumption under different scenarios. Based on the underlying cash flow projections under such 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 financial statements 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 measures. The statement of financial position, statements of income, comprehensive income and cash flows of the insurance operations and shareholders’ operations which are presented in note 34 of the financial statements 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 statements of financial position, statements of income, comprehensive income and cash flows prepared for the insurance operations and shareholders operations as referred to above, reflect only the assets, liabilities, income, expenses and comprehensive gains or losses of the respective operations. In preparing the Company-level financial statements in compliance with IFRS, the balances and transactions of the insurance operations are amalgamated and combined with those of the shareholders’ operations. 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. | |
| Disclosure of accounting framework used in preparation of financial statements [text block] | 3 SURPLUS DISTRIBUTION 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' surplus for the year ended 31 December 2019 amounted to SAR 9,955 thousand (31 December 2018: deficit of SAR 213,459 thousand). Accordingly, 90% of the insurance operations' surplus amounting to SAR 8,960 thousand was transferred to shareholders’ operations for the year, leaving a surplus payable to policyholders of SAR 995 thousand (31 December 2018: the full amount of SAR 213,459 thousand was transfer to shareholders because of the deficit). | |
| Disclosure of new standards and amendments in standards [text block] | 4 CHANGES IN ACCOUNTING POLICIES AND RESTATEMENTS The accounting policies and risk management policy used in the preparation of the financial statement are consistent with those followed in the preparation of the Company’s annual financial statements for the year ended 31 December 2018, except as explained below: Standards issued and effective Standard/ Interpretation Description Effective date IFRS 16 Leases 1 January 2019 IFRS 16 ‘Leases’ replaces IAS 17 ‘Leases’ along with three Interpretations (IFRIC 4 ‘Determining whether an Arrangement contains a Lease’, SIC 15 ‘Operating Leases-Incentives’ and SIC 27‘Evaluating the Substance of Transactions Involving the Legal Form of a Lease’). The new Standard has been applied using the modified retrospective approach. Prior periods have not been restated. For contracts in place at the date of initial application, the Company has elected to apply the definition of a lease from IAS 17 and IFRIC 4 and has not applied IFRS 16 to arrangements that were previously not identified as lease under IAS 17 and IFRIC 4. The Company has elected not to include initial direct costs in the measurement of the right-of-use asset for operating leases in existence at the date of initial application of IFRS 16, being 1 January 2019. At this date, the Company has also elected to measure the right-of-use assets at an amount equal to the lease liability adjusted for any prepaid or accrued lease payments that existed at the date of transition. Instead of performing an impairment review on the right-of-use assets at the date of initial application, the Company has relied on its historic assessment as to whether leases were onerous immediately before the date of initial application of IFRS 16. On transition, for leases previously accounted for as operating leases with a remaining lease term of less than 12 months and for leases of low-value assets the Company has applied the optional exemptions to not recognise right-of-use assets but to account for the lease expense on a straight line basis over the remaining lease term. For those leases previously classified as finance leases, the right-of-use asset and lease liability are measured at the date of initial application at the same amounts as under IAS 17 immediately before the date of initial application. On transition to IFRS 16 the weighted average incremental borrowing rate applied to lease liabilities recognised under IFRS 16 was 4%. The Company has benefited from the use of hindsight for determining lease term when considering options to extend and terminate leases. The following is the lease liability recognised at 1 January 2019: SAR '000' Total lease liabilities recognised under IFRS 16 at 1 January 2019 24,853 4 CHANGES IN ACCOUNTING POLICIES AND RESTATEMENTS (Continued) Standards and amendments published but not yet effective IFRS 17 – Insurance Contracts This standard has been published on May 18, 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. distinct performance obligations to provide non-insurance goods and services. These components should be accounted for separately in accordance with the related standards (IFRS 9 and IFRS 15). Measurement In contrast to the requirements in IFRS 4, which permitted insurers to continue to use the accounting policies for measurement purposes that existed prior to January 2015, IFRS 17 provides the following different measurement models: The General model is based on the following “building blocks”: a) the fulfilment cash flows (FCF), which comprise: probability-weighted estimates of future cash flows, an adjustment to reflect the time value of money (i.e. discounting) and the financial risks associated with those future cash flows, and a risk adjustment for non-financial risk; b) the Contractual Service Margin (CSM). The CSM represents the unearned profit for a group of insurance contracts and will be recognized as the entity provides services in the future. The CSM cannot be negative at inception; any net negative amount of the fulfilment cash flows at inception will be recorded in profit or loss immediately. At the end of each subsequent reporting period the carrying amount of a group of insurance contracts is remeasured to be the sum of: the liability for remaining coverage, which comprises the FCF related to future services and the CSM of the group at that date; and the liability for incurred claims, which is measured as the FCF related to past services allocated to the group at that date. the remaining contracts in the portfolio. The CSM is adjusted subsequently for changes in cash flows related to future services but the CSM cannot be negative, so changes in future cash flows that are greater than the remaining CSM are recognized in profit or loss. Interest is also accreted on the CSM at rates locked in at initial recognition of a contract (i.e. discount rate used at inception to determine the present value of the estimated cash flows). Moreover, the CSM will be released into profit or loss based on coverage units, reflecting the quantity of the benefits provided and the expected coverage duration of the remaining contracts in the group. 4 CHANGES IN ACCOUNTING POLICIES AND RESTATEMENTS (Continued) Standards and amendments published but not yet effective (Continued) IFRS 17 – Insurance Contracts (Continued) The Variable Fee Approach (VFA) is a mandatory model for measuring contracts with direct participation features (also referred to as ‘direct participating contracts’). This assessment of whether the contract meets these criteria is made at inception of the contract and not reassessed subsequently. For these contracts, the CSM is also adjusted for in addition to adjustment under general model; changes in the entity’s share of the fair value of underlying items , changes in the effect of the time value of money and financial risks not relating to the underlying items. the entity expects a substantial proportion of any change in the amounts to be paid to the policyholder to vary with the change in fair value of the underlying items. In addition, a simplified Premium Allocation Approach (PAA) is permitted for the measurement of the liability for the remaining coverage if it provides a measurement that is not materially different from the general model or if the coverage period for each contract in the group is one year or less. With the PAA, the liability for remaining coverage corresponds to premiums received at initial recognition less insurance acquisition cash flows. The general model remains applicable for the measurement of incurred claims. However, the entity is not required to adjust future cash flows for the time value of money and the effect of financial risk if those cash flows are expected to be paid/received in one year or less from the date the claims are incurred. Effective Date The IASB issued an Exposure Draft Amendments to IFRS 17 during June 2019 and received comments from various stakeholders. The IASB is currently re-deliberating issues raised by stakeholders. For any proposed amendments to IFRS 17, the IASB will follow its normal due process for standard-setting. The effective date of IFRS 17 and the deferral of the IFRS 9 temporary exemption in IFRS 4,is currently January 1, 2021. Under the current exposure draft, it is proposed to amend the IFRS 17 effective date to reporting periods beginning on or after January 1, 2022. This is a deferral of 1 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 intend to apply the standard on its effective date. Transition Retrospective application is required. However, if full retrospective application for a group of insurance contracts is impracticable, then the entity is required to choose either a modified retrospective approach or a fair value approach. Presentation and Disclosures 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 is currently assessing the impact of the application and implementation of IFRS 17. As of the date of the publication of these financial statements, the financial impact of adopting the standard has yet to be fully assessed by the Company. The Company has undertaken a Gap Analysis and the key areas of Gaps are as follows: | |
| Disclosure of summary of significant accounting policies [abstract] | | |
| Description of accounting policy for statutory reserve [text block] | 17 RIGHT OF USE ASSETS - NET Building Total SAR’000 SAR’000 Cost: Impact of adoption of IFRS 16 25,206 25,206 Additions during the period 9,581 9,581 Balance at 31 December 2019 34,787 34,787 Accumulated amortization: Balance at 1 January 2019 Charge for the period 8,933 8,933 Balance at 31 December 2019 8,933 8,933 Net book value: At 31 December 2019 25,854 25,854 | |
| Description of accounting policy for zakat [text block] | 19 STATUTORY DEPOSIT AND ACCRUED COMMISSION 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 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). Thereafter, during the year 2018, the company increased its paid capital to SR 800 million by right issue shares. After the aforementioned amendments to the capital, the statutory deposit is currently maintained at 15% of the new paid up capital, SR 800 million, amounting to SR 120 million. The Statutory deposit is placed at the commission rate of 2.4% per anum ( 2018 : 2.05%) | |
| Description of accounting policy for time (murabaha) deposit [text block] | 6 SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS The key assumptions concerning the future and other key sources of estimation uncertainty at the date of 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 year are discussed below. 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 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 statement of financial position, for which the insured event has occurred prior to the date of statement of financial position. 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. 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. Following are the critical areas of estimation and judgments for medical and motor business for which the Company acquires services of independent actuary to determine such reserves. As a first step towards setting appropriate IBNR reserves for the medical and motor line of businesses, a runoff analysis is prepared to assess how the claims reserves determined at the previous valuation dates compare with actual developments. Results from runoff analysis are taken into consideration while setting reserves for IBNR claims. An analysis is carried out by using the following methods: Chain Ladder method - this builds up, using historical claims payment patterns, ratios of eventual cumulative claims which have been incurred in a particular year to those which have been paid as at the end of a reporting year. Bornhuetter Ferguson method – this is a technique that combines actual past claims experience and any prior information or expectations that might be available concerning claims, for example expected ultimate loss ratios. Expected Loss Ratio method – this technique determines the projected amount of claims relative to earned premiums. The method is used where the insurer lacks the appropriate past claim occurrence data because of changes in product offerings, change in claims settlement processes, etc. Claims requiring court or arbitration decisions are estimated individually. Independent loss adjusters normally estimate property claims. Management reviews its provisions for claims incurred, and claims incurred but not reported, on quarterly basis. 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 reserve Estimation 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. iii) Impairment of receivables The Company assesses receivables that are individually significant and receivables included in a group of financial assets with similar credit risk characteristics for impairment. Receivables that are individually assessed for impairment and for which an impairment loss is or continues to be 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. During 2017, the Company has revisited its provisioning approach and significantly increased the level of provisioning in respect of insurance and reinsurance receivables due to increase in credit risk associated with the receivables. 6 SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS (Continued) iv) Goodwill impairment Impairment 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. Management used a valuation expert to perform fair value less cost to sell analysis through a market based approach to test impairment. 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. In arriving at the valuation under market approach, the expert also applied certain judgments and factors including analysis of price book value multiples of the comparable companies and comparable transactions. v) Reinsurance The Company accounts for its reinsurance transactions based on their understanding of the contractual terms of the reinsurance treaties. | |
| Description of accounting policy for statutory deposit [text block] | 12 INVESTMENT IN AN ASSOCIATE Investment in an associate comprises of an equity investment in Al-Waseel for Electronic Transportation amounting to SAR 9,393 thousand (a 25% equity interest) (2018: SAR 9,872), in an unquoted company (the “associate”), registered in the Kingdom of Saudi Arabia. SAR’000 December 31, 2019 December 31, 2018 At the beginning of the year 9,872 9,341 Dividend received from investment in an associate (4,896) (4,486) Income from investment in an associate 4,417 5,017 At the end of year 9,393 9,872 Al-Waseel for Electronic Transportation Country of Incorporation Saudi Arabia SAR’000 September 30, 2019 December 31, 2018 Assets 46,838 56,841 Liabilities 9,267 10,590 Revenue 26,275 38,590 Profit 10,536 19,216 % Interest Held 25% 25% | |
| Disclosure of notes forming part of accounts [abstract] | | |
| Disclosure of investments in associates and joint ventures [text block] | 10 TRANSACTIONS AND BALANCES WITH RELATED PARTIES 10.a The following are the details of major related party transactions during the year and their balances at the end of the year: Related parties Nature of transaction Transactions for the year ended Balance receivable / (payable) as at December 31, December 31, December 31, December 31, January 01, 2019 2018 2019 2018 2018 SAR’000 Due from a related party Medgulf BSC - Head office account (major shareholder) -Balance due from at year end - - 2,453 2,453 2,453 -Allowance for doubtful debts - - (2,390) (2,390) (2,390) -Net Balance due from at year end - - 63 63 63 Total due from related party 63 63 63 Due to a related party Medivisa KSA (affiliate) -Insurance premium for employees of fellow subsidiary 2,956 3,017 - - - -Third party administration fees 57,013 51,555 - - - -Claim incurred 126 95 - - - -Payment received 2 - - - -premium refundable 260 464 - - - -Payment on third party administration fees 54,832 35,386 - - - -Balance due to at year end* - - 17,080 17,600 3,886 Total due to related party 17,080 17,600 3,886 *This doesn't includes unearned TPA fee due to the Company amounting to SAR 20.3 million (31 December 2018 : SAR 25.7 million). Other related parties transactions and balances – due from / (due to) The Saudi Investment Bank, (Founding shareholder) -Current account and time deposits (31,513) 34,453 3,937 35,450 997 -Statutory deposit (refer note 10.a (i)) - 26,039 139,507 139,507 165,546 -Gross written premiums 4,879 3,244 - - - -Premiums (refundable) - - (413) (1,016) (1,163) -Claims incurred / adjustment 84 - - - - -Outstanding Claims - - (1,432) (580) (607)TRANSACTIONS AND BALANCES WITH RELATED PARTIES (Continued) Related parties Nature of transaction Transactions for the year ended Balance receivable / (payable) as at December 31, December 31, December 31, December 31, January 01, 2019 2018 2019 2018 2018 SAR’000 Other related parties transactions and balances – due from / (due to) Medivisa KSA (affiliate) -Medical Claim Jordan / Balance - 1,022 - 570 1,592 -Medical claim Lebanon / balance - 580 - 1,109 529 -Medical claim Egypt / balance - 160 - 160 Al Istithmar Capital (subsidiary of SIB-founding shareholder) -Discretionary portfolio arrangement (refer 10.a (ii)) - 55,524 - - 55,524 -Current account - 685 - 1,205 520 -Premiums refundable - - - (38) - Abunayyan trading Co (Under common directorship) -Gross written premiums 4,227 - - - - -Premiums receivable - - 703 -Claims incurred 84 - - - - KSB Pumps Arabia (Under common directorship) -Gross written premiums 863 - - - - -Premiums receivable - - 906 -Claims incurred 1 - - - - Toray membrane middle east (Under common directorship) -Gross written premiums 817 - - - - -Premiums receivable - - 680 -Claims incurred 18 - - - - Tumpane jubar (Under common directorship) -Gross written premiums 964 - - - - -Premiums receivable - - 1,013 -Claims incurred 6 - - - - TRANSACTIONS AND BALANCES WITH RELATED PARTIES (Continued) Related parties Nature of transaction Transactions for the year ended Balance receivable / (payable) as at December 31, December 31, December 31, December 31, January 01, 2019 2018 2019 2018 2018 SAR’000 Other related parties transactions and balances – due from / (due to) Bayan Credit Bureau (Under common directorship) -Gross written premiums 792 808 - - - -Premiums receivable - - 10 (38) - -Claims incurred 441 343 - - - Medgulf BSC (major shareholder) -Claim recoveries - - - - - -Reinsurance recovery (refer 10.a(iii)) - - 5,962 5,962 5,962 -Allowance for doubtful debts - - (4,471) (4,471) (5,962) -Net Balance receivable at year end - - 1,491 1,491 - Addison Bradley Overseas / Addison Bradley & Co. (affiliate) -Balance receivable at year end - - 3,856 3,856 3,856 -Allowance for doubtful debts - - (3,856) (3,856) (3,856) -Net balance due from at year end - - - - - Citiscape (Under common directorship) --Gross written premiums 1,337 - - - - -Premiums receivable - - 1,399 -Claims incurred 3 - - - - Middle east agriculture (Under common directorship) -Gross written premiums 619 - - - - -Premiums receivable - - 650 -Claims incurred 15 - - - - TRANSACTIONS AND BALANCES WITH RELATED PARTIES (Continued) Related parties Nature of transaction Transactions for the year ended Balance receivable / (payable) as at December 31, December 31, December 31, December 31, January 01, 2019 2018 2019 2018 2018 SAR’000 Other related parties transactions and balances – due from / (due to) Eletronic and electric industry (Under common directorship) -Gross written premiums 1,019 - - - - -Premiums receivable - - 1,070 - - -Claims incurred 29 - - Addison Bradley International / Medgulf Lebanon (affiliate) -Reinsurance recovery - 23 - - - -Balance receivable at year end - - 30,265 30,265 30,242 -Allowance for doubtful debts - - (30,242) (30,242) (30,242) -Net balance due from at year end - - 23 23 - Arabian qudra (Under common directorship) --Gross written premiums 526 - - - - -Premiums receivable - - 457 - - -Claims incurred 18 - - - - Saudi meter company (Under common directorship) --Gross written premiums 116 - - - - -Premiums receivable - - 121 -Claims incurred 1 - - - - Saudi Tumpane Co.(Under common directorship) -Gross written premiums 2,980 - - - - -Premiums receivable - - 3,129 -Claims incurred 52 - - - - 10 TRANSACTIONS AND BALANCES WITH RELATED PARTIES (Continued) Related parties Nature of transaction Transactions for the year ended Balance receivable / (payable) as at December 31, December 31, December 31, December 31, January 01, 2019 2018 2019 2018 2018 SAR’000 Other related parties transactions and balances – due from / (due to) Abunayyan electrical (Under common directorship) -Gross written premiums 253 - - - - -Premiums receivable - - 266 -Claims incurred 2 - - - - Industrial instrumentation and control system(Under common directorship) -Gross written premiums 506 - - - - -Premiums receivable - - 631 - - -Allowance for doubtful debts - - (15) - - -Net Balance receivable at year end - - 616 - - -Claims incurred 11 - - - - Saline water conversion corporation(Under common directorship) -Gross written premiums 3,915 91,803 - - - -Premiums receivable - - 107 -Claims incurred 63,031 25,544 - - - Raad Al Barakati (Under common directorship) -Gross written premiums 3 9 - - - -Claims incurred 17 - - - - Amal Bin Shiha (Under common directorship) -Gross written premiums 1 1 - - - 10 TRANSACTIONS AND BALANCES WITH RELATED PARTIES (Continued) Related parties Nature of transaction Transactions for the year ended Balance receivable / (payable) as at December 31, December 31, December 31, December 31, January 01, 2019 2018 2019 2018 2018 SAR’000 Other related parties transactions and balances – due from / (due to) Addison Bradley Arabia-KSA (affiliate) -Payment received during the year - - - - - -Reinsurance recoveries (Refer 10.a (iv) 15 2,779 - - - -Net balance due from at year end - - 16,267 16,252 13,453 -Allowance for doubtful debts - - (12,191) (10,106) (10,090) -Net balance due from at year end - - 4,076 6,146 3,363 Addison Bradley Arabia Holding LLC (UAE) (affiliate) -Balance due from at year end - - 1,472 1,472 1,472 -Allowance for doubtful debts - - (1,472) (1,472) (1,472) -Net balance due from at year end (Refer 10.a (v)) - - - - - Saudi Fransi Capital (Under common directorship) --Gross written premiums - 3,969 -Premiums receivable - - - 253 - -Allowance for doubtful debts - (66) - -Net balance due from at year end - - - 187 - -Claims incurred 2,774 -Investment portfolio 122,995 135,000 - - 10.a(i) Statutory deposit is placed with the Saudi Investment Bank, at the commission rate of 2.4% per annum 10.a(ii) Discretionary portfolio management agreement (DPM) was signed on 11 February 2011 and includes a mix of equity and debt investments. 10. a (iii) This represent overpayment of premium ceded to Medgulf Bahrain for reinsurance placement. 10. a (iv) 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 10.c). 10. a (v) Reinsurance placement was made by the said related party. There is a claim recovery from the reinsurer which related party needs to recover. 10 TRANSACTIONS AND BALANCES WITH RELATED PARTIES (Continued) 10.b Compensation of key management personnel The following table shows the annual salaries, remuneration and allowances pertaining to the Board members and top executives for the year ended December 31, 2019 and 2018: 2019 BOD members (Non-Executive) Top Executives including the CEO and CFO Salaries and compensation - 8,520 Allowances 337 - Annual remuneration 3,390 - End of service indemnities - 2,282 3,727 10,802 2018 BOD members (Non-Executive) Top Executives including the CEO and CFO Salaries and compensation 85 7,260 Allowances 480 - Annual remuneration 3,394 - End of service indemnities - 1,863 3,959 9,123 10.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 is carrying out 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 9 amounting to Saudi Riyals 114.0 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 investments in available-for-sale investments [text block] | 8 SHORT TERM DEPOSITS Short term deposits are placed with counterparties that have credit ratings equivalent to BBB+ to BBB 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 2.43% per annum (2018: 3.04% per annum). For the year ended 31 December 2019 the carrying amounts of the short term deposits reasonably approximate the fair value at the statement of financial position date. The company did not have any short term deposit as at 31 December 2018. | |
| Disclosure of premiums/ contributions and insurance/ reinsurance or takaful/ retakaful balance receivables [text block] | CASH AND CASH EQUIVALENTS Cash and cash equivalents included in the statement of cash flows comprise the following: SAR’000 Insurance operations December 31, 2019 December 31, 2018 January 01, 2018Cash and bank balances 88,607 208,789 97,035 Deposits maturing within 3 months from the acquisition date 88,752 438,500 251,749 Cash and cash equivalent in the statement of cash flows 177,359 647,289 348,784 Deposit against letter of guarantee 80,321 64,957 29,565 257,680 712,246 378,349 SAR’000 Shareholders’ operations December 31, 2019 December 31, 2018 January 01, 2018Cash and bank balances 33,536 6,314 5,176 Deposits maturing within 3 months from the acquisition date - 403,869 - 33,536 410,183 5,176 Cash and bank balances 291,216 1,122,429 383,525 Cash and cash equivalents in the statement of cash flow 210,895 1,057,472 353,960 Cash at banks and short-term deposits 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. Deposits maturing within 3 months from the acquisition date are placed with local and licensed foreign banks’ branches in Kingdom of Saudi Arabia and earned special commission income at an average rate of 2.29% per annum (2018: 3.22% per annum). The carrying amounts disclosed above reasonably approximate the fair value at the statement of financial position date. Deposits against letters of guarantee comprise amounts placed with a local bank against issuance of payment guarantees in favor of the Company’s customers and service providers (also see note 31). Such deposits against letters of guarantee cannot be withdrawn before the expiration of guarantee (are restricted in nature). | |
| Disclosure of cash and cash equivalents [text block] | 5 SIGNIFICANT ACCOUNTING POLICTIES The following is a summary of significant accounting policies followed in preparation of these financial statements: Insurance contracts The Company issues insurance contracts that transfer insurance risk. Insurance contracts are those contracts where the insurer accepts significant insurance risk from the policyholder by agreeing to compensate the policyholder if a specified uncertain future event adversely affects the policyholder. As a general guideline, the Company defines significant insurance risk as the possibility of having to pay benefits on the occurrence of an insured event that are at least 10% more than the benefits payable if the insured event did not occur. Cash and cash equivalents Cash and cash equivalents comprise of cash in hand and at banks and short-term time deposits with an original maturity of less than three months at the date of acquisition. Goodwill Goodwill represents the fair value of the consideration paid in excess of the fair value of net assets or liabilities acquired. Goodwill is tested for impairment by management at least once at the end of each financial year. Impairment for goodwill is determined by assessing the recoverable amount of the cash generating unit (or a group of cash generating units) to which the goodwill is related. When the recoverable amount of the cash-generating unit (or a group of cash generating units) is less than the carrying amount of the cash generating unit (or a group of cash generating units) to which goodwill has been allocated, an impairment loss is recognised. Impairment losses, if any, relating to goodwill cannot be reversed in future periods. Land, property and equipment Land is stated at cost less any impairment and is not depreciated. Property and equipment are measured at cost less accumulated depreciation and any impairment in value. Cost includes expenditure that is directly attributable to the acquisition of the asset. Depreciation is charged to the statement of insurance operations and accumulated surplus on a straight line basis at the following depreciation rates: Class of Assets Rates Leasehold improvements 15% - 25% Office equipment, furniture and fixtures 10% - 15% Computers 25% Motor vehicles 25% Any gain or loss on disposal of an item of property, plant and equipment (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in statement of income The assets’ residual values and useful lives are reviewed at each reporting date and adjusted if appropriate. The carrying values of these assets are reviewed for impairment when event or changes in circumstances indicate that the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount. Intangible assets IT development and software is shown at historical cost. It has a finite useful life and are subsequent carried at cost less accumulated amortization and impairment losses. The Company amortises intangible assets with a limited useful life using straight-line method over the following periods: Years IT development and software 15% - 25% SIGNIFICANT ACCOUNTING POLICTIES (Continued) Investments All investments are initially recognised at fair value, being the fair value of the consideration given, including acquisition charges associated with the investment except for investments at fair value through profit or loss. Premiums and discounts are amortized on a systematic basis to their maturity. For investments that are traded in organized financial markets, fair value is determined by reference to exchange quoted market bid prices at the close of business on the statement of financial position date without any deduction for transaction costs. (a) Available for sale investments Investments which are classified as "available for sale" are subsequently measured at fair value. Available for sale investments are those investments that are not held to maturity nor held for trading. For an available for sale investment where the fair value has not been hedged, any unrealized gain or loss arising from a change in its fair value is recognised directly under insurance operations’ surplus and / or shareholders' comprehensive income until the investment is derecognized or impaired at which time the cumulative gain or loss previously recognised under the insurance operations’ surplus and / or shareholders' comprehensive income is included in the statement of insurance operations and accumulated surplus and / or shareholders' operations for the year. Available for sale investments whose fair value cannot be reliably measured are carried at amortised cost less impairment provision. (b) Investments in held to maturity securities Investments which have fixed or determinable payments that the Company has the positive intention and ability to hold to maturity are subsequently measured at amortized cost, less provision for impairment in value. Amortized cost is calculated by taking into account any discount or premium on acquisition. Any gain or loss on such investments is recognised in the statement of income - shareholders' operations when the investment is derecognized or impaired. (c) Investment in an associate Associates are enterprises in which the Company generally holds 20% to 50% of the voting power and / or over which it exercises significant influence. Investments in an associates are carried in the statement of financial position at cost, plus post acquisition changes in the Company’s share of net assets of the associate, less any impairment in the value of individual investments. Statutory reserve In accordance with its bylaws, the Company shall allocate 20% of its net income from shareholders’ operations 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. In view of the accumulated losses, no such transfer has been made for the year ended 31 December 2019. Impairment and un-collectability of financial assets An assessment is made at each statement of financial position date to determine whether there is objective evidence that a financial asset or group of financial assets may be impaired. If such evidence exists, any impairment loss is recognized in the statement of shareholders’ operations. Impairment is determined as follows: For assets carried at fair value, impairment is the difference between the cost and fair value (fair value being lower than cost), less any impairment loss previously recognized in the statement of shareholders’ operations. For assets carried at cost, impairment is the difference between the cost and the present value (present value being lower than cost) of future cash flows discounted at the current market rate of return for a similar financial asset. For assets carried at amortized cost, impairment is determined based on future cash flows that are discounted at the original effective special commission rate. SIGNIFICANT ACCOUNTING POLICTIES (Continued) Accrued expenses and other liabilities Liabilities are recognised for amounts to be paid in the future for goods or services received, whether billed by the supplier or not. Special commission income Special commission income from time deposits is recognized on an effective yield basis. Dividend income Dividend income is recognised when the right to receive dividend is established. Provisions Provisions are recognised when the Company has an obligation (legal or constructive) arising from past events, and the costs to settle the obligation are both probable and may be measured reliably. Provisions are not recognised for future operating losses. Trade date accounting All regular way purchases and sales of financial assets are recognized / derecognized on the trade date (i.e. the date that the Company commits to purchase or sell the assets). Regular way purchases or sales of financial assets are transactions that require settlement of assets within the time frame generally established by regulation or convention in the market place. Employees’ end of service indemnities The Company operates an end of service benefit plan for its employees based on the prevailing Saudi Labor Laws. Accruals are made at the present value of expected future payments in respect of services provided by the employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the end of the reporting period of high-quality corporate bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows. The benefit payments obligation is discharged as and when it falls due. Remeasurements (actuarial gains/ losses) as a result of experience adjustments and changes in actuarial assumptions are recognised in statement of comprehensive income – insurance operations. Foreign currencies Transactions in foreign currencies are recorded in Saudi Riyals at the exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated to Saudi Riyals at the rate of exchange prevailing at the statement of financial position date. All differences are taken to the statements of income - insurance operations and accumulated surplus and shareholders’ operations. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction and are not subsequently restated. Foreign exchange gains or losses on available for sale investments are recognised in ‘insurance operations surplus’ in the statement of insurance operations and other comprehensive income under the statement of shareholders’ comprehensive operations. As the Company’s foreign currency transactions are primarily in US dollars, foreign exchange gains and losses are not significant. SIGNIFICANT ACCOUNTING POLICTIES (Continued) Offsetting financial assets and liabilities Financial assets and liabilities are offset and the net amount reported in the statement of financial position only when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liability simultaneously. Income and expense are not offset in the statement of shareholders’ operations unless required or permitted by any accounting standard or interpretation. Premiums earned and commission income Premiums are taken into income over the term of the policies to which they relate on a pro-rata basis. For engineering construction projects with policy terms in excess of one year, the premium are taken into income linearly over the policy term. Unearned premiums represent the portion of premiums written relating to the unexpired period of coverage. The underwriting results represents premiums earned and fee and commission income less claims paid, other underwriting expenses and anticipated claims payable in respect of the year, net of amounts subject to reinsurance, less provision for any anticipated future losses on continuing policies. Commission receivable on reinsurance contracts are deferred and amortised on a straight-line basis over the term of the reinsurance contracts. Retained premiums and commission income, which relate to unexpired risks beyond the end of the financial year, are reported as unearned and deferred based on the following methods: Actual number of days for all lines of business, except For engineering construction projects with policy terms in excess of one year, it is assumed that the risk is increasing linearly over the policy term. Last three month of premiums for marine cargo business. Premiums receivable Premiums receivable are recognized when due and are measured on initial recognition at the fair value of the considerations received or receivable. The carrying value of premiums receivable is reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable, with the impairment loss recorded in the statement of insurance operations and accumulated surplus. Premiums receivable are derecognized when the de-recognition criteria for financial assets have been met. Claims Claims consist of amounts payable to contract holders and third parties and related loss adjustment expenses, net of salvage and other recoveries, and are charged to statement of income - insurance operations and accumulated surplus / (deficit) as incurred. Gross outstanding claims comprise the gross estimated cost of claims incurred but not settled at the date of statement of financial position, whether reported or not. Provisions for reported claims not paid as at the date of statement of financial position are made on the basis of individual case estimates. In addition, a provision based on management’s judgment and the Company’s prior experience is maintained for the cost of settling claims incurred but not reported at date of statement of financial position. The ultimate liability may be in excess of or less than the amount provided. Any difference between the provisions at the date of statement of financial position and settlements and provisions in the following year is included in the underwriting account for that year. The Company does not discount its liabilities for unpaid claims as substantially all claims are expected to be paid within one year of the statement of financial position date.SIGNIFICANT ACCOUNTING POLICTIES (Continued) Salvage and subrogation reimbursement Some insurance contracts permit the Company to sell (usually damaged) assets acquired in settling a claim (for example, salvage). The Company may also have the right to pursue third parties for payment of some or all costs (for example, subrogation). Estimates of salvage recoveries are included as an allowance in the measurement of the outstanding claims liability. The allowance is the amount that can reasonably be recovered from the disposal of the asset. Subrogation reimbursements are also considered as an allowance in the measurement of the outstanding claims liability. The allowance is the assessment of the amount that can be recovered from the third party. Reinsurance contracts held Reinsurance is distributed between treaty, facultative, stop loss and excess of loss reinsurance contracts. Contracts entered into by the Company with reinsurers under which the Company is compensated for losses on one or more contracts issued by the Company and that meet the classification requirements for insurance contracts in Note 4 are classified as reinsurance contracts held. Contracts that do not meet these classification requirements are classified as financial assets. Insurance contracts entered into by the Company under which the contract holder is another insurer (inwards reinsurance) are included with insurance contracts. An asset or liability is recorded in the statement of financial position representing payments due from reinsurers, the share of losses recoverable from reinsurers and premiums due to reinsurers. Amounts receivable from reinsurance is estimated in a manner consistent with the claim liability associated with the insured parties. Reinsurance assets or liabilities are derecognised when the contractual rights are extinguished or expire or when the contract is transferred to another party. An impairment review is performed at each reporting date or more frequently when an indication of impairment arises during the reporting year. Impairment occurs when objective evidence exists that the Company may not recover outstanding amounts under the terms of the contract and when the impact on the amounts that the Company will receive from the reinsurer can be measured reliably. The impairment loss is recorded in the statement of income as incurred. For details please refer to note 4. Ceded reinsurance arrangements do not relieve the Company from its obligations to policyholders. Premiums and claims on assumed reinsurance are recognised as income and expenses in the same manner as they would be if the reinsurance were considered direct business, taking into account the product classification of the reinsured business. Reinsurance assumed The Company also assumes reinsurance risk in the normal course of business for life insurance and non-life insurance contracts where applicable. Premiums and claims on assumed reinsurance are recognised as revenue or expenses in the same manner as they would be if the reinsurance were considered direct business, taking into account the product classification of the reinsured business. Reinsurance liabilities represent balances due to insurance companies. Amounts payable are estimated in a manner consistent with the related reinsurance contract. Premiums and claims are presented on a gross basis for both ceded and assumed reinsurance. Reinsurance assets or liabilities are derecognised when the contractual rights are extinguished or expire or when the contract is transferred to another party. Reinsurance contracts that do not transfer significant insurance risk are accounted for directly through the statement of financial position. These are deposit assets or financial liabilities that are recognised based on the consideration paid or received less any explicit identified premiums or fees to be retained by the reinsured. Investment income on these contracts is accounted for using the EIR method when accrued. SIGNIFICANT ACCOUNTING POLICTIES (Continued) Liability adequacy test At each statement of financial position date, the Company assesses whether its recognised insurance liabilities are adequate using current estimates of future cash flows under its insurance contracts. If that assessment shows that the carrying amount of its insurance liabilities (less related deferred policy acquisition costs) is inadequate in the light of estimated future cash flows, the entire deficiency is immediately recognised in the statement of income - insurance operations and accumulated surplus and an unexpired risk provision is created. Deferred policy acquisition costs Commissions, SAMA fees, CCHI fees, TPA fees, partial administration cost (related to underwriting and issuance of policy), and other costs directly related to the acquisition and renewal of insurance contracts are deferred and amortized over the terms of the insurance contracts to which they relate, similar to premiums earned. All other acquisition costs are recognised as an expense when incurred. Amortization is recorded in the statement of income - insurance operations and accumulated surplus. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period and are treated as a change in accounting estimate. An impairment review is performed at each reporting date or more frequently when an indication of impairment arises. If the assumptions relating to future profitability of these policies are not realised, the amortization of these costs could be accelerated and this may also require additional impairment write-offs in the statement of insurance operations and accumulated surplus. Deferred policy acquisition costs are also considered in the liability adequacy test for each reporting year. Reinsurance The Company cedes insurance risk in the normal course of business. Reinsurance assets represent balances due from reinsurance companies. Recoverable amounts are estimated in a manner consistent with the outstanding claims provision and are in accordance with the reinsurance contract. An impairment review is performed at each reporting date or more frequently when an indication of impairment arises during the reporting year. Impairment occurs when objective evidence exists that the Company may not recover outstanding amounts under the terms of the contract and when the impact on the amounts that the Company will receive from the reinsurer can be measured reliably. The impairment loss is recorded in the statement of income - insurance operations and accumulated surplus. Ceded reinsurance arrangements do not relieve the Company from its obligations to policyholders. Premiums and claims on assumed reinsurance are recognised as income and expenses in the same manner as they would be if the reinsurance were considered direct business, taking into account the product classification of the reinsured business. Reinsurance liabilities represent balances due to reinsurance companies. Amounts payable are estimated in a manner consistent with the associated reinsurance contract. Premiums and claims are presented on a gross basis for both ceded and assumed reinsurance. Reinsurance assets or liabilities are derecognised when the contractual rights are extinguished or expire or when the contract is transferred to another party. Unearned reinsurance commission Commission receivable on outwards reinsurance contracts are deferred and amortized over the terms of the insurance contracts to which they relate. Amortisation is recorded in the statement of income - insurance operations and accumulated surplus.SIGNIFICANT ACCOUNTING POLICTIES (Continued) Product classification The Company issues insurance contracts that transfer insurance risk. Insurance contracts are those contracts where the insurer accepts significant insurance risk from the policyholder by agreeing to compensate the policyholder if a specified uncertain future event adversely affects the policyholder. As a general guideline, the Company defines significant insurance risk as the possibility of having to pay benefits on the occurrence of an insured event. Derecognition of financial instruments The derecognition of a financial instrument takes place when the Company no longer controls the contractual rights that comprise the financial instrument, which is normally the case when the instrument is sold, or all the cash flows attributable to the instrument are passed through to an independent third party. Fair values The fair value of financial assets are based on quoted prices for marketable securities or estimated fair values. The fair value of commission-bearing items is estimated based on discounted cash flow using commission for items with similar terms and risk characteristics. For financial assets where there is no active market, fair value is determined by reference to the market value of a similar financial assets or where the fair values cannot be derived from active market, they are determined using a variety of valuation techniques that includes the use of mathematical models. The inputs of this models is taken from observable market where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Segmental reporting An operating segment is a component of the Company that is engaged in business activities from which it earns revenues and incurs expenses and about which discrete financial statement is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. For management purposes, the Company is organized into business units based on their products and services and has three reportable operating segments as follows: Medical insurance, which covers medical costs, medicines, and all other medical services and supplies. Motor Insurance, which provides coverage against losses and liability related to motor vehicles. Other classes, which covers any other classes of insurance not included above. Shareholders’ operations’ is a non-operating segment. Income earned from time deposits and investments is the only revenue generating activity. Certain direct operating expenses and other overhead expenses are allocated to this segment on an appropriate basis. The loss or surplus from the insurance operations is allocated to this segment on an appropriate basis. Segment performance is evaluated based on profit or loss which, in certain respects, is measured differently from income or loss in the accompanying financial statements. No inter-segment transactions occurred during the year. If any transaction were to occur, transfer prices between operating segments are set on an arm’s length basis in a manner similar to transactions with third parties. Segment income, expense and results will then include those transfers between operating segments which will then be eliminated at the level of financial statements of the Company. The preparation of the financial statements 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. | |
| Disclosure of classes of share capital [text block] | 15 UNEARNED PREMIUMS The movements during the year for unearned premiums are as follows: For the year ended December 31, 2019 SAR’000 Gross Re-insurance Net Balance at the beginning of the year 1,236,849 (282,901) 953,948 Premium written during the year 2,421,277 (628,510) 1,792,767 Premium earned during the year (2,672,689) 620,792 (2,051,897) Balance at the end of the year 985,437 (290,619) 694,818 For the year ended December 31, 2018 SAR’000 Gross Re-insurance Net Balance at the beginning of the year 1,405,228 (464,063) 941,165 Premium written during the year 2,069,473 (266,003) 1,803,470 Premium earned during the year (2,237,852) 447,165 (1,790,687) Balance at the end of the year 1,236,849 (282,901) 953,948 | |
| Disclosure of retained earnings (accumulated losses) [text block] | PREPAYMENTS AND OTHER ASSETS, NET (a) Prepayment and other assets, net SAR'000 31 December 2019 31 December 2018 InsuranceOperations Shareholders’ Operations Total InsuranceOperations Shareholders’ Operations Total Prepayment on hospital dues 165,655 - 165,655 61,092 - 61,092 Deferral of SAMA, CCHI and TPA fees (Note 14 b) 31,101 - 31,101 39,321 - 39,321 Advances to suppliers 48,221 - 48,221 10,902 - 10,902 Advances to employees 9,158 - 9,158 8,824 - 8,824 Accrued Income from Manafeth 5,467 - 5,467 2,467 - 2,467 Prepaid rent 339 - 339 1,889 - 1,889 Accrued special commission income 671 3,270 3,941 900 2,522 3,422 Prepaid expenses 2,141 - 2,141 470 - 470 VAT 6,470 - 6,470 - - - Others 6,039 - 6,039 5,886 - 5,886 Provision for doubtfull debts (24,691) (24,691) - - - 250,571 3,270 253,841 131,751 2,522 134,273 (b) The movements during the year for deferral of TPA, SAMA and CCHI fees are as follows: SAR’000 December 31, 2019 December 31, 2018 TPA fees 25,772 23,909 Costs incurred during the year 48,885 49,511 Amortised during the year charged to claim expenses (54,299) (47,648) At the end of the year 20,358 25,772 SAR’000 Note December 31, 2019 December 31, 2018 Supervision and inspection fees - SAMA 6,185 7,024 Costs incurred during the year 10,848 10,347 Amortised during the year 25 (12,106) (11,186) At the end of the year 4,927 6,185 SAR’000 Note December 31, 2019 December 31, 2018 Supervision and inspection fees - CCHI 7,364 6,832 Costs incurred during the year 16,560 14,392 Amortised during the year 25 (18,108) (13,860) At the end of the year 5,816 7,364 Total Deferral of SAMA, CCHI and TPA fees 31,101 39,321 | |
| Disclosure of technical reserve for insurance/takaful/reinsurance/retakaful operations [text block] | PREMIUM AND REINSURERS' RECEIVABLE, NET Receivables comprise amounts due from the following: SAR’000 December 31, 2019 December 31, 2018 January 01, 2018Policyholders 407,434 450,663 518,982 Brokers and agents 348,888 419,703 349,996 Premiums receivables 756,322 870,366 868,978 Less: Allowance for doubtful debts (272,495) (313,582) (290,942) 483,827 556,784 578,036 Reinsurers’ receivable 307,208 339,354 302,568 Less: Allowance for doubtful debts (218,820) (215,060) (221,499) 88,388 124,294 81,069 Premium and reinsurers’ receivable – net 572,215 681,078 659,105 As disclosed in note 10.c, the Company, together with CRC is carrying out 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 114.0 million may be identified as receivable from related parties and therefore may need to be disclosed under due from related parties in note 10. As at December 31, 2019, the movement in the provision for doubtful debts of premium receivables was as follows: Movement in provision for doubtful debts: SAR’000 December 31, 2019 December 31, 2018 January 01, 2018Balance, January 1 528,642 512,441 219,571 Write off during the year - 27,074 292,870 Provision for the year (37,327) (10,873) - Balance, December 31 491,315 528,642 512,441 9 PREMIUM AND REINSURERS' RECEIVABLE, NET The aging analysis of gross premiums and reinsurance balances receivable is as at 31 December 2019 and 2018 is set as below: As at December 31, the ageing of receivables is as follows: Total Neither past due nor impaired Past due but not impaired Less than 30 days 31 - 90 days Past due and impaired SAR '000' Premiums and re- insurance receivables - Policyholders 407,434 205,081 36,707 15,792 149,854 - Brokers and agents 348,888 145,255 27,210 25,240 151,183 - Premium receivables 756,322 350,336 63,917 41,032 301,037 - Receivable from reinsurers 307,208 - 23,032 23,582 260,594 As at December 31, 2019 1,063,530 350,336 86,949 64,614 561,631 Total Neither past due nor impaired Past due but not impaired Less than 30 days 31 - 60 days Past due and impaired SAR '000' Premiums and re-insurance receivables - Policyholders’ 450,663 161,994 48,674 23,376 216,619 - Brokers and agents 419,703 275,004 39,426 15,252 90,021 - Premium receivables 870,366 436,998 88,100 38,628 306,640 - Receivable from re- insurance 339,354 - 62,168 731 276,455 As at December 31, 2018 1,209,720 436,998 150,268 39,359 583,095 Premiums and reinsurance balances receivables comprise a large number of customers mainly within the Kingdom of Saudi Arabia as well as reinsurance companies mainly in Europe. Premiums and reinsurance balances receivable include SAR 33.7 million (31 December 2018: SAR 21.4 million) due in foreign currencies, mainly in US Dollars. The Company’s terms of business require amounts to be paid within 30 to 90 days of the date of transaction. Arrangements with reinsurers normally require settlement if the balance exceeds a certain agreed amount. The five largest customers accounts for 29% (31 December 2018: 41%) of the premiums receivable as at 31 December 2019. Further, total receivable from government entities amount to SR 179.1 million (31 December 2018: SAR 163.9 million) constituting 24% (31 December 2018: 19%) of total premium receivable. Unimpaired premiums and reinsurance balances receivables are expected, on the basis of past experience, to be fully recoverable. It is not the practice of the Company to obtain collateral over receivables and the vast majority are, therefore, unsecured. The Company does not have an internal credit ratings assessment process and accordingly, amounts which are neither past due nor impaired, in respect of premiums receivable balances, are from individuals and unrated corporates. Balances due from reinsurers are with counterparties who have investment grade credit ratings issued by external rating agencies. | |
| Disclosure of related party transactions [text block] | 11 CLAIMS a) Outstanding Claims and IBNR December 31, 2019 December 31, 2018 Gross Re-insurance share Net Gross Re-insurance share Net SAR’000 SAR’000 End of the year Outstanding claims 466,610 (334,829) 131,781 325,214 (294,162) 31,052 Claims incurred but not reported 751,200 (222,617) 528,583 624,910 (126,644) 498,266 1,217,810 (557,446) 660,364 950,124 (420,806) 529,318 Claims paid during the year 1,915,510 (361,784) 1,553,726 2,049,647 (380,720) 1,668,927 Beginning of the year Outstanding claims 325,214 (294,162) 31,052 499,938 (366,647) 133,291 Claims incurred but not reported 624,910 (126,644) 498,266 594,499 (114,493) 480,006 950,124 (420,806) 529,318 1,094,437 (481,140) 613,297 Claims incurred 2,183,196 (498,424) 1,684,772 1,905,334 (320,386) 1,584,948 b) Other Technical Reserves SAR’000 December 31, 2019 December 31, 2018 January 01, 2018 SAR’000 Premium deficiency reserve 20,529 51,052 15,700 Others 14,894 9,759 10,596 Other reserves at end of the year 35,423 60,811 26,296 c) Claims Triangulation Analysis by Accident Year The Company maintains adequate reserves in respect of its insurance business in order to protect against adverse future claims experience and developments. As claims develop and the ultimate cost of claims becomes more certain, adverse claims experiences will be eliminated which results in the release of reserves from earlier accident years. In order to maintain adequate reserves, the Company transfers much of this release to the current accident year reserves when the development of claims is less mature and there is much greater uncertainty attached to the ultimate cost of claims. Claims triangulation analysis is by accident years spanning a number of financial years. 11 CLAIMS (Continued) c) Claims Triangulation Analysis by Accident Year (Continued) i) On Gross Basis SAR '000' Accident Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 TOTAL At the end of accident year 1,148,965 1,525,392 1,759,169 2,030,375 2,865,129 3,196,139 3,553,993 2,821,668 2,281,556 1,776,365 2,154,612 2,154,612 One year later 1,166,831 1,538,465 1,887,696 2,355,342 3,006,147 3,446,409 3,403,193 2,818,050 2,446,353 1,784,344 - 1,784,344 Two years later 1,165,977 1,509,521 1,967,919 2,319,794 3,056,802 3,430,507 3,413,046 2,838,429 2,430,527 - - 2,430,527 Three years later 1,145,562 1,537,038 1,950,795 2,321,681 3,082,282 3,453,587 3,438,152 2,846,770 - - - 2,846,770 Four years later 1,281,007 1,537,201 1,948,513 2,323,884 3,021,821 3,453,723 3,465,713 - - - - 3,465,713 Five years later 1,257,000 1,543,934 1,945,686 2,331,979 3,015,807 3,453,423 - - - - - 3,453,423 Six years later 1,238,429 1,544,369 1,942,946 2,338,689 3,015,089 - - - - - - 3,015,089 Seven years later 1,238,219 1,538,549 1,942,017 2,339,764 - - - - - - - 2,339,764 Eight years later 1,233,679 1,537,916 1,942,388 - - - - - - - - 1,942,388 Nine years later 1,233,062 1,537,958 - - - - - - - - - 1,537,958 Ten years later 1,233,120 - - - - - - - - - - 1,233,120 Ultimate paid claims (estimated) 1,233,120 1,537,958 1,942,388 2,339,764 3,015,089 3,453,423 3,465,713 2,846,770 2,430,527 1,784,344 2,154,612 26,203,708 Cumulative paid claims 1,233,290 1,529,898 1,937,305 2,327,187 2,991,523 3,421,361 3,391,068 2,778,964 2,361,239 1,700,002 1,314,061 24,985,898 Outstanding claims + IBNR (170) 8,060 5,083 12,577 23,566 32,062 74,645 67,806 69,288 84,342 840,551 1,217,810 ii) On net Basis (net of reinsurance) SAR '000' Accident Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 TOTAL At the end of accident year 605,607 872,437 1,029,061 1,115,317 1,430,868 1,854,990 1,966,552 1,883,118 1,456,421 1,129,932 1,100,423 1,100,423 One year later 959,934 1,230,858 1,469,036 1,763,784 2,293,167 2,598,710 2,682,079 2,472,220 1,989,928 1,518,948 - 1,518,948 Two years later 974,509 1,253,311 1,497,190 1,787,052 2,327,099 2,620,345 2,750,789 2,527,054 2,021,596 - - 2,021,596 Three years later 976,864 1,256,963 1,501,740 1,793,553 2,337,348 2,625,289 2,773,677 2,543,036 - - - 2,543,036 Four years later 977,869 1,258,320 1,504,241 1,795,712 2,343,473 2,630,417 2,786,625 - - - - 2,786,625 Five years later 978,295 1,265,141 1,507,236 1,796,369 2,344,794 2,631,894 - - - - - 2,631,894 Six years later 979,726 1,265,527 1,508,070 1,796,769 2,345,439 - - - - - - 2,345,439 Seven years later 980,167 1,267,881 1,508,888 1,797,404 - - - - - - - 1,797,404 Eight years later 980,233 1,267,944 1,509,241 - - - - - - - - 1,509,241 Nine years later 980,233 1,268,543 - - - - - - - - - 1,268,543 Ten years later 980,213 - - - - - - - - - - 980,213 Ultimate paid claims (estimated) 976,818 1,263,807 1,507,009 1,807,846 2,345,494 2,635,383 2,791,543 2,550,553 2,039,561 1,541,857 1,703,855 21,163,726 Cumulative paid claims 980,213 1,268,543 1,509,241 1,797,404 2,345,439 2,631,894 2,786,625 2,543,036 2,021,596 1,518,948 1,100,423 20,503,362 Outstanding claims + IBNR (3,395) (4,736) (2,232) 10,442 55 3,489 4,918 7,517 17,965 22,909 603,432 660,364 | |
| Disclosure of entity's operating segments [text block] | 13 AVAILABLE FOR SALE INVESTMENTS Investments are classified as set out below: a) Insurance Operations - Available for sale investments SAR’000 SAR’000 December 31, 2019 December 31, 2018 Type of Investments -Mutual Fund 10,181 - -Sukuks quoted- international - 25,000 10,181 25,000 The available for sale investments comprise of mutual funds, bonds, sukuk and equities issued by corporate and financial institutions in the Kingdom of Saudi Arabia. The cumulative change in fair values of available for sale investments for shareholders’ operations amounting to SAR 181 thousand (31 December 2018: SAR Nil) is presented within shareholders’ equity in the statement of financial position. The movements during the year in available for sale investments for insurance’s operations were as follows: December 31, 2019 December 31, 2018 At the beginning of the year 25,000 28,358 Purchase during the year 10,000 - Sold during the year (25,000) (3,379) Net change in fair values 181 21 At the end of the year 10,181 25,000 *The realised gain is transferred to statement of income under special commission income.13 AVAILABLE FOR SALE INVESTMENTS (Continued) b) Shareholders’ Operations - Available for sale investments SAR’000 December 31, 2019 December 31, 2018 Type of Investments Equity unquoted- domestic 1,923 1,923 Equity quoted- domestic 135,067 - Mutual Funds unqoted- domestic 80,983 - Sukuks unquoted- domestic 10,000 10,000 Sukuks unquoted- international - 18,622 Sukuks quoted- domestic 241,291 - Sukuks quoted- international - 18,606 469,264 49,151 The available for sale investments comprise of mutual funds, bonds, sukuk and equities issued by corporate and financial institutions in the Kingdom of Saudi Arabia. The cumulative change in fair values of available for sale investments for shareholders’ operations amounting to SAR 21,480 thousand (31 December 2018: SAR (442) thousand) is presented within shareholders’ equity in the statement of financial position. The movements during the year in available for sale investments for shareholders’ operations were as follows: SAR’000 December 31, 2019 December 31, 2018 At the beginning of the year 49,151 125,018 Purchase during the year 436,606 - Sold during the year (38,415) (75,665) Net change in fair values 21,922 (202) At the end of the year 469,264 49,151 c) Analysis of investments of insurance and shareholders’ operations i. The analysis of investments of insurance and shareholders’ operations by counterparties is as follows: SAR’000 December 31, 2019 December 31, 2018 Government and quasi government 357,602 10,000 Banks and other financial institutions 119,920 62,228 Corporates 1,923 1,923 Total 479,445 74,151 ii. The credit quality of investment portfolio is as follows: SAR’000 December 31, 2019 December 31, 2018 AA- To AAA 10,000 28,605 A- To A+ 347,602 5,000 N/A 121,843 40,546 Total 479,445 74,151 Credit ratings are based on Standard and Poor, Fitch and Moody’s rating methodology or the issuer, noting that “NA” represents the sum of the investments which are not rated. 13 AVAILABLE FOR SALE INVESTMENTS (Continued) iii. Fair value Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or the most advantageous) market between market participants at the measurement date under current market conditions regardless of whether that price is directly observable or estimated using another valuation technique. The fair values of recognised financial instruments are not significantly different from the carrying values included in the financial statement. The estimated fair values of financial instruments are based on quoted market prices, when available. The fair values of these 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 SAR1.92 million (31 December 2018: SAR 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 year ended 31 December 2019, 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. 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 hierarchy The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments: Level 1: quoted prices in active markets for the same or identical instrument that an entity can access at the measurement date; 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; and Level 3: valuation techniques for which any significant input is not based on observable market data. 1. Insurance operations – Fair Value SAR’000s Level 1 Level 2 Level 3 Total December 31, 2019 Available for sale investments - Mutual Fund 10,181 - - 10,181 Total available for sale investments 10,181 - - 10,181 13 AVAILABLE FOR SALE INVESTMENTS (Continued) iii. Fair value (Continued) 1. Insurance operations – Fair Value (Continued) SAR’000s Level 1 Level 2 Level 3 Total December 31, 2018 Available for sale investments - Sukuk - 25,000 - 25,000 Total available for sale investments - 25,000 - 25,000 SAR’000s Level 1 Level 2 Level 3 Total January 01, 2018 Available for sale investments - Mutual funds 3,358 - - 3,358 - Sukuk - 25,000 - 25,000 Total available for sale investments 3,358 25,000 - 28,358 2. Shareholders’ operations – Fair Value SAR’000s Level 1 Level 2 Level 3 Total December 31, 2019 Available for sale investments - Mutual Fund 80,983 - - 80,983 - Sukuk - 251,291 - 251,291 - Equities - 135,067 1,923 136,990 Total available for sale investments 80,983 386,358 1,923 469,264 SAR’000s Level 1 Level 2 Level 3 Total December 31, 2018 Available for sale investments - Bonds - 37,228 - 37,228 - Sukuk - 10,000 - 10,000 - Equities - - 1,923 1,923 Total available for sale investments - 47,228 1,923 49,151 SAR’000s Level 1 Level 2 Level 3 Total January 01, 2018 Available for sale investments - Mutual funds 55,524 - - 55,524 - Bonds 9,998 37,573 - 47,571 - Sukuk 20,000 - 20,000 - Equities - - 1,923 1,923 Total available for sale investments 65,522 57,573 1,923 125,018 | |
| Disclosure of capital management [text block] | 16 DEFERRED POLICY ACQUISITION COSTS (a) The movements during the year for commissions’ incurred for operations are as follows: SAR’000 For the year ended December 31, 2019 For the year ended December 31, 2018 At the beginning of the year 61,500 71,402 Incurred during the year 108,754 114,938 Amortized during the year (114,691) (124,840) At the end of the year 55,563 61,500 (b) The movements during the year for deferral of administration cost are as follows: SAR’000 For the year ended December 31, 2019 For the year ended December 31, 2018 At the beginning of the year 14,727 13,663 Amortized during the year (3,094) 1,064 At the end of the year 11,633 14,727 Total deferred acquisition cost at end of the year 67,196 76,227 | |
| Disclosure of commitments and contingencies, general [text block] | 20 GOOD WILL The Company held an ordinary general assembly meeting on 22 December 2008 and approved the purchase of the insurance portfolio and the related net assets and liabilities of the Saudi Arabian Operations of the Mediterranean and Gulf Insurance and Reinsurance Company (MEDGULF) B.S.C (closed) (“Portfolio”) effective 1 January 2009. The acquisition resulted in goodwill of SR 480 million. Determining whether goodwill is impaired requires an estimation of the recoverable amount of cash-generating units (‘CGU’) to which goodwill has been allocated. To assess the Goodwill impairment impact as of 31 December 2018, the Company appointed a consultant and a report dated 11 February 2018 was issued. Considering the Company as a single CGU, the consultant applied ‘Share Price’ and ‘Market’ approach on the trading activity of the Company’s stock and the capitalization of the earnings using value metrics of broadly comparable listed companies and Mergers and Acquisitions transaction multiples. Accordingly, as of the date of the approval of the financial statements for the year ended 31 December 2018 based on the aforementioned approach, the valuation result concluded the recoverable amount of goodwill to be higher than the carrying value. During the year end December 31, 2018 the management revisited the assessment approach by using Value-In-Use (VIU) assessment for the goodwill impairment based on a detailed five year business plan, in addition to the ‘Share Price’ and ‘Market’ approach on the trading activity of the Company’s stock. This assessment was carried-out by a consultant appointed by the Company in their report dated February 20, 2019. As per the management’s assessment, the goodwill will be impaired if WACC (Weighted average cost of capital) will have to increase to over 30% and terminal value growth rate reduce to 1% for goodwill to be impaired. | |
| Disclosure of other notes relevant to understanding of financial statements [text block] | 18 PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS Property and Equipment Intangible Assets Shareholders’ Operations InsuranceOperations Land Leasehold improvements Office equipment, furniture and fixtures Computers Motor vehicles Total Computer software Total SAR '000 Cost: Balance at January 1, 2019 30,000 41,821 38,756 21,237 2,875 134,689 14,526 149,215 Additions during the year - 742 494 2,824 - 4,060 3,470 7,530 Disposals during the year - - (101) (654) (465) (1,220) - (1,220) Balance at December 31, 2019 30,000 42,563 39,149 23,407 2,410 137,529 17,996 155,525 Accumulated depreciation: Balance at January 1, 2019 - 37,143 29,504 16,226 2,658 85,531 12,042 97,573 Charge for the year (note 25) - 1,830 2,501 2,491 201 7,023 1,235 8,258 Disposals during the year - - (77) (653) (465) (1,195) - (1,195) Balance at December 31, 2019 - 38,973 31,928 18,064 2,394 91,359 13,277 104,636 Net book value as at December 31, 2019 30,000 3,590 7,221 5,343 16 46,170 4,719 80,889 December 31, 2018 30,000 4,678 9,252 5,011 217 49,158 2,484 81,642 December 31, 2017 30,000 5,841 12,070 4,832 468 53,211 3,319 56,530 | |
