| 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 basis of preparation of financial statements [text block] |
BASIS OF PREPARATION
(a) Statement of compliance
The interim condensed financial statements of the Company as at and for the three-month and six-month periods ended 30 June 2021 have been prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting” (IAS 34) as endorsed in Kingdom of Saudi Arabia and other standards and pronouncements issued by the Saudi Organization for Chartered and Professional Accountants (“SOCPA”).
These interim condensed financial statements are prepared under the going concern basis and the historical cost convention, except for the measurement at fair value of available-for-sale investments, employees’ terminal benefits which are recognized at the present value of future obligation using the projected unit credit method. The Company’s statement of financial position is not presented using a current/non-current classification. However, the following balances would generally be classified as current: cash and cash equivalents, term deposits, premiums and reinsurers’ receivable - net, reinsurers’ share of unearned premium, reinsurers’ share of outstanding claims, reinsurers’ share of claims incurred but not reported, deferred policy acquisitions cost, due from related parties, prepaid expenses and other assets, policyholders claim payable, accrued and other liabilities, unearned premiums, unearned reinsurance commission, outstanding claims, claims incurred but not reported, other technical reserves, surplus distribution payable and zakat and income tax. The following balances would generally be classified as non-current: employees’ terminal benefits, available-for-sale investments, statutory deposit, accrued income on statutory deposit, property and equipment, intangible assets and right of use assets.
The Company presents its statement of financial position in order of liquidity. As required by the Saudi Arabian Insurance Regulations, the Company maintains separate books of accounts for Insurance Operations and Shareholders’ Operations and presents the financial statements accordingly (note 18). Assets, liabilities, revenues and expenses clearly attributable to either activity are recorded in the respective accounts. The basis of allocation of expenses from joint operations is determined and approved by the management and the Board of Directors.
The interim 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 18 of the interim condensed financial statements have been provided as supplementary financial information to comply with the requirements of the guidelines issued by SAMA implementing regulations and is not required under IFRSs. 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.
BASIS OF PREPARATION - (Continued)
(a) Statement of compliance - (Continued)
In preparing the Company-level interim condensed financial statements in compliance with IFRS, the balances and transactions of the insurance operations are amalgamated and combined with those of the shareholders’ operations. Inter-operation balances, transactions and unrealised gains or losses, if any, are eliminated in full during amalgamation. The accounting policies adopted for the insurance operations and shareholders’ operations are uniform for like transactions and events in similar circumstances.
The inclusion of separate information of the insurance operations with the financial information of the Company in the statement of financial position, the statement of income, statement of comprehensive income, cash flows as well as certain relevant notes to the financial information represents additional supplementary information as required by the implementing regulations.
As per the by-laws of the Company, surplus arising from the Insurance Operations is distributed as follows:
Transfer to Shareholders’ operations | 90% | Transfer to Policyholders’ operations | 10% |
| 100% |
In case of deficit, the whole deficit will be transferred to Shareholders’ operations.
(c) Functional and presentation currency
These interim condensed financial statements have been presented in Saudi Arabian Riyals (SR), which is also the functional currency of the Company. All financial information presented in Saudi Arabian Riyal has been rounded to the nearest thousands, except where otherwise indicated.
(d) Fiscal year
The Company’s fiscal year is aligned with the calendar year i.e. it begins at 1 January and ends at 31 December.
(e) Significant accounting estimates and judgements
The preparation of condensed interim financial statements 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.
In preparing this interim condensed financial information, the significant judgments made by the management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements for the year ended 31 December 2020. However, the Company has reviewed the key sources of estimation uncertainties disclosed in the last annual financial statements against the backdrop of the COVID-19 pandemic. For further details, please see note 21 to these interim condensed financial statements. Management will continue to assess the situation, and reflect any required changes in future reporting periods.
2. BASIS OF PREPARATION-(Continued)
(e) Significant accounting estimates and judgements
Impact of Covid-19 on the medical technical reserves and financial assets
Financial assets
To cater for any potential impacts, the Covid-19 pandemic may have had on its financial assets, the Company has performed an assessment in accordance with its accounting policy, to determine whether there is an objective evidence that a financial asset or a group of financial assets has been impaired. For debt financial assets, these include factors such as, significant financial difficulties of issuers or debtors, default or delinquency in payments, probability that the issuer or debtor will enter bankruptcy or other financial reorganization, etc. In case of equities classified under available-for-sale, the Company has performed an assessment to determine whether there is a significant or prolonged decline in the fair value of financial assets below their cost.
Based on these assessments, the Company’s management believes that the Covid-19 pandemic has had no material effects on Company’s reported results for the three-month and six-month periods ended 30 June 2021. The Company’s management continues to monitor the situation closely.
Credit risk management
The Company has strengthened its credit risk management policies to address the fast changing and evolving risks posed by the current circumstances. These include review of credit concentrations at the granular economic sector, region and counterparty level and the Company has taken appropriate action where required. Based on the review, the Company has identified the certain sectors such as government contracting, airlines, retail sector and hospitality industry as being impacted significantly by the Covid-19 pandemic. | 2 |
| Disclosure of other general disclosures about reporting entity [text block] | 1. ORGANIZATION AND PRINCIPAL ACTIVTIESAllied Cooperative Insurance Group (“the Company” or “ACIG”) is a Saudi Joint Stock Company incorporated in the Kingdom of Saudi Arabia under Commercial Registration No. 1010417178 dated 9 Shabaan 1428H, corresponding to 22 August 2007. The registered office of the Company is situated at Hteen district, Prince Turki bin Abdulaziz Road, Riyadh.The activities of the Company are to transact cooperative insurance operations and related activities in the Kingdom of Saudi Arabia. On 4 April 2009, the Company received a license from the Saudi Central Bank (“SAMA”) to engage in insurance in Saudi Arabia. The Company commenced its commercial operations on 1 July 2009. The Company was listed on the Saudi Stock Exchange (Tadawul) on 27 August 2007. The Company has 3 registered branches as set out below:Branch Commercial Registration Number Place of issuance DateBranch of ACIG 2051043671 Al Khobar 12 Ramadan 1439 HBranch of ACIG 5855035150 Khamis Mushayt 12 Ramadan 1439 HBranch of ACIG 4030204059 Jeddah 12 Ramadan 1439 H | 1 |
| Disclosure of summary of significant accounting policies [abstract] | | |
| Disclosure of summary of significant accounting policies, general comment [text block] |
SIGNIFICANT ACCOUNTING POLICIES
The accounting policies, estimates and assumptions 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 2020, except for the new standards and adoption of the amendments to existing standards which have had either insignificant effect or no financial impact on the interim condensed financial information of the Company on the current period or prior periods and are expected to have an insignificant effect in future period.
Standards issued but not yet effective
The Company has chosen not to early adopt the following new standards which have been issued but not yet effective for the Company’s accounting year beginning on 1 January 2021 and is currently assessing their impact.
SIGNIFICANT ACCOUNTING POLICIES-(Continued)
Standards issued but not yet effective - (Continued)
IFRS 17 - “Insurance Contracts”
Overview
This standard has been published on 18 May 2017, it establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts and supersedes IFRS 4 – Insurance contracts.
The new standard applies to insurance contracts issued, to all reinsurance contracts and to investment contracts with discretionary participating features provided the entity also issues insurance contracts. It requires to separate the following components from insurance contracts:
A)embedded derivatives, if they meet certain specified criteria; B)distinct investment components; and C)any promise to transfer distinct goods or non-insurance services.
These components should be accounted for separately in accordance with the related standards (IFRS 9 and IFRS 15).
Measurement
In contrast to the requirements in IFRS 4, which permitted insurers to continue to use the accounting policies for measurement purposes that existed prior to January 2015, IFRS 17 provides the following different measurement models
The General model is based on the following “building blocks”: 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;
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 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.
SIGNIFICANT ACCOUNTING POLICIES - (Continued)
Standards issued 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;
A)changes in the entity’s share of the fair value of underlying items; and B)changes in the effect of the time value of money and financial risks not relating to the underlying items.
In addition, a simplified Premium Allocation Approach (PAA) is permitted for the measurement of the liability for 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 Company intends to apply the Standard on its effective date i.e. 1 January 2023. The IASB issued an Exposure Draft Amendments to IFRS 17 proposing certain amendments to IFRS 17 during June 2019 and received comments from various stakeholders. On 17 March 2020, the IASB completed its discussions on the amendments to IFRS 17 Insurance Contracts that were proposed for public consultation in June 2019. It decided that the effective date of the Standard will be deferred to annual reporting periods beginning on or after 1 January 2023. The IASB expects to issue the amendments to IFRS 17 in the second quarter of 2020. Earlier application is permitted if both IFRS 15 – Revenue from Contracts with Customers and IFRS 9 – Financial Instruments have also been applied.
Transition
Retrospective application is required. However, if full retrospective application for a group of insurance contracts is impracticable, then the entity is required to choose either a modified retrospective approach or a fair value approach.
Presentation and Disclosures
The Company expects that the new standard will result in a change to the accounting policies for insurance contracts together with amendments to presentation and disclosures.
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 expects a material impact on measurement and disclosure of insurance and cession that will affect both the statement of income and the statement of financial position. The Company has decided not to early adopt this new standard.
The Company has started its implementation process and has set up a project team, supervised by an IFRS executive management committee.
SIGNIFICANT ACCOUNTING POLICIES-(Continued)
A.Standards issued but not yet effective - (Continued)
IFRS 17 - “Insurance Contracts” - (Continued)
Impact – (continued):
Impact area | Summary of impact | Financial impact | As per the analysis on underwriting year 2018, the financial impact was observed to be minor in proportion to the overall equity as the Company's insurance contracts are mostly short-termed and short tailed entitling for premium allocation approach (PAA) which is largely similar to current account practice. | Data impact | IFRS 17 has additional data requirements (e.g. premium due date for initial recognition, premium receipt data for the LFRC, RI contracts held break down into risk attaching or loss incurring for assessing contract boundaries, lower granularity to meet level of aggregation requirements and data for additional disclosures as per IFRS 17). Further extensive exercise is being carried out to ensure the required data is made available. | IT systems impact | The Company has identified the need for IFRS-17 accounting engine. A solution vendor is expected to be finalized by the end of 2021. | Process impact | The Company carried out an operational impact assessment exercise to assess the operational impact of implementing IFRS 17. Since, majority of the Company’s contracts would be measured under the premium allocation approach, the process impact is expected to be moderate. | Impact on Reinsurance arrangements | Further assessment is being done to confirm measurement approach for reinsurance arrangements where RI gross premium ceded does not automatically qualify for PAA. | Impact on policies and control frameworks | The Company's policies and procedures needs update to accommodate the changes in the Company's processes and systems related to IFRS 17 implementation. Detailed exercise for the purpose is being carried out as part of Phase III of SAMA implementation guidelines. |
The Company is currently in design phase of IFRS 17 implementation which requires developing and designing new processes and procedures for the business including any system developments required under IFRS 17 and detailed assessment of business requirements. Following are the main areas under design phase and status of the progress is as follows:
Major areas of design phase | Summary of progress | Governance and control framework | The Company has put in place a comprehensive IFRS 17 governance program which includes establishing oversight steering committee for monitoring the progress of implementation and assigning roles and responsibilities to various stakeholders. | Operational area | The Company is in progress of designing operational aspects of the design phase which includes establishing comprehensive data policy and data dictionary. Also the Company is finalizing architectural designs for various sub-systems. The Company has progressed through assessment of business requirements and currently working on vendor selection while finalizing various process needed for transition and assessment of new resources needed. | Technical and financial area | The Company has completed various policy papers encompassing various technical and financial matters after concluding on policy decisions required under the IFRS 17 standard. The policy decisions are taken after due deliberations among various stakeholders. Currently policy papers are in approval process by the Company's IFRS 17 project steering committee. | Assurance plan | The Company is working along with other stakeholders to finalize the assurance plan for transitional and post-implementation periods. |
SIGNIFICANT ACCOUNTING POLICIES-(Continued)
Standards issued but not yet effective
IFRS 9 - “Financial instruments” - (Continued)
This standard was published on 24 July 2014 and has replaced IAS 39. The new standard addresses the following items related to financial instruments:
a) Classification and measurement:
IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss. A financial asset is measured at amortized cost if both: the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding (“SPPI”).
The financial asset is measured at fair value through other comprehensive income and realized gains or losses would be recycled through profit or loss upon sale, if both conditions are met: the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows and for sale; and the contractual terms of cash flows are SPPI,
Assets not meeting either of these categories are measured at fair value through profit or loss. Additionally, at initial recognition, an entity can use the option to designate a financial asset at fair value through profit or loss if doing so eliminates or significantly reduces an accounting mismatch.
For equity instruments that are not held for trading, an entity can also make an irrevocable election to present in other comprehensive income subsequent changes in the fair value of the instruments (including realized gains and losses), dividends being recognized in profit or loss. Additionally, for financial liabilities that are designated as at fair value through profit or loss, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognized in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss.
b) Impairment:
The impairment model under IFRS 9 reflects expected credit losses, as opposed to incurred credit losses under IAS 39. Under the IFRS 9 approach, it is no longer necessary for a credit event to have occurred before credit losses are recognized. Instead, an entity always accounts for expected credit losses and changes in those expected credit losses. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition.
c) Hedge accounting:
IFRS 9 introduces new requirements for hedge accounting that align hedge accounting more closely with Risk Management. The requirements establish a more principles-based approach to the general hedge accounting model. The amendments apply to all hedge accounting with the exception of portfolio fair value hedges of interest rate risk (commonly referred to as “fair value macro hedges”). For these, an entity may continue to apply the hedge accounting requirements currently in IAS 39. This exception was granted largely because the IASB is addressing macro hedge accounting as a separate project.
Effective date
The published effective date of IFRS 9 was 1 January 2018. However, amendments to IFRS 4 – Insurance Contracts: Applying IFRS 9 – Financial Instruments with IFRS 4 – Insurance Contracts, published on 12 September 2016, changes the existing IFRS 4 to allow entities issuing insurance contracts within the scope of IFRS 4 to mitigate certain effects of applying IFRS 9 before the IASB’s new insurance contract standard (IFRS 17 – Insurance Contracts) becomes effective. The amendments introduce two alternative options:
SIGNIFICANT ACCOUNTING POLICIES-(Continued)
Standards issued but not yet effective-(Continued)
IFRS 9 - “Financial instruments” - (Continued)
Effective date - (Continued)
Apply a temporary exemption from implementing IFRS 9 until the earlier of:
the effective date of a new insurance contract standard; or
annual reporting periods beginning on or after 1 January 2023. Additional disclosures related to financial assets are required during the deferral period. This option is only available to entities whose activities are predominately connected with insurance and have not applied IFRS 9 previously; or
Adopt IFRS 9 but, for designated financial assets, remove from profit or loss the effects of some of the accounting mismatches that may occur before the new insurance contract standard is implemented. During the interim period, additional disclosures are required.
The Company has performed a detailed assessment beginning 1 January 2017: (1) The carrying amount of the Company’s liabilities arising from contracts within the scope of IFRS 4 (including deposit components or embedded derivatives unbundled from insurance contracts) were compared to the total carrying amount of all its liabilities; and (2) the total carrying amount of the Company’s liabilities connected with insurance were compared to the total carrying amount of all its liabilities. Based on these assessments the Company determined that it is eligible for the temporary exemption. Consequently, the Company has decided to defer the implementation of IFRS 9 until the effective date of the new insurance contracts standard. Disclosures related to financial assets required during the deferral period are included in the Company’s financial statements.
Impact assessment
Overall, the Company expects some impact of applying the impairment requirements of IFRS 9 on the financial statements of the Company. However, the impact of the same is not expected to be significant. At present it is not possible to provide reasonable estimate of the effects of application of this new standard as the Company is yet to perform a detailed review. | 3 |
| Disclosure of notes forming part of accounts [abstract] | | |
| Disclosure of property and equipment [text block] | 9. RIGHT OF USE ASSETS, NET 30 June 31 December 2021 2020 (Unaudited) (Audited) SR’000 SR’000Cost: At beginning of the period / year 10,073 9,985Additions 18 88As at end of period / year 10,091 10,073 Accumulated amortization At beginning of the period / year (4,851) (2,758)Charge for the period / year (1,006) (2,093)As at end of period / year (5,857) (4,851) Net book value 4,234 5,22210. LEASE LIABILITIES 30 June 31 December 2021 2020 (Unaudited) (Audited) SR’000 SR’000Liabilities At beginning of the period / year 10,593 10,306Finance cost 82 287At end of the period / year 10,675 10,593 Payments At beginning of the period / year (5,619) (3,184)Paid during period / year (1,066) (2,435)At end of the period / year (6,685) (5,619) Total lease liabilities 3,990 4,974 | 9 |
| Disclosure of investments in available-for-sale investments [text block] | 6. AVAILABLE-FOR-SALE INVESTMENTSAll available-for-sale investments are in shareholders’ operations and comprise the following:a) Investment securities are classified as follows: 30 June 2021 31 December 2020 (Unaudited) (Audited) SR’000 SR’000 Investment in sukuk 20,000 20,000Quoted securities 11,208 11,177Unquoted securities 1,923 1,923Units in quoted local real estate fund 18,167 16,159Total 51,298 49,259b) Movements in available-for-sale investments are as follows: Investment in sukuk Quoted securities Unquoted securities Units in quoted local real estate fund Total SR’000 SR’000 SR’000 SR’000 SR’000 As at 1 January 2021 – (audited) 20,000 11,177 1,923 16,159 49,259Changes in fair value of investments - 31 - 2,008 2,039As at 30 June 2021 – (unaudited) 20,000 11,208 1,923 18,167 51,298 Investment in sukuk Quoted securities Unquoted securities Units in quoted local real estate fund Total SR’000 SR’000 SR’000 SR’000 SR’000 As at 1 January 2020 – (audited) 25,000 11,256 1,923 12,927 51,106Disposals (5,000) - - - (5,000)Changes in fair value of investments - (79) - 3,232 3,153As at 31 December 2020 – (audited) 20,000 11,177 1,923 16,159 49,259 | 7 |
| Disclosure of premiums/ contributions and insurance/ reinsurance or takaful/ retakaful balance receivables [text block] | 6. PREMIUMS AND REINSURERS’ RECEIVABLE, NET Receivables comprise amounts due from the following: 30 June 2021 31 December 2020 (Unaudited) (Audited) SR’000 SR’000 Due from policyholders 86,105 78,842Due from policyholders – related parties – (note 13) 1,838 1,881Due from brokers and agents 18,377 21,309Receivables from reinsurers 6,892 5,329 113,212 107,361Allowance for doubtful debts {note 6.1} (9,759) (8,723)Premiums and reinsurers’ receivable – net 103,453 98,6386. PREMIUMS AND REINSURERS’ RECEIVABLE, NET - (CONTINUED)6.1 Movement in allowance for doubtful debts during the period / year was as follows: 30 June 2021 31 December 2020 (Unaudited) (Audited) SR’000 SR’000 Balance at the beginning of the period / year 8,723 13,077Provided / (released) during the period / year 1,036 (4,354)Balance at the end of the period / year 9,759 8,723 | 6 |
| Disclosure of cash and cash equivalents [text block] | 4. CASH AND CASH EQUIVALENTS Cash and cash equivalents included in the statement of cash flows comprise the following: 30 June 2021 31 December 2020 (Unaudited) (Audited) SR’000 SR’000Insurance operations Bank balances and cash 70,973 53,559Deposits maturing within 3 month from the acquisition date 116,167 19,166 187,140 72,725Shareholders’ operations Bank balances and cash 7,064 14,201Deposits maturing within 3 month from the acquisition date * 64,696 61,050 71,760 75,251 258,900 147,976These deposits earn commission at an average rate of 1.13% per annum as at 30 June 2021 (31 December 2020: 1.08%).5. TERM DEPOSITS 30 June 2021 31 December 2020 (Unaudited) (Audited) SR’000 SR’000Insurance Operations Term deposits - 119,331Shareholders’ Operations Term deposits - - - 119,331The term deposits are held with the commercial banks. These term deposits are denominated in Saudi Arabian Riyals and have been an original maturity of more than three months and less than twelve months. The carrying amounts of these term deposits reasonably approximate their fair values at the reporting date. These deposit earn commission at an average of 1% per annum as at 30 June 2021 (31 December 2020: 2.67%) | 4 |
| Disclosure of statutory deposit [text block] | 8. STATUTORY DEPOSIT 30 June 2021 31 December 2020 (Unaudited) (Audited) SR’000 SR’000Shareholders’ operations Statutory deposit 30,000 30,000As required by Saudi Arabian Insurance Regulations, the Company had deposited 15% of its initial pre-reduction paid up capital of SR 200 million (Note 15), in a bank designated by the Saudi Central Bank (SAMA). The Company cannot withdraw this deposit without SAMA’s approval and commission accruing on this deposit is payable to SAMA. | 8 |
| Disclosure of gross unearned premiums/ contributions [text block] | 8. TECHNICAL RESERVES (INSURANCE OPERATIONS)8.1 Net outstanding claims and reservesNet outstanding claims and reserves comprise of the following: 30 June 2021 31 December 2020 (Unaudited) (Audited) SR’000 SR’000 Gross outstanding claims 30,900 26,094 30,900 26,094 Claims incurred but not reported 70,606 68,643Premium deficiency reserves 1,995 9,516Other technical reserves 2,557 2,482 106,058 106,735Less: - Reinsurers’ share of outstanding claims (13,553) (11,908)- Reinsurers’ share of claims incurred but not reported (8,950) (8,020) (22,503) (19,928)Net outstanding claims and reserves 83,555 86,8078.2 Movement in unearned premiumsMovement in unearned premiums comprise of the following: For the six-month period ended 30 June 2021 (Unaudited) Gross Reinsurance Net SR’000 SR’000 SR’000 Balance as at the beginning of the period 264,469 (27,393) 237,076Premium written during the period 284,837 (34,774) 250,063Premium earned during the period (267,361) 36,005 (231,356)Balance as at the end of the period 281,945 (26,162) 255,783 For the year ended 31 December 2020 (Audited) Gross Reinsurance Net SR’000 SR’000 SR’000 Balance as at the beginning of the year 254,360 (21,323) 233,037Premium written during the year 515,117 (65,657) 449,460Premium earned during the year (505,008) 59,587 (445,421)Balance as at the end of the year 264,469 (27,393) 237,076 | 8 |
| Disclosure of zakat [text block] | 14. ZAKAT AND INCOME TAX - (CONTINUED)Income tax:Foreign shareholder, being Islamic Development Bank (IDB) is exempted from income tax. 30 June2021 31 December 2020 (Unaudited) (Audited) SR’000 SR’000Balance at the beginning of the period / year 25 25Balance at the end of the period / year 25 25Status of assessmentsZakat and income tax returns have been filed with the Zakat, Tax and Custom Authority (the “ZATCA”) for the years ended up to 31 December 2020. Final certificate has been received from the ZATCA for the year ended 31 December 2020. However, the ZATCA has raised an additional assessment in respect of the returns filed for the years ended 31 December 2008, 2009 and 2010 amounting to total SR 1.86 million which has been paid. The major difference of additional assessment relates to disallowance of a portion of pre-incorporation expenses and withholding tax. The Company has filed an objection against this additional assessment with the Preliminary Tax Objection Committee subsequent to the year end, an adverse decision was received from the Preliminary Tax Objection Committee, upon which the Company filed appeal with the Higher Objection Committee. The Higher Objection Committee issued its decision in favour of the Company with respect to Zakat and rejected the appeal related to withholding tax. The Company has referred the matter to the Board of Grievance for the case of the withholding tax and raised a letter of guarantee in the amount of 1.83 million and also paid the amount of tax SAR 1.27 million. The Company has raised an objection for an unfavourable assessment raised by the ZATCA for the years ended 31 December 2013 till 2015 with the amount of SAR 4.98 million. The objection is currently under study by the ZATCA. The Company received a claim from the ZATCA for an amount of SAR 5.18 million representing withholding tax, the Company raised an objection against the claim with the General Secretariat of Tax Committee (GSTC) which has been also rejected and now is under appeal with the Appeal Committee for Tax Violation and Disputes.During 2020, the ZATCA issued an assessment for the years 2016 to 2018 claiming additional liability of 7.83 million. The Company has raised an objection against such assessments which has been rejected by the ZATCA. The Company raised the objection to the GSTC and it is currently under study by the committee. | 14 |
| Disclosure of income tax [text block] | 17. VALUE ADDED TAX (VAT)On 28 September 2020, the Company received from Zakat, Tax and Custom Authority VAT assessments for the years ended 31 December 2018 and 2019 claiming additional liability of SAR 1.78 million and SAR 1.98 million for VAT and SR 2.85 million and SR 1.78 million for related penalties respectively. Management has filled an objection against the said assessments and is confident of receiving a favourable outcome. | 17 |
| Disclosure of earnings per share [text block] | 15. EARNINGS PER SHAREEarnings per share for the period has been calculated by dividing the net income for the period by the weighted average number of issued and outstanding shares for the period. The Company have reduced its share capital by offsetting with accumulated loss (note 15), as result the weighted average number of ordinary shares issued and outstanding in the prior year has been restated to 14.1 million and accordingly earning per share is restated.A) The weighted average number of shares has been retrospectively adjusted for prior period to reflect the reduction in share capital as required by IAS 33 ‘’Earning per share” as follows: 30 June2021 30 June 2020 (Unaudited) (Unaudited) (Restated) SR’000 SR’000 Issued and outstanding ordinary shares as at 1 January 20,000 20,000Effect of reduction of share capital (5,900) (5,900) Weighted average number of ordinary shares outstanding 14,100 14,100B) The basic and diluted income per share is calculated as follows: 30 June2021 30 June 2020 (Unaudited) (Unaudited) (Restated) SR’000 SR’000 Net (loss)/profit for the period (4,891) 8,000Weighted average number of ordinary shares outstanding 14,100 14,100 Basic (loss)/ earnings per share (SR) (0.35) 0.57 | 17 |
| Disclosure of related party transactions [text block] | 13. RELATED PARTY TRANSACTIONS AND BALANCESRelated parties represent major shareholders, directors and key management personnel of the Company, and companies of which they are principal owners and any other entities controlled, jointly controlled or significantly influenced by them. Pricing policies and terms of these transactions are approved by the Company’s management and Board of Directors. The following are the details of the major related party transactions during the period and the related balances:RelatedParty Nature of transaction Transactions for the six-month period ended Closing balanceReceivables / (Payables) 30 June 2021 30 June 2020 30 June 2021 31 December 2020 (Unaudited) (Unaudited) (Unaudited) (Audited) SR’000 SR’000 SR’000 SR’000 Board of directors Premium written 145 110 1,838 1,881 Claim paid / payment received - 721 (187) (811) ACIG Bahrain (Shareholder) Claims paid on behalf of ACIG Bahrain - 225 1,985 1,985 Board and audit committee Attendance fees 138 1,689 - -The compensation of the key management personnel during the six-month period ended 30 June 2021 30 June2021 30 June2020 (Unaudited) (Unaudited) SR’000 SR’000 Salaries and other allowances 2,738 2,738Employees’ terminal benefits 206 206 2,944 2,944 | 13 |
| Disclosure of entity's operating segments [text block] |
SEGMENTAL INFORMATION
Operating segments are identified on the basis of internal reports about components of the Company that are regularly reviewed by the Company’s Board of Directors in their function as chief operating decision maker in order to allocate resources to the segments and to assess its performance.
Transactions between the operating segments are on normal commercial terms and conditions. The revenue from external parties reported to the Board is measured in a manner consistent with that in the income statement. Segment assets and liabilities comprise operating assets and liabilities.
Segment results do not include general and administrative expenses, allowance for doubtful debts and other income.
Segment assets do not include cash and cash equivalents, term deposits, available-for-sale investments, prepayments and other receivables, due from a related party property and equipment, net, intangible assets and right of use assets, net.
Segment liabilities do not include reinsurance payables, accrued expenses and other liabilities, due to shareholders’ operations and employees’ terminal benefits.
SEGMENTAL INFORMATION – (CONTINUED)
These unallocated assets and liabilities are not reported to chief operating decision maker under related segments and are monitored on a centralized basis.
The segment information provided to the Company’s Board of Directors for the reportable segments for the Company’s total assets and liabilities at 30 June 2021 and 31 December 2020, its total revenues, expenses, and net income for the period then ended, are as follows:
| As at 30 June 2021 (Unaudited) |
OPERATING SEGMENTS | Medical | Motor | General Accident | Others | Total - Insurance operations | Share- holders operations | Total |
| SR’000 | SR’000 | SR’000 | SR’000 | SR’000 | SR’000 | SR’000 | ASSETS |
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| Reinsurers’ share of unearned premiums | 17,341 | - | 4,176 | 4,645 | 26,162 | - | 26,162 | | Reinsurers’ share of outstanding claims | 5,934 | 3,399 | 3,306 | 914 | 13,553 | - | 13,553 | | Reinsurers’ share of claims incurred but not reported | 7,612 | - | 615 | 723 |
8,950 | - |
8,950 | | Deferred policy acquisition costs | 4,015 | 31,505 | 713 | 484 | 36,717 | - | 36,717 | | Unallocated assets | - | - | - | - | 371,889 | 159,312 | 531,201 | | TOTAL ASSETS | 34,902 | 34,904 | 8,810 | 6,766 | 457,271 | 159,312 | 616,583 | |
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| | LIABILITIES |
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| | Policyholders claim payable | 236 | 1,364 | - | - | 1,600 | - | 1,600 | | Reinsurers' balances payable | 6,927 | - | - | 19,416 | 26,343 | - | 26,343 | | Unearned premiums | 73,123 | 187,172 | 16,119 | 5,531 | 281,945 | - | 281,945 | | Unearned reinsurance commission | - | - | 428 | 816 | 1,244 | - | 1,244 | | Outstanding claims | 18,617 | 2,058 | 8,971 | 1,254 | 30,900 | - | 30,900 | | Claims incurred but not reported | 24,145 | 42,368 | 3,296 | 797 | 70,606 | - | 70,606 | | Premium deficiency reserve | 1,995 | - | - | - | 1,995 | - | 1,995 | | Loss adjustment expenses reserve | 398 | 1,782 | 319 | 58 | 2,557 | - | 2,557 | | Unallocated liabilities and equity | - | - | - | - | 40,081 | 159,312 | 199,393 | | TOTAL LIABILITIES AND EQUITY | 125,441 | 234,744 | 29,133 | 27,872 | 457,271 | 159,312 | 616,583 | |
SEGMENTAL INFORMATION – (CONTINUED)
| As at 31 December 2020 (Audited) |
OPERATING SEGMENTS | Medical | Motor | General Accident |
Others | Total - Insurance operations | Share-holders operations | Total |
| SR’000 | SR’000 | SR’000 | SR’000 | SR’000 | SR’000 | SR’000 | ASSETS |
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| Cash and cash equivalents | - | - | - | - | 72,725 | 75,251 | 147,976 | Term deposits | - | - | - | - | 119,331 | - | 119,331 | Premiums and reinsurers’ receivable, net | - | - | - | - | 98,638 | - | 98,638 | Reinsurers’ share of unearned premiums | 13,733 | - | 5,085 | 8,575 | 27,393 | - | 27,393 | Reinsurers’ share of outstanding claims | 4,564 | 3,399 | 2,592 | 1,353 | 11,908 | - | 11,908 | Reinsurers’ share of claims incurred but not reported | 6,683 | - | 614 | 723 | 8,020 | - | 8,020 | Deferred policy acquisition costs | 3,637 | 26,943 | 672 | 407 | 31,659 | - | 31,659 | Unallocated assets | - | - | - | - | 77,348 | 85,137 | 162,485 | TOTAL ASSETS | 28,617 | 30,342 | 8,963 | 11,058 | 447,022 | 160,388 | 607,410 |
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| LIABILITIES |
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| Policyholders claims payable | - | - | - | - | 10,142 | - | 10,142 | Reinsurers' balances payable | - | - | - | - | 16,661 | - | 16,661 | Unearned reinsurance commission | - | - | 467 | 959 | 1,426 | - | 1,426 | Unearned premiums | 65,369 | 172,480 | 17,261 | 9,359 | 264,469 | - | 264,469 | Premium deficiency reserves | 5,060 | 4,456 | - | - | 9,516 | - | 9,516 | Other technical reserves | 356 | 1,776 | 309 | 41 | 2,482 | - | 2,482 | Outstanding claims | 15,226 | 1,983 | 8,466 | 419 | 26,094 | - | 26,094 | Claims incurred but not reported | 22,292 | 42,258 | 3,296 | 797 | 68,643 | - | 68,643 | Unallocated liabilities and equity | - | - | - | - | 47,589 | 160,388 | 207,977 | TOTAL LIABILITIES AND EQUITY | 108,303 | 222,953 | 29,799 | 11,575 | 447,022 | 160,388 | 607,410 |
SEGMENTAL INFORMATION – (CONTINUED)
| For the three-month period ended 30 June 2021 (Unaudited) |
OPERATING SEGMENTS | Medical | Motor | General Accident | Others | Total |
| SR’000 | SR’000 | SR’000 | SR’000 | SR’000 | REVENUES |
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| Gross premiums written | 34,481 | 90,848 | 2,620 | 4,741 | 132,690 | Reinsurance premiums ceded |
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| -Local | (34) | - | (20) | (284) | (338) | -Foreign | (8301) | - | (398) | (3,997) | (12,696) |
| (8,335) | - | (418) | (4,281) | (13,034) | Excess of loss premiums |
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| -Local | - | (140) | (1) | (45) | (186) | -Foreign | - | (211) | (3) | (66) | (280) |
| - | (351) | (4) | (111) | (466) |
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| Net written premiums | 26,146 | 90,497 | 2,198 | 349 | 119,190 | Changes in net unearned premiums | 3,755 | (4,585) | 871 | 115 | 156 | Net premiums earned | 29,901 | 85,912 | 3,069 | 464 | 119,346 | Reinsurance commission earned | - | - | 174 | 1,025 | 1,199 | Other underwriting income | 5 | 33 | (42) | - | (4) | TOTAL REVENUES | 29,906 | 85,945 | 3,201 | 1,489 | 120,541 |
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| UNDERWRITING COSTS AND EXPENSES |
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| Gross claims paid | 28,901 | 71,797 | 539 | 7 | 101,244 | Reinsurers’ share of claims paid | (8,518) | - | - | (7) | (8,525) | Net claims paid | 20,383 | 71,797 | 539 | - | 92,719 | Changes in outstanding claims, net | 2,641 | 972 | 204 | 257 | 4,074 | Changes in claims incurred but not reported, net | (506) | (938) | - | - | (1,444) | Change in loss adjustment expenses | 20 | (17) | (9) | 9 | 3 | Net claims incurred | 22,538 | 71,814 | 734 | 266 | 95,352 | Changes in premium deficiency reserve | (2,159) | (750) | - | - | (2,909) | Policy acquisition costs | 2,468 | 10,768 | 189 | 390 | 13,815 | Other underwriting expenses | (15) | 67 | - | - | 52 | TOTAL UNDERWRITING COSTS AND EXPENSES | 22,832 | 81,899 | 923 | 656 | 106,310 | NET UNDERWRITING INCOME | 7,074 | 4,046 | 2,278 | 833 | 14,231 |
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| OTHER OPERATING (EXPENSES) / INCOME |
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| Allowance for doubtful debts |
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| (440) | General and administrative expenses |
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| (20,067) | Commission income on deposits |
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| 456 | Investment income |
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| 275 | Other income |
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| 4 | TOTAL OTHER OPERATING EXPENSES |
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| (19,772) |
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| Loss before zakat and income tax |
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| (5,541) | Zakat charge for the period |
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| (1,778) | Loss after zakat and income tax |
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| (7,319) | Income attributed to the insurance operations |
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| - | Net loss attributable to the shareholders |
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| (7,319) |
SEGMENTAL INFORMATION – (CONTINUED)
| For the three-month period ended 30 June 2020 (Unaudited) |
OPERATING SEGMENTS | Medical | Motor | General Accident | Others | Total |
| SR’000 | SR’000 | SR’000 | SR’000 | SR’000 |
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| REVENUES |
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| Gross premiums written | 22,863 | 95,920 | 6,622 | 8,807 | 134,212 | Reinsurance premiums ceded |
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| -Local | (480) | - | (10) | (239) | (729) | -Foreign | (4,323) | - | (4,355) | (8,007) | (16,685) |
| (4,803) | - | (4,365) | (8,246) | (17,414) | Excess of loss premiums |
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| -Local | - | (333) | (466) | (46) | (845) | -Foreign | - | (499) | (4) | (69) | (572) |
| - | (832) | (470) | (115) | (1,417) |
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| Net written premiums | 18,060 | 95,088 | 1,787 | 466 | 115,381 | Changes in net unearned premiums | 4,430 | (11,833) | 83 | (4) | (7,324) | Net premiums earned | 22,490 | 83,255 | 1,870 | 462 | 108,057 | Reinsurance commission earned | - | - | 263 | 981 | 1,244 | Other underwriting income | 1,482 | 485 | 2,000 | - | 3,967 | TOTAL REVENUES | 23,972 | 83,740 | 4,133 | 1,443 | 113,268 |
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| UNDERWRITING COSTS AND EXPENSES |
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| Gross claims paid | 29,036 | 45,216 | 19 | 59 | 74,330 | Reinsurers’ share of claims paid | (8,477) | - | (8) | (35) | (8,520) | Net claims paid | 20,559 | 45,216 | 11 | 24 | 65,810 | Changes in outstanding claims, net | (1,631) | (744) | 63 | (33) | (2,345) | Changes in claims incurred but not reported, net | 1,567 | 3,303 | - | - | 4,870 | Change in lost adjustment expense | - | 98 | - | - | 98 | Net claims incurred | 20,495 | 47,873 | 74 | (9) | 68,433 | Changes in premium deficiency reserve | 247 | 10,235 | - | - | 10,482 | Policy acquisition costs | 2,014 | 2,745 | 186 | 352 | 5,297 | Other underwriting expenses | 45 | 616 | - | - | 661 | TOTAL UNDERWRITING COSTS AND EXPENSES | 22,801 | 61,469 | 260 | 343 | 84,873 | NET UNDERWRITING INCOME | 1,171 | 22,271 | 3,873 | 1,080 | 28,395 | OTHER OPERATING (EXPENSES) / INCOME |
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| Release of doubtful debts |
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| (634) | General and administrative expenses |
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| (20,856) | Commission income on deposits |
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| 330 | Investment income |
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| 640 | Other expenses |
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| (1) | TOTAL OTHER OPERATING EXPENSES |
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| (20,521) | Net surplus |
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| 6,559 | Surplus transferred to shareholders |
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| (5,771) | NET INCOME AFTER TRANSFER OF SURPLUS TO SHAREHOLDERS |
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| 788 |
SEGMENTAL INFORMATION - (CONTINUED)
| For the six-month period ended 30 June 2021 (Unaudited) |
OPERATING SEGMENTS | Medical | Motor | General Accident | Others | Total |
| SR’000 | SR’000 | SR’000 | SR’000 | SR’000 | REVENUES |
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| Gross premiums written | 80,788 | 183,942 | 7,621 | 12,486 | 284,837 | Reinsurance premiums ceded |
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| -Local | (136) | - | (53) | (702) | (892) | -Foreign | (19,546) | - | (1,929) | (10,650) | (32,125) |
| (19,682) | - | (1,982) | (11,353) | (33,017) | Excess of loss premiums |
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| -Local | - | (610) | (3) | (89) | (702) | -Foreign | - | (916) | (5) | (134) | (1,055) |
| - | (1,526) | (8) | (223) | (1,757) |
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| NET WRITTEN PREMIUMS | 61,106 | 182,416 | 5,631 | 910 | 250,063 | Changes in net unearned premiums | (4,147) | (14,691) | 233 | (103) | (18,708) | NET PREMIUMS EARNED | 56,959 | 167,725 | 5,864 | 807 | 231,355 | Reinsurance commission earned | - | - | 320 | 2,360 | 2,680 | Other underwriting income | 62 | 33 | 179 | - | 274 | TOTAL REVENUES | 57,021 | 167,758 | 6,363 | 3,167 | 234,309 |
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| UNDERWRITING COSTS AND EXPENSES |
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| Gross claims paid | 60,035 | 134,420 | 858 | 95 | 195,407 | Reinsurers’ share of claims paid | (17,743) | - | (9) | (42) | (17,794) | NET CLAIMS PAID | 42,292 | 134,420 | 849 | 53 | 177,613 | Changes in outstanding claims, net | 2,022 | 75 | 813 | 251 | 3,161 | Changes in claims incurred but not reported, net | 923 | 110 | - | - | 1,033 | Change in loss adjustment expenses | 42 | 6 | 10 | 17 | 76 | NET CLAIMS INCURRED | 45,279 | 134,611 | 1,672 | 321 | 181,883 | Changes in premium deficiency reserve | (3,065) | (4,455) | - | - | (7,520) | Policy acquisition costs | 4,713 | 17,424 | 382 | 719 | 23,238 | Other underwriting expenses | (7) | 296 | - | - | 289 | TOTAL UNDERWRITING COSTS AND EXPENSES | 46,920 | 147,876 | 2,054 | 1,040 | 197,890 |
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| NET UNDERWRITING INCOME | 10,101 | 19,882 | 4,309 | 2,127 | 36,419 |
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| OTHER OPERATING (EXPENSES)/ INCOME |
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| Release of doubtful debts |
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| (1,036) | General and administrative expenses |
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| (38,921) | Commission income on deposits |
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| 924 | Other income |
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| 33 | Investment income |
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| 768 | TOTAL OTHER OPERATING EXPENSES |
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| (38,232) |
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| Net deficit |
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| (1,813) | Zakat charged for the period |
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| (3,078) | Surplus attributable to insurance operations |
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| - | Net loss attributable to the shareholders |
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| (4,891) |
SEGMENTAL INFORMATION - (CONTINUED)
| For the six-month period ended 30 June 2020 (Unaudited) |
OPERATING SEGMENTS | Medical | Motor | General Accident | Others | Total |
| SR’000 | SR’000 | SR’000 | SR’000 | SR’000 | REVENUES |
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| Gross premiums written | 54,256 | 181,851 | 11,182 | 20,919 | 268,208 | Reinsurance premiums ceded |
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| -Local | (1,128) | - | (72) | (697) | (1,897) | -Foreign | (10,152) | - | (5,940) | (18,921) | (35,013) |
| (11,280) | - | (6,012) | (19,618) | (36,910) | Excess of loss premiums |
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| -Local | - | (486) | (932) | (93) | (1,511) | -Foreign | - | (729) | (6) | (138) | (873) |
| - | (1,215) | (938) | (231) | (2,384) |
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| NET WRITTEN PREMIUMS | 42,976 | 180,636 | 4,232 | 1,070 | 228,914 | Changes in net unearned premiums | 6,512 | (10,368) | (438) | (209) | (4,503) | Net premiums earned | 49,488 | 170,268 | 3,794 | 861 | 224,411 | Reinsurance commission earned | - | - | 435 | 1,875 | 2,310 | Other underwriting income | 1,482 | 1,451 | 2,000 | - | 4,933 | TOTAL REVENUES | 50,970 | 171,719 | 6,229 | 2,736 | 231,654 |
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| UNDERWRITING COSTS AND EXPENSES |
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| Gross claims paid | 61,988 | 123,941 | 1,057 | 69 | 187,055 | Reinsurers’ share of claims paid | (17,671) | - | (18) | (35) | (17,724) | NET CLAIMS PAID | 44,317 | 123,941 | 1,039 | 34 | 169,331 | Changes in outstanding claims, net | (1,294) | (7,845) | 280 | (30) | (8,889) | Changes in claims incurred but not reported, net | 2,315 | 775 | - | - | 3,090 | Change in loss adjustment expenses | 11 | (143) | - | - | (132) | NET CLAIMS INCURRED | 45,349 | 116,728 | 1,319 | 4 | 163,400 | Changes in premium deficiency reserve | 270 | 10,235 | - | - | 10,505 | Policy acquisition costs | 4,353 | 7,386 | 391 | 767 | 12,897 | Other underwriting expenses | 220 | 1,579 | - | - | 1,799 | TOTAL UNDERWRITING COSTS AND EXPENSES | 50,192 | 135,928 | 1,710 | 771 | 188,601 |
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| NET UNDERWRITING INCOME | 778 | 35,791 | 4,519 | 1,965 | 43,053 |
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| OTHER OPERATING (EXPENSES) / INCOME |
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| Release of doubtful debts |
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| 5,857 | General and administrative expenses |
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| (40,351) | Commission income on deposits |
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| 1,421 | Investments income |
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| 1,088 | TOTAL OTHER OPERATING (EXPENSES) / INCOME |
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| (31,985)
| Net surplus |
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| 11,068 | Zakat charged for the period |
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| (1,963) | Surplus transferred to shareholders |
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| (8,000) | NET INCOME AFTER TRANSFER OF SURPLUS TO SHAREHOLDERS |
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| 1,105 |
SEGMENTAL INFORMATION - (CONTINUED)
| For the three-month period ended 30 June 2021 (Unaudited) |
| Medical | Motor | Properties and accident | Total |
| SR’000 | SR’000 | SR’000 | SR’000 | Gross written premium |
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| Retail | 1,213 | 88,303 | 1,847 | 91,363 | Micro | 20,551 | 1,762 | 153 | 22,466 | Small | 11,189 | 737 | 760 | 12,686 | Medium | 1,245 | 46 | 3,701 | 4,992 | Large | 283 | - | 900 | 1,183 | Total | 34,481 | 90,848 | 7,361 | 132,690 |
| For the three-month period ended 30 June 2020 (Unaudited) |
| Medical | Motor | Properties and accident | Total |
| SR’000 | SR’000 | SR’000 | SR’000 | Gross written premium |
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| Retail | 1,497 | 93,920 | 2,001 | 97,418 | Micro | 2,953 | 371 | - | 3,324 | Small | 6,376 | 1,350 | 286 | 8,012 | Medium | 3,433 | 279 | 938 | 4,650 | Large | 8,604 | - | 12,204 | 20,808 | Total | 22,863 | 95,920 | 15,429 | 134,212 |
| For the six-months period ended 30 June 2021 (Unaudited) |
| Medical | Motor | Properties and accident | Total |
| SR’000 | SR’000 | SR’000 | SR’000 | Gross written premium |
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| Retail | - | 179,731 | 4,322 | 184,053 | Micro | 39,691 | 3,045 | 624 | 43,360 | Small | 29,897 | 1,078 | 1,718 | 32,693 | Medium | 4,091 | 88 | 6,712 | 10,891 | Large | 7,109 | - | 6,731 | 13,840 | Total | 80,788 | 183,942 | 20,107 | 284,837 |
| For the six-month period ended 30 June 2020 (Unaudited) |
| Medical | Motor | Properties and accident | Total |
| SR’000 | SR’000 | SR’000 | SR’000 | Gross written premium |
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| Retail | 4,183 | 178,843 | 4,224 | 187,250 | Micro | 8,951 | 708 | - | 9,659 | Small | 19,748 | 2,280 | 933 | 22,961 | Medium | 8,426 | 491 | 3,056 | 11,973 | Large | 12,948 | (471) | 23,888 | 36,365 | Total | 54,256 | 181,851 | 32,101 | 268,208 |
| 12 |
| Disclosure of capital management [text block] | 15. SHARE CAPITAL As at 30 June 2021 and 31 December 2020, the authorized, subscribed and paid up share capital of the Company was SR 141 million, divided into 14.1 million shares of SR 10 each.On 16 January 2020, the Company’s Board of Directors had recommended to reduce the Company’s share capital from SR 200 million to SR 141 million – represented by 5.9 million share - by off-setting with accumulated losses. In an extra-ordinary general meeting held on 21 Muharram 1441H corresponding to 26 August 2020, the shareholders of the Company approved the above recommendation and required changes in the Company by-law relating to the reduction. Accordingly, the share capital and accumulated losses have been reduced to SR 141 million. The capital reduction is through the reduction of 1 share for every 3.3898 shares held by the shareholders. The purpose of capital reduction is to restructure the capital position of the Company in order to comply with the Companies Law. There is no impact of reduction in capital on the Company’s financial obligations.15. SHARE CAPITAL - (CONTINUED)On 21 Jamad Al-Awwal 1441H corresponding to 16 January 2020, the Board of Directors had recommended an increased in the Company’s capital through right issue with a total value of SR 150 million. On 14 Safar 1442H corresponding to 1 October 2020, the Company obtained approval from SAMA. As of the date of approval of these financial statements, the Company is currently in the process of completing the remaining regulatory and legal formalities underlying such increase. | 15 |
| Disclosure of comparative figures [text block] | 20. COMPARATIVE FIGURESCertain prior period figures have been reclassified to conform to current period presentation (if applicable). | 20 |
| Disclosure of board of director's approval of the financial statements [text block] | 22. APPROVAL OF THE FINANCIAL STATEMENTSThese interim condensed financial statements have been approved by the Board of Directors on 10 August 2021 corresponding to 02 Muharram 1442H. | 22 |
| Disclosure of other notes relevant to understanding of financial statements [text block] |
SUPPLEMENTARY INFORMATION
INTERIM CONDENSED STATEMENT OF FINANCIAL POSITION
| 30 June 2021 (Unaudited) | 31 December 2020 (Audited) |
| Insurance operations | Share-holders’ operations | Total | Insurance operations | Share-holders’ operations | Total |
| SR '000 | SR '000 | SR '000 | SR '000 | SR '000 | SR '000 | ASSETS |
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| Cash and cash equivalents | 187,140 | 71,760 | 258,900 | 72,725 | 75,251 | 147,976 | | Term deposits | - | - | - | 119,331 | - | 119,331 | | Premiums and reinsurers’ receivable, net | 103,453 | - | 103,453 | 98,638 | - | 98,638 | | Reinsurers’ share of unearned premiums | 26,162 | - | 26,162 | 27,393 | - | 27,393 | | Reinsurers’ share of outstanding claims | 13,553 | - | 13,553 | 11,908 | - | 11,908 | | Reinsurers’ share of claims incurred but not reported | 8,950 | - | 8,950 | 8,020 | - | 8,020 | | Deferred policy acquisition cost | 36,717 | - | 36,717 | 31,659 | - | 31,659 | | Due from a related party | 1,985 | - | 1,985 | 1,985 | - | 1,985 | | Property and equipment, net | 5,076 | - | 5,076 | 5,314 | - | 5,314 | | Intangible assets | 4,433 | - | 4,433 | 4,751 | - | 4,751 | | Right-of-use asset, net | 4,234 | - | 4,234 | 5,222 | - | 5,222 | | Available-for-sale investments | - | 51,298 | 51,298 | - | 49,259 | 49,259 | | Prepayments and other receivables | 65,568 | 4,402 | 69,970 | 60,076 | 4,084 | 64,160 | | Statutory deposit | - | 30,000 | 30,000 | - | 30,000 | 30,000 | | Accrued commission on statutory deposit | - | 1,852 | 1,852 | - | 1,794 | 1,794 | | TOTAL ASSETS | 457,271 | 159,312 | 616,583 | 447,022 | 160,388 | 607,410 |
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| LIABILITIES |
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|
| Policyholders claim payable | 1,600 | - | 1,600 | 10,142 | - | 10,142 | Accrued and other payables | 17,049 | 1,858 | 18,907 | 23,264 | 899 | 24,163 | Reinsurances’ balances payable | 26,343 | - | 26,343 | 16,661 | - | 16,661 | Unearned commission income | 1,244 | - | 1,244 | 1,426 | - | 1,426 | Unearned premiums | 281,945 | - | 281,945 | 264,469 | - | 264,469 | Premium deficiency reserve | 1,995 | - | 1,995 | 9,516 | - | 9,516 | Other technical reserve | 2,557 | - | 2,557 | 2,482 | - | 2,482 | Outstanding claims | 30,900 | - | 30,900 | 26,094 | - | 26,094 | Claims incurred but not reported | 70,606 | - | 70,606 | 68,643 | - | 68,643 | Employees’ terminal benefits | 14,570 | - | 14,570 | 14,006 | - | 14,006 | Lease liabilities | 3,990 | - | 3,990 | 4,974 | - | 4,974 | Surplus distribution payable | 5,536 | - | 5,536 | 6,409 | - | 6,409 | Accrued zakat and income tax | - | 11,759 | 11,759 | - | 11,000 | 11,000 | Accrued commission on statutory deposit payable to SAMA | - | 1,852 | 1,852 | - | 1,794 | 1,794 |
|
|
|
|
|
|
| TOTAL LIABILITIES | 458,335 | 15,469 | 473,804 | 448,086 | 13,693 | 461,779 |
|
|
|
|
|
|
| EQUITY |
|
|
|
|
|
| Share capital | - | 141,000 | 141,000 | - | 141,000 | 141,000 | Accumulated losses | - | (6,322) | (6,322) | - | (1,431) | (1,431) | Fair value reserve on investments | - | 9,165 | 9,165 | - | 7,126 | 7,126 | TOTAL SHAREHOLDER’S EQUITY | - | 143,843 | 143,843 | - | 146,695 | 146,695 | Re-measurement reserve of employees’ terminal benefits | (1,064) | - | (1,064) | (1,064) | - | (1,064) | TOTAL EQUITY | (1,064) | 143,843 | 142,779 | (1,064) | 146,695 | 145,631 | TOTAL LIABILITIES AND EQUITY | 457,271 | 159,312 | 616,583 | 447,022 | 160,388 | 607,410 |
SUPPLEMENTARY INFORMATION – (CONTINUED)
INTERIM CONDENSED STATEMENT OF INCOME
| For the three-month period ended |
| For the three-month period ended |
| 30 June 2021 (Unaudited) |
| 30 June 2020 (Unaudited) |
| Insurance operations | Share-holders’ operations | Total |
| Insurance operations | Share-holders’ operations | Total |
| SR '000 | SR '000 | SR '000 |
| SR '000 | SR '000 | SR '000 | REVENUES |
|
|
|
|
|
|
| Gross premiums written | 132,690 | - | 132,690 |
| 134,212 | - | 134,212 | Reinsurance premiums ceded |
|
|
|
|
|
|
| -Local | (340) | - | (340) |
| (729) | - | (729) | -Foreign | (12,694) | - | (12,694) |
| (16,685) | - | (16,685) |
| (13,034) |
| (13,034) |
| (17,414) | - | (17,414) | Excess of loss premiums |
|
|
|
|
|
|
| -Local | (186) | - | (186) |
| (845) | - | (845) | -Foreign | (280) | - | (280) |
| (572) | - | (572) |
| (466) |
| (466) |
| (1,417) | - | (1,417) | Net premiums written | 119,190 | - | 119,190 |
| 115,381 | - | 115,381 | Changes in unearned premiums, net | 156 | - | 156 |
| (7,324) | - | (7,324) | Net premiums earned | 119,346 | - | 119,346 |
| 108,057 | - | 108,057 | Reinsurance commission earned | 1,199 | - | 1,199 |
| 1,244 | - | 1,244 | Other underwriting income | (4) | - | (4) |
| 3,967 | - | 3,967 | TOTAL REVENUES | 120,541 | - | 120,541 |
| 113,268 | - | 113,268 |
|
|
|
|
|
|
|
| Gross claims paid | 101,244 | - | 101,244 |
| 74,330 | - | 74,330 | Reinsurers’ share of claims paid | (8,525) | - | (8,525) |
| (8,520) | - | (8,520) | Net claims paid | 92,719 | - | 92,719 |
| 65,810 | - | 65,810 | Changes in outstanding claims, net | 4,074 | - | 4,074 |
| (2,345) | - | (2,345) | Changes in incurred but not reported, net | (1,444) | - | (1,444) |
| 4,870 | - | 4,870 | Changes in loss adjustment expense | 3 | - | 3 |
| 98 | - | 98 | Net claims incurred | 95,352 | - | 95,352 |
| 68,433 | - | 68,433 | Change in premium deficiency reserve | (2,909) | - | (2,909) |
| 10,482 | - | 10,482 | Policy acquisition costs | 13,815 | - | 13,815 |
| 5,297 | - | 5,297 | Other underwriting expenses | 52 | - | 52 |
| 661 | - | 661 | TOTAL UNDERWRITING COST AND EXPENSES | 106,310 | - | 106,310 |
| 84,873 | - | 84,873 |
|
|
|
|
|
|
|
| NET UNDERWRITING RESULT | 14,231 | - | 14,231 |
| 28,395 | - | 28,395 |
|
|
|
|
|
|
|
| OTHER OPERATING (EXPENSE) / INCOME |
|
|
|
|
|
|
| Allowance for doubtful debts | (440) | - | (440) |
| (634) | - | (634) | General and administrative expenses | (19,344) | (723) | (20,067) |
| (20,140) | (716) | (20,856) | Commission income on deposits | 365 | 91 | 456 |
| 260 | 70 | 330 | Investment income | - | 275 | 275 |
| - | 640 | 640 | Other income | 4 | - | 4 |
| (1) | - | (1) | TOTAL OTHER OPERATING EXPENSES | (19,415) | (357) | (19,772) |
| (20,515) | (6) | (20,521) |
|
|
|
|
|
|
|
| (LOSS) / INCOME BEFORE SURPLUS, ZAKAT AND INCOME TAX | (5,184) | (357) | (5,541) |
| 7,880 | (6) | 7,874 |
SUPPLEMENTARY INFORMATION – (CONTINUED)
INTERIM CONDENSED STATEMENT OF INCOME - (CONTINUED)
| For the three-month period ended |
| For the three-month period ended |
| 30 June 2021 (Unaudited) |
| 30 June 2020 (Unaudited) |
| Insurance operations | Share-holders’ operations | Total |
| Insurance operations | Share-holders’ operations | Total |
| SR '000 | SR '000 | SR '000 |
| SR '000 | SR '000 | SR '000 |
|
|
|
|
|
|
|
| Zakat charge for the period | - | (1,778) | (1,778) |
| - | (1,315) | (1,315) |
(LOSS) / INCOME AFTER ZAKAT AND INCOME TAX | (5,184) | (2,135) | (7,319) |
| 7,880 | (1,321) | 6,559 | Transfer of (deficit) / surplus to shareholders’ | 5,184 | (5,184) | - |
| (7,092) | 7,092 | - | Net result after transfer of surplus to shareholders | - | (7,319) | (7,319) |
| 788 | 5,771 | 6,559 |
|
|
|
|
|
|
|
| Weighted average number of ordinary outstanding shares (in thousands) |
| 14,100 |
|
|
| 14,100 |
|
|
|
|
|
|
|
|
| Basic (loss) / earnings per share ( Express in SAR per share) – restated – 2020 |
| (0.52) |
|
|
| 0.41 |
|
|
|
|
|
|
|
|
| Net (loss) / Income for the period | - | (7,319) | (7,319) |
| 788 | 5,771 | 6,559 | OTHER COMPREHENSIVE INCOME / (LOSS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ITEMS THAT ARE OR MAY BE RECLASSIFIED TO STATEMENTS OF INCOME IN SUBSEQUENT PERIOD |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Available-for-sale investments: | - | (34) | (34) |
| - | 2,205 | 2,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| TOTAL COMPREHENSIVE (LOSS) / INCOME FOR THE PERIOD | - | (7,353) | (7,353) |
| 788 | 7,976 | 8,764 |
SUPPLEMENTARY INFORMATION – (CONTINUED)
INTERIM CONDENSED STATEMENT OF INCOME
| For the six-month period ended | For the six-month period ended |
| 30 June 2021 (Unaudited) | 30 June 2020 (Unaudited) |
| Insurance operations | Share-holders’ operations | Total | Insurance operations | Share-holders’ operations | Total |
| SR '000 | SR '000 | SR '000 | SR '000 | SR '000 | SR '000 | REVENUES |
|
|
|
|
|
| Gross premiums written | 284,837 | - | 284,837 | 268,208 | - | 268,208 | Reinsurance premiums ceded |
|
|
|
|
|
| -Local | (892) | - | (892) | (1,897) | - | (1,897) | -Foreign | (32,125) | - | (32,125) | (35,013) | - | (35,013) |
| (33,017) | - | (33,017) | (36,910) | - | (36,910) | Excess of loss premiums |
|
|
|
|
|
| -Local | (702) | - | (702) | (1,511) | - | (1,511) | -Foreign | (1,055) | - | (1,055) | (873) | - | (873) |
| (1,757) | - | (1,757) | (2,384) | - | (2,384) | NET PREMIUMS WRITTEN | 250,063 | - | 250,063 | 228,914 | - | 228,914 | Changes in unearned premiums, net | (18,708) | - | (18,708) | (4,503) | - | (4,503) | NET PREMIUMS EARNED | 231,355 | - | 231,355 | 224,411 | - | 224,411 | Reinsurance commission earned | 2,680 | - | 2,680 | 2,310 | - | 2,310 | Other underwriting income | 274 | - | 274 | 4,933 | - | 4,933 | NET REVENUES | 234,309 | - | 234,309 | 231,654 | - | 231,654 |
|
|
|
|
|
|
| Gross claims paid | 195,407 | - | 195,407 | 187,055 | - | 187,055 | Reinsurers’ share of claims paid | (17,794) | - | (17,794) | (17,724) | - | (17,724) | NET CLAIMS PAID | 177,613 | - | 177,613 | 169,331 | - | 169,331 | Changes in outstanding claims, net | 3,161 | - | 3,161 | (8,889) | - | (8,889) | Changes in incurred but not reported, net | 1,033 | - | 1,033 | 3,090 | - | 3,090 | Changes in loss adjustment expenses | 76 | - | 76 | (132) | - | (132) | NET CLAIMS INCURRED | 181,883 | - | 181,883 | 163,400 | - | 163,400 | Change in premium deficiency reserve | (7,520) | - | (7,520) | 10,505 | - | 10,505 | Policy acquisition costs | 23,238 | - | 23,238 | 12,897 | - | 12,897 | Other underwriting expenses | 289 | - | 289 | 1,799 | - | 1,799 | TOTAL UNDERWRITING COST AND EXPENSES | 197,890 | - | 197,890 | 188,601 | - | 188,601 |
|
|
|
|
|
|
| NET RESULT OF INSURANCE OPERATIONS | 36,419 | - | 36,419 | 43,053 | - | 43,053 |
|
|
|
|
|
|
| OTHER OPERATING (EXPENSE) / INCOME |
|
|
|
|
|
| (Allowance) / Release of doubtful debts | (1,036) | - | (1,036) | 5,857 | - | 5,857 | General and administrative expenses | (37,739) | (1,182) | (38,921) | (39,022) | (1,329) | (40,351) | Commission income on deposits | 731 | 193 | 924 | 1,162 | 259 | 1,421 | Investment income | - | 768 | 768 | - | 1,088 | 1,088 | Other income | 33 | - | 33 | - | - | - | TOTAL OTHER OPERATING (EXPENSES) / INCOME | (38,011) | (221) | (38,232) | (32,003) | 18 | (31,985) | (Loss) / income for the period | (1,592) | (221) | (1,813) | 11,050 | 18 | 11,068 | Zakat charge for the period | - | (3,078) | (3,078) | - | (1,963) | (1,963) | Net (loss) / surplus | (1,592) | (3,299) | (4,891) | 11,050 | (1,945) | 9,105 |
SUPPLEMENTARY INFORMATION – (CONTINUED)
INTERIM CONDENSED STATEMENT OF INCOME-(CONTINUED)
| For the six-months period ended | For the six-months period ended |
| 30 June 2021 (Unaudited) | 30 June 2020 (Unaudited) |
| Insurance operations | Share-holders’ operations | Total | Insurance operations | Share-holders’ operations | Total |
| SR '000 | SR '000 | SR '000 | SR '000 | SR '000 | SR '000 |
|
|
|
|
|
|
| Surplus transferred to Shareholders | 1,592 | (1,592) | - | (9,945) | 9,945 | - | Net result after transfer of surplus to shareholders | - | (4,891) | (4,891) | 1,105 | 8,000 | 9,105 |
|
|
|
|
|
|
| (Loss) / Earnings per share | - | (0.35) | - | - | 0.57 | - |
|
|
|
|
|
|
| Income for the period | - | (4,891) | (4,891) | 1,105 | 8,000 | 9,105 |
|
|
|
|
|
|
| OTHER COMPREHENSIVE INCOME / (LOSS) |
|
|
|
|
|
| ITEMS THAT WILL NOT BE RECLASSIFIED TO STATEMENT OF INCOME IN SUBSEQUENT PERIODS |
|
|
|
|
|
| - Actuarial gains / (losses) on employees’ terminal benefits | - | - | - | - | - | - |
|
|
|
|
|
|
| ITEMS THAT ARE OR MAY BE RECLASSIFIED TO STATEMENTS OF INCOME IN SUBSEQUENT PERIOD |
|
|
|
|
|
| Available-for-sale investments: - Net change in fair value | - | 2,039 | 2,039 | - | (901) | (901) |
|
|
|
|
|
|
| TOTAL COMPREHENSIVE (LOSS) / INCOME FOR THE PERIOD | - | (2,852) | (2,852) | 1,105 | 7,099 | 8,204 |
SUPPLEMENTARY INFORMATION – (CONTINUED)
INTERIM CONDENSED STATEMENT OF CASH FLOWS
| For the six-month period ended | For the six-month period ended |
| 30 June 2021 (Unaudited) | 30 June 2020 (Unaudited) | |
| Insurance operations | Share-holders’ operations | Total | Insurance operations | Share-holders’ operations | Total |
| SR '000 | SR '000 | SR '000 | SR '000 | SR '000 | SR '000 | CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
| Total (loss) / income for the period | (1,592) | (221) | (1,813) | 1,105 | 9,963 | 11,068 | Adjustments for non-cash items: |
|
|
|
|
|
| Depreciation of property and equipment | 1,003 | - | 1,003 | 952 | - | 952 | Amortization of intangible and right of use assets | 1,493 | - | 1,493 | 1,112 | - | 1,112 | Provision for employees’ terminal benefits | 781 | - | 781 | 1,039 | - | 1,039 | Allowance for / (release of) doubtful debts | 1,036 | - | 1,036 | (5,857) | - | (5,857) |
|
|
|
|
|
|
| Changes in operating assets and liabilities: |
|
|
|
|
|
| Premiums and reinsurers’ receivable | (5,851) | - | (5,851) | (12,129) | - | (12,129) | Reinsurers’ share of unearned premiums | 1,231 | - | 1,231 | (7,273) | - | (7,273) | Reinsurers’ share of outstanding claims | (1,645) | - | (1,645) | 679 | - | 679 | Reinsurers’ share of claims incurred but not reported | (930) | - | (930) | (1,301) | - | (1,301) | Deferred policy acquisition costs | (5,058) | - | (5,058) | 646 | - | 646 | Due from related party | - | - | - | (225) | - | (225) | Prepayments and other receivables | (5,492) | (318) | (5,810) | (10,443) | 718 | (9,725) | Policyholders claim payables | (8,542) | - | (8,542) | 14,579 | - | 14,579 | Accrued and other payables | (4,297) | (959) | (5,256) | 20,567 | (175) | 20,392 | Reinsurers' balances payable | 9,682 | - | 9,682 | 20,434 | - | 20,434 | Unearned commission income | (182) | - | (182) | 424 | - | 424 | Unearned premiums | 17,476 | - | 17,476 | 11,776 | - | 11,776 | Premium deficiency reserve | (7,521) | - | (7,521) | 10,505 | - | 10,505 | Other technical reserves | 75 | - | 75 | (132) | - | (132) | Outstanding claims | 4,806 | - | 4,806 | (9,568) | - | (9,568) | Claims incurred but not reported | 1,963 | - | 1,963 | 4,391 | - | 4,391 | Cash (used in) / from operations | (1,564) | (1,498) | (3,062) | 41,281 | 10,506 | 51,787 | Surplus distribution paid | - | (873) | (873) | - | - | - | Employees’ terminal benefits paid | (217) | - | (217) | (180) | - | (180) | Zakat and income tax paid | - | (2,319) | (2,319) | - | - | - | Net cash (used in) / from operating activities | (1,781) | (4,690) | (6,471) | 41,101 | 10,506 | 51,607 |
18. SUPPLEMENTARY INFORMATION – (CONTINUED)
INTERIM CONDENSED STATEMENT OF CASH FLOWS
| For the six-month period ended | For the six-month period ended |
| 30 June 2021 (Unaudited) | 30 June 2020 (Unaudited) | |
| Insurance operations | Share-holders’ operations | Total | Insurance operations | Share-holders’ operations | Total |
| SR '000 | SR '000 | SR '000 | SR '000 | SR '000 | SR '000 |
|
|
|
|
|
|
| CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
| Purchase of property and equipment | (765) | - | (765) | (168) | - | (168) | Proceed from sale of available-for-sale investment | - | - | - | - | 5,000 | 5,000 | Purchase of Intangible assets | (187) | - | (187) | (302) | - | (302) | Maturity of term deposits | 119,331 |
| 119,331 | 138,920 | 55,663 | 194,583 | Net cash from investing activities | 118,379 | - | 118,379 | 138,450 | 60,663 | 199,113 |
|
|
|
|
|
|
| CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
| Lease liabilities | (984) | - | (984) | (1,059) | - | (1,059) | Net cash used in financing activities | (984) | - | (984) | (1,059) | - | (1,059) | Net change in cash and cash equivalents | 115,614 | (4,690) | 110,924 | 178,492 | 71,169 | 249,661 | Cash and cash equivalents, beginning of the period | 72,725 | 75,251 | 147,976 | 65,320 | 12,159 | 77,479 | Cash and cash equivalents, end of the period | 188,339 | 70,561 | 258,900 | 243,812 | 83,328 | 327,140 |
FAIR VALUES OF FINANCIAL INSTRUMENTS
| 18 |
| Disclosure of derivatives and hedges[text block] | 18. FAIR VALUES OF FINANCIAL INSTRUMENTSFair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction takes place either:- in the accessible principal market for the asset or liability, or- in the absence of a principal market, in the most advantages accessible market for the asset or liability.The fair values of on-balance sheet financial instruments are not significantly different from their carrying amounts included in the financial statement.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 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; andLevel 3: valuation techniques for which any significant input is not based on observable market data.19. FAIR VALUES OF FINANCIAL INSTRUMENTS – (CONTINUED)a. Carrying amount and fair valueThe following table shows the carrying amount and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy for financial instruments measured at fair value. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is not considered to reasonably approximate fair value.Shareholders’ Operations Carrying value Level 1 Level 2 Level 3 * Total SR’000 30 June 2021 Financial assets measured at fair value - Available-for-sales investments Debt instrument 20,000 - - 20,000 20,000 Equities 11,208 11,208 - - 11,208 Others 18,167 18,167 - - 18,167 51,298 29,375 - 20,000 49,375 Shareholders’ Operations Carrying value Level 1 Level 2 Level 3 * Total SR’000 31 December 2020 Financial assets measured at fair value - Available-for-sales investments Debt instrument 20,000 - - 20,000 20,000 Equities 11,177 11,177 - - 11,177 Others 16,159 16,159 - - 16,159 49,259 27,336 - 20,000 47,336 (*) The fair value of unquoted securities at level 3 is not materially different than its cost price. (**) Najm investments amounting to SR 1,923,000 is excluded from above table because it is carried at cost and its fair value was not determined.19. COMPARATIVE FIGURESCertain prior period figures have been reclassified to conform to current period presentation (if applicable).20. IMPACT OF COVID-19On 11 March 2020, the World Health Organisation (“WHO”) declared the Coronavirus (“COVID-19”) outbreak as a pandemic in recognition of its rapid spread across the globe. This outbreak has also affected the GCC region including the Kingdom of Saudi Arabia. Governments all over the world took steps to contain the spread of the virus. Saudi Arabia in particular has implemented closure of borders, released social distancing guidelines and enforced country wide lockdowns and curfews.In response to the spread of the Covid-19 virus in the GCC and other territories (to be tailored based on company’s operations) where the Company operates and its consequential disruption to the social and economic activities in those markets, the Company’s management has proactively assessed its impacts on its operations and has taken a series of proactive and preventative measures and processes to ensure: the health and safety of its employees and the wider community where it is operating the continuity of its business throughout the Kingdom is protected and kept intact.The major impact of Covid-19 pandemic is seen in medical and motor line of business as explained below. As with any estimate, the projections and likelihoods of occurrence are underpinned by significant judgment and rapidly evolving situation and uncertainties surrounding the duration and severity of the pandemic, and therefore, the actual outcomes may be different to those projected. The impact of such uncertain economic environment is judgmental, however, the Company will continue to reassess its position and the related impact on a regular basis.Medical technical reservesBased on the management’s assessment, the management believes that the Government’s decision to assume the medical treatment costs for both Saudi citizens and expatriates has helped in reducing any unfavourable impact. During the lockdown, the Company saw a decline in medical reported claims (majorly elective and non-chronic treatment claims) which resulted in a drop in claims experience. However, subsequent to the lifting of lockdown since 21 June 2020, the Company is experiencing a surge in claims which is in line with the expectations of the Company’s management. The Company’s management has duly considered the impact of surge in claims in the current estimate of future contractual cash flows of the insurance contracts in force as at 30 June 2021 for its liability adequacy test. Based on the results, the Company has booked an amount of SR 1.95 million (31 December 2020: SR 5.06 million) as a premium deficiency reserve.Motor technical reservesIn response to the Covid-19 pandemic, SAMA issued a circular 189 (the “circular”) dated 08 May 2020 to all insurance companies in the Kingdom of Saudi Arabia. Amongst other things, the circular instructed insurance companies to extend the period of validity of all existing retail motor insurance policies by further two months as well as providing a two-month additional coverage for all new retail motor policies written within one month of this circular.The Management, in conjunction with its appointed actuary, deliberated on a variety of internal factors and concluded, that the Company considers the extension of two months in exiting motor policies as new policy and record a premium deficiency reserve based on the expected claims for the extended two-months period. For new policies written as per above circular, the premium is earned over the period of coverage i.e 14 month as per the Company accounting policy. There is no significant impact of two-month extension in earned premium as of 30 June 2021 as no material amounts of premium have been written during the one-month period. | 19 |
