| Notes forming part of accounts [line items] | | |
| Disclosure of notes and other explanatory information [text block] | United Cooperative Assurance (“the Company”) is a Saudi Joint Stock Company registered in the Kingdom of Saudi Arabia under Commercial Registration No. 4030179955 dated 6 Jamad-al-Thani 1429H, corresponding to 6 June 2008. Registered Office address of the Company is Al-Mukmal Centre (1st and 4th floor) Prince Saud Al Faisal Street, Khalediya District, P. O. Box 5019, Jeddah 21422, Kingdom of Saudi Arabia.The activities of the Company are to transact cooperative insurance and reinsurance operations and related activities in the Kingdom of Saudi Arabia. On 29 Rabi Al Thani 1429H (5 May 2008), the Company received a license from the Saudi Arabian Monetary Authority (“SAMA”) to engage in insurance and reinsurance in Saudi Arabia. The Company started the operations on 1 January 2009.The Company received the approval letters from the Saudi Arabian Monetary Authority (SAMA) and Ministry of Commerce and Investment regarding the amendment of the Company’s by-laws to be in accordance with the new companies’ regulations. The Company’s extraordinary general assembly was held on 10 August 2017 corresponding to 18 Thul Qeadah 1438H and accordingly the new by-laws was approved.2.BASIS OF PREPARATIONa.Basis of presentationThese financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) that are endorsed in the Kingdom of Saudi Arabia (KSA), and other standards and pronouncements that are endorsed by the Saudi Organization for Certified Public Accountants (“SOCPA”) (referred to as “IFRS as endorsed in KSA”). The financial statements of the Company as at and for the year ended 31 December 2019 were prepared in compliance with IFRS as endorsed in KSA. The Company has updated its accounting policy to account for zakat and income taxes in the statement of income based on the instructions issued by SAMA on 23 July 2019 to insurance companies in the Kingdom of Saudi Arabia. This aligns with the IFRS as endorsed in KSA. Accordingly, the Company changed its accounting treatment for zakat and income tax by retrospectively adjusting the impact in line with International Accounting Standard 8 - Accounting Policies, Changes in Accounting Estimates and Errors (“IAS 8”). The effects of this change are disclosed in note 3.2 of the financial statements.These financial statements have been prepared under going concern basis and historical cost convention except for the measurement at fair value of investments held as fair value through statement of income (FVSI). and employees’ defined benefit obligations which is recognized at the present value of future obligations 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, short-term deposits, premiums and reinsurers’ receivable - net, reinsurers’ share of unearned premiums, deferred policy acquisition costs, deferred excess of loss premiums, prepayments and other assets, due to policyholders, reinsurers and brokers, accrued expenses, unearned premiums and reinsurance commission, outstanding claims and claims incurred but not reported, premium deficiency reserve, other technical reserves and accrued Zakat. All other financial statement line items would generally be classified as non-current unless stated otherwise.The Company presents its statement of financial position broadly in order of liquidity. As required by Saudi Arabian Insurance Regulations “the Implementing Regulations” the Company maintains separate books of accounts for “Insurance operations” and “Shareholders’ operations”. Accordingly, 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 physical custody of all assets related to the insurance operations and shareholders’ operations are held by the Company. Note 30 to these annual financial statements provides the statement of financial position, statements of income, comprehensive income and cash flows of the insurance operations and shareholders operations, separately. | 1 |
| Disclosure of general information about reporting entity [abstract] | | |
| Disclosure of general information about reporting entity [text block] | a.Basis of presentation – (continued)The financial statements of the Company as at and for the year ended 31 December 2018, were prepared in compliance with the International Financial Reporting Standards (“IFRS”), as modified by SAMA for the accounting of Zakat and income tax (relating to the application of IAS 12 – “Income Taxes” and IFRIC 21 – “Levies” so far as these relate to Zakat and income tax).The accounting policies used in the preparation of the financial statements are consistent with those followed in the preparation of the Company’s annual financial statements for the year ended 31 December 2018, except where otherwise stated.b.Functional and presentation currency These 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 Riyals have been rounded off to the nearest thousands, except where otherwise indicated.c.Fiscal yearThe Company follows a fiscal year ending 31 December.In preparing these financial statements, the significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty including the risk management policies were the same as those that applied to the annual financial statements as at and for the year ended 31 December 2018.d.Critical accounting judgments, estimates and assumptionsThe preparation of the Company’s financial statements requires the use of estimates and judgements that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. Although these estimates and judgements are based on management’s best knowledge of current events and actions, actual results ultimately may differ from those estimates.Estimates and judgments are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.Set out below are the accounting judgements and estimates that are critical in the preparation of these financial statements:i)The ultimate liability arising from claims made under insurance contractsThe estimation of the ultimate liability arising from claims made under insurance contracts is the Company’s most critical accounting estimate. There are several sources of uncertainty that need to be considered in the estimate of the liability that the Company will ultimately pay for such claims. Estimates are made at the end of the reporting year both for the expected ultimate cost of claim reported and for the expected ultimate costs of claims incurred but not reported (“IBNR”). Liabilities for unpaid reported claims are estimated using the input of assessments for individual cases reported to the Company. At the end of each reporting period, prior year claims estimates are reassessed for adequacy and changes are made to the provision. Such estimates are necessarily based on significant assumptions about several factors involving varying, and possible significant, degrees of judgment and uncertainty and actual results may differ from management’s estimates resulting in future changes in estimated liabilities. Claims requiring court or arbitration decisions are estimated individually. Independent loss adjusters normally estimate property claims. Management reviews its provisions for claims incurred on a monthly basis, and IBNR on a quarterly basis. The provision for outstanding claims, as at 31 December, is also verified by an independent actuary. | 2 |
| Disclosure of basis of preparation of financial statements [text block] | d.Critical accounting judgments, estimates and assumptions – (continued)i)The ultimate liability arising from claims made under insurance contracts – (continued)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 the statement of financial position, for which the insured event has occurred prior to the date of the statement of financial position. The primary technique adopted by management in estimating the cost of notified and IBNR claims is that of using the past claims settlement trends to predict future claims settlement trends. The liability is calculated at the reporting date using a range of standard actuarial claim projection techniques, based on empirical data and current assumptions that may include a margin for adverse deviation. At each reporting date, prior year claims estimates are reassessed for adequacy and changes are made to the provision. These provisions are not discounted for the time value of money. A range of methods such as Chain Ladder Method, Bornhuetter-Ferguson Method and Expected Loss Ratio Method are used by the actuaries to determine these provisions. The actuary had also used a segmentation approach including analyzing cost per member per year for medical line of business. Underlying these methods are a number of explicit or implicit assumptions relating to the expected settlement amount and settlement patterns of claims.ii)Impairment of financial assetsThe Company determines that financial assets are impaired when there has been a significant or prolonged decline in the fair value of the financial assets below its cost. The determination of what is significant or prolonged requires judgment. A period of 12 months or longer is considered to be prolonged and a decline of 30% from the original cost is considered significant as per the Company’s policy. In making this judgment, the Company evaluates among other factors, the normal volatility in share price, the financial health of the investee, industry and sector performance, changes in technology, and operational and financing cash flows.iii)Impairment of receivablesA provision for impairment of receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter into bankruptcy or financial reorganization, and default or delinquency in payments are considered indicators that the receivable is impaired. The Company is exposed to disputes with, and the possibility of defaults by, its reinsurers. The Company monitors on a quarterly basis the evolution of disputes with and the strength of its reinsurers.iv)Deferred acquisition costsCertain acquisition costs related to the sale of new policies are recorded as deferred acquisition costs and are amortized in the statement of income over the related period of policy coverage. If the assumptions relating to the 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 income. | 2 |
| Disclosure of accounting framework used in preparation of financial statements [text block] | d.Critical accounting judgments, estimates and assumptions – (continued)v)Useful lives of property and equipment and intangible assetsThe Company's management determines the estimated useful lives of its property and equipment and intangible assets for calculating depreciation / amortization. These estimates are determined after considering the expected usage of the assets or physical wear and tear. Management reviews the residual value and useful lives annually and future depreciation / amortization charge would be adjusted where the management believes the useful lives differ from previous estimates.vi)Premium deficiency reserveEstimation of premium deficiency reserve is highly sensitive to a number of assumptions as to 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 Company’s actuarial team and the independent actuary, consider the claims and premiums relationship which is expected to apply on a monthly basis, and ascertain, at the end of the financial year, whether a premium deficiency reserve is required.vii)Fair value of financial instrumentsThe fair value for financial instruments traded in active markets at the reporting date are based on quoted prices for marketable securities or estimated fair values. The fair value of commission-bearing items is estimated based on discounted cash flows using commission for items with similar terms and risk characteristics.The fair value of financial instruments where no active market exists or where quoted prices are not otherwise available are determined by using valuation techniques. In these cases, the fair values are estimated from observable data in respect of similar financial instruments or using models. Where market observable inputs are not available, they are estimated based on appropriate assumptions. Where valuation techniques (for example, models) are used to determine fair values, they are validated and periodically reviewed by qualified personnel independent of those that sourced them. All models are certified before they are used, and models are calibrated to ensure that outputs reflect actual data and comparative market prices. To the extent practical, models use only observable data; however, areas such as credit risk (both own credit risk and counterparty risk), volatilities and correlations require management to make estimates.viii)Going concernThe Company’s management has made an assessment of its ability to continue as a going concern and is satisfied that it has the resources to continue in business for the foreseeable future. Furthermore, management is not aware of any material uncertainties that may cast significant doubt upon the Company’s ability to continue as a going concern. Therefore, the financial statements continue to be prepared on the going concern basis.ix)Employees defined benefit obligationsThe employees’ defined benefits obligation is determined by an independent actuary using the projected unit credit method as recommended in IAS 19 “Employee benefits”. The present value of the defined benefit obligation is determined by discounting the estimated cash outflows using interest rates of sovereign debt instruments that are denominated in Saudi Riyals and have maturity periods approximating that of the gratuity liability.The present value of the defined benefit obligation depends on several factors that are determined by the actuary using assumptions such as discount rate, expected future salary increases, mortality rates and staff turnover etc. These estimates are subject to significant uncertainty due to their long-term nature and are reviewed at each reporting date. | 2 |
| Disclosure of statement of compliance [text block] | 3.SIGNIFICANT ACCOUNTING POLICIESThe accounting policies, estimates and assumptions used in the preparation of these financial statements are consistent with those used in the preparation of the annual financial statements for the year ended December 31, 2019 except for the adoption of the following:a.New IFRS, International Financial Reporting and Interpretations Committee’s interpretations (IFRIC) and amendments thereof, adopted by the CompanyThe Company has adopted the following new standards, amendments and revisions to existing standards, which were issued by the International Accounting Standards Board (IASB):Standard/AmendmentsDescriptionIFRIC 23Uncertainty over Income Tax TreatmentsIAS 28Long-term interest in associates and joint venturesIAS 19Plan amendments, curtailments or settlementsIFRS 3 & 11 and IAS 12 & 23Annual improvements to IFRS 2015-2017 cycleIFRS 16Leases (refer below)IFRS 16 - LeasesIFRS 16 replaces IAS 17 ‘Leases’, 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’.IFRS 16 was issued in January 2016 and is effective for annual periods commencing on or after 1 January 2019. On 1 January 2019 i.e. the effective date, IFRS 16 had no significant financial impact on the Company’s financial statements. IFRS 16 stipulates that all lease and the associated contractual rights and obligations should generally be recognized in the Company’s statement of financial position, unless the term is 12 months or less or the lease is for low value assets.IFRS 16 ‘Leases’ introduces a single, on-balance sheet accounting model for lessees. A lessee recognises a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. There are optional exemptions for short-term leases and leases of low-value items. Lessor accounting remains similar to the current standard – i.e. lessors continue to classify leases as finance or operating leases.Thus, the classification required under IAS 17 “Leases” into operating or finance leases is eliminated for lessees. For each lease, the lessee recognizes a liability for the lease obligation incurred in the future. Correspondingly, a right to use the leased asset is capitalized, which is generally equivalent to the present value of the future lease payments plus directly attributable costs, which is amortized over the useful life. | 3 |
| Description of initial application of standards or interpretations [text block] | a.New IFRS, International Financial Reporting and Interpretations Committee’s interpretations (IFRIC) and amendments thereof, adopted by the Company – (continued)IFRS 16 – Leases – (continued)i)Right of use (RoU) Assets / Lease LiabilitiesOn initial recognition, at inception of the contract, the Company shall assess whether the contract is, or contains a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is identified if most of the benefits are flowing to the Company and the Company can direct the usage of such assets.Right of Use AssetsThe Company applies the cost model, and measures the right of use assets at cost:a) Less any accumulated depreciation and any accumulated impairment losses; andb) Adjusted for any re-measurement of the lease liability for lease modifications.Generally, a RoU asset would be equal to lease liability. However, if there are additional costs such as site preparation, non-refundable deposits, application money, other expenses related to the transactions, etc, these need to be added to the RoU asset value.Lease LiabilityOn initial recognition, the lease liability is the present value of all remaining payments to the lessor. After the commencement date, the Company measures the lease liability by:a) Increasing the carrying amount to reflect incremental financing rate on the lease liability;b) Reducing the carrying amount to reflect the lease payments made; andc) Re-measuring the carrying amount to reflect any re-assessment or lease modification.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. | 3 |
| Disclosure of new standards and amendments in standards [text block] | b.Standards issued but not yet effectiveStandards issued but not yet effective up to the date of issuance of the Company’s financial statements are listed below. The listing is of standards and interpretations issued, which the Company reasonably expects to be applicable at a future date. The Company intends to adopt these standards when they are effective.Standard/InterpretationDescriptionEffective from periods beginning on or after the following dateAmendments to IFRS 3Definition of business1 January 2020Amendments to IAS 1 & IAS 8Definition of material1 January 2020IFRS 9Financial InstrumentsRefer belowIFRS 17Insurance Contracts (note below)1 January 2022IFRS 9 - Financial InstrumentsThis standard was published on July 24, 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 andthe 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 andthe 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 | 3 |
| Disclosure of issued IFRS not yet adopted [text block] | IFRS 17 – Insurance ContractsOverviewThis 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:a.embedded derivatives, if they meet certain specified criteria;b.distinct investment components; andc.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). b.Standards issued but not yet effective – (continued)IFRS 17 – Insurance Contracts – (continued)MeasurementIn 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 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.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;I.changes in the entity’s share of the fair value of underlying items,II.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 dateThe 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. | 3 |
| Disclosure of summary of significant accounting policies [abstract] | | |
| Description of accounting policy for cash and cash equivalents [text block] | 4.CASH AND CASH EQUIVALENTSCash and cash equivalents included in the statement of cash flows comprise the following:31 December2019SAR’00031 December 2018SAR’000Insurance operationsBank balances and cash216,19988,477Shareholders’ operationsBank balances and cash41,4541,056Total cash and cash equivalents257,65389,5334. (b)SHORT TERM DEPOSIT31 December2019SAR’00031 December 2018SAR’000Insurance operationsShort term deposits23,496-a.Short term deposits represent deposits with local banks that have investment grade credit rating and have an original maturity of more than three months from the date of acquisition.b.These deposits earn commission at an average rate of 2.35% per annum as at 31 December 2019 (2018: Nil % per annum). | 4 |
| Description of accounting policy for receivables [text block] | 5.PREMIUMS AND REINSURERS’ RECEIVABLE – NETReceivables comprise amounts due from the following:31 December2019SAR’00031 December 2018SAR’000Policyholders117,35398,399Brokers and agents210321Related parties (note 23)146,671134,622Receivables from reinsurers22,13823,059286,372256,401Provision for doubtful receivables(83,920)(86,665)Premiums and reinsurers’ receivable – net202,452169,736Movement in the allowance for doubtful premiums and reinsurers’ receivable during the year was as follows:31 December2019SAR’00031 December 2018SAR’000Balance at beginning of the year86,66575,689Provision made during the year(2,745)11,080Written-off during the year-(104)Balance at end of the year83,92086,665Past due but not impairedAs at 31 December 2019Amount in SR ‘000Less than 90 days91 to180 daysMore than180 daysTotalPremiums and reinsurers’ receivable40,94622,02776,728139,701Premiums receivable – related parties91,9065,28849,477146,671Provision for doubtful debts-(3,204)(80,716)(83,920)Premiums and reinsurers’ receivable, net132,85224,11145,489202,452Past due but not impaired31 December 2018Amount in SR ‘000Less than 90 days91 to180 daysMore than180 daysTotalPremiums and reinsurers’ receivable41,61816,49963,662121,779Premiums receivable – related parties42,98226,03365,607134,622Provision for doubtful debts-(5,946)(80,719)(86,665)Premiums and reinsurers’ receivable, net84,60036,58648,550169,736Past due but not impaired premiums receivable 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 is, therefore, unsecured. In respect of premiums receivable, the five largest customer balances accounted for approximately 56% of the balance as at 31 December 2019 (2018: 61%). | 5 |
| Description of accounting policy for deferred policy acquisition costs [text block] | 7.DEFFERED POLICY ACQUISATION COST31 December2019SAR’00031 December 2018SAR’000As at 1 January5,69910,301Incurred during the year10,6139,283Amortised during the year(9,868)(13,885)As at 31 December6,4445,699 | 7 |
| Description of accounting policy for intangible assets and goodwill [text block] | 30.GOODWILLThe Company entered into an agreement with UCA Insurance Bahrain BSC (‘the seller’) pursuant to which it acquired the seller’s insurance operations in the Kingdom of Saudi Arabia, effective from 31 December 2008, for a total consideration of SR 656.95 million with a goodwill amount of SR 78.4 million. The transaction was approved by SAMA. The goodwill amount payable to the seller was paid in full subsequent to 2008, after obtaining specific approval from SAMA.Determining whether goodwill is impaired requires an estimation of the recoverable amount of the cash generating units to which goodwill has been allocated. The recoverable amount has been determined based on a value in use calculation using cash flow projections from financial budgets approved by the Board of Directors covering a five-year period. The budgeted growth rate for gross premiums to be written in 2020 is about 21.7% (2019: 35.3%). The budgeted annual growth rate for gross premiums to be written over the next four years (2021 – 2024) to be in the range of 10% to 15% (2018: 10% to 11%). The growth rate used to extrapolate the cash flows of the unit beyond the five-year period is 4.24% (2018: 4.24%). The discount rate applied to the cash flow projections is 10% (2018: 10%). The valuation result has determined that the carrying value of the goodwill at the reporting date is less than its recoverable amount.The calculation of value in use is most sensitive to the following assumptions:Growth rate of premiums Discount ratesGrowth rates used to extrapolate cash flows beyond the forecast periodWith regard to the assessment of value in use, the management believes that no reasonably possible change in any of the above assumptions would cause the carrying value to materially exceed its recoverable amount at the reporting date. | 30 |
| Description of accounting policy for statutory reserve [text block] | STATUTORY RESERVEAs required by Saudi Arabian Insurance Regulations, 20% of the net shareholders’ income shall be set aside as a statutory reserve until this reserve amounts to 100% of paid capital. As the Company has accumulated losses at year end, no transfer to statutory reserve has been made during the year. The reserve is not available for dividend distribution. | 14 |
| Description of accounting policy for general reserve [text block] | 18.TECHNICAL RESERVESNet outstanding claims and reservesNet outstanding claims and reserves comprise of the following:31 December2019SAR’00031 December 2018SAR’000Outstanding claims66,652111,586Claims incurred but not reported 162,673209,481229,325321,067Premium deficiency reserve18,76016,454Other technical reserves9,60436,539257,689374,060Less:- Reinsurers’ share of outstanding claims – note 12(45,581)(88,169)- Reinsurers’ share of claims Incurred but not reported – note 12(112,881)(135,637)(158,462)(223,806)Net outstanding claims and reserves99,227150,254Movement in unearned premiumsMovement in unearned premiums comprise of the following:31 December 2019GrossReinsuranceNetSAR’000Balance as at the beginning of the year141,051(94,750)46,301Premium written during the year420,292(366,014)54,278Premium earned during the year(398,250)322,850(75,400)Balance as at the end of the year163,093(137,914)25,17931 December 2018GrossReinsuranceNetSAR’000Balance as at the beginning of the year270,374(204,792)65,582Premium written during the year391,968(288,368)103,600Premium earned during the year(521,291)398,410(122,881)Balance as at the end of the year141,051(94,750)46,301 | 18 |
| Disclosure of notes forming part of accounts [abstract] | | |
| Disclosure of reinsurers/ retakaful share of unearned premium/ contributions, net [text block] | 10.UNEARNED COMMISSION INCOME31 December2019SAR’00031 December 2018SAR’000As at 1 January19,29531,460Commission received during the year49,70737,475Commission earned during the year(41,233)(49,640)As at 31 December27,76919,29511.MOVEMENT IN UNEARNED PREMIUMS31 December2019SAR’00031 December 2018SAR’000Gross unearned premiums as at 1 January141,051270,375Gross unearned premiums as at 31 December(163,093)(141,051)Movement in gross unearned premiums(22,042)129,324Reinsurers’ share of unearned premiums as at 1 January(94,750)(204,792)Reinsurers’ share of unearned premiums as at 31 December137,91494,750Movement in reinsurers’ share of unearned premiums43,164(110,042)Movement in unearned premiums, net21,12219,282 | 10 |
| Disclosure of zakat [text block] | Zakat base has been computed based on the Company’s understanding of the zakat regulations enforced in the Kingdom of Saudi Arabia. The zakat regulations in Saudi Arabia are subject to different interpretations, and the assessments to be raised by the GAZT could be different from the declarations filed by the Company.Status of assessment:The Company has filed its zakat declarations for the years ended 31 December 2009 to 2018 and obtained restricted zakat certificates.During 2017, the Company received the zakat assessments for the years 2005 to 2008 from the General Authority of Zakat and Income Tax (GAZT) with regards to the portfolio transferred from the old company claiming zakat liability amounting to SR 6.01 million and with-holding tax liability amounting to SR 16.09 million. The management believes that the existing provision for zakat and with-holding tax is sufficient. The Management has filed an objection against the above assessments and is confident of receiving a favourable ruling. In 2017, the Company had issued a bank guarantee in favour of GAZT amounting to SR 22.096 million (2018: SR 22.096 million) (note 8).During the year, GAZT has issued assessment for the years 2012 and 2013 claiming additional Zakat and Tax liability of SR 15.84 million. The management believes that the existing provision for zakat and tax is sufficient. However, the Company objected against the assessment and are planning to meet the Dispute Resolution Committee to assign a date and reach to final settlement.GAZT has not yet raised assessments for the years from 2014 to 2018. The Zakat is applicable on 99% of the shareholders while Income Tax on 1% of the shareholders. | 24 |
| Disclosure of investments income [text block] | Available-for-sale investmentsMovement in available-for-sale investment balance is as follows:Shareholders’ operations31 December2019SAR’00031 December 2018SAR’000Opening balance26,27736,624Purchases during the year23,576-Transfer from held to maturity investments157,585-Disposals during the year(24,613)(13,713)Changes in fair value of investments7,8963,366Closing balance190,72126,27731 December2019SAR’00031 December 2018SAR’000Investment in equity shares6,6131,923Investment in bonds164,20513,035Investment in mutual funds19,90311,319190,72126,2776.3Held to maturity investmentsMovement in held to maturity investment balance is as follows:Insurance operations31 December2019SAR’00031 December 2018SAR’000Opening balance156,265156,060Transfer of investment(78,486)-Disposals(81,099)-Realized gain3,209Amortization of held to maturity investments111205Closing balance-156,265Shareholders’ operations31 December2019SAR’00031 December 2018SAR’000Opening balance198,31998,131Disposals(42,355)-Transfer to / (from) available-for-sale investments(157,585)100,000Realized gain1,446-Amortization of held to maturity investments175188Closing balance-198,319Available-for-sale investmentsMovement in available-for-sale investment balance is as follows:Insurance’ operations31 December2019SAR’00031 December 2018SAR’000Opening balance3,894104,262Purchases during the year20,000-Disposals during the year(103,391)(690)Transfer from / (to) shareholders' operations78,486(100,000)Changes in fair value of investments1,238322Closing balance2273,894Insurance’ operations31 December2019SAR’00031 December 2018SAR’000Investment in bonds-3,672Investment in mutual funds2272222273,894Shareholders’ operations31 December2019SAR’00031 December 2018SAR’000- Available-for-sale (note 6.2)190,72126,277- Held to maturity (note 6.3)-198,319Total190,721224,596 | 6 |
| Disclosure of risk management [abstract] | | |
| Disclosure of insurance/ takaful risk [text block] | RISK MANAGEMENTRisk governanceThe Company’s risk governance is manifested in a set of established policies, procedures and controls which uses the existing organizational structure to meet strategic targets. The Company’s philosophy revolves on willing and knowledgeable risk acceptance commensurate with the risk appetite and strategic plan approved by the Board. The Company is exposed to insurance, reinsurance, regulatory framework, credit, liquidity, foreign currency, commission rate, and market risks.Risk management structureA cohesive organizational structure is established within the Company in order to identify, assess, monitor and control risks.Board of DirectorsThe apex of risk governance is the centralized oversight of Board of Directors providing direction and the necessary approvals of strategies and policies in order to achieve defined corporate goals.Senior managementSenior management is responsible for the day to day operations towards achieving the strategic goals within the Company’s pre-defined risk appetite.Audit Committee and Internal Audit FunctionRisk management processes throughout the Company are audited annually by the Internal Audit function which examines both the adequacy of the procedures and the Company’s compliance with such procedures. The Internal Auditor discusses the results of all assessments with senior management, and reports its findings and recommendations directly to the Audit Committee.The primary objective of the Company’s risk and financial management framework is to protect the Company from events that hinder the sustainable achievement of financial performance objectives, including failing to exploit opportunities.The risks faced by the Company and the manner in which these risks are mitigated by management are summarized below:Insurance risk managementThe risk under an insurance contract is the possibility that the insured event occurs and the uncertainty of the amount of the resulting claim. By the very nature of an insurance contract, this risk is random and therefore unpredictable. The principal risk that the Company faces under such contracts is the occurrence of the insured events and the severity of reported claims. The Company’s risk profile is improved by diversification of these risks of losses to a large portfolio of contracts as a diversified portfolio is less likely to be affected by an unexpected event in a single subset.The principal risk the Company faces under insurance contracts is that the actual claims and benefit payments or the timing thereof, differ from expectations. This is influenced by the frequency of claims, severity of claims, actual benefits paid and subsequent development of long-term claims. Therefore, the objective of the Company is to ensure that sufficient reserves are available to cover these liabilities.The Company purchases reinsurance as part of its risks mitigation programme. Reinsurance ceded is placed on both a proportional and non-proportional basis. The majority of proportional reinsurance is quota share reinsurance which is taken out to reduce the overall exposure of the Company to certain classes of business. Non-proportional reinsurance is primarily facultative and excess of loss reinsurance designed to mitigate the Company’s net exposure to catastrophe losses. Retention limits for the excess of loss reinsurance vary by product line and territory. | 31 |
| Disclosure of reinsurance/ retakaful risk [text block] | Insurance risk management – (continued)Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding claims provision and are in accordance with the reinsurance contracts. The Company’s placement of reinsurance is diversified such that it is neither dependent on a single reinsurer nor are the operations of the Company substantially dependent upon any single reinsurance contract. There is no single counterparty exposure that exceeds 51% of total reinsurance assets at the reporting date.Underwriting and retention policies and procedures and limits and clear underwriting authorities precisely regulate who is authorized and accountable for concluding insurance and reinsurance contracts and at what conditions. Compliance with these guidelines is regularly checked and developments in the global, regional and local market are closely observed, reacting were necessary with appropriate measures that are translated without delay into underwriting guidelines if required.The primary risk control measure in respect of the insurance risk is the transfer of risks to third parties via reinsurance. The reinsurance business ceded is placed on a proportional and non-proportional basis with retention limits varying by lines of business. The placements of reinsurance contracts are diversified so that the Company is not dependent on a single reinsurer or a reinsurance contract.Reinsurance is used to manage insurance risk. Although the Company has reinsurance arrangements, it does not, however, discharge the Company’s liability as primary insurer and thus a credit risk exposure remains with respect to reinsurance ceded to the extent that any reinsurer may be unable to meet its obligations under such reinsurance arrangements. The Company minimizes such credit risk by entering into reinsurance arrangements with reinsurers having good credit ratings, which are reviewed on a regular basis. The creditworthiness of reinsurers is considered on an annual basis by reviewing their financial strength prior to finalization of any contract. Reserve risks are controlled by constantly monitoring the provisions for insurance claims that have been submitted but not yet settled and by amending the provisions, if deemed necessary.Concentration of insurance riskThe Company monitors concentration of insurance risks primarily by class of business. The major concentration lies in Energy and Engineering.The Company also monitors concentration of risk by evaluating multiple risks covered in the same geographical location. For flood or earthquake risk, a complete city is classified as a single location. For fire and property risk a particular building and neighboring buildings, which could be affected by a single claim incident, are considered as a single location. Similarly, for marine risk, multiple risks covered in a single vessel voyage are considered as a single risk while assessing concentration of risk. The Company evaluates the concentration of exposures to individual and cumulative insurance risks and establishes its reinsurance policy to reduce such exposures to levels acceptable to the Company.Since the Company operates in Saudi Arabia, hence, all the insurance risks relate to policies written in Saudi Arabia. | 31 |
| Disclosure of currency risk [text block] | Foreign currency riskCurrency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company principal transactions are carried out in Saudi Riyal. Management believes that there is minimal risk of significant losses due to exchange rate fluctuations and consequently the Company does not hedge its foreign currency exposure. | 31 |
| Disclosure of market risk [text block] | Insurance risk management – (continued)Independent actuarial review of claims and claims reservesIn further mitigation of the insurance risk, the Company utilises an independent actuary who performs periodical reviews of the Company’s claims modelling and claims projections as well as verifying the closing position claims reserves are adequate.Key assumptionsThe key source of estimation uncertainty at the statement of financial position date relates to valuation of outstanding claims, whether reported or not, and includes expected claims settlement costs. The principal assumption underlying the liability estimates is that the Company’s future claims development will follow a similar pattern to past claims development experience. This includes assumptions in respect of average claim costs, claim handling costs, claim inflation factors and claim numbers for each accident year. Additional qualitative judgements are used to assess the extent to which past trends may not apply in the future, for example: one off occurrence; changes in market factors such as public attitude to claiming: economic conditions: as well as internal factors such as portfolio mix, policy conditions and claims handling procedures. Judgement is further used to assess the extent to which external factors such as judicial decisions and government legislation affect the estimates. Considerable judgment by management is required in the estimation of amounts due to policyholders arising from claims made under insurance contracts. Such estimates are necessarily based on assumptions about several factors involving varying and possibly significant degrees of judgment and uncertainty and actual results may differ from management’s estimates resulting in future changes in estimated liabilities. Qualitative judgments are used to assess the extent to which past trends may not apply in the future, for example one off occurrence, changes in market factors such as public attitude to claiming and economic conditions. Judgment is further used to assess the extent to which external factors such as judicial decisions and government legislation affect the estimates.In particular, estimates have to be made both for the expected ultimate cost of claims reported at the statement of financial position date and for the expected ultimate cost of claims incurred but not reported (IBNR) at the statement of financial positionProcess used to decide on assumptionsThe process used to determine the assumptions for calculating the outstanding claim reserve is intended to result in neutral reasonable estimates of the most likely or expected outcome. The nature of the business makes it very difficult to predict with certainty the likely outcome of any particular claim and the ultimate cost of notified claims. Each notified claim is assessed on a separate, case by case basis with due regard to claim circumstances, information available from providers and historical evidence of the size of similar claims. Case estimates are reviewed regularly and are updated as and when new information is available.The estimation of IBNR is generally subject to a greater degree of uncertainty than the estimation of the cost of settling claims already notified to the Company, in which case information about the claim event is available. The estimation process takes into account the past claims reporting pattern and details of reinsurance programs. For details please refer note 3.The ultimate cost of outstanding claims is estimated by using a range of standard actuarial claims projection techniques, such as Chain Ladder, Bornheutter-Ferguson, Cape Cod and expected loss ratio methods. | 31 |
| Disclosure of credit risk [text block] | Liquidity riskLiquidity risk is the risk that the Company will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk may result from an inability to sell a financial asset quickly at an amount close to its fair value. Liquidity requirements are monitored on monthly basis and management ensures that sufficient liquid funds are available to meet any commitments as they arise. All assets of the Company are current, except for property and equipment, intangible assets and statutory deposit, which are non-current in nature. The Company’s financial liabilities consist of outstanding claims, reinsurance balances payable, amount due to insurance operations, amount due to related parties and certain other liabilities. All financial liabilities are non-commission bearing and are expected to be settled within 12 months from the date of statement of financial position, except end of service benefits, which are non-current in nature.Maturity profilesThe table below summarises the maturity profile of the financial liabilities of the Company based on remaining expected undiscounted contractual obligations: | 31 |
| Disclosure of fair value of financial assets and liabilities [text block] | Carrying amounts 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 a reasonable approximation to fair value.31 December 2019Level 1Level 2Level 3TotalFair ValueSR’ 000SR’ 000SR’ 000SR’ 000Financial assets measured at fair valueEquity securities-Insurance operations-227-227-Shareholders’ operations4,69019,9031,92326,516Financial assets not measured at fair valueDebt securities-Shareholders’ operations60,260103,946-164,20664,950123,8491,923190,72231 December 2018Level 1Level 2Level 3TotalFair ValueSR’ 000SR’ 000SR’ 000SR’ 000Financial assets measured at fair valueEquity securities-Insurance operations-222-222-Shareholders’ operations-11,3191,92313,242Financial assets not measured at fair valueDebt securities-Insurance operations3,672--3,672-Shareholders’ operations13,035--13,03516,70711,5411,92330,171 | 20 |
| Disclosure of board of director's approval of the financial statements [text block] | The financial statements have been approved by the Board of Directors, on 22 Rajab 1441H, corresponding to 17 March 2020. | 34 |
