| Notes forming part of accounts [line items] | | |
| Disclosure of notes and other explanatory information [text block] | | |
| Disclosure of general information about reporting entity [abstract] | | |
| Disclosure of general information about reporting entity [text block] | United Cooperative Assurance Company (“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, Al Khalidiyah 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 its operations on 1 January 2009. On 11 February 2020 corresponding to 17 Jamad-ul-Thani 1441H, the Company has received the SAMA approval upon the Company’s request for the cancellation of its Reinsurance License. From the date of SAMA Approval, the Company has not assumed any reinsurance business. | 1 |
| Disclosure of basis of preparation of financial statements [text block] | (a)Statement of complianceThe interim condensed financial statements for the three-months and nine-months periods ended 30 September 2020 have been prepared in accordance with International Accounting Standard 34 – Interim Financial Reporting (“IAS 34”), as endorsed in the Kingdom of Saudi Arabia and other standards and pronouncements issued by Saudi Organization for Certified Public Accountants (SOCPA).These interim condensed financial statements have been prepared under the going concern basis and historical cost convention except for the measurement of available-for-sale investments and employees’ defined benefit obligations which are recognized at fair value and present value of future obligations using the projected unit credit method, respectively. The Company’s interim condensed statement of financial position is presented in order of liquidity. Except for property and equipment, right-of-use assets, statutory deposit, employees’ defined benefit obligations, outstanding claims, claims incurred but not reported, lease liabilities, all other assets and liabilities are of short-term nature, unless, stated otherwise.As required by the Saudi Arabian Insurance Regulations (the Implementation Regulations), the Company maintains separate books of accounts for Insurance Operations and Shareholders’ Operations and presents the financial information 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 interim condensed statement of financial position, statements of income and statement of comprehensive income and cash flows of the insurance operations and shareholders’ operations which are presented in note 19 have been provided as supplementary financial information and to comply with the requirements of the guidelines issued by SAMA Implementing Regulations and is not required by International Financial Reporting Standards (IFRS). SAMA implementing regulations requires the clear segregation of the assets, liabilities, income and expenses of the insurance operations and the shareholders’ operations. In preparing the Company-level financial statements in compliance with IFRS, the balances and transactions of the insurance operations are amalgamated and combined with those of the shareholders’ operations. Inter-operation balances, transactions and unrealized 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 interim condensed financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the annual financial statements as of and for the year ended 31 December 2019. The interim condensed financial statements may not be considered indicative of the expected results for the full year.These interim condensed financial statements are expressed in Saudi Arabian Riyals (SAR) and are rounded off to the nearest thousands. | 2 |
| Disclosure of accounting framework used in preparation of financial statements [text block] | (b)Critical accounting judgments estimates and assumptionsThe preparation of interim condensed 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 expenses. Actual results may differ from these estimates.In preparing these interim condensed 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 2019. 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.(c)Seasonality of operationsThere are no seasonal changes that may affect insurance operations of the Company.. | 2 |
| Disclosure of new standards and amendments in standards [text block] | 3.SIGNIFICANT ACCOUNTING POLICIESThe accounting policies adopted by the Company for the preparation of these interim condensed financial statements are in accordance with International Financial Reporting Standards (IFRS), as endorsed in the Kingdom of Saudi Arabia and are consistent with those used for the preparation of the annual financial statements for the year ended 31 December 2019 and new amended IFRS and IFRS Interpretations Committee Interpretations (IFRIC) as mentioned in note 3(a) which had no significant impact on the financial position or financial performance of the Company. (a)New IFRS, IFRIC and amendments thereof, adopted by the CompanyThe following new standards, amendments and revisions to existing standards, which were issued by the International Accounting Standards Board (“IASB”), as endorsed in the Kingdom of Saudi Arabia have been effective from 1 January 2020 and accordingly adopted by the Company, as applicable:Standard/AmendmentsDescriptionAmendments to IAS 1 & IAS 8Definition of MaterialAmendments to IFRS 3Definition of a BusinessConceptual FrameworkAmendments to References to Conceptual Framework in IFRS StandardsThe adoption of the relevant amended standards and interpretations applicable to the Company did not have any significant impact on these interim condensed financial statements.(b)Standards issued but not yet effectiveStandards issued but not yet effective up to the date of issuance of the Company’s interim condensed 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 dateIFRS 9Financial InstrumentsRefer belowIFRS 17Insurance Contracts (note below)1 January 2023IFRS 9 - Financial InstrumentsThis 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 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.Debt financial 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, both debt and equity instrument 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 statement of income.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 statement of income. | 3 |
| Disclosure of issued IFRS not yet adopted [text block] | b.Standards issued but not yet effective – (continued)IFRS 9 - Financial Instruments – (continued)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 dateThe 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:1.apply a temporary exemption from implementing IFRS 9 until the earlier ofthe effective date of a new insurance contract standard; orannual reporting periods beginning on or after 1 January 2023. On 17 March 2020, the International Accounting Standards Board (“IASB”) decided to extend the effective date of IFRS 17 and the IFRS 9 temporary exemption in IFRS 4 from 1 January 2021 to 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;2.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 annual financial statements for the year ended 31 December 2019.Impact assessmentOverall, 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. IFRS 17 – Insurance ContractsOverviewThis 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; 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).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.IFRS 17 – Insurance Contracts – (continued)Measurement – (continued)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 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.TransitionRetrospective 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 DisclosuresThe 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.ImpactThe Company is currently assessing the impact of the application and implementation of IFRS 17. As of the date of the publication of these interim condensed 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 with their implementation process and have set up an implementation committee. | 3 |
| Disclosure of summary of significant accounting policies [abstract] | | |
| Description of accounting policy for cash and cash equivalents [text block] | 4.CASH AND CASH EQUIVALENTS AND SHORT TERM DEPOSITS4.1 CASH AND CASH EQUIVALENTSCash and cash equivalents included in the statement of cash flows comprise the following:30 September2020(Unaudited)SAR’00031 December 2019(Audited)SAR’000Insurance operationsBank balances and cash138,425216,199Shareholders’ operationsBank balances and cash7,92041,454Total cash and cash equivalents146,345257,6534.2 SHORT TERM DEPOSITS30 September2020(Unaudited)SAR’00031 December 2019(Audited)SAR’000Insurance operationsShort term deposits23,49623,496a.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 30 September 2020 (31 December 2019: 2.35%) | 4 |
| Description of accounting policy for premiums/ contributions and insurance/ reinsurance or takaful/ retakaful balance receivables [text block] | Receivables comprise amounts due from the following:30 September2020(Unaudited)SAR’00031 December 2019(Audited)SAR’000Policyholders182,213117,361Brokers and agents16,870210Related parties (note 14)177,937146,663Receivables from reinsurers15,66122,138392,681286,372Provision for doubtful receivables(94,302)(83,920)Premiums and reinsurers’ receivable – net298,379202,452Movement in the provision for doubtful receivables during the period / year was as follows:30 September2020(Unaudited)SAR’00031 December 2019(Audited)SAR’000Balance at the beginning of the period / year83,92086,665Provision charged / (released) during the period / year10,382(2,745)Balance at the end of the period / year94,30283,920 | 5 |
| Description of accounting policy for unearned premium/ contributions [text block] | 7.TECHNICAL RESERVES7.1Net outstanding claims and reservesNet outstanding claims and reserves comprise of the following:30 September2020(Unaudited)SAR’00031 December 2019(Audited)SAR’000Outstanding claims55,06466,652Claims incurred but not reported 176,777162,673231,841229,325Premium deficiency reserve26,52918,760Other technical reserves12,4459,604270,815257,689Less:- Reinsurers’ share of outstanding claims(36,173)(45,581)- Reinsurers’ share of claims incurred but not reported(129,212)(112,881)(165,385)(158,462)Net outstanding claims and reserves105,43099,2277.2Movement in unearned premiumsMovement in unearned premiums comprise of the following:Nine-months period ended 30 September 2020(Unaudited)GrossReinsuranceNetSAR’000Balance as at the beginning of the period163,093(137,914)25,179Premium written / (ceded) during the period517,907(346,249)171,658Premium earned during the period(300,909)217,831(83,078)Balance as at the end of the period380,091(266,332)113,759Year ended 31 December 2019(Audited)GrossReinsuranceNetSAR’000Balance as at the beginning of the year141,051(94,750)46,301Premium written / (ceded) 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)25,179 | 7 |
| Description of accounting policy for investment income [text block] | 6.INVESTMENTSAvailable-for-sale investments30 September2020(Unaudited)SAR’00031 December 2019(Audited)SAR’000Insurance operations (note 6.1)119,776227Shareholders’ operations (note 6.2)174,067190,721293,843190,9486.1Insurance operationsMovement during the period / year is as follows:30 September2020(Unaudited)SAR’00031 December 2019(Audited)SAR’000Opening balance2273,894Purchases during the period / year111,14220,000Disposals during the period / year-(103,391)Transfer from held to maturity investments during the period / year-78,486Realized gain on investments-1,136Changes in fair value of investments8,407102Closing balance119,776227Investment in sukuks119,547-Investment in mutual funds229227119,7762276.2Shareholders’ operationsMovement during the period / year is as follows:30 September2020(Unaudited)SAR’00031 December 2019(Audited)SAR’000Opening balance190,72126,277Purchases during the period / year38,75823,576Transfer from held to maturity investments during the period / year (note 6.3)-157,585Disposals during the period / year(61,831)(24,613)Realized gain on investments4,246311Changes in fair value of investments2,1737,585Closing balance174,067190,721Investment in equity shares (Note 6.4)6,6996,613Investment in sukuks146,634164,205Investment in mutual funds20,73419,903174,067190,7216.3During 2019, the Company had sold few held to maturity investments before the maturity dates. Hence, the Company reclassified all of its held to maturity investments into available-for-sale investments category.6.4 This includes 3.85% (31 December 2019: 3.85%) shareholding in Najm for Insurance Services Company, a Saudi Closed Joint Stock Company. These shares are un-quoted and are carried at cost. In the absence of reliable financial information, management believes that fair values cannot be ascertained reliably.` | 6 |
| Description of accounting policy for segment reporting [text block] | 13.OPERATING SEGMENTSOperating 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 of Directors is measured in a manner consistent with that in the income statement. Segment assets and liabilities comprise operating assets and liabilities.There have been no changes to the basis of segmentation or the measurement basis for the segment profit or loss since 31 December 2019.Segment assets do not include cash and cash equivalents, short-term deposits, net premiums and reinsurers’ receivable, prepaid expenses and other assets, investments, property and equipment, right-of-use assets and goodwill. Accordingly, they are included in unallocated assets. Segment liabilities do not include policyholders’ claims payables, reinsurers’ balance payable, lease liabilities, zakat and income tax payable, surplus from insurance operations accrued and other liabilities and employees’ defined benefit obligations. Accordingly, they are included in unallocated liabilities.These unallocated assets and liabilities are not reported to chief operating decision maker under related segments and are monitored on a centralized basis.Segment performance is evaluated on the basis of underwriting results from each segment and therefore, operating expenses are not allocated to each segment and are monitored at the Company level.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 September 2020 and 31 December 2019, its total revenues, expenses, and net income for the three-months and nine-months periods ended 30 September 2020 and 30 September 2019, | 13 |
| Description of accounting policy for accounting of leases [text block] | 8.LEASES8.1RIGHT-OF-USE ASSETS – NETBuilding30 September2020(Unaudited)SAR’00031 December 2019(Audited)SAR’000Cost:At beginning of the period / year--Additions during the period / year9,126-At end of the period / year9,126-Accumulated depreciation:At beginning of the period / year--Additions during the period / year1,185-At end of the period / year1,185-Net book value7,9418.2LEASE LIABILTIES30 September2020(Unaudited)SAR’00031 December 2019(Audited)SAR’000At beginning of the period / year--Additions during the period / year9,126-Finance cost111-Payments during period / year(1,790)-At end of the period / year7,447- | 8 |
| Description of accounting policy for statutory deposit [text block] | 10.STATUTORY DEPOSIT30 September2020(Unaudited)SAR’00031 December 2019(Audited)SAR’000Statutory deposit60,00060,000In compliance with Article 58 of the Implementing Regulations of the Saudi Arabian Monetary Authority ("SAMA"), the Company deposited an amount equivalent to 15% of its paid up share capital, amounting to SAR 60 million in a bank designated by the Saudi Arabian Monetary Authority (“SAMA”). This statutory deposit cannot be withdrawn without the consent of SAMA and commission accruing on this deposit is payable to SAMA.In accordance with instructions received from SAMA vide their circular dated 1 March 2016; the Company has disclosed the commission due on the statutory deposit as an asset and a liability in these interim condensed financial statements. | 10 |
| Description of other accounting policies relevant to understanding of financial statements [text block] | 9.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 SAR 656.95 million with a goodwill amount of SAR 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 based on a value in use calculation using discounted cash flows projections from financial budgets approved by the Board of Directors for next five years. Cash flows beyond five years period are extrapolated using the estimated long-term growth rate. The assumptions used by the management in value in use calculation involve considerable degree of estimation and actual results may differ from those expected amounts.The most significant assumptions used in determination of value in use calculations are weighted average cost of capital and long-term growth rate. Weighted average cost of capital has been estimated at 10%.Based the assumptions made, the value in use calculated above exceeded the carrying amount of goodwill and hence no impairment was recognized. With 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.A sensitivity analysis of has been performed and an addition of 0.5% to the weighted average cost of capital and a reduction of 0.5% in the long-term growth rate has no impact on the results of impairment tests. | 9 |
| Disclosure of notes forming part of accounts [abstract] | | |
| Disclosure of investments at fair value through statement of income [text block] | 12.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 advantageous accessible market for the asset or liabilityThe fair values on-balance sheet financial instruments are not significantly different from their carrying amounts included in the interim condensed financial information.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.The following table shows the fair values of financial assets, 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 not measured at fair value if the carrying amount is a reasonable approximation to fair value.30 September 2020 (Unaudited)Level 1Level 2Level 3TotalSAR’ 000SAR’ 000SAR’ 000SAR’ 000Financial assets measured at fair valueEquity securities-Insurance operations-229-229-Shareholders’ operations4,776-1,9236,699Debt securities-Insurance operations-119,547-119,547-Shareholders’ operations-167,368-167,3684,776287,1441,923293,84331 December 2019 (Audited)Level 1Level 2Level 3TotalSAR’ 000SAR’ 000SAR’ 000SAR’ 000Financial assets measured at fair valueEquity securities-Insurance operations-227-227-Shareholders’ operations4,69019,9021,92326,515Debt securities-Insurance operations-----Shareholders’ operations60,260103,946-164,20664,950124,0751,923190,948 | 12 |
| Disclosure of zakat [text block] | 15.ZAKAT AND INCOME TAXa.Provision for zakat and income taxThe zakat and income tax payable by the Company has been calculated in accordance with zakat and income tax regulations in the Kingdom of Saudi Arabia.The movement in the zakat and income tax payable is as follows:Movements in zakat provision during the period / year30 September2020(Unaudited)31 December 2019(Audited)SAR’000Balance at the beginning of the period / year28,13621,788Charge for the period / year5,7007,900Paid during the period / year(22,634)(1,552)Balance at the end of the period / year11,20228,136The movement in the income tax payable is as follows:Movements in income tax provision during the period / year30 September2020(Unaudited)31 December 2019(Audited)SAR’000Balance at the beginning of the period / year800700Charge for the period / year300100Balance at the end of the period / year1,100800The differences between the financial and the zakatable/taxable results are mainly due to certain adjustments in accordance with the relevant fiscal regulations.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 General Authority of Zakat and Tax (GAZT) could be different from the declarations filed by the Company. b.Status of zakat assessmentsThe Company has filed its zakat and income tax declarations for the years ended 31 December 2009 to 2019 and obtained restricted zakat and tax certificates.During 2017, the Company received the zakat assessments for the years 2005 to 2008 from the GAZT with regards to the portfolio transferred from the old company claiming zakat liability amounting to SAR 6.01 million and withholding tax liability amounting to SAR 16.09 million. Management has filed an objection against the above assessments and is confident of receiving a favorable outcome. Further, the Company has issued a bank guarantee in favor of GAZT amounting to SAR 22.09 million (2019: SAR 22.09 million) against such assessments (see note 11).During the nine-months period ended 30 September 2020, GAZT issued an amended assessment based on the decision of the Preliminary Objection Committee and claimed additional delay fine amounting to SAR 2.4 million relating to 2009 to 2011. During 2019, GAZT had issued assessment for the years 2012 and 2013 claiming additional zakat and income tax liability amounting to SAR 15.84 million. However, the Company objected against the assessments and is planning to meet the Dispute Resolution Committee to assign a date and reach a final settlement.During the three-month period ended 30 September 2020, GAZT issued an assessment for the years 2014, 2015 and 2018 claiming additional zakat in addition to the delay fine amounting to SAR 25.65 million and withholding tax for the years 2016, 2017 and 2018 amounting to SAR 29.82 million. The Company settled the additional zakat amount of SAR 13.82 million and objected against the remaining amount. The Company also settled withholding tax amount of SAR 18.93 million on the ground that part of this withholding tax difference related to local broker and delay fine will be set aside by GAZT. Also, during the three-month period ended 30 September 2020, GAZT issued an assessment claiming additional zakat, tax and delay fine for the years 2016 and 2017 amounting to SAR 10.38 and SAR 10.27 million, respectively. The Company is planning to object against the said assessment.The Zakat is applicable on 99% of the shareholders while income tax on 1% of the shareholders. | 15 |
| Disclosure of classes of share capital [text block] | 16.SHARE CAPITALAs at 30 September 2020 and 31 December 2019, the authorised, subscribed and paid up share capital of the Company is SAR 400,000,000, divided into 40,000,000 shares of SAR 10 each. | 16 |
| Disclosure of related party transactions [text block] | 14.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.14.1 TRANSACTIONS WITH RELATED PARTIESThe following are the details of the significant related parties’ transactions during the period:Nature of transactionsThree-months period ended30 SeptemberNine-months period ended30 September2020201920202019SAR’000SAR’000SAR’000SAR’000(Unaudited)(Unaudited)(Unaudited)(Unaudited)Major shareholdersHaji Hussien Ali RezaPremium written1,1185,7185,77310,373Payments received and claims paid(624)(4,274)(3,889)(7,539)Saudi Bin Laden – GroupPremium written13,08538,706119,950145,571Payments received and claims paid(69,922)(89,420)(93,594)(113,092)Construction Product CompanyPremium written-6,8997,03113,930Payments received and claims paid(1,676)(4,821)(3,863)(7,007)Entities controlled, jointly controlled or significantly influenced by related partiesUnited Commercial AgenciesPayment made on behalf of Company--(150)150Law Office of Hassan MahassniPremium written94326841,541Payments received and claims paid(153)(212)(503)(996)Middle East GroupPremium written--2222Payments received and claims paid--(12)(12)14.2 RELATED PARTIES BALANCESBalance receivable / (payable) as at30 September2020(Unaudited)31 December2019(Audited)SAR’000Haji Hussien Ali Reza12,23910,355Saudi Bin Laden – Group143,357117,001Construction Product Company22,34219,174United Commercial Agencies697847UCA Workshop(3)(3)Law Office of Hassan Mahassni313132Middle East Group111The above balances are included in premiums receivables-net, prepayments and other assets, policyholders payables and accrued expenses and other liabilities.14.RELATED PARTY TRANSACTIONS AND BALANCES – (continued)Key management personnel are persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly and comprise top management executives including the Chief Executive Officer and the Chief Financial Officer of the Company.The following table shows the annual salaries, remuneration and allowances obtained by the key management personnel for the period ended 30 September 2020 and 30 September 2019:Three-months period ended30 SeptemberNine-months period ended30 September2020201920202019SAR’000SAR’000SAR’000SAR’000(Unaudited)(Unaudited)(Unaudited)(Unaudited)Salaries and other allowances1,3011,2663,9013,834End of service indemnities54721601431,3551,3384,0613,977Remuneration to those charged with governance504184979612 | 14 |
| Disclosure of capital management [text block] | 17.CAPITAL MANAGEMENTObjectives are set by the Company to maintain healthy capital ratios in order to support its business objectives and maximize shareholders’ value.The Company manages its capital requirements by assessing shortfalls between reported and required capital levels on a regular basis. Adjustments to current capital levels are made in light of changes in market conditions and risk characteristics of the Company’s activities. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders or issue shares. In the opinion of the Board of Directors, the Company has fully complied with the externally imposed capital requirements during the reported financial period.The Company’s management has assessed the potential impact of the COVID-19 pandemic by performing stress testing for various variables like: gross premium growth, increase in employee cost, YTD loss ratio, outstanding premium provisions, etc. and the related impact on the revenue, profitability, loss ratio and solvency ratio. As with any forecasts, the projections and likelihoods of occurrence are underpinned by significant judgements and uncertainties and, therefore, the actual outcomes may be different to those projected. As the situation is fluid and rapidly evolving, the Company will continue to reassess its position and the related impact on a regular basis. | 17 |
| Disclosure of commitments and contingencies, general [text block] | 11.COMMITMENTS AND CONTINGENCIESa.There were no capital commitments outstanding as at 30 September 2020 (31 December 2019: Nil).b.As at 30 September 2020, the Company’s bankers have given guarantees to non-government customers amounting to SAR 1.40 million (31 December 2019: SAR 1.40 million) in respect of motor insurance and to the General Authority of Zakat and Tax (GAZT) amounting to SAR 22.09 million (31 December 2019: SAR 22.09 million) in respect of a disputed assessment order (also see note 15b). Margin deposit of SAR 22.09 million (31 December 2019: SAR 22.09 million) being deposited with a bank which is included in prepaid expenses and other assets.c.On 25 August 2020, the Company received VAT assessments from GAZT for the years ended 31 December 2018 and 2019 claiming additional liability of SAR 9.56 million and SAR 2.72 million respectively. Management is in the process of filing an objection against the said assessments and is confident of receiving a favorable outcome. However, as required by the GAZT regulation, the Company will pay the said amount under protest before filing objection against said assessments. | 11 |
| Disclosure of comparative figures [text block] | 20.COMPARATIVE FIGURESCertain prior period figures have been reclassified to conform to current period presentation. Such reclassifications have not resulted in any additional impact on equity, income or total comprehensive income for comparative periods. | 20 |
| Disclosure of board of director's approval of the financial statements [text block] | 22.APPROVAL OF THE INTERIM CONDENSED FINANCIAL STATEMENTSThe interim condensed financial statements have been approved by the Board of Directors on 03 November 2020 corresponding to 17 Rabi ul Awal 1442H. | 22 |
| Disclosure of other notes relevant to understanding of financial statements [text block] | 18.BASIC AND DILUTED (LOSS) / EARNINGS PER SHARE(Loss) / earnings per share for the period has been calculated by dividing the net (loss) / earnings for the period by the weighted average number of issued and outstanding shares for the period.21.IMPACT OF COVID-19The Coronavirus (“COVID-19”) pandemic continues to disrupt global markets as many geographies are beginning to experience a “second wave” of infections despite having previously controlled the outbreak through aggressive precautionary measures such as imposing restrictions on travel, lockdowns and strict social distancing rules. The Government of Kingdom of Saudi Arabia (“the Government”) however has managed to successfully control the outbreak to date, owing primarily to the effective measures taken by the Government, following which the Government ended the lockdowns and begun taking phased measures to normalize international travel and resume Umrah pilgrimages. The Company continues to be cognizant of both the micro and macroeconomic challenges that COVID-19 has posed, the teething effects of which may be felt for some time, and is closely monitoring its operations at a granular level, while maintaining acceptable service levels and operational activities and ensuring the safety and wellbeing of its employees. The liquidity and solvency positions of the Company remain strong as at the date of issuing these interim condensed financial statements. Medical technical reservesDuring the peak period of COVID-19 pandemic’s first wave i.e. March to June 2020, access to providers and demand for healthcare declined temporarily due to measures taken by the local authorities. This resulted in a substantial drop in incurred claims from April through May which began to recover in June reaching pre-COVID-19 claims levels by the end of the second quarter. At this stage, the Company continues to expect a significant portion of the untreated health conditions to rebound as health care patterns are gradually restored and hence expects a surge in expected future claims.The propensity of a particular type of claim to be deferred depends on the nature of the medical condition and the types of diagnostic investigation and treatment associated with it. The expected surge in future claims related to insurance contracts in force as at 30 September 2020 was explicitly considered in the Premium Deficiency Reserve (PDR) estimation.With reference to SAMA’s circular 173, dated 16/01/2019, insurance companies are required to hold an additional PDR in case the relevant Unearned Premium Reserve (UPR) is insufficient against the corresponding projected claims and expenses. To be adequate to meet the future insurance liabilities of the unexpired risk, the PDR calculation for the third quarter of 2020 after considering the expected surge in claims resulted in recognizing an amount of SAR 1.19 million net (2019: Nil). 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.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 to record a premium deficiency reserve based on the expected claims for the extended two months’ period.For new policies written as per the above circular, the premium is earned over the period of coverage i.e. 14 months as per the Company’s accounting policy. There is no significant impact of two-month extension in earned premium as of 30 September 2020 as no material amounts of premium have been written during the one-month period.The Company has performed a liability adequacy test using current estimates of future cash flows under its insurance contracts at an aggregated level for motor line of business and recorded a premium deficiency reserve amounting to SAR 9.76 million as at 30 September 2020 (31 December 2019: Nil).IMPACT OF COVID-19 – (continued)Financial assetsTo cater for any potential impacts, the COVID-19 pandemic may have had on the financial assets of the Company, 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 months and nine-months periods ended 30 September 2020. The Company’s management continues to monitor the situation closely. | 18-21 |
