ORGANIZATION AND PRINCIPLE ACTIVITIES

Gulf General Cooperative Insurance Company ("GGCI" or the "Company") is a Saudi Joint Stock Company incorporated in the Kingdom of Saudi Arabia as per the Ministry of Commerce and Industry's Resolution number 12/Q dated 17 Muharram 1431H (corresponding to 3 January 2010) and registered under Commercial Registration number 4030196620 dated 9 Safar 1431H (corresponding to 25 January 2010). The registered address of the Company’s head office is as follows:

Gulf General Cooperative Insurance Company Al Gheithy Plaza, Second Floor,

Ameer Al Shoura'a Street

Jeddah, Kingdom of Saudi Arabia

The Company also has the following branches, which are operating under separate commercial registrations:

The Company is licensed to conduct insurance business in the Kingdom of Saudi Arabia under cooperative principles in accordance with Royal Decree No. M/85 dated 5 Thul Hujja 1429H (corresponding to 3 December 2008) pursuant to Council of Ministers' Resolution No. 365 dated 3 Thul Hujja 1429H (corresponding to 1 December 2008). The Company obtained a license to conduct insurance operations in the Kingdom of Saudi Arabia from the Saudi Central Bank ("SAMA") on 20 Rabi-al-Awwal 1431H (corresponding to 6 March 2010). The Company was listed on the Saudi Arabian Stock Exchange (“Tadawul”) on 24 Safar 1431H (corresponding to 8 February 2010).

The objectives of the Company are to engage in providing insurance and related services, which include reinsurance, in accordance with its by-laws, and applicable regulations in the Kingdom of Saudi Arabia. Its principal lines of business include medical, motor, property, engineering, marine and accident and liability.

In accordance with the By-laws of the Company, the surplus arising from the insurance operations is distributed as follows:

In case of deficit arising from the insurance operations, the entire deficit is allocated and transferred to the shareholders’ operations in full.

In accordance with the Implementing Regulations issued by SAMA, the Company proposes to distribute, subject to the approval of SAMA, its annual net policyholders’ surplus directly to policyholders at a time, and according to criteria, as set by its Board of Directors.

Portfolio transfer

On 19 May 2012, the Company entered into an agreement with Saudi General Insurance Company

E.C. (“SGI”) and Gulf Cooperation Insurance Company Ltd. E.C. (“GCI”) (the "Sellers") pursuant to which it acquired the sellers' insurance operations in the Kingdom of Saudi Arabia, effective 1 January 2009, at a goodwill amount of SR 36.26 million, as approved by SAMA, along with the related insurance assets and liabilities of an equivalent amount.

2.1Statement of compliance

The interim condensed financial information of the Company has 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 the Saudi Organization for Chartered and Professional Accountants (SOCPA).

These interim condensed financial statements have been prepared under the going concern basis and historical cost convention, except for the measurement of investments held at fair value through income statement (“FVIS”) and available-for-sale investment that are measured at fair value, and employees’ defined benefit obligations which is recognized at the present value of future obligations using the projected unit credit method.

The Company’s interim condensed statement of financial position is presented in order of liquidity. Except for available-for-sale investment, property and equipment, right-of-use assets, intangible assets, goodwill, statutory deposit, accrued income on statutory deposit, employees’ defined benefit obligations, lease liabilities and accrued income payable to SAMA, all other assets and liabilities are of short-term nature, unless, stated otherwise.

As of June 30, 2021, the Company's accumulated losses reached 42% of its share capital. During the six-month period ended June 30, 2021, the Company incurred losses amounting to Saudi Riyals

44.1 million and has negative operating cash flows. The Company via a Board of Directors’ resolution dated 29 April 2019 recommended an increase in the Company’s capital through offering a rights issue with a total value of SR 300 million. The Company received approval from Saudi Central Bank (“SAMA”) and is currently in the process of finalizing the remaining regulatory and legal formalities underlying such increase. Subsequent to period end 30 June 2021, the Company completed the increase of capital from SR 200 million to SR 500 million through right issue shares of an amount of SR 300 million.

The loss for the six-month period ended June 30, 2021 is mainly attributable to the adverse results in the motor line of business, which although have recovered, when compared with the comparative period as well as the previous quarters. Management has already formulated and implemented various performance improvement measures which, among other things, include better pricing strategies, diversification of insurance portfolio, introduction of new benefits and replacement of the motor third-party administrator. Results from such measures are expected to reflect positively in the remaining quarters of 2021 and as such a positive trend as a result of performance improvement measures is expected to continue, provided that the underlying projections of the business and economic conditions continue to be realized. Management will continue to monitor performance indicators and prevailing market conditions and make the necessary corrective actions and amend its business plan, if necessary.

The Company’s Board of Directors has made an assessment of its ability to continue as a going concern and is satisfied that it will be able to continue as a going concern in the foreseeable future. Furthermore, the Board of Directors are not aware of any material uncertainties that may cast significant doubt upon the Company’s ability to continue as a going concern. Therefore, the interim condensed financial statements have been prepared on the going concern basis.

Accordingly, management believes that the Company's operations shall continue for a foreseeable future under the normal course of business and the going concern basis used in the preparation of this interim condensed financial information remains appropriate.

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 attributable to either operation, are recorded in the respective accounts. Note 21 to these interim condensed financial statements provides the statement of financial position, statements of income, comprehensive income and cash flows of the insurance operations and shareholders operations, separately.

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 2020.

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 (SR) and are rounded off to the nearest thousands.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies, estimates, and assumptions used in the preparation of these interim condensed financial statements are consistent with those used in the preparation of the annual financial statements for the year ended 31 December 2020, except as explained below:

3.1 New IFRS Standards, IFRIC interpretations and amendments thereof, adopted by the Company

The following new standards, amendments and revisions to existing standards, which were issued by the International Accounting Standards Board (“IASB”) have been effective from 1 January 2021 and accordingly adopted by the Company, as applicable:

The adoption of the amended standards and interpretations applicable to the Company did not have any significant impact on these interim condensed financial statements.

3.2 Standards issued but not yet effective

Standards issued but not yet effective up to the date of issuance of the Company’s interim condensed financial statements are listed below. The Company intends to adopt these standards, when they become effective.

IFRS 17 – Insurance Contracts

Overview:

This standard has been published on 18 May 2017, it establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts and supersedes IFRS 4 – Insurance contracts.

The new standard applies to insurance contracts issued, to all reinsurance contracts and to investment contracts with discretionary participating features provided the entity also issues insurance contracts. It requires to separate the following components from insurance contracts:

• • • embedded derivatives, if they meet certain specified criteria;

    • distinct investment components; and

    • 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).

1. 1. IFRS 17 – Insurance Contracts (continued)

Measurement:

In contrast to the requirements in IFRS 4, which permitted insurers to continue to use the accounting policies for measurement purposes that existed prior to January 2015, IFRS 17 provides the following different measurement models:

The General Measurement Model (“GMM”) is based on the following “building blocks” of:

1. 1. 1. the fulfilment cash flows (“FCF”), which comprises:

         • 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;

1. 1. 2. 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. Since the CSM cannot be negative, 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;

1. changes in the entity’s share of the fair value of underlying items,

changes in the effect of the time value of money and financial risks not relating to the underlying items

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 date:

The IASB issued an Exposure Draft Amendments to IFRS 17 during September 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 1 January 2023. Under the current exposure draft, it is proposed to amend the IFRS 17 effective date to reporting periods beginning on or after 1 January 2023. This is a deferral of 1 year compared to the previous date of 1 January 2021. Earlier application is permitted if both IFRS 15 – Revenue from Contracts with Customers and IFRS 9 – Financial Instruments have also been applied. The Company intend to apply the standard on its effective date.

Transition:

Retrospective application is required. However, if full retrospective application for a group of insurance contracts is impracticable, then the entity is required to choose either a modified retrospective approach or a fair value approach.

Presentation and Disclosures:

The Company expects that the new standard will result in a change to the accounting policies for insurance contracts together with amendments to presentation and disclosures.

Impact:

The Company is currently assessing the impact of the application and implementation of IFRS 17. As of 30 June 2021, the financial impact of adopting the standard has yet to be fully assessed by the Company. The Company has started with their implementation process and have set up an implementation committee. Further, the Company has undertaken a Gap Analysis and the key areas of Gaps are as follows:

1. 2. IFRS 17 – Insurance Contracts (continued) Impact: (continued):

At the date of publication of these financial statements, it was not practicable to quantify the potential impact of adopting IFRS 17.

IFRS 9 – Financial Instruments

This standard was published on 24 July 2014 and has replaced IAS 39. The new standard addresses the following items related to financial instruments:

1. 1. 3. 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:

2. the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows and;

3. the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding (“SPPI”).

The financial asset is measured at fair value through other comprehensive income and realized gains or losses would be recycled through profit or loss upon sale, if both conditions are met:

1. the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows and for sale and;

2. the contractual terms of cash flows are SPPI.

Assets not meeting either of these categories are measured at fair value through profit or loss. Additionally, at initial recognition, an entity can use the option to designate a financial asset at fair value through profit or loss if doing so eliminates or significantly reduces an accounting mismatch.

1. 3. IFRS 9 – Financial Instruments (continued)

      4. Classification and measurement (continued):

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.

1. 1. 5. 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.

1. 1. 6. Hedge accounting:

IFRS 9 introduces new requirements for hedge accounting that align hedge accounting more closely with Risk Management. The requirements establish a more principles-based approach to the general hedge accounting model. The amendments apply to all hedge accounting with the exception of portfolio fair value hedges of interest rate risk (commonly referred to as “fair value macro hedges”). For these, an entity may continue to apply the hedge accounting requirements currently in IAS 39.

This exception was granted largely because the IASB is addressing macro hedge accounting as a separate project.

Effective date:

The published effective date of IFRS 9 was 1 January 2018. However, amendments to IFRS 4 – Insurance Contracts: Applying IFRS 9 – Financial Instruments with IFRS 4 – Insurance Contracts, published on 12 September 2016, changes the existing IFRS 4 to allow entities issuing insurance contracts within the scope of IFRS 4 to mitigate certain effects of applying IFRS 9 before the IASB’s new insurance contract standard (IFRS 17 – Insurance Contracts) becomes effective. The amendments introduce two alternative options:

1. Apply a temporary exemption from implementing IFRS 9 until the earlier of

   • the effective date of a new insurance contract standard; or

   • annual reporting periods beginning on or after 1 January 2021. The IASB is proposing to extend the effective date of IFRS 17 and the IFRS 9 temporary exemption in IFRS 4 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

IFRS 9 – Financial Instruments (continued)

c) Hedge accounting (continued):

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 financial statements.

Impact assessment:

As at 30 June 2021, the Company has total financial assets and insurance related assets amounting to SR 188 million (31 December 2020: SR 294 million) and SR 148 million (31 December 2020: SR 70 million), respectively. Currently, financial assets held at amortized cost consist of cash and cash equivalents and certain other receivables amounting to SR 144 million (31 December 2020: SR 163 million). Investments are carried currently at fair value through statement of income at SR 41 million (31 December 2020: SR 33 million).

The Company is yet to fully assess changes from the application and implementation of IFRS 9, however at this stage, the Company does not expect the classification and measurement of financial assets to be impacted by IFRS 9 implementation.

2.2 Critical accounting judgements, estimates and assumptions

The preparation of interim financial statements requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses and the accompanying notes, disclosures including disclosures of contingent liabilities. 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 2020. However, the Company has reviewed the key sources of estimation uncertainties disclosed in the last annual financial statements against the backdrop of the COVID-19 pandemic (refer note 22). Based on these assessments, the Company believes that the COVID-19 pandemic has had no material effects on Company’s reported results for the six-month period ended 30 June 2021. The Company continues to monitor the situation closely.

4. CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise of the following:

6. PREMIUMS RECEIVABLE - NET

Premiums receivable due from the following:

Movement in provision for impairment of premiums receivable during the period / year was as follows:

17. ZAKAT

17.1 Zakat provision

Movements in the Zakat provision during the six-month period ended 30 June 2021 and year ended 31 December 2020 are as follows:

17.2 Status of assessments

The Company has finalized its Zakat and withholding assessment for the years from December 31, 2010 to 2015, after reaching a final settlement for Zakat and withholding tax of SR 2,846,754, at the Dispute Resolution Committee. The Company filed its Zakat returns for years December 31, 2016 and 2017 and obtained the related Zakat certificates. In line with the disclosure initiative, the Company obtained the ZATCA approval to apply the same withholding tax treatment for the above years and settled additional withholding tax of SR 1,805,884.The Company filed its Zakat return for the year December 31, 2018 and obtained the related Zakat certificate. ZATCA issued the Zakat and WHT assessment for the years ended December 31, 2016 to 2018 and claimed additional Zakat and withholding liabilities of SR 19,934,125. The Company settled the amount of SR 1,824,414 related to the Zakat differences and objected against the remaining WHT differences. The ZATCA issued the revised assessment claiming the same WHT differences of SR 18,109,711. The Company escalated the said objection to the Committee for Resolution of Tax Violations and Disputes “CRTVD”, to assign a hearing session. The Company filed its Zakat returns for the years December 31, 2019 and 2020 and obtained the related Zakat certificates. The ZATCA did not finalize the study of the said years.

14. FAIR VALUES OF FINANCIAL INSTRUMENTS

Fair 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 to sell the asset or transfer the liability 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 liability

The fair values of on-balance sheet financial instruments are not significantly different from their carrying amounts included in these financial statements.

1. Determination of fair value and fair value hierarchy

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments:

Level 1: quoted prices in active markets for the same or identical instrument that an entity can access at the measurement date;

Level 2: quoted prices in active markets for similar assets and liabilities or other valuation techniques for which all significant inputs are based on observable market data; and

Level 3: valuation techniques for which any significant input is not based on observable market data.

2. Carrying amounts and fair value

The following table shows the carrying amount and the 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.

Fair Value

Fair Value

The fair value of investments in mutual funds at level 2 is based on the net assets values communicated by the fund manager, and the daily prices are available on Tadawul. The fair value of investments in equity securities at level 1 is based on quoted prices that are available on Tadawul.

As at 30 June 2021, the Company has an investment amounting to SR 1.9 million (31 December 2020: SR 1.9 million) in an unquoted available for sale investment. This investment is held as part of Company’s shareholder operations and is stated at cost in the absence of active markets or other means of reliably measuring their fair value.

There were no transfers between levels during the six-month period ended 30 June 2021 and the year ended 31 December 2020. Further, there were no changes in the valuation techniques during the period from previous periods.

12. REINSURANCE PREMIUMS AND EXCESS OF LOSS PREMIUM CEDED

12.1 Reinsurance premiums ceded

12.2 Excess of loss expenses

5. MURABAHA DEPOSITS

Murabaha deposits comprises the following:

1. 1. These Murabaha deposits earn commission at an average rate of 0.64% per annum as at 30 June 2021 (31 December 2020: 0.69% per annum).

^{9. STATUTORY DEPOSIT}

^{As required by SAMA Insurance Regulations, the Company deposited an amount equivalent to 10% of its paid-up share capital, amounting to SR 20 million, in a bank designated by SAMA. However, during the period ended 30 June 2021, SAMA has directed the Company to make an additional deposit of 10 million due to the low solvency margins. Accrued income on this deposit is payable to SAMA and this deposit cannot be withdrawn without approval from SAMA.}

2.3 Seasonality of operations

There are no significant seasonal changes that may affect the insurance operations of the Company.

7. INVESTMENTS

7.2. Available-for-sale investment

The Company holds 3.85% of the equity in Najm for Insurance Services Company ("Najm"), a Saudi Closed Joint Stock Company. The investment is classified as an available-for-sale investment and is stated at cost (see note 14).

7.1. Investments

held at FVIS Movement in investments classified as FVIS is as follows:

The investments held at FVIS of Shareholders’ operations comprise of portfolio amounting to SR 40.45 million (31 December 2020: SR 32.95 million) which is invested in mutual funds and equity shares in the Kingdom of Saudi Arabia. The investments are denominated in Saudi Arabian Riyals and US Dollars. All investments held at FVIS are quoted. The portfolio is invested in securities and mutual funds issued by corporates and financial institutions in the Kingdom of Saudi Arabia.

^{8. PREPAYMENTS AND OTHER ASSETS}

^{8.1 Other assets include payment made by the Company in relation to VAT assessment raised by Zakat, Tax and Customs Authority (“ZATCA”) for 2018 and 2019 financial years amounting to SR 7.3 million. The payments were made to ZATCA to avoid penalties. However, subsequent to period end, the Company has submitted objections to the ZATCA assessment. The Company's management believes that there is strong basis that the assessment raised by the ZATCA will be reversed and the full amount will be returned in due course}

18. SHARE CAPITAL

The share capital of the Company is SR 200 million divided into 20 million shares of SR 10 each (31 December 2020: 20 million shares of SR 10 each). The shareholding structure of the Company is as below.

On 24 Shabaan 1440H, corresponding to 29 April 2019, the Board of Directors recommended an increase in the Company’s capital through offering a rights issue with a total value of SR 300 million. During 2019, the Company received approval from Saudi Central Bank (“SAMA”) and is currently in the process of finalizing the remaining regulatory and legal formalities underlying such increase.

1. GROSS WRITTEN PREMIUMS

1. TECHNICAL RESERVES

10.1 Movement in unearned premiums

Movement in unearned premiums are as follows:

1. 1. Net outstanding claims and other technical reserves

Net outstanding claims and other technical reserves comprise of the following:

10.2 Net outstanding claims and other technical reserves

Net outstanding claims and other technical reserves comprise of the following:

20. (LOSS) / EARNING PER SHARE

The basic (loss) / Earning per share have been calculated by dividing the net (loss)/ Profit for the period by the weighted average number of ordinary shares issued and outstanding at the period- end. In the absence of any convertible liability, the diluted (loss)/ Earning per share do not differ from the basic (loss) / Earning per share.

16. RELATED PARTY TRANSACTIONS AND BALANCES

Related 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 the Board of Directors. The following are the details of the major related party transactions during the period/year and the related balances:

15. OPERATING SEGMENTS

Operating segments are identified on the basis of internal reports about components of the Company that are regularly reviewed by the Company’s Board of Directors in their function as the chief operating decision maker in order to allocate resources to the segments and to assess its performance. All of the insurance operations of the Company are carried out in the Kingdom of Saudi Arabia. For management purposes, the operations are monitored in nine major lines of business.

Transactions between the operating segments are on normal commercial terms and conditions. The revenue from external parties reported to the Board is measured in a manner consistent with that in the condensed statement of income. 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 2020.

Segment assets do not include cash and cash equivalents, Murabaha deposits, premiums receivable- net, due from reinsurers-net, investments, prepayments and other assets, property and equipment, right-of-use assets, intangible assets, goodwill, statutory deposit and accrued income on statutory deposit. Accordingly, they are included in unallocated assets.

Segment liabilities do not include due to policyholders, accrued expenses and other liabilities, due to reinsurers, due to brokers, employees’ defined benefit obligations, lease liabilities, Insurance operations’ surplus payable, accrued Zakat and accrued income payable to SAMA. Accordingly, they are included in unallocated liabilities.

Segment liabilities do not include due to policyholders, accrued expenses and other liabilities, due to reinsurers, due to brokers, employees’ defined benefit obligations, lease liabilities, Insurance operations’ surplus payable, accrued Zakat and accrued income payable to SAMA. 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. The segment information provided to the Company’s Board of Directors for the reportable segments for the Company’s total assets and liabilities at 30 June 2021 and 31 December 2020, its total revenues, expenses, and net income for the six-month period then ended, are as follows:

INTERIM CONDENSED STATEMENT OF INCOME