| Disclosure of issued IFRS not yet adopted [text block] |
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.
Standard / Interpretation |
Description |
Effective date |
|
|
| IAS 1 | Presentation of financial statements’, on classification of liabilities.
| Deferred until accounting periods starting not earlier than 1 January 2024 | Narrow scope amendments to IAS 1, Practice statement 2 and IAS 8 | The amendments aim to improve accounting policy disclosures and to help users of the financial statements to distinguish between changes in accounting estimates and changes in accounting policies.
| Annual periods beginning on or after 1 January 2023 | IFRS 17 | Insurance contracts | See below | IFRS 9 | Financial Instrument | See below | IAS 12 | Deferred Tax related to Assets and Liabilities arising from a Single Transaction` | January 1, 2023 | IFRS 10 and IAS 28 | Sale or contribution of assets between investor and its associate or joint venture (amendments to IFRS 10 and IAS 28) | Available for optional adoption / effective date deferred indefinitely |
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).
3.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3.2.Standards issued but not yet effective (continued)
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:
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;
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;
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.
3.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3.2.Standards issued but not yet effective (continued)
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 2022, 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:
3.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3.2.Standards issued but not yet effective (continued)
IFRS 17 – Insurance Contracts (continued)
Impact: (continued):
Impact area | Summary of impact |
|
| Financial impact | Not yet fully assessed by the Company. |
|
| Data impact | The Company believes that the data impact is not likely to be significant as a major proportion of the company’s business would qualify for measurement under the premium allocation approach. |
|
| IT systems | The Company is already in the process of implementing a new upgraded IT system which will facilitate the implementation of IFRS 17 |
|
| Process impact | The process impact is under evaluation, but no significant process changes are anticipated. |
|
| Impact on reinsurance arrangements | The Company’s reinsurance arrangements are currently under testing to determine the suitable measurement approach |
|
| Impact on policies & control’s frameworks | The Company is currently working with an external consultant to review and modify the current policy control framework |
|
| Human resources | The Company needs to recruit suitably qualified personnel who have a comprehensive understanding of IFRS 17 |
At of the date of the publication of these financial statements, the company has already submitted Phase 3 Implementation plan to SAMA and two unaudited dry run results using 2020 and 2021 data, respectively.
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:
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:
i) the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows and; ii) 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:
i)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; ii)the contractual terms of cash flows are SPPI.
3.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3.2Standards issued but not yet effective (continued)
IFRS 9 – Financial Instruments (continued)
a)Classification and measurement (continued):
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.
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.
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:
3.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3.2Standards issued but not yet effective (continued)
IFRS 9 – Financial Instruments (continued)
c)Hedge accounting (continued):
Apply a temporary exemption from implementing IFRS 9 until the earlier of
the effective date of a new insurance contract standard; or annual reporting periods beginning on or after 1 January 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
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 2022, the Company has total financial assets and insurance related assets amounting to SR 524 million (31 December 2021: SR 536 million) and SR 243 million (31 December 2021: SR 70 million), respectively. Currently, financial assets held at amortized cost consist of cash and cash equivalents and certain other receivables amounting to SR 221 million (31 December 2021: SR 300 million). Investments are carried currently at fair value through statement of income at SR 40.66 million (31 December 2021: SR 44.83 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 | 3.2 |
| Disclosure of other notes relevant to understanding of financial statements [text block] |
SUPPLEMENTARY INFORMATION
As required by the Implementing Regulations, the statement of financial position, statement of income and statement of cash flows separately for insurance operations and shareholders operations are as follows:
INTERIM CONDENSED STATEMENT OF FINANCIAL POSITION
| 30 June 2022 (Unaudited) |
| 31 December 2021 (Audited) |
| Insurance operations | Shareholders’ operations | Total |
| Insurance operations | Shareholders’ operations | Total |
| SR’000 | SR’000 | SR’000 |
| SR’000 | SR’000 | SR’000 | ASSETS |
|
|
|
|
|
|
| Cash and cash equivalents | 22,965 | 931 | 23,896 |
| 24,820 | 231,292 | 256,112 | Murabaha deposits | -- | 180,000 | 180,000 |
| -- | -- | -- | Premiums receivable – net | 148,536 | -- | 148,536 |
| 63,940 | -- | 63,940 | Due from reinsurers – net | 15,689 | -- | 15,689 |
| 32,967 | -- | 32,967 | Reinsurers’ share of unearned premiums | 44,133 | -- | 44,133 |
| 21,707 | -- | 21,707 | Reinsurers’ share of outstanding claims | 5,585 | -- | 5,585 |
| 11,596 | -- | 11,596 | Reinsurers’ share of claims incurred but not reported | 12,512 | -- | 12,512 |
| 11,850 | -- | 11,850 | Reinsurers’ excess of loss claims | 2,847 | -- | 2,847 |
| 4,892 | -- | 4,892 | Deferred policy acquisition costs | 13,889 | -- | 13,889 |
| 7,283 | -- | 7,283 | Investments | -- | 44,592 | 44,592 |
| -- | 48,755 | 48,755 | Prepayments and other assets | 37,829 | 671 | 38,500 |
| 41,630 | 262 | 41,892 | Right-of-use assets | 1,010 | -- | 1,010 |
| 1,555 | -- | 1,555 | Property and equipment | 14,313 | -- | 14,313 |
| 13,120 | -- | 13,120 | Intangible assets | 11,095 | -- | 11,095 |
| 9,626 | -- | 9,626 | Goodwill | -- | 36,260 | 36,260 |
| -- | 36,260 | 36,260 | Statutory deposit | -- | 75,000 | 75,000 |
| -- | 75,000 | 75,000 | Accrued income on statutory deposit | -- | 2,741 | 2,741 |
|
| 2,495 | 2,495 | Due from Shareholder’s operations | -- | (39) | (39) |
| -- | (16,307) | (16,307) | TOTAL ASSETS | 330,403 | 340,156 | 670,559 |
| 244,986 | 377,757 | 622,743 |
21.SUPPLEMENTARY INFORMATION (continued)
INTERIM CONDENSED STATEMENT OF FINANCIAL POSITION (continued)
| 30 June 2022 (Unaudited) |
| 31 December 2021 (Audited) |
| Insurance operations | Shareholders’ operations | Total |
| Insurance operations | Shareholder’ operations | Total |
| SR’000 | SR’000 | SR’000 |
| SR’000 | SR’000 | SR’000 | LIABILITIES |
|
|
|
|
|
|
| Due to policyholders | 13,290 |
| 13,290 |
| 12,739 | -- | 12,739 | Accrued expenses and other liabilities | 20,209 | 1,363 | 21,572 |
| 19,592 | 2,539 | 22,131 | Due to reinsurers | 7,396 | -- | 7,396 |
| 1,249 | -- | 1,249 | Due to brokers | 16,729 | -- | 16,729 |
| 8,692 | -- | 8,692 | Unearned premiums | 182,351 | -- | 182,351 |
| 103,835 | -- | 103,835 | Unearned reinsurance commission | 6,398 | -- | 6,398 |
| 4,380 | -- | 4,380 | Outstanding claims | 21,607 | -- | 21,607 |
| 40,950 | -- | 40,950 | Claims incurred but not reported | 31,167 | -- | 31,167 |
| 37,355 | -- | 37,355 | Premium deficiency reserve | 13,069 | -- | 13,069 |
| 12,273 | -- | 12,273 | Other technical reserves | 3,364 | -- | 3,364 |
| 4,672 | -- | 4,672 | Due to / (from) shareholders’ operations | (39) | -- | (39) |
| (16,307) | -- | (16,307) | Employees’ defined benefit obligations | 4,955 | -- | 4,955 |
| 5,157 | -- | 5,157 | Lease liabilities | 732 | -- | 732 |
| 1,224 | -- | 1,224 | Insurance operations’ surplus payable | 8,738 | -- | 8,738 |
| 8,738 | -- | 8,738 | Accrued Zakat | -- | 2,569 | 2,569 |
| -- | 2,287 | 2,287 | Accrued income payable to SAMA | -- | 2,741 | 2,741 |
| -- | 2,495 | 2,495 | TOTAL LIABILITIES | 329,966 | 6,673 | 336,639 |
| 244,549 | 7,321 | 251,870 |
|
|
|
|
|
|
|
| EQUITY |
|
|
|
|
|
|
| Share capital | -- | 500,000 | 500,000 |
| -- | 500,000 | 500,000 | Statutory reserve | -- | 2,165 | 2,165 |
| -- | 2,165 | 2,165 | Accumulated losses | -- | (168,682) | (168,682) |
| -- | (131,729) | (131,729) | Re-measurement reserve of defined benefit obligations | 437 | -- | 437 |
| 437 | -- | 437 | TOTAL EQUITY | 437 | 333,483 | 333,920 |
| 437 | 370,436 | 370,873 |
|
|
|
|
|
|
|
| TOTAL LIABILITIES AND EQUITY | 330,403 | 340,156 | 670,559 |
| 244,986 | 377,757 | 622,743 |
21.SUPPLEMENTARY INFORMATION (continued)
INTERIM CONDENSED STATEMENT OF INCOME
For the three-month period ended | 30 June 2022 (Unaudited) |
| 30 June 2021 (Unaudited) |
| Insurance operations | Shareholder’ operations | Total |
| Insurance operations | Shareholder’ operations | Total |
| SR’000 | SR’000 | SR’000 |
| SR’000 | SR’000 | SR’000 | REVENUES |
|
|
|
|
|
|
| Gross written premiums | 83,569 | -- | 83,569 |
| 67,084 | -- | 67,084 | Less: Reinsurance premiums ceded |
|
|
|
|
|
|
| | (1,573) | -- | (1,573) |
| (459) | -- | (459) | | (15,820) | -- | (15,820) |
| (17,417) | -- | (17,417) |
| (17,393) |
| (17,393) |
| (17,876) |
| (17,876) | Less: Excess of loss expenses |
|
|
|
|
|
|
| | (351) | -- | (351) |
| (64) | -- | (64) | | (4,334) | -- | (4,334) |
| (3,249) | -- | (3,249) |
| (4,685) |
| (4,685) |
| (3,313) |
| (3,313) |
|
|
|
|
|
|
|
| Net written premiums | 61,491 | -- | 61,491 |
| 45,895 | -- | 45,895 | Change in unearned premiums – net | 3,841 | -- | 3,841 |
| 13,874 | -- | 13,874 |
|
|
|
|
|
|
|
| Net premiums earned | 65,332 |
| 65,332 |
| 59,769 | -- | 59,769 | Reinsurance commissions | 4,602 |
| 4,602 |
| 3,079 | -- | 3,079 | Other underwriting income | 22 |
| 22 |
| 17 | -- | 17 |
|
|
|
|
|
|
|
| TOTAL REVENUES | 69,956 | -- | 69,956 |
| 62,865 | -- | 62,865 |
|
|
|
|
|
|
|
| UNDERWRITING COSTS AND EXPENSES |
|
|
|
|
|
|
| Gross claims paid | 53,199 | -- | 53,199 |
| 62,644 | -- | 62,644 | Expenses incurred related to claims | 1,701 | -- | 1,701 |
| 1,260 | -- | 1,260 | Less: Reinsurers' share of claims paid | (7,671) | -- | (7,671) |
| (11,541) | -- | (11,541) |
|
|
|
|
|
|
|
| Net claims and other benefits paid | 47,229 | -- | 47,229 |
| 52,363 | -- | 52,363 | Change in net outstanding claims – net | 5,181 | -- | 5,181 |
| (342) | -- | (342) | Change in claims incurred but not reported – net | (2,742) | -- | (2,742) |
| 2,325 | -- | 2,325 | Other technical reserves | (364) | -- | (364) |
| 254 | -- | 254 |
|
|
|
|
|
|
|
| Net claims and other benefits incurred | 49,304 | -- | 49,304 |
| 54,600 | -- | 54,600 | Provision for premium deficiency reserve | 1,837 | -- | 1,837 |
| 735 | -- | 735 | Policy acquisition costs | 10,201 | -- | 10,201 |
| 11,100 | -- | 11,100 |
|
|
|
|
|
|
|
| TOTAL UNDERWRITING COSTS AND EXPENSES | 61,342 | -- | 61,342 |
| 66,435 | -- | 66,435 |
|
|
|
|
|
|
|
| NET UNDERWRITING INCOME / (LOSS) | 8,614 | -- | 8,614 |
| (3,570) | -- | (3,570) |
21.SUPPLEMENTARY INFORMATION (continued)
INTERIM CONDENSED STATEMENT OF INCOME (continued)
For the three-month period ended | 30 June 2022 (Unaudited) |
| 30 June 2021 (Unaudited) |
| Insurance operations | Shareholder’ operations | Total |
| Insurance operations | Shareholder’ operations | Total |
| SR’000 | SR’000 | SR’000 |
| SR’000 | SR’000 | SR’000 | OTHER OPERATING (EXPENSES) / INCOME |
|
|
|
|
|
|
| Provision for impairment of premium receivables | (513) | -- | (513) |
| 64 | -- | 64 | Provision for impairment of reinsurance receivables | (38) | -- | (38) |
| (41) | -- | (41) | General and administration expenses | (17,824) | (904) | (18,728) |
| (18,118) | (785) | (18,903) | Investment (loss)/ income | 46 | (6,655) | (6,609) |
| 101 | 4,039 | 4,140 | Other income / (expenses) | 741 | -- | 741 |
| (1,403) | -- | (1,403) |
|
|
|
|
|
|
|
| TOTAL OTHER OPERATING EXPENSES- NET | (17,588) | (7,559) | (25,147) |
| (19,397) | 3,254 | (16,143) |
|
|
|
|
|
|
|
| Income before Surplus and Zakat | (8,974) | (7,559) | (16,533) |
| (22,967) | 3,254 | (19,713) |
|
|
|
|
|
|
|
| Surplus transferred to Shareholders (note 1) | 8,974 | (8,974) | -- |
| 22,967 | (22,967) | -- |
|
|
|
|
|
|
|
| NET EXPENSES FOR THE PERIOD AFTER TRANSFER OF SURPLUS TO THE SHAREHOLDERS BEFORE ZAKAT |
-- |
(16,533) |
(16,533) |
|
-- |
(19,713) |
(19,713) |
|
|
|
|
|
|
|
| Zakat charge | -- | (1,231) | (1,231) |
| -- | (54) | (54) |
|
|
|
|
|
|
|
| NET LOSS FOR THE PERIOD | -- | (17,764) | (17,764) |
| -- | (19,767) | (19,767) |
|
|
|
|
|
|
|
| Basic and diluted loss per share (SR per share) |
| (0.36) |
|
|
| (0.99) |
|
21.SUPPLEMENTARY INFORMATION (continued)
INTERIM CONDENSED STATEMENT OF COMPREHENSIVE INCOME
For the three-month periods ended | 30 June 2022 (Unaudited) |
| 30 June 2021 (Unaudited) |
| Insurance operations | Shareholders’ operations | Total |
| Insurance operations | Shareholders’ operations | Total |
| SR’000 | SR’000 | SR’000 |
| SR’000 | SR’000 | SR’000 |
|
|
|
|
|
|
|
| NET EXPENSES FOR THE PERIOD | -- | (17,764) | (17,764) |
| -- | (19,767) | (19,767) |
|
|
|
|
|
|
|
| Other comprehensive income | -- | -- |
|
| -- | -- | -- | TOTAL COMPREHENSIVE LOSS FOR THE PERIOD |
| (17,764) | (17,764) |
| -- | (19,767) | (19,767) | Less: net income attributable to insurance operations |
|
|
|
|
|
| -- | TOTAL COMPREHENSIVE LOSS FOR THE PERIOD ATTRIBUTABLE TO THE SHAREHOLDERS |
|
| (17,764) |
|
|
| (19,767) |
21.SUPPLEMENTARY INFORMATION (continued)
INTERIM CONDENSED STATEMENT OF INCOME
For the six-month period ended | 30 June 2022 (Unaudited) |
| 30 June 2021 (Unaudited) |
| Insurance operations | Shareholder’ operations | Total |
| Insurance operations | Shareholder’ operations | Total |
| SR’000 | SR’000 | SR’000 |
| SR’000 | SR’000 | SR’000 | REVENUES |
|
|
|
|
|
|
| Gross written premiums | 231,485 | -- | 231,485 |
| 197,148 | -- | 197,148 | Less: Reinsurance contracts premiums ceded |
|
|
|
|
|
|
| -Local reinsurance | (4,856) | -- | (4,856) |
| (1,135) | -- | (1,135) | -Foreign reinsurance | (41,716) | -- | (41,716) |
| (39,652) | -- | (39,652) |
| (46,572) |
| (46,572) |
| (40,787) |
| (40,787) | Less: Excess of loss expenses | (8,520) | -- | (8,520) |
| (6,414) | -- | (6,414) |
|
|
|
|
|
|
|
| -Local reinsurance | (683) | -- | (683) |
| (130) | -- | (130) | -Foreign reinsurance | (7,837) | -- | (7,837) |
| (6,284) | -- | (6,284) |
| (8,520) |
| (8,520) |
| (6,414) |
| (6,414) |
|
|
|
|
|
|
|
| Net written premiums | 176,393 | -- | 176,393 |
| 149,947 | -- | 149,947 | Change in unearned premiums – net | (56,091) | -- | (56,091) |
| (40,084) | -- | (40,084) |
|
|
|
|
|
|
|
| Net premiums earned | 120,302 | -- | 120,302 |
| 109,863 | -- | 109,863 | Commission earned on ceded reinsurance | 7,731 | -- | 7,731 |
| 6,582 | -- | 6,582 | Other underwriting income | 53 | -- | 53 |
| 50 | -- | 50 |
|
|
|
|
|
|
|
| TOTAL REVENUES | 128,086 | -- | 128,086 |
| 116,495 | -- | 116,495 |
|
|
|
|
|
|
|
| UNDERWRITING COSTS AND EXPENSES |
|
|
|
|
|
|
| Gross claims paid | 134,291 | -- | 134,291 |
| 116,271 | -- | 116,271 | Expenses incurred related to claims | 3,401 | -- | 3,401 |
| 3,353 | -- | 3,353 | Less: Reinsurers' share of claims paid | (16,062) | -- | (16,062) |
| (20,944) | -- | (20,944) |
|
|
|
|
|
|
|
| Net claims and other benefits paid | 121,630 | -- | 121,630 |
| 98,680 | -- | 98,680 | Change in net outstanding claims - net | (11,288) | -- | (11,288) |
| 3,478 | -- | 3,478 | Change in claims incurred but not reported - net | (6,851) | -- | (6,851) |
| 3,720 |
| 3,720 | Other technical reserves | (1,306) | -- | (1,306) |
| 348 | -- | 348 |
|
|
|
|
|
|
|
| Net claims and other benefits incurred | 102,185 | -- | 102,185 |
| 106,226 | -- | 106,226 | Provision for premium deficiency reserve | 797 | -- | 797 |
| 998 | -- | 998 | Policy acquisition costs | 18,101 | -- | 18,101 |
| 20,902 | -- | 20,902 |
|
|
|
|
|
|
|
| TOTAL UNDERWRITING COSTS AND EXPENSES | 121,083 | -- | 121,083 |
| 128,126 | -- | 128,126 |
|
|
|
|
|
|
|
| NET UNDERWRITING INCOME / (LOSS) | 7,003 | -- | 7,003 |
| (11,631) | -- | (11,631) |
21.SUPPLEMENTARY INFORMATION (continued)
INTERIM CONDENSED STATEMENT OF INCOME (continued)
For the six-month period ended | 30 June 2022 (Unaudited) |
| 30 June 2021 (Unaudited) |
| Insurance operations | Shareholder’ operations | Total |
| Insurance operations | Shareholder’ operations | Total |
| SR’000 | SR’000 | SR’000 |
| SR’000 | SR’000 | SR’000 | OTHER OPERATING (EXPENSES) / INCOME |
|
|
|
|
|
|
| Provision for impairment of premium receivables | (1,347) | -- | (1,347) |
| (635) | -- | (635) | Provision for impairment of reinsurance receivables | 139 | -- | 139 |
| (134) | -- | (134) | General and administration expenses | (36,859) | (2,300) | (39,159) |
| (36,589) | (1,870) | (38,459) | Investment income/ (loss) | 65 | (2,970) | (2,905) |
| 203 | 7,909 | 8,112 | Other income / (expense) | 1,666 | -- | 1,666 |
| (379) | -- | (379) |
|
|
|
|
|
|
|
| TOTAL OTHER OPERATING (EXPENSES) / INCOME – NET | (36,336) | (5,270) | (41,606) |
| (37,534) | 6,039 | (31,495) |
|
|
|
|
|
|
|
| Income before Surplus and Zakat | (29,333) | (5,270) | (34,603) |
| (49,165) | 6,039 | (43,126) |
|
|
|
|
|
|
|
| Surplus transferred to Shareholders (note 1) | 29,333 | (29,333) | -- |
| 49,165 | (49,165) | -- |
|
|
|
|
|
|
|
| NET LOSS FOR THE PERIOD AFTER TRANSFER OF SURPLUS TO THE SHAREHOLDERS BEFORE ZAKAT |
-- |
(34,603) |
(34,603) |
|
-- |
(43,126) |
(43,126) |
|
|
|
|
|
|
|
| Zakat charge | -- | (2,350) | (2,350) |
| -- | (1,001) | (1,001) |
|
|
|
|
|
|
|
| NET LOSS FOR THE PERIOD | -- | (36,953) | (36,953) |
| -- | (44,127) | (44,127) |
|
|
|
|
|
|
|
| LOSS PER SHARE (Expressed in SR per share) |
|
|
|
|
|
|
| Weighted average number of shares (in thousands) |
| 50,000 |
|
|
| 20,000 |
|
|
|
|
|
|
|
|
| Basic and diluted loss per share (SR per share) |
| (0.74) |
|
|
| (2.21) |
|
21.SUPPLEMENTARY INFORMATION (continued)
INTERIM CONDENSED STATEMENT OF COMPREHENSIVE INCOME
For the six-month period ended | 30 June 2022 (Unaudited) |
| 30 June 2021 (Unaudited) |
| Insurance operations | Shareholder’ operations | Total |
| Insurance operations | Shareholder’ operations | Total |
| SR’000 | SR’000 | SR’000 |
| SR’000 | SR’000 | SR’000 |
|
|
|
|
|
|
|
| NET LOSS FOR THE PERIOD | -- | (36,953) | (36,953)) |
| -- | (44,127) | (44,127) |
|
|
|
|
|
|
|
| Other comprehensive income | -- | -- | -- |
| -- | -- | -- | TOTAL COMPREHENSIVE LOSS FOR THE PERIOD | -- | (36,953) | (36,953) |
| -- | (44,127) | (44,127) |
|
|
|
|
|
|
|
| Less: net income attributable to insurance operations |
|
|
|
|
|
| -- |
|
|
| -- |
|
|
|
| TOTAL COMPREHENSIVE LOSS FOR THE PERIOD ATTRIBUTABLE TO THE SHAREHOLDERS |
|
| (36,953) |
|
|
| (44,127) |
21.SUPPLEMENTARY INFORMATION (continued)
INTERIM CONDENSED STATEMENT OF CASH FLOWS
For the six-month period ended | 30 June 2022 (Unaudited) |
| 30 June 2021 (Unaudited) |
| Insurance operations | Shareholders’ operations | Total |
| Insurance operations | Shareholder’ operations | Total |
| SR’000 | SR’000 | SR’000 |
| SR’000 | SR’000 | SR’000 | CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
| Net loss for the period | -- | (34,603) | (34,603) |
| -- | (43,126) | (43,126) |
|
|
|
|
|
|
|
| Adjustments for non-cash items: |
|
|
|
|
|
|
| Depreciation on property and equipment | 1,134 | -- | 1,134 |
| 1,527 | -- | 1,527 | Amortization on right-of-use assets | 544 | -- | 544 |
| 844 | -- | 844 | Amortization on intangible assets | 590 | -- | 590 |
| 545 | -- | 545 | Provision for impairment of premium receivables | 1,347 | -- | 1,347 |
| 635 | -- | 635 | Provision for impairment of reinsurance receivables | (139) | -- | (139) |
| 134 | -- | 134 | Finance cost | 51 | -- | 51 |
| 66 | -- | 66 | Unrealized loss / (gain) on investments held at FVIS | -- | 4,163 | 4,163 |
| -- | (7,505) | (7,505) |
|
|
|
|
|
|
|
|
| 3,527 | (30,440) | (26,913) |
| 3,751 | (50,631) | (46,880) |
|
|
|
|
|
|
|
| Changes in operating assets and liabilities: |
|
|
|
|
|
|
| Premiums receivable – net | (85,943) | -- | (85,943) |
| (32,953) | -- | (32,953) | Due from reinsurers – net | 17,417 | -- | 17,417 |
| (2,980) | -- | (2,980) | Reinsurers’ share of unearned premiums | (22,426) | -- | (22,426) |
| 1,251 | -- | 1,251 | Reinsurer’s share of outstanding claims | 6,011 | -- | 6,011 |
| (3,189) | -- | (3,189) | Reinsurer’s share of claims incurred but not reported | (662) | -- | (662) |
| 655 | -- | 655 | Deferred excess of loss claims | 2,045 | -- | 2,045 |
| 36 | -- | 36 | Deferred policy acquisition costs | (6,606) | -- | (6,606) |
| (1,078) | -- | (1,078) | Prepayments and other assets | 3,801 | (409) | 3,392 |
| (419) | 185 | (234) | Due from shareholders’ operations | 16,266 | (16,266) | -- |
| (17,468) | 17,468 | -- | Due to policyholders | 551 | -- | 551 |
| 73 | -- | 73 | Accrued expenses and other liabilities | 619 | (1,178) | (559) |
| (1,177) | 982 | (195) | Due to reinsurers | 6,147 | -- | 6,147 |
| 4,037 | -- | 4,037 | Due to brokers | 8,037 | -- | 8,037 |
| 1,311 | -- | 1,311 | Unearned premiums | 78,516 | -- | 78,516 |
| 38,831 | -- | 38,831 |
21.SUPPLEMENTARY INFORMATION (continued)
INTERIM CONDENSED STATEMENT OF CASH FLOWS (continued)
For the six-month period ended | 30 June 2022 (Unaudited) |
| 30 June 2021 (Unaudited) |
| Insurance operations | Shareholders’ operations | Total |
| Insurance operations | Shareholder’ operations | Total |
| SR’000 | SR’000 | SR’000 |
| SR’000 | SR’000 | SR’000 | CASH FLOWS FROM OPERATING ACTIVITIES (continued) |
|
|
|
|
|
|
| Changes in operating assets and liabilities (continued) |
|
|
|
|
|
|
| Unearned reinsurance commission | 2,018 | -- | 2,018 |
| (131) | -- | (131) | Outstanding claims | (19,343) | -- | (19,343) |
| 6,629 | -- | 6,629 | Claims incurred but not reported | (6,188) | -- | (6,188) |
| 3,066 | -- | 3,066 | Premium deficiency reserve | 796 | -- | 796 |
| 998 | -- | 998 | Other technical reserves | (1,308) | -- | (1,308) |
| 347 | -- | 347 | Employees defined benefit obligations | (202) | -- | (202) |
| 167 |
| 167 |
|
|
|
|
| ----- |
|
|
| (454) | (17,853) | (18,307) |
| (1,994) | 18,635 | 16,641 | Surplus paid to policy holders | -- | -- | -- |
| -- | -- | -- | Zakat paid | -- | (2,068) | (2,068) |
| -- | (3,335) | (3,335) |
|
|
|
|
|
|
|
| Net cash generated from / (used in) operating activities | 3,073 | (50,361) | (47,288) |
| 1,757 | (35,331) | (33,574) |
|
|
|
|
|
|
|
| CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
| Additions to property and equipment | (2,325) | -- | (2,325) |
| (4,523) | -- | (4,523) | Additions to intangible assets | (2,060) | -- | (2,060) |
| (3,203) | -- | (3,203) | Purchase of Murabaha deposits | -- | (180,000) | (180,000) |
| -- | -- | -- |
|
|
|
|
|
|
|
| Net cash used in investing activities | (4,385) | (180,000) | (184,385) |
| (7,726) | -- | (7,726) |
|
|
|
|
|
|
|
| CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
| Statutory deposit | -- | -- | --- |
| -- | (10,000) | (10,000) | Payment of lease liabilities | (543) | -- | (543) |
| (180) | -- | (180) |
|
|
|
|
|
|
|
| Net cash used in financing activities | (543) | - | (543) |
| (180) | (10,000) | (10,180) |
|
|
|
|
|
|
|
| Net decrease in cash and cash equivalents | (1,855) | (230,361) | (232,216) |
| (6,149) | (45,331) | (51,480) |
|
|
|
|
|
|
|
| Cash and cash equivalents at the beginning of the period | 24,820 | 231,292 | 256,112 |
| 83,775 | 77,619 | 161,394 |
|
|
|
|
|
|
|
| Cash and cash equivalents at the end of the period | 22,965 | 931 | 23,896 |
| 77,626 | 32,288 | 109,914 |
IMPACT OF COVID 19 OUTBREAK AND SUBSEQUENT EVENTS
In response to the spread of the Covid-19 in the Kingdom of Saudi Arabia where the Company operates and its resulting disruptions to the social and economic activities in those markets over the last two years, management continues to proactively assess its impacts on its operations. In particular, the Company is closely monitoring the current surge in cases due to the outbreak of a new variant - Omicron. The preventive measures taken by the Company in April 2020 are still in effect including the creation of ongoing crisis management teams and processes, to ensure the health and safety of its employees, customers and the wider community as well as to ensure the continuity of its operations. Employee health continues to be a key area of focus with programs being implemented to assist with increasing awareness, identification, support and monitoring of employee health. A majority of the employees of the Company have been fully vaccinated for at least two doses of vaccine and the management is working on a plan to encourage booster shots in line with the government initiatives related to Covid-19.
The management of the Company believes that any potential lockdown measures being reintroduced will not materially affect the underlying demand for the Company’s insurance products and forecast.
Based on these factors, management believes that the Covid-19 pandemic has had no material effect on the Company’s reported financial results for the period ended 30 June 2022 including the significant accounting judgements and estimates.
The Company continues to monitor the surge of the new variant closely although at this time management is not aware of any factors that are expected to change the impact of the pandemic on the Company’s operations during 2022 or beyond.
APPROVAL OF THE FINANCIAL STATEMENTS
These interim condensed financial statements were approved and authorized for issue by the Board of Directors on --------, corresponding to ---------. | 21,22,23 |
