| 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] |
1. ORGANISATION AND PRINCIPAL ACTIVITIES
Al Alamiya for Cooperative Insurance Company (The Company) is a Saudi joint stock Company registered on 29 Dhu-al Qu’dah, 1430H (17 November 2009) under commercial registration (CR) number 4030194978. The registered head office of the Company is in Riyadh under CR number of 1010287831 with branches in Jeddah (CR 4030194978) and Khobar (CR 2051042939). The registered address of the Company's head office is as follows:
Al Alamiya for Cooperative Insurance Company
Prince Mohammed bin Abdul Aziz Road,
Home Centre Building, P.O. Box: 6393,
Riyadh 11442, Kingdom of Saudi Arabia
The activities of the Company are to transact cooperative insurance and reinsurance operations and all related activities in accordance with the Law on Supervision of Cooperative Insurance Companies and its implementing regulations in the Kingdom of Saudi Arabia. On 26 Dhu Al Hijjah, 1430H (13 December 2009), the Company received the license from Saudi Arabian Monetary Authority (SAMA) to transact insurance business in the Kingdom of Saudi Arabia.
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| Disclosure of basis of preparation of financial statements [text block] | 2 BASIS OF PREPARATION
a) Statement of compliance
The financial statements for the year ended 31 December 2018 have been prepared in accordance with:
International Financial Reporting Standard (IFRS) as modified by the Saudi Arabian Monetary Authority (SAMA) for the accounting of zakat and income tax’, which requires, adoption of all IFRS as issued by the International Accounting Standards Board (IASB) except for the application of International Accounting Standard (IAS) 12 - “Income Taxes” and IFRIC 21 - “Levies” so far as these relate to zakat and income tax. As per SAMA Circular No.381000074519 dated 11 April 2017 and subsequent amendments through certain clarifications relating to the accounting for Zakat and Income tax (SAMA Circular), the Zakat and Income tax will continue to be accrued on a quarterly basis through the statement of changes in shareholders’ equity under retained earnings with a corresponding liability recognized in the statement of financial position.
The requirements of the Regulations for Companies and Company’s By-laws and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
As required by Saudi Arabian Insurance Regulations, the Company maintains separate accounts for Insurance Operations and Shareholders’ Operations. The physical custody of all assets related to the Insurance Operations and Shareholders’ Operations are held by the Company. Revenues and expenses clearly attributable to either activity are recorded in the respective accounts. The basis of allocation of other revenue and expenses from joint operations is determined by the management and Board of Directors.
The Company is required to distribute 10% of the net surplus from insurance operations to policyholders and the remaining 90% is to be allocated to the shareholders of the Company in accordance with the Insurance Law and Implementation Regulations issued by the Saudi Arabian Monetary Agency Authority (SAMA). Any deficit arising on insurance operations is transferred to the shareholders’ operations in full.
b) Basis of measurement
The financial statements have been prepared under the historical cost basis, except for the measurement at fair value of available for sale investments and End Of Service Benefits (EOSB) at present value.
a) Functional and presentational currency
The financial statements have been presented in Saudi Riyals, which is the functional and presentational currency of the Company.
b) Fiscal year
The Company follows a fiscal year ending December 31.
c) Critical accounting judgments, estimates and assumptions
The preparation of financial statements requires the use of estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at the reporting date and the reported amounts of revenue and expenses during the reporting year. Although these estimates and judgments are based on management’s best knowledge of current events and actions, actual results ultimately may differ from those estimates.
The Company makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The key assumptions concerning the future and other key sources of estimation uncertainty at the statement of financial position date, that have a significant risk of causing a material adjustment to the carrying amounts of the assets and liabilities within the foreseeable future are discussed below.
(i) The ultimate liability arising from claims made under insurance contracts
The estimation of the ultimate liability arising from claims made under insurance contracts is the Company's most critical accounting estimate. There are several sources of uncertainty that need to be considered in estimating the liability that the Company will ultimately pay for such claims. The provision for claims Incurred But Not Reported (IBNR) is an estimation of claims which are expected to be reported subsequent to the end of reporting date, for which the insured event has occurred prior to the end of reporting date. The Company uses the services of a qualified actuary in the valuation of IBNR as well as premium deficiency reserves.
(ii) Impairment on premiums and insurance balances receivable
The Company assesses receivables that are individually significant and receivables included in a group of financial assets with similar credit risk characteristics for impairment. Receivables that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment. This assessment of impairment requires judgment. In making this judgment, the Company evaluates credit risk characteristics that considers past-due status being indicative of the ability to pay all amounts due as per contractual terms.
(iii) Impairment of available for sale financial assets
The Company determines that available-for-sale financial assets are impaired when there has been a significant or prolonged decline in the fair value below its cost. This determination of what is significant or prolonged requires judgment. In making this judgment, the Company evaluates among other factors, the normal volatility in the financial health of the investee, industry and sector performance, changes in technology, and operational and financing cash flow. Impairment may be appropriate when there is evidence of deterioration in the financial health of the investee, industry and sector performance, changes in technology, and financing and operational cash flows
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| Disclosure of new standards and amendments in standards [text block] | New and amendments to existing standards
Disclosure initiative (Amendments to IAS 7)
Amendments to IAS 7 – “Statement of Cash Flows”, applicable for the annual periods beginning on or after 1 January 2018. The amendments require disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flow and non-cash changes. | |
| Disclosure of summary of significant accounting policies [abstract] | | |
| Disclosure of summary of significant accounting policies, general comment [text block] |
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies adopted in the preparation of these financial statements are consistent with those followed in the preparation of the previous financial year, except for the following new and amended IFRS and IFRIC interpretations. In the current year, the Company has applied a number of amendments to IFRS and new interpretations issued by International Accounting Standards Board (IASB) that are mandatorily effective for accounting periods beginning on or after 1 January 2018. The adoption of new standards, amendments and revisions to existing standards, as mentioned below, had no significant financial impact on the financial statements of the Company.
Standards issued but not yet effective
In addition to the above mentioned standards, the following standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company’s financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective. Further, the Company has chosen not to early adopt the amendments and revisions to the International Financial Reporting Standards which have been published and are mandatory for compliance for the Company with effect date in future.
IFRS 16 Leases
The Company will elect to apply the standard to contracts that were previously identified as leases applying IAS 17 and IFRIC 4. The Company will therefore not apply the standard to contracts that were not previously identified as containing a lease applying IAS 17 and IFRIC 4.
The Company will elect to use the exemptions proposed for those lease contracts where the lease term ends within 12 months as of the date of initial application, and lease contracts for which the underlying asset is of low value.
During 2018, the Company has completed an impact assessment of IFRS 16. The impact of IFRS 16 adoption is expected to be as follows:
Due to the adoption of IFRS 16, the Company’s net income is not expected to be significantly affected with a change in commission expense and depreciation, and a change in rent expense. This is due to the change in the accounting for the expenses of leases that were previously classified as operating leases under IAS 17.
IFRS 9 Financial Instruments
In July 2014, the IASB published IFRS 9 Financial Instruments which will replace IAS 39 Financial Instruments: Recognition and Measurement. The standard incorporates new classification and measurements requirements for financial assets, the introduction of an expected credit loss impairment model which will replace the incurred loss model of IAS 39, and new hedge accounting requirements. Under IFRS 9, all financial assets will be measured at either amortised cost or fair value. The basis of classification will depend on the business model and the contractual cash flow characteristics of the financial assets. The standard retains most of IAS 39’s requirements for financial liabilities except for those designated at fair value through profit or loss whereby that part of the fair value changes attributable to own credit is to be recognised in other comprehensive income instead of the income statement.
In September 2016, the IASB issued amendments to IFRS 4 to address issues arising from the different effective dates of IFRS 9 and the new insurance contracts standard (IFRS 17).
The amendments introduce two alternative options of applying IFRS 9 for entities issuing contracts within the scope of IFRS 4: a temporary exemption; and an overlay approach. The temporary exemption enables eligible entities to defer the implementation date of IFRS 9 for annual periods beginning before 1 January 2021 and continue to apply IAS 39 to financial assets and liabilities. An entity may apply the temporary exemption from IFRS 9 if: (i) it has not previously applied any version of IFRS 9, other than only the requirements for the presentation of gains and losses on financial liabilities designated as FVPL; and (ii) its activities are predominantly connected with insurance on its annual reporting date that immediately precedes 1 April 2016.
An entity can apply the temporary exemption from IFRS 9 for annual periods beginning on or after 1 January 2018. An entity may start applying the overlay approach when it applies IFRS 9 for the first time.
During 2018, the Company performed an assessment of the amendments and reached the conclusion that its activities are predominantly connected with insurance. The Company intends to apply the temporary exemption from IFRS 9 and, therefore, continue to apply IAS 39 to its financial assets and liabilities in its reporting period starting on 1 January 2018 and through the year ended 31 December 2018.
- IFRS 17 - “Insurance Contracts”, applicable for the period beginning on or after 1 January 2022, and will supersede IFRS 4 “Insurance Contracts”. Earlier adoption permitted if both IFRS 15 'Revenue from Contracts with Customers' and IFRS 9 'Financial Instruments' have also been applied. The Company expects a material impact on measurement and disclosure of insurance and reinsurance that will affect both the income statement and the balance sheet. The Company has decided not to early adopt this new standard.
The overlay approach allows an entity applying IFRS 9 to reclassify between profit or loss and other comprehensive income an amount that results in the profit or loss at the end of the reporting period for certain designated financial assets being the same as if an entity had applied IAS 39 to these designated financial assets.
The following is a summary of significant accounting policies followed in preparation of these financial statements:
a) Cash and Bank Balances
Cash and bank balances comprise cash on hand and with banks and other short-term highly liquid investments, if any, with original maturities of three months or less from the date of acquisition.
b) Prepayments
Prepayments represent expenses not yet incurred but already paid in cash. Prepayments are initially recorded as assets and measured at the amount of cash paid. Subsequently, these are charged to statement of comprehensive income as they are consumed or expire with the passage of time.
c) Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities are recognised for amounts to be paid in the future for goods and services, whether billed by the supplier or not.
d) Insurance Contracts
Insurance contracts are those contracts where the Company (The Insurer) has accepted significant insurance risk from another party (The Policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (The Insured Event) adversely affects the policyholder. As a general guideline, the Company defines significant insurance risk as the possibility of having to pay benefits on the occurrence of an insured event. Insurance contracts can also transfer financial risk.
Once a contract has been classified as an insurance contract, it remains an insurance contract for the remainder of its lifetime, even if the insurance risk reduces significantly during this period, unless all rights and obligations are extinguished or expire. Investment contracts can, however, be reclassified as insurance contracts after inception if insurance risk becomes significant
e) Available For Sale Investments (AFS)
Available for sale investents include equity and debt securities. Equity investments classified as AFS are those which are neither classified as held for trading nor designated at fair value through income statement. Debt securities in this category are those which are intended to be held for an indefinite period of time and which may be sold in response to needs for liquidity or in response to changes in the market conditions. After initial measurement, AFS investments are subsequently measured at fair value.
Return on debt securities is recognised on an effective yield method. Profit or loss on sale of investments is recognised at the time of sale. Dividend income is recognised when right to receive such dividend is established.
Unrealised gains and losses are recognised directly in equity (through other comprehensive income) captioned under ‘fair value reserve for available for sale investments’. When the investment is disposed of, the cumulative gain or loss previously recognised in equity is recognised in the statement of comprehensive income.
Any significant or prolonged decline in value of investments is adjusted for and reported in the statement of comprehensive income as impairment charges. Fair values of investments are based on quoted prices for marketable securities or estimated fair values.
a) Provisions
A provision for incurred liabilities is recognised when the Company has a present legal or constructive obligation as a result of past events and it is more likely than not that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated.
b) Liability Adequacy Test
As at each year end, an assessment is made of whether provision of unearned premium is adequate. Provision for premiums deficiency reserve is made where the expected claims and related expenses are expected to exceed unearned premiums. At the end of each reporting date, the Company reviews it premiums deficiency reserve and carries out a liability adequacy test to ensure the adequacy of the insurance contracts liabilities using the current best estimates of future contractual cash flows, claims handling and administration expenses. If these estimates show that the carrying amount of insurance liabilities is insufficient, the deficiency is recognized in the statement of income by establishing a provision in the statement of financial position. The Company estimates premium deficiency reserve based on actuarial valuation for each line of business separately.
c) Revenue Recognition
Premiums and commissions are taken into income over the terms of the policies to which they relate, on a pro-rata basis. Unearned premiums and commissions represent the portion of premiums and commissions relating to the un expired period of coverage. The change in the provision for unearned premium and unearned commission is taken to the statement of income in the same order that revenue is recognised over the period of risk.
Retained premiums and commissions which relate to unexpired risks beyond the end of the financial period, are reported as unearned and deferred based on the following methods:
Last three months of the period-end, in respect of marine cargo;
Actual number of days for other lines of business; and
Pre-defined calculation for engineering class of business for risks undertaken that extend beyond a single year. In accordance with this calculation, lower premiums are earned in the first year which gradually increase towards the end of the tenure of the policy.
d) Claims
These include the cost of claims and claims handling expenses paid during the period, together with the movements in provisions for outstanding claims, claims incurred but not reported (IBNR) and claims handling provisions.
Total outstanding claims comprise estimated amounts payable, in respect of claims reported to the Company and those not reported at the statement of financial position date, net of salvage and other recoveries including claims handling expenses.
The Company estimates its claims provisions based on previous experience. Independent loss adjusters normally estimate property claims. In addition, a provision based on management’s judgement and the Company’s prior experience, is maintained for Incurred But Not Reported (IBNR) claims as well as for the cost of settling pending claims at the statement of financial position date. The IBNR amount is based on estimates calculated using widely accepted actuarial techniques such as Chain
Ladder, Bornhuetter Ferguson Method and loss ratio which are reviewed at regular intervals by the Company’s appointed actuary. The techniques generally use projections, based on past experience of the development of claims over time, to form a view on the likely ultimate claims to be experienced. Regard is given to the variations in the business portfolio accepted and the underlying terms and conditions. Thus, the critical assumptions used when estimating provisions are that past experience is a reasonable predictor of likely future claims development and that the rating and business portfolio assumptions are a fair reflection of the likely level of ultimate claims to be incurred for the more recent years.
The outstanding claims are shown on a gross basis and the related share of the reinsurers is shown separately. Reinsurance claims are recognised when the related gross insurance claim is recognised according to the terms of the relevant reinsurance contract. The Company does not discount its liabilities for unpaid claims as substantially all claims are expected to be paid within one year of the reporting date.
a) Receivables
Premiums receivable are non-derivative financial assets with fixed or determinable payments. These are recognized when due and are measured initially at fair value of the consideration received or receivable. Subsequent to initial recognition, receivables are measured at amortized cost using the effective interest method, less provision for impairment. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognized in the statement of income. An allowance for impairment of receivables is established when there is objective evidence that the carrying amount will not be recoverable. Premiums receivable are derecognized when the de recognition criteria for financial assets have been met.
b) Property and Equipment
Property and equipment are stated at cost less accumulated depreciation and any impairment in value. The cost less estimated residual value is depreciated on a straight line basis over the estimated useful life as follows:
| | Furniture, fixtures and office equipment | 3 | Motor vehicles | 3 |
The assets' residual values and useful lives are reviewed at each financial position date and adjusted prospectively if appropriate. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.
Gains or losses arising from disposal of property and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the related property and equipment and are recognised in the statement of income when the related property and equipment is disposed.
c) Reinsurance
The Company cedes insurance risk in the normal course of business for a portion of risk it is insuring. Such reinsurance arrangements provide for greater diversification of business, allows management to control exposure to potential losses arising from large risks, and provide additional capacity for growth. A significant portion of the reinsurance is affected under treaty, facultative and excess of loss reinsurance contracts. An asset or liability is recorded in the financial position representing premiums due to or payments due from reinsurers and the share of losses recoverable from reinsurers. Amounts receivable from reinsurance is estimated in a manner consistent with the claim liability associated with the insured parties. Reinsurance assets or liabilities are derecognised when the contractual rights are extinguished or expire or when the contract is transferred to another party.
d) Deferred Policy Acquisition Costs (DPAC)
DPAC are those direct and indirect costs incurred during the financial period arising from the writing or renewing of insurance contracts that are deferred to the extent that those costs are recoverable out of future premiums. All other policy acquisition costs are recognised as an expense when incurred. Subsequent to initial recognition, these costs are amortised based on the term of expected future premiums. Amortisation is recorded in the statement of income. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period and are treated as a change in accounting estimate.
e) Salvage and Subrogation Reimbursement
Some insurance contracts permit the Company to sell a (usually damaged) asset acquired in settling a claim (i.e. salvage). The Company may also have the right to pursue third parties for payment of some or all costs (i.e. subrogation). Estimates of salvage
recoveries are included as an allowance in the measurement of the outstanding claims liability. The allowance is the amount that can reasonably be recovered from the disposal of property. Subrogation reimbursements are also considered as an allowance in the measurement of the outstanding claims liability. The allowance is the assessment of the amount that can be recovered from action against the liable third party.
a) Zakat and Income Tax
In accordance with the regulations of the General Authority for Zakat and Tax (GAZT), the Company is subject to zakat attributable to the Saudi shareholders and income tax attributable to the foreign shareholders. Provision for zakat and income tax is charged in full to the retained earnings as required by SAMA Circular no. 381000074519 issued in April 2017. Additional amounts payable, if any, at the finalization of final assessments are accounted for when such amounts are determined. Zakat is computed on the Saudi shareholders' share of equity and/ or net income using the basis defined under the regulations of GAZT. Income tax is computed on the foreign shareholders' share of net income for the year. Zakat and income tax are charged to retained earnings as these are liabilities of the shareholders.
The Company withholds taxes on certain transactions with non-resident parties, including dividend payments to foreign shareholders, in the Kingdom of Saudi Arabia as required under Saudi Arabian Income Tax Law. Withholding taxes paid on behalf of non-resident parties, which are not recoverable from such parties, are expensed.
b) Foreign Currencies
Transactions in foreign currencies are initially recorded at the spot exchange rate at the transaction date. Monetary assets and liabilities denominated in foreign currencies are retranslated at the spot exchange rate at the reporting date. All differences arising on non–trading activities are taken to the statement. Non–monetary items that are measured in terms of historical cost in a foreign currency are translated using the spot exchange rates as at the date of recognition. Non–monetary items measured at fair value in a foreign currency are translated using the spot exchange rates at the date when the fair value was determined.
As the Company’s foreign currency transactions are primarily in US dollars, which is pegged against Saudi Riyals, therefore foreign exchange gains and losses are not significant and have not been disclosed separately.
c) Impairment of Non-Financial assets
Assets that have an indefinite useful life – for example, land – are not subject to depreciation and are tested annually for impairment. Assets that are subject to depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
d) Offsetting
Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position only when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously. Income and expense are not offset in the statement of income unless required or permitted by an accounting standard or interpretation, as specifically disclosed in the accounting policies of the Company.
e) Impairment of Financial assets
An assessment is made at each reporting date to determine whether there is objective evidence that a specific financial asset or group of financial assets may be impaired. If such evidence exists, an impairment loss is recognised in the statement of comprehensive income. Impairment is determined as follows:
a) For assets carried at fair value, impairment is the difference between cost and fair value, less any impairment loss previously recognised in the statement of comprehensive income;
b) For assets carried at cost, impairment is the difference between carrying value and the present value of future cash flows discounted at the current market rate of return for a similar financial asset;
c) For assets carried at amortised cost, impairment is the difference between carrying amount and the present value of future cash flows discounted at the original effective interest rate.
Company about the following events:
Significant financial difficulty of the issuer or debtor;
A breach of contract, such as a default or delinquency in payments;
It becoming probable that the issuer or debtor will enter bankruptcy or other financial reorganisation;
The disappearance of an active market for that financial asset because of financial difficulties; or
Observable data indicating that there is a measurable decrease in the estimated future cash flow from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the Company, including:
– adverse changes in the payment status of issuers or debtors in the Company; or
– national or local economic conditions at the country of the issuers that correlate with defaults on the assets.
a) Derecognition of Financial Instruments
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Company’s statement of financial position) when:
The rights to receive cash flows from the asset have expired;
The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
b) Trade Date Accounting
All regular way purchases and sales of financial assets are recognised / derecognised on the trade date (i.e. the date that the Company commits to purchase or sell the assets). Regular way purchases or sales of financial assets are transactions that require settlement of assets within the time frame generally established by regulation or convention in the market place.
c) Expense Recognition
Expenses are recognized in the statement of income when decrease in future economic benefit related to a decrease in an asset or an increase in a liability has arisen that can be measured reliably. Expenses are recognized on the basis of a direct association between the costs incurred and the earning of specific items of income; on the basis of systematic and rational allocation procedures when economic benefits are expected to arise over the accounting period. Expenses are presented using the nature of expense method.
d) Unearned Commission Income
Commission receivable on outwards reinsurance contracts are deferred and amortised over the terms of the insurance contracts to which they relate. Amortisation is recorded in the statement of income.
e) Reinsurance Claims
Reinsurance claims are recognised when the related gross insurance claim is recognised according to the terms of the relevant reinsurance contract.
f) Segmental Reporting
An operating segment is a component of the Company that is engaged in business activities from which it may earn revenues and incur expenses and which is subject to risk and rewards that are different from those of other segments. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as Board of Directors that makes strategic decisions. The Company is organised into business units based on their products and services and has six reportable operating segments as follows:
Property insurance contracts, with the main peril being fire, accidental damage and other allied perils resulting there from.
Motor insurance products which provide coverage against losses and liability related to motor vehicles, excluding transport insurance.
Machinery Break Down (MBD), Machinery All Risk, Electronic Data Processing, Business Interruption in conjunction with MBD.
Medical products which provide health care cover to policyholders.
Marine insurance for loss or damage to marine craft and accidents resulting in the total or partial loss of cargoes.
Group Life insurance which provides life insurance to groups of policyholders.
Others include mainly general accident.
Shareholders’ operations is a non-operating segment. Income earned from investments is its only revenue generating activity. Certain direct operating expenses and other overhead expenses are allocated to this segment on an appropriate basis. The loss or surplus from the insurance operations is allocated to this segment on an appropriate basis.
No inter-segment transactions occurred during the year. If any transactions were to occur, transfer prices between operating segments are set mutually agreed terms. Segment income, expense and results will then include those transfers between operating segments which will then be eliminated at the level of financial statements of the Company.
As the Company carries out its activities entirely in the Kingdom of Saudi Arabia, reporting is provided by business segment only.
a) Statutory Reserve
In accordance with its by-laws, the Company shall allocate 20% of its net income and after setting off the accumulated losses, each year to a statutory reserve until it has built up a reserve equal to the share capital.
b) Reinsurance Premiums
Reinsurance premiums written comprise the total premiums payable for the whole cover provided by contracts entered into the year and are recognised from the date on which the policy incepts. Premiums include any adjustments arising in the accounting period in respect of reinsurance contracts incepting in prior accounting periods. Unearned reinsurance premiums are those proportions of premiums written in a year that relate to periods of risk after the reporting date.
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| Description of accounting policy for segment reporting [text block] | 21. 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 chief operating decision maker in order to allocate resources to the segments and to assess their performance.
Transactions between the operating segments are on normal commercial terms and conditions. The revenue from external parties reported to the Board is measured in a manner consistent with that in the statement of income.
Segment assets and liabilities comprise operating assets and liabilities.
Segment assets do not include (in respect of insurance operations) property and equipment, Term deposits, Investments, cash and cash equivalents, prepaid expenses, other assets, premiums and reinsurance balances receivable, net. Accordingly, these are included in unallocated assets and are managed and reported to the chief operating decision maker on a centralized basis.
Segment liabilities do not include (in respect of insurance operations) employees’ end of service benefits, reinsurance balances payable, accrued and other liabilities, account payables, due to related parties, zakat and income tax, accrued commission, income payable to SAMA and due from insurance operations. Accordingly these are included in unallocated liabilities and are managed and reported to the chief operating decision maker on a centralized basis.
These unallocated assets and liabilities are not reported to chief operating decision maker under related segments and are monitored on a centralized basis. | |
| Disclosure of notes forming part of accounts [abstract] | | |
| Disclosure of property and equipment [text block] | 12. PROPERTY AND EQUIPMENT
| Furniture and fixtures | Office equipment | Motor vehicles | Total 2018 | Total 2017 | SAR’000 | | | | | | Cost: |
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| Balance at 1 January | 3,404 | 6,834 | 315 | 10,553 | 9,969 | Additions during the year | 29 | 1,240 | -- | 1,269 | 654 | Disposals during the year | -- | -- | -- | -- | (70) |
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| Balance at 31 December | 3,433 | 8,074 | 315 | 11,822 | 10,553 |
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| Accumulated depreciation: |
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| Balance at 1 January | (3,300) | (6,252) | (315) | (9,867) | (9,809) | Charge for the year (note 19) | (55) | (359) | -- | (414) | (128) | Disposals during the year | -- | -- | -- | -- | 70 |
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| Balance at 31 December | (3,355) | (6,611) | (315) | (10,281) | (9,867) |
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| Net book value: |
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| At 31 December 2018 | 78 | 1,463 | -- | 1,541 |
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| At 31 December 2017 | 104 | 582 | -- |
| 686 |
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| Disclosure of investments [text block] | 3. INVESTMENTS
Investments are classified as follows:
SAR’000 | |
| December 31, 2017 |
| Domestic | International |
| Domestic | International | Available for sale investments – Insurance operations * |
1,923 | -- |
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1,923 | -- | Available for sale investments – Shareholders’ operations |
62,424 | 28,635 |
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38,896 | 36,459 | Total available for sale investments |
64,347 | 28,635 |
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40,819 | 36,459 |
a) Insurance operations – Investments
* This represents investments in respect of the Company’s shareholding in Najm for Insurance Services which is a claim’s service provider. This investment has been carried at cost in the absence of active markets or other means of reliably measuring its fair value.
b) Shareholders’ operations – Available for sale investments (AFS)
SAR ’000 | | |
| Amortised cost | Market value | Amortised cost | Market value | Bonds – Fixed rate (Quoted) |
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| Abu Dhabi National Energy Company (TAQA) | -- | -- | 3,845 | 3,855 | SABIC Capital II BV | -- | -- | 20,389 | 20,260 | QNB (Qatar National Bank)Finance | 13,595 | 13,301 | 13,665 | 13,367 | Abu Dhabi Commercial Bank | 15,625 | 15,334 | 15,645 | 15,485 |
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| Sukuks – Fixed rate (Quoted) |
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| EIB Sukuk Ltd(Emirates Islamic Bank) | -- | -- | 3,752 | 3,752 | KSA Sukuk Ltd | 63,507 | 62,424 | 18,919 | 18,636 |
| 92,727 | 91,059 | 76,215 | 75,355 |
Movement in the investment balance for shareholders’ operations is as follows:
| Shareholders’ operations |
SAR’000 | December 31, 2018
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| December 31, 2017
| Opening balance | 75,355 |
| 75,877 | Purchases | 44,564 |
| 18,945 | Maturities | (27,750) |
| (18,750) | Amortization of investments | (301) |
| (545) | Changes in fair value of investments | (809) |
| (172) | Closing balance | 91,059 |
| 75,355 |
The geographical split of investments held as available for sale comprise of sukuks/ bonds issued by Government of Kingdom of Saudi Arabia and GCC (Gulf Cooperation Council) based companies through international stock exchanges.
These investments include Bonds and Sukuks amounting to nil which are maturing in the next twelve months.
The cumulative unrealized loss in fair value of available for sale investments amounts to SR 1.67 million (31 December 2017: loss of SR 0.86 million) is presented with in the shareholders’ equity in the statement of financial position.
| |
| Disclosure of investments at fair value through statement of income [text block] |
6. 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 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 the financial information.
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.
a. Carrying amounts and fair value (1)
The following table shows the carrying amount and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy for financial instruments measured at fair value. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation to fair value.
|
| |
SAR’000s December 31, 2018 | | | | | | Shareholders’ operations |
|
|
|
|
| Available for sale investments measured at fair value |
|
|
|
|
| Bonds and Sukuks | 91,059 | 91,059 | -- | -- | 91,059 |
|
|
|
|
|
| Insurance Operations |
|
|
|
|
| Najm | 1,923 | -- | -- | 1,923 | 1,923 |
| 92,982 | 91,059 | -- | 1,923 | 92,982 |
|
|
|
|
|
|
|
| | SAR’000s December 31 , 2017 | | | | | | Shareholders’ operations |
|
|
|
|
| Available for sale investments measured at fair value |
|
|
|
|
| Bonds and Sukuks | 75,355 | 56,118 | 19,237 | -- | 75,355 |
|
|
|
|
|
| Insurance Operations |
|
|
|
|
| Najm | 1,923 | -- | -- | 1,923 | 1,923 |
| 77,278 | 56,118 | 19,237 | 1,923 | 77,278 |
The unlisted security of SR 1.92 million (2017: SR 1.92 million) held as part of Company’s insurance operations, was stated at cost in the absence of active markets or other means of reliably measuring their fair value.
During the year ended 31 December 2018, there were no transfers into or out of level 3 fair value measurements. As at 31 March 2018, available-for-sale investments with a carrying amount of SR 19.2 million were transferred from Level 2 to Level 1 because these investments are now being actively traded in the market. To determine the fair value of such investments, management used a valuation technique in which all significant inputs were based on observable market data. There were no transfers from Level 1 to Level 2 during the year ended 31 December 2018.
| |
| Disclosure of premiums/ contributions and insurance/ reinsurance or takaful/ retakaful balance receivables [text block] | 7. PREMIUMS AND REINSURERS’ RECEIVABLE (GROSS)
Receivables comprise amounts due from the following:
| Insurance operations | SAR’000 | December 31, 2018 |
| December 31, 2017 |
|
|
|
| Policyholders | 46,443 |
| 41,236 | Brokers and agents | 28,424 |
| 28,713 | Related parties (note 20) | 8,496 |
| 5,960 | Receivables from reinsurers | 4,362 |
| 19,968 |
| 87,725 |
| 95,877 | Provision for doubtful receivables | (16,857) |
| (14,693) | Premiums and reinsurers’ receivable – net | 70,868 |
| 81,184 |
Allowance for impairment of receivables include SR 1.6 million (2017: SR 1.2 million) against receivables from related parties. Movement in the allowance for impairment of receivables is as follows:
| 2018 | 2017 | SAR ’000 | SR | SR |
|
|
| Balance at 1 January | 14,693 | 12,971 | Debts written off against the provision | 391 | -- | Charge of provision for the year | 1,773 | 1,722 | Balance at 31 December | 16,857 | 14,693 |
SAR ’000 |
| Neither past due nor impaired | Past due but not impaired | Past due and impaired |
| Total | Less than 30 days | 31 - 60 days | 61 - 90 days |
90 - 180 days |
181 - 360 days |
More than 360 days |
|
|
|
|
|
|
|
| Premium and reinsurance receivables |
|
|
|
|
|
|
| - Policyholders | 46,443 | 22,103 | (53) | 8,495 | 5,230 | 6,398 | 4,270 | - Brokers and agents | 28,424 | 1,604 | 2,886 | 5,425 | 4,409 | 7,265 | 6,835 | - Due from related parties | 8,496 | 2,259 | 3,192 | 108 | 379 | 751 | 1,807 | - Receivable from reinsurers | 4,362 | 224 | -- | 12 | 1,469 | 87 | 2,570 | 2018 | 87,725 | 26,190 | 6,025 | 14,040 | 11,487 | 14,501 | 15,482 |
|
|
|
|
|
|
|
| Premium and reinsurance receivables |
|
|
|
|
|
|
| - Policyholders | 41,236 | 1,847 | 733 | 24,446 | 5,635 | 5,658 | 2,917 | - Brokers and agents | 28,713 | 7,638 | 5,972 | 973 | 3,559 | 4.343 | 6,228 | - Due from related parties | 5,960 | 1,774 | 563 | 259 | 1,991 | 246 | 1,127 | - Receivable from reinsurers | 19,968 | 21,397 | -- | -- | (5,961) | 1,002 | 3,530 | 2017 | 95,877 | 32,656 | 7,268 | 25,678 | 5,224 | 11,249 | 13,802 |
The Company classifies balances as “past due and impaired” on case by case basis and an impairment adjustment is recorded in the statement of income. Unimpaired premiums receivable are expected, on the basis of past experience, to be fully recoverable. It is the normal practice of the Company to not obtain collateral over premiums receivable. These balances are therefore unsecured. The credit quality of these financial assets that are neither past due nor impaired can be assessed by reference to respective policyholders’ credit history, where there are minimal account defaults and vast majority of the receivables have been fully recovered in the past.
The Company does not have a formal internal credit ratings assessment process. Amounts which are neither past due nor impaired, in respect of premium receivable balances, are from individuals and unrated corporates.
Premiums and insurance balances receivables comprise a large number of customers mainly within the Kingdom of Saudi Arabia as well as reinsurance companies outside Kingdom of Saudi Arabia. The Company’s terms of business require amounts to be paid within 30 to 90 days of the date of transaction. Arrangements with reinsurers normally require settlement if the balance exceeds a certain agreed amount. As at 31 December 2018 no individual or Company accounts for more than 23% of the premiums receivable (31 December 2017: 27%). In addition, the five largest customers accounts for 57% of the premiums receivable as at 31 December 2018 (31 December 2017: 43%).
| |
| Disclosure of cash and cash equivalents [text block] | 3. CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise the following:
SAR’000 | December 31, 2018 |
| December 31, 2017 | Bank balances and cash – Insurance operations | 12,175 |
| 14,110 |
Bank balances and cash – Shareholders’ operations | 1,374 |
| 1,641 | Short term deposits – Shareholders’ operations | 41,427 |
| -- |
|
|
|
| Cash and cash equivalents in statement of cashflows | 54,976 |
| 15,751 |
Deposits against letters of guarantee – Insurance operations | 700 |
| 900 |
The Company holds an amount of SAR 700 thousand (31 December 2017: SAR 900 thousand) in the statement of financial position, in respect of cash and cash equivalents against letters of guarantee in favor of the Company’s service providers. | |
| Disclosure of statutory deposit [text block] | 11. STATUTORY DEPOSIT
In compliance with Insurance Implementing Regulations of SAMA, the Company deposited 10% of its paid up capital, amounting to SR 40 million (31 December 2017: SR 40 million) in a bank designated by SAMA. The received return on investment of statutory deposit as at 31 December 2018 amounts to SR 3.1m (31 December 2017: SR 2.2m) and has been disclosed in assets as “Accrued income on statutory deposit” and the corresponding amount is shown in the liabilities as “Accrued commission income payable to SAMA” as this deposit cannot be withdrawn without SAMA’s consent. | |
| Disclosure of employees' end of service benefits [text block] | 22. END OF SERVICE BENEFITS
The movement in provision for end-of-service benefits for the year ended 31 December 2018 as follows:
SAR’000 | |
| |
|
|
|
| Balance as 1 January | 10,921 |
| 9,803 | Current service cost | 2,279 |
| 1,881 | Interest cost | 214 |
| 170 |
| 2,493 |
| 2,051 | Amount recognized in profit or loss |
|
|
| Re-measurement (gain)/loss recognized in other comprehensive income | (1,218) |
| 1,675 | Benefits paid during the year | (546) |
| (2,608) | Balance as 31 December | 11,650 |
| 10,921 |
a) Re-measurement loss recognized in other comprehensive income for the year ended 31 December 2018 as follows:
SAR’000 | |
| |
|
|
|
| Effect of experience adjustments | (1,218) |
| 1,675 | Re-measurement loss recognized in other comprehensive income | (1,218) |
| 1,675 |
b) Net defined benefit as at year-end as follows:
SAR’000 | |
| |
|
|
|
| Present value of defined benefit obligation | 11,650 |
| 10,921 |
c) Principal actuarial assumptions
The following were the principal actuarial assumptions:
Key actuarial assumptions | |
| |
|
|
|
| Discount rate used | 3% |
| 2% | Future growth in salary | 3.5% |
| 3% | Retirement Age | 60 year |
| 60 year |
Discount rate used
This is the rate used to obtain the actuarial present value of the projected benefits. As per International Accounting Standard 19 “Employee Benefits”, the rate used to discount post-employment benefit obligations shall be determined by reference to market yields at the end of the reporting period on high quality corporate bonds. The discount rate is derived with reference to the rates available in the market for the duration allowed as per the Company’s investment policy. The Company currently considers bonds with a minimum credit rating of A as per Standard & Poor’s or the equivalent from Moody’s.
c) Principal actuarial assumptions (continued)
Salary increases
With regards to the past trend, it is assumed that the salaries would increase at a rate of 3% per annum compound in the long range. The valuation is sensitive to the gap between the interest and salary increase assumptions. Salary increments are assumed to be given on 1st of April every year.
Turnover
We assumed age-dependent withdrawal rates, with high rates for younger employees. It was assumed that there would be zero withdrawals after age 55 years.
Sensitivity analysis
Reasonably possible changes as to one of the relevant actuarial assumptions, holding other assumptions constant, the amount of defined benefit obligations would have been:
SAR’000 | 2018 SR | |
| Increase |
| Decrease | |
|
|
|
| | Discount rate (0.5% movement) | 11,050 |
| 12,308 | Future salary growth (0. 5% movement) | 12,073 |
| 11,256 |
SAR’000 | 2017 SR | |
| Increase |
| Decrease | |
|
|
|
| | Discount rate (0.5% movement) | 9,924 |
| 11,722 | Future salary growth (0. 5% movement) | 11,499 |
| 10,725 |
d) Risks associated with defined benefit plans
Longevity risks
The risk arises when the actual lifetime of retirees is longer than expectation. This risk is measured at the plan level over the entire retiree population.
Salary increase risk
The most common type of retirement benefit is one where the benefit is linked with final salary. The risk arises when the actual salary increases are higher than expectation and impacts the liability accordingly
| |
| Disclosure of accrued expenses and other liabilities [text block] | 13. ACCRUED EXPENSES AND OTHER LIABILITIES
| Insurance operations 2018 | Shareholders’ operations 2018 | Insurance operations 2017 | Shareholders’ operations 2017 | SAR’000 | | | | |
|
|
|
|
| Accrued salaries and benefits | 4,851 | -- | 5,555 | -- | Accrued supervision fees | 591 | -- | 409 | -- | Board of Directors’ remuneration | -- | 569 | -- | 569 | Accrued withholding tax | 8,095 | -- | 7,169 | -- | Provision for levy on insurance polices | 2,955 | -- | 3,150 | -- | Accrued IT related services | 2,335 | -- | 1,784 | -- | Accrued legal and professional fees | 1,956 | -- | 2,785 | -- | Outsourced service charges payable | 8,674 | -- | 7,699 | -- | Office relocation | -- | -- | -- | -- | Training and recruitments | -- | -- | -- | -- | Hotels and travelling | 100 | -- | 100 | -- | Value Added Tax payable | 1,096 | -- | -- | -- | Others | 830 | 3,732 | 1,022 | 3,027 |
|
|
|
|
|
| 31,483 | 4,301 | 29,673 | 3,596 |
|
|
|
|
|
| |
| Disclosure of zakat [text block] | 15. ZAKAT AND INCOME TAX
Status of assessments
The Company’s zakat and tax calculations and corresponding accruals and payment of zakat and tax are based on the ownership percentages which are 74.97% for zakat and 25.03% for the tax.
The Company has submitted its zakat and tax returns up to the years ended 31 December 2017 and obtained the required certificates and acknowledgements. General Authority of Zakat and Tax (GAZT) has raised final assessments for the period / years ended 2009 to 2013 with additional Zakat and withholding tax (WHT) liabilities amounting to SR 11.2 million and SR 8.9 million respectively. The Company has submitted an appeal against the GAZT’s assessments and GAZT’s review is awaited.
The zakat and tax charge for the year ended are as follows:
SAR’000 | | | | Charge for zakat for the year | 8,334 |
| 6,697 | Charge for tax for the year | 1,490 |
| 1,707 |
| 9,824 |
| 8,404 |
|
|
|
| Zakat and tax provision at the end of year | 38,153 |
| 31,055 |
a) Zakat charge for the year
The Company’s zakat and tax calculations and corresponding accruals and payments of zakat and tax are based on the ownership percentages which are 74.97% for zakat and 25.03% for the tax. The Company has submitted its zakat and tax returns up to the year ended 31 December 2017 and obtained the required certificates and acknowledgements.
The zakat provision is based on the following:
SAR’000 | | |
|
|
| Share capital | 400,000 | 400,000 | Reserves and provisions | 8,216 | (45,562) | Book value of long term assets | (3,187) | (42,514) | Adjusted net profit for the year | 39,672 | 45,443 |
|
|
| Zakat base | 444,701 | 357,367 |
|
|
| Saudi shareholders’ share of zakat base | 333,370 | 267,900 |
|
|
| Zakat @ 2.5% | 8,334 | 6,698 |
|
|
|
The differences between the financial and the zakatable results are mainly due to provisions which are not included in the calculation of zakatable income.
a) Income tax charge for the year
The movement in the provision for income tax for the year is as follows:
SAR’000 | | |
|
|
| Balance at 1 January | 2,571 | 2,534 | Provided during the year | 1,490 | 1,706 | Payments during the year | (1,819) | (1,669) |
|
|
| Balance at 31 December | 2,242 | 2,571 |
|
|
|
b) Movement in the provision for zakat during the year
The movement in the provision for zakat for the year is as follows:
SAR’000 | | |
|
|
| Balance at 1 January | 28,484 | 21,851 | Provided during the year | 8,334 | 6,698 | Payments made during the year | (907) | (65) |
|
|
| Balance at 31 December | 35,911 | 28,484 |
|
|
|
c) Movement in the provision for zakat and income tax during the year
The movement in the provision for zakat and income tax for the year is as follows:
SAR’000 | | |
|
|
| Balance at 1 January | 31,055 | 24,385 | Provided during the year | 9,824 | 8,404 | Paid during the year | (2,726) | (1,734) |
|
|
| Balance at 31 December | 38,153 | 31,055 |
|
|
|
| |
| Disclosure of classes of share capital [text block] | 16. SHARE CAPITAL
The authorized and paid up share capital of the Company is SAR 400 million divided into 40 million shares of SAR 10 each
(31 December 2017: SAR 400 million divided into 40 million shares of SAR 10 each).
Shareholding structure of the Company is as below. The shareholders of the Company are subject to zakat and income tax.
| December 31, 2018 |
| No. of Shares | Authorized, issued and paid up capital |
| ‘000 | SAR’000 | Royal & Sun Alliance | 20,028 | 200,280 | Riyadh Bank | 7,968 | 79,680 | Others | 12,004 | 120,040 |
|
40,000 |
400,000 |
| December 31, 2017 |
| No. of Shares | Authorized, issued and paid up capital |
| ‘000 | SAR’000 | Royal & Sun Alliance | 20,028 | 200,280 | Riyadh Bank | 7,968 | 79,680 | Others | 12,004 | 120,040 |
|
40,000 |
400,000 |
| |
| Disclosure of statutory reserve [text block] | 17. STATUTORY RESERVE
In accordance with Regulations for Companies in Saudi Arabia and the by-laws of the Company, the Company is required to establish a statutory reserve by appropriating 20% of net income until the reserve equals 100% of the share capital. This reserve is not available for dividend distribution. No appropriation has been made because the Company has accumulated losses at the end of the year | |
| Disclosure of general and administrative expense [text block] | 18. GENERAL AND ADMINISTRATIVE EXPENSES
| | | SAR’000 | Insurance operations | Shareholders' operations | Insurance Operations | Shareholders' operations | | | | |
|
|
|
|
| Salaries and benefits | 38,601 | 325 | 36,018 | 325 | End of service benefits | 2,492 | -- | 2,051 | -- | Remuneration of the Board of Directors (note 21) | -- | 630 | -- | 630 | Technical service charges (note 21) | 6,479 | -- | 5,139 | -- | Rent | 1,160 | -- | 1,691 | -- | Depreciation | 414 | -- | 128 | -- | Legal and professional fees | 2,195 | -- | 2,155 | -- | Business travel and transport | 604 | -- | 868 | -- | IT related services | 4,206 | -- | 3,350 | -- | Provision for levy in insurance policies | -- | -- | 3,150 | -- | Utilities | 488 | -- | 510 | -- | Stationery | 297 | -- | 319 | -- | Others | 846 | 851 | 1 | 851 |
| | | | |
| 57,782 | 1,806 | 55,380 | 1,806 |
| | | | |
| |
| Disclosure of technical reserve for insurance/takaful/reinsurance/retakaful operations [text block] | 9. TECHNICAL RESERVES
9.1 NET OUTSTANDING CLAIMS AND RESERVES
Net outstanding claims and reserves comprise of the following:
| Insurance operations |
SAR’000 | December 31, 2018 |
| December 31, 2017 |
|
|
|
| Outstanding claims | 107,034 |
| 103,920 | Less: Realizable value of salvage and subrogation | (21,314) |
| (17,704) | Outstanding claims reserve | 85,720 |
| 86,216 | Claims incurred but not reported | 46,357 |
| 77,759 | Other technical reserves | 693 |
| 1,733 |
| 132,770 |
| 165,708 | Less: |
|
|
| - Reinsurers’ share of outstanding claims | (44,355) |
| (41,545) | - Reinsurers’ share of claims Incurred but not reported | (8,230) |
| (25,338) |
| (52,585) |
| (66,883) | Net outstanding claims and reserves | 80,185 |
| 98,825 |
9.2 MOVEMENT IN UNEARNED PREMIUMS
Movement in unearned premiums comprise of the following
| Year ended December 31, 2018 |
SAR’000 | Gross | Reinsurance | Net |
|
|
|
| Balance as at the beginning of the year | 100,103 | (49,140) | 50,963 | Premium written during the year | 293,533 | *(136,111) | 157,422 | Premium earned during the year | (281,163) | 128,714 | (152,449) | Balance as at the end of the year | 112,473 | (56,537) | 55,936 |
* This amount includes SR 125.3 million for reinsurance premium ceded abroad, SR 3.2 million for reinsurance premium ceded locally and SR 7.7 million for excess of loss expenses.
9.2 MOVEMENT IN UNEARNED PREMIUMS (Continued)
| Year ended December 31, 2017 |
SAR’000 | Gross | Reinsurance | Net | Balance as at the beginning of the year | 120,085 | (65,178) | 54,907 | Premium written during the year | 263,369 | *(117,000) | 146,369 | Premium earned during the year | (283,351) | 133,038 | (150,313) | Balance as at the end of the year | 100,103 | (49,140) | 50,963 |
* This amount includes SR 108.1 million for reinsurance premium ceded abroad, SR 0.5 million for reinsurance premium ceded locally and SR 8.8 million for excess of loss expenses.
9.3 DEFERRED POLICY ACQUISITION COSTS
| 2018 | 2017 | SAR’000 | | |
|
|
| Balance at 1 January | 3,792 | 4,145 | Cost incurred during the year | 18,832 | 25,068 | Amortised during the year | (17,993) | (25,421) |
|
|
| Balance at 31 December | 4,631 | 3,792 |
|
|
|
9.4 UNEARNED REINSURANCE COMMISSION
| 2018 | 2017 | SAR’000 | | |
|
|
| Balance at 1 January | 4,465 | 6,907 | Commission received during the year | 10,419 | 19,848 | Commission earned during the year | (11,518) | (22,290) |
|
|
| Balance at 31 December | 3,366 | 4,465 |
|
|
|
| |
| Disclosure of related party transactions [text block] | 20. 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 Board of Directors. The following are the details of the major related party transactions during the year and the related balances:
Entities controlled, jointly controlled | | Transactions for the year ended | or significantly influenced by related parties
| | 2018 |
| 2017 |
| SAR’ 000 | | Gross premiums written |
| 91,807 |
| 60,536 | Gross claims paid |
| 43,825 |
| 27,310 | Reinsurance premium ceded |
| 20,646 |
| 24,741 | Reinsurance share of gross claim paid |
| 7,476 |
| 11,843 | Reinsurance commission income |
| 6,230 |
| 13,389 | Profit commission incurred-Group Life |
| -- |
| 6,135 | Technical service charges |
| 6,479 |
| 5,139 | Brand fees |
| 30 |
| 30 | Operational expenses paid on behalf of affiliates and reinsurance placements |
| 754 |
| 324 | Operational expenses paid by affiliates on behalf of Company |
| (1,444) |
| (859) | Key management personnel and Board members |
|
|
|
| Gross written premiums |
| 30 |
| 188 | Remuneration and meeting fee |
| 630 |
| 630 | |
| Balance receivable / (payable) as at | Entities controlled, jointly controlled |
| or significantly influenced by related parties |
| 2018 |
| 2017 |
|
|
|
|
| |
| SAR’000 | Premium receivable |
| 8,496 |
| 5,960 | Reinsurance balance payable |
| (9,338) |
| (4,983) | Accrued expenses and other liabilities |
| (9,559) |
| (7,729) | Reinsurance share of gross outstanding claims |
| 8,487 |
| 11,264 | Gross outstanding claim |
| (40,357) |
| (25,586) | Due from related parties |
| 630 |
| 31 | Due to related parties |
| (1,045) |
| (1,064) |
The compensation of key management personnel during the year is as follows:
| December 30, 2018 |
| December 31, 2017 |
| SAR’000 | Salaries and other allowances | 7,256 |
| 7,305 | End of service indemnities | 424 |
| 321 |
| 7,680 |
| 7,626 |
| |
| Disclosure of entity's operating segments [text block] | | As at December 31, 2018 | |
|
|
|
| |
|
|
|
| Insurance operations |
|
|
|
| Operating segments | Property | Motor | Engineering | Medical | Marine | Group life | Others |
| Total - Insurance operations | | Shareholders’ operations | | Total | |
|
|
|
| SAR’000 | | Assets |
|
|
|
| | Reinsurers’ share of unearned premiums |
28,138 |
-- |
7,674 |
15,994 |
1,636 |
48 |
3,047 |
|
56,537 |
| -- |
|
56,537 | | Reinsurers’ share of outstanding claims |
14,859 |
2,083 |
4,918 |
2 |
4,752 |
15,517 |
2,224 |
|
44,355 |
|
-- |
|
44,355 | | Reinsurers’ share of claims Incurred but not reported |
1,562 |
-- |
1,098 |
625 |
193 |
3,904 |
848 |
|
8,230 |
|
-- |
|
8,230 | | Deferred policy acquisition costs | 762 | 3,037 | 497 | 4 | 110 | 58 | 163 |
| 4,631 |
| -- |
| 4,631 | | Unallocated assets | -- | -- | -- | -- | -- | -- | -- |
| 302,359 |
| 433,421 |
| 735,780 | | Total assets | 45,321 | 5,120 | 14,187 | 16,625 | 6,691 | 19,527 | 6,282 |
| 416,112 |
| 433,421 |
| 849,533 | |
|
|
|
|
|
|
|
|
|
|
|
|
| | Liabilities and shareholders’ equity |
|
|
|
|
|
|
|
|
|
|
|
| | Outstanding claim reserve | 17,149 | 30,258 | 6,372 | 52 | 7,408 | 21,223 | 3,258 |
| 85,720 |
| -- |
| 85,720 | | Claims incurred but not reported | 1,805 | 35,938 | 1,132 | 905 | 188 | 5,204 | 1,185 |
| 46,357 |
| -- |
| 46,357 | | Other technical reserves | -- | -- | -- | 693 | -- | -- | -- |
| 693 |
| -- |
| 693 | | Unearned premiums | 37,368 | 37,970 | 8,431 | 19,164 | 3,135 | 444 | 5,961 |
| 112,473 |
| -- |
| 112,473 | | Unearned reinsurance commission | 1,239 | -- | 1,590 | -- | 360 | 1 | 176 |
| 3,366 |
| -- |
| 3,366 | | Unallocated liabilities | -- | -- | -- | -- | -- | -- | -- |
| 167,503 |
| 433,421 |
| 600,924 | | Total Liabilities, Insurance operations’ surplus and shareholders’ equity |
57,561 |
104,166 |
17,525 |
20,814 |
11,091 |
26,872 |
10,580 |
|
416,112 |
|
433,421 |
|
849,533 | |
| As at December 31, 2017 | |
|
|
|
| |
|
|
|
| Insurance operations |
|
|
|
| Operating segments | Property | Motor |
Engineering |
Medical |
Marine | Group life | Others |
| Total - Insurance operations | | Shareholders’ operations | | Total | |
|
|
|
| SAR’000 | | Assets |
|
|
|
| | Reinsurers’ share of unearned premiums | 32,908 | -- | 7,589 | 1,189 | 4,250 | 92 | 3,112 |
| 49,140 |
| -- |
| 49,140 | | Reinsurers’ share of outstanding claims | 17,579 | -- | 6,525 | -- | 6,291 | 7,618 | 3,532 |
| 41,545 |
| -- |
| 41,545 | | Reinsurers’ share of claims Incurred but not reported | 8,682 | -- | 4,703 | 679 | 2,689 | 7,269 | 1,316 |
| 25,338 |
| -- |
| 25,338 | | Deferred policy acquisition costs | 697 | 1,765 | 781 | 196 | 208 | 31 | 114 |
| 3,792 |
| -- |
| 3,792 | | Unallocated assets | -- | -- | -- | -- | -- | -- | -- |
| 283,322 |
| 404,133 |
| 687,455 | | Total assets | 59,866 | 1,765 | 19,598 | 2,064 | 13,438 | 15,010 | 8,074 |
| 403,137 |
| 404,133 |
| 807,270 | |
|
|
|
|
|
|
|
|
|
|
|
|
| | Liabilities and shareholders’ equity | |
|
|
|
| |
|
| | | |
| | Outstanding claims | 23,117 | 31,950 | 8,049 | 52 | 8,206 | 10,691 | 4,151 |
| 86,216 |
| -- |
| 86,216 | | Claims incurred but not reported | 14,681 | 35,722 | 5,724 | 1,128 | 5,759 | 10,458 | 4,287 |
| 77,759 |
| -- |
| 77,759 | | Other technical reserves | -- | 814 | 256 | 396 | 125 | 19 | 123 |
| 1,733 |
| -- |
| 1,733 | | Unearned premiums | 52,061 | 23,806 | 8,590 | 2,429 | 6,912 | 178 | 6,127 |
| 100,103 |
| -- |
| 100,103 | | Unearned reinsurance commission | 1,861 | -- | 1,747 | -- | 585 | -- | 272 |
| 4,465 |
| -- |
| 4,465 | | Unallocated liabilities | -- | -- | -- | -- | -- | -- | -- |
| 132,861 |
| 404,133 |
| 536,994 | | Total Liabilities, Insurance operations’ surplus and shareholders’ equity
| For the year ended December 31, 2018 | Operating segments | Property |
| Motor |
| Engineering |
| Medical |
| Marine | | Group Life |
| Others | | Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| REVENUES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross premiums written | 81,880 |
| 110,373 |
| 20,473 |
| 20,615 |
| 19,073 |
| 27,195 |
| 13,924 |
| 293,533 | Reinsurance premiums ceded | (63,367) |
| -- |
| (16,574) |
| (16,860) |
| (9,896) |
| (15,822) |
| (5,951) |
| (128,470) | Excess of loss premium | (2,128) |
| (1,793) |
| (603) |
| (133) |
| (1,900) |
| (800) |
| (284) |
| (7,641) | Net premiums written | 16,385 |
| 108,580 |
| 3,296 |
| 3,622 |
| 7,277 |
| 10,573 |
| 7,689 |
| 157,422 | Changes in unearned premiums, net | 9,923 |
| (14,164) |
| 244 |
| (1,930) |
| 1,163 |
| (310) |
| 101 |
| (4,973) | Net premiums earned | 26,308 |
| 94,416 |
| 3,540 |
| 1,692 |
| 8,440 |
| 10,263 |
| 7,790 |
| 152,449 | Reinsurance commissions | 6,250 |
| -- |
| 3,477 |
| -- |
| 2,046 |
| (684) |
| 429 |
| 11,518 | TOTAL REVENUES | 32,558 |
| 94,416 |
| 7,017 |
| 1,692 |
| 10,486 |
| 9,579 |
| 8,219 |
| 163,967 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| UNDERWRITING COSTS AND EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross claims paid | (9,773) |
| (68,542) |
| (5,047) |
| (3,324) |
| (2,636) |
| (12,431) |
| (11,076) |
| (112,829) | Reinsurers’ share of claims paid | 6,415 |
| -- |
| 4,632 |
| 2,192 |
| 1,205 |
| 9,259 |
| 10,501 |
| 34,204 | Net claims paid | (3,358) |
| (68,542) |
| (415) |
| (1,132) |
| (1,431) |
| (3,172) |
| (575) |
| (78,625) | Changes in outstanding claims, IBNR & technical reserves | 9,004 |
| 4,373 |
| 1,313 |
| (126) |
| 2,459 |
| (725) |
| 2,342 |
| 18,640 | Net claims incurred | 5,646 |
| (64,169) |
| 898 |
| (1,258) |
| 1,028 |
| (3,897) |
| 1,767 |
| (59,985) | Policy acquisition costs | (3,442) |
| (6,832) |
| (1,972) |
| (208) |
| (1,409) |
| (3,132) |
| (998) |
| (17,993) | Other underwriting expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1,615) | TOTAL UNDERWRITING COSTS AND EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (79,593) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NET UNDERWRITING INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 84,374 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| OTHER OPERATING (EXPENSES)/ INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Allowance for doubtful debts |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (2,164) | General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (59,588) | Investment income on term deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 9,248 | Other investment income |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,255 | TOTAL OTHER OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (50,249) | TOTAL INCOME FOR THE YEAR |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 34,125 | NET INCOME FOR THE YEAR ATTRIBUTABLE TO THE INSURANCE OPERATIONS |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (2,862) | TOTAL INCOME FOR THE YEAR ATTRIBUTED TO THE SHAREHOLDERS’ |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 31,263 |
| For the year ended December 30, 2017 | Operating segments | Property |
| Motor |
| Engineering |
| Medical |
| Marine | | Group Life |
| Others | | Total | REVENUES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross premiums written | 91,652 |
| 91,653 |
| 17,018 |
| 4,993 |
| 26,005 |
| 16,872 |
| 15,176 |
| 263,369 | Reinsurance premiums ceded | (61,266) |
| -- |
| (14,925) |
| (2,412) |
| (13,597) |
| (10,360) |
| (5,586) |
| (108,146) | Excess of loss expenses | (2,500) |
| (1,708) |
| (1,391) |
| (223) |
| (1,936) |
| (750) |
| (346) |
| (8,854) | NET PREMIUMS WRITTEN | 27,886 |
| 89,945 |
| 702 |
| 2,358 |
| 10,472 |
| 5,762 |
| 9,244 |
| 146,369 | Changes in unearned premiums, net | 4,467 |
| (3,948) |
| 214 |
| (649) |
| 937 |
| 521 |
| 2,402 |
| 3,944 | NET PREMIUMS EARNED | 32,353 |
| 85,997 |
| 916 |
| 1,709 |
| 11,409 |
| 6,283 |
| 11,646 |
| 150,313 | Reinsurance commissions | 7,950 |
| -- |
| 8,743 |
| (88) |
| 5,802 |
| (323) |
| 206 |
| 22,290 | TOTAL REVENUES | 40,303 |
| 85,997 |
| 9,659 |
| 1,621 |
| 17,211 |
| 5,960 |
| 11,852 |
| 172,603 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| UNDERWRITING COSTS AND EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross claims paid | (8,786) |
| (47,459) |
| (9,432) |
| (3,395) |
| (10,279) |
| (7,364) |
| (3,764) |
| (90,479) | Reinsurers’ share of claims paid | 7,019 |
| -- |
| 8,392 |
| 2,141 |
| 5,601 |
| 5,517 |
| 3,239 |
| 31,909 | Net claims paid | (1,767) |
| (47,459) |
| (1,040) |
| (1,254) |
| (4,678) |
| (1,847) |
| (525) |
| (58,570) | Changes in outstanding claims, IBNR & technical reserves | 2,794 |
| 1,572 |
| 1,851 |
| 186 |
| 6,186 |
| (936) |
| 293 |
| 11,946 | Net claims incurred | 1,027 |
| (45,887) |
| 811 |
| (1,068) |
| 1,508 |
| (2,783) |
| (232) |
| (46,624) | Policy acquisition costs | (3,677) |
| (8,430) |
| (2,132) |
| (137) |
| (1,588) |
| (8,597) |
| (860) |
| (25,421) | Other underwriting expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1,383) | TOTAL UNDERWRITING COSTS AND EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (73,428) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NET UNDERWRITING INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 99,175 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| OTHER OPERATING (EXPENSES)/ INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reversal for doubtful debts |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1,719) | General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (57,189) | Investment income on term deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 6,997 | Other investment income |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,708 | Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 16 | TOTAL OTHER OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (50,187) | TOTAL INCOME FOR THE YEAR |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 48,988 | NET INCOME FOR THE YEAR ATTRIBUTABLE TO THE INSURANCE OPERATIONS |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (4,503) | TOTAL INCOME FOR THE YEAR ATTRIBUTED TO THE SHAREHOLDERS’ |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 44,485 |
|
91,720 |
92,292 |
24,366 |
4,005 |
21,587 |
21,346 |
14,960 |
|
403,137 |
|
404,133 |
|
807,270 |
|
| |
| Disclosure of capital management [text block] | 24. CAPITAL MANAGEMENT
The Company manages its capital to ensure that it is able to continue as going concern and comply with the regulator’s capital requirements of the market in which the Company operates while maximizing the return to stakeholders through the optimization of the equity balance. The capital structure of the Company consists of equity attributable to equity holders comprising paid share capital and reserves. The operations of the Company are subject to local regulatory requirements in the Kingdom of Saudi Arabia. Such regulations not only prescribe approval and monitoring of activities but also impose certain restrictive provisions e.g. capital adequacy to minimize the risk of default and insolvency on the part of the insurance companies and to enable them to meet unforeseen liabilities as these arise. In order to maintain or adjust the capital structure, the Company may issue right shares. As per guidelines laid out by SAMA in Article 66 table 3 and 4 of the Implementing Insurance Regulations detailing the solvency margin required to be maintained, the Company maintains solvency margin equivalent to the highest of the three methods as per SAMA Implementing Regulations.
The Company has fully complied with the externally imposed capital requirements during the reported financial year. | |
| Disclosure of insurance/ takaful operations surplus and dividends [text block] | 7. SURPLUS DISTRIBUTION PAYABLE
| 2018 | 2017 | SAR’000 | | |
|
|
| Balance at January 1, | 9,616 | 7,947 | Total income attributed to the insurance operations during the year | 2,862 | 4,503 | Surplus paid to policy holders | (2,215) | (2,834) |
|
|
| Balance at 31 December | 10,263 | 9,616 |
|
|
|
| |
| Disclosure of claims/ benefits development table [text block] | 14. CLAIMS DEVELOPMENT
The following reflects the cumulative incurred claims, including both claims notified and incurred but not reported for each successive accident year at each financial position date, together with the cumulative payments to date. The development of insurance liabilities provides a measure of the Company's ability to estimate the ultimate value of the claims.
The Company aims to maintain adequate reserves in respect of its insurance business in order to protect against adverse future claims experience and developments. As claims develop and the ultimate cost of claims becomes more certain, adverse claims experiences will be eliminated which results in the release of reserves from earlier accident years. In order to maintain adequate reserves, the Company transfers much of this release to the current accident year reserves when the development of claims is less mature and there is much greater uncertainty attached to the ultimate cost of claims. During each year, the estimate of ultimate claim cost for respective year presented net of payments. Claims triangulation analysis (gross and net) by accident year spanning a number of financial years is set out as below.
|
|
|
|
|
|
|
| | | | | | | | | Estimate of ultimate claim cost: |
|
| | | |
|
| At the end of accident year |
659,615 |
116,010 |
189,703 |
102,701 |
87,591 |
61,228 |
1,216,848 | One year later | 577,528 | 87,714 | 130,995 | 81,803 | 71,985 | -- | 950,025 | Two years later | 565,410 | 83,561 | 110,278 | 50,616 | -- | -- | 809,865 | Three years later | 570,481 | 81,946 | 118,856 | -- | -- | -- | 771,283 | Four years later | 568,928 | 81,808 | -- | -- | -- | -- | 650,736 | Five years later and after | | | | | | | | Current estimate of cumulative claims | 570,908 | 81,808 | 118,856 | 50,616 | 71,985 |
61,228 | 955,401 | Cumulative paid claims | | | | | | | | Liability recognised in statement of financial position | | | | | | | |
|
|
|
|
|
|
|
| | | | | | | | | Estimate of ultimate claim cost: |
|
| | | |
|
| At the end of accident year |
57,472 |
60,252 |
86,578 |
64,501 |
42,587 |
36,782 |
348,172 | One year later | 64,516 | 42,715 | 67,487 | 57,430 | 38,008 | -- | 270,156 | Two years later | 58,048 | 42,576 | 55,129 | 37,835 | -- | -- | 193,588 | Three years later | 62,665 | 39,169 | 53,551 | -- | -- | -- | 155,385 | Four years later | 60,830 | 39,670 | -- | -- | -- | -- | 100,500 | Five years later and after | | | | | | | | Current estimate of cumulative claims |
64,528 |
39,670 |
53,551 |
37,835 |
38,008 |
36,782 |
270,374 | Cumulative paid claims | | | | | | | | Liability recognised in statement of financial position | | | | | | | |
|
|
|
|
|
|
|
| | | | | | | | | Estimate of ultimate claim cost: |
|
|
|
|
|
|
| At the end of accident year | 140,657 | 628,710 | 116,010 | 189,703 | 102,701 | 87,591 | 1,265,372 | One year later | 97,802 | 563,528 | 87,714 | 130,995 | 81,803 | -- | 961,842 | Two years later | 80,895 | 554,690 | 83,561 | 110,278 | -- | -- | 829,424 | Three years later | 77,616 | 555,914 | 81,946 | -- | -- | -- | 715,476 | Four years later | 81,449 | 555,243 | -- | -- | -- | -- | 636,692 | Five years later and after | | | | | | | | Current estimate of cumulative claims | 80,555 | 555,243 | 81,946 | 110,278 | 81,803 | 87,591 | 997,416 | Cumulative paid claims | | | | | | | | Liability recognised in statement of financial position | | | | | |
87,591 | |
|
|
|
|
|
|
|
| | | | | | | | | Estimate of ultimate claim cost: |
|
| | | |
|
| At the end of accident year | 44,197 | 48,920 | 60,252 | 86,578 | 64,501 | 42,587 | 347,035 | One year later | 45,226 | 55,779 | 42,715 | 67,487 | 57,430 | -- | 268,637 | Two years later | 45,412 | 52,146 | 42,576 | 55,129 | -- | -- | 195,263 | Three years later | 42,576 | 52,846 | 39,169 | -- | -- | -- | 134,591 | Four years later | 46,507 | 52,289 | -- | -- | -- | -- | 98,796 | Five years later and after | | | | | | | | Current estimate of cumulative claims | 45,356 | 52,289 | 39,169 | 55,129 | 57,430 | 42,587 | 291,960 | Cumulative paid claims | | | | | | | | Liability recognised in statement of financial position | | | | | |
42,587 | |
| |
| Disclosure of commitments and contingencies, general [text block] | 19. COMMITMENTS AND CONTINGENCIES
a) The Company’s commitments and contingencies are as follows:
SAR’000 | December 31, 2018 |
| December 31, 2017 | Letters of guarantee | 700 |
| 900 | Commitments for the rents | 186 |
| 399 | Total | 886 |
| 1,299 |
The Company is subject to legal proceedings in the ordinary course of business. While it is not practicable to forecast or determine the final results of all pending or threatened legal proceedings, management believes that such proceedings (including litigations) will not have a material effect on its results and financial position. The Company did not have any significant outstanding legal proceedings as at the reporting date. | |
| Disclosure of risk management [abstract] | | |
| Disclosure of insurance/ takaful risk [text block] | 22. RISK MANAGEMENT
Risk Governance
The Company’s risk governance is manifested in a set of established policies, procedures and controls which uses the existing organisational structure to meet strategic targets. The Company’s philosophy revolves on willing and knowledgeable risk acceptance commensurate with the risk appetite and strategic plan approved by the Board. The Company is exposed to insurance, claims management, reserving and ultimate reserves, reinsurance, regulatory framework, credit, liquidity, foreign currency, investment income rate and market rate risks.
Risk management structure
A cohesive organisational structure is established within the Company in order to identify, assess, monitor and control risks.
Board of Directors
The apex of risk governance is the centralised oversight of the Board of Directors providing direction and the necessary approvals of strategies and policies in order to achieve defined corporate goals.
Senior management
Senior management is responsible for the day to day operations towards achieving the strategic goals within the Company’s pre-defined risk appetite.
Audit Committee and Internal Audit Department
Risk management processes throughout the Company are audited annually by the Internal Audit Department which examines both the adequacy of the procedures and the Company’s compliance with such procedures. The Internal Audit Department discusses the results of all assessments with senior management, and reports its findings and recommendations directly to the Audit Committee.
The risks faced by the Company and the way these risks are mitigated by management are summarised below:
a) Insurance risk
Insurance risk is the risk that actual claims payable to policy holders in respect of insured events exceed expectations. This could occur because the frequency or amounts of claims are more than expected. Insurance risk is monitored regularly by the Company to make sure the levels are within the projected frequency bands. The Company underwrites mainly property, motor, casualty, engineering, medical and marine risks.
Frequency and severity of claims
The frequency and severity of claims can be affected by several factors. The Company underwrites mainly property, engineering, motor, casualty, medical and marine classes. These classes of insurance except for long tail engineering policies are generally regarded as annual insurance contracts where claims are normally intimated and settled within a short time span. This helps to mitigate insurance risk.
Sources of uncertainty in estimation of future probable claim payments
The key source of estimation uncertainty at the balance sheet date relates to the valuation of outstanding claims, whether reported or not, and includes expected claims settlement costs. Considerable judgment by management is required in the estimation of amounts due to policyholders arising from claims made under insurance contracts. Such estimates are necessarily based on assumptions about several factors involving varying and possibly significant degrees of judgement and uncertainty and actual results may differ from management's estimates resulting in future changes in estimated liabilities. Qualitative judgments are used to assess the extent to which past trends may not apply in the future, for example one off occurrence, changes in market factors such as public attitude to claiming and economic conditions. Judgment is further used to assess the extent to which external factors such as judicial decisions and government legislation affect the estimates.
In particular, estimates have to be made both for the expected ultimate cost of claims reported at balance sheet date the expected ultimate cost of claims incurred but not reported (IBNR)at the balance sheet date. The details of estimation of outstanding claims (including IBNR) are given under notes 9(a).
Process used to decide on assumptions
The process used to determine the assumptions for calculating the outstanding claim reserve is intended to result in neutral estimates of the most likely or expected outcome. The nature of the business makes it very difficult to predict with certainty the likely outcome of any particular claim and the ultimate cost of notified claims. Each notified claim is assessed on a separate, case by case basis with due regard to claim circumstances, information available from surveyors and historical evidence of the size of similar claims. Case estimates are reviewed regularly and are updated as and when new information is available.
The estimation of IBNR is generally subject to a greater degree of uncertainty than the estimation of the cost of settling claims already notified to the Company, in which case information about the claim event is available. IBNR provisions are initially estimated at a gross level and a separate calculation is carried out to estimate the size of the reinsurance recoveries. The estimation process takes into account the past claims reporting pattern and details of reinsurance programs.
The premium liabilities have been determined such that the total premium liability provisions (unearned premium reserve and premium deficiency reserve) would be sufficient to service the future expected claims and expenses likely to occur on the unexpired policies as of balance sheet date. The expected future liability is determined using estimates and assumptions based on the experience during the expired period of the contracts and expectations of future events that are believed to be reasonable.
Property
Property insurance contracts, with the main peril being fire, accidental damage and other allied perils resulting therefrom are underwritten either on a replacement value or on a market value basis with appropriate values for the interest insured. The cost of rebuilding or repairing the damaged properties and the time taken to reinstate the operations to its pre-loss position in the case of business interruption are the main factors that influence the level of claims.
In respect of accumulation of the retentions under the property business, this is covered by proportional as well as non-proportional treaties.
Engineering
The engineering business includes long term Erection All Risks (EAR) and Contractor All Risk (CAR) policies and annual policies for Machinery Break Down (MBD), Machinery All Risk, Electronic Data Processing, Business Interruption in conjunction with MBD. The long tail EAR/CAR policies cover various projects for the whole project period. Selection of the risks and proper underwriting are the criteria for this line of business. These are adequately covered under the Engineering proportional and non-proportional treaties.
Motor
For motor contracts the main risks are claims for death and bodily injury and the replacement or repair of vehicles. In recent years, the Company has only underwritten comprehensive polices for owner/drivers over 18 years of age. The Company also has risk management procedures to control cost of claims. The Company has reinsurance cover to limit the losses for any individual claim to SR 2million (2017: SR 2 million).
Medical
The Company’s underwriting strategy is designed to ensure that risks are well diversified in terms of type of risks and level of insured benefits. This is largely achieved through diversification across industry sectors and geography, the use of medical screening in order to ensure that pricing takes account of current health conditions and family medical history, regular view of actual claims experience and product pricing, as well as detailed claims handling procedures. The Company further enforces a policy of actively managing and promptly pursuing claims, in order to reduce its exposure to unpredictable future developments that can negatively impact the Company. The Company has reinsurance cover to limit the losses for any individual claim to SR 1.5 million (2017: SR 1.5 million).
Marine
For marine insurance the main risks are loss or damage to marine craft and accidents resulting in the total or partial loss of cargo.
The underwriting strategy for the marine class of business is to ensure that policies are well diversified in terms of cargo, vessels and shipping routes covered. The Company has reinsurance cover to limit losses for any individual claim to SR 1.75 million (2017: SR 1.75 million).
Concentration of insurance risk
The Company monitors concentration of insurance risks primarily by class of business. The major concentration lies in property and motor. The Company also monitors concentration of risk by evaluating multiple risks covered in the same geographical location or by the same party. For flood or earthquake risk, a complete city is classified as a single location. For fire and property risk a particular building and neighbouring buildings, which could be affected by a single claim incident, are considered as a single location. Similarly, for marine risk, multiple risks covered in a single vessel voyage are considered as a single risk while assessing concentration of risk. The Company evaluate the concentration of exposures to individual and cumulative insurance risks and establishes its reinsurance policy to reduce such exposures to levels acceptable to the Company. Since the Company does not have any foreign operations, hence, all the insurance risks relate to policies written in Saudi Arabia.
Sensitivity analysis
The Company believes that the claim liabilities under insurance contracts outstanding at the reporting date are adequate. However, these amounts are not certain and actual payments may differ from the claims liabilities provided in the financial statements. The insurance claim liabilities are sensitive to the various assumptions. It has not been possible to quantify the sensitivity of specific variable such as legislative changes or uncertainty in the estimation process. A hypothetical 10% change in the claims ratio would impact income annually in aggregate by:
| Income from insurance operations | | 2018 | 2017 |
| SAR’000 | Impact of change in claim ratio by +10% |
| Property | (565) | (103) | Motor | 6,417 | 4,589 | Engineering | (90) | (81) | Medical | 126 | 107 | Marine | (103) | (151) | Group Life | 390 | 278 | Others | (177) | 23 |
| 5,998 | 4,662 | Impact of change in claim ratio by -10% |
|
| Property | 565 | 103 | Motor | (6,417) | (4,589) | Engineering | 90 | 81 | Medical | (126) | (107) | Marine | 103 | 151 | Group Life | (390) | (278) | Others | 177 | (23) | | (5,998) | (4,662) |
a) Claims management risk
Claims management risk may arise within the Company in the event of inaccurate or incomplete case reserves and claims settlements, poor service quality or excessive claims handling costs. These risks may damage the Company and undermine its ability to win and retain business, or incur punitive damages. These risks can occur at any stage of the claims life cycle. The Company’s claims teams are focused on delivering quality, reliability and speed of service the policyholders. Their aim is to adjust and process claims in a fair, efficient and timely manner, in accordance with the policy’s terms and conditions, the regulatory environment, and the business’ broader interests. Prompt and accurate case reserves are set for all known claims liabilities, including provisions for expenses, as soon as a reliable estimate can be made of the claims liability.
a) Reserving and ultimate reserves risk
Reserving and ultimate reserves risk occurs within the Company where established insurance liabilities are insufficient through inaccurate forecasting, or where there is inadequate allowance for expenses and reinsurance bad debts in provisions. To manage reserving and ultimate reserves risk, the Company’s actuarial team uses a range of recognized techniques to project gross premiums written, monitor claims development patterns and stress-test ultimate insurance liability balances. The objective of the Company’s reserving policy is to produce accurate and reliable estimates that are consistent over time and across classes of business.
a) Reinsurance risk
In order to minimise its financial exposure to potential losses arising from large claims, the Company enters into agreements with other parties for reinsurance purpose. Such reinsurance arrangements provide for greater diversification of business, allow management to control exposure to potential losses arising from large risks, and provide additional capacity for growth. Reinsurance program is effected under treaty, facultative and excess of loss reinsurance contracts.
To minimize its exposure to significant losses from reinsurer insolvencies, the Company evaluates the financial condition of its reinsurers and monitors the concentrations of credit risk arising from similar geographic regions, activities and economic characteristics of reinsurers.
Reinsurance ceded contracts do not relieve the Company from its obligations to the policyholders and as a result the Company remains liable for a portion of outstanding claims reinsured to the extent that the reinsurer fails to meet the obligations under the reinsurance agreements. The credit exposure in this connection is SR 52.6 million (2017: SR 66.9 million).
d) Regulatory framework risk
The operations of the Company are subject to local regulatory requirements in the Kingdom of Saudi Arabia. Such regulations not only prescribe approval and monitoring of activities but also impose certain restrictive provisions e.g. capital adequacy to minimize the risk of default and insolvency on the part of the insurance companies and to enable them to meet unforeseen liabilities as these arise.
| |
| Disclosure of currency risk [text block] | g) Foreign currency risk
Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Management believes that there is minimal risk of significant losses due to exchange rate fluctuation as the majority of monetary assets and liabilities are in currencies linked to the Saudi Riyal.
h) Investment income rate risk
Investment income rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate because of changes in market investment income rates. Floating rate instruments expose the Company to cash flow investment income risk, whereas fixed investment income rate instruments expose the Company to fair value interest risk. The Company is not exposed to investment income rate risk as rates are fixed.
| |
| Disclosure of market risk [text block] | i) Market rate risk
Market rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market.
The Company has unquoted equity instruments carried at cost or indicative selling price, where the impact of changes in equity price will only be reflected when the instrument is sold or deemed to be impaired and then the statement of shareholders’ operations will be impacted.
The sensitivity of the income on the assumed changes in the market prices of quoted available for sale investments on the statement of shareholders’ comprehensive income is set out below:
| Changein market price | Effect on statement of shareholders’ comprehensive operations |
| | |
|
|
| 2018 | +5% | 4,553 |
| -5% | (4,553) |
|
|
| 2017 | +5% | 3,767 |
| -5% | (3,767) |
| |
| Disclosure of credit risk [text block] | (e) Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. For all classes of financial assets held by the Company, the maximum exposure to credit risk to the Company is the carrying value as disclosed in the statement of financial position.
The following policies and procedures are in place to mitigate the Company’s exposure to credit risk:
The Company only enters into insurance and reinsurance contracts with recognised, creditworthy third parties. It is the Company’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivables from insurance and reinsurance contracts are monitored on an ongoing basis in order to reduce the Company’s exposure to bad debts.
The Company seeks to limit credit risk with respect to agents and brokers by setting credit limits for individual agents and brokers and monitoring outstanding receivables.
The Company’s investment portfolio is managed by the management in accordance with the investment policy established by the investment committee.
The Company, with respect to credit risk arising from other financial assets, is restricted to commercial banks having strong financial positions and credit ratings.
Maximum exposure to credit risk
The Company's maximum exposure to credit risk on its financial assets as at 31 December 2018 is SR 353.4 million for Insurance Operations (31 December 2017: SR 346.6 million) and SR 380.7 million for Shareholders’ Operations (31 December 2017: SR 374.2 million).
The table below shows the maximum exposure to credit risk for the components of the statement of financial position.
SAR’000 | 2018 SR | 2017 |
| | Shareholders’ | | | Assets |
|
|
|
| Cash and cash equivalents | 12,875 | 42,801 | 15,010 | 1,641 | Time deposits | 211,522 | 199,708 | 181,538 | 252,567 | Investments | 1,923 | 91,059 | 1,923 | 75,355 | Premiums and reinsurer’ receivable, net | 70,868 | -- | 81,184 | -- | Reinsurers’ share of outstanding claims | 44,355 | -- | 41,545 | -- | Reinsurers’ share of claims incurred but not reported | 8,230 | -- | 25,338 | -- | Due from related parties | 630 | -- | 31 | -- | Prepaid expenses and other assets | 3,000 | 4,117 | -- | 2,430 | Statutory deposit | -- | 40,000 | -- | 40,000 | Accrued income on statutory deposit | -- | 3,059 | -- | 2,204 |
|
|
|
|
|
| 353,403 | 380,744 | 346,569 | 374,197 |
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|
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Concentration of credit risk
Concentration of credit risk exists when changes in economic or industry factors similarly affect groups of counterparties whose aggregate credit exposure is significant in relation to the Company's total credit exposure. The Company's portfolio of financial instruments is broadly diversified and transactions are entered into with diverse credit-worthy counterparties thereby mitigating any significant concentrations of credit risk.
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| Disclosure of liquidity risk [text block] | f) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet obligation and commitments associated with financial liabilities when they full due. The Company has a proper cash management system, where daily cash collection and payments are monitored and reconciled at the end of the day. At the time of investment, particular emphasis is focused on the selection of those companies which are actively traded. The Company manages this risk by maintaining maturities of financial assets and financial liabilities and investing a major portion of the Company's assets in highly liquid financial assets.
Maturity table
The table below summarizes the maturity profile of the financial assets and liabilities of the Company based on remaining expected undiscounted contractual obligations:
| | | SAR’000 | | | | | | |
| SR | SR | SR | SR | SR | SR | INSURANCE OPERATIONS’ ASSETS |
|
|
|
|
|
| Cash and cash equivalents | 12,875 | -- | 12,875 | 15,010 | -- | 15,010 | Term deposits | 211,522 | -- | 211,522 | 181,538 | -- | 181,538 | Investments | -- | 1,923 | 1,923 | -- | 1,923 | 1,923 | Premiums and insurance balances receivable, net | 70,868 |
-- | 70,868 | 81,184 |
-- | 81,184 | Due from related parties | 630 | -- | 630 | 31 | -- | 31 |
Due from shareholders’operations | -- |
-- | -- | -- |
-- | -- | Reinsurers’ share of unearned premiums | 56,537 |
-- | 56,537 | 49,140 |
-- | 49,140 | Reinsurers’ share of outstanding claims | 44,355 |
-- | 44,355 | 41,545 | -- | 41,545 | Reinsurers’ share of claims Incurred but not reported | 8,230 | -- | 8,230 | 25,338 | -- | 25,338 | Deferred policy acquisition costs | 4,631 | -- | 4,631 | 3,792 | -- | 3,792 | Prepayments and other assets | 3,000 | -- | 3,000 | 2,950 | -- | 2,950 | Property and equipment, net | -- | 1,541 | 1,541 | -- | 686 | 686 |
|
|
|
|
|
|
| TOTAL INSURANCE OPERATIONS’ ASSETS | 412,648 | 3,464 | 416,112 | 400,528 | 2,609 | 403,137 |
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|
|
|
|
|
| | | SAR’000 | | | | | | |
| | | | | | | SHAREHOLDERS’ ASSETS |
|
|
|
|
|
| Cash and cash equivalents | 42,801 | -- | 42,801 | 1,641 | -- | 1,641 | Term deposits | 199,708 | -- | 199,708 | 252,567 | -- | 252,567 | Investments | -- | 91,059 | 91,059 | 27,866 | 47,489 | 75,355 | Due from insurance operations | 52,677 | -- | 52,677 | 29,936 | -- | 29,936 | Prepaid expenses and other assets | 4,117 | -- | 4,117 | 2,430 | -- | 2,430 |
Accrued income on statutory deposit |
-- | 3,059 | 3,059 |
-- | 2,204 | 2,204 | Statutory deposit | -- | 40,000 | 40,000 | -- | 40,000 | 40,000 |
|
|
|
|
|
|
| TOTAL SHAREHOLDERS’ ASSETS | 299,303 | 134,118 | 433,421 | 314,440 | 89,693 | 404,133 |
|
|
|
|
|
|
| TOTAL ASSETS | 711,951 | 137,582 | 849,533 | 714,968 | 92,302 | 807,270 |
|
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|
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|
| | | SAR’000 | | | | | | |
| | | | | | | INSURANCE OPERATIONS’ LIABILITIES |
|
|
|
|
|
| Outstanding claims reserve | 85,720 | -- | 85,720 | 86,216 | -- | 86,216 | Claims incurred but not reported | 46,357 | -- | 46,357 | 77,759 | -- | 77,759 | Other technical reserves | 693 | -- | 693 | 1,733 | -- | 1,733 | Unearned premiums | 112,473 | -- | 112,473 | 100,103 | -- | 100,103 | Due to shareholders’ operations | 52,677 | -- | 52,677 | 29,936 | -- | 29,936 | Accounts payable | 8,471 | -- | 8,471 | 13,019 | -- | 13,019 | Reinsurance balances payable | 52,784 | -- | 52,784 | 40,720 | -- | 40,720 | Due to related parties | 632 | -- | 632 | 651 | -- | 651 | Accrued expenses and other liabilities | 31,483 |
-- | 31,483 | 29,673 |
-- | 29,673 | Accumulated surplus | 10,263 | -- | 10,263 | 9,616 | -- | 9,616 | Unearned reinsurance commission | 3,366 | -- | 3,366 | 4,465 | -- | 4,465 | End-of-service benefits | -- | 11,650 | 11,650 | -- | 10,921 | 10,921 |
|
|
|
|
|
|
| TOTAL INSURANCE OPERATIONS’ LIABILITIES | 404,919 | 11,650 | 416,569 | 393,891 | 10,921 | 404,812 |
|
|
|
|
|
|
| SHAREHOLDERS’ LIABILITIES |
|
|
|
|
|
| Due to insurance operations | -- | -- | -- | -- | -- | -- | Due to related parties | 413 | -- | 413 | 413 | -- | 413 | Accrued commission income payable to SAMA | -- |
3,059 | 3,059 | -- |
2,204 | 2,204 |
Accrued and other liabilities | 4,301 |
-- | 4,301 | 3,596 |
-- | 3,596 | Zakat & income tax | 38,153 | -- | 38,153 | 31,055 | -- | 31,055 |
|
|
|
|
|
|
| TOTAL SHAREHOLDERS’ LIABILITIES | 42,867 | 3,059 | 45,926 | 35,064 | 2,204 | 37,268 |
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The tables below summarise the maturity profile of the financial assets and financial liabilities of the Company based on residual maturity. For insurance contract liabilities and reinsurance assets, maturity profiles are determined based on the estimated timing of net cash outflows from the recognised insurance liabilities. Unearned premiums, reinsurance share of unearned premiums and deferred acquisition cost have been excluded from the analysis as they are not contractual obligations. Repayments that are subject to notice are treated as if notice were to be given immediately.
| 2018 | SAR’000 | On Demand | Up to 1 year | 2-5 years | More than 5 years | Total |
|
|
|
|
|
| INSURANCE OPERATIONS’ ASSETS |
|
|
|
|
| Cash and cash equivalents | 12,875 | -- | -- | -- | 12,875 | Term deposits | -- | 211,522 | -- | -- | 211,522 | Investments | -- | -- | -- | 1,923 | 1,923 | Premiums and insurance balances receivable, net |
-- | 70,868 |
-- | -- | 70,868 | Due from related parties | -- | 630 | -- | -- | 630 | Due from shareholders’ operations | -- | -- | -- | -- | -- | Reinsurers’ share of unearned premiums |
-- | 56,537 |
-- | -- | 56,537 | Reinsurers’ share of outstanding claims | -- | 44,355 | -- | -- | 44,355 | Reinsurers’ share of claims incurred but not reported |
-- | 8,230 |
-- | -- | 8,230 | Deferred policy acquisition costs | -- | 4,631 | -- | -- | 4,631 | Prepayments and other assets | -- | 3,000 | -- | -- | 3,000 | Property and equipment, net | -- | -- | 1,541 | -- | 1,541 |
|
|
|
|
|
| TOTAL INSURANCE OPERATIONS’ ASSETS | 12,875 | 399,773 | 1,541 | 1,923 | 416,112 |
|
|
|
|
|
| SHAREHOLDERS’ ASSETS |
|
|
|
|
| Cash and cash equivalents | 42,801 | -- | -- | -- | 42,801 | Term deposits | -- | 199,708 | -- | -- | 199,708 | Investments | -- | -- | 91,059 | -- | 91,059 | Due from insurance operations | -- | 52,677 | -- | -- | 52,677 | Prepaid expenses and other assets | -- | 4,117 | -- | -- | 4,117 | Accrued income on statutory deposit | -- | -- | -- | 3,059 | 3,059 | Statutory deposit | -- | -- | -- | 40,000 | 40,000 |
|
|
|
|
|
| TOTAL SHAREHOLDERS’ ASSETS | 42,801 | 256,502 | 91,059 | 43,059 | 433,421 |
|
|
|
|
|
|
| 2018 | SAR’000 | On Demand | Up to 1 year | 2-5 years | More than 5 years | Total | INSURANCE OPERATIONS’ LIABILITIES |
|
|
|
|
| Outstanding claims reserve | -- | 85,720 | -- | -- | 85,720 | Claims incurred but not reported | -- | 46,357 | -- | -- | 46,357 | Other technical reserve | -- | 693 | -- | -- | 693 | Unearned premiums | -- | 112,473 | -- | -- | 112,473 | Due to shareholders’ operations | -- | 52,677 | -- | -- | 52,677 | Accounts payables | -- | 8,471 | -- | -- | 8,471 | Reinsurers' balances payable | -- | 52,784 | -- | -- | 52,784 | Due to related parties | -- | 632 | -- | -- | 632 | Accrued expenses and other liabilities | -- | 31,483 | -- | -- | 31,483 | Accumulated surplus | -- | 10,263 | -- | -- | 10,263 | Unearned reinsurance commission | -- | 3,366 | -- | -- | 3,366 | End-of-service benefits | 11,650 | -- | -- | -- | 11,650 |
|
|
|
|
|
| TOTAL INSURANCE OPERATIONS’ LIABILITIES | 11,650 | 404,919 | -- | -- | 416,569 |
|
|
|
|
|
| SHAREHOLDERS’ LIABILITIES |
|
|
|
|
| Due to insurance operations | -- | -- | -- | -- | -- | Due to a related parties | -- | 413 | -- | -- | 413 | Accrued commission income payable to SAMA | 3,059 | -- | -- | -- | 3,059 | Accrued expenses and other liabilities | -- | 4,301 | -- | -- | 4,301 | Zakat and income tax | -- | 38,153 | -- | -- | 38,153 |
|
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|
|
| TOTAL SHAREHOLDERS’ LIABILITIES | 3,059 | 42,867 | -- | -- | 45,926 |
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|
|
| 2017 | SAR’000 | On Demand | Up to 1 year | 2-5 years | More than 5 years | Total | INSURANCE OPERATIONS’ ASSETS |
|
|
|
|
| Cash and cash equivalents | 15,010 | -- | -- | -- | 15,010 | Term deposits | -- | 181,538 | -- | -- | 181,538 | Investments | -- | -- | -- | 1,923 | 1,923 | Premiums and insurance balances receivable, net |
-- | 81,184 |
-- | -- | 81,184 | Due from related parties | -- | 31 | -- | -- | 31 | Due from shareholders’operations | -- | -- | -- | -- | -- | Reinsurers’ share of unearned premiums | -- | 49,140 | -- | -- | 49,140 | Reinsurers’ share of outstanding claims | -- | 41,545 | -- | -- | 41,545 | Reinsurers’ share of claims incurred but not reported |
-- | 25,338 |
-- | -- | 25,338 | Deferred policy acquisition costs | -- | 3,792 | -- | -- | 3,792 | Prepaid expenses and other assets | -- | 2,950 | -- | -- | 2,950 | Property and equipment, net | -- | -- | 686 | -- | 686 |
|
|
|
|
|
| TOTAL INSURANCE OPERATIONS’ ASSETS | 15,010 | 385,518 | 686 | 1,923 | 403,137 |
|
|
|
|
|
|
| 2017 | SAR’000 | On Demand | Up to 1 year | 2-5 years | More than 5 years | Total |
|
|
|
|
|
| SHAREHOLDERS’ ASSETS |
|
|
|
|
| Cash and bank balances | 1,641 | -- | -- | -- | 1,641 | Term deposits | -- | 252,567 | -- | -- | 252,567 | Investments | -- | 27,866 | 47,489 | -- | 75,355 | Due from insurance operations | -- | 29,936 | -- | -- | 29,936 | Other assets | -- | 2,430 | -- | -- | 2,430 | Return on investment of statutory deposit | -- | -- | -- | 2,204 | 2,204 | Statutory deposit | -- | -- | -- | 40,000 | 40,000 |
|
|
|
|
|
| TOTAL SHAREHOLDERS’ ASSETS | 1,641 | 312,799 | 47,489 | 42,204 | 404,133 |
|
|
|
|
|
|
| 2017 | SAR’000 | On Demand | Up to 1 year | 2-5 years | More than 5 years | Total |
|
|
|
|
|
| INSURANCE OPERATIONS’ LIABILITIES |
|
|
|
|
| Outstanding claims reserve | -- | 86,216 | -- | -- | 86,216 | Claims incurred but not reported | -- | 77,759 | -- | -- | 77,759 | Other technical reserve | -- | 1,733 | -- | -- | 1,733 | Unearned premiums | -- | 100,103 | -- | -- | 100,103 | Due to shareholders’ operations | -- | 29,936 | -- | -- | 29,936 | Accounts payable | -- | 13,019 | -- | -- | 13,019 | Reinsurers' balances payable | -- | 40,720 | -- | -- | 40,720 | Due to related parties | -- | 651 | -- | -- | 651 | Accrued expenses and other liabilities | -- | 29,673 | -- | -- | 29,673 | Accumulated surplus | -- | 9,616 | -- | -- | 9,616 | Unearned reinsurance commission | -- | 4,465 | -- | -- | 4,465 | End-of-service benefits | 10,921 | -- | -- | -- | 10,921 |
|
|
|
|
|
| TOTAL INSURANCE OPERATIONS’ LIABILITIES | 10,921 | 393,891 | -- | -- | 404,812 |
|
|
|
|
|
| SHAREHOLDERS’ LIABILITIES |
|
|
|
|
| Due to insurance operations | -- | -- | -- | -- | -- | Due to a related parties | -- | 413 | -- | -- | 413 | Accrued commission income payable to SAMA | 2,204 | -- | -- | -- | 2,204 | Accrued expenses and other liabilities | -- | 3,596 | -- | -- | 3,596 | Zakat and income tax | -- | 31,055 | -- | -- | 31,055 |
|
|
|
|
|
| TOTAL SHAREHOLDERS’ LIABILITIES | 2,204 | 35,064 | -- | -- | 37,268 |
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To manage the liquidity risk arising from financial liabilities mentioned above, the Company holds liquid assets comprising cash and bank balances and investment securities for which there is an active market. These assets can be readily sold to meet liquidity requirements. | |
