| 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] | Wataniya Insurance Company (the “Company”) is a Saudi Joint Stock Company incorporated in the Kingdom of Saudi Arabia under Commercial Registration No. 4030200981 dated 1 Jumada II 1431H (corresponding to May 15, 2010) and Industry’s Resolution number 158/K dated Jumad-ul-Awal 12, 1431H (corresponding to April 26, 2010). The Registered Office address of the Company is Juffali Building, Madina Road, Jeddah, Saudi Arabia.The Company is licensed to conduct insurance business in Saudi Arabia under Cooperative insurance principles in accordance with Royal Decree No M/53 dated Shawwal 21, 1430H (corresponding to October 10, 2009) pursuant to Council of Ministers’ Resolution No. 330 dated Shawwal 16,1430H (corresponding to October 5, 2009). The Company was listed on the Saudi Arabian stock market (Tadawul) on June 6, 2010. The objectives of the Company are to provide general insurance and related services in accordance with its by-laws and applicable regulations in Saudi Arabia. | 1 |
| Disclosure of basis of preparation of financial statements [text block] | (a) Basis of presentation and measurementThese financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) that are endorsed in the Kingdom of Saudi Arabia (KSA), and other standards and pronouncements that are endorsed by Saudi organization for Certified Public Accountants (‘SOCPA”) (referred to as “IFRS as endorsed in KSA”). The Company has updated its accounting policy to account for zakat and income taxes in the statement of income based on the instructions issued by SAMA on 23 July 2019 to insurance companies in the Kingdom of Saudi Arabia. This aligns with the IFRS as endorsed in KSA. Accordingly, the Company changed its accounting treatment for zakat and income tax by retrospectively adjusting the impact in line with International Accounting Standard 8 Accounting Policies, Changes in Accounting Estimates and Errors.The financial statements have been prepared under the going concern basis and the historical cost convention, except for the measurement at fair value of investment held as fair value through statement of income (FVSI). The Company’s statement of financial position is not presented using a current/non-current classification. However, the following balances would generally be classified as non-current: Investments, Deferred policy acquisition costs, Property and Equipment, Intangible assets, Outstanding claims and Technical reserves. All other financial statement line items would generally be classified as current unless stated otherwise.As required by the Saudi Arabian Insurance Regulations “the Implementation Regulations”, the Company maintains separate books of accounts for “Insurance Operations” and “Shareholders’ Operations”. Accordingly, assets, liabilities, revenues and expenses attributable to either operation are recorded in the respective accounts. Note 28 to these annual financial statements provides the statement of financial position, statements of income, comprehensive income and cash flows of the insurance operations and shareholders operations, separately.The financial statements of the Company as at and for the year ended 31 December 2018, were prepared in compliance with the International Financial Reporting Standards (“IFRS”), as modified by SAMA for the accounting of Zakat and income tax (relating to the application of IAS 12 – “Income Taxes” and IFRIC 21 – “Levies” so far as these relate to Zakat and income tax).(b) Functional and presentation currencyThese financial statements have been presented in Saudi Arabian Riyals (SAR), which is also the functional currency of the Company. All financial information presented in Saudi Arabian Riyal has been rounded to the nearest thousands, except where otherwise indicated.(c) Fiscal yearThe Company follows a fiscal year ending December 31.(d) Critical accounting judgments estimates and assumptions The preparation of these financial statements requires the use of estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. Although these estimates and judgments are based on management’s best knowledge of current events and actions, actual results ultimately may differ from those estimates. Estimates and judgments are continuously being evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Following are the accounting judgments and estimates that are critical in preparation of these financial statements:i)The ultimate liability arising from claims made under insurance contractsThe estimation of the ultimate liability arising from claims made under insurance contracts is the Company’s most critical accounting estimate. There are several sources of uncertainty that need to be considered in the estimate of the liability that the Company will ultimately pay for such claims. Estimates are made at the end of the reporting year both for the expected ultimate cost of claim reported and for the expected ultimate costs of claims incurred but not reported (“IBNR”). Liabilities for unpaid reported claims are estimated using the input of assessments for individual cases reported to the Company. At the end of each reporting year, prior year claims estimates are reassessed for adequacy and changes are made to the provision.The provision for claims incurred but not reported (IBNR) is an estimation of claims which are expected to be reported subsequent to the date of statement of financial position, for which the insured event has occurred prior to the date of statement of financial position. The primary technique adopted by management in estimating the cost of notified and IBNR claims, is that of using the past claims settlement trends to predict future claims settlement trends. A range of methods such as Chain Ladder Method, Bornhuetter-Ferguson Method and Expected Loss Ratio Method are used by the actuaries to determine these provisions. Actuary had also used a segmentation approach including analyzing cost per member per year for medical line of business. Underlying these methods are a number of explicit or implicit assumptions relating to the expected settlement amount and settlement patterns of claims.ii)Impairment of financial assetsThe Company determines that financial assets are impaired when there has been a significant or prolonged decline in the fair value of the financial assets below its cost. The determination of what is significant or prolonged requires judgment. A year of 12 months or longer is considered to be prolonged and a decline of 30% from original cost is considered significant as per Company policy. In making this judgment, the Company evaluates among other factors, the normal volatility in share price, the financial health of the investee, industry and sector performance, changes in technology, and operational and financing cash flows. iii)Impairment of receivablesA provision for impairment of receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or delinquency in payments are considered indicators that the receivable is impaired.iv)Fair value of financial instrumentsFair values of available-for-sale investments are based on quoted prices for marketable securities or estimated fair values. The fair value of commission-bearing items is estimated based on discounted cash flows using commission for items with similar terms and risk characteristics. (d) Critical accounting judgments estimates and assumptions (continued)iv)Fair value of financial instruments (continued)The fair value of financial instruments where no active market exists or where quoted prices are not otherwise available are determined by using valuation techniques. In these cases, the fair values are estimated from observable data in respect of similar financial instruments or using models. Where market observable inputs are not available, they are estimated based on appropriate assumptions. Where valuation techniques (for example, models) are used to determine fair values, they are validated and periodically reviewed by qualified personnel independent of those that sourced them. All models are certified before they are used, and models are calibrated to ensure that outputs reflect actual data and comparative market prices. To the extent practical, models use only observable data; however, areas such as credit risk (both own credit risk and counterparty risk), volatilities and correlations require management to make estimates. | 2 |
| Disclosure of new standards and amendments in standards [text block] | 3 Significant accounting policiesThe accounting policies, estimates and assumptions used in the preparation of these financial statements are consistent with those used in the preparation of the annual financial statements for the year ended December 31, 2019 except for the adoption of the following:New IFRS, International Financial Reporting and Interpretations Committee’s interpretations (IFRIC) and amendments thereof, adopted by the Company3.1 The Company has adopted the following amendments, interpretations and revisions to existing standards, which were issued by the IASB:Standard / AmendmentsDescriptionIFRIC 23Uncertainty over Income Tax TreatmentsIAS 28Long term interests in associates and joint ventures IAS 19Plan amendments, curtailments or settlements IFRS 3,11 and IAS 12, 23Annual Improvements to IFRS 2015 - 2017 cycle.The adoption of the above amendments and interpretations did not have any significant impact on these financial statements.3.2 The Company has adopted the following new standard issued:IFRS 16 - LeasesThe Company adopted IFRS16 ‘Leases’ the standard replaces the existing guidance on leases, including IAS 17 ‘Leases’, IFRIC 4 “Determining whether an Arrangement contains a Lease”, SIC 15 “Operating Leases Incentives” and SIC 27 “Evaluating the Substance of Transaction in the Legal Form of a Leases”.IFRS 16 was issued in January 2016 and is effective for annual periods commencing on or after 1 January 2019. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and finance lessees to account for all the leases under a single on-balance sheet model similar to the accounting for finance lease under IAS 17. The standard includes two recognition exemption for lease of low value assets (e.g. personal computers) and short-term leases (i.e. leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees are required to separately recognise the special commission expense on the lease liability and the depreciation expense on the right-of-use asset.Presently IFRS 16 has no impact on these financial statements as the Company does not have long term leases.3.2 The Company has adopted the following new standard issued (continued)Zakat and Income taxAs mentioned under the note 2, the basis of preparation of the financial statements has changed as a result of the issuance on latest instructions from SAMA dated 23 July 2019. Previously, zakat and income tax were recognized in the statements of changes in equity as per the SAMA circular no 381000074519 dated 11 April 2017. With the latest instruction issued by SAMA dated 23 July 2019, the Zakat and income tax shall be recognized in the statement of income. The Company has accounted for this change in the accounting for zakat and income tax retrospectively (see note 3) and the effects of the above change are disclosed in note 3 to the financial statements. The change has resulted in reduction of reported income of the Company for the year ended December 31, 2018 by SR 6.8 million. The Change has had no impact on the statement of cashflows for the year ended December 31, 2018.For the year ended December 31, 2018:AccountFinancial statement impactedAs previously reported for year ended 2018Effect of restatementAs restated for the year ended 2018Zakat Statement of income -(4,853)(4,853)Income tax Statement of income -(2,020)(2,020)Net income for the year Statement of income 20,433(6,873)13,560Earnings per share for the year (expressed in SR per share) Statement of income 1.02(0.34)0.68Zakat Statement of changes in shareholders’ equity(4,853)4,853-Income tax charge Statement of changes in shareholders’ equity(2,020)2,020-Total comprehensive income for the year Statement of changes in shareholders’ equity19,069(6,873)12,196The financial impact of adoption of accounting policy for deferred tax is not material to the financial statements, therefore prior year amounts for such impact have not been restated. As required under IAS 8 “Accounting policies, changes in accounting estimates and errors”, the balances as of 1 January 2018 were not presented in the statement of financial position as change in the accounting policy has not resulted in restatement of the amounts relating to year ended December 31, 2017.Income tax:The income tax expense or credit for the year is the tax payable on the current year’s taxable income, based on the applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company and subsidiaries and associates operate and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions, where appropriate, on the basis of amounts expected to be paid to the tax authorities. Adjustments arising from the final income tax assessments are recorded in the year in which such assessments are made. The income tax expense or credit for the period is the tax payable on the current year’s taxable income based on the applicable income tax rate adjusted for the changes in deferred tax assets and liabilities attributable to the temporary differences and to the unused tax losses.3.2 The Company has adopted the following new standard issued (continued)IFRIC Interpretation 23 Uncertainty over Income Tax Treatment The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of IAS 12 Income Taxes. It does not apply to taxes or levies outside the scope of IAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The Interpretation specifically addresses the following: Whether an entity considers uncertain tax treatments separately The assumptions an entity makes about the examination of tax treatments by taxation authorities How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates How an entity considers changes in facts and circumstances An entity has to determine whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments. The approach that better predicts the resolution of the uncertainty needs to be followed. The Company applies significant judgement in identifying uncertainties over income tax treatments. Upon adoption of the Interpretation, the Company considered whether it has any uncertain tax positions. The Company determined, based on its tax compliance study, that it is probable that its tax treatments will be accepted by the taxation authorities. The Interpretation did not have an impact on the financial statements of the Company.Deferred income tax:Deferred income tax is provided using the liability method on temporary differences arising between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for the taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amounts of assets and liabilities using the tax rates enacted or substantively enacted at the reporting date. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available, and the credits can be utilized. Deferred tax asset is reduced to the extent that it is no longer probable that the related tax benefits will be realized. Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised.3.3 Standards issued but not yet effectiveStandards issued but not yet effective up to the date of issuance of the Company’s financial statements are listed below. The listing is of standards and interpretations issued, which the Company reasonably expects to be applicable at a future date. The Company intends to adopt these standards when they become effective.Standard/InterpretationDescriptionEffective from periods beginning on or after the following dateIFRS 9 Financial InstrumentsSee note belowAmendments to IFRS 3Definition of business1 January 2020Amendments to IAS 1 & IAS 8Definition of material 1 January 2020IFRS 17Insurance Contracts 1 January 2022IFRS 9 – Financial InstrumentsThis standard was published on July 24, 2014 and has replaced IAS 39. The new standard addresses the following items related to financial instruments:a) Classification and measurementIFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss. A financial asset is measured at amortized cost if both:i. the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; andii. the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding (“SPPI”).The financial asset is measured at fair value through other comprehensive income and realized gains or losses would be recycled through profit or loss upon sale, if both conditions are met:i. the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows and for sale; andii. the contractual terms of cash flows are SPPI.Assets not meeting either of these categories are measured at fair value through profit or loss. Additionally, at initial recognition, an entity can use the option to designate a financial asset at fair value through profit or loss if doing so eliminates or significantly reduces an accounting mismatch.For equity instruments that are not held for trading, an entity can also make an irrevocable election to present in other comprehensive income subsequent changes in the fair value of the instruments (including realized gains and losses), dividends being recognized in statement of income.Additionally, for financial liabilities that are designated as at fair value through profit or loss, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognized in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in statement of income.b) ImpairmentThe impairment model under IFRS 9 reflects expected credit losses, as opposed to incurred credit losses under IAS 39. Under the IFRS 9 approach, it is no longer necessary for a credit event to have occurred before credit losses are recognized. Instead, an entity always accounts for expected credit losses and changes in those expected credit losses. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition.c) Hedge accountingIFRS 9 introduces new requirements for hedge accounting that align hedge accounting more closely with Risk Management. The requirements establish a more principles-based approach to the general hedge accounting model. The amendments apply to all hedge accounting with the exception of portfolio fair value hedges of interest rate risk (commonly referred to as “fair value macro hedges”). For these, an entity may continue to apply the hedge accounting requirements currently in IAS 39. This exception was granted largely because the IASB is addressing macro hedge accounting as a separate project.Effective dateThe published effective date of IFRS 9 was January 1, 2018. However, amendments to IFRS 4 – Insurance Contracts: Applying IFRS 9 – Financial Instruments with IFRS 4 – Insurance Contracts, published on September 12, 2016, changes the existing IFRS 4 to allow entities issuing insurance contracts within the scope of IFRS 4 to mitigate certain effects of applying IFRS 9 before the IASB’s new insurance contract standard (IFRS 17 – Insurance Contracts) becomes effective. The amendments introduce two alternative options:1.apply a temporary exemption from implementing IFRS 9 until the earlier of:a)the effective date of a new insurance contract standard; orb)annual reporting periods beginning on or after January 1, 2021. The IASB is proposing to extend the effective date of IFRS 17 and the IFRS 9 temporary exemption in IFRS 4 to January 1, 2022. Additional disclosures related to financial assets are required during the deferral period. This option is only available to entities whose activities are predominately connected with insurance and have not applied IFRS 9 previously; or2.adopt IFRS 9 but, for designated financial assets, remove from profit or loss the effects of some of the accounting mismatches that may occur before the new insurance contract standard is implemented. During the interim period, additional disclosures are required.The Company has performed a detailed assessment beginning January 1, 2017: (1) The carrying amount of the Company’s liabilities arising from contracts within the scope of IFRS 4 (including deposit components or embedded derivatives unbundled from insurance contracts) were compared to the total carrying amount of all its liabilities; and (2) the total carrying amount of the company’s liabilities connected with insurance were compared to the total carrying amount of all its liabilities. Based on these assessments the Company determined that it is eligible for the temporary exemption. Consequently, the Company has decided to defer the implementation of IFRS 9 until the effective date of the new insurance contracts standard. Disclosures related to financial assets required during the deferral period are included in the Company’s financial statements.Impact assessmentAs at December 31, 2019, the Company has total financial assets and insurance related assets amounting to SR 670 million (2018: SR 551 million) and SR 717 million (2018: 367 million), respectively. Currently, financial assets held at amortized cost consist of cash and cash equivalents and certain other receivables amounting to SR 670 million (2018: SR 551 million). Investments are carried currently at fair value through statement of income at SR 110 million (2018: SR 105 million). Credit risk exposure, concentration of credit risk and credit quality of the company’s receivables portfolio are mentioned in notes 5 and 6. The Company financial assets have low credit risk as at December 31, 2019 and 2018. The above is based on high-level impact assessment of IFRS 9. This preliminary assessment is based on currently available information and may be subject to changes arising from further detailed analyses or additional reasonable and supportable information being made available to the Company in the future. Overall, the Company expects some effect of applying the impairment requirements of IFRS 9. However, the impact of the same is not expected to be significant. At present it is not possible to provide reasonable estimate of the effects of application of this new standard as the Company is yet to perform a detailed review. IFRS 17 – Insurance ContractsOverviewThis standard has been published on May 18, 2017, it establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts and supersedes IFRS 4 – Insurance contracts.The new standard applies to insurance contracts issued, to all reinsurance contracts and to investment contracts with discretionary participating features provided the entity also issues insurance contracts. It requires to separate the following components from insurance contracts:i.embedded derivatives, if they meet certain specified criteria;ii.distinct investment components; andiii.any promise to transfer distinct goods or non-insurance services.These components should be accounted for separately in accordance with the related standards (IFRS 9 and IFRS 15). MeasurementIn contrast to the requirements in IFRS 4, which permitted insurers to continue to use the accounting policies for measurement purposes that existed prior to January 2015, IFRS 17 provides the following different measurement models:1)The General Measurement Model (GMM) is based on the following “building blocks”:a)the fulfilment cash flows (FCF), which comprises:probability-weighted estimates of future cash flows;an adjustment to reflect the time value of money (i.e. discounting) and the financial risks associated with those future cash flows;and a risk adjustment for non-financial risk.b)the Contractual Service Margin (CSM). The CSM represents the unearned profit for a group of insurance contracts and will be recognized as the entity provides services in the future. The CSM cannot be negative at inception; any net negative amount of the fulfilment cash flows at inception will be recorded in profit or loss immediately.At the end of each subsequent reporting period the carrying amount of a group of insurance contracts is remeasured to be the sum of:the liability for remaining coverage, which comprises the FCF related to future services and the CSM of the group at that date;and the liability for incurred claims, which is measured as the FCF related to past services allocated to the group at that date.The CSM is adjusted subsequently for changes in cash flows related to future services but the CSM cannot be negative, so changes in future cash flows that are greater than the remaining CSM are recognized in profit or loss. Interest is also accreted on the CSM at rates locked in at initial recognition of a contract (i.e. discount rate used at inception to determine the present value of the estimated cash flows). Moreover, the CSM will be released into profit or loss based on coverage units, reflecting the quantity of the benefits provided and the expected coverage duration of the remaining contracts in the group2)The Variable Fee Approach (VFA):VFA is a mandatory model for measuring contracts with direct participation features (also referred to as ‘direct participating contracts’). This assessment of whether the contract meets these criteria is made at inception of the contract and not reassessed subsequently. For these contracts, the CSM is also adjusted for in addition to adjustment under general model:i.changes in the entity’s share of the fair value of underlying items;ii.changes in the effect of the time value of money and financial risks not relating to the underlying items.In addition, a simplified Premium Allocation Approach (PAA) is permitted for the measurement of the liability for the remaining coverage if it provides a measurement that is not materially different from the general model or if the coverage period for each contract in the group is one year or less. With the PAA, the liability for remaining coverage corresponds to premiums received at initial recognition less insurance acquisition cash flows. The general model remains applicable for the measurement of incurred claims. However, the entity is not required to adjust future cash flows for the time value of money and the effect of financial risk if those cash flows are expected to be paid/received in one year or less from the date the claims are incurred.Effective dateThe IASB issued an Exposure Draft Amendments to IFRS 17 during June 2019 and received comments from various stakeholders. The IASB is currently re-deliberating issues raised by stakeholders. For any proposed amendments to IFRS 17, the IASB will follow its normal due process for standard-setting. The effective date of IFRS 17 and the deferral of the IFRS 9 temporary exemption in IFRS 4, is currently January 1, 2021. Under the current exposure draft, it is proposed to amend the IFRS 17 effective date to reporting periods beginning on or after January 1, 2022. This is a deferral of 1 year compared to the previous date of January 1, 2021. Earlier application is permitted if both IFRS 15 – Revenue from Contracts with Customers and IFRS 9 – Financial Instruments have also been applied. The Company intend to apply the standard on its effective date.TransitionRetrospective application is required. However, if full retrospective application for a group of insurance contracts is impracticable, then the entity is required to choose either a modified retrospective approach or a fair value approach.Presentation and DisclosuresThe Company expects that the new standard will result in a change to the accounting policies for insurance contracts together with amendments to presentation and disclosures. Impact assessmentThe Company is currently assessing the impact of the application and implementation of IFRS 17. As of the date of the publication of these financial statements, the financial impact of adopting the standard has yet to be fully assessed by the Company. The Company has undertaken a Gap Analysis and the key areas of Gaps are as follows: Impact areaSummary of impactFinancial impactNot yet fully assessed by the Company.Data impactThe Company believes that the data impact is not likely to be significant as a major proportion of the company’s business would qualify for measurement under the premium allocation approach.IT systemsWith respect to IT-system, the Company has at present short listed a vendor to provide the necessary technical support to ensure an effective implementation of IFRS 17. The current accounting chart of accounts is under review for amendments to comply with IFRS 17 requirements. In addition, new disclosures will need to be developed.Process impactThe process impact is under evaluation, but no significant process changes are anticipated. However, should the Company shift its focus to majority long term business, the process impact would be significant.Impact on reinsurance arrangementsThe Company’s reinsurance arrangements under the proportional treaties currently are under testing to determine the suitable measurement approach.Impact on policies & control’s frameworksThe Company is in the process of hiring external consultants to modify their current policies control framework, to be more compliant towards the requirements of IFRS 17.Human resources The Company needs to recruit suitably qualified personnel who have a comprehensive understanding of the IFRS 17.The Company has started with their implementation process and have set up a proper team, supervised by a steering committee.The significant accounting policies used in preparing these financial statements are set out below:a)Insurance contractsThe Company issues insurance contracts that transfer insurance risk. Insurance contracts are those contracts where the insurer accepts significant insurance risk from the policyholder by agreeing to compensate the policyholder if a specified uncertain future 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 that are at least 10% more than the benefits payable if the insured event did not occur.Marine insurance is designed to compensate contract holders for damage and liability arising through loss or damage to marine craft and accidents at sea resulting in the total or partial loss of cargoes. For marine insurance, the main risks are loss or damage to marine craft and accidents resulting in the total or partial loss of cargoes. Property insurance contracts mainly compensate the Company’s customers for damage suffered to their properties or for the value of property lost. Customers who undertake commercial activities on their premises could also receive compensation for the loss of earnings caused by the inability to use the insured properties in their business activities (business interruption cover). For property insurance contracts, the main risks are fire, business interruption and burglary.Motor insurance is designed to compensate contract holders for damages suffered to their vehicles or liability to third parties arising through accidents. Contract holders could also receive compensation for fire or theft of their vehicles. In Saudi Arabia, it is compulsory for all vehicles to have minimum third party cover. The Company also issues comprehensive motor policies. Such motor policies cover damages to vehicles due to storm, tempest, flood, fire, theft and personal accident.Accident insurance includes money insurance, fidelity guarantee insurance, business all risk insurance, business travel insurance and exhibition insurance. Liability insurance includes general third-party liability, product liability, workmen’s compensation/employer’s liability and professional indemnity cover protecting the insured’s legal liability arising out of acts of negligence during their business operations.Engineering insurance covers two principal types (a) “Contractors all risk” insurance offering cover during erection or construction of buildings or civil engineering works such as houses, shops, blocks of flats, factory buildings, roads, buildings, roads, bridges, sewage works and reservoirs. (b) “Erection all risk” insurance offering cover during the erection or installation of plant and machinery such as power stations, oil refineries, chemical works, cement works, metallic structures or any factory with plant and machinery. The Engineering line of business also includes machinery breakdown insurance and electronic equipment insurance.Extended Warranty insurance commences when the manufacturer warranty expires and covers all electrical and mechanical damages occurring to the vehicles, as covered in the original manufacturer warranty. Term Life insurance is a policy that pays a pre-determined amount of money called "sum insured" at the time of the insured's death. It covers the insured for a period of time. At the expiration of the policy term no refunds or returns are allowed.Claim and loss adjustment expenses are charged to income as incurred based on the estimated liability for compensation owed to contract holders or third parties damaged by the contract holders. They include direct and indirect claims settlement costs and arise from events that have occurred up to the balance sheet date even if they have not yet been reported to the Company. The Company does not discount its liabilities for unpaid claims. Liabilities for unpaid claims are estimated using the input of assessments for individual cases reported to the Company and statistical analyses for the claims incurred but not reported and to estimate the expected ultimate cost of more complex claims that may be affected by external factors such as court decisions.b)Revenue recognitionRecognition of premium and commission revenuePremiums and commission are recorded in the statement of income based on straight line method over the insurance policy coverage year except for long term polices (construction and engineering) and marine cargo. Unearned premiums are calculated on a straight-line method over the insurance policy coverage except for: Last three months premium at a reporting date is considered as unearned in respect of marine cargo; 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 increases towards the end of the tenure of the policy; andUnearned premiums represent the portion of premiums written relating to the unexpired year of coverage. The change in the provision for unearned premium is taken to the statement of income in the same order that revenue is recognised over the year of risk.Reinsurance contracts that do not transfer significant insurance risk are accounted for directly through the statement of financial position. These are deposit assets or financial liabilities that are recognised based on the consideration paid or received less any explicit identified premiums or fees to be retained by the reinsured. Commission incomeCommission income is recognized on an effective yield basis taking account of the principal outstanding and thecommission rate applicable.c)ClaimsClaims consist of amounts payable to policyholders and third parties and related loss adjustment expenses, net of salvage and other recoveries.Gross outstanding claims comprise the gross estimated cost of claims incurred but not settled at the statement of financial position date together with related claims handling costs, whether reported by the insured or not. Provisions for reported claims not paid as of the statement of financial position date are made on the basis of individual case estimates. In addition, a provision based on management’s judgment and the Company’s prior experience is maintained for the cost of settling claims incurred but not reported including related claims handling costs at the statement of financial position date. The outstanding claims are shown on a gross basis and the related share of the reinsurers is shown separately. Further, the Company does not discount its liability for unpaid claims as substantially all claims are expected to be paid within one year of the statement of financial position date.d)Salvage and subrogation reimbursementSome insurance contracts permit the Company to sell (usually damaged) assets acquired in settling a claim (for example, salvage). The Company may also have the right to pursue third parties for payment of some or all costs (for example, 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 the asset.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 the third party.e)Reinsurance contracts heldReinsurance is distributed between treaty, facultative and excess of loss reinsurance contracts. Contracts entered into by the Company with reinsurers under which the Company is compensated for losses on one or more contracts issued by the Company and that meet the classification requirements for insurance contracts in Note 3(b) are classified as reinsurance contracts held. Contracts that do not meet these classification requirements are classified as financial assets. An asset or liability is recorded in the statement of financial position representing payments due from reinsurers, the share of losses recoverable from reinsurers and premiums due to 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.An impairment review is performed at each reporting date or more frequently when an indication of impairment arises during the reporting year. Impairment occurs when objective evidence exists that the Company may not recover outstanding amounts under the terms of the contract and when the impact on the amounts | 3 |
| Disclosure of issued IFRS not yet adopted [text block] | 3 Significant accounting policiesThe accounting policies, estimates and assumptions used in the preparation of these financial statements are consistent with those used in the preparation of the annual financial statements for the year ended December 31, 2019 except for the adoption of the following:New IFRS, International Financial Reporting and Interpretations Committee’s interpretations (IFRIC) and amendments thereof, adopted by the Company3.1 The Company has adopted the following amendments, interpretations and revisions to existing standards, which were issued by the IASB:Standard / AmendmentsDescriptionIFRIC 23Uncertainty over Income Tax TreatmentsIAS 28Long term interests in associates and joint ventures IAS 19Plan amendments, curtailments or settlements IFRS 3,11 and IAS 12, 23Annual Improvements to IFRS 2015 - 2017 cycle.The adoption of the above amendments and interpretations did not have any significant impact on these financial statements.3.2 The Company has adopted the following new standard issued:IFRS 16 - LeasesThe Company adopted IFRS16 ‘Leases’ the standard replaces the existing guidance on leases, including IAS 17 ‘Leases’, IFRIC 4 “Determining whether an Arrangement contains a Lease”, SIC 15 “Operating Leases Incentives” and SIC 27 “Evaluating the Substance of Transaction in the Legal Form of a Leases”.IFRS 16 was issued in January 2016 and is effective for annual periods commencing on or after 1 January 2019. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and finance lessees to account for all the leases under a single on-balance sheet model similar to the accounting for finance lease under IAS 17. The standard includes two recognition exemption for lease of low value assets (e.g. personal computers) and short-term leases (i.e. leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees are required to separately recognise the special commission expense on the lease liability and the depreciation expense on the right-of-use asset.Presently IFRS 16 has no impact on these financial statements as the Company does not have long term leases.3.2 The Company has adopted the following new standard issued (continued)Zakat and Income taxAs mentioned under the note 2, the basis of preparation of the financial statements has changed as a result of the issuance on latest instructions from SAMA dated 23 July 2019. Previously, zakat and income tax were recognized in the statements of changes in equity as per the SAMA circular no 381000074519 dated 11 April 2017. With the latest instruction issued by SAMA dated 23 July 2019, the Zakat and income tax shall be recognized in the statement of income. The Company has accounted for this change in the accounting for zakat and income tax retrospectively (see note 3) and the effects of the above change are disclosed in note 3 to the financial statements. The change has resulted in reduction of reported income of the Company for the year ended December 31, 2018 by SR 6.8 million. The Change has had no impact on the statement of cashflows for the year ended December 31, 2018.For the year ended December 31, 2018:AccountFinancial statement impactedAs previously reported for year ended 2018Effect of restatementAs restated for the year ended 2018Zakat Statement of income -(4,853)(4,853)Income tax Statement of income -(2,020)(2,020)Net income for the year Statement of income 20,433(6,873)13,560Earnings per share for the year (expressed in SR per share) Statement of income 1.02(0.34)0.68Zakat Statement of changes in shareholders’ equity(4,853)4,853-Income tax charge Statement of changes in shareholders’ equity(2,020)2,020-Total comprehensive income for the year Statement of changes in shareholders’ equity19,069(6,873)12,196The financial impact of adoption of accounting policy for deferred tax is not material to the financial statements, therefore prior year amounts for such impact have not been restated. As required under IAS 8 “Accounting policies, changes in accounting estimates and errors”, the balances as of 1 January 2018 were not presented in the statement of financial position as change in the accounting policy has not resulted in restatement of the amounts relating to year ended December 31, 2017.Income tax:The income tax expense or credit for the year is the tax payable on the current year’s taxable income, based on the applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company and subsidiaries and associates operate and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions, where appropriate, on the basis of amounts expected to be paid to the tax authorities. Adjustments arising from the final income tax assessments are recorded in the year in which such assessments are made. The income tax expense or credit for the period is the tax payable on the current year’s taxable income based on the applicable income tax rate adjusted for the changes in deferred tax assets and liabilities attributable to the temporary differences and to the unused tax losses.3.2 The Company has adopted the following new standard issued (continued)IFRIC Interpretation 23 Uncertainty over Income Tax Treatment The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of IAS 12 Income Taxes. It does not apply to taxes or levies outside the scope of IAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The Interpretation specifically addresses the following: Whether an entity considers uncertain tax treatments separately The assumptions an entity makes about the examination of tax treatments by taxation authorities How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates How an entity considers changes in facts and circumstances An entity has to determine whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments. The approach that better predicts the resolution of the uncertainty needs to be followed. The Company applies significant judgement in identifying uncertainties over income tax treatments. Upon adoption of the Interpretation, the Company considered whether it has any uncertain tax positions. The Company determined, based on its tax compliance study, that it is probable that its tax treatments will be accepted by the taxation authorities. The Interpretation did not have an impact on the financial statements of the Company.Deferred income tax:Deferred income tax is provided using the liability method on temporary differences arising between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for the taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amounts of assets and liabilities using the tax rates enacted or substantively enacted at the reporting date. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available, and the credits can be utilized. Deferred tax asset is reduced to the extent that it is no longer probable that the related tax benefits will be realized. Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised.3.3 Standards issued but not yet effectiveStandards issued but not yet effective up to the date of issuance of the Company’s financial statements are listed below. The listing is of standards and interpretations issued, which the Company reasonably expects to be applicable at a future date. The Company intends to adopt these standards when they become effective.Standard/InterpretationDescriptionEffective from periods beginning on or after the following dateIFRS 9 Financial InstrumentsSee note belowAmendments to IFRS 3Definition of business1 January 2020Amendments to IAS 1 & IAS 8Definition of material 1 January 2020IFRS 17Insurance Contracts 1 January 2022IFRS 9 – Financial InstrumentsThis standard was published on July 24, 2014 and has replaced IAS 39. The new standard addresses the following items related to financial instruments:a) Classification and measurementIFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss. A financial asset is measured at amortized cost if both:i. the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; andii. the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding (“SPPI”).The financial asset is measured at fair value through other comprehensive income and realized gains or losses would be recycled through profit or loss upon sale, if both conditions are met:i. the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows and for sale; andii. the contractual terms of cash flows are SPPI.Assets not meeting either of these categories are measured at fair value through profit or loss. Additionally, at initial recognition, an entity can use the option to designate a financial asset at fair value through profit or loss if doing so eliminates or significantly reduces an accounting mismatch.For equity instruments that are not held for trading, an entity can also make an irrevocable election to present in other comprehensive income subsequent changes in the fair value of the instruments (including realized gains and losses), dividends being recognized in statement of income.Additionally, for financial liabilities that are designated as at fair value through profit or loss, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognized in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in statement of income.b) ImpairmentThe impairment model under IFRS 9 reflects expected credit losses, as opposed to incurred credit losses under IAS 39. Under the IFRS 9 approach, it is no longer necessary for a credit event to have occurred before credit losses are recognized. Instead, an entity always accounts for expected credit losses and changes in those expected credit losses. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition.c) Hedge accountingIFRS 9 introduces new requirements for hedge accounting that align hedge accounting more closely with Risk Management. The requirements establish a more principles-based approach to the general hedge accounting model. The amendments apply to all hedge accounting with the exception of portfolio fair value hedges of interest rate risk (commonly referred to as “fair value macro hedges”). For these, an entity may continue to apply the hedge accounting requirements currently in IAS 39. This exception was granted largely because the IASB is addressing macro hedge accounting as a separate project.Effective dateThe published effective date of IFRS 9 was January 1, 2018. However, amendments to IFRS 4 – Insurance Contracts: Applying IFRS 9 – Financial Instruments with IFRS 4 – Insurance Contracts, published on September 12, 2016, changes the existing IFRS 4 to allow entities issuing insurance contracts within the scope of IFRS 4 to mitigate certain effects of applying IFRS 9 before the IASB’s new insurance contract standard (IFRS 17 – Insurance Contracts) becomes effective. The amendments introduce two alternative options:1.apply a temporary exemption from implementing IFRS 9 until the earlier of:a)the effective date of a new insurance contract standard; orb)annual reporting periods beginning on or after January 1, 2021. The IASB is proposing to extend the effective date of IFRS 17 and the IFRS 9 temporary exemption in IFRS 4 to January 1, 2022. Additional disclosures related to financial assets are required during the deferral period. This option is only available to entities whose activities are predominately connected with insurance and have not applied IFRS 9 previously; or2.adopt IFRS 9 but, for designated financial assets, remove from profit or loss the effects of some of the accounting mismatches that may occur before the new insurance contract standard is implemented. During the interim period, additional disclosures are required.The Company has performed a detailed assessment beginning January 1, 2017: (1) The carrying amount of the Company’s liabilities arising from contracts within the scope of IFRS 4 (including deposit components or embedded derivatives unbundled from insurance contracts) were compared to the total carrying amount of all its liabilities; and (2) the total carrying amount of the company’s liabilities connected with insurance were compared to the total carrying amount of all its liabilities. Based on these assessments the Company determined that it is eligible for the temporary exemption. Consequently, the Company has decided to defer the implementation of IFRS 9 until the effective date of the new insurance contracts standard. Disclosures related to financial assets required during the deferral period are included in the Company’s financial statements.Impact assessmentAs at December 31, 2019, the Company has total financial assets and insurance related assets amounting to SR 670 million (2018: SR 551 million) and SR 717 million (2018: 367 million), respectively. Currently, financial assets held at amortized cost consist of cash and cash equivalents and certain other receivables amounting to SR 670 million (2018: SR 551 million). Investments are carried currently at fair value through statement of income at SR 110 million (2018: SR 105 million). Credit risk exposure, concentration of credit risk and credit quality of the company’s receivables portfolio are mentioned in notes 5 and 6. The Company financial assets have low credit risk as at December 31, 2019 and 2018. The above is based on high-level impact assessment of IFRS 9. This preliminary assessment is based on currently available information and may be subject to changes arising from further detailed analyses or additional reasonable and supportable information being made available to the Company in the future. Overall, the Company expects some effect of applying the impairment requirements of IFRS 9. However, the impact of the same is not expected to be significant. At present it is not possible to provide reasonable estimate of the effects of application of this new standard as the Company is yet to perform a detailed review. IFRS 17 – Insurance ContractsOverviewThis standard has been published on May 18, 2017, it establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts and supersedes IFRS 4 – Insurance contracts.The new standard applies to insurance contracts issued, to all reinsurance contracts and to investment contracts with discretionary participating features provided the entity also issues insurance contracts. It requires to separate the following components from insurance contracts:i.embedded derivatives, if they meet certain specified criteria;ii.distinct investment components; andiii.any promise to transfer distinct goods or non-insurance services.These components should be accounted for separately in accordance with the related standards (IFRS 9 and IFRS 15). MeasurementIn contrast to the requirements in IFRS 4, which permitted insurers to continue to use the accounting policies for measurement purposes that existed prior to January 2015, IFRS 17 provides the following different measurement models:1)The General Measurement Model (GMM) is based on the following “building blocks”:a)the fulfilment cash flows (FCF), which comprises:probability-weighted estimates of future cash flows;an adjustment to reflect the time value of money (i.e. discounting) and the financial risks associated with those future cash flows;and a risk adjustment for non-financial risk.b)the Contractual Service Margin (CSM). The CSM represents the unearned profit for a group of insurance contracts and will be recognized as the entity provides services in the future. The CSM cannot be negative at inception; any net negative amount of the fulfilment cash flows at inception will be recorded in profit or loss immediately.At the end of each subsequent reporting period the carrying amount of a group of insurance contracts is remeasured to be the sum of:the liability for remaining coverage, which comprises the FCF related to future services and the CSM of the group at that date;and the liability for incurred claims, which is measured as the FCF related to past services allocated to the group at that date.The CSM is adjusted subsequently for changes in cash flows related to future services but the CSM cannot be negative, so changes in future cash flows that are greater than the remaining CSM are recognized in profit or loss. Interest is also accreted on the CSM at rates locked in at initial recognition of a contract (i.e. discount rate used at inception to determine the present value of the estimated cash flows). Moreover, the CSM will be released into profit or loss based on coverage units, reflecting the quantity of the benefits provided and the expected coverage duration of the remaining contracts in the group2)The Variable Fee Approach (VFA):VFA is a mandatory model for measuring contracts with direct participation features (also referred to as ‘direct participating contracts’). This assessment of whether the contract meets these criteria is made at inception of the contract and not reassessed subsequently. For these contracts, the CSM is also adjusted for in addition to adjustment under general model:i.changes in the entity’s share of the fair value of underlying items;ii.changes in the effect of the time value of money and financial risks not relating to the underlying items.In addition, a simplified Premium Allocation Approach (PAA) is permitted for the measurement of the liability for the remaining coverage if it provides a measurement that is not materially different from the general model or if the coverage period for each contract in the group is one year or less. With the PAA, the liability for remaining coverage corresponds to premiums received at initial recognition less insurance acquisition cash flows. The general model remains applicable for the measurement of incurred claims. However, the entity is not required to adjust future cash flows for the time value of money and the effect of financial risk if those cash flows are expected to be paid/received in one year or less from the date the claims are incurred.Effective dateThe IASB issued an Exposure Draft Amendments to IFRS 17 during June 2019 and received comments from various stakeholders. The IASB is currently re-deliberating issues raised by stakeholders. For any proposed amendments to IFRS 17, the IASB will follow its normal due process for standard-setting. The effective date of IFRS 17 and the deferral of the IFRS 9 temporary exemption in IFRS 4, is currently January 1, 2021. Under the current exposure draft, it is proposed to amend the IFRS 17 effective date to reporting periods beginning on or after January 1, 2022. This is a deferral of 1 year compared to the previous date of January 1, 2021. Earlier application is permitted if both IFRS 15 – Revenue from Contracts with Customers and IFRS 9 – Financial Instruments have also been applied. The Company intend to apply the standard on its effective date.TransitionRetrospective application is required. However, if full retrospective application for a group of insurance contracts is impracticable, then the entity is required to choose either a modified retrospective approach or a fair value approach.Presentation and DisclosuresThe Company expects that the new standard will result in a change to the accounting policies for insurance contracts together with amendments to presentation and disclosures. Impact assessmentThe Company is currently assessing the impact of the application and implementation of IFRS 17. As of the date of the publication of these financial statements, the financial impact of adopting the standard has yet to be fully assessed by the Company. The Company has undertaken a Gap Analysis and the key areas of Gaps are as follows: Impact areaSummary of impactFinancial impactNot yet fully assessed by the Company.Data impactThe Company believes that the data impact is not likely to be significant as a major proportion of the company’s business would qualify for measurement under the premium allocation approach.IT systemsWith respect to IT-system, the Company has at present short listed a vendor to provide the necessary technical support to ensure an effective implementation of IFRS 17. The current accounting chart of accounts is under review for amendments to comply with IFRS 17 requirements. In addition, new disclosures will need to be developed.Process impactThe process impact is under evaluation, but no significant process changes are anticipated. However, should the Company shift its focus to majority long term business, the process impact would be significant.Impact on reinsurance arrangementsThe Company’s reinsurance arrangements under the proportional treaties currently are under testing to determine the suitable measurement approach.Impact on policies & control’s frameworksThe Company is in the process of hiring external consultants to modify their current policies control framework, to be more compliant towards the requirements of IFRS 17.Human resources The Company needs to recruit suitably qualified personnel who have a comprehensive understanding of the IFRS 17.The Company has started with their implementation process and have set up a proper team, supervised by a steering committee.The significant accounting policies used in preparing these financial statements are set out below:a)Insurance contractsThe Company issues insurance contracts that transfer insurance risk. Insurance contracts are those contracts where the insurer accepts significant insurance risk from the policyholder by agreeing to compensate the policyholder if a specified uncertain future 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 that are at least 10% more than the benefits payable if the insured event did not occur.Marine insurance is designed to compensate contract holders for damage and liability arising through loss or damage to marine craft and accidents at sea resulting in the total or partial loss of cargoes. For marine insurance, the main risks are loss or damage to marine craft and accidents resulting in the total or partial loss of cargoes. Property insurance contracts mainly compensate the Company’s customers for damage suffered to their properties or for the value of property lost. Customers who undertake commercial activities on their premises could also receive compensation for the loss of earnings caused by the inability to use the insured properties in their business activities (business interruption cover). For property insurance contracts, the main risks are fire, business interruption and burglary.Motor insurance is designed to compensate contract holders for damages suffered to their vehicles or liability to third parties arising through accidents. Contract holders could also receive compensation for fire or theft of their vehicles. In Saudi Arabia, it is compulsory for all vehicles to have minimum third party cover. The Company also issues comprehensive motor policies. Such motor policies cover damages to vehicles due to storm, tempest, flood, fire, theft and personal accident.Accident insurance includes money insurance, fidelity guarantee insurance, business all risk insurance, business travel insurance and exhibition insurance. Liability insurance includes general third-party liability, product liability, workmen’s compensation/employer’s liability and professional indemnity cover protecting the insured’s legal liability arising out of acts of negligence during their business operations.Engineering insurance covers two principal types (a) “Contractors all risk” insurance offering cover during erection or construction of buildings or civil engineering works such as houses, shops, blocks of flats, factory buildings, roads, buildings, roads, bridges, sewage works and reservoirs. (b) “Erection all risk” insurance offering cover during the erection or installation of plant and machinery such as power stations, oil refineries, chemical works, cement works, metallic structures or any factory with plant and machinery. The Engineering line of business also includes machinery breakdown insurance and electronic equipment insurance.Extended Warranty insurance commences when the manufacturer warranty expires and covers all electrical and mechanical damages occurring to the vehicles, as covered in the original manufacturer warranty. Term Life insurance is a policy that pays a pre-determined amount of money called "sum insured" at the time of the insured's death. It covers the insured for a period of time. At the expiration of the policy term no refunds or returns are allowed.Claim and loss adjustment expenses are charged to income as incurred based on the estimated liability for compensation owed to contract holders or third parties damaged by the contract holders. They include direct and indirect claims settlement costs and arise from events that have occurred up to the balance sheet date even if they have not yet been reported to the Company. The Company does not discount its liabilities for unpaid claims. Liabilities for unpaid claims are estimated using the input of assessments for individual cases reported to the Company and statistical analyses for the claims incurred but not reported and to estimate the expected ultimate cost of more complex claims that may be affected by external factors such as court decisions.b)Revenue recognitionRecognition of premium and commission revenuePremiums and commission are recorded in the statement of income based on straight line method over the insurance policy coverage year except for long term polices (construction and engineering) and marine cargo. Unearned premiums are calculated on a straight-line method over the insurance policy coverage except for: Last three months premium at a reporting date is considered as unearned in respect of marine cargo; 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 increases towards the end of the tenure of the policy; andUnearned premiums represent the portion of premiums written relating to the unexpired year of coverage. The change in the provision for unearned premium is taken to the statement of income in the same order that revenue is recognised over the year of risk.Reinsurance contracts that do not transfer significant insurance risk are accounted for directly through the statement of financial position. These are deposit assets or financial liabilities that are recognised based on the consideration paid or received less any explicit identified premiums or fees to be retained by the reinsured. Commission incomeCommission income is recognized on an effective yield basis taking account of the principal outstanding and thecommission rate applicable.c)ClaimsClaims consist of amounts payable to policyholders and third parties and related loss adjustment expenses, net of salvage and other recoveries.Gross outstanding claims comprise the gross estimated cost of claims incurred but not settled at the statement of financial position date together with related claims handling costs, whether reported by the insured or not. Provisions for reported claims not paid as of the statement of financial position date are made on the basis of individual case estimates. In addition, a provision based on management’s judgment and the Company’s prior experience is maintained for the cost of settling claims incurred but not reported including related claims handling costs at the statement of financial position date. The outstanding claims are shown on a gross basis and the related share of the reinsurers is shown separately. Further, the Company does not discount its liability for unpaid claims as substantially all claims are expected to be paid within one year of the statement of financial position date.d)Salvage and subrogation reimbursementSome insurance contracts permit the Company to sell (usually damaged) assets acquired in settling a claim (for example, salvage). The Company may also have the right to pursue third parties for payment of some or all costs (for example, 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 the asset.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 the third party.e)Reinsurance contracts heldReinsurance is distributed between treaty, facultative and excess of loss reinsurance contracts. Contracts entered into by the Company with reinsurers under which the Company is compensated for losses on one or more contracts issued by the Company and that meet the classification requirements for insurance contracts in Note 3(b) are classified as reinsurance contracts held. Contracts that do not meet these classification requirements are classified as financial assets. An asset or liability is recorded in the statement of financial position representing payments due from reinsurers, the share of losses recoverable from reinsurers and premiums due to 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.An impairment review is performed at each reporting date or more frequently when an indication of impairment arises during the reporting year. Impairment occurs when objective evidence exists that the Company may not recover outstanding amounts under the terms of the contract and when the impact on the amounts | 3 |
| Disclosure of summary of significant accounting policies [abstract] | | |
| Disclosure of summary of significant accounting policies, general comment [text block] | 3 Significant accounting policiesThe accounting policies, estimates and assumptions used in the preparation of these financial statements are consistent with those used in the preparation of the annual financial statements for the year ended December 31, 2019 except for the adoption of the following:New IFRS, International Financial Reporting and Interpretations Committee’s interpretations (IFRIC) and amendments thereof, adopted by the Company3.1 The Company has adopted the following amendments, interpretations and revisions to existing standards, which were issued by the IASB:Standard / AmendmentsDescriptionIFRIC 23Uncertainty over Income Tax TreatmentsIAS 28Long term interests in associates and joint ventures IAS 19Plan amendments, curtailments or settlements IFRS 3,11 and IAS 12, 23Annual Improvements to IFRS 2015 - 2017 cycle.The adoption of the above amendments and interpretations did not have any significant impact on these financial statements.3.2 The Company has adopted the following new standard issued:IFRS 16 - LeasesThe Company adopted IFRS16 ‘Leases’ the standard replaces the existing guidance on leases, including IAS 17 ‘Leases’, IFRIC 4 “Determining whether an Arrangement contains a Lease”, SIC 15 “Operating Leases Incentives” and SIC 27 “Evaluating the Substance of Transaction in the Legal Form of a Leases”.IFRS 16 was issued in January 2016 and is effective for annual periods commencing on or after 1 January 2019. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and finance lessees to account for all the leases under a single on-balance sheet model similar to the accounting for finance lease under IAS 17. The standard includes two recognition exemption for lease of low value assets (e.g. personal computers) and short-term leases (i.e. leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees are required to separately recognise the special commission expense on the lease liability and the depreciation expense on the right-of-use asset.Presently IFRS 16 has no impact on these financial statements as the Company does not have long term leases.3.2 The Company has adopted the following new standard issued (continued)Zakat and Income taxAs mentioned under the note 2, the basis of preparation of the financial statements has changed as a result of the issuance on latest instructions from SAMA dated 23 July 2019. Previously, zakat and income tax were recognized in the statements of changes in equity as per the SAMA circular no 381000074519 dated 11 April 2017. With the latest instruction issued by SAMA dated 23 July 2019, the Zakat and income tax shall be recognized in the statement of income. The Company has accounted for this change in the accounting for zakat and income tax retrospectively (see note 3) and the effects of the above change are disclosed in note 3 to the financial statements. The change has resulted in reduction of reported income of the Company for the year ended December 31, 2018 by SR 6.8 million. The Change has had no impact on the statement of cashflows for the year ended December 31, 2018.For the year ended December 31, 2018:AccountFinancial statement impactedAs previously reported for year ended 2018Effect of restatementAs restated for the year ended 2018Zakat Statement of income -(4,853)(4,853)Income tax Statement of income -(2,020)(2,020)Net income for the year Statement of income 20,433(6,873)13,560Earnings per share for the year (expressed in SR per share) Statement of income 1.02(0.34)0.68Zakat Statement of changes in shareholders’ equity(4,853)4,853-Income tax charge Statement of changes in shareholders’ equity(2,020)2,020-Total comprehensive income for the year Statement of changes in shareholders’ equity19,069(6,873)12,196The financial impact of adoption of accounting policy for deferred tax is not material to the financial statements, therefore prior year amounts for such impact have not been restated. As required under IAS 8 “Accounting policies, changes in accounting estimates and errors”, the balances as of 1 January 2018 were not presented in the statement of financial position as change in the accounting policy has not resulted in restatement of the amounts relating to year ended December 31, 2017.Income tax:The income tax expense or credit for the year is the tax payable on the current year’s taxable income, based on the applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company and subsidiaries and associates operate and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions, where appropriate, on the basis of amounts expected to be paid to the tax authorities. Adjustments arising from the final income tax assessments are recorded in the year in which such assessments are made. The income tax expense or credit for the period is the tax payable on the current year’s taxable income based on the applicable income tax rate adjusted for the changes in deferred tax assets and liabilities attributable to the temporary differences and to the unused tax losses.3.2 The Company has adopted the following new standard issued (continued)IFRIC Interpretation 23 Uncertainty over Income Tax Treatment The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of IAS 12 Income Taxes. It does not apply to taxes or levies outside the scope of IAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The Interpretation specifically addresses the following: Whether an entity considers uncertain tax treatments separately The assumptions an entity makes about the examination of tax treatments by taxation authorities How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates How an entity considers changes in facts and circumstances An entity has to determine whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments. The approach that better predicts the resolution of the uncertainty needs to be followed. The Company applies significant judgement in identifying uncertainties over income tax treatments. Upon adoption of the Interpretation, the Company considered whether it has any uncertain tax positions. The Company determined, based on its tax compliance study, that it is probable that its tax treatments will be accepted by the taxation authorities. The Interpretation did not have an impact on the financial statements of the Company.Deferred income tax:Deferred income tax is provided using the liability method on temporary differences arising between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for the taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amounts of assets and liabilities using the tax rates enacted or substantively enacted at the reporting date. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available, and the credits can be utilized. Deferred tax asset is reduced to the extent that it is no longer probable that the related tax benefits will be realized. Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised.3.3 Standards issued but not yet effectiveStandards issued but not yet effective up to the date of issuance of the Company’s financial statements are listed below. The listing is of standards and interpretations issued, which the Company reasonably expects to be applicable at a future date. The Company intends to adopt these standards when they become effective.Standard/InterpretationDescriptionEffective from periods beginning on or after the following dateIFRS 9 Financial InstrumentsSee note belowAmendments to IFRS 3Definition of business1 January 2020Amendments to IAS 1 & IAS 8Definition of material 1 January 2020IFRS 17Insurance Contracts 1 January 2022IFRS 9 – Financial InstrumentsThis standard was published on July 24, 2014 and has replaced IAS 39. The new standard addresses the following items related to financial instruments:a) Classification and measurementIFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss. A financial asset is measured at amortized cost if both:i. the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; andii. the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding (“SPPI”).The financial asset is measured at fair value through other comprehensive income and realized gains or losses would be recycled through profit or loss upon sale, if both conditions are met:i. the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows and for sale; andii. the contractual terms of cash flows are SPPI.Assets not meeting either of these categories are measured at fair value through profit or loss. Additionally, at initial recognition, an entity can use the option to designate a financial asset at fair value through profit or loss if doing so eliminates or significantly reduces an accounting mismatch.For equity instruments that are not held for trading, an entity can also make an irrevocable election to present in other comprehensive income subsequent changes in the fair value of the instruments (including realized gains and losses), dividends being recognized in statement of income.Additionally, for financial liabilities that are designated as at fair value through profit or loss, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognized in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in statement of income.b) ImpairmentThe impairment model under IFRS 9 reflects expected credit losses, as opposed to incurred credit losses under IAS 39. Under the IFRS 9 approach, it is no longer necessary for a credit event to have occurred before credit losses are recognized. Instead, an entity always accounts for expected credit losses and changes in those expected credit losses. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition.c) Hedge accountingIFRS 9 introduces new requirements for hedge accounting that align hedge accounting more closely with Risk Management. The requirements establish a more principles-based approach to the general hedge accounting model. The amendments apply to all hedge accounting with the exception of portfolio fair value hedges of interest rate risk (commonly referred to as “fair value macro hedges”). For these, an entity may continue to apply the hedge accounting requirements currently in IAS 39. This exception was granted largely because the IASB is addressing macro hedge accounting as a separate project.Effective dateThe published effective date of IFRS 9 was January 1, 2018. However, amendments to IFRS 4 – Insurance Contracts: Applying IFRS 9 – Financial Instruments with IFRS 4 – Insurance Contracts, published on September 12, 2016, changes the existing IFRS 4 to allow entities issuing insurance contracts within the scope of IFRS 4 to mitigate certain effects of applying IFRS 9 before the IASB’s new insurance contract standard (IFRS 17 – Insurance Contracts) becomes effective. The amendments introduce two alternative options:1.apply a temporary exemption from implementing IFRS 9 until the earlier of:a)the effective date of a new insurance contract standard; orb)annual reporting periods beginning on or after January 1, 2021. The IASB is proposing to extend the effective date of IFRS 17 and the IFRS 9 temporary exemption in IFRS 4 to January 1, 2022. Additional disclosures related to financial assets are required during the deferral period. This option is only available to entities whose activities are predominately connected with insurance and have not applied IFRS 9 previously; or2.adopt IFRS 9 but, for designated financial assets, remove from profit or loss the effects of some of the accounting mismatches that may occur before the new insurance contract standard is implemented. During the interim period, additional disclosures are required.The Company has performed a detailed assessment beginning January 1, 2017: (1) The carrying amount of the Company’s liabilities arising from contracts within the scope of IFRS 4 (including deposit components or embedded derivatives unbundled from insurance contracts) were compared to the total carrying amount of all its liabilities; and (2) the total carrying amount of the company’s liabilities connected with insurance were compared to the total carrying amount of all its liabilities. Based on these assessments the Company determined that it is eligible for the temporary exemption. Consequently, the Company has decided to defer the implementation of IFRS 9 until the effective date of the new insurance contracts standard. Disclosures related to financial assets required during the deferral period are included in the Company’s financial statements.Impact assessmentAs at December 31, 2019, the Company has total financial assets and insurance related assets amounting to SR 670 million (2018: SR 551 million) and SR 717 million (2018: 367 million), respectively. Currently, financial assets held at amortized cost consist of cash and cash equivalents and certain other receivables amounting to SR 670 million (2018: SR 551 million). Investments are carried currently at fair value through statement of income at SR 110 million (2018: SR 105 million). Credit risk exposure, concentration of credit risk and credit quality of the company’s receivables portfolio are mentioned in notes 5 and 6. The Company financial assets have low credit risk as at December 31, 2019 and 2018. The above is based on high-level impact assessment of IFRS 9. This preliminary assessment is based on currently available information and may be subject to changes arising from further detailed analyses or additional reasonable and supportable information being made available to the Company in the future. Overall, the Company expects some effect of applying the impairment requirements of IFRS 9. However, the impact of the same is not expected to be significant. At present it is not possible to provide reasonable estimate of the effects of application of this new standard as the Company is yet to perform a detailed review. IFRS 17 – Insurance ContractsOverviewThis standard has been published on May 18, 2017, it establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts and supersedes IFRS 4 – Insurance contracts.The new standard applies to insurance contracts issued, to all reinsurance contracts and to investment contracts with discretionary participating features provided the entity also issues insurance contracts. It requires to separate the following components from insurance contracts:i.embedded derivatives, if they meet certain specified criteria;ii.distinct investment components; andiii.any promise to transfer distinct goods or non-insurance services.These components should be accounted for separately in accordance with the related standards (IFRS 9 and IFRS 15). MeasurementIn contrast to the requirements in IFRS 4, which permitted insurers to continue to use the accounting policies for measurement purposes that existed prior to January 2015, IFRS 17 provides the following different measurement models:1)The General Measurement Model (GMM) is based on the following “building blocks”:a)the fulfilment cash flows (FCF), which comprises:probability-weighted estimates of future cash flows;an adjustment to reflect the time value of money (i.e. discounting) and the financial risks associated with those future cash flows;and a risk adjustment for non-financial risk.b)the Contractual Service Margin (CSM). The CSM represents the unearned profit for a group of insurance contracts and will be recognized as the entity provides services in the future. The CSM cannot be negative at inception; any net negative amount of the fulfilment cash flows at inception will be recorded in profit or loss immediately.At the end of each subsequent reporting period the carrying amount of a group of insurance contracts is remeasured to be the sum of:the liability for remaining coverage, which comprises the FCF related to future services and the CSM of the group at that date;and the liability for incurred claims, which is measured as the FCF related to past services allocated to the group at that date.The CSM is adjusted subsequently for changes in cash flows related to future services but the CSM cannot be negative, so changes in future cash flows that are greater than the remaining CSM are recognized in profit or loss. Interest is also accreted on the CSM at rates locked in at initial recognition of a contract (i.e. discount rate used at inception to determine the present value of the estimated cash flows). Moreover, the CSM will be released into profit or loss based on coverage units, reflecting the quantity of the benefits provided and the expected coverage duration of the remaining contracts in the group2)The Variable Fee Approach (VFA):VFA is a mandatory model for measuring contracts with direct participation features (also referred to as ‘direct participating contracts’). This assessment of whether the contract meets these criteria is made at inception of the contract and not reassessed subsequently. For these contracts, the CSM is also adjusted for in addition to adjustment under general model:i.changes in the entity’s share of the fair value of underlying items;ii.changes in the effect of the time value of money and financial risks not relating to the underlying items.In addition, a simplified Premium Allocation Approach (PAA) is permitted for the measurement of the liability for the remaining coverage if it provides a measurement that is not materially different from the general model or if the coverage period for each contract in the group is one year or less. With the PAA, the liability for remaining coverage corresponds to premiums received at initial recognition less insurance acquisition cash flows. The general model remains applicable for the measurement of incurred claims. However, the entity is not required to adjust future cash flows for the time value of money and the effect of financial risk if those cash flows are expected to be paid/received in one year or less from the date the claims are incurred.Effective dateThe IASB issued an Exposure Draft Amendments to IFRS 17 during June 2019 and received comments from various stakeholders. The IASB is currently re-deliberating issues raised by stakeholders. For any proposed amendments to IFRS 17, the IASB will follow its normal due process for standard-setting. The effective date of IFRS 17 and the deferral of the IFRS 9 temporary exemption in IFRS 4, is currently January 1, 2021. Under the current exposure draft, it is proposed to amend the IFRS 17 effective date to reporting periods beginning on or after January 1, 2022. This is a deferral of 1 year compared to the previous date of January 1, 2021. Earlier application is permitted if both IFRS 15 – Revenue from Contracts with Customers and IFRS 9 – Financial Instruments have also been applied. The Company intend to apply the standard on its effective date.TransitionRetrospective application is required. However, if full retrospective application for a group of insurance contracts is impracticable, then the entity is required to choose either a modified retrospective approach or a fair value approach.Presentation and DisclosuresThe Company expects that the new standard will result in a change to the accounting policies for insurance contracts together with amendments to presentation and disclosures. Impact assessmentThe Company is currently assessing the impact of the application and implementation of IFRS 17. As of the date of the publication of these financial statements, the financial impact of adopting the standard has yet to be fully assessed by the Company. The Company has undertaken a Gap Analysis and the key areas of Gaps are as follows: Impact areaSummary of impactFinancial impactNot yet fully assessed by the Company.Data impactThe Company believes that the data impact is not likely to be significant as a major proportion of the company’s business would qualify for measurement under the premium allocation approach.IT systemsWith respect to IT-system, the Company has at present short listed a vendor to provide the necessary technical support to ensure an effective implementation of IFRS 17. The current accounting chart of accounts is under review for amendments to comply with IFRS 17 requirements. In addition, new disclosures will need to be developed.Process impactThe process impact is under evaluation, but no significant process changes are anticipated. However, should the Company shift its focus to majority long term business, the process impact would be significant.Impact on reinsurance arrangementsThe Company’s reinsurance arrangements under the proportional treaties currently are under testing to determine the suitable measurement approach.Impact on policies & control’s frameworksThe Company is in the process of hiring external consultants to modify their current policies control framework, to be more compliant towards the requirements of IFRS 17.Human resources The Company needs to recruit suitably qualified personnel who have a comprehensive understanding of the IFRS 17.The Company has started with their implementation process and have set up a proper team, supervised by a steering committee.The significant accounting policies used in preparing these financial statements are set out below:a)Insurance contractsThe Company issues insurance contracts that transfer insurance risk. Insurance contracts are those contracts where the insurer accepts significant insurance risk from the policyholder by agreeing to compensate the policyholder if a specified uncertain future 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 that are at least 10% more than the benefits payable if the insured event did not occur.Marine insurance is designed to compensate contract holders for damage and liability arising through loss or damage to marine craft and accidents at sea resulting in the total or partial loss of cargoes. For marine insurance, the main risks are loss or damage to marine craft and accidents resulting in the total or partial loss of cargoes. Property insurance contracts mainly compensate the Company’s customers for damage suffered to their properties or for the value of property lost. Customers who undertake commercial activities on their premises could also receive compensation for the loss of earnings caused by the inability to use the insured properties in their business activities (business interruption cover). For property insurance contracts, the main risks are fire, business interruption and burglary.Motor insurance is designed to compensate contract holders for damages suffered to their vehicles or liability to third parties arising through accidents. Contract holders could also receive compensation for fire or theft of their vehicles. In Saudi Arabia, it is compulsory for all vehicles to have minimum third party cover. The Company also issues comprehensive motor policies. Such motor policies cover damages to vehicles due to storm, tempest, flood, fire, theft and personal accident.Accident insurance includes money insurance, fidelity guarantee insurance, business all risk insurance, business travel insurance and exhibition insurance. Liability insurance includes general third-party liability, product liability, workmen’s compensation/employer’s liability and professional indemnity cover protecting the insured’s legal liability arising out of acts of negligence during their business operations.Engineering insurance covers two principal types (a) “Contractors all risk” insurance offering cover during erection or construction of buildings or civil engineering works such as houses, shops, blocks of flats, factory buildings, roads, buildings, roads, bridges, sewage works and reservoirs. (b) “Erection all risk” insurance offering cover during the erection or installation of plant and machinery such as power stations, oil refineries, chemical works, cement works, metallic structures or any factory with plant and machinery. The Engineering line of business also includes machinery breakdown insurance and electronic equipment insurance.Extended Warranty insurance commences when the manufacturer warranty expires and covers all electrical and mechanical damages occurring to the vehicles, as covered in the original manufacturer warranty. Term Life insurance is a policy that pays a pre-determined amount of money called "sum insured" at the time of the insured's death. It covers the insured for a period of time. At the expiration of the policy term no refunds or returns are allowed.Claim and loss adjustment expenses are charged to income as incurred based on the estimated liability for compensation owed to contract holders or third parties damaged by the contract holders. They include direct and indirect claims settlement costs and arise from events that have occurred up to the balance sheet date even if they have not yet been reported to the Company. The Company does not discount its liabilities for unpaid claims. Liabilities for unpaid claims are estimated using the input of assessments for individual cases reported to the Company and statistical analyses for the claims incurred but not reported and to estimate the expected ultimate cost of more complex claims that may be affected by external factors such as court decisions.b)Revenue recognitionRecognition of premium and commission revenuePremiums and commission are recorded in the statement of income based on straight line method over the insurance policy coverage year except for long term polices (construction and engineering) and marine cargo. Unearned premiums are calculated on a straight-line method over the insurance policy coverage except for: Last three months premium at a reporting date is considered as unearned in respect of marine cargo; 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 increases towards the end of the tenure of the policy; andUnearned premiums represent the portion of premiums written relating to the unexpired year of coverage. The change in the provision for unearned premium is taken to the statement of income in the same order that revenue is recognised over the year of risk.Reinsurance contracts that do not transfer significant insurance risk are accounted for directly through the statement of financial position. These are deposit assets or financial liabilities that are recognised based on the consideration paid or received less any explicit identified premiums or fees to be retained by the reinsured. Commission incomeCommission income is recognized on an effective yield basis taking account of the principal outstanding and thecommission rate applicable.c)ClaimsClaims consist of amounts payable to policyholders and third parties and related loss adjustment expenses, net of salvage and other recoveries.Gross outstanding claims comprise the gross estimated cost of claims incurred but not settled at the statement of financial position date together with related claims handling costs, whether reported by the insured or not. Provisions for reported claims not paid as of the statement of financial position date are made on the basis of individual case estimates. In addition, a provision based on management’s judgment and the Company’s prior experience is maintained for the cost of settling claims incurred but not reported including related claims handling costs at the statement of financial position date. The outstanding claims are shown on a gross basis and the related share of the reinsurers is shown separately. Further, the Company does not discount its liability for unpaid claims as substantially all claims are expected to be paid within one year of the statement of financial position date.d)Salvage and subrogation reimbursementSome insurance contracts permit the Company to sell (usually damaged) assets acquired in settling a claim (for example, salvage). The Company may also have the right to pursue third parties for payment of some or all costs (for example, 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 the asset.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 the third party.e)Reinsurance contracts heldReinsurance is distributed between treaty, facultative and excess of loss reinsurance contracts. Contracts entered into by the Company with reinsurers under which the Company is compensated for losses on one or more contracts issued by the Company and that meet the classification requirements for insurance contracts in Note 3(b) are classified as reinsurance contracts held. Contracts that do not meet these classification requirements are classified as financial assets. An asset or liability is recorded in the statement of financial position representing payments due from reinsurers, the share of losses recoverable from reinsurers and premiums due to 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.An impairment review is performed at each reporting date or more frequently when an indication of impairment arises during the reporting year. Impairment occurs when objective evidence exists that the Company may not recover outstanding amounts under the terms of the contract and when the impact on the amounts | 3 |
| Description of accounting policy for cash and cash equivalents [text block] | 4Cash and cash equivalents20192018Cash in hand2828Bank balances32,80435,282Deposits with original maturity of less than 3 months 321,875288,750354,707324,060The bank balances and deposits are with a bank which is a related party, registered in Saudi Arabia and are denominated in Saudi Riyals and US Dollars. The deposits have an original maturity of less than three months and yield income at rates up to 2% per annum (2018: up to 2% per annum). | 4 |
| Description of accounting policy for zakat [text block] | Zakat and income tax21.1Components of zakat baseSignificant components of zakat base of the Company attributable to the Saudi shareholders, which are subject to adjustment under zakat and income tax regulations, are shareholders’ equity at the beginning of the year, adjusted net income and certain other items. Zakat base has been computed based on the Company’s understanding of the zakat regulations enforced in the Kingdom of Saudi Arabia. The zakat regulations in Saudi Arabia are subject to different interpretations, and the assessments to be raised by the General Authority of Zakat and Tax (“GAZT”) could be different from the declaration filed by the Company.21.2Provision for zakat and income tax2019 2018 Opening balance7,3057,205Charge for zakat4,1614,853Charge for income tax1,1842,020Payments of zakat(4,784)(4,559)Payment of income tax(292)(2,056)Reduction in tax recoverable(185)(158)Other charges7-Tax paid in advance(1,543)-Closing balance5,8537,305Zakat is payable at 2.5% of higher of the approximate zakat base and adjusted net income attributable to Saudi shareholders.Provision for income tax is payable at 20% of the adjusted net income attributable to the foreign shareholders of the Company, less allowances for foreign shareholders’ share in the losses carry forwarded from previous year calculated in accordance with the guidelines provided in the income tax regulations. Income tax paid is recovered from foreign shareholders.The shareholding percentage subject to zakat and income tax is as follows:2019 2018 %%Zakat74.4474.44Income tax25.5625.56Status of assessmentsThe Company has filed its tax returns with the General Authority of Zakat and Tax (“GAZT”) from inception up to 2017. The Company’s tax and zakat position has been finalized up to the years ended December 31, 2012. The tax returns filed for the years from 2013 to 2017 are currently being reviewed by the GAZT. The tax return for 2013 is deemed to be finalized as no queries has been received from the GAZT and the statutory time limit of 5 years is over.The Company has received the final assessment for 2018 for zakat and income tax, the assessment has raised additional tax and Zakat liability for SR 174 thousand. Management has accepted this assessment and has accrued for this amount in these financial statements.In addition to above, the Company has also received an assessment for the 2018 withholding tax liability in which the GAZT has imposed additional taxes, including penalties, of SR 11.37 million. Management believes that the assessment raised is without merit and has appealed against this assessment. | 21 |
| Description of accounting policy for fair value measurement [text block] | 17Fair 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 advantages accessible market for the asset or liabilityThe fair values of on-balance sheet financial instruments are not significantly different from their carrying amounts included in these financial statements.Determination of fair value and fair value hierarchyThe Company uses the following hierarchy for determining and disclosing the fair value of financial instruments:Level 1: quoted prices in active markets for the same or identical instrument that an entity can access at the measurement date;Level 2: quoted prices in active markets for similar assets and liabilities or other valuation techniques for which all significant inputs are based on observable market data; andLevel 3: valuation techniques for which any significant input is not based on observable market data.As at December 31, 2019 and December 31, 2018, all financial instruments which are fair valued are Level 3 instruments except for investment in sukuks and equity amounting to SR 30.03 million (2018: SR 33.84 million) and SR 3.2 million (2018: SR 3.75 million) which are Level 1 investments. The Company ascertains the Level 3 fair values based on a valuation technique which is primarily derived by net assets value of the respective investee at the year end. There are no transfers between Level 1, Level 2 and Level 3 during the year.Available-for-sale investment is carried at cost as its fair value cannot be measured reliably. | 17 |
| Description of accounting policy for investment income [text block] | 8Investments Note20192018Fair value through statement of income investments (FVSI)8.1110,332105,004Available-for-sale investment8.21,9231,923Investment in equity shares8.3313-112,568106,9278.1Fair value through statement of incomeMovement is as follows:For the year ended December 31, 2019For the year ended December 31, 2018Balance as at beginning of the year105,004103,231Changes in fair value of investments5,3281,773Balance as at end of the year110,332105,004The analysis of the composition of investments is as follows:20192018Cash and cash equivalents2,348 706Equity2,9173,752Murabaha placements35,70028,400Mutual funds39,34238,305Sukuks 30,02533,841Total Investments110,332105,0048.2 Available-for-sale investmentThis represents the Company’s 3.85% (December 31, 2018: 3.85%) holding in Najm for Insurance Services Company, a Saudi Closed Joint Stock Company. These shares are un-quoted and are carried at cost. 8.3 Investment in equity sharesThis represents Company’s investment in Saudi Arabian Oil Co. These represent 8,870 shares at a market price of SR 35.25 per share at December 31, 2019. 20192018Additions during the year284-Change in fair value of investment29-Balance as at the end of the year313- | 8 |
| Description of accounting policy for segment reporting [text block] | 19 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 (CODM) in order to allocate resources to the segments and to assess its performance. Transactions between the operating segments are on normal commercial terms and conditions. The revenue from external parties reported to the Board is measured in a manner consistent with that in the income statement. Segment assets and liabilities comprise operating assets and liabilities.There have been no changes to the basis of segmentation or the measurement basis for the segment profit or loss since December 31, 2018. Segment assets do not include cash and cash equivalents, premiums receivables, investments, due from reinsurers, prepaid expenses and other assets, property and equipment, statutory deposit and accrued income on statutory deposit. Accordingly, they are included in unallocated assets. Segment liabilities do not include policyholders payable, accrued expenses and other liabilities, due to reinsurers, agents, brokers and third-party administrators, surplus distribution payable, zakat and income tax, and accrued income on statutory deposit. Accordingly, they are included in unallocated liabilities.These unallocated assets and liabilities are not reported to CODM under related segments and are monitored on a centralized basis.The segment information provided to the Company’s Board of Directors for the reportable segments for the Company’s total assets and liabilities at December 31, 2019 and December 31, 2018, its total revenues, expenses, and net income for the year then ended, are as follows:MarinePropertyMotorEngineeringAccident & liabilityExtended warrantyTerm lifeTotal For the year ended December 31, 2019Revenues Gross premiums written 56,410106,868390,20754,33432,12122,25372,851735,044Reinsurance premiums ceded (43,419)(95,310)(9,764)(50,740)(22,821)(22,253)(62,288)(306,595)Excess of loss expenses(2,290)(3,609)(5,425)(1,000)(300)-(119)(12,743)Net premiums written10,7017,949375,0182,5949,000-10,444415,706Change in unearned premiums, net(687)(319)(3,333)(433)(760)-(96)(5,628)Net premiums earned10,0147,630371,6852,1618,240-10,348410,078Reinsurance commissions 9,85919,0382,9069,8775,83210,46918,05876,039Other underwriting income84711002529-10319Total revenues19,95726,739374,69112,06314,10110,46928,416486,436Cost and expensesGross claims paid and loss adjustment expenses135,00426,023315,19113,3063,6005,38442,700541,208Reinsurer’s share of claims paid(131,960)(23,757)(17,148)(12,438)(2,851)(5,384)(35,532)(229,070)Net claims paid3,0442,266298,043868749-7,168312,138Changes in outstanding claims, net1,925391(11,358)1,8681,128-53(5,993)Changes in incurred but not reported claims, net(1,281)7112,476(496)(291)-(524)9,955Net claims incurred3,6882,728299,1612,2401,586-6,697316,100-Premium deficiency reserve(16)(1,721)(9,820)(819)---(12,376)Additional unexpired risk reserve---14---14Unallocated loss adjusted expenses(636)(117)2,467(98)143-(252)1,507Policy acquisition costs5,8149,41523,1015,3933,2308,6459,41765,015Total underwriting cost and expenses8,85010,305314,9096,7304,9598,64515,862370,260Net underwriting income 11,10716,43459,7825,3339,1421,82412,554116,176Other operating (expenses) / incomeAllowance for impairment of doubtful debts(7,473)General and administration expenses(110,329)Commission income on deposits7,411Unrealized gain on investments5,357Other income15,153Total other operating expenses(89,881)Net income before allocation26,295Net income attributed to the policyholders(2,512)Net income for the year attributable to the shareholders, before zakat and income tax23,783Zakat(4,161)Income tax(1,184)Net income for the year 18,438MarinePropertyMotorEngineer-ingAccident & liabilityExtended warrantyTerm lifeTotal (Restated) For the year ended December 31, 2018RevenuesGross premiums written 37,172103,137424,78641,55332,94021,14951,587712,324Reinsurance premiums ceded(26,749)(95,024)(31,941)(38,385)(24,723)(21,149)(45,678)(283,649)Excess of loss expenses(1,053)(2,185)(3,902)(721)(66)-(79)(8,006)Net premiums written9,3705,928388,9432,4478,151-5,830420,669Change in unearned premiums, net(603)159(49,989)1,900425-502(47,606)Net premiums earned8,7676,087338,9544,3478,576-6,332373,063Reinsurance commissions7,00720,3825,3927,4455,69912,86014,13972,924Other underwriting income96382202026-6406Total revenues15,87026,507344,56611,81214,30112,86020,477446,393Cost and expensesGross claims paid and loss adjustment expenses8,4954,781229,59115,3564,5646,75329,069298,609Reinsurer’s share of claims paid(6,742)(4,161)(22,493)(14,753)(2,704)(6,753)(25,198)(82,804)Net claims paid1,753620207,0986031,860-3,871215,805Changes in outstanding claims55732136,0301,434(586)-61438,370Changes in incurred but not reported claims, net429(1,393)(6,301)(69)667-58(6,609)Net claims incurred2,739(452)236,8271,9681,941-4,543247,566Reversal of reinsurance reserves-(2,451)(1,146)----(3,597)Premium deficiency reserve151,72120,665820---23,221Additional unexpired risk reserve---385---385Unallocated loss adjustment expenses8532711,112305345-6213,507Policy acquisition costs3,8339,78326,9494,0853,43110,7236,51465,318Total underwriting cost and expenses7,4408,872284,4077,5635,71710,72311,678336,400Net underwriting income 8,43017,63560,1594,2498,5842,1378,799109,993Other operating (expenses) / incomeAllowance for impairment of doubtful debts(7,900)General and administration expenses(95,272)Commission income on deposits5,085Unrealized gain on investments1,773Other income9,107Total other operating expenses(87,207)Net income before allocation 22,786Net income attributed to the policyholders (2,353)Net income for the year attributable to the shareholders, before zakat and income tax20,433Zakat(4,853)Income tax(2,020)Net income for the year13,560 MarinePropertyMotorEngineer-ingAccident & liabilityExtended warrantyTerm life TotalAs at December 31, 2019AssetsReinsurers’ share of unearned premiums14,29425,4763,67020,13111,46622,9057,002104,944Reinsurers’ share of outstanding claims9,5169,5283,311390,830111,073377,306531,601Reinsurers’ share of claims incurred but not reported3,8542,0681,72925,59911,784-12,05757,091Deferred policy acquisition costs2,1073,0397,8782,8091,2155,6781,04523,771Unallocated assets 848,284Total assets1,565,691LiabilitiesUnearned premiums17,50328,425146,69121,70814,26122,9058,394259,887Unearned reinsurance commission3,5104,8235514,7211,8867,8451,99225,328Outstanding claims12,90610,78671,119394,481112,845378,249610,423Claims incurred but not reported4,5682,31340,65126,19114,146-14,310102,179Premium deficiency reserve--10,845----10,845Additional unexpired risk reserve---399---399Unallocated loss adjustment expenses2191543,577208487-3695,014Unallocated liabilities293,346Total liabilities 1,307,421MarinePropertyMotorEngineer-ingAccident & LiabilityExtended WarrantyTerm life TotalAs at December 31, 2018AssetsReinsurers’ share of unearned premiums6,03325,28011,34614,89513,72021,79410,971104,039Reinsurers’ share of outstanding claims4,6377,0947,39031,282105,58883,449159,448Reinsurers’ share of claims incurred but not reported12,8401,4093,56613,77631,839-15,45078,880Deferred policy acquisition costs1,2012,9287,2291,7307858,8961,51024,279Unallocated assets 709,356Total assets1,076,002LiabilitiesUnearned premiums8,55627,910151,03416,03915,75321,79412,268253,354Unearned reinsurance commission2,1305,4161,9863,3112,29910,8043,49729,443Outstanding claims6,1037,96086,55533,065106,23384,339244,263Claims incurred but not reported14,8351,58330,01214,86434,492-18,227114,013Premium deficiency reserve151,72120,665820---23,221Additional unexpired risk reserve---385---385Unallocated loss adjustment expenses8532711,112305345-6213,507Unallocated liabilities168,241Total liabilities 836,427 | 19 |
| Description of accounting policy for statutory deposit [text block] | 12 Statutory DepositIn compliance with Article 58 of the Implementing Regulations of the SAMA, the Company deposited 10% of its share capital, amounting to Saudi Riyals 20 million in a bank designated by SAMA. The statutory deposit is maintained with a reputed bank which is also a related party. The Company cannot withdraw this deposit without SAMA’s approval. Commission accruing on this deposit is payable to SAMA.In accordance with instructions received from the SAMA vide their circular dated March 1, 2016, the Company disclosed the commission due on the statutory deposit as an asset and a liability in these financial statements. | 12 |
| Disclosure of notes forming part of accounts [abstract] | | |
| Disclosure of investments [text block] | 8Investments Note20192018Fair value through statement of income investments (FVSI)8.1110,332105,004Available-for-sale investment8.21,9231,923Investment in equity shares8.3313-112,568106,9278.1Fair value through statement of incomeMovement is as follows:For the year ended December 31, 2019For the year ended December 31, 2018Balance as at beginning of the year105,004103,231Changes in fair value of investments5,3281,773Balance as at end of the year110,332105,004The analysis of the composition of investments is as follows:20192018Cash and cash equivalents2,348 706Equity2,9173,752Murabaha placements35,70028,400Mutual funds39,34238,305Sukuks 30,02533,841Total Investments110,332105,0048.2 Available-for-sale investmentThis represents the Company’s 3.85% (December 31, 2018: 3.85%) holding in Najm for Insurance Services Company, a Saudi Closed Joint Stock Company. These shares are un-quoted and are carried at cost. 8.3 Investment in equity sharesThis represents Company’s investment in Saudi Arabian Oil Co. These represent 8,870 shares at a market price of SR 35.25 per share at December 31, 2019. 20192018Additions during the year284-Change in fair value of investment29-Balance as at the end of the year313- | 8 |
| Disclosure of investments at fair value through statement of income [text block] | 8.1Fair value through statement of incomeMovement is as follows:For the year ended December 31, 2019For the year ended December 31, 2018Balance as at beginning of the year105,004103,231Changes in fair value of investments5,3281,773Balance as at end of the year110,332105,004The analysis of the composition of investments is as follows:20192018Cash and cash equivalents2,348 706Equity2,9173,752Murabaha placements35,70028,400Mutual funds39,34238,305Sukuks 30,02533,841Total Investments110,332105,004 | 8.1 |
| Disclosure of due from related parties [text block] | 20Related party transactions and balances 20.1Related party transactions Related parties represent major shareholders, directors and key management personnel of the Company, and entities controlled or significantly influenced by such parties.The Company in the normal course of business carries out transactions with its related parties. The transactions with related parties are made on terms equivalent to those related parties and the transactions are approved by the Board of Directors.The significant transactions with related parties and the related amounts are as follows:Related PartyNature of TransactionsFor the year ended December 31, 2019For the year ended December 31, 2018Board Members Fees and related expenses1,6011,568Key management personnel-Remuneration and related expenses11,00011,064-Loans and advances602687Shareholders’ and related parties (common ownership)-Insurance premiums written64,25371,394-Claims paid and payable 15,64727,270-Facultative premiums ceded2,6503,859-Facultative commission received5681,042-Facultative claims recovered1,1771,828-Expenses incurred6,2314,818-Commission income on deposits7,4115,08520.2Related party balances 20192018Premiums receivable8,913 11,067Claims payable 5,809-Cash and cash equivalents with a shareholder 354,679324,032Amounts due from/(to) a shareholder for facultative transactions 39(52)Advances due from key management personnel 602450Income tax receivable from foreign shareholders 1,1842,020Statutory deposit with a shareholder 20,00020,000Accrued income on statutory deposit1,275848 | 20 |
| Disclosure of cash and cash equivalents [text block] | 4Cash and cash equivalents20192018Cash in hand2828Bank balances32,80435,282Deposits with original maturity of less than 3 months 321,875288,750354,707324,060The bank balances and deposits are with a bank which is a related party, registered in Saudi Arabia and are denominated in Saudi Riyals and US Dollars. The deposits have an original maturity of less than three months and yield income at rates up to 2% per annum (2018: up to 2% per annum). | 4 |
| Disclosure of statutory deposit [text block] | 12 Statutory DepositIn compliance with Article 58 of the Implementing Regulations of the SAMA, the Company deposited 10% of its share capital, amounting to Saudi Riyals 20 million in a bank designated by SAMA. The statutory deposit is maintained with a reputed bank which is also a related party. The Company cannot withdraw this deposit without SAMA’s approval. Commission accruing on this deposit is payable to SAMA.In accordance with instructions received from the SAMA vide their circular dated March 1, 2016, the Company disclosed the commission due on the statutory deposit as an asset and a liability in these financial statements. | 12 |
| Disclosure of due to related parties [text block] | 20Related party transactions and balances 20.1Related party transactions Related parties represent major shareholders, directors and key management personnel of the Company, and entities controlled or significantly influenced by such parties.The Company in the normal course of business carries out transactions with its related parties. The transactions with related parties are made on terms equivalent to those related parties and the transactions are approved by the Board of Directors.The significant transactions with related parties and the related amounts are as follows:Related PartyNature of TransactionsFor the year ended December 31, 2019For the year ended December 31, 2018Board Members Fees and related expenses1,6011,568Key management personnel-Remuneration and related expenses11,00011,064-Loans and advances602687Shareholders’ and related parties (common ownership)-Insurance premiums written64,25371,394-Claims paid and payable 15,64727,270-Facultative premiums ceded2,6503,859-Facultative commission received5681,042-Facultative claims recovered1,1771,828-Expenses incurred6,2314,818-Commission income on deposits7,4115,08520.2Related party balances 20192018Premiums receivable8,913 11,067Claims payable 5,809-Cash and cash equivalents with a shareholder 354,679324,032Amounts due from/(to) a shareholder for facultative transactions 39(52)Advances due from key management personnel 602450Income tax receivable from foreign shareholders 1,1842,020Statutory deposit with a shareholder 20,00020,000Accrued income on statutory deposit1,275848 | 20 |
| Disclosure of zakat [text block] | Zakat and income tax21.1Components of zakat baseSignificant components of zakat base of the Company attributable to the Saudi shareholders, which are subject to adjustment under zakat and income tax regulations, are shareholders’ equity at the beginning of the year, adjusted net income and certain other items. Zakat base has been computed based on the Company’s understanding of the zakat regulations enforced in the Kingdom of Saudi Arabia. The zakat regulations in Saudi Arabia are subject to different interpretations, and the assessments to be raised by the General Authority of Zakat and Tax (“GAZT”) could be different from the declaration filed by the Company.21.2Provision for zakat and income tax2019 2018 Opening balance7,3057,205Charge for zakat4,1614,853Charge for income tax1,1842,020Payments of zakat(4,784)(4,559)Payment of income tax(292)(2,056)Reduction in tax recoverable(185)(158)Other charges7-Tax paid in advance(1,543)-Closing balance5,8537,305Zakat is payable at 2.5% of higher of the approximate zakat base and adjusted net income attributable to Saudi shareholders.Provision for income tax is payable at 20% of the adjusted net income attributable to the foreign shareholders of the Company, less allowances for foreign shareholders’ share in the losses carry forwarded from previous year calculated in accordance with the guidelines provided in the income tax regulations. Income tax paid is recovered from foreign shareholders.The shareholding percentage subject to zakat and income tax is as follows:2019 2018 %%Zakat74.4474.44Income tax25.5625.56Status of assessmentsThe Company has filed its tax returns with the General Authority of Zakat and Tax (“GAZT”) from inception up to 2017. The Company’s tax and zakat position has been finalized up to the years ended December 31, 2012. The tax returns filed for the years from 2013 to 2017 are currently being reviewed by the GAZT. The tax return for 2013 is deemed to be finalized as no queries has been received from the GAZT and the statutory time limit of 5 years is over.The Company has received the final assessment for 2018 for zakat and income tax, the assessment has raised additional tax and Zakat liability for SR 174 thousand. Management has accepted this assessment and has accrued for this amount in these financial statements.In addition to above, the Company has also received an assessment for the 2018 withholding tax liability in which the GAZT has imposed additional taxes, including penalties, of SR 11.37 million. Management believes that the assessment raised is without merit and has appealed against this assessment. | 21 |
| Disclosure of income tax [text block] | 21.2Provision for zakat and income tax2019 2018 Opening balance7,3057,205Charge for zakat4,1614,853Charge for income tax1,1842,020Payments of zakat(4,784)(4,559)Payment of income tax(292)(2,056)Reduction in tax recoverable(185)(158)Other charges7-Tax paid in advance(1,543)-Closing balance5,8537,305Zakat is payable at 2.5% of higher of the approximate zakat base and adjusted net income attributable to Saudi shareholders.Provision for income tax is payable at 20% of the adjusted net income attributable to the foreign shareholders of the Company, less allowances for foreign shareholders’ share in the losses carry forwarded from previous year calculated in accordance with the guidelines provided in the income tax regulations. Income tax paid is recovered from foreign shareholders.The shareholding percentage subject to zakat and income tax is as follows:2019 2018 %%Zakat74.4474.44Income tax25.5625.56Status of assessmentsThe Company has filed its tax returns with the General Authority of Zakat and Tax (“GAZT”) from inception up to 2017. The Company’s tax and zakat position has been finalized up to the years ended December 31, 2012. The tax returns filed for the years from 2013 to 2017 are currently being reviewed by the GAZT. The tax return for 2013 is deemed to be finalized as no queries has been received from the GAZT and the statutory time limit of 5 years is over.The Company has received the final assessment for 2018 for zakat and income tax, the assessment has raised additional tax and Zakat liability for SR 174 thousand. Management has accepted this assessment and has accrued for this amount in these financial statements.In addition to above, the Company has also received an assessment for the 2018 withholding tax liability in which the GAZT has imposed additional taxes, including penalties, of SR 11.37 million. Management believes that the assessment raised is without merit and has appealed against this assessment. | 21.2 |
| Disclosure of statutory reserve [text block] | 23 Statutory reserveAs required by Saudi Arabian Insurance Regulations, 20% of the net income for the year has to be set aside from net income for the year as a statutory reserve until this amounts to 100% of the paid-up share capital. Accordingly, during the year, the Company has transferred SR 3.688 million, (2018: SR 4.087 million) to the statutory reserve. This reserve is not available for distribution. | 23 |
| Disclosure of technical reserve for insurance/takaful/reinsurance/retakaful operations [text block] | 7Technical reserves7.1 Unearned premiums and net outstanding claims and reserves20192018a)Unearned premiumsGross premium written735,044712,324Gross unearned premiums at beginning of the year253,354211,294988,398923,618Gross unearned premiums at end of the year(259,887)(253,354)Gross premium earned728,511670,264Reinsurance premium ceded(319,338)(291,655)Reinsurance share of unearned premiums at beginning of the year(104,039)(109,585)(423,377)(401,240)Reinsurance share of unearned premiums at end of the year104,944104,039Insurance premium ceded to reinsurers(318,433)(297,201)Net earned premium410,078373,063b)Net outstanding claims and reserves comprise of the following:20192018Outstanding claims610,423244,263Claims incurred but not reported102,179114,013Premium deficiency reserve10,84523,221Additional unexpired risk reserve399385Unallocated loss adjustment expenses5,0143,507728,860385,389Less:Reinsurers’ share of outstanding claims(531,601)(159,448)Reinsurers’ share of claims incurred but not reported(57,091)(78,880)(588,692)(238,328)Net outstanding claims and reserves140,168147,0617.2 Movement in unearned premiums Movement in unearned premiums comprise of the following:For the year ended December 31, 2019GrossReinsuranceNetBalance at beginning of the year253,354104,039149,315Premium written during the year735,044319,338415,706Premium earned during the year(728,511)(318,433)(410,078)Balance at end of the year259,887104,944154,943For year ended December 31, 2018Gross ReinsuranceNetBalance at beginning of the year211,294109,585101,709Premium written during the year712,324291,655420,669Premium earned during the year(670,264)(297,201)(373,063)Balance at end of the year253,354104,039149,3157.3 Movement in deferred policy acquisition costs Movement in deferred policy acquisition costs comprise of the following:20192018Balance as at the beginning of the year24,27928,047Costs accrued64,50761,550Costs charged(65,015)(65,318)Balance as at the end of the year23,77124,2797.4 Movement in unearned reinsurance commission Movement in unearned reinsurance commission comprise of the following:2019 2018Balance at the beginning of the year29,44331,204Commission accrued71,92471,163Commission earned(76,039)(72,924)Balance at the end of the year25,32829,443 | 7 |
| Disclosure of compensation to key management personnel [text block] | 20Related party transactions and balances 20.1Related party transactions Related parties represent major shareholders, directors and key management personnel of the Company, and entities controlled or significantly influenced by such parties.The Company in the normal course of business carries out transactions with its related parties. The transactions with related parties are made on terms equivalent to those related parties and the transactions are approved by the Board of Directors.The significant transactions with related parties and the related amounts are as follows:Related PartyNature of TransactionsFor the year ended December 31, 2019For the year ended December 31, 2018Board Members Fees and related expenses1,6011,568Key management personnel-Remuneration and related expenses11,00011,064-Loans and advances602687Shareholders’ and related parties (common ownership)-Insurance premiums written64,25371,394-Claims paid and payable 15,64727,270-Facultative premiums ceded2,6503,859-Facultative commission received5681,042-Facultative claims recovered1,1771,828-Expenses incurred6,2314,818-Commission income on deposits7,4115,08520.2Related party balances 20192018Premiums receivable8,913 11,067Claims payable 5,809-Cash and cash equivalents with a shareholder 354,679324,032Amounts due from/(to) a shareholder for facultative transactions 39(52)Advances due from key management personnel 602450Income tax receivable from foreign shareholders 1,1842,020Statutory deposit with a shareholder 20,00020,000Accrued income on statutory deposit1,275848 | 13 |
| Disclosure of earnings per share [text block] | 22Share capital and earnings per share The authorized, issued and paid up capital of the Company is SAR 200 million divided into 20 million shares of SR 10 each (December 31, 2018: SAR 200 million divided into 20 million shares of SR 10 each).Earnings per share for the year have been calculated by dividing the net income for the year attributable to the shareholders by the weighted average number of ordinary shares at the statement of financial position date. Diluted earnings per share is not applicable to the Company | 22 |
| Disclosure of investments held at fair value through statement of income [text block] | 8.2 Available-for-sale investmentThis represents the Company’s 3.85% (December 31, 2018: 3.85%) holding in Najm for Insurance Services Company, a Saudi Closed Joint Stock Company. These shares are un-quoted and are carried at cost. | 8.2 |
| Disclosure of related party transactions [text block] | 20Related party transactions and balances 20.1Related party transactions Related parties represent major shareholders, directors and key management personnel of the Company, and entities controlled or significantly influenced by such parties.The Company in the normal course of business carries out transactions with its related parties. The transactions with related parties are made on terms equivalent to those related parties and the transactions are approved by the Board of Directors.The significant transactions with related parties and the related amounts are as follows:Related PartyNature of TransactionsFor the year ended December 31, 2019For the year ended December 31, 2018Board Members Fees and related expenses1,6011,568Key management personnel-Remuneration and related expenses11,00011,064-Loans and advances602687Shareholders’ and related parties (common ownership)-Insurance premiums written64,25371,394-Claims paid and payable 15,64727,270-Facultative premiums ceded2,6503,859-Facultative commission received5681,042-Facultative claims recovered1,1771,828-Expenses incurred6,2314,818-Commission income on deposits7,4115,08520.2Related party balances 20192018Premiums receivable8,913 11,067Claims payable 5,809-Cash and cash equivalents with a shareholder 354,679324,032Amounts due from/(to) a shareholder for facultative transactions 39(52)Advances due from key management personnel 602450Income tax receivable from foreign shareholders 1,1842,020Statutory deposit with a shareholder 20,00020,000Accrued income on statutory deposit1,275848 | 13 |
| Disclosure of entity's operating segments [text block] | 19 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 (CODM) in order to allocate resources to the segments and to assess its performance. Transactions between the operating segments are on normal commercial terms and conditions. The revenue from external parties reported to the Board is measured in a manner consistent with that in the income statement. Segment assets and liabilities comprise operating assets and liabilities.There have been no changes to the basis of segmentation or the measurement basis for the segment profit or loss since December 31, 2018. Segment assets do not include cash and cash equivalents, premiums receivables, investments, due from reinsurers, prepaid expenses and other assets, property and equipment, statutory deposit and accrued income on statutory deposit. Accordingly, they are included in unallocated assets. Segment liabilities do not include policyholders payable, accrued expenses and other liabilities, due to reinsurers, agents, brokers and third-party administrators, surplus distribution payable, zakat and income tax, and accrued income on statutory deposit. Accordingly, they are included in unallocated liabilities.These unallocated assets and liabilities are not reported to CODM under related segments and are monitored on a centralized basis.The segment information provided to the Company’s Board of Directors for the reportable segments for the Company’s total assets and liabilities at December 31, 2019 and December 31, 2018, its total revenues, expenses, and net income for the year then ended, are as follows:MarinePropertyMotorEngineeringAccident & liabilityExtended warrantyTerm lifeTotal For the year ended December 31, 2019Revenues Gross premiums written 56,410106,868390,20754,33432,12122,25372,851735,044Reinsurance premiums ceded (43,419)(95,310)(9,764)(50,740)(22,821)(22,253)(62,288)(306,595)Excess of loss expenses(2,290)(3,609)(5,425)(1,000)(300)-(119)(12,743)Net premiums written10,7017,949375,0182,5949,000-10,444415,706Change in unearned premiums, net(687)(319)(3,333)(433)(760)-(96)(5,628)Net premiums earned10,0147,630371,6852,1618,240-10,348410,078Reinsurance commissions 9,85919,0382,9069,8775,83210,46918,05876,039Other underwriting income84711002529-10319Total revenues19,95726,739374,69112,06314,10110,46928,416486,436Cost and expensesGross claims paid and loss adjustment expenses135,00426,023315,19113,3063,6005,38442,700541,208Reinsurer’s share of claims paid(131,960)(23,757)(17,148)(12,438)(2,851)(5,384)(35,532)(229,070)Net claims paid3,0442,266298,043868749-7,168312,138Changes in outstanding claims, net1,925391(11,358)1,8681,128-53(5,993)Changes in incurred but not reported claims, net(1,281)7112,476(496)(291)-(524)9,955Net claims incurred3,6882,728299,1612,2401,586-6,697316,100-Premium deficiency reserve(16)(1,721)(9,820)(819)---(12,376)Additional unexpired risk reserve---14---14Unallocated loss adjusted expenses(636)(117)2,467(98)143-(252)1,507Policy acquisition costs5,8149,41523,1015,3933,2308,6459,41765,015Total underwriting cost and expenses8,85010,305314,9096,7304,9598,64515,862370,260Net underwriting income 11,10716,43459,7825,3339,1421,82412,554116,176Other operating (expenses) / incomeAllowance for impairment of doubtful debts(7,473)General and administration expenses(110,329)Commission income on deposits7,411Unrealized gain on investments5,357Other income15,153Total other operating expenses(89,881)Net income before allocation26,295Net income attributed to the policyholders(2,512)Net income for the year attributable to the shareholders, before zakat and income tax23,783Zakat(4,161)Income tax(1,184)Net income for the year 18,438MarinePropertyMotorEngineer-ingAccident & liabilityExtended warrantyTerm lifeTotal (Restated) For the year ended December 31, 2018RevenuesGross premiums written 37,172103,137424,78641,55332,94021,14951,587712,324Reinsurance premiums ceded(26,749)(95,024)(31,941)(38,385)(24,723)(21,149)(45,678)(283,649)Excess of loss expenses(1,053)(2,185)(3,902)(721)(66)-(79)(8,006)Net premiums written9,3705,928388,9432,4478,151-5,830420,669Change in unearned premiums, net(603)159(49,989)1,900425-502(47,606)Net premiums earned8,7676,087338,9544,3478,576-6,332373,063Reinsurance commissions7,00720,3825,3927,4455,69912,86014,13972,924Other underwriting income96382202026-6406Total revenues15,87026,507344,56611,81214,30112,86020,477446,393Cost and expensesGross claims paid and loss adjustment expenses8,4954,781229,59115,3564,5646,75329,069298,609Reinsurer’s share of claims paid(6,742)(4,161)(22,493)(14,753)(2,704)(6,753)(25,198)(82,804)Net claims paid1,753620207,0986031,860-3,871215,805Changes in outstanding claims55732136,0301,434(586)-61438,370Changes in incurred but not reported claims, net429(1,393)(6,301)(69)667-58(6,609)Net claims incurred2,739(452)236,8271,9681,941-4,543247,566Reversal of reinsurance reserves-(2,451)(1,146)----(3,597)Premium deficiency reserve151,72120,665820---23,221Additional unexpired risk reserve---385---385Unallocated loss adjustment expenses8532711,112305345-6213,507Policy acquisition costs3,8339,78326,9494,0853,43110,7236,51465,318Total underwriting cost and expenses7,4408,872284,4077,5635,71710,72311,678336,400Net underwriting income 8,43017,63560,1594,2498,5842,1378,799109,993Other operating (expenses) / incomeAllowance for impairment of doubtful debts(7,900)General and administration expenses(95,272)Commission income on deposits5,085Unrealized gain on investments1,773Other income9,107Total other operating expenses(87,207)Net income before allocation 22,786Net income attributed to the policyholders (2,353)Net income for the year attributable to the shareholders, before zakat and income tax20,433Zakat(4,853)Income tax(2,020)Net income for the year13,560 MarinePropertyMotorEngineer-ingAccident & liabilityExtended warrantyTerm life TotalAs at December 31, 2019AssetsReinsurers’ share of unearned premiums14,29425,4763,67020,13111,46622,9057,002104,944Reinsurers’ share of outstanding claims9,5169,5283,311390,830111,073377,306531,601Reinsurers’ share of claims incurred but not reported3,8542,0681,72925,59911,784-12,05757,091Deferred policy acquisition costs2,1073,0397,8782,8091,2155,6781,04523,771Unallocated assets 848,284Total assets1,565,691LiabilitiesUnearned premiums17,50328,425146,69121,70814,26122,9058,394259,887Unearned reinsurance commission3,5104,8235514,7211,8867,8451,99225,328Outstanding claims12,90610,78671,119394,481112,845378,249610,423Claims incurred but not reported4,5682,31340,65126,19114,146-14,310102,179Premium deficiency reserve--10,845----10,845Additional unexpired risk reserve---399---399Unallocated loss adjustment expenses2191543,577208487-3695,014Unallocated liabilities293,346Total liabilities 1,307,421MarinePropertyMotorEngineer-ingAccident & LiabilityExtended WarrantyTerm life TotalAs at December 31, 2018AssetsReinsurers’ share of unearned premiums6,03325,28011,34614,89513,72021,79410,971104,039Reinsurers’ share of outstanding claims4,6377,0947,39031,282105,58883,449159,448Reinsurers’ share of claims incurred but not reported12,8401,4093,56613,77631,839-15,45078,880Deferred policy acquisition costs1,2012,9287,2291,7307858,8961,51024,279Unallocated assets 709,356Total assets1,076,002LiabilitiesUnearned premiums8,55627,910151,03416,03915,75321,79412,268253,354Unearned reinsurance commission2,1305,4161,9863,3112,29910,8043,49729,443Outstanding claims6,1037,96086,55533,065106,23384,339244,263Claims incurred but not reported14,8351,58330,01214,86434,492-18,227114,013Premium deficiency reserve151,72120,665820---23,221Additional unexpired risk reserve---385---385Unallocated loss adjustment expenses8532711,112305345-6213,507Unallocated liabilities168,241Total liabilities 836,427 | 19 |
| Disclosure of capital management [text block] | 25Capital management Objectives are set by the Company to maintain healthy capital ratios in order to support its business objectives and maximize shareholders’ value.The Company manages its capital requirements by assessing shortfalls between reported and required capital levels on a regular basis. Adjustments to current capital levels are made in light of changes in market conditions and risk characteristics of the Company’s activities. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders or issue shares.The Company manages its capital to ensure that it is able to continue as going concern and comply with the regulators’ capital requirements of the markets in which the Company operates while maximizing the return to stakeholders through the optimization of the debt and equity balance. The capital structure of the Company consists of equity attributable to equity holders comprising paid share capital, reserves and retained earnings. As per guidelines laid out by SAMA in Article 66 of the Implementing Insurance Regulations detailing the solvency margin required to be maintained, the Company shall maintain solvency margin equivalent to the highest of the following three methods as per SAMA Implementing Regulations:Minimum Capital Requirement of SAR 100 millionPremium Solvency MarginClaims Solvency MarginThe Company is in compliance with all externally imposed capital requirements with sound solvency margin. The capital structure of the Company as at December 31, 2019 consists of paid-up share capital of SAR 200 million, statutory reserves of SAR 13.787 million and retained earnings of SAR 44.483 million (December 31, 2018: paid-up share capital of SAR 200 million, statutory reserves of SAR 10.099 million and retained earnings of SAR 29.476 million), in the statement of financial position. In the opinion of the Board of Directors, the Company has fully complied with the externally imposed capital requirements during the reported financial year. | 25 |
| Disclosure of commitments and contingencies, general [text block] | 31Commitments and ContingenciesThe Company’s bankers have issued payment guarantees of SR 2.1 million (2018: SR 1.9 million) to its suppliers on behalf of the Company. Also see note 21.2. | 31 |
| Disclosure of comparative figures [text block] | 30Comparative figures Certain of the comparative figures have been reclassified and regrouped to conform to the current year presentation. | 30 |
| Disclosure of board of director's approval of the financial statements [text block] | 32Approval of the financial statements These financial statements have been approved by the Board of Directors on 12 March 2020. | 32 |
