	English [member]
Start Date	2019-01-01	2018-01-01
End Date	2019-12-31	2018-12-31
Filing information [line items]
Disclosure of entity information [abstract]
Name of reporting entity	Amana Cooperative Insurance Co.
Company symbol code\| ISIN code	8310 \| SA12HG541R18
Sector\| Industry group	Financials \| Insurance
Disclosure of document information [abstract]
Whether entity wants to report opening statement of financial position	No
Period covered by financial statements	Annual
Reporting period start date	2019-01-01	2018-01-01
Reporting period end date	2019-12-31	2018-12-31
Description of nature of financial statements	Consolidated
Status of financial statements	Audited
Description of presentation currency	Saudi Arabia, Riyals
Level of rounding used in financial statements	Thousands

	Primary auditor [member]	Second primary auditor [member]
	English [member]	English [member]
Start Date	2019-01-01	2019-01-01
End Date	2019-12-31	2019-12-31
Auditors information [line items]
Details of auditors signing report [abstract]
Name of auditor signing report	PKF Al Bassam & Co.	GT Aldar Audit Bureau
Registration number of auditor	337	171
Details of audit firm [abstract]
Name of audit firm	PKF Al Bassam & Co.	GT Aldar Audit Bureau
Registration number of audit firm	337	171
Contact number of audit firm	567164899	557836297
Address of audit firm	PO Box 69658 Riyadh 11557	PO Box 2195 Riyadh 11451

Start Date	2019-01-01	2018-01-01
End Date	2019-12-31	2018-12-31
Statement of financial position [abstract]
Assets [abstract]
Insurance/ takaful operations assets [abstract]
Property and equipment, net, insurance/ takaful operations assets	6,486	3,439
Deferred policy acquisition costs	8,328	5,396
Reinsurers/ retakaful share of unearned premiums/ contributions	4,866	17,189
Prepayments and other assets, insurance/ takaful operations assets	17,337	18,407
Due from shareholders operations	111,315	106,774
Premiums/ insurance receivables/takaful contributions receivable, net	79,559	21,519
Reinsurers/ retakaful share of outstanding claims/ benefits, net	19,390	33,271
Available-for-sale investments, insurance/ takaful operations assets	1,923	1,923
Cash and cash equivalents, insurance/ takaful operations assets	21,230	25,935
Total insurance/ takaful operations assets	270,434	233,853
Shareholders assets [abstract]
Investments held-to-maturity, shareholders assets	48,640	47,172
Statutory deposit	36,000	21,000
Prepayments and other assets, shareholders assets	2,698	16,090
Time (Murabaha) deposits, shareholders assets	145,993	112,350
Accrued investment income	2,577	1,949
Available-for-sale investments, shareholders assets	17,375	6,548
Cash and cash equivalents, shareholders assets	23,285	13,289
Total shareholders assets	276,568	218,398
Total assets	547,002	452,251
Liabilities and equity [abstract]
Insurance/ takaful operations liabilities and surplus (deficit) [abstract]
Insurance/ takaful operations liabilities [abstract]
Gross unearned premiums/ contributions	100,911	65,334
Unearned commission income	1,057	884
Employees end of service benefits, insurance/ takaful operations liabilities	4,043	2,763
Surplus distribution payable	779	779
Reinsurers/ retakaful balance payable	12,976	23,936
Gross outstanding claims/ benefits including IBNR payable	79,830	70,867
Other technical reserves	26,360	17,483
Accrued expenses payable, insurance/ takaful operations liabilities	44,774	47,136
Other liabilities, insurance/ takaful operations	-296	4,671
Total insurance/ takaful operations liabilities	270,434	233,853
Total insurance/ takaful operations liabilities and surplus (deficit)	270,434	233,853
Shareholders liabilities and equity [abstract]
Shareholders liabilities [abstract]
Zakat payable	2,859	9,516
Due to insurance/ takaful operations	111,315	106,774
Accrued expenses payable, shareholders liabilities	2,423	4,614
Other liabilities, shareholders liabilities	2,577	1,949
Total shareholders liabilities	119,174	122,853
Shareholders equity [abstract]
Equity attributable to owners of parent [abstract]
Share capital	240,000	140,000
Fair value reserve on investments, shareholders equity	3,060	117
Retained earnings (accumulated losses)	-85,666	-44,572
Total equity attributable to owners of parent	157,394	95,545
Total equity attributable to equity holders of company	157,394	95,545
Total shareholders liabilities and equity	276,568	218,398
Total insurance/ takaful operations liabilities, surplus (deficit) and shareholders liabilities and equity	547,002	452,251

Start Date	2019-01-01	2018-01-01	Note No.
End Date	2019-12-31	2018-12-31
Statement of insurance/ takaful operations [abstract]
Statement of insurance/ takaful operations and accumulated surplus (deficit) [abstract]
Income from insurance/ takaful operations [abstract]
Net premiums/ contributions earned [abstract]
Net premiums/ contributions written [abstract]
Gross premiums/ contributions written	248,054	137,446	7b
Expenses incurred on gross premium written	6,023	2,941	7b
Reinsurance/ retakaful premiums ceded	10,461	43,376	7b
Net premiums/ contributions written	231,570	91,129
Changes in unearned premiums/ contributions	47,900	28,595	7b
Net premiums/ contributions earned	183,670	62,534
Reinsurance/ retakaful commissions	1,975	2,895	7c
Fees and other income from insurance/ takaful operations	16,419	4,610
Total income from insurance/ takaful operations	202,064	70,039
Cost and expenses [abstract]
Net claims/ benefits incurred [abstract]
Net claims/ benefits paid [abstract]
Gross claims/ benefits paid	174,422	59,359	7a
Reinsurance/ retakaful share of gross claims/ benefits paid	46,439	26,996	7a
Net claims/ benefits paid	127,983	32,363
Changes in outstanding claims/ benefits including IBNR	-3,617	-33,205	7a
Changes in reinsurance/ retakaful share of outstanding claims/ benefits	9,919	35,787	7a
Changes in other technical reserves	12,580	-10,923	7a
Changes in reserve for takaful activities	3,962	4,566	7a
Net claims/ benefits incurred	150,827	28,588
Policy acquisition costs	17,510	5,353	7e
Supervision and inspection fees	12,746	5,839
General and administrative expenses, insurance/ takaful operations	43,396	42,473	18
Selling and marketing expenses, insurance/ takaful operations	2,523	-1,281	6
Other underwriting expenses	8,877	10,967	7d
Other cost and expenses	-84
Total cost and expenses	235,795	91,939
Surplus (deficit) for period from insurance/ takaful operations	-33,731	-21,900
Shareholders appropriation from insurance/ takaful operations surplus (deficit)	-33,731	-21,900
Net result for period from insurance/ takaful operations after shareholders appropriation	0	0
Policyholders share of accumulated surplus, at start of period	0	0
Policyholders share of accumulated surplus, at end of period	0	0

Start Date	2019-01-01	2018-01-01	Note No.
End Date	2019-12-31	2018-12-31
Statement of shareholders operations [abstract]
Profit (loss) [abstract]
Income (loss) from continuing operations [abstract]
Shareholders appropriation of surplus (deficit) transferred from insurance/ takaful operations	-33,731	-21,900
Revenue [abstract]
Investment income	7,787	4,512
Realised gain (loss) on available-for-sale investments	8	-99
Total revenue	7,795	4,413
Expenses [abstract]
General and administrative expenses, shareholders operations	1,770	1,299	18
Other expenses		1,431	18
Total expenses	1,770	2,730
Income (loss) from continuing operations before zakat and income tax	-27,706	-20,217
Zakat expenses on continuing operations for period	9,541	1,587	15
Profit (loss) from continuing operations	-37,247	-21,804
Income (loss) from discontinued operations [abstract]
Income (loss) from discontinued operations	0	0
Profit (loss) from discontinued operations before zakat and income tax	0	0
Zakat expenses on discontinued operations for period	0	0
Profit (loss) from discontinued operations	0	0
Profit (loss) for the period	-37,247	-21,804
Profit (loss), attributable to [abstract]
Profit (loss), attributable to saudi shareholders of company	-36,867.0806	-21,581.5992
Profit (loss), attributable to non-saudi shareholders of company	-379.9194	-222.4008
Profit (loss), attributable to non-controlling interests	0	0
Earnings per share [abstract]
Basic earnings (loss) per share [abstract]
Basic earnings (loss) per share from continuing operations	-1.62	-1.26	17
Basic earnings (loss) per share from discontinued operations	0	0
Total basic earnings (loss) per share	-1.62	-1.26
Diluted earnings (loss) per share [abstract]
Diluted earnings (loss) per share from continuing operations	-1.62	-1.26
Diluted earnings (loss) per share from discontinued operations	0	0
Total diluted earnings (loss) per share	-1.62	-1.26
Weighted average number of equity shares outstanding	22922000	17283000	17
Share closing price at the last trading day of financial year (in numbers)	12.06	16.89

Start Date	2019-01-01	2018-01-01	Note No.
End Date	2019-12-31	2018-12-31
Statement of other comprehensive income, before tax [abstract]
Net result for period from insurance/ takaful operations after shareholders appropriation	0	0
Other comprehensive income [abstract]
Components of other comprehensive income that will not be reclassified to profit or loss [abstract]
Other comprehensive gains (losses) that will not be reclassified to profit or loss	-539	0	14
Total other comprehensive income that will not be reclassified to profit or loss	-539	0
Components of other comprehensive income that will be reclassified to profit or loss [abstract]
Share of other comprehensive income of associates and joint ventures accounted for using equity method that will be reclassified to profit or loss	0	0
Foreign currency translation [abstract]
Other comprehensive income, foreign currency translation	0	0
Total other comprehensive income (loss), foreign currency translation	0	0
Cash flow hedges [abstract]
Other comprehensive income, cash flow hedges	0	0
Total other comprehensive income (loss), cash flow hedges	0	0
Available-for-sale financial assets [abstract]
Gains (losses) on remeasuring available-for-sale financial assets	0	0
Total other comprehensive income (loss), available-for-sale financial assets	0	0
Hedges of net investment in foreign operations [abstract]
Gains (losses) on hedges of net investments in foreign operations	0	0
Total other comprehensive income (loss), hedges of net investment in foreign operations	0	0
Other comprehensive gains (losses) that will be reclassified to profit or loss	0	0
Total other comprehensive income (loss), that will be reclassified to profit or loss	0	0
Total other comprehensive income (loss)	-539	0
Total comprehensive income (loss) for period	-539	0

Start Date	2019-01-01	2018-01-01	Note No.
End Date	2019-12-31	2018-12-31
Statement of other comprehensive income, before tax [abstract]
Statement of comprehensive income [abstract]
Profit (loss) for the period	-37,247	-21,804
Other comprehensive income [abstract]
Components of other comprehensive income that will not be reclassified to profit or loss [abstract]
Gains (losses) on revaluation of property, plant and equipment	0	0
Total other comprehensive income that will not be reclassified to profit or loss	0	0
Components of other comprehensive income that will be reclassified to profit or loss [abstract]
Share of other comprehensive income of associates and joint ventures accounted for using equity method that will be reclassified to profit or loss	0	0
Foreign currency translation [abstract]
Gains (losses) on exchange differences on translation of foreign operations	0	0
Other comprehensive income, foreign currency translation	0	0
Total other comprehensive income (loss), foreign currency translation	0	0
Cash flow hedges [abstract]
Gains (losses) on cash flow hedges, net	0	0
Total other comprehensive income (loss), cash flow hedges	0	0
Available-for-sale financial assets [abstract]
Gains (losses) on remeasuring available-for-sale financial assets	2,951	216	8
Income tax (charge) credit relating to unrealised losses on available-for-sale financial assets, net	8	99	8
Total other comprehensive income (loss), available-for-sale financial assets	2,943	117
Hedges of net investment in foreign operations [abstract]
Gains (losses) on hedges of net investments in foreign operations	0	0
Total other comprehensive income (loss), hedges of net investment in foreign operations	0	0
Other comprehensive gains (losses) that will be reclassified to profit or loss	0	0
Total other comprehensive income (loss), that will be reclassified to profit or loss	2,943	117
Total other comprehensive income (loss)	2,943	117
Total comprehensive income (loss) for period	-34,304	-21,687
Total comprehensive income (loss) attributable to [abstract]
Total comprehensive income (loss), attributable to saudi shareholders of company	-33,954.0992	-21,465.7926
Total comprehensive income (loss), attributable to non-saudi shareholders of company	-349.9008	-221.2074
Total comprehensive income (loss), attributable to non-controlling interests	0	0

Start Date	2019-01-01	2018-01-01
End Date	2019-12-31	2018-12-31
Statement of cash flows, indirect method [abstract]
Statement of cash flows, insurance/ takaful operations [abstract]
Cash flows from (used in) operating activities, insurance/ takaful operations [abstract]
Net result for period from insurance/ takaful operations after shareholders appropriation	0	0
Adjustments to reconcile net income to net cash from insurance/ takaful operations after shareholders appropriation
Adjustments for depreciation, insurance/ takaful operations cash flow	1,611	1,376
Adjustments for employees end of service benefits	969	1,339
Adjustments for allowance for doubtful receivables	2,523	-1,281
Other adjustments to reconcile net income to net cash from insurance/ takaful operating activities	0	0
Total adjustments to reconcile net income to net cash from insurance/ takaful operations after shareholders appropriation	5,103	1,434
Changes in operating assets and liabilities [abstract]
Adjustments for decrease (increase) in premium receivables, net	-60,563	-4,042
Adjustments for decrease (increase) in prepayments and other assets	1,070	-3,162
Adjustments for increase (decrease) in outstanding claims including IBNR	8,963	-44,128
Adjustments for increase (decrease) in reinsurers/ retakaful balance payable	-10,960	11,878
Adjustments for increase (decrease) in accrued expenses and other liabilities	-4,553	-1,758
Adjustments for decrease (increase) in reinsurers/ retakaful share of outstanding claims, net	13,881	40,353
Adjustments for decrease (increase) in deferred policy acquisition costs	-2,932	-2,928
Adjustments for decrease (increase) in unearned commission income	173	-620
Adjustments for decrease (increase) in due from shareholders operations	-4,541	-26,241
Adjustments for movement in gross unearned premiums/ contributions	35,577	30,938
Adjustments for reinsurance/ retakaful share of unearned premiums/ contributions	12,323	-2,343
Adjustment for changes in other technical reserves	8,877	10,967
Adjustments for other changes in operating assets and liabilities, insurance/ takaful operations cash flow	-2,237	-1,416
Total changes in operating assets and liabilities	-4,922	7,498
Net cash flows from (used in) insurance/ takaful operations	181	8,932
Other inflows (outflows) of cash classified as operating activities, insurance/ takaful operations cash flow	-228	-943
Net cash flows from (used in) operating activities, insurance/ takaful operations	-47	7,989
Cash flows from (used in) investing activities, insurance/ takaful operations [abstract]
Time (Murabaha) deposits, insurance/ takaful operations cash flow	0	0
Purchase of property and equipment, insurance/ takaful operations cash flow	4,658	2,192
Net cash flows from (used in) investing activities, insurance/ takaful operations	-4,658	-2,192
Cash flows from (used in) financing activities, insurance/ takaful operations [abstract]
Adjustments for decrease (increase) in due from shareholders operations	0	0
Other inflows (outflows) of cash classified as financing activities, insurance/ takaful operations cash flow	0	0
Net cash flows from (used in) financing activities, insurance/ takaful operations	0	0
Increase (decrease) in cash and cash equivalents before effect of exchange rate changes	-4,705	5,797
Effect of exchange rate changes on cash and cash equivalents	0	0
Net increase (decrease) in cash and cash equivalents	-4,705	5,797
Cash and cash equivalents at beginning of period	25,935	20,138
Cash and cash equivalents at end of period	21,230	25,935
Non-cash supplemental information, insurance/ takaful operations [abstract]
Operational cash flows from interest and dividends [abstract]
Interest paid, insurance/ takaful operations	0	0
Interest received, insurance/ takaful operations	84	0
Dividend received, insurance/ takaful operations	0	0

Start Date	2019-01-01	2018-01-01
End Date	2019-12-31	2018-12-31
Statement of cash flows, indirect method [abstract]
Statement of cash flows [abstract]
Cash flows from (used in) operating activities [abstract]
Net profit (loss) for period [abstract]
Income (loss) from continuing operations before zakat and income tax	-27,706	-20,217
Profit (loss) from discontinued operations before zakat and income tax	0	0
Net profit (loss) for period (before zakat expenses and income tax)	-27,706	-20,217
Adjustments to reconcile profit (loss) [abstract]
Adjustments for realised loss (gain) on available-for-sale investments, shareholders cash flow	-8	99
Adjustments for amortisation of premium (accretion of discounts) on investments	-1,468	-168
Total adjustments to reconcile profit (loss)	-1,476	-69
Changes in operating assets and liabilities [abstract]
Adjustments for increase (decrease) in accrued expenses and other liabilities, shareholders cash flow	2,191	2,773
Adjustments for decrease (increase) in due from insurance/ takaful operations	-4,541	26,241
Adjustments for decrease (increase) in prepayments and other assets, shareholders assets	13,392	-4,060
Adjustments for increase (decrease) in other liabilities	4,700
Total changes in operating assets and liabilities	15,742	24,954
Net cash flows from (used in) operations	-13,440	4,668
Zakat expenses	16,198	1,220
Net cash flows from (used in) operating activities	-29,638	3,448
Cash flows from (used in) investing activities [abstract]
Purchase of available-for-sale investments	9,212	7,850
Proceeds from disposal of available-for-sale investments	1,336	1,320
Purchase of held-to-maturity investments		47,004
Acquistion of murabaha/ time deposits	33,643	-27,650
Net cash flows from (used in) investing activities	-41,519	-25,884
Cash flows from (used in) financing activities [abstract]
Proceeds from issuing shares	100,000
Payment of transaction costs	3,847
Other inflows (outflows) of cash	-15,000	27,000
Net cash flows from (used in) financing activities	81,153	27,000
Increase (decrease) in cash and cash equivalents before effect of exchange rate changes	9,996	4,564
Net increase (decrease) in cash and cash equivalents	9,996	4,564
Cash and cash equivalents at beginning of period	13,289	8,725
Cash and cash equivalents at end of period	23,285	13,289

[400100] Notes forming part of accounts

English [member]

Note No.

Start Date

2019-01-01

End Date

2019-12-31

Notes forming part of accounts [line items]

Disclosure of notes and other explanatory information [text block]

Disclosure of general information about reporting entity [abstract]

Disclosure of general information about reporting entity [text block]

1	ORGANIZATION AND PRINCIPAL ACTIVITIES

Amana Cooperative Insurance Company (the “Company”) is a Saudi joint stock company established in Riyadh, Kingdom of Saudi Arabia by Royal Decree Number M/35 dated Jumada Al-Akher 3, 1431 H (corresponding to May 17, 2010), and registered in the Kingdom of Saudi Arabia under Commercial Registration No. 1010288711 dated Jumada Al-Akher 10, 1431 H (corresponding to May 24, 2010). The Company’s head office is at Salah-uddin Al-Ayubi Street P.O. Box 27986, Riyadh 11427, Kingdom of Saudi Arabia.






The objective of the Company is to engage in providing insurance services in accordance with its Articles of Association and By-laws and the applicable regulations in the Kingdom of Saudi Arabia.


On 31 July 2003, corresponding to 2 Jumada II 1424H, the Law on the Supervision of Cooperative Insurance Companies (“Insurance Law”) was promulgated by Royal Decree Number (M/32). During March 2008, the Saudi Arabian Monetary Authority (“SAMA”), as the principal authority responsible for the application and administration of the Insurance Law and its Implementing Regulations, granted the Company a license to transact insurance activities in the Kingdom of Saudi Arabia.





It was approved to update the Company’s by-laws to comply with the new companies’ regulations, issued by royal decree no.m/3 on 28/01/1437 H and this is as per the extraordinary general assembly meeting on 23/09/1438 H, corresponding June 18, 2017.

Disclosure of basis of preparation of financial statements [text block]

BASIS OF PREPARATION

(a)

Basis of presentation and measurement

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as endorsed in Kingdom of Saudi Arabia (KSA) by Saudi Organization for Certified Public Accountants (SOCPA), other standards and pronouncements issued by SOCPA, regulations for Companies and Company's by-Laws.

Previously financial statements were prepared in accordance with IFRS as modified by SAMA for the accounting of zakat and income tax’, which requires, adoption of all IFRSs as issued by the International Accounting Standards Board (“IASB”) except for the application of International Accounting Standard (IAS) 12 - “Income Taxes” and IFRIC 21 - “Levies” so far as these relate to zakat and income tax. As per Circular no. 2019/23099 dated 26 shaban 1440H, (corresponding to 1 May 2019) SAMA instructed the Insurance Companies in the Kingdom of Saudi Arabia to account for the zakat and income taxes in the statement of income. This aligns with the IFRSs and its interpretations as issued by the International Accounting Standards Board (“IASB”). 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 and the effects of this change is disclosed in note 15 to the financial statements.

In accordance with Article 70 of the SAMA Implementing Regulations, and as per the Articles of Association of the Company, the Company maintains separate accounts for both insurance operations and shareholders' operations. It distributes the net annual insurance surplus as set forth in the Company's Articles of Association and the insurance policy in terms of cooperative insurance, The customer (insurance policy) is valid and paid to date at the time of payment of the cooperative distribution amount.

(a)	Basis of presentation and measurement (continued)
The financial statements are prepared under the going concern concept (refer 'going concern' note below) and the historical cost convention, except for the measurement at fair value of available-for-sale investments and measurement at present value of employees' end-of-service benefit obligations. 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: Held-to-maturity investments, Available-for-sale investments, Property and equipment, Intangible assets, Statutory deposit, Accrued income on statutory deposit, Employees' end-of-service benefits and Accrued commission income payable to SAMA. All other financial statement line items would generally be classified as current.








The Company presents its statement of financial position in order of liquidity. As required by the Saudi Arabian Insurance Regulations, the Company maintains separate books of accounts for Insurance Operations and Shareholders’ Operations and presents the financial statements accordingly (note 26). Assets, liabilities, revenues and expenses clearly attributable to either activity are recorded in the respective accounts. The basis of allocation of expenses from joint operations is determined and approved by the management and the Board of Directors.






The statement of financial position, statements of income, comprehensive income and cash flows of the insurance operations and shareholders operations which are presented in note 26 of the financial statements have been provided as supplementary financial information to comply with the requirements of the guidelines issued by SAMA implementing regulations and is not required under IFRSs. SAMA implementing regulations requires the clear segregation of the assets, liabilities, income and expenses of the insurance operations and the shareholders operations. Accordingly, the statements of financial position, statements of income, statements of comprehensive income and statements of cash flows prepared for the insurance operations and shareholders operations as referred to above, reflect only the assets, liabilities, income, expenses and comprehensive gains or losses of the respective operations.









In preparing the Company-level financial statements in compliance with IFRSs, the balances and transactions of the insurance operations are amalgamated and combined with those of the shareholders’ operations. Inter-operation balances and transactions are eliminated in full during amalgamation. The accounting policies adopted for the insurance operations and shareholders operations are uniform for like transactions and events in similar circumstances.





*Going concern*
The accumulated losses of the Company as at 31 December 2019 are 35.69% (31 December 2018: 31.84%) of the share capital. To improve financial position, solvency margin and future business activities of the Company, the Company's shareholders in their meeting held on 28 January 2019, approved a right issue amounting to SAR 100 million (note 16). Consequently, the Company has significantly increased its business as compared to last financial year. Moreover, the Company has put together a two-pillar plan under which the growth in topline is planned along with a firm control on expenses and has prepared a comprehensive business plan approved by the Board of Directors of the Company. Based on above the management is satisfied that it will be able to continue as a going concern in the foreseeable future.









(b)	Functional and presentation currency
The financial statements have been prepared in Saudi Arabian Riyals (SAR), which is also the functional currency of the Company. All financial information presented in SAR has been rounded off to the nearest thousand, unless otherwise stated.



(c)	Fiscal year
The Company follows a fiscal year ending 31 December.

(d)	Critical accounting judgments, estimates and assumptions
The preparation of the 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 continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

2	BASIS OF PREPARATION (CONTINUED)

(d)	Critical accounting judgments, estimates and assumptions (continued)

Following are the accounting judgments and estimates that are critical in preparation of these financial statements:

*The ultimate liability arising from claims made under insurance contracts*
The estimation of the ultimate liability arising from claims made under insurance contracts is the Company’s most critical accounting estimate. There are several sources of uncertainty that need to be considered in the estimate of the liability that the Company will ultimately pay for such claims. Estimates are made at the end of the reporting period 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 period, 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 actuary to determine these provisions. The actuary has 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.









*Impairment of financial assets*
The 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 period 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.






*Impairment of receivables*
A 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.




*Fair value of financial instruments*
Fair 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.



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.




*Useful lives of property and equipment and intangible assets*
The Company’s management determines the estimated useful lives for calculating depreciation/amortization. These estimates are determined after considering the expected usage of the assets or physical wear and tear. Management reviews the residual values, useful lives and depreciation method annually. Future depreciation/amortization charge, if any shall be adjusted where the management believes the useful lives, residual values and depreciation method differ from previous estimates.





*Premium deficiency reserve and other techincal reserves*
Estimation of the premium deficiency reserve is highly sensitive to a number of assumptions as to the future events and conditions. It is based on an expected loss ratio for the unexpired portion of the risks for written policies. To arrive at the estimate of the expected loss ratio, the actuary looks at the claims and premiums relationship which is expected to be realized in the future. Other technical reserves represent unallocated loss adjustment expense reserves and reinsurance accrual reserves. Unallocated loss adjustment expense reserve are based on estimates of future payments and derived from the claim department expenses, including payroll and allocation of other expenses.






2	BASIS OF PREPARATION (CONTINUED)

(d)	Critical accounting judgments, estimates and assumptions (continued)

*Provision for zakat*
Zakat provision is made and recorded at the end of each fiscal year in accordance with General Authority of Zakat and Tax (GAZT) regulations applicable in the Kingdom of Saudi Arabia. Differences in zakat assessments are recorded in the income statement when final zakat assessments are obtained.



*Employees' end-of-service benefits*
The retirement benefit obligation is determined using projected unit credit method which requires estimates to be made of the various inputs. The key estimates are the discount rate, rate of salary, mortality rate and withdrawal rate.



*Deferred Tax*
Deferred tax asset is recognised only to the extent that it is probable that the future taxable profits will be available and credits can be utilized. Deferred tax asset has not been provided in these financial statements for the year ended 31 December 2019 since the Company does not anticipate availability of future taxable profit in foreseeable future to utilize any tax credits.




*Contingencies*
By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of such contingencies inherently involves the exercise of significant judgements and estimates of the outcome of future events.

Disclosure of accounting framework used in preparation of financial statements [text block]

3	SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies applied in the preparation of these financial statements are summarised below. These policies have been consistently applied to each of the financial years presented except for the adoption of the following new standards and other amendments to existing standards mentioned below and zakat and income tax (note 2a) which have had no significant financial impact on the financial statements of the Company on the current year or prior year and is expected to have no significant effect in future years:





Standards adopted during the year

*IFRS 16 - Leases*
The Company adopted IFRS 16 using the modified retrospective approach. The Company elected to apply the standard to contracts that were previously identified as leases applying IAS 17 and IFRIC 4. The Company elected to use the exemptions proposed by the standard regarding lease contracts for which the lease term ends within 12 months of the date of initial application, and lease contracts for which the underlying asset is of low value. The Company has performed an assessment of IFRS 16 and determined the difference as compared to IAS 17 and IFRIC 4 is not material to the Company’s financial statements as a whole.






The details of new significant accounting policy and the nature are set out below.

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
Leases of low value assets; and
Leases with a term of 12 months or less.

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Company’s incremental commission rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.









3	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Standards adopted during the year (continued)

*IFRS 16 - Leases (continued)*
Assets and liabilities arising from a lease are initially measured on a present value basis.

Lease liabilities include the net present value of the following lease payments:
Fixed payments (including in- substance fixed payments), less any lease incentives receivable;
Variable lease payments that are based on an index or a rate;
Amounts expected to be payable by the lessee under residual value guarantees;
The exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.


Right-of-use assets are measured at cost comprising the following:
the amount of the initial measurement of lease liability;
any lease payments made at or before the commencement date less any lease incentives received; and
any initial direct costs, and restoration costs.

The lease payments are discounted using the incremental borrowing rate, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.



Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in the statement of income. Short-term leases are leases with a lease term of 12 months or less.


Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.



Standards issued but not yet effective

In addition to the above mentioned standards, the following standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company’s financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective. Further, the Company has chosen not to early adopt the amendments and revisions to the International Financial Reporting Standards which have been published and are mandatory for compliance for the Company with effect from future dates.





IFRS 17 Insurance Contracts

Overview
This 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; and
iii.	any promise to transfer distinct goods or non-insurance services.

These components should be accounted for separately in accordance with the related standards (IFRS 9 and IFRS 15).





3	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Standards issued but not yet effective (continued)

IFRS 17 Insurance Contracts (continued)

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



The General model is based on the following "building blocks":
a)	the fulfilment cash flows (FCF), which comprise:
i.	probability-weighted estimates of future cash flows,
ii.	an adjustment to reflect the time value of money (i.e. discounting) and the financial risks associated with those future cash flows,

iii.	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:




i.	the liability for remaining coverage, which comprises the FCF related to future services and the CSM of the group at that date;

ii.	and the liability for incurred claims, which is measured as the FCF related to past services allocated to the group at that date.


The CSM is adjusted subsequently for changes in cash flows related to future services but the CSM cannot be negative, so changes in future cash flows that are greater than the remaining CSM are recognized in profit or loss. Interest is also accreted on the CSM at rates locked in at initial recognition of a contract (i.e. discount rate used at inception to determine the present value of the estimated cash flows). Moreover, the CSM will be released into profit or loss based on coverage units, reflecting the quantity of the benefits provided and the expected coverage duration of the remaining contracts in the group.






The Variable Fee Approach (VFA) is a mandatory model for measuring contracts with direct participation features (also referred to as ‘direct participating contracts’). This assessment of whether the contract meets these criteria is made at inception of the contract and not reassessed subsequently. For these contracts, the CSM is also adjusted for in addition to adjustment under general model;



i.	changes in the entity’s share of the fair value of underlying items,
ii.	changes in the effect of the time value of money and financial risks not relating to the underlying items.

In addition, a simplified Premium Allocation Approach (PAA) is permitted for the measurement of the liability for the remaining coverage if it provides a measurement that is not materially different from the general model or if the coverage period for each contract in the group is one year or less. With the PAA, the liability for remaining coverage corresponds to premiums received at initial recognition less insurance acquisition cash flows. The general model remains applicable for the measurement of incurred claims. However, the entity is not required to adjust future cash flows for the time value of money and the effect of financial risk if those cash flows are expected to be paid/received in one year or less from the date the claims are incurred.







Effective date
The IASB issued an Exposure Draft Amendments to IFRS 17 proposing certain amendments to IFRS 17 during June 2019 and received comments from various stakeholders. On 17 March 2020, the International Accounting Standards Board (“IASB”) has completed its discussions on the amendments to IFRS 17 Insurance Contracts that were proposed for public consultation in June 2019. It has decided that the effective date of the Standard will be deferred to annual reporting periods beginning on or after 1 January 2023. The IASB expects to issue the amendments to IFRS 17 in the second quarter of 2020. Earlier application is permitted if both IFRS 15 – Revenue from Contracts with Customers and IFRS 9 – Financial Instruments have also been applied. The Company intends to apply the Standard on its effective date i.e. 1 January 2023.








3	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Standards issued but not yet effective (continued)

IFRS 17 Insurance Contracts (continued)

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



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


Impact
The Company is currently assessing the impact of the application and implementation of IFRS 17. As of 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:



Financial Impact
A detailed financial impact assessment (FIA) is presently in progress as per SAMA requirements with due date of 31 March 2020. A few gaps identified during gap assessment phase include:-


a)	On a financial year basis, the combined ratio of the Company is 115%. It means that if the loss ratio pattern does not improve, the Company could have a significant portion of contracts that are onerous at initial recognition or have a significant probability of becoming onerous. Such groups of onerous contracts should be defined and managed separately from profitable portfolios. A loss from onerous insurance contracts is immediately recognized in profit or loss. That will lead to an increase in recognized losses in the period.





b)	Risk adjustment should be done for the incurred claims liability calculation. It will affect all LoB's. The methodology for risk adjustment should be chosen, taking into account insurance portfolios' features.

c)	An adjustment should be done for the discounting for the incurred claims liability calculation. For LoB's, that have short expected duration to the settlement of claims for these LoB's, the discounting factor will have no material impact on the claims severity in respect of incurred claims, but the impact will be significant for LoB's with long tails. The methodology for discount rates should be chosen, taking into account insurance portfolios' features.




d)	VFA will not be applicable as the Company does not write life business.

Data Impact
a)	addition of data attributes to include P&L vs. OCI identification.
b)	Store both the locked-in inception rate and the current rate in the data base.
c)	New functionality required for actuarial database.
d)	Any existing spreadsheet data models will be revised to support IFRS 17 discounting calculations.
e)	Delivering IFRS 17 compliant Chart of Accounts by Jan 1 2021 for parallel run.

Impact on Information Technology systems
a)	A process will be developed that monitors and tests multi-year reinsurance policies for PAA eligibility.
b)	The impact of the outward reinsurance should be estimated and disclosed separately using the appropriate methodology that depends on the features of the reinsurance contracts. Since company has different types of reinsurance contracts, each of reinsurance treaties should be estimated separately.


c)	The assumptions used for measurement of reinsurance contracts held should be consistent with the assumptions used for measurement of the underlying insurance contracts.


Impact on Policies & Control Frameworks
a)	A new accounting policy will be required.
b)	Determine new relevant IFRS 17 metrics & KPI’s.
c)	Rigorous controls around data inputs and outputs into the CSM (if applicable) spreadsheet solution will need to be developed and enforced.

d)	New controls designed for the IFRS 17 process.
e)	Periodic reviews of the expense base.
f)	Performance of the onerous contracts test with new set of controls (financial and actuarial).

The Company has started with their implementation process and have set up an implementation committee.
3	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Standards issued but not yet effective (continued)

*IFRS 9 – Financial Instruments*

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


Classification and measurement
IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss. A financial asset is measured at amortized cost if both:



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

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


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


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

ii.	the contractual terms of cash flows are SPPI,

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



For equity instruments that are not held for trading, an entity can also make an irrevocable election to present in other comprehensive income subsequent changes in the fair value of the instruments (including realized gains and losses), dividends being recognized in profit or loss.



Additionally, for financial liabilities that are designated as at fair value through profit or loss, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognized in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss.





Impairment
The impairment model under IFRS 9 reflects expected credit losses, as opposed to incurred credit losses under IAS 39. Under the IFRS 9 approach, it is no longer necessary for a credit event to have occurred before credit losses are recognized. Instead, an entity always accounts for expected credit losses and changes in those expected credit losses. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition.





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











3	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Standards issued but not yet effective (continued)

IFRS 9 – Financial Instruments (continued)

Effective date
The 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:





a)	apply a temporary exemption from implementing IFRS 9 until the earlier of
i.	the effective date of a new insurance contract standard; or
ii.	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, 2023. Additional disclosures related to financial assets are required during the deferral period. This option is only available to entities whose activities are predominately connected with insurance and have not applied IFRS 9 previously; or





b)	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 year, additional disclosures are required.



The Company is eligible for temporary exemption from first time adoption. Consequently, the Company has decided to defer the implementation of IFRS 9 until the effective date of the new insurance contracts. Disclosures related to financial assets required during the deferral period are included in the Company’s financial statements.



As at December 31, 2019, the Company has total financial assets and insurance related assets amounting to SAR 429 million and SAR 112 million respectively. Financial assets and insurance related assets are not mutually exclusive in terms of classification. The financial assets consist of financial assets held at amortized cost and other financial assets.




Currently, financial assets held at amortized cost amount to SAR 410 million and mainly consist of cash and cash equivalents, short term deposits, premium and reinsurance receivables.


Other financial assets consist of available-for-sale investments amounting to SAR 19 million. The Company expect to use the FVOCI classification of these financial assets based on the business model of the Company for debt securities and strategic nature of equity investments. However, the Company is yet to perform a detailed assessment to determine whether the debt securities meet the SPPI test as required by IFRS 9.




Credit risk exposure, concentration of credit risk and credit quality of these financial assets are mentioned in note 23. The Company’s financial assets have low credit risk as at December 31, 2019.


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.














3	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The significant accounting policies used in preparing these financial statements are set out below have been consistently applied unless otherwise mentioned:


Cash and cash equivalents
Cash and cash equivalents comprise of current accounts at banks.

Cash flow statement
The Company’s main cash flows are from insurance operations which are classified as cash flow from operating activities. Cash flows generated from investing and financing activities are classified accordingly.


Premiums receivable
Premiums receivable are stated at gross written premiums receivable from insurance contracts, less an allowance for any uncollectible amounts. Premiums and reinsurance balances receivable are recognised when due and measured on initial recognition at the fair value of the consideration received or receivable. The carrying value of receivable is reviewed for impairment and whenever events or circumstances indicate that the carrying amount may not be recoverable, the impairment loss is recorded in “Other expenses / income - net” in the statement of income. Receivable balances are derecognised when the Company no longer controls the contractual rights that comprise the receivable balance, which is normally the case when the receivable balance is sold, or all the cash flows attributable to the balance are passed through to an independent third party. Receivables disclosed in note 6 fall under the scope of IFRS 4 “Insurance contracts”. Receivables are also analyzed as per the ageing and accordingly provision is maintained on a systematic basis.










Foreign currencies
Transactions denominated in foreign currencies are recorded in Saudi Riyals (SAR) at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated to SAR at the rate of exchange prevailing at the date of statement of financial position. Exchange differences are taken to the statements of insurance operations or statement of shareholders’ operations. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using exchange rate at the date of initial transaction and are not subsequently restated. As the Company’s foreign currency transactions are primarily in US dollars, foreign exchange gains and losses are not significant.







Insurance contracts
Insurance contracts are those contracts where the Company (the insurer) has accepted significant insurance risk from another party (the policyholder) at the inception of the contract, or those where at the inception of the contract there is a scenario with commercial substance where the level of insurance risk may be significant over time. The significance of insurance risk depends upon the probability of occurrence of an insurance event and the magnitude of its potential effect.





Once a contract has been classified as an insurance contract, it remains an insurance contract for the remainder of its lifetime, even if the insurance risk is significantly reduced subsequently unless all rights and liabilities are extinguished or expired.



Reinsurance
Reinsurance is distributed between treaty, facultative, stop loss 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 'Insurance contracts - note' are classified as reinsurance contracts held. Contracts that do not meet these classification requirements are classified as financial assets. Insurance contracts entered into by the Company under which the contract holder is another insurer (inwards reinsurance) are included with insurance contracts. An asset or liability is recorded in the statement of financial position - insurance operations’ 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 derecognized 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 that the Company will receive from the reinsurer can be measured reliably. The impairment loss is recorded in the statement of income as incurred.





Ceded reinsurance arrangements do not relieve the Company from its obligations to policyholders.
3	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Provisions, accrued expenses and other liabilities
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognized for future operating losses. Liabilities are recognized for amounts to be paid in the future for goods or services received, whether billed by the supplier or not.





Investments

*Available-for-sale investments (AFS)*
Available-for-sale financial assets are those non-derivative financial assets that are neither classified as held for trading or held to maturity or loans and receivables, nor are designated at fair value through profit or loss. Such investments are initially recorded at cost, being the fair value of the consideration given including transaction costs directly attributable to the acquisition of the investment and subsequently measured at fair value. Cumulative changes in fair value of such investments are recognized in other comprehensive income in the statement of comprehensive income under “Net change in fair value – Available for sale investments”. Realized gains or losses on sale of these investments are reported in the statement of income under “Realized gain / (loss) on investments.”








Dividend, commission income and foreign currency gain/loss on available-for-sale investments are recognized in the statement of income or statement of comprehensive income as part of the net investment income / loss.


Fair 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.



For unquoted investments, fair value is determined by reference to the market value of a similar investment or where the fair values cannot be derived from active markets, they are determined using a variety of valuation techniques. The input to these models is taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values.




The Company evaluates whether the ability and intention to sell its AFS financial assets in the near term is still appropriate. When, in rare circumstances, the Company is unable to trade these financial assets due to inactive markets, the Company may elect to reclassify these financial assets if management has the ability and intention to hold the assets for the foreseeable future or until maturity. Reclassification to loans and receivables is permitted when the financial asset meets the definition of loans and receivables and management has the intention and ability to hold these assets for the foreseeable future or until maturity. The reclassification to HTM is permitted only when the entity has the ability and intention to hold the financial asset until maturity. For a financial asset reclassified out of the available-for-sale category, the fair value at the date of reclassification becomes its new amortised cost and any previous gain or loss on that asset that has been recognised in equity is amortised to profit or loss over the remaining life of the investment using the Effective Interest Rate (EIR). Any difference between the new amortised cost and the maturity amount is also amortised over the remaining life of the asset using EIR. If the asset is subsequently determined to be impaired, then the amount recorded in equity is reclassified to the statement of income.













*Held as Fair Value through Statement of Income*
Investments in this category are classified if they are held for trading or designated by management as FVSI on initial recognition. Investments classified as trading are acquired principally for the purpose of selling or repurchasing in short term and are recorded in the statement of financial position at fair value. Changes in fair value are recognized in statement of income.




An investment may be designated at FVSI by the management, at initial recognition, if it satisfies the criteria laid down by IAS 39 except for the equity instruments that do not have a quoted price in an active market and whose fair values cannot be reliably measured.






3	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Investments (continued)

*Held as Fair Value through Statement of Income (continued)*
Investments at FVSI are recorded in the statement of financial position at fair value. Changes in the fair value are recognised in the statement of income for the year in which it arises. Transaction costs, if any, are not added to the fair value measurement at initial recognition of FVSI investments. Special commission income and dividend income on financial assets held as FVSI are reflected as income from FVSI financial instruments in the statement of income.





Investments at FVSI are not reclassified subsequent to their initial recognition, except that non-derivative FVSI instrument, other than those designated as FVSI upon initial recognition, may be reclassified out of the FVSI fair value through the statement of income (i.e., trading) category if they are no longer held for the purpose of being sold or repurchased in the near term, and the following conditions are met:




- If the financial asset would have met the definition of loans and receivables, if the financial asset had not been required to be classified as held for trading at initial recognition, then it may be reclassified if the entity has the intention and ability to hold the financial asset for the foreseeable future or until maturity.



- If the financial asset would not have met the definition of loans and receivables, and then it may be reclassified out of the trading category only in ‘rare circumstances’.


*Held-to-maturity*
Investments having fixed or determinable payments and fixed maturity that the Company has the positive intention and ability to hold to maturity are classified as held-to-maturity. Held to maturity investments are initially recognised at fair value including direct and incremental transaction costs and subsequently measured at amortised cost, less provision for impairment in value. Amortised cost is calculated by taking into account any discount or premium on acquisition using an effective yield basis. Any gain or loss on such investments is recognised in the statement of income when the investment is derecognised or impaired.






Investments classified as held-to-maturity cannot ordinarily be sold or reclassified without impacting the Company's ability to use this classification and cannot be designated as a hedged item with respect to commission rate or prepayment risk, reflecting the longer-term nature of these investments.



However, sales and reclassifications in any of the following circumstances would not impact the Company's ability to use this classification:

- Sales or reclassifications that are so close to maturity that the changes in market rate of commission would not have a significant effect on the fair value.

- Sales or reclassifications after the Company has collected substantially all the assets’ original principal.
- Sales or reclassifications attributable to non-recurring isolated events beyond the Company's control that could not have been reasonably anticipated.


Impairment of financial assets
The Company assesses, at each reporting date, whether there is objective evidence that a financial asset or a group of financial assets is impaired. An impairment exists if one or more events that has occurred since the initial recognition of the asset (an incurred ‘loss event’) has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.




Evidence of impairment may include:
	significant financial difficulty of the issuer or debtor;
	a breach of contract, such as a default or delinquency in payments;
	it becoming probable that the issuer or debtor will enter bankruptcy or other financial reorganization;
	the disappearance of an active market for that financial asset because of financial difficulties; or
	observable data indicating that there is a measurable decrease in the estimated future cash flow from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the Company, including:


	adverse changes in the payment status of issuers or debtors in the Company; or
	national or local economic conditions at the country of the issuers that correlate with defaults on the assets.

3	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Impairment of financial assets (continued)
If there is objective evidence that an impairment loss on a financial asset exists, the impairment is determined as follows:

- For assets carried at fair value, impairment is the significant or prolong decline in the fair value of the financial asset.

- For assets carried at amortized cost, impairment is based on estimated future cash flows that are discounted at the original effective commission rate.


For available-for-sale financial assets, the Company assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired.


In the case of debt instruments classified as available-for-sale, the Company assesses individually whether there is an objective evidence of impairment. Objective evidence may include indications that the borrower is experiencing significant financial difficulty, default or delinquency in special commission income or principal payments, the probability that it will enter bankruptcy or other financial reorganization and where observable data indicates that there is a measurable decrease in the estimated future cash flows, such as changes in economic conditions that correlate with defaults. However, the amount recorded for impairment is the cumulative loss measured as the difference between the amortized cost and the current fair value, less any impairment loss on that investment previously recognized in the statement of income and statement of comprehensive income. If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to credit event occurring after the impairment loss was recognized in the statement of income and statement of comprehensive income, the impairment loss is reversed through the statement of income and statement of comprehensive income.












For equity investments held as available-for-sale, a significant or prolonged decline in fair value below its cost represents objective evidence of impairment. The impairment loss cannot be reversed through statement of income as long as the asset continues to be recognised i.e. any increase in fair value after impairment has been recorded can only be recognised in other comprehensive income. On derecognition, any cumulative gain or loss previously recognised in other comprehensive income is included in the statement of income under “Realized gain / (loss) on investments.






The determination of what is ‘significant’ or ‘prolonged’ requires judgement. A period of 12 months or longer is considered to be prolonged and a decline of 30% or more from original cost is considered significant as per the Company policy. In making this judgement, the Company evaluates, among other factors, the duration or extent to which the fair value of an investment is less than its cost.




In making an assessment of whether an investment in debt instrument is impaired, the Company considers the factors such as market’s assessment of creditworthiness as reflected in the bond yields, rating agencies’ assessment of creditworthiness, country’s ability to access the capital markets for new debt issuance and probability of debt being restructured, resulting in holders suffering losses through voluntary or mandatory debt forgiveness. The amount recorded for impairment is the cumulative loss measured as the difference between the amortised cost and the current fair value, less any impairment loss on that investment previously recognised in the statement of income and statement of comprehensive income.







Property and equipment
Property and equipment are stated at cost less accumulated depreciation and any impairment losses. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of income during the financial period in which they are incurred. Land is not depreciated. The cost of other items of property and equipment is depreciated on the straight line method to allocate the cost over estimated useful lives, as follows:






		Years
Leasehold improvement		20%
Computer hardware and office equipment		25%
Furniture and fixtures		20%
Vehicles		25%
3	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property and equipment (continued)
The assets’ residual values and useful lives are reviewed at each reporting date and adjusted if appropriate. The carrying values of these assets are reviewed for impairment when event or changes in circumstances indicate that the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount.




Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are included in “other income'(expenses)” in the statement of income.


*Capital work in progress*
Capital work in progress, includes facility refurbishment and upgradation projects that are being developed for future use. When commissioned, capital work in progres will be transferred to the respective category i.e. property and equipment, and depreciated in accordance with the Company’s policy.



Intangible assets
Intangible assets are shown at historical cost less accumulated amortisation. They have a finite useful life and are subsequently carried at cost less accumulated amortization and impairment losses. The Company amortises intangible assets with a limited useful life using straight-line method over 4 years.



Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to depreciation and are tested annually for impairment. Assets that are subject to depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.



An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash flows (cash-generating units).




Employees' end-of-service benefits
The Company operates an end of service benefit plan for its employee based on the prevailing Saudi Labour Laws. Accruals are made in accordance with the actuarial valuation under projected unit credit method, while the benefits payments obligation is discharged as and when it falls due.



Remeasurements for actuarial gains and losses are recognised immediately in the statement of financial position with a corresponding credit to equity through other comprehensive income in the period in which they occur. Remeasurements are not reclassified to statement of income in subsequent periods.



Past service cost are recognised in statement of income on the earlier of:
- The date of the plan amendment or curtailment, and
- The date the Company recognizes related restructuring costs

Net special commission income is calculated by applying the discount rate to the net defined benefit liability. The Company recognises the following changes in the net defined benefit obligation in the statement of income under general and administrative expenses:


- Service costs comprising current service costs, past service costs, gains and losses on curtailments and non
routine settlements
- Net special commission expense or income

*Short term employee benefits*
Short term employee benefits include leave pay and airfare, are current liabilities included in accrued expenses, measured at the undiscounted amount that the entity expects to pay as a result of the unused entitlement.


*Other short term employee benefits*
The Company pays retirement contributions for its Saudi Arabian employees to the General Organization for Social Insurance. This represents a state-owned defined contribution plan. The payments made are expensed as incurred.


3	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Liability adequacy test
At each statement of financial position date, the Company assesses whether its recognised insurance liabilities are adequate using current estimates of future cash flows under its insurance contracts. If such an assessment shows that the carrying amount of its insurance liabilities is inadequate in the light of estimated future cash flows, the entire deficiency is immediately recognised in the statement of income and an unexpired risk provision is made.





Zakat and income tax
The Company is subject to zakat in accordance with the regulations of the General Authority of Zakat and Tax (“GAZT”). Zakat is computed on the Saudi shareholders’ share of equity or net income using the basis defined under the Zakat regulations. Income taxes are computed on the foreign shareholders share of net adjusted income for the year. Zakat and income tax is accrued on a quarterly basis.




Effective 1 January 2017, based on the Circular issued by SAMA, the Company amended its accounting policy to charge zakat and tax directly into retained earnings in the statement of changes in shareholders’ equity instead of statement of income.



*Change in the accounting for zakat and income tax*
As mentioned above, the basis of preparation has been changed for the year ended 31 December 2019 as a result of the issuance of latest instructions from SAMA dated 1 May 2019. Previously, zakat and income tax were recognized in the statement of changes in equity as per the SAMA circular no 381000074519 dated 11 April 2017. With the latest instructions issued by SAMA dated 1 May 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 and the effects of the above change are disclosed in note 15 to the financial statements. The change has resulted in reduction of reported income of the Company for the year ended 31 December 2019 by SAR 9.7 million. The change has had no impact on the statement of cash flows for the year ended 31 December 2019.









*Zakat*
The Company is subject to Zakat in accordance with the regulations of the General Authority of Zakat and Income Tax ("GAZT"). Zakat expense is charged to the profit or loss. Zakat is not accounted for as income tax and as such no deferred tax is calculated relating to zakat.



*Deferred tax*
Deferred tax is calculated by using the statement of financial position liability method, providing the temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amount used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using tax rates enacted at the statement of financial position date. Deferred tax asset is recognised only to the extent that it is probable that the future taxable profits will be available and credits can be utilized.






Deferred tax is charged or credited in the statement of income, except in the case of items credited or charged to other comprehensive income/equity in which case it is included in other comprehensive income/equity.


Deferred tax asset has not been provided in these financial statements for the year ended 31 December 2019 since the Company does not anticipate availability of future taxable profit in foreseeable future to utilize any tax credits. The deferred tax liability has not been recorded since there are no temporary taxable differences.



Statutory deposit
Statutory deposit represents 15% of the paid up capital of the Company which is maintained with a bank designated by SAMA in accordance with The Cooperative Insurance Companies Control Law for insurance companies. This statutory deposit cannot be withdrawn without the consent of SAMA.



Statutory reserve
In accordance with its by-laws, the Company allocates 20% of its net income of each year to the statutory reserve until it has built up a reserve equal to the share capital.


3	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue recognition

*Recognition of premium and commission revenue*
Premiums and commission are recorded in the statement of income based on straight line method over the insurance policy coverage period except for long term engineering policies. 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.



Unearned premiums represent the portion of premiums written relating to the unexpired period 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 period of risk.



Insurance policyholders are charged for policy administration services and policy fees. These fees are recognized as revenue over the period in which the related services are performed. If the fees are for services provided in future periods, then they are deferred and recognised over future periods.



Claims
Claims 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.



Deferred policy acquisition costs
Commission paid to sales staff and incremental direct costs incurred in relation to the acquisition and renewal of insurance contracts are deferred and shown as an asset in statement of financial position. The deferred policy acquisition costs are subsequently amortised over the terms of the insurance contracts to which they relate as premiums are earned and charged to statement of income.




Offsetting
Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position only when there is legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the assets and settle the liabilities simultaneously. Income and expenses are not offset in the statement of income unless required or permitted by any accounting standard or interpretation.





Trade date accounting
All routine purchases and sales of financial assets are initially recognized / derecognized on the trade date (i.e. the date on which the Company becomes a party to the contractual provisions of the instrument). Regular way purchases or sales are purchases or sales of financial assets that require settlement of assets within the time frame generally established by regulation or convention in the market place.




De-recognition of financial instruments
The derecognition of a financial instrument takes place when the Company no longer controls the contractual rights that comprise the financial instrument, which is normally the case when the instrument is sold, or all the cash flows attributable to the instrument are passed through to an independent third party and the Company has also transferred substantially all risks and rewards of ownership.



3	SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Salvage and subrogation reimbursement
Some 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.


Operating segments
A segment is a distinguishable component of the Company that is engaged in providing products or services (a business segment), which is subject to risk and rewards that are different from those of other segments. For management purposes, the Company is organized into business units based on their products and services and has the following reportable segments:



	Medical
	Motor
	Property & casualty
	Shareholders’ segment - reporting shareholder operations of the Company. Income earned from investments is the only revenue generating activity. Certain direct operating expenses and other overhead expenses are allocated to this segment on an appropriate basis. The surplus or loss from the insurance operations is allocated to this segment on an appropriate basis.




Operating segments have been approved by management in respect of the Company’s activities, assets and liabilities and is based on current reporting to the Chief Executive Officer.


Fair values
The fair value of financial assets 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 flow using commission for items with similar terms and risk characteristics.



For financial assets where there is no active market, fair value is determined by reference to the market value of a similar financial assets or where the fair values cannot be derived from active market, they are determined using a variety of valuation techniques. The inputs of this models is taken from observable market where possible, but where this is not feasible, a degree of judgment is required in establishing fair values.

Disclosure of notes forming part of accounts [abstract]

Disclosure of business combinations [text block]

21	SEGMENT INFORMATION

Consistent with the Company’s internal reporting process, insurance operating segments have been approved by Management in respect of the Company’s activities, assets and liabilities as stated below.


Segment results do not include general and administrative expenses, allowance for doubtful debts. Accordingly, they are included in unallocated expenses or income.

Segment assets do not include insurance operations’ property and equipment, investments, prepayments and other assets, premiums and reinsurance balances receivable, cash and cash equivalents and time deposits. Accordingly they are included in unallocated assets. Segment liabilities do not include employees’ end-of-service benefits, and reinsurance balances payable, accrued expenses and other liabilities and accrued surplus to policyholders. Accordingly they are included in unallocated liabilities.

		2019
		SAR' 000
						Property & casualty	Unallocated	Total - Insurance operations	Shareholders'operations
Operating segment		Medical		Motor		Property & casualty	Unallocated	Total - Insurance operations	Shareholders'operations	Total
Revenues
Gross premiums written
- Corporate enterprises		94,255		5,962		11,515	-	111,732	-	111,732
- Medium enterprises		38,070		2,483		849	-	41,402	-	41,402
- Small enterprises		21,897		1,047		723	-	23,667	-	23,667
- Very Small enterprises		70,214		45		96	-	70,355	-	70,355
- Individual		-		898		-	-	898	-	898
		224,436		10,435		13,183	-	248,054	-	248,054
Reinsurance premiums ceded
- Local		-		-		(1,643)	-	(1,643)	-	(1,643)
- International (includes premium ceded through local broker)		(1,260)		-		(7,558)	-	(8,818)	-	(8,818)
		(1,260)		-		(9,201)	-	(10,461)	-	(10,461)

Excess of loss expenses
- Local		-		(253)		(98)	-	(351)	-	(351)
- International		(4,716)		(776)		(180)	-	(5,672)	-	(5,672)
		(4,716)		(1,029)		(278)	-	(6,023)	-	(6,023)
Net premiums written		218,460		9,406		3,704	-	231,570	-	231,570




21	SEGMENT INFORMATION (CONTINUED)
		2019
		SAR' 000
						Property & casualty	Unallocated	Total - Insurance operations	Shareholders'operations
		Medical		Motor		Property & casualty	Unallocated	Total - Insurance operations	Shareholders'operations	Total

Changes in unearned premiums - net		(49,271)		919		452	-	(47,900)	-	(47,900)
Net premiums earned		169,189		10,325		4,156	-	183,670	-	183,670
Reinsurance commissions		-		-		1,975	-	1,975	-	1,975
Other underwriting income		12,344		2,789		1,286	-	16,419	-	16,419
Total revenues		181,533		13,114		7,417	-	202,064	-	202,064
Underwriting costs and expenses
Gross claims paid		(161,373)		(13,194)		145	-	(174,422)	-	(174,422)
Reinsurers' share of claims paid		46,555		(640)		524	-	46,439	-	46,439
Net claims paid		(114,818)		(13,834)		669	-	(127,983)	-	(127,983)
Changes in outstanding claims - net		(12,730)		6,321		107	-	(6,302)	-	(6,302)
Changes in claims incurred but not reported - net		(17,714)		1,212		(40)	-	(16,542)	-	(16,542)
Net claims incurred		(145,262)		(6,301)		736	-	(150,827)	-	(150,827)
Premiums deficiency reserve		(368)		(1,028)		1,843	-	447	-	447
Other technical reserves		(9,376)		43		9	-	(9,324)	-	(9,324)
Policy acquisition costs		(15,570)		(789)		(1,151)	-	(17,510)	-	(17,510)
Inspection and supervision fees		(11,289)		(585)		(872)	-	(12,746)	-	(12,746)
Total underwriting costs and expenses		(181,865)		(8,660)		565	-	(189,960)	-	(189,960)
Net underwriting (loss)/income		(332)		4,454		7,982	-	12,104	-	12,104













21	SEGMENT INFORMATION (CONTINUED)
		2019
		SAR' 000
							Unallocated	Total - Insurance operations	Shareholders'operations
		Medical		Motor		Property & casualty	Unallocated	Total - Insurance operations	Shareholders'operations	Total
Other operating income / ( expenses)
Reversal for doubtful debts		-		-		-	(2,523)	(2,523)	-	(2,523)
General and administrative expenses		-		-		-	(43,397)	(43,397)	(1,769)	(45,166)
Dividends and commission income		-		-		-	84	84	7,787	7,871
Realized gain from sale of available for sale investments		-		-		-	-	-	8	8
Other expenses		-		-		-	-	-	-	-
Total other operating revenue expenses		-		-		-	(45,836)	(45,836)	6,026	(39,810)

Total loss for the year attributable to the shareholders before zakat and income tax
		(332)		4,454		7,982	(45,836)	(33,732)	6,026	(27,706)
Zakat and income tax		-		-		-	-	-	(9,541)	(9,541)
Total inloss for the year attributable to the shareholders after zakat and income tax
		(332)		4,454		7,982	(45,836)	(33,732)	(3,515)	(37,247)


		2018
		SAR' 000
						Property & casualty	Unallocated	Total - Insurance operations	Shareholders'operations (restated)	Total (Restated)
Operating segment		Medical		Motor		Property & casualty	Unallocated	Total - Insurance operations	Shareholders'operations (restated)	Total (Restated)
Revenues
Gross premiums written		111,380		12,720		13,346	-	137,446	-	137,446
Reinsurance premiums ceded
- Local		-		3	-	(1,110)	-	(1,107)	-	(1,107)
- International (includes premium ceded through local broker)		(33,372)	-	-		(8,897)	-	(42,269)	-	(42,269)
		(33,372)		3		(10,007)	-	(43,376)	-	(43,376)

Excess of loss expenses
- Local		(192)		(491)	-	(138)	-	(821)	-	(821)
- International		(768)		(1,146)	-	(206)	-	(2,120)	-	(2,120)
		(960)		(1,637)		(344)	-	(2,941)	-	(2,941)
Net premiums written		77,048		11,086		2,995	-	91,129	-	91,129
21	SEGMENT INFORMATION (CONTINUED)
		2018
		SAR' 000
						Property & casualty	Unallocated	Total - Insurance operations	Shareholders'operations (restated)	Total (Restated)
		Medical		Motor		Property & casualty	Unallocated	Total - Insurance operations	Shareholders'operations (restated)	Total (Restated)

Changes in unearned premiums - net		(28,871)		179		97	-	(28,595)	-	(28,595)
Net premiums earned		48,177		11,265		3,092	-	62,534	-	62,534
Reinsurance commissions		(84)		627		2,352	-	2,895	-	2,895
Other underwriting income		1,786		1,989		835	-	4,610	-	4,610
Total revenues		49,879		13,881		6,279	-	70,039	-	70,039
Underwriting costs and expenses
Gross claims paid		(41,849)		(16,067)		(1,443)	-	(59,359)	-	(59,359)
Reinsurers' share of claims paid		20,314		5,419		1,263	-	26,996	-	26,996
Net claims paid		(21,535)		(10,648)		(180)	-	(32,363)	-	(32,363)
Changes in outstanding claims - net		(11,077)		7,032		1,463	-	(2,582)	-	(2,582)
Changes in claims incurred but not reported - net		2,263		4,062		32	-	6,357	-	6,357
Net claims incurred		(30,349)		446		1,315	-	(28,588)	-	(28,588)
Premiums deficiency reserve		(10,434)		1,610		(1,892)	-	(10,716)	-	(10,716)
Other technical reserves		(232)		(256)		237	-	(251)	-	(251)
Policy acquisition costs		(4,229)		(743)		(381)	-	(5,353)	-	(5,353)
Other underwriting expenses		(5,520)		(269)		(50)	-	(5,839)	-	(5,839)
Total underwriting costs and expenses		(50,764)		788		(771)	-	(50,747)	-	(50,747)
Net underwriting (loss)/income		(885)		14,669		5,508	-	19,292	-	19,292

Other operating income / ( expenses)
Reversal for doubtful debts		-		-		-	1,281	1,281	-	1,281
General and administrative expenses		-		-		-	(42,473)	(42,473)	(1,299)	(43,772)
Dividends and commission income		-		-		-	-	-	4,512	4,512
Realized loss from sale of available for sale investments		-		-		-	-	-	(99)	(99)
Other expenses		-		-		-	-	-	(1,431)	(1,431)
Total other operating revenue expenses		-		-		-	(41,192)	(41,192)	1,683	(39,509)
Total (loss)/income for the period attributable to the shareholders before zakat and income tax
		(885)		14,669		5,508	(41,192)	(21,900)	1,683	(20,217)
Zakat and income tax		-		-		-	-	-	(1,587)	(1,587)
Total (loss)/income for the period attributable to the shareholders after zakat and income tax
		(885)		14,669		5,508	(41,192)	(21,900)	96	(21,804)
21	SEGMENT INFORMATION (CONTINUED)
		2019
		SAR' 000
						Property & casualty	Unallocated	Total - Insurance operations	Shareholders'operations
Operating segment		Medical		Motor		Property & casualty	Unallocated	Total - Insurance operations	Shareholders'operations	Total

Assets
Cash and cash equivalents		-		-		-	21,230	21,230	23,285	44,515
Premiums and reinsurers' receivable - net		39,433		4,194		1,516	34,416	79,559	-	79,559
Reinsurers' share of unearned premiums		-		-		4,866	-	4,866	-	4,866
Reinsurers' share of outstanding claims		5,649		9,267		725	-	15,641	-	15,641
Reinsurers' share of claims incurred but not reported		1,759		264		1,726	-	3,749	-	3,749
Deferred policy acquisition costs		7,321		341		666	-	8,328	-	8,328
Investments		-		-		-	1,923	1,923	66,015	67,938
Unallocated assets		-		-		-	23,823	23,823	187,268	211,091
Total assets		54,162		14,066		9,499	81,392	159,119	276,568	435,687

Liabilities
Policyholders claims payable		343		(1,287)		1,187	-	243	-	243
Reinsurers' balances payable		-		-		-	12,976	12,976	-	12,976
Unearned premiums		90,864		3,825		6,222	-	100,911	-	100,911
Unearned reinsurance commission		-		-		1,057	-	1,057	-	1,057
Outstanding claims		30,449		20,176		849	-	51,474	-	51,474
Claims incurred but not reported		23,825		2,661		1,870	-	28,356	-	28,356
Premium deficiency reserve		13,563		1,759		98	-	15,420	-	15,420
Other technical reserves		9,973		557		410	-	10,940	-	10,940
Unallocated liabilities		-		-		-	49,596	49,596	7,859	57,455
Total liabilities		169,017		27,691		11,693	62,572	270,973	7,859	278,832









21	SEGMENT INFORMATION (CONTINUED)
		2018
		SAR' 000
						Property & casualty	Unallocated	Total - Insurance operations	Shareholders'operations
Operating segment		Medical		Motor		Property & casualty	Unallocated	Total - Insurance operations	Shareholders'operations	Total

Assets
Cash and cash equivalents		-		-		-	25,935	25,935	13,289	39,224
Premiums and reinsurers' receivable - net		7,422		5,168		2,387	6,542	21,519	-	21,519
Reinsurers' share of unearned premiums		12,911		-		4,278	-	17,189	-	17,189
Reinsurers' share of outstanding claims		12,005		12,587		968	-	25,560	-	25,560
Reinsurers' share of claims incurred but not reported		1,919		1,981		3,811	-	7,711	-	7,711
Deferred policy acquisition costs		4,674		371		351	-	5,396	-	5,396
Investments		-		-		-	1,923	1,923	53,720	55,643
Unallocated assets		-		-		-	21,846	21,846	151,389	173,235
Total assets		38,931		20,107		11,795	56,246	127,079	218,398	345,477

Liabilities
Policyholders claims payable		407		2,694		1,570	-	4,671	-	4,671
Reinsurers' balances payable		-		-		-	23,936	23,936	-	23,936
Unearned premiums		54,505		4,744		6,085	-	65,334	-	65,334
Unearned reinsurance commission		-		-		884	-	884	-	884
Outstanding claims		24,075		29,818		1,198	-	55,091	-	55,091
Claims incurred but not reported		6,001		5,034		4,741	-	15,776	-	15,776
Premium deficiency reserve		13,195		731		1,941	-	15,867	-	15,867
Other technical reserves		597		600		419	-	1,616	-	1,616
Unallocated liabilities		-		-		-	50,678	50,678	16,079	66,757
Total liabilities		98,780		43,621		16,838	74,614	233,853	16,079	249,932

Disclosure of property and equipment [text block]

9	PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS

		2019
		SAR' 000
		Leasehold improvements	Furniture and fittings	Computer and office equipment	Motor Vehicles	Capital work in progress	Total property and equipment	Intangible assets
Cost
1 January		3,990	1,429	3,940	219	579	10,157	5,302
Additions		227	403	1,350	-	2,613	4,593	65
31December		4,217	1,832	5,290	219	3,192	14,750	5,367

Accumulated depreciation/amortisation
1 January		3,409	1,207	2,836	143	-	7,595	4,425
Charge for the year		323	140	667	55	-	1,185	426
31December		3,732	1,347	3,503	198	-	8,780	4,851
Net book value:
31December		485	485	1,787	21	3,192	5,970	516

		2018
		SAR' 000
		Leasehold improvements	Furniture and fittings	Computer and office equipment	Motor Vehicles	Capital work in progress	Total property and equipment	Intangible assets
Cost
1 January		3,933	1,365	3,093	219	-	8,610	4,657
Additions		57	64	847	-	579	1,547	645
31December		3,990	1,429	3,940	219	579	10,157	5,302

Accumulated depreciation/amortisation
1 January		3,079	1,086	2,396	88	-	6,649	3,995
Charge for the year		330	121	440	55	-	946	430
31December		3,409	1,207	2,836	143	-	7,595	4,425
Net book value:
31December		581	222	1,104	76	579	2,562	877

The depreciation/amortisation charge for the year is included in general and administrative expenses in the statement of income (note 18).

*Intangible assets and property and equipment have been separately presented in the statement of financial position. The average remaining useful life of intangible assets is 2 years.

Disclosure of investments [text block]

8	INVESTMENTS

Investments are classified as follows:
		2019			2018
		SAR' 000			SAR' 000
		Insurance operations*	Shareholders’ operations	Total	Insurance operations*	Shareholders’ operations	Total
Available-for-sale investments		1,923	17,375	19,298	1,923	6,548	8,471
Held-to-maturity investments		-	48,640	48,640	-	47,172	47,172
		1,923	66,015	67,938	1,923	53,720	55,643

*This represents the share in Najm for Insurance Services Company measured at cost and the fair value was not materially different from its carrying value.


**Investments for shareholders’ operations comprised as follows:						2019	2018
						SAR' 000	SAR' 000

Available-for-sale investments - Equity instruments (Domestic)						17,375	6,548
Held-to-maturity investments - Debt instruments (Domestic) ***						43,587	42,218
Held-to-maturity investments - Debt instruments (International) ***						5,053	4,954
						66,015	53,720

***The investment represents sukuks earning average profit at a rate of 3.45% per annum (2018: 3.45% per annum) having maturities upto 20 April 2027. The fair value of the “HTM” investments as at 31 December 2019 was not different from its carrying value.



The movements in available for sale investments for shareholders’ operations are as follows:
						2019	2018
						SAR' 000	SAR' 000
Opening balance						6,548	-
Additions						9,212	7,850
Change in fair value of available for sale investments						2,951	216
Transferred from fair value reserve to income for the year						(8)	(99)
Disposals at cost						(1,328)	(1,419)
Closing balance						17,375	6,548

The movements in held to maturity investments for shareholders’ operations are as follows:

Opening balance						47,172	-
Additions						-	47,004
Amortization						1,468	168
Closing balance						48,640	47,172


There was no movement in the investments pertaining to insurance operations.

Disclosure of premiums/ contributions and insurance/ reinsurance or takaful/ retakaful balance receivables [text block]

6	PREMIUMS AND REINSURERS' RECEIVABLE - NET

							2019	2018
Receivables comprise amounts due from the following:							SAR' 000	SAR' 000

Policyholders			This is total. Breakup shared by Ahmed Arafa has diff of 180,000.			71,173	30,200	24,100
Brokers and agents							39,761	13,971
Related parties (note 19)							1,211	1,268
Receivables from reinsurers							35,325	6,595
							106,497	45,934
Less: provision for doubtful receivables							(26,938)	(24,415)
Premiums and reinsurers’ receivable – net							79,559	21,519

The movement in the provision for doubtful receivables is as follows:							2019	2018
							SAR' 000	SAR' 000

Beginning balance							24,415	25,696
Charge / (reversal) made during the year							2,523	(1,281)
Ending balance							26,938	24,415

*Related party balances have been reclassifified under premium and reinusrance receivables, net for currrent and comparative year.

As at 31 December, the aging of receivables were as follows:


		Total	Past due but not impaired			Past due and impaired
			Less than 30 days	31 - 60 days	61 - 90 days	91 - 180 days	181 - 360 days	More than 360 days
			Less than 30 days	31 - 60 days	61 - 90 days	91 - 180 days	181 - 360 days	More than 360 days
		SAR' 000
2019		106,497	3,984	16,506	5,783	32,820	18,907	28,497
2018		45,934	10,666	917	1,752	810	2,947	28,842

The five largest customers accounts for 24% of the receivable as at 31 December 2019 (31 December 2018: 32%).

Disclosure of prepayments and other assets [text block]

10	PREPAYMENTS AND OTHER ASSETS
		2019	2018
		SAR' 000	SAR' 000

Advance payments, net		-	9,427
Prepaid medical claims review fees		3,337	2,128
Accrued Manafeth income		3,069	2,470
Prepaid excess of loss expenses		6,259	3,638
Prepaid medical insurance premiums		961	730
Employees’ receivables		111	595
Prepaid CCHI fees		916	545
Prepaid rent		389	430
Prepaid SAMA fees		490	327
Accrued interests		2,430	1,093
Letter of guarantee		-	11,777
Others		2,073	1,337
		20,035	34,497

Disclosure of cash and cash equivalents [text block]

CASH AND CASH EQUIVALENTS

For the purpose of the statements of cash flows, cash and cash equivalents comprise the following:

2019

2018

SAR' 000

SAR' 000

Insurance operations

Shareholders ‘operations

Total

Insurance operations

Shareholders operations

Total

Cash at bank

21,230

23,285

44,515

25,935

13,289

39,224

21,230

23,285

44,515

25,935

13,289

39,224

Both bank balances are placed with counterparties with sound credit ratings under Standard and Poor’s and Moody’s ratings methodology.

The carrying amounts disclosed above reasonably approximate their fair values at the reporting date.

5	DEPOSITS

a)	Short term deposits
Short-term deposits are placed with local banks with an original maturity of more than three months from the date of acquisition and earning profit at an average rate 3.1% per annum (2018: 2.55% per annum).The carrying amounts of short-term deposits reasonably approximate their fair values at the reporting date.



b) Long term deposit
Long-term deposit represents murabaha deposit having maturity of more than one year from the date of acquisition earning profit at a rate of 5.35% per annum (2018: 5.25% per annum) having maturities upto 16 November 2021.


The carrying amounts of the deposits reasonably approximate their fair values at the reporting date.

Both short term and long term deposits are placed with counterparties with sound credit ratings under Standard and Poor’s and Moody’s ratings methodology.

4, 5

Disclosure of employees' end of service benefits [text block]

14	EMPLOYEES' END-OF-SERVICE BENEFITS

The Company operates a defined benefit plan for its employees based on the prevailing Saudi Labor Law. Accruals are made in accordance with the actuarial valuation under the projected unit credit method while the benefit payments obligation is discharged as and when it falls due. The amounts recognized in the statement of financial position and movement in the obligation during the year based on its present value are as follows:




		2019	2018
		SAR' 000	SAR' 000

Present value of defined benefit obligation		4,043	2,763

Movement of defined benefit obligation

Opening balance		2,763	2,367
Charge to statement of income
Current service cost		881	1,339
Past service cost		88	-
		969	1,339
Charge to statement of comprehensive income
Actuarial loss on employees' end-of-service benefits		539	-
Payment of benefits during the year		(228)	(943)
Closing balance		4,043	2,763

In 2018, the Company also made an assessment of the benefits of employees in accordance with IAS 19, whereby the cost of end of service indemnities ("employees' remuneration") is determined by the actuary. Based on the assessment of the impact of the calculation of the employees' end of service benefits, the impact on last year was not material. Therefore, corresponding figures are not available.



			2019
Principal actuarial assumptions

Valuation discount rate			2.1%
Expected rate of increase in salary level across different age bands			2.1%
Withdrawal rate			High
Mortality rate (average base rate)			0.14%
Duration of the Liability (in years)			4.05

The impact of changes in sensitivities on present value of defined benefit obligation is as follows:
			2019
			SAR' 000
Valuation discount rate
- Increase by 1%			3,887
- Decrease by 1%			4,214
Expected rate of increase in salary level across different age bands
- Increase by 1%			4,233
-Decrease by 1%			3,866
Mortality rate
-1 year mortality rate set back			4,043
-1 year mortality rate set forward			4,044
Withdrawl rate
-Increase by 10%			3,947
-Decrease by 10%			4,150

Disclosure of gross unearned premiums/ contributions [text block]

7	MOVEMENT IN OUTSTANDING CLAIMS, UNEARNED PREMIUMS, UNEARNED REINSURANCE COMMISSION AND DEFERRED POLICY ACQUISITION COSTS

a)	Outstanding claims	2019			2018
		SAR' 000			SAR' 000
		Gross	RI share	Net	Gross	RI share	Net
Outstanding claims at end of the year		51,474	(15,641)	35,833	55,091	(25,560)	29,531
Less: realizable value of salvage and subrogation at end of the year		-	-	-	-	-	-
Outstanding claims at end of the year		51,474	(15,641)	35,833	55,091	(25,560)	29,531
Claims incurred but not reported at end of the year		28,356	(3,749)	24,607	15,776	(7,711)	8,065
		79,830	(19,390)	60,440	70,867	(33,271)	37,596
Claims paid during the year		174,422	(46,439)	127,983	59,359	(26,996)	32,363

Outstanding claims at beginning of the year		(55,091)	25,560	(29,531)	(88,296)	61,347	(26,949)
Claims incurred but not reported at beginning of the year		(15,776)	7,711	(8,065)	(26,699)	12,277	(14,422)
		(70,867)	33,271	(37,596)	(114,995)	73,624	(41,371)
Claims incurred during the year		183,385	(32,558)	150,827	15,231	13,357	28,588

b)	Unearned premiums	2019			2018
		SAR' 000			SAR' 000
		Gross	RI share	Net	Gross	RI share	Net
Unearned premiums at beginning of the year		65,334	(17,189)	48,145	34,396	(14,846)	19,550
Premiums written during the year		248,054	(10,461)	237,593	137,446	(43,376)	94,070
Excess of loss expenses during the year		-	(6,023)	(6,023)	-	(2,941)	(2,941)
Premiums earned during the year		(212,477)	28,807	(183,670)	(106,508)	43,974	(62,534)
Unearned premiums at end of the year		100,911	(4,866)	96,045	65,334	(17,189)	48,145

c)	Unearned reinsurance commission					2019	2018
						SAR' 000	SAR' 000

Beginning of the year						884	1,504
Commission received during the year						2,148	2,275
Commission earned during the year						(1,975)	(2,895)
End of the year						1,057	884

7	MOVEMENT IN OUTSTANDING CLAIMS, UNEARNED PREMIUMS, UNEARNED REINSURANCE COMMISSION AND DEFERRED POLICY ACQUISITION COSTS (CONTINUED)

d)	Other technical reserves	2019	2018
		SAR' 000	SAR' 000

Premium deficiency reserve		15,420	15,867
Other reserves		10,940	1,616
		26,360	17,483

e)	Movement in deferred policy acquisition costs

Beginning of the year		5,396	2,468
Incurred during the year		20,442	8,281
Amortized during the year		(17,510)	(5,353)
End of the year		8,328	5,396

Disclosure of accrued expenses and other liabilities [text block]

12	ACCRUED AND OTHER LIABILITIES
		2019	2018
		SAR' 000	SAR' 000

Medical provider's payables		21,919	19,320
Provision for reinsurance withholding tax		1,682	8,159
Accrual against stale cheques		4,416	8,179
Accrued commission		8,010	3,117
Accrued employees' benefits		2,526	1,961
Provision for bonuses		1,000	1,800
Provision for value added tax		882	674
Accrued bonus and allowances for BOD		1,451	1,293
Others		5,311	7,247
		47,197	51,750

Disclosure of zakat [text block]

15	PROVISION FOR ZAKAT AND INCOME TAX

a)	Charge for the year

The zakat and income tax payable by the Company has been calculated in accordance with the zakat regulations in Kingdom of Saudi Arabia.


The zakat and income tax provision for the year is based on the following:
				2019	2018
				SAR' 000	SAR' 000

Share capital				140,000	140,000
Accumulated deficit				(44,572)	(22,768)
Loss before zakat, as adjusted				(21,810)	(15,429)
Provisions				26,950	38,479
Property and equipment, intangibles and investments				(25,784)	(3,439)
Other additions /deductions				(43,549)	(27,544)
Estimated zakat base				31,235	109,299
Saudi Shareholders’ share 98.98% (2018: 98.98%)				30,918	108,184
Zakat (2.5%)				797	2,705
Foreign Shareholders’ share from profit or (loss) adjusted 1.02% (2018: 1.02%).				(222)	(157)
Income tax (20%)				-	-
Total zakat and income tax				797	2,705

b)	Zakat and income tax payable
The movement in zakat payable during the year were as follows:
				2019	2018
				SAR' 000	SAR' 000

At beginning of the year				9,516	9,149
Charge for the year				797	2,705
Prior year charge / (reversal)				8,744	(1,118)
				9,541	1,587
Paid during the year				(16,198)	(1,220)
At end of the year				2,859	9,516

The change in the accounting treatment for zakat and income tax (as explained in note 2a) has the following impact on the line items of the statements of income and changes in equity:


			As at 31 December 2018
Financial statement impacted		Financial Statement head	Before the restatement	Effect of restatement	After taking effect of restatement
			SAR '000
Statement of changes in		Provision for zakat and income tax	44,572	-	44,572
equity		(retained earnings)
Statement of income		Zakat and income tax charge	-	1,587	1,587
Statement of income		Loss per share SAR	(1.44)	(0.12)	(1.56)

c)	Status of assessments
The Company has filed all zakat and tax returns till the year 2018. The Company had went through a settlement procedure with the GAZT for the period from year 2009 to year 2016 (Zakat and Income Tax) and from the year 2009 to year 2015 (Witholding Tax - WHT). According to an official settlement agreement with GAZT, Company finally settled all due zakat, income tax and WHT including delay penalties for SAR 22.64 million. The Company paid the settlement amount and obtained a final zakat certificate. There are no assessments or dues for the period from year 2017 to year 2018.

Disclosure of statutory reserve [text block]

11	STATUTORY DEPOSIT

Statutory deposit is placed with a bank approved by SAMA and cannot be withdrawn without SAMA’s consent. Company received a letter from SAMA dated 20/09/1438H, (corresponding to 15 June 2017), approving to reduce the statutory deposit to be 15% of the share capital provided that this will not be carried out until one year after the date of the reduction of share capital. Accordingly, during 2018, statutory deposit was reduced from SAR 48 million to SAR 21 million.





During the year ended 31 December 2019, the Company increased the statutory deposit by SAR 15 million to reflect the corresponding increase in share capital (note 16). Accrued commission income on the statutory deposit amounting to SAR 2.58 million (31 December 2018: SAR 1.95 million) has been presented in the statement of financial position.

Disclosure of general and administrative expense [text block]

18	GENERAL AND ADMINISTRATIVE EXPENSES
		2019	2018
		SAR' 000	SAR' 000

Employees' costs and salaries		29,341	26,382
Rent		2,407	1,966
Consultant and professional fees		1,488	2,974
Programs license expenses		1,405	1,671
Medical expenses		1,250	1,412
Depreciation (note 9)		1,185	946
Amortization (note 9)		426	430
End of service indemnity (note 14)		969	1,339
Government expenses		947	952
Advertisement promotion and printing		1,604	822
Communication expenses		428	657
Legal cases expenses		20	552
Travel Expenses		444	550
Withholding tax		424	360
Bank charges		297	189
Electric Expenses		143	146
Bonus and allowances for BOD and related committee members		1,555	1,285
Others		833	1,139
		45,166	43,772

Disclosure of earnings per share [text block]

17	LOSS PER SHARE - BASIC AND DILUTED

Basic and diluted loss per share for the year have been calculated by dividing the net loss for the year by the weighted average numbers of shares in issue through out the year. The weighted average number of shares have been retrospectively adjusted due to right issue of 10 million shares during the year and has been calculated using an adjustment factor of 1.23. Adjustment factor is the fair value per share immediately before the exercise of rights which is SAR 18.38 per share on 24 February 2019 on the last day of trading prior to the issue of rights issue and theoretical ex-rights fair value which is SAR 14.89 per share.





		2019	2018
		SAR' 000	SAR' 000
			Restated
Loss for the year		(37,247)	(21,804)

As at December 31, 2019 and 2018, the weighted average numbers of shares is calculated as follows:
		2019	2018
		In 000's	In 000's
Weighted average number of shares outstanding before right issue		14,000	14,000
Effects of right issued		8,922	3,283
Weighted average number of shares outstanding after right issue		22,922	17,283

Loss per share- basic and diluted		(1.62)	(1.26)

Disclosure of related party transactions [text block]

19	RELATED PARTY TRANSACTIONS AND BALANCES

Related parties represent major shareholders, directors and key management personnel of the Company, and companies of which they are principal owners and any other entities controlled, jointly controlled or significantly influenced by them. Pricing policies and terms of these transactions are approved by the Company’s management and Board of Directors. The following are the details of the major related party transactions during the year and the related balances:




DUE FROM RELATED PARTIES		Amounts of transactions		Balances as at
		2019	2018	2019	2018
		SAR'000	SAR'000	SAR'000	SAR'000
Entities controlled, jointly controlled or significantly influenced by related parties


El Seif companies group
- Insurance premium written		34,595	8,220	755	226
- Paid claims		17,021	1,463	-	-
		51,616	9,683	755	226

El Tukhy companies group
- Insurance premium written		7	693	456	1,042
- Paid claims		182	298	-	-
		189	991	456	1,042
Total		51,805	10,674	1,211	1,268


Less: provision for doubtful receivables				(408)	(535)
Due from related parties, net				803	733

The movement in the provision for doubtful receivables regarding related parties was as following:
				2019	2018
				SAR' 000	SAR' 000

At the beginning of the year				535	1,371
Reversal during the year				(127)	(836)
At the end of the year				408	535


DUE TO RELATED PARTIES
		Amounts of transactions		Balances as at
		2019	2018	2019	2018
		SAR'000	SAR'000	SAR'000	SAR'000

Board of Directors & related committee
Bonus and other allowances		1,664	1,306	1,451	1,280

Globe-Med (Group entity)
Administration fees for handling medical claims and others		8,997	4,879	2,325	1,258
		10,661	6,185	3,776	2,538

Key management personnel are persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly and comprise top management executives including the Chief Executive Officer, and the Chief Financial Officer of the Company.



The compensation of key management personnel during the year is as follows:
				2019	2018
				SAR' 000	SAR' 000

Salaries and other allowances				4,541	4,402
End of service indemnities				189	186
				4,730	4,588

Disclosure of capital management [text block]

16	SHARE CAPITAL

The share capital of the Company as of 31 December 2019 is SAR 240 million divided into 24 million shares of SAR 10 each, (31 December 2018: SAR 140 million divided into 14 million shares of SAR 10 each).Shareholding structure of the Company is as below:


		2019		2018
		Authorised, issued and paid up		Authorised, issued and paid up
		No. of Shares	SAR’000	No. of Shares	SAR’000
Amana Gulf Insurance Co.		4,408,800	44,088	2,571,800	25,718
Others		19,591,200	195,912	11,428,200	114,282
		24,000,000	240,000	14,000,000	140,000

On 28 January 2019, after completing all the regulatory and other requirements, the Company’s extraordinary general assembly approved the capital increase by SAR 100 million through issuing 10 million shares of rights issue with a resulting increase in the statutory deposits by SAR 15 million. The right shares were issued on 24 February 2019. The purpose of the issuance of right shares is to increase the solvency and improve the financial position of the Company. Transaction cost for capital increase amounts to SAR 3.8 million.

CAPITAL MANAGEMENT

The Company manages its capital to ensure that it is able to continue as going concern and comply with the SAMA’s capital requirements 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 shareholders comprising paid capital and accumulated deficit.

The Company maintains its capital as per guidelines laid out by SAMA in Article 66 table 3 and 4 of the Implementing Regulations detailing the solvency margin required to be maintained. According to the article, 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 million

Premium Solvency Margin

Claims Solvency Margin

16, 22

Disclosure of claims/ benefits development table [text block]

20	CLAIMS DEVELOPMENT TABLE

The following table shows the estimates of cumulative incurred claims, including both claims notified and incurred but not reported for each successive accident year at each statement of financial position date, together with cumulative payments to date. The development of insurance liabilities provides a measure of the Company's ability to estimate the ultimate value of the claims.



The Company aims to maintain adequate reserves in respect of its insurance business in order to protect against adverse future claims experience and developments.

Claims triangular analysis is by accident years spanning a number of financial years.

2019
Accident year		2012	2013	2014	2015	2016	2017	2018	2019	Total
		SAR'000
Estimate of ultimate claims cost gross of reinsurance:

At end of accident year		97,334	84,580	101,734	280,390	250,402	79,549	80,907	198,300	198,300
One year later		77,609	50,510	91,537	293,830	234,970	64,855	78,237	-	78,237
Two years later		78,543	50,498	315,478	289,781	186,202	60,052	-	-	60,052
Three years later		78,462	102,164	317,842	286,106	181,436	-	-	-	181,436
Four years later		50,848	89,127	319,073	284,814	-	-	-	-	284,814
Five years later		50,409	89,432	315,204	-	-	-	-	-	315,204
Six years later		50,540	89,432	-	-	-	-	-	-	89,432
Seven years later		50,624	-	-	-	-	-	-	-	50,624
Current estimate of cumulative claims		50,624	89,432	315,204	284,814	181,436	60,052	78,237	198,300	1,258,099
Cumulative payments to date		(50,540)	(89,432)	(307,945)	(280,368)	(176,855)	(57,393)	(76,077)	(139,659)	(1,178,269)
Liability recognized in statement of financial position		84	-	7,259	4,446	4,581	2,659	2,160	58,641	79,830

2018
Accident year		2011	2012	2013	2014	2015	2016	2017	2018	Total
		SAR'000
Estimate of ultimate claims cost gross of reinsurance:

At end of accident year		1,888	97,334	84,580	101,734	280,390	250,402	79,549	80,907	80,907
One year later		1,601	77,609	50,510	91,537	293,830	234,970	64,855	-	64,855
Two years later		1,052	78,543	50,498	315,478	289,781	186,202	-	-	186,202
Three years later		1,035	78,462	102,164	317,842	286,106	-	-	-	286,106
Four years later		949	50,848	89,127	319,073	-	-	-	-	319,073
Five years later		77,921	50,409	89,432	-	-	-	-	-	89,432
Six years later		77,919	50,540	-	-	-	-	-	-	50,540
Seven years later		77,953	-	-	-	-	-	-	-	77,953
Current estimate of cumulative claims		77,953	50,540	89,432	319,073	286,106	186,202	64,855	80,907	1,155,068
Cumulative payments to date		(77,919)	(50,336)	(88,916)	(305,829)	(279,542)	(177,882)	(57,209)	(46,568)	(1,084,201)
Liability recognized in statement of financial position		34	204	516	13,244	6,564	8,320	7,646	34,339	70,867
20	CLAIMS DEVELOPMENT TABLE (CONTINUED)

2019
Accident year		2012	2013	2014	2015	2016	2017	2018	2019	Total
		SAR'000
Estimate of ultimate claims cost net of reinsurance:

At end of accident year		37,325	49,297	50,359	218,861	167,765	39,580	43,983	163,693	163,693
One year later		25,993	38,264	49,013	197,413	159,010	32,060	43,587	-	43,587
Two years later		26,428	38,248	253,648	196,496	151,491	30,332	-	-	30,332
Three years later		26,349	60,529	258,783	194,237	148,382	-	-	-	148,382
Four years later		26,855	48,442	257,828	194,544	-	-	-	-	194,544
Five years later		26,534	48,704	256,853	-	-	-	-	-	256,853
Six years later		26,661	48,704	-	-	-	-	-	-	48,704
Seven years later		26,661	-	-	-	-	-	-	-	26,661
Current estimate of cumulative claims		26,661	48,704	256,853	194,544	148,382	30,332	43,587	163,693	912,756
Cumulative payments to date		(26,661)	(48,704)	(249,752)	(190,803)	(146,522)	(29,276)	(42,210)	(118,388)	(852,316)
Liability recognized in statement of financial position		-	-	7,101	3,741	1,860	1,056	1,377	45,305	60,440


2018
Accident year		2011	2012	2013	2014	2015	2016	2017	2018	Total
		SAR'000
Estimate of ultimate claims cost net of reinsurance:


At end of accident year		20,785	37,325	49,297	50,359	218,861	167,765	39,580	43,983	43,983
One year later		17,301	25,993	38,264	49,013	197,413	159,010	32,060	-	32,060
Two years later		16,920	26,428	38,248	253,648	196,496	151,491	-	-	151,491
Three years later		16,886	26,349	60,529	258,783	194,237	-	-	-	194,237
Four years later		16,577	26,855	48,442	257,828	-	-	-	-	257,828
Five years later		32,752	26,534	48,704	-	-	-	-	-	48,704
Six years later		32,750	26,661	-	-	-	-	-	-	26,661
Seven years later		32,783	-	-	-	-	-	-	-	32,783
Current estimate of cumulative claims		32,783	26,661	48,704	257,828	194,237	151,491	32,060	43,983	787,747
Cumulative payments to date		(32,750)	(26,520)	(48,342)	(247,764)	(190,527)	(148,577)	(29,860)	(25,811)	(750,151)
Liability recognized in statement of financial position		33	141	362	10,064	3,710	2,914	2,200	18,172	37,596

Disclosure of risk management [abstract]

Disclosure of insurance/ takaful risk [text block]

23	RISK MANAGEMENT (CONTINUED)

Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its commitments associated with financial liabilities when they fall due. Liquidity requirements are monitored on a monthly basis and management ensures that sufficient liquid funds are available to meet any commitments as they arise.


*Maturity Profiles*
The table below summarizes the maturity profile of the financial assets and financial liabilities of the Company based on remaining contractual obligations. For insurance contract liabilities maturity profiles are determined based on the estimated timing of net cash outflows from the recognized insurance liabilities. The amount disclosed are the contractual undiscounted cash flows which equal their carrying balances as the impact of discounting is not significant.



			2019			2018
			SAR' 000			SAR' 000
		Note	Less than one year	More than one year	Total	Less than one year	More than one year	Total
ASSETS
Cash and cash equivalents		4	44,515	-	44,515	39,224	-	39,224
Short term deposits		5	115,993	-	115,993	92,350	-	92,350
Premiums and reinsurers' receivable - net		6	79,559	-	79,559	21,519	-	21,519
Reinsurers' share of unearned premiums		7b	4,866	-	4,866	17,189	-	17,189
Reinsurers' share of outstanding claims		7a	15,641	-	15,641	25,560	-	25,560
Reinsurers' share of claims incurred but not reported		7a	3,749	-	3,749	7,711	-	7,711
Deferred policy acquisition costs		7e	8,328	-	8,328	5,396	-	5,396
Available-for-sale investments		8	-	19,298	19,298	-	8,471	8,471
Held-to-maturity investments		8	-	48,640	48,640	-	47,172	47,172
Prepayments and other assets		10	20,035	-	20,035	34,497	-	34,497
Property and equipment		9	-	5,970	5,970	-	2,562	2,562
Intangible assets		9	-	516	516	-	877	877
Long term deposits		5	-	30,000	30,000	-	20,000	20,000
Statutory deposit		11	-	36,000	36,000	-	21,000	21,000
Accrued commission income on statutory deposit			-	2,577	2,577	-	1,949	1,949
			292,686	143,001	435,687	243,446	102,031	345,477






23	RISK MANAGEMENT (CONTINUED)

Liquidity risk (continued)

Maturity Profiles (continued)
			2019			2018
			SAR' 000			SAR' 000
		Note	Less than one year	More than one year	Total	Less than one year	More than one year	Total
LIABILITIES
Policyholders claims payable			243	-	243	4,671	-	4,671
Accrued expenses and other liabilities		12	47,197	-	47,197	51,750	-	51,750
Reinsurance balances payable			12,976	-	12,976	23,936	-	23,936
Unearned premiums		7b	100,911	-	100,911	65,334	-	65,334
Unearned reinsurance commission		7c	1,057	-	1,057	884	-	884
Outstanding claims		7a	51,474	-	51,474	55,091	-	55,091
Claims incurred but not reported		7a	28,356	-	28,356	15,776	-	15,776
Premium deficiency reserve		7d	15,420	-	15,420	15,867	-	15,867
Other technical reserve		7d	10,940	-	10,940	1,616	-	1,616
Employees' end-of-service benefits		14	-	4,043	4,043	-	2,763	2,763
Surplus distribution payable		13	779	-	779	779	-	779
Provision for zakat and income tax		15	2,859	-	2,859	9,516	-	9,516
Accrued commission income payable to SAMA			2,577	-	2,577	-	1,949	1,949
			274,789	4,043	278,832	245,220	4,712	249,932

Total liquidity gap			17,897	138,958	156,855	(1,774)	97,319	95,545

The assets with maturity less than one year are expected to realize as follows:
- Accrued investment income is expected to be realized within 12 months from statement of financial position's date.
- Murabaha deposits are expected to be matured / settled within 1 month to 2 years (more than one year) from the statement of financial position date.
- Reinsurers share of outstanding claims majorly pertain to medical and motor businesses and are generally realized within 3 to 6 months based on settlement of balances with reinsurers.

- Cash and bank balances are available on demand.

The liabilities with maturity less than one year are expected to settle as follows:
- Majority of gross outstanding claims are expected to settle within 3 months in accordance with statutory timelines for payment. All other policies due to the inherent nature are generally settled within 12 months from the date of receipt of loss adjustor report.

- Reinsurers’ balances payable are settled on a net basis as per terms of reinsurance agreements.
- The policyholders claims payable, accrued expenses and other liabilities are expected to settle within a period of 12 months from the period end date.

RISK MANAGEMENT

The risks faced by the Company and the way these risks are mitigated by management are summarized below:

Risk governance

The Company’s risk governance is manifested in a set of established policies, procedures and controls which uses the existing organizational structure to meet strategic targets, The Company’s philosophy revolves on willing and knowledgeable risk acceptance commensurate with the risk appetite and a strategic plan approved by the Board of Directors. The Company is exposed to insurance, reinsurance, currency, commission rate, credit, liquidity, market price, and regulatory framework risks.

Risk management structure

Organizational structure is established within the Company in order to identify, assess, monitor and control risks.

Board of directors

The risk governance is the centralized oversight of the Board of Directors providing direction and the necessary approvals of strategies and policies in order to achieve defined corporate goals.

Senior management

Senior management is responsible for the day to day operations towards achieving the strategic goals within the Company’s pre-defined risk appetite.

Risk Management and Audit committees

Risk management processes throughout the Company examine both the adequacy of the procedures and the Company’s compliance with such procedures. The risk and internal audit departments discusses the results of all assessments with senior management, and reports its findings and recommendations directly to the risk management and audit committees.

The risks faced by the Company and the way these risks are mitigated by management are summarized below.

Insurance risk

The risk under an insurance contract is the risk that an insured event will occur including the uncertainty of the amount and timing of any resulting claim, The principal risk the Company faces under such contracts is that the actual claims and benefit payments exceed the carrying amount of insurance liabilities, This is influenced by the frequency of claims, severity of claims, actual benefits paid are greater than originally estimated and subsequent development of long-term claims.

Therefore, the objective of the Company is to ensure that the variability of risks is improved by diversification of risk of loss to a large portfolio of insurance contracts as a more diversified portfolio is less likely to be affected across the Board by change in any subset of the portfolio, as well as unexpected outcomes. The variability of risks is also improved by careful selection and implementation of underwriting strategy and guidelines as well as the use of reinsurance arrangements.

RISK MANAGEMENT (CONTINUED)

Insurance risk (continued)

Significant portion of reinsurance business ceded is placed on excess of loss treaty. Amounts recoverable from reinsurers are estimated in a manner consistent with the assumptions used for ascertaining the underlying policy benefits and are presented in the statement of financial position as reinsurance assets.

Although the Company has reinsurance arrangements, it is not relieved of its direct obligations to its policyholders and thus a credit exposure exists with respect to reinsurance ceded, to the extent that any reinsurer is unable to meet its obligations assumed under such reinsurance arrangements.

Frequency and severity of claims

The frequency and severity of claims can be affected by several factors like natural disasters, flood, environmental and economical, atmospheric disturbances, concentration of risks, civil riots etc. The Company manages these risk through the measures described above. The Company has limited its exposure to catastrophic and riot events by use of reinsurance arrangements.

Concentration of insurance risk

The Company monitors concentration of insurance risks primarily by class of business. The major concentration lies in medical segment.

The Company also monitors concentration of risk by evaluating multiple risks covered in the same geographical location. For flood or earthquake risk, a complete city is classified as a single location. For fire and property risk a particular building and neighboring buildings, which could be affected by a single claim incident, are considered as a single location. Similarly, for marine risk, multiple risks covered in a single vessel voyage are considered as a single risk while assessing concentration of risk. The Company evaluates the concentration of exposures to individual and cumulative insurance risks and establishes its reinsurance policy to reduce such exposures to levels acceptable to the Company.

Since the Company operates in Saudi Arabia, hence, all the insurance risks relate to policies written in Saudi Arabia.

Sensitivity analysis

The Company believes that the claim liabilities under insurance contracts outstanding at the reporting date are adequate. However, these amounts are not certain and actual payments may differ from the claims liabilities provided in the financial statements. The insurance claim liabilities are sensitive to the various assumptions. It has not been possible to quantify the sensitivity of specific variable such as legislative changes or uncertainty in the estimation process.

A hypothetical 10% change in the claim ratio, net of reinsurance, would impact net underwriting income/(loss) as follows:

Impact of change in claim ratio by + / - 10%

2019

2018

SAR’000

SAR’000

Medical

16,919

4,818

Motor

1,033

1,127

Property & casualty

416

309

RISK MANAGEMENT (CONTINUED)

Reinsurance risk

Similar to other insurance companies, in order to minimize financial exposure arising from large claims, the Company, in the normal course of business, enters into agreements with other parties for reinsurance purposes.

To minimize its exposure to significant losses from reinsurer insolvencies, the Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities or economic characteristics of the reinsurers.

Reinsurers are selected using the following parameters and guidelines set by the Company’s Board of Directors and Reinsurance Committee. The criteria may be summarized as follows:

- Minimum acceptable credit rating by recognized rating agencies that is not lower than (BBB).

- Reputation of particular reinsurance companies

- Existing or past business relationship with the reinsurer.

The exception to this rule is in respect of local companies who do not carry any such credit rating. This, however, is limited to those companies registered and approved by the Local Insurance Regulators.

Furthermore, the financial strength and managerial and technical expertise as well as historical performance, wherever applicable, are thoroughly reviewed by the Company and matched against a list of requirements pre- set by the Company’s Board of Directors before approving them for exchange of reinsurance business. As at 31 December 2019, one major reinsurer's balance comprise of 50% of reinsurance balance. As at 31 December 2018, there is no significant concentration of reinsurance balances.

Reinsurance ceded contracts do not relieve the Company from its obligations to policyholders and as a result the Company remains liable for the portion of outstanding claims reinsured to the extent that the reinsurer fails to meet the obligations under the reinsurance agreements.

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: foreign exchange rates (currency risk), market commission rates (commission rate risk) and market prices (price risk).

Currency risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Management assesses that there is minimal risk of significant losses due to exchange rate fluctuations.

Commission rate risk

The Company places deposits that are subject to commission rate risk, with the exception of restricted deposits which are required to be maintained in accordance with SAMA regulations on which the Company does not earn any commission. Commission rate risk to the Company is the risk of changes in commission rates reducing the overall return on its fixed commission rate bearing securities. The Commission rate risk is limited by monitoring changes in commission rates.

An increase or decrease of 100 basis points in interest yields would result in a change in the loss or gain for the year by SAR 70,000 (2018: SAR 43,000).

The commission and non-commission bearing investments of the Company and their maturities as at December 31, 2019 and 2018 are as follows:

Commission bearing

Non- commission bearing

Total

Insurance Operations

Less than 1 year

1 to 5 years

Over 5 years

SAR’000

2019

1,923

2018

1,923

RISK MANAGEMENT (CONTINUED)

Market risk (continued)

Commission rate risk (continued)

Commission bearing

Non- commission bearing

Total

Shareholders Operations

Less than 1 year

1 to 5 years

Over 5 years

SAR’000

2019

115,993

66,259

12,381

17,375

212,008

2018

19,179

Other price risk

Other price risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in market prices (other than those arising from commission rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market.

The Company's investments amounting to SAR 17.4 million (2018: SAR 6.55 million) are susceptible to market price risk arising from uncertainty about the future value of invested securities. The Company limits this nature of market risk by diversifying its invested portfolio and by actively monitoring the developments in markets.

The impact of hypothetical change of a 10% increase and 10% decrease in the market prices of investments on Company's total comprehensive loss would be as follows:

Fair Value change

Effect on company's loss (SAR' 000)

2019

+/- 10%

1,737

2018

+/- 10%

655

The sensitivity analysis presented is based upon the portfolio position as at December 31, 2019 and 2018. Accordingly, the sensitivity analysis prepared is not necessarily indicative of the effect on the Company's assets of future movements in the value of investments held by the Company.

Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. For all classes of financial assets held by the Company, the maximum exposure to credit risk to the Company is the carrying value as disclosed in the statement of financial position.

The following policies and procedures are in place to mitigate the Company’s exposure to credit risk:

- The Company only enters into insurance and reinsurance contracts with recognized, credit worthy third parties, it is the Company’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivables from insurance and reinsurance contracts are monitored on an ongoing basis in order to reduce the Company’s exposure to bad debts.

- The Company with respect to credit risk arising from other financial assets, is restricted to commercial banks and counterparties having strong balance sheets and credit ratings.

Concentration of credit risk

Concentration of credit risk exists when changes in economic or industry factors similarly affect groups of counterparties whose aggregate credit exposure is significant in relation to the Company’s total credit exposure. The Company’s portfolio of financial instruments is not broadly diversified however, transactions are entered into with credit-worthy counterparties thereby mitigating any significant concentrations of credit risk.

RISK MANAGEMENT (CONTINUED)

Credit risk (continued)

The table below shows the maximum exposure to credit risk for the components of the statement of financial position:

2019

SAR' 000

Note

Insurance Operations

Shareholders' Operations

Cash and cash equivalents

21,230

23,285

Short term deposits

115,993

Premiums and reinsurers' receivable - net

79,559

Investments net of quoted equity investments

1,923

48,640

Long term deposits

30,000

Statutory deposit

36,000

Reinsurers' share of outstanding claims

15,641

118,353

253,918

2018

SAR' 000

Insurance Operations

Shareholders' Operations

Cash and cash equivalents

25,935

13,289

Short term deposits

92,350

Premiums and reinsurers' receivable - net

21,519

Investments net of quoted equity investments

1,923

47,172

Long term deposits

20,000

Statutory deposit

21,000

Reinsurers' share of outstanding claims

25,560

74,937

193,811

Credit risk exposure investments

The table below provides information regarding the credit risk exposure of the Company by classifying assets according to the management’s best estimate. Investment grade is considered to be the highest possible rating.

2019

2018

2019

2018

Note

SAR'000

SAR'000

SAR'000

SAR'000

Investment grade

Non investment grade

Cash and cash equivalents

44,515

39,224

Short term deposits

115,993

92,350

Premiums and reinsurers' receivable - net

79,559

21,519

Reinsurers' share of outstanding claims

15,641

25,560

Available-for-sale investments

19,298

8,471

Held-to-maturity investments

48,640

47,172

Long term deposits

30,000

20,000

Statutory deposit

36,000

21,000

275,148

219,746

114,498

55,550

RISK MANAGEMENT (CONTINUED)

Operational Risk

Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the processes, technology and infrastructure supporting the Company’s operations either internally within the Company or externally at the Company’s service providers, and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of investment management behavior. Operational risks arise from all of the Company’s activities.

The Company’s objective is to manage operational risk so as to balance limiting of financial losses and damage to its reputation with achieving its investment objective of generating returns for investors. The primary responsibility for the development and implementation of controls over operational risk rests with the Board of Directors. This responsibility encompasses the controls in the following areas:

- Requirements for appropriate segregation of duties between various functions, roles and responsibilities;

- Requirements for the reconciliation and monitoring of transactions;

- Compliance with regulatory and other legal requirements;

- Documentation of controls and procedures;

- Requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures to address the risks identified;

- Ethical and business standards; and

- Risk mitigation policies and procedures.

Senior management ensures that the Company's staff has adequate training and experience and fosters effective communication related to operational risk management.

Disclosure of fair value of financial assets and liabilities [text block]

FAIR VALUE 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 liability

Determination of fair value and fair value hierarchy

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

Level 1: Quoted market prices in an active market (that are unadjusted) for identical assets or liabilities,

Level 2: Valuation techniques (for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable), and

Level 3: Valuation techniques (for which the lowest level input that is significant to the fair value measurement is unobservable).

FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

a) Carrying amounts and fair value

The following table summarizes the fair values of financial assets as at 31 December 2019 and 2018 by level of the fair value hierarchy.

Insurance operations

As at 31 December 2019 (SAR' 000)

Carrying value

Level 1

Level 2

Level 3

Total

Available for sale investments

1,923

As at 31 December 2018 (SAR' 000)

Carrying value

Level 1

Level 2

Level 3

Total

Available for sale investments

1,923

Shareholders' operations

As at 31 December 2019 (SAR' 000)

Carrying value

Level 1

Level 2

Level 3

Total

Available for sale investments

Shares and REIT

17,375

Held to maturity investments

Sukuks

48,640

66,015

17,375

48,640

66,015

As at 31 December 2018 (SAR' 000)

Carrying value

Level 1

Level 2

Level 3

Total

Available for sale investments

Shares and REIT

6,548

Held to maturity investments

Sukuks

47,172

53,720

6,548

47,172

53,720

There were no transfers between levels during the year ended 31 December 2019 and 31 December 2018.

Disclosure of comparative figures [text block]

COMPARATIVE FIGURES

Certain prior year figures have been reclassified to conform to the current year presentation.

Disclosure of board of director's approval of the financial statements [text block]

APPROVAL OF FINANCIAL STATEMENTS

The financial statements have been approved by the Board of Directors on 24 March 2020 (corresponding to 29 Rajab 1441H).

Disclosure of other notes relevant to understanding of financial statements [text block]

COMMITMENTS AND CONTINGENCIES

a) The Company's commitments and contingencies are as follows:

2019

2018

SAR' 000

SAR' 000

Letters of guarantee

11,777

Capital work in progress

3,447

526

3,447

12,303

b) The Company operates in the insurance industry and is subject to legal proceedings in the normal course of business. While it is not practicable to forecast or determine the final results of all pending or threatened legal proceedings, management does not believe that such proceedings (including litigations) will have a material effect on its results and financial position.

26.4	Statement of cash flows		2019	2018	2019	2018	2019	2018
			SAR' 000	SAR' 000	SAR' 000	SAR' 000	SAR' 000	SAR' 000
		Note	Insurance Operations		Shareholders' Operations		Total
CASH FLOWS FROM OPERATING ACTIVITIES
Total loss for the year before zakat and income tax			-	-	(27,706)	(20,217)	(27,706)	(20,217)
Adjustments for non-cash items:
Depreciation and amortization		9	1,611	1,376	-	-	1,611	1,376
Provision / (reversal) for doubtful debts		6	2,523	(1,281)	-	-	2,523	(1,281)
Realized loss on sale of available-for-sale investments		8	-	-	(8)	99	(8)	99
Amortization of held-to-maturity investments			-	-	(1,468)	(168)	(1,468)	(168)
Provision for employees' end-of-service benefits		14	969	1,339	-	-	969	1,339
			5,103	1,434	(1,476)	(69)	3,627	1,365
Changes in operating assets and liabilities:
Premiums and reinsurers’ receivable			(60,563)	(2,427)	-	-	(60,563)	(2,427)
Reinsurers’ share of unearned premiums			12,323	(2,343)	-	-	12,323	(2,343)
Reinsurers’ share of outstanding claims			9,919	35,787	-	-	9,919	35,787
Reinsurers’ share of claims incurred but not reported			3,962	4,566	-	-	3,962	4,566
Deferred policy acquisition costs			(2,932)	(2,928)	-	-	(2,932)	(2,928)
Prepaid expenses and other assets			1,070	(3,162)	13,392	(4,060)	14,462	(7,222)
Policyholders claims payable			(4,428)	(3,031)	-	-	(4,428)	(3,031)
Accrued expenses and other liabilities			(4,553)	1,015	-	-	(4,553)	1,015
Reinsurers' balances payable			(10,960)	11,878	-	-	(10,960)	11,878
Unearned premiums			35,577	30,938	-	-	35,577	30,938
Unearned reinsurance commission			173	(620)	-	-	173	(620)
Outstanding claims			(3,617)	(33,205)	-	-	(3,617)	(33,205)
Claims incurred but not reported			12,580	(10,923)	-	-	12,580	(10,923)
Premium deficiency reserve			(447)	10,716	-	-	(447)	10,716
Other technical reserves			9,324	251	-	-	9,324	251
			2,531	37,946	(15,790)	(24,346)	(13,259)	13,600
Employees' end-of-service benefits paid		14	(228)	(943)	-	-	(228)	(943)
Zakat and income tax paid		15	(16,198)	(1,220)	-	-	(16,198)	(1,220)
Net cash (used in)/from operating activities			(13,895)	35,783	(15,790)	(24,346)	(29,685)	11,437

26	SUPPLEMENTARY INFORMATION (CONTINUED)

26.4	Statement of cash flows (continued)
			2019	2018	2019	2018	2019	2018
			SAR' 000	SAR' 000	SAR' 000	SAR' 000	SAR' 000	SAR' 000
		Note	Insurance Operations		Shareholders' Operations		Total
CASH FLOWS FROM INVESTING ACTIVITIES
Short term time deposits			-	-	(23,643)	27,650	(23,643)	27,650
Additions to available for sale investments		8	-	-	(9,212)	(7,850)	(9,212)	(7,850)
Proceeds from sale of available for sale investments			-	-	1,336	1,320	1,336	1,320
Purchase of held to maturity investments		8	-	-	-	(47,004)	-	(47,004)
Purchase of property,equipment and intangibles		9	(4,658)	(2,192)	-	-	(4,658)	(2,192)
Net cash used in investing activities			(4,658)	(2,192)	(31,519)	(25,884)	(36,177)	(28,076)

CASH FLOWS FROM FINANCING ACTIVITY
Due from / (to) shareholders’ operations			(4,541)	26,241	4,541	(26,241)	-	-
(Increase) / decrease in statutory deposits			-	-	(15,000)	27,000	(15,000)	27,000
Increase in long term deposits			-	-	(10,000)	-	(10,000)	-
Proceeds from issuance of capital		16	-	-	100,000	-	100,000	-
Transaction cost for increase in capital		16	-	-	(3,847)	-	(3,847)	-
Net cash from financing activities			(4,541)	26,241	75,694	759	71,153	27,000
Net change in cash and cash equivalents			(23,094)	59,832	28,385	(49,471)	5,291	10,361
Cash and cash equivalents at the beginning of the year			25,935	20,138	13,289	8,725	39,224	28,863
Cash and cash equivalents at the end of the year			2,841	79,970	41,674	(40,746)	44,515	39,224

26.2	Statement of income
		2019	2018	2019	2018	2019	2018
		SAR' 000	SAR' 000	SAR' 000	SAR' 000	SAR' 000	SAR' 000
			(Restated)		(Restated)		(Restated)
		Insurance Operations		Shareholders' Operations		Total
REVENUES
Gross premiums written		248,054	137,446	-	-	248,054	137,446
Reinsurance premiums ceded				-
- Local		(1,643)	(1,107)	-	-	(1,643)	(1,107)
- Foreign		(8,818)	(42,269)	-	-	(8,818)	(42,269)
		(10,461)	(43,376)	-	-	(10,461)	(43,376)
Excess of loss expenses
- Local		(351)	(821)	-	-	(351)	(821)
- International		(5,672)	(2,120)	-	-	(5,672)	(2,120)
		(6,023)	(2,941)	-	-	(6,023)	(2,941)

Net premiums written		231,570	91,129	-	-	231,570	91,129
Changes in unearned premiums		(35,577)	(30,938)	-	-	(35,577)	(30,938)
Changes in reinsurers’ share of unearned premiums		(12,323)	2,343	-	-	(12,323)	2,343
Net premiums earned		183,670	62,534	-	-	183,670	62,534
Reinsurance commissions		1,975	2,895	-	-	1,975	2,895
Other underwriting income		16,419	4,610	-	-	16,419	4610
NET REVENUES		202,064	70,039	-	-	202,064	70,039

UNDERWRITING COSTS AND EXPENSES
Gross claims paid		(174,422)	(59,359)	-	-	(174,422)	(59,359)
Reinsurers' share of claims paid		46,439	26,996	-	-	46,439	26,996
Net claims paid		(127,983)	(32,363)	-	-	(127,983)	(32,363)
Changes in outstanding claims		3,617	33,205	-	-	3,617	33,205
Changes in reinsurers' share of outstanding claims		(9,919)	(35,787)	-	-	(9,919)	(35,787)
Changes in claims incurred but not reported		(12,580)	10,923	-	-	(12,580)	10,923
Changes in reinsurers' share of claims incurred but not reported		(3,962)	(4,566)	-	-	(3,962)	(4,566)
Net claims incurred		(150,827)	(28,588)	-	-	(150,827)	(28,588)
Change in premiums deficiency reserve		447	(10,716)	-	-	447	(10,716)
Change in other technical reserves		(9,324)	(251)	-	-	(9,324)	(251)
Policy acquisition costs		(17,510)	(5,353)	-	-	(17,510)	(5,353)
Inspection and supervision fees		(12,746)	(5,839)	-	-	(12,746)	(5,839)
TOTAL UNDERWRITING COSTS AND EXPENSES		(189,960)	(50,747)	-	-	(189,960)	(50,747)

NET UNDERWRITING INCOME		12,104	19,292	-	-	12,104	19,292

SUPPLEMENTARY INFORMATION

26.1

Statement of financial position

2019

2018

2019

2018

2019

2018

SAR' 000

SAR' 000

SAR' 000

SAR' 000

SAR' 000

SAR' 000

Insurance Operations

Shareholders' Operations

Total

ASSETS

Cash and cash equivalents

21,230

25,935

23,285

13,289

44,515

39,224

Short term deposits

115,993

92,350

115,993

92,350

Premiums and reinsurers' receivable - net

79,559

21,519

79,559

21,519

Reinsurers' share of unearned premiums

4,866

17,189

4,866

17,189

Reinsurers' share of outstanding claims

15,641

25,560

15,641

25,560

Reinsurers' share of claims incurred but not reported

3,749

7,711

3,749

7,711

Deferred policy acquisition costs

8,328

5,396

8,328

5,396

Available-for-sale investments

1,923

1,923

17,375

6,548

19,298

8,471

Held-to-maturity investments

48,640

47,172

48,640

47,172

Due from shareholders' operations

111,315

106,774

111,315

106,774

Prepayments and other assets

17,337

18,407

2,698

16,090

20,035

34,497

Property and equipment

5,970

2,562

5,970

2,562

Intangible assets

516

877

516

877

Long term deposits

30,000

20,000

30,000

20,000

Statutory deposit

36,000

21,000

36,000

21,000

Accrued commission income on statutory deposit

2,577

1,949

2,577

1,949

TOTAL ASSETS

270,434

233,853

276,568

218,398

547,002

452,251

26.1	Statement of financial position (continued)

		2019	2018	2019	2018	2019	2018
		SAR' 000	SAR' 000	SAR' 000	SAR' 000	SAR' 000	SAR' 000
		Insurance Operations		Shareholders' Operations		Total

LIABILITIES
Policyholders claims payable		243	4,671	-	-	243	4,671
Accrued expenses and other liabilities		44,774	47,136	2,423	4,614	47,197	51,750
Reinsurance balances payable		12,976	23,936	-	-	12,976	23,936
Unearned premiums		100,911	65,334	-	-	100,911	65,334
Unearned reinsurance commission		1,057	884	-	-	1,057	884
Outstanding claims		51,474	55,091	-	-	51,474	55,091
Claims incurred but not reported		28,356	15,776	-	-	28,356	15,776
Premium deficiency reserve		15,420	15,867	-	-	15,420	15,867
Other technical reserve		10,940	1,616	-	-	10,940	1,616
Due to insurance operation		-	-	111,315	106,774	111,315	106,774
Employees' end-of-service benefits		4,043	2,763	-	-	4,043	2,763
Surplus distribution payable		779	779	-	-	779	779
Provision for zakat and income tax		-	-	2,859	9,516	2,859	9,516
Accrued commission income payable to SAMA		-	-	2,577	1,949	2,577	1,949
TOTAL LIABILITIES		270,973	233,853	119,174	122,853	390,147	356,706
EQUITY
Share capital		-	-	240,000	140,000	240,000	140,000
Accumulated losses		-	-	(85,666)	(44,572)	(85,666)	(44,572)
Actuarial loss on end-of-service benefits		(539)	-	-	-	(539)	-
Fair value reserve for available-for-sale investments		-	-	3,060	117	3,060	117
TOTAL EQUITY		(539)	-	157,394	95,545	156,855	95,545
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		270,434	233,853	276,568	218,398	547,002	452,251

26.2	Statement of income (continued)

		2019	2018	2019	2018	2019	2018
		SAR' 000	SAR' 000	SAR' 000	SAR' 000	SAR' 000	SAR' 000
			(Restated)		(Restated)		(Restated)
		Insurance Operations		Shareholders' Operations		Total

NET UNDERWRITING INCOME		12,104	19,292	-	-	12,104	19,292

OTHER INCOME/(EXPENSES)
Reversal for doubtful debts		(2,523)	1,281	-	-	(2,523)	1,281
General and administrative expenses		(43,397)	(42,473)	(1,769)	(1,299)	(45,166)	(43,772)
Dividends and commission income		84	-	7,787	4,512	7,871	4,512
Realized gain/(loss) from sale of available for sale investments		-	-	8	(99)	8	(99)
Other expenses		-	-	-	(1,431)	-	(1,431)
TOTAL OTHER INCOME/(EXPENSES)		(45,836)	(41,192)	6,026	1,683	(39,810)	(39,509)
Total (loss)/income for the year		(33,732)	(21,900)	6,026	1,683	(27,706)	(20,217)
Surplus attributed to the insurance operations		-	-	-	-	-	-
Total (loss)/income for the year attributable to the shareholders before zakat and income tax		(33,732)	(21,900)	6,026	1,683	(27,706)	(20,217)
Zakat and income tax		-	-	(9,541)	(1,587)	(9,541)	(1,587)
Total (loss)/income for the year attributable to the shareholders after zakat and income tax		(33,732)	(21,900)	(3,515)	96	(37,247)	(21,804)

26.3

Statement of comprehensive income

2019

2018

2019

2018

2019

2018

SAR' 000

SAR' 000

SAR' 000

SAR' 000

SAR' 000

SAR' 000

Note

(Restated)

Insurance Operations

Shareholders' Operations

Total

Total loss for the year after zakat and income tax

(33,732)

(21,900)

(3,515)

(37,247)

(21,804)

Other comprehensive income / (loss) :

Items that will not be reclassified to statement of income in subsequent years

- Actuarial loss on end-of-service benefit

(539)

Items that may be reclassified to statement of insurance

operations' surplus in subsequent years

- Change in fair value of available for sale investments

2,951

216

2,951

216

- Transferred from fair value reserve to income for the year

(8)

(99)

(8)

(99)

2,943

117

2,943

117

Total comprehensive (loss)/income for the year

(34,271)

(21,900)

(572)

213

(34,843)

(21,687)

25, 26

[100010] Filing information	[200100] Independent auditors report	[300100] Statement of financial position, order of liquidity
[300200] Statement of insurance/ takaful operations, nature of expense	[300300] Statement of shareholders operations, nature of expense	[300400] Statement of other comprehensive income, before tax, insurance operations
[300500] Statement of other comprehensive income, before tax, shareholders operations	[300600] Statement of cash flows, indirect method, insurance operations	[300700] Statement of cash flows, indirect method, shareholders operations
[300800] Statement of changes in equity	[400100] Notes forming part of accounts