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Bupa Arabia for Cooperative Insurance Co. announces its Annual Financial Results for the Period Ending on 2020-12-31

Element ListCurrent YearPrevious Year%Change
Gross Written Premiums (GWP) 10,447,35310,410,8680.35
Net Written Premiums (NWP) 10,382,11110,305,0740.747
Net Incurred Claims 8,719,9287,749,29712.525
Net Profit (Loss) of Policy Holders Investment 121,788137,264-11.274
Surplus (deficit) of insurance operations minus the revenues of policy holders' investments (operational procedures results) 679,622531,07727.97
Net Profit (loss) of Shareholders Capital Investment 91,50797,741-6.378
Net Profit (Loss) before Zakat 823,669712,65415.577
Total Comprehensive Income 843,795653,31629.155
Total Share Holders Equity (after Deducting Minority Equity) 3,878,7953,032,39327.912
Perpetrating Expenses (First Operation Year) ---
Profit (Loss) per Share 5.834.97
All figures are in (Thousands) Saudi Arabia, Riyals
Element ListExplanation
The reason of the increase (decrease) in the net profit during the current year compared to the last year is The increase in profits before Zakat and Income Tax for the year of SR 111,015K compared with the previous year was due to the following main reasons:

• Increase in underwriting results of SR 225,368K compared with last year, an increase of 19.5%. Net earned premiums increased by SR 1,363,191K in the current year compared with the last year, an increase of 14.6%, while net claims incurred increased by only SR 970,631K compared with last year, an increase of 12.5%. This was due to the significant decline in demand for healthcare services during the Covid-19 lockdown period earlier in the year.

• Decrease in the provision for doubtful receivables of SR 3,137K compared to last year, a decrease of 9.8%, primarily driven by the record collection performance achieved in 2020.

These favorable movements were partially offset with the below variances:

• An increase in deferred acquisition costs expensed during the year reaching SR 630,734K compared with last year, an increase of 36.1%, which was related to the Premium Deficiency Reserves (PDR) recognized during the year. A PDR was established to account for the expected surge in claims post Covid-19 lockdown, as well as to partially reflect the cost impact of the recently announced enforcement of Article 11 of the Cooperative Health Insurance Law, in which insurance companies are required to include all accredited government healthcare providers in their approved networks, while also complying with the mandated financial compensation structure.

The enforcement of Article 11 is expected to have a material impact on future medical claims considering the mandated prices and protocols regulating the relationship between government health facilities and insurance companies. Given the many uncertainties surrounding the actual rollout and application of Article 11, management will monitor the situation closely, while reassessing and updating its estimates and judgments on a regular basis.

• Other operating expenses also increased by 15.2% compared with last year, reaching SR 692,016K, while Investment and other income decreased by 5.1%, reaching SR 240,776K in the current year.

• Policyholders’ share of insurance operations’ surplus increased to reach SR 80,141K in the current year versus SR 66,834K in last year, an increase of 19.9%.

• Gross Written Premiums (GWP) increased by SR 36,485K in the current year compared with last year, an increase of 0.4%.

Statement of the type of external auditor's report Unmodified opinion
Modification, Qualification or Emphasis of a Matter as Stated within the External Auditor Opinion The joint independent auditors report on the annual financial statements states that the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at 31 December 2020, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRSs”) that are endorsed in the Kingdom of Saudi Arabia and other standards and pronouncements issued by Saudi organization for Certified Public Accountants (‘SOCPA”) (referred to as “IFRS as endorsed in KSA”).
Reclassification of Comparison Items Certain of the prior year amounts have been reclassified to conform to the presentation in the current year. These changes were made for better presentation of balances and transactions in the Annual financial statements of the Company.
Additional Information Refer to Note 38 of the Annual financial statements for further information about the impact of both COVID-19 and Article 11 of the Cooperative Health Insurance Law on the company’s operations and financials, including the recognition of a PDR.

Total Insurance Operations Comprehensive Income for the current year is SR 91,695K compared to SR 87,927K for the last year, an increase of 4.3%. Total Shareholders Comprehensive Income for the current year is SR 832,241K compared to SR 632,223K for the last year, an increase of 31.6%.

The earnings per share (EPS) for the current year is SR 5.83 per share versus SR 4.97 per share for the last year by dividing the net income attributed to shareholders after zakat and income tax amount of SR 696,128K over the weighted average number of ordinary outstanding shares of 119,421K for the current year and SR 593,797K over 119,548K for the last year.

Total Shareholder Equity (no minority interest) as at end of current year is SR 3,879 Million versus SR 3,032 Million as at end of last year, an increase of 27.9%.

The profits after Zakat and Income Tax for the current year reached SR 696,128K compared to SR 593,797K for the last year, an increase of 17.2%.

The Capital Market Authority and Saudi Exchange take no responsibility for the contents of this disclosure, make no representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this disclosure, and the issuer accepts full responsibility for the accuracy of the information contained in it and confirms, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts or information the omission of which would make the disclosure misleading, incomplete or inaccurate.

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