(a saudi joint stock company) unaudited interim condensed financial ...
WATANIYA INSURANCE COMPANY (A SAUDI JOINT STOCK COMPANY) UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2015
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Unaudited interim condensed financial statements For the three-month and nine- month periods ended September 30, 2015
INDEX Independent auditors’ limited review report
Interim statement of financial position
Page 2
3-4
Interim statement of insurance operations and accumulated surplus
5
Interim statement of shareholders’ operations
6
Interim statement of shareholders’ comprehensive income
7
Interim statement of changes in shareholders’ equity
8
Interim statement of insurance operations’ cash flows
9
Interim statement of shareholders operations’ cash flows
Notes to the interim condensed financial statements
10
11 - 22
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyals thousands unless otherwise stated) 1
Organization and principal activities Wataniya Insurance Company (the “Company”) is a Saudi Joint Stock Company incorporated in the Kingdom of Saudi Arabia as per Ministry of Commerce and Industry’s Resolution number 158/K dated Jumad-ul-Awal 12, 1431H (corresponding to April 26, 2010). The Registered Office address of the Company is Juffali Building, Madina Road, Jeddah, Saudi Arabia. The Company is licensed to conduct insurance business in Saudi Arabia under Cooperative insurance principles in accordance with Royal Decree No M/53 dated Shawwal 21, 1430H (corresponding to October 10, 2009) pursuant to Council of Ministers’ Resolution No. 330 dated Shawwal 16,1430H (corresponding to October 5, 2009). The Company was listed on the Saudi Arabian stock market (Tadawul) on September 6, 2010. The share capital of the Company is Saudi Riyals 100 million divided into ten million shares of Saudi Riyals 10 each. The founding shareholders of the Company have subscribed and paid for seven million shares with a nominal value of Saudi Riyals 10 each, which represents 70% of the shares of the Company, and the remaining three million shares with a nominal value of Saudi Riyals 10 each, which represents 30% of the shares of the Company, have been subscribed by the general public. The objectives of the Company are to provide general insurance and related services in accordance with its bylaws and applicable regulations in Saudi Arabia.
2
Basis of preparation The interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 have been prepared in accordance with International Accounting Standard 34 - “Interim Financial Reporting” (IAS-34). Accordingly, these interim condensed financial statements are not intended to be a presentation in conformity with the accounting principles generally accepted in the Kingdom of Saudi Arabia, i.e. in accordance with the Standard of Interim Financial Reporting issued by the Saudi Organization for Certified Public Accountants. The interim condensed financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2014. The preparation of interim condensed financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, if any, at the date of the interim condensed financial statements and the reported amounts of revenues and expenses during the interim reporting period. Although these estimates and judgments are based on management’s best knowledge of current events and actions, actual results ultimately may differ from those estimates. The accompanying interim condensed financial statements include all adjustments comprising mainly of normal recurring accruals considered necessary by the Company’s management to present a fair statement of the financial position, results of operations and cash flows. The interim results of the three-month and nine month periods ended September 30, 2015 may not represent a proper indication for the annual results of operations. As required by Saudi Arabian insurance regulations, the Company maintains separate accounts for Insurance Operations and Shareholders’ Operations and presents the financial statements accordingly. The physical custody and title of all assets related to the Insurance Operations and Shareholders’ Operations are held by the Company. Revenues and expenses clearly attributable to either activity are recorded in the respective accounts. The basis of allocation of expenses from joint operations is determined by the management and Board of Directors. As per the by-laws of the Company, surplus arising from the Insurance Operations is distributed as follows: Transfer to Shareholders’ operations Transfer to Policyholders’ payable
90% 10% 100%
11
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyals thousands unless otherwise stated) 2
Basis of preparation (continued) In case of deficit arising from insurance operations, the entire deficit is allocated and transferred to shareholders’ operations. In accordance with Article 70 of the Saudi Arabian Monetary Agency (“SAMA”) Implementing Regulations, the Company proposes to distribute, subject to the approval of SAMA, its annual net policyholders’ surplus directly to policyholders at a time, and according to criteria, as set by its Board of Directors. The interim condensed financial statements are presented in Saudi Riyals, being the functional currency of the Company, and have been rounded off to the nearest thousand, unless otherwise specified.
3
Summary of significant accounting policies The accounting policies adopted in the preparation of the interim condensed financial statements are consistent with those followed in the preparation of the Company’s financial statements for the year ended December 31, 2014. New IFRS, International Financial Reporting and Interpretations Committee’s interpretations (IFRIC) and amendments thereof, adopted by the Company The Company has adopted the following amendments and revisions to existing standards, which were issued by the International Accounting Standards Board (IASB): Standard
Description
IFRS 1 IFRS 2 IFRS 3 IFRS 8 IFRS 13 IAS 16 and IAS 38 IAS 19 IAS 24 IAS 40
Amendments to IFRS 1 First-time adoption of International Financial Reporting Standards Amendments to IFRS 2 Share-based payment Amendments IFRS 3 Business combinations Amendments IFRS 8 Operating segments Amendments IFRS 13 Fair Value Measurement Amendments to IAS 16 and IAS 38 Property, plant and equipment and Intangible assets Amendments to IAS 19 Employee benefits Amendments to IAS 24 Related party disclosures Amendments to IAS 40 Investment property
The adoption of the relevant new and amended standards and interpretations applicable to the Company did not have any significant impact on these interim condensed financial statements. Standards issued but not yet effective Standards issued but not yet effective up to the date of issuance of the Company’s interim condensed financial statements are listed below. The listing is of standards and interpretations issued, which the Company reasonably expects to be applicable at a future date. The Company intends to adopt these standards when they become effective. Effective from periods beginning on or after the Standard Description following date IAS 1 IFRS 9 IFRS 10, IFRS 12 and IAS 28 IFRS 10 and IAS 28
IFRS 11 IFRS 14 IFRS 15 IAS 16 and IAS 38 IAS 16 and IAS 41 IAS 27
Amendments to IAS 1 Disclosure Initiative Financial Instruments Amendments to IFRS 10, IFRS 12 and IAS 28 Investment entities: applying the consolidation exception Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint venture. Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations Regulatory Deferral Accounts Revenue from Contracts with Customers Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation Amendments to IAS 16 and IAS 41 Agriculture Bearer plants Amendment to IAS 27 Equity Method in Separate Financial Statements 12
1 January 2016 1 January 2018 1 January 2016
1 January 2016 1 January 2016 1 January 2016 1 January 2018 1 January 2016 1 January 2016 1 January 2016
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyals thousands unless otherwise stated) 3
Summary of significant accounting policies (continued) Financial Management The Company’s activities expose it to variety of financial risks: market risk (including commission rate risk, currency risk, fair value interest rate risk and price risk), credit risk and liquidity risk. The interim condensed financial statements do not include all financial risk management information and disclosures required in the annual financial statements and therefore should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2014. There have been no changes in the risk management department or in any risk management policies since the year end. Seasonality of Operations There are no seasonal changes that affect insurance operations.
4
Cash and cash equivalents September 30, 2015 (Unaudited) Insurance operations Cash in hand Cash at bank Time deposits
December 31, 2014 (Audited)
28 40,093 66,875 106,996
24 25,915 46,875 72,814
153
272
Shareholders’ operations Cash at bank Cash at bank and time deposits are with a bank which is a related party and registered in Saudi Arabia. The deposits yield financial income at prevailing market rates. 5
Premiums receivable September 30, 2015 (Unaudited) Insurance operations Policyholders Provision for doubtful receivables
December 31, 2014 (Audited)
144,498 (9,636) 134,862
68,112 (6,995) 61,117
Movement in provision for doubtful receivables is as follows: Period ended September 30, 2015 (Unaudited) Opening balance Charge Closing balance
6,995 2,641 9,636
Year ended December 31, 2014 (Audited)
5,421 1,574 6,995
The ageing of unimpaired receivables is as follows: Total Less than 90 days
Past due but not impaired 90 to 180 181 to 360 More than days days 360 days
September 30, 2015
134,862
96,427
25,322
12,815
298
December 31, 2014
61,117
35,880
15,105
9,775
357
13
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyals thousands unless otherwise stated) 6
Investments
Note Shareholders’ operations Fair value through income statement investments Available-for-sale investments
6.1
6.1 6.2
September 30, 2015 (Unaudited)
December 31, 2014 (Audited)
79,720 1,923 81,643
77,459 77,459
Fair value through income statement investments Investments classified as financial assets at fair value through income statement are managed by professional fund managers in accordance with the guidelines approved by the Board of Directors. Movement in investment is as follows:
Opening balance Addition during the period Net change in fair value Closing balance 6.2
Nine-month period ended September 30, 2015 (Unaudited)
Year ended December 31, 2014 (Audited)
77,459 2,000 261 79,720
75,645 1,814 77,459
Available-for-sale investments During the period, the Company has been allotted with 192,308 shares representing 3.85% holding in Najm for Insurance Services Company, a Saudi Closed Joint Stock Company in lieu of an advance paid earlier. Accordingly, the Company has reclassified the amount recorded as an advance paid earlier to available-for-sale investments.
7
Statutory deposit In compliance with Article 58 of the Implementing Regulations of the Saudi Arabian Monetary Agency ("SAMA"), the Company has deposited 10% of its share capital, amounting to Saudi Riyals 10 million in a bank designated by SAMA. The statutory deposit is maintained with a reputed bank and can be withdrawn only with the consent of SAMA.
8
Zakat and income tax matters 8.1
Components of zakat base
Significant components of zakat base of the Company attributable to the Saudi shareholders, which are subject to adjustment under zakat and income tax regulations, are shareholders’ equity at the beginning of the period, adjusted net income and certain other items. 8.2
Provision for zakat and income tax
Zakat is payable at 2.5% of the approximate zakat base attributable to Saudi shareholders. Provision for income tax is payable at 20% of the adjusted net income attributable to the foreign shareholders of the Company, less allowances for foreign shareholders’ share in the losses carry forwarded from previous year calculated in accordance with the guidelines provided in the income tax regulations.
14
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyals thousands unless otherwise stated) 8
Zakat and income tax matters (continued) 8.2
Provision for zakat and income tax (continued)
Zakat base has been computed based on the Company’s understanding of the zakat regulations enforced in the Kingdom of Saudi Arabia. The zakat regulations in Saudi Arabia are subject to different interpretations, and the assessments to be raised by the DZIT could be different from the declaration filed by the Company. 8.3
Status of final assessments
The Company has filed its return with Department of Zakat and Income Tax (DZIT) from inception up to 2014. During 2012, DZIT has raised the final assessment for the Company’s first period from April 26, 2010 (date of Ministerial Resolution) to December 31, 2011 and claimed additional zakat of Saudi Riyals 272,620 and additional withholding taxes of Saudi Riyals 296,949. Management had appealed against such additional assessments. The Preliminary Appeal Committee ruled in favour of the DZIT. During 2013, the Company settled the entire additional claim of withholding income tax liability and paid additional zakat of Saudi Riyals 186,110 under appeal. During 2014, the DZIT issued the amended tax and zakat assessment for 2012 levying additional zakat of Saudi Riyals 8,651. The Company has filed its objection against the additional assessment, and has obtained a favourable ruling from the preliminary zakat and income tax objection committee. No assessments have yet been raised by the DZIT for 2013 and 2014. 9
Related party matters 9.1
Related party transactions
The significant transactions with related parties and the related amounts are as follows:
Related Party
Nature of Transactions
Board Members Ex-Managing director Key management personnel
Fees and related expenses
Shareholders and related parties
Three-month period ended September 30, 2015 (Unaudited)
Three-month period ended September 30, 2014 (Unaudited)
Nine-month period ended September 30, 2015 (Unaudited)
Nine-month period ended September 30, 2014 (Unaudited)
97
50
1,360
177
-
62
31
234
1,855 50
1,825 75
5,987 367
5,460 315
16,309 4,632 628 25 820
17,883 2,872 633 75 741
68,164 16,556 3,155 75 2,553
63,886 14,923 2,898 225 2,295
2,196
1,091
5,819
5,244
2,722 18
1,114 32
6,033 154
5,267 177
Fees and related expenses - Remuneration and related expenses - Loans and advances - Insurance premiums written - Claims payable - Facultative premiums (net) - Expenses reimbursed - Expenses incurred - Claims and expenses paid on behalf of a shareholder recharged at cost - Amount received from a shareholder for claims charged at cost and paid on their behalf - Bank commission income
15
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyals thousands unless otherwise stated) 9.2
Related party balances (continued) As at September 30, 2015 (Unaudited)
Balances with related parties
Premiums receivable from related parties Bank balance with a shareholder Amounts due for facultative premiums to a shareholder Loans and advances due from key management personnel Advance provided to the managing director Amounts due to a shareholder Other payable (contribution towards fixed assets financing) to a shareholder Maintenance fees paid in advance to a related party Taxation receivable from foreign shareholders Rent paid in advance to a related party 10
7,632 107,121 (302) 329 (690) 103 550 325
As at December 31, 2014 (Audited) 3,170 73,062 (329) 277 31 (476) (40) 112 904 -
Earning per share Earnings per share has been calculated by dividing the net income for the period by the weighted average number of issued and outstanding shares for the period.
16
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyals thousands unless otherwise stated) 11
Segment information Consistent with the Company’s internal reporting process; operating segments have been approved by the management in respect of the Company’s activities, assets and liabilities. Information disclosed in the note is based on current reporting to the chief operating decision maker which is the Chief Executive Officer. Operating segments does not include shareholders’ operations of the Company. Segment results do not include general and administration expenses and other income. Segment assets do not include insurance operations’ cash and cash equivalents, premiums receivable, due from reinsurers, due from shareholders’ operations and prepaid expenses and other assets. Segment liabilities and surplus do not include due to reinsurers, agents, brokers and third party administrators, due to policyholders, accrued expenses and other liabilities, and accumulated surplus from insurance operations.
For the three-month period ended September 30, 2015 (unaudited) Gross written premiums Less: Reinsurance premiums ceded Net written premiums Change in unearned premiums Net earned premiums Commission earned on ceded reinsurance Total revenues Gross claims paid Reinsurer’s share of claims paid Net claims paid Changes in outstanding claims Net claims incurred Policy acquisition costs Reversal of premiums deficiency reserve Total cost Net underwriting results General and administration expenses – (unallocated) Other income Surplus from insurance operations Shareholders’ share of surplus from insurance operations Insurance operations surplus after shareholders’ appropriation Accumulated surplus at the beginning of the period Accumulated surplus at the end of the period
Marine
Property
Motor
Engineer -ing
Accident & Liability
10,678
10,026
86,785
4,225
6,034
(9,037) 1,641
(9,084) 942
(16,038) 70,747
(3,895) 330
(5,046) 988
(451) 1,190
479 1,421
(22,762) 47,985
1,753 2,083
1,816 3,006 2,131
3,656 5,077 1,039
1,812 49,797 32,801
2,039 4,122 1,911
(1,817) 314
(997) 42
(5,865) 26,936
(1,644) 267
(773) 186
37 351 950
1,614 1,656 2,107
10,000 36,936 5,917
(332) (65) 1,156
1,301 1,705
3,763 1,314
(2,337) 40,516 9,281
1,091 3,031
Extended Warranty
Term Life
Total
4,972
6,727
129,447
(4,972) -
(5,942) 785
(54,014) 75,433
1,193 2,181
-
(128) 657
(19,916) 55,517
965 3,146 959
4,769 4,769 -
1,491 2,148 977
-
(856) 121
(11,952) 27,866
284 470 774
3,969
281 402 680
11,884 39,750 15,553
1,244 1,902
3,969 800
1,082 1,066
16,548 72,065 39,818
(2,337) 52,966 19,099
(14,178) 303 5,224
(4,702)
522
2,886
3,408
17
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyals thousands unless otherwise stated) 11
Segment information (continued) Marine For the nine-month period ended September 30, 2015 (unaudited) Gross written premiums Less: Reinsurance premiums ceded Net written premiums Change in unearned premiums Net earned premiums Commission earned on ceded reinsurance Total revenues Gross claims paid Reinsurer’s share of claims paid Net claims paid Changes in outstanding claims Net claims incurred Policy acquisition costs Premium deficiency reserve Total cost Net underwriting results
Engineering
Accident & Liability
Extended Warranty
Property
Motor
33,606
77,676
225,483
36,102
26,241
30,390
23,905
453,403
(28,286)
(72,503)
(41,425)
(33,969)
(18,801)
(30,390)
(21,156)
(246,530)
2,133
2,749
206,873
5,320
5,173
184,058 (53,396)
4,949
3,936
130,662
3,045
6,192
-
2,275
151,059
8,193
10,013
4,922
5,802
2,817
12,649
5,843
50,239
13,142
13,949
135,584
8,847
9,009
12,649
8,118
201,298
7,592
4,181
115,810
13,413
2,213
-
6,109
149,318
(6,526)
(3,904)
(21,026)
(12,619)
(1,613)
-
(5,417)
(51,105)
1,066 (84)
277
912
94,784
794 (504)
7,440
-
Total
(1,237)
(371)
(1,248)
Term Life
600
-
(474)
692
(55,814)
98,213
1,333
11,025
2,719
-
96
14,585
982 4,283
1,610 5,689
105,809 16,000
290 3,286
3,319 2,198
10,513
788 2,656
112,798 44,625
-
-
205
-
-
-
-
205
5,265
7,299
122,014
3,576
5,517
10,513
3,444
157,628
7,877
6,650
13,570
5,271
3,492
2,136
4,674
43,670
General and administration expenses (unallocated) Other income Surplus from insurance operations Shareholders’ share of surplus from insurance operations Insurance operations surplus after shareholders’ appropriation Accumulated surplus at the beginning of the period Accumulated surplus at the end of the period
(41,580) 4,830 6,920
(6,228)
692
2,716 3,408
18
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyals thousands unless otherwise stated) 11
Segment information (continued)
For the three-month period ended September 30, 2014 (unaudited) Gross written premiums Less: Reinsurance premiums ceded Net written premiums Change in unearned premiums Net earned premiums Commission earned on ceded reinsurance Total revenues Gross claims paid Reinsurer’s share of claims paid Net claims paid Changes in outstanding claims Net claims incurred Policy acquisition costs Total cost Net underwriting results
Marine
Property
Motor
Enginee r-ing
8,826
9,270
65,334
2,103
(7,569) 1,257
(7,685) 1,585
(10,853) 54,481
(2,361) (258)
(262) 995
(1,446) 139
(14,610) 39,871
280 22
1,604 2,599
3,146 3,285
1,340 41,211
1,576
3,176
(1,373) 203
Accident & Liability
Extended Warranty
Term Life
Total
6,681
17,393
5,913
115,520
(5,490) 1,191
(17,393) -
(5,144) 769
(56,495) 59,025
570 1,761
-
43 812
(15,425) 43,600
1,565 1,587
887 2,648
1,920 1,920
804 1,616
11,266 54,866
32,836
20
637
-
799
39,044
(3,121) 55
(5,834) 27,002
(7) 13
(446) 191
-
(645) 154
(11,426) 27,618
(414) (211) 812 601
131 186 1,827 2,013
(512) 26,490 4,681 31,171
360 373 931 1,304
580 771 612 1,383
1,590 1,590
154 513 667
145 27,763 10,966 38,729
1,998
1,272
10,040
283
1,265
330
949
16,137
General and administration expenses – (unallocated) Other income Surplus from insurance operations Shareholders’ share of surplus from insurance operations Insurance operations surplus after shareholders’ appropriation Accumulated surplus at the beginning of the period Accumulated surplus at the end of the period
(12,914) 32 3,255
(3,018)
237
1,475
1,712
19
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyals thousands unless otherwise stated) 11
Segment information (continued)
For the nine-month period ended September 30, 2014 (unaudited) Gross written premiums Less: Reinsurance premiums ceded Net written premiums Change in unearned premiums Net earned premiums Commission earned on ceded reinsurance Total revenues Gross claims paid Reinsurer’s share of claims paid Net claims paid Changes in outstanding claims Net claims incurred Policy acquisition costs Reversal of premium deficiency reserve Total cost Net underwriting results
Engineering
Accident & Liability
Marine
Property
Motor
31,170
63,756
151,002
26,585
19,473
(27,663) 3,507
(60,647) 3,109
(28,089) 122,913
(25,123) 1,462
384 3,891
(745) 2,364
10,878 133,791
7,717 11,608 7,216
9,589 11,953 121,917
(6,144) 1,072
Extended Warranty
Term Life
Total
52,405
17,742
362,133
(12,998) 6,475
(52,405) -
(14,397) 3,345
(221,322) 140,811
(164) 1,298
(1,509) 4,966
-
(709) 2,636
8,135 148,946
4,216 138,007 144,466
4,519 5,817 6,698
2,559 7,525 2,761
27,152 27,152 -
3,301 5,937 4,543
59,053 207,999 287,601
(120,879) 1,038
(25,786) 118,680
(5,238) 1,460
(2,165) 596
-
(4,070) 473
(164,282) 123,319
(143) 929 4,058
205 1,243 5,940
(5,829) 112,851 17,910
(81) 1,379 2,691
789 1,385 1,854
22,372
473 2,027
(5,059) 118,260 56,852
4,987
7,183
(2,888) 127,873
4,070
3,239
22,372
2,500
(2,888) 172,224
6,621
4,770
10,134
1,747
4,286
4,780
3,437
35,775
General and administration expenses – (unallocated) Other income Surplus from insurance operations Shareholders’ share of surplus from insurance operations Insurance operations surplus after shareholders’ appropriation Accumulated surplus at the beginning of the period Accumulated surplus at the end of the period
(33,585) 177 2,367
(2,130)
237
1,475 1,712
20
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyal thousands unless otherwise stated) 11
Segment information (continued)
Property
Motor
Engineering
Accident & Liability
7,104
30,996
24,090
20,116
11,658
58,292
10,294
162,550
3,920
42,804
11,156
31,648
39,799
-
2,657
131,984
1,027
3,616
12,676
1,840
1,577
29,044
1,594
51,374
Marine As at September 30, 2015 (Unaudited) Insurance operations’ assets Reinsurers’ share of unearned premiums Reinsurers’ share of outstanding claims Deferred policy acquisition costs Unallocated assets Total insurance operations’ assets Insurance operations’ liabilities Unearned premiums Outstanding claims Unearned reinsurance commission Premium deficiency reserve Unallocated liabilities and surplus Total insurance operations’ liabilities and surplus
As at December 31, 2014 (Audited) Insurance operations’ assets Reinsurers’ share of unearned premiums Reinsurers’ share of outstanding claims Deferred policy acquisition costs Unallocated assets Total insurance operations’ assets Insurance operations’ liabilities and surplus Unearned premiums Outstanding claims Unearned reinsurance commission Unallocated liabilities and surplus Total insurance operations’ liabilities and surplus
Extended Warranty
Term Life
Total
274,859 620,767
8,592 4,665
34,789 45,078
137,679 58,234
22,601 32,648
15,275 43,954
58,292 -
11,767 3,015
288,995 187,594
1,939
5,917
4,216
3,199
1,965
34,615
3,647
55,498
-
-
205
-
-
-
-
205 88,475
620,767
8,572
12,190
12,771
20,792
5,966
49,406
5,864
115,561
5,611
42,540
7,670
56,258
36,283
-
4,244
152,606
1,278
1,532
6,513
1,301
946
24,053
928
36,551 175,066
479,784
9,689 6,440
14,746 43,481
72,964 43,723
24,189 57,762
8,335 37,719
49,406 -
6,863 4,506
186,192 193,631
2,455
2,334
2,234
1,964
1,363
29,060
1,888
41,298 58,663
479,784
21
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyal thousands unless otherwise stated) 12
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 to sell the asset or transfer the liability takes place either: • •
In the principal market for the asset or liability, or In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible to by the Company. The Company’s financial assets consist of cash and cash equivalents, premiums receivable, reinsurance share of outstanding claims, investments, due from reinsurers’ and shareholder operations, and statutory deposit and its financial liabilities consist of outstanding claims, due to reinsurers, agents, brokers and third party administrators and brokers, due to policyholders, due to insurance operations, and certain other liabilities. The fair values of financial assets and liabilities are not materially different from their carrying values at the reporting date. Determination of fair value and fair value hierarchy The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments: Level 1: quoted prices in active markets for the identical assets or liabilities (i.e. without modification or repacking). Level 2: quoted prices in active markets for similar financial assets and liabilities or other valuation techniques for which all significant inputs are based on observable market data; and Level 3: valuation techniques for which any significant input is not based on observable market data. As at 30 September 2015 and 31 December 2014, all financial instruments, which are fair valued, are Level 1 instruments except for the available for sale investment which is included within Level 3. There were no transfers between levels during the three-month and nine months periods ended 30 September 2015 and year ended 31 December 2014. Also, there were no changes in the valuation techniques during the period from the previous periods. 13
Approval of the interim condensed financial statements These interim condensed financial statements have been approved by the Board of Directors on 15 October 2015.
22
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Unaudited interim condensed financial statements For the three-month and nine- month periods ended September 30, 2015
INDEX Independent auditors’ limited review report
Interim statement of financial position
Page 2
3-4
Interim statement of insurance operations and accumulated surplus
5
Interim statement of shareholders’ operations
6
Interim statement of shareholders’ comprehensive income
7
Interim statement of changes in shareholders’ equity
8
Interim statement of insurance operations’ cash flows
9
Interim statement of shareholders operations’ cash flows
Notes to the interim condensed financial statements
10
11 - 22
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyals thousands unless otherwise stated) 1
Organization and principal activities Wataniya Insurance Company (the “Company”) is a Saudi Joint Stock Company incorporated in the Kingdom of Saudi Arabia as per Ministry of Commerce and Industry’s Resolution number 158/K dated Jumad-ul-Awal 12, 1431H (corresponding to April 26, 2010). The Registered Office address of the Company is Juffali Building, Madina Road, Jeddah, Saudi Arabia. The Company is licensed to conduct insurance business in Saudi Arabia under Cooperative insurance principles in accordance with Royal Decree No M/53 dated Shawwal 21, 1430H (corresponding to October 10, 2009) pursuant to Council of Ministers’ Resolution No. 330 dated Shawwal 16,1430H (corresponding to October 5, 2009). The Company was listed on the Saudi Arabian stock market (Tadawul) on September 6, 2010. The share capital of the Company is Saudi Riyals 100 million divided into ten million shares of Saudi Riyals 10 each. The founding shareholders of the Company have subscribed and paid for seven million shares with a nominal value of Saudi Riyals 10 each, which represents 70% of the shares of the Company, and the remaining three million shares with a nominal value of Saudi Riyals 10 each, which represents 30% of the shares of the Company, have been subscribed by the general public. The objectives of the Company are to provide general insurance and related services in accordance with its bylaws and applicable regulations in Saudi Arabia.
2
Basis of preparation The interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 have been prepared in accordance with International Accounting Standard 34 - “Interim Financial Reporting” (IAS-34). Accordingly, these interim condensed financial statements are not intended to be a presentation in conformity with the accounting principles generally accepted in the Kingdom of Saudi Arabia, i.e. in accordance with the Standard of Interim Financial Reporting issued by the Saudi Organization for Certified Public Accountants. The interim condensed financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2014. The preparation of interim condensed financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, if any, at the date of the interim condensed financial statements and the reported amounts of revenues and expenses during the interim reporting period. Although these estimates and judgments are based on management’s best knowledge of current events and actions, actual results ultimately may differ from those estimates. The accompanying interim condensed financial statements include all adjustments comprising mainly of normal recurring accruals considered necessary by the Company’s management to present a fair statement of the financial position, results of operations and cash flows. The interim results of the three-month and nine month periods ended September 30, 2015 may not represent a proper indication for the annual results of operations. As required by Saudi Arabian insurance regulations, the Company maintains separate accounts for Insurance Operations and Shareholders’ Operations and presents the financial statements accordingly. The physical custody and title of all assets related to the Insurance Operations and Shareholders’ Operations are held by the Company. Revenues and expenses clearly attributable to either activity are recorded in the respective accounts. The basis of allocation of expenses from joint operations is determined by the management and Board of Directors. As per the by-laws of the Company, surplus arising from the Insurance Operations is distributed as follows: Transfer to Shareholders’ operations Transfer to Policyholders’ payable
90% 10% 100%
11
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyals thousands unless otherwise stated) 2
Basis of preparation (continued) In case of deficit arising from insurance operations, the entire deficit is allocated and transferred to shareholders’ operations. In accordance with Article 70 of the Saudi Arabian Monetary Agency (“SAMA”) Implementing Regulations, the Company proposes to distribute, subject to the approval of SAMA, its annual net policyholders’ surplus directly to policyholders at a time, and according to criteria, as set by its Board of Directors. The interim condensed financial statements are presented in Saudi Riyals, being the functional currency of the Company, and have been rounded off to the nearest thousand, unless otherwise specified.
3
Summary of significant accounting policies The accounting policies adopted in the preparation of the interim condensed financial statements are consistent with those followed in the preparation of the Company’s financial statements for the year ended December 31, 2014. New IFRS, International Financial Reporting and Interpretations Committee’s interpretations (IFRIC) and amendments thereof, adopted by the Company The Company has adopted the following amendments and revisions to existing standards, which were issued by the International Accounting Standards Board (IASB): Standard
Description
IFRS 1 IFRS 2 IFRS 3 IFRS 8 IFRS 13 IAS 16 and IAS 38 IAS 19 IAS 24 IAS 40
Amendments to IFRS 1 First-time adoption of International Financial Reporting Standards Amendments to IFRS 2 Share-based payment Amendments IFRS 3 Business combinations Amendments IFRS 8 Operating segments Amendments IFRS 13 Fair Value Measurement Amendments to IAS 16 and IAS 38 Property, plant and equipment and Intangible assets Amendments to IAS 19 Employee benefits Amendments to IAS 24 Related party disclosures Amendments to IAS 40 Investment property
The adoption of the relevant new and amended standards and interpretations applicable to the Company did not have any significant impact on these interim condensed financial statements. Standards issued but not yet effective Standards issued but not yet effective up to the date of issuance of the Company’s interim condensed financial statements are listed below. The listing is of standards and interpretations issued, which the Company reasonably expects to be applicable at a future date. The Company intends to adopt these standards when they become effective. Effective from periods beginning on or after the Standard Description following date IAS 1 IFRS 9 IFRS 10, IFRS 12 and IAS 28 IFRS 10 and IAS 28
IFRS 11 IFRS 14 IFRS 15 IAS 16 and IAS 38 IAS 16 and IAS 41 IAS 27
Amendments to IAS 1 Disclosure Initiative Financial Instruments Amendments to IFRS 10, IFRS 12 and IAS 28 Investment entities: applying the consolidation exception Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint venture. Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations Regulatory Deferral Accounts Revenue from Contracts with Customers Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation Amendments to IAS 16 and IAS 41 Agriculture Bearer plants Amendment to IAS 27 Equity Method in Separate Financial Statements 12
1 January 2016 1 January 2018 1 January 2016
1 January 2016 1 January 2016 1 January 2016 1 January 2018 1 January 2016 1 January 2016 1 January 2016
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyals thousands unless otherwise stated) 3
Summary of significant accounting policies (continued) Financial Management The Company’s activities expose it to variety of financial risks: market risk (including commission rate risk, currency risk, fair value interest rate risk and price risk), credit risk and liquidity risk. The interim condensed financial statements do not include all financial risk management information and disclosures required in the annual financial statements and therefore should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2014. There have been no changes in the risk management department or in any risk management policies since the year end. Seasonality of Operations There are no seasonal changes that affect insurance operations.
4
Cash and cash equivalents September 30, 2015 (Unaudited) Insurance operations Cash in hand Cash at bank Time deposits
December 31, 2014 (Audited)
28 40,093 66,875 106,996
24 25,915 46,875 72,814
153
272
Shareholders’ operations Cash at bank Cash at bank and time deposits are with a bank which is a related party and registered in Saudi Arabia. The deposits yield financial income at prevailing market rates. 5
Premiums receivable September 30, 2015 (Unaudited) Insurance operations Policyholders Provision for doubtful receivables
December 31, 2014 (Audited)
144,498 (9,636) 134,862
68,112 (6,995) 61,117
Movement in provision for doubtful receivables is as follows: Period ended September 30, 2015 (Unaudited) Opening balance Charge Closing balance
6,995 2,641 9,636
Year ended December 31, 2014 (Audited)
5,421 1,574 6,995
The ageing of unimpaired receivables is as follows: Total Less than 90 days
Past due but not impaired 90 to 180 181 to 360 More than days days 360 days
September 30, 2015
134,862
96,427
25,322
12,815
298
December 31, 2014
61,117
35,880
15,105
9,775
357
13
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyals thousands unless otherwise stated) 6
Investments
Note Shareholders’ operations Fair value through income statement investments Available-for-sale investments
6.1
6.1 6.2
September 30, 2015 (Unaudited)
December 31, 2014 (Audited)
79,720 1,923 81,643
77,459 77,459
Fair value through income statement investments Investments classified as financial assets at fair value through income statement are managed by professional fund managers in accordance with the guidelines approved by the Board of Directors. Movement in investment is as follows:
Opening balance Addition during the period Net change in fair value Closing balance 6.2
Nine-month period ended September 30, 2015 (Unaudited)
Year ended December 31, 2014 (Audited)
77,459 2,000 261 79,720
75,645 1,814 77,459
Available-for-sale investments During the period, the Company has been allotted with 192,308 shares representing 3.85% holding in Najm for Insurance Services Company, a Saudi Closed Joint Stock Company in lieu of an advance paid earlier. Accordingly, the Company has reclassified the amount recorded as an advance paid earlier to available-for-sale investments.
7
Statutory deposit In compliance with Article 58 of the Implementing Regulations of the Saudi Arabian Monetary Agency ("SAMA"), the Company has deposited 10% of its share capital, amounting to Saudi Riyals 10 million in a bank designated by SAMA. The statutory deposit is maintained with a reputed bank and can be withdrawn only with the consent of SAMA.
8
Zakat and income tax matters 8.1
Components of zakat base
Significant components of zakat base of the Company attributable to the Saudi shareholders, which are subject to adjustment under zakat and income tax regulations, are shareholders’ equity at the beginning of the period, adjusted net income and certain other items. 8.2
Provision for zakat and income tax
Zakat is payable at 2.5% of the approximate zakat base attributable to Saudi shareholders. Provision for income tax is payable at 20% of the adjusted net income attributable to the foreign shareholders of the Company, less allowances for foreign shareholders’ share in the losses carry forwarded from previous year calculated in accordance with the guidelines provided in the income tax regulations.
14
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyals thousands unless otherwise stated) 8
Zakat and income tax matters (continued) 8.2
Provision for zakat and income tax (continued)
Zakat base has been computed based on the Company’s understanding of the zakat regulations enforced in the Kingdom of Saudi Arabia. The zakat regulations in Saudi Arabia are subject to different interpretations, and the assessments to be raised by the DZIT could be different from the declaration filed by the Company. 8.3
Status of final assessments
The Company has filed its return with Department of Zakat and Income Tax (DZIT) from inception up to 2014. During 2012, DZIT has raised the final assessment for the Company’s first period from April 26, 2010 (date of Ministerial Resolution) to December 31, 2011 and claimed additional zakat of Saudi Riyals 272,620 and additional withholding taxes of Saudi Riyals 296,949. Management had appealed against such additional assessments. The Preliminary Appeal Committee ruled in favour of the DZIT. During 2013, the Company settled the entire additional claim of withholding income tax liability and paid additional zakat of Saudi Riyals 186,110 under appeal. During 2014, the DZIT issued the amended tax and zakat assessment for 2012 levying additional zakat of Saudi Riyals 8,651. The Company has filed its objection against the additional assessment, and has obtained a favourable ruling from the preliminary zakat and income tax objection committee. No assessments have yet been raised by the DZIT for 2013 and 2014. 9
Related party matters 9.1
Related party transactions
The significant transactions with related parties and the related amounts are as follows:
Related Party
Nature of Transactions
Board Members Ex-Managing director Key management personnel
Fees and related expenses
Shareholders and related parties
Three-month period ended September 30, 2015 (Unaudited)
Three-month period ended September 30, 2014 (Unaudited)
Nine-month period ended September 30, 2015 (Unaudited)
Nine-month period ended September 30, 2014 (Unaudited)
97
50
1,360
177
-
62
31
234
1,855 50
1,825 75
5,987 367
5,460 315
16,309 4,632 628 25 820
17,883 2,872 633 75 741
68,164 16,556 3,155 75 2,553
63,886 14,923 2,898 225 2,295
2,196
1,091
5,819
5,244
2,722 18
1,114 32
6,033 154
5,267 177
Fees and related expenses - Remuneration and related expenses - Loans and advances - Insurance premiums written - Claims payable - Facultative premiums (net) - Expenses reimbursed - Expenses incurred - Claims and expenses paid on behalf of a shareholder recharged at cost - Amount received from a shareholder for claims charged at cost and paid on their behalf - Bank commission income
15
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyals thousands unless otherwise stated) 9.2
Related party balances (continued) As at September 30, 2015 (Unaudited)
Balances with related parties
Premiums receivable from related parties Bank balance with a shareholder Amounts due for facultative premiums to a shareholder Loans and advances due from key management personnel Advance provided to the managing director Amounts due to a shareholder Other payable (contribution towards fixed assets financing) to a shareholder Maintenance fees paid in advance to a related party Taxation receivable from foreign shareholders Rent paid in advance to a related party 10
7,632 107,121 (302) 329 (690) 103 550 325
As at December 31, 2014 (Audited) 3,170 73,062 (329) 277 31 (476) (40) 112 904 -
Earning per share Earnings per share has been calculated by dividing the net income for the period by the weighted average number of issued and outstanding shares for the period.
16
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyals thousands unless otherwise stated) 11
Segment information Consistent with the Company’s internal reporting process; operating segments have been approved by the management in respect of the Company’s activities, assets and liabilities. Information disclosed in the note is based on current reporting to the chief operating decision maker which is the Chief Executive Officer. Operating segments does not include shareholders’ operations of the Company. Segment results do not include general and administration expenses and other income. Segment assets do not include insurance operations’ cash and cash equivalents, premiums receivable, due from reinsurers, due from shareholders’ operations and prepaid expenses and other assets. Segment liabilities and surplus do not include due to reinsurers, agents, brokers and third party administrators, due to policyholders, accrued expenses and other liabilities, and accumulated surplus from insurance operations.
For the three-month period ended September 30, 2015 (unaudited) Gross written premiums Less: Reinsurance premiums ceded Net written premiums Change in unearned premiums Net earned premiums Commission earned on ceded reinsurance Total revenues Gross claims paid Reinsurer’s share of claims paid Net claims paid Changes in outstanding claims Net claims incurred Policy acquisition costs Reversal of premiums deficiency reserve Total cost Net underwriting results General and administration expenses – (unallocated) Other income Surplus from insurance operations Shareholders’ share of surplus from insurance operations Insurance operations surplus after shareholders’ appropriation Accumulated surplus at the beginning of the period Accumulated surplus at the end of the period
Marine
Property
Motor
Engineer -ing
Accident & Liability
10,678
10,026
86,785
4,225
6,034
(9,037) 1,641
(9,084) 942
(16,038) 70,747
(3,895) 330
(5,046) 988
(451) 1,190
479 1,421
(22,762) 47,985
1,753 2,083
1,816 3,006 2,131
3,656 5,077 1,039
1,812 49,797 32,801
2,039 4,122 1,911
(1,817) 314
(997) 42
(5,865) 26,936
(1,644) 267
(773) 186
37 351 950
1,614 1,656 2,107
10,000 36,936 5,917
(332) (65) 1,156
1,301 1,705
3,763 1,314
(2,337) 40,516 9,281
1,091 3,031
Extended Warranty
Term Life
Total
4,972
6,727
129,447
(4,972) -
(5,942) 785
(54,014) 75,433
1,193 2,181
-
(128) 657
(19,916) 55,517
965 3,146 959
4,769 4,769 -
1,491 2,148 977
-
(856) 121
(11,952) 27,866
284 470 774
3,969
281 402 680
11,884 39,750 15,553
1,244 1,902
3,969 800
1,082 1,066
16,548 72,065 39,818
(2,337) 52,966 19,099
(14,178) 303 5,224
(4,702)
522
2,886
3,408
17
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyals thousands unless otherwise stated) 11
Segment information (continued) Marine For the nine-month period ended September 30, 2015 (unaudited) Gross written premiums Less: Reinsurance premiums ceded Net written premiums Change in unearned premiums Net earned premiums Commission earned on ceded reinsurance Total revenues Gross claims paid Reinsurer’s share of claims paid Net claims paid Changes in outstanding claims Net claims incurred Policy acquisition costs Premium deficiency reserve Total cost Net underwriting results
Engineering
Accident & Liability
Extended Warranty
Property
Motor
33,606
77,676
225,483
36,102
26,241
30,390
23,905
453,403
(28,286)
(72,503)
(41,425)
(33,969)
(18,801)
(30,390)
(21,156)
(246,530)
2,133
2,749
206,873
5,320
5,173
184,058 (53,396)
4,949
3,936
130,662
3,045
6,192
-
2,275
151,059
8,193
10,013
4,922
5,802
2,817
12,649
5,843
50,239
13,142
13,949
135,584
8,847
9,009
12,649
8,118
201,298
7,592
4,181
115,810
13,413
2,213
-
6,109
149,318
(6,526)
(3,904)
(21,026)
(12,619)
(1,613)
-
(5,417)
(51,105)
1,066 (84)
277
912
94,784
794 (504)
7,440
-
Total
(1,237)
(371)
(1,248)
Term Life
600
-
(474)
692
(55,814)
98,213
1,333
11,025
2,719
-
96
14,585
982 4,283
1,610 5,689
105,809 16,000
290 3,286
3,319 2,198
10,513
788 2,656
112,798 44,625
-
-
205
-
-
-
-
205
5,265
7,299
122,014
3,576
5,517
10,513
3,444
157,628
7,877
6,650
13,570
5,271
3,492
2,136
4,674
43,670
General and administration expenses (unallocated) Other income Surplus from insurance operations Shareholders’ share of surplus from insurance operations Insurance operations surplus after shareholders’ appropriation Accumulated surplus at the beginning of the period Accumulated surplus at the end of the period
(41,580) 4,830 6,920
(6,228)
692
2,716 3,408
18
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyals thousands unless otherwise stated) 11
Segment information (continued)
For the three-month period ended September 30, 2014 (unaudited) Gross written premiums Less: Reinsurance premiums ceded Net written premiums Change in unearned premiums Net earned premiums Commission earned on ceded reinsurance Total revenues Gross claims paid Reinsurer’s share of claims paid Net claims paid Changes in outstanding claims Net claims incurred Policy acquisition costs Total cost Net underwriting results
Marine
Property
Motor
Enginee r-ing
8,826
9,270
65,334
2,103
(7,569) 1,257
(7,685) 1,585
(10,853) 54,481
(2,361) (258)
(262) 995
(1,446) 139
(14,610) 39,871
280 22
1,604 2,599
3,146 3,285
1,340 41,211
1,576
3,176
(1,373) 203
Accident & Liability
Extended Warranty
Term Life
Total
6,681
17,393
5,913
115,520
(5,490) 1,191
(17,393) -
(5,144) 769
(56,495) 59,025
570 1,761
-
43 812
(15,425) 43,600
1,565 1,587
887 2,648
1,920 1,920
804 1,616
11,266 54,866
32,836
20
637
-
799
39,044
(3,121) 55
(5,834) 27,002
(7) 13
(446) 191
-
(645) 154
(11,426) 27,618
(414) (211) 812 601
131 186 1,827 2,013
(512) 26,490 4,681 31,171
360 373 931 1,304
580 771 612 1,383
1,590 1,590
154 513 667
145 27,763 10,966 38,729
1,998
1,272
10,040
283
1,265
330
949
16,137
General and administration expenses – (unallocated) Other income Surplus from insurance operations Shareholders’ share of surplus from insurance operations Insurance operations surplus after shareholders’ appropriation Accumulated surplus at the beginning of the period Accumulated surplus at the end of the period
(12,914) 32 3,255
(3,018)
237
1,475
1,712
19
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyals thousands unless otherwise stated) 11
Segment information (continued)
For the nine-month period ended September 30, 2014 (unaudited) Gross written premiums Less: Reinsurance premiums ceded Net written premiums Change in unearned premiums Net earned premiums Commission earned on ceded reinsurance Total revenues Gross claims paid Reinsurer’s share of claims paid Net claims paid Changes in outstanding claims Net claims incurred Policy acquisition costs Reversal of premium deficiency reserve Total cost Net underwriting results
Engineering
Accident & Liability
Marine
Property
Motor
31,170
63,756
151,002
26,585
19,473
(27,663) 3,507
(60,647) 3,109
(28,089) 122,913
(25,123) 1,462
384 3,891
(745) 2,364
10,878 133,791
7,717 11,608 7,216
9,589 11,953 121,917
(6,144) 1,072
Extended Warranty
Term Life
Total
52,405
17,742
362,133
(12,998) 6,475
(52,405) -
(14,397) 3,345
(221,322) 140,811
(164) 1,298
(1,509) 4,966
-
(709) 2,636
8,135 148,946
4,216 138,007 144,466
4,519 5,817 6,698
2,559 7,525 2,761
27,152 27,152 -
3,301 5,937 4,543
59,053 207,999 287,601
(120,879) 1,038
(25,786) 118,680
(5,238) 1,460
(2,165) 596
-
(4,070) 473
(164,282) 123,319
(143) 929 4,058
205 1,243 5,940
(5,829) 112,851 17,910
(81) 1,379 2,691
789 1,385 1,854
22,372
473 2,027
(5,059) 118,260 56,852
4,987
7,183
(2,888) 127,873
4,070
3,239
22,372
2,500
(2,888) 172,224
6,621
4,770
10,134
1,747
4,286
4,780
3,437
35,775
General and administration expenses – (unallocated) Other income Surplus from insurance operations Shareholders’ share of surplus from insurance operations Insurance operations surplus after shareholders’ appropriation Accumulated surplus at the beginning of the period Accumulated surplus at the end of the period
(33,585) 177 2,367
(2,130)
237
1,475 1,712
20
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyal thousands unless otherwise stated) 11
Segment information (continued)
Property
Motor
Engineering
Accident & Liability
7,104
30,996
24,090
20,116
11,658
58,292
10,294
162,550
3,920
42,804
11,156
31,648
39,799
-
2,657
131,984
1,027
3,616
12,676
1,840
1,577
29,044
1,594
51,374
Marine As at September 30, 2015 (Unaudited) Insurance operations’ assets Reinsurers’ share of unearned premiums Reinsurers’ share of outstanding claims Deferred policy acquisition costs Unallocated assets Total insurance operations’ assets Insurance operations’ liabilities Unearned premiums Outstanding claims Unearned reinsurance commission Premium deficiency reserve Unallocated liabilities and surplus Total insurance operations’ liabilities and surplus
As at December 31, 2014 (Audited) Insurance operations’ assets Reinsurers’ share of unearned premiums Reinsurers’ share of outstanding claims Deferred policy acquisition costs Unallocated assets Total insurance operations’ assets Insurance operations’ liabilities and surplus Unearned premiums Outstanding claims Unearned reinsurance commission Unallocated liabilities and surplus Total insurance operations’ liabilities and surplus
Extended Warranty
Term Life
Total
274,859 620,767
8,592 4,665
34,789 45,078
137,679 58,234
22,601 32,648
15,275 43,954
58,292 -
11,767 3,015
288,995 187,594
1,939
5,917
4,216
3,199
1,965
34,615
3,647
55,498
-
-
205
-
-
-
-
205 88,475
620,767
8,572
12,190
12,771
20,792
5,966
49,406
5,864
115,561
5,611
42,540
7,670
56,258
36,283
-
4,244
152,606
1,278
1,532
6,513
1,301
946
24,053
928
36,551 175,066
479,784
9,689 6,440
14,746 43,481
72,964 43,723
24,189 57,762
8,335 37,719
49,406 -
6,863 4,506
186,192 193,631
2,455
2,334
2,234
1,964
1,363
29,060
1,888
41,298 58,663
479,784
21
WATANIYA INSURANCE COMPANY (A Saudi Joint Stock Company) Notes to the interim condensed financial statements for the three-month and nine-month periods ended September 30, 2015 (Unaudited) (All amounts in Saudi Riyal thousands unless otherwise stated) 12
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 to sell the asset or transfer the liability takes place either: • •
In the principal market for the asset or liability, or In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible to by the Company. The Company’s financial assets consist of cash and cash equivalents, premiums receivable, reinsurance share of outstanding claims, investments, due from reinsurers’ and shareholder operations, and statutory deposit and its financial liabilities consist of outstanding claims, due to reinsurers, agents, brokers and third party administrators and brokers, due to policyholders, due to insurance operations, and certain other liabilities. The fair values of financial assets and liabilities are not materially different from their carrying values at the reporting date. Determination of fair value and fair value hierarchy The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments: Level 1: quoted prices in active markets for the identical assets or liabilities (i.e. without modification or repacking). Level 2: quoted prices in active markets for similar financial assets and liabilities or other valuation techniques for which all significant inputs are based on observable market data; and Level 3: valuation techniques for which any significant input is not based on observable market data. As at 30 September 2015 and 31 December 2014, all financial instruments, which are fair valued, are Level 1 instruments except for the available for sale investment which is included within Level 3. There were no transfers between levels during the three-month and nine months periods ended 30 September 2015 and year ended 31 December 2014. Also, there were no changes in the valuation techniques during the period from the previous periods. 13
Approval of the interim condensed financial statements These interim condensed financial statements have been approved by the Board of Directors on 15 October 2015.
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