UNITED COOPERATIVE ASSURANCE COMPANY
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) Interim Condensed Financial Statements (Unaudited) Together with Independent Auditors’ Review Report For the three-month period ended 31 March 2018
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) INTERIM CONDENSED FINANCIAL STATEMENTS For the three-month period ended 31 March 2018 INDEX
PAGE
Independent Auditors’ Review Report
1
Interim Statement of Financial Position
3–4
Interim Statement of Income
5–6
Interim Statement of Comprehensive Income
7
Interim Statement of Changes in Shareholders’ Equity
8
Interim Statement of Insurance Operations’ Cash Flows
9
Notes to the Interim Condensed Financial Statements
10 – 37
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 1.
GENERAL
United Cooperative Assurance (“the Company”) is a Saudi Joint Stock Company registered in the Kingdom of Saudi Arabia under Commercial Registration No. 4030179955 dated 6 Jamad-al-Thani 1429H, corresponding to 6 June 2008. Registered Office address of the Company is Al-Mukmal Centre (1st and 4th floor) Prince Saud Al Faisal Street, Khalediya District, P. O. Box 5019, Jeddah 21422, Kingdom of Saudi Arabia. The activities of the Company are to transact cooperative insurance and reinsurance operations and related activities in the Kingdom of Saudi Arabia. On 29 Rabi Al Thani 1429H (5 May 2008), the Company received a license from the Saudi Arabian Monetary Agency (“SAMA”) to engage in insurance and reinsurance in Saudi Arabia. The Company started the operations on 1 January 2009. The Company received the approval letters from the Saudi Arabian Monetary Authority and Ministry of Commerce and Investment regarding the amendment of the Company’s by-laws to be in accordance with the new companies’ regulations. The Company’s extraordinary general assembly was held on 10 August 2017 corresponding to 18 Thul Qeadah 1438H and accordingly the new by-laws was approved. 2.
BASIS OF PREPARATION a.
Basis of presentation
The interim condensed financial information of the Company has been prepared in accordance with ‘International Accounting Standard 34 - Interim Financial Reporting ("IAS 34") 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 the SAMA Circular no. 381000074519 dated 11 April 2017 and subsequent amendments through certain clarifications relating to the accounting for zakat and income tax (“SAMA Circular”), the zakat and income tax are to be accrued on a quarterly basis through shareholders equity under retained earnings. The interim condensed financial information is prepared under the going concern basis and the historical cost convention, except for the measurement of investments (excluding held-to-maturity) at their fair value. The Company’s interim condensed statement of financial position is presented in order of liquidity. Except for property and equipment, statutory deposit, End-of-service indemnities, outstanding claims, claims incurred but not reported, all other assets and liabilities are of short-term nature, unless, stated otherwise. 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 information accordingly. Assets, liabilities, revenues and expenses clearly attributable to either activity are recorded in the respective accounts. Similarly, in the past, the Company’s interim condensed and annual financial statements presented separately the statements of financial position, income, comprehensive income and cash flows for the insurance operations and shareholders operations. The basis of allocation of expenses from joint operations is determined and approved by the management and the Board of Directors.
10
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 2.
BASIS OF PREPARATION – (continued) b. Basis of presentation – (continued)
The interim condensed statement of financial position, statements of income and statement of comprehensive income and cash flows of the insurance operations and shareholders operations which are presented on pages 31 to 37 of the financial statements have been provided as supplementary financial information and to comply with the requirements of the guidelines issued by SAMA implementing regulations. SAMA implementing regulations requires the clear segregation of the assets, liabilities, income and expenses of the insurance operations and the shareholders operations. Accordingly, the interim condensed statements of financial position, statements of income, comprehensive income and 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 IFRS, the balances and transactions of the insurance operations are amalgamated and combined with those of the shareholders’ operations. Interoperation balances, transactions and unrealized gains or losses, if any, 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. The inclusion of separate information of the insurance operations with the financial information of the Company in the interim condensed statements of financial position, statement of income, statement of comprehensive income, statement of cash flows as well as certain relevant notes to the financial statements represents additional supplementary information required as required by the implementing regulations. The interim condensed financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the annual financial statements as of and for the year ended 31 December 2017. The interim condensed financial statements may not be considered indicative of the expected results for the full year. These interim condensed financial statements are expressed in Saudi Arabian Riyals (SAR) and are rounded off to the nearest thousands. c.
Judgment and estimates
The preparation of interim condensed financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these interim condensed financial statements, the significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty including the risk management policies were the same as those that applied to the annual financial statements as at and for the year ended 31 December 2017.
11
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 2.
BASIS OF PREPARATION – (continued) d. Seasonality of operations
There are no seasonal changes that may affect insurance operations of the Company. 3.
SIGNIFICANT ACCOUNTING POLICIES
The accounting policies adopted by the Company for the preparation of these interim condensed financial statements are in accordance with International Financial Reporting Standards (IFRS) as endorsed in the Kingdom of Saudi Arabia and are consistent with those used for the preparation of the annual financial statements for the year ended 31 December 2017 and new amended IFRS and International Financial Reporting Interpretations Committee Interpretations (IFRIC) as mentioned in note 3(a) which had no impact on the financial position or financial performance of the Company. Certain comparative amounts have been reclassified / regrouped to conform with the current period’s presentation. This did not have any impact on interim condensed statement of changes in shareholders’ equity for the period. a.
New IFRS, International Financial Reporting and Interpretations Committee’s interpretations (IFRIC) and amendments thereof, adopted by the Company
The Company has adopted the following new standards, amendments and revisions to existing standards, which were issued by the International Accounting Standards Board (IASB): Standard/ Amendments IFRS 2 IAS 40 IFRIC 22 IFRS 15 IFRS 1 and IAS 28
Description Amendments to IFRS 2 Classification and Measurement of share-based Payment transactions. Amendments to IAS 40 Transfers of investment property Foreign Currency Transactions and Advance consideration Revenue from Contracts with Customers (refer below) Annual Improvements 2016 to IFRS 2014- 2016 cycle.
IFRS 15 – Revenue from Contracts with Customers IFRS 15 outlines a single comprehensive model of accounting for revenue arising from contracts with customers and supersedes current revenue guidance, which is found currently across several Standards and Interpretations within IFRSs. However, IFRS 15 does not apply to “revenue from insurance contracts”. However, entities will need to apply IFRS 15 to non-insurance contracts (or components of insurance contracts). Therefore, insurance entities will need to carefully evaluate the scope of this standard. IFRS 15 established a new five-step model that will apply to revenue arising from contracts with customers. Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring of goods or services to a customer. Though there are changes in accounting policy, however, management assessed and concluded that there is no material impact on the amounts reported at transition to IFRS 15 on 1 January 2018. Further, the adoption of the amended standards and interpretations applicable to the Company did not have any significant impact on these interim condensed financial statements.
12
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 3.
SIGNIFICANT ACCOUNTING POLICIES – (continued) b. 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 are effective. Standard/ Interpretation IFRS 9 IFRS 16 IFRIC 23 IFRS 17
Description Financial Instruments Leases Uncertainty over Income Tax Treatments Insurance Contracts (note below)
Effective from periods beginning on or after the following date Refer below 1 January 2019 1 January 2019 1 January 2021
IFRS 9 and IFRS 17 In July 2014, the IASB published IFRS 9 Financial Instruments which will replace IAS 39 Financial Instruments: Recognition and Measurement. The standard incorporates new classification and measurements requirements for financial assets, the introduction of an expected credit loss (ECL) impairment model which will replace the incurred loss model of IAS 39, and new hedge accounting requirements. Under IFRS 9:
All financial assets will be measured at either amortised cost or fair value. The basis of classification will depend on the business model and the contractual cash flow characteristics of the financial assets. The standard retains most of IAS 39’s requirements for financial liabilities except for those designated at fair value through profit or loss whereby that part of the fair value changes attributable to own credit is to be recognised in other comprehensive income instead of the statement of income. IFRS 9 requires entities to record an allowance for ECLs for all loans and other debt financial assets not held at fair value through statement of income as well we finance lease receivables, together with loan commitments and financial guarantee contracts. The allowance is based on the ECLs associated with the probability of default in the next twelve months unless there has been a significant increase in credit risk since origination. Under IFRS 9, credit losses are recognised earlier than under IAS 39. The hedge accounting requirements are more closely aligned with risk management practices and follow a more principle based approach.
In September 2016, the IASB published amendments to IFRS 4 Insurance Contracts that address the accounting consequences of the application of IFRS 9 to insurers prior to the publication of the forthcoming accounting standard for insurance contracts. The amendments introduce two options for insurers: the deferral approach and the overlay approach. The deferral approach provides an entity, if eligible, with a temporary exemption from applying IFRS 9 until the earlier of the effective date of a new insurance contract standard or 2021. The overlay approach allows an entity to remove from profit or loss the effects of some of the accounting mismatches that may occur before the new insurance contracts standard is applied. Under the temporary exemption as introduced by amendments to IFRS 4, the reporting entities whose activities predominantly relate to “insurance” can defer the implementation of IFRS 9. The Company having assessed the implications and has concluded to defer the implementation of IFRS 9 until a later date which will not be later than 1 January 2021. The impact of the adoption of IFRS 9 on the Company’s interim condensed financial statements will, to a large extent, have to take into account the interaction with the forthcoming insurance contracts standard. As such, it is not possible to fully assess the effect of the adoption of IFRS 9.
13
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 4.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents included in the statement of cash flows comprise the following:
Insurance operations Bank balances and cash Shareholders’ operations Bank balances and cash 5.
31 March 2018 (Unaudited) SAR’000
31 December 2017 (Audited) SAR’000
93,502
43,953
2,528
94,843
31 March 2018 (Unaudited) SAR’000
31 December 2017 (Audited) SAR’000
119,689 38,718 180,982 22,181 361,570 (83,301) 278,269
83,680 42,669 170,495 32,466 329,310 (75,689) 253,621
PREMIUMS AND REINSURERS’ RECEIVABLE – NET
Receivables comprise amounts due from the following:
Policyholders Brokers and agents Related parties (note 11) Receivables from reinsurers’ Provision for doubtful receivables Premiums and reinsurers’ receivable – net
Movement in the allowance for doubtful premiums receivable during the period was as follows:
Balance at beginning of the period / year Provision made during the period / year Balance at end of the period / year
14
31 March 2018 (Unaudited) SAR’000
31 December 2017 (Audited) SAR’000
75,689 7,612 83,301
49,761 25,928 75,689
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 6.
INVESTMENTS
Investment are classified as follows:
Insurance operations
- Available for sale (note 6.1) - Held to maturity (note 6.3) Total 6.1
31 March 2018 (Unaudited)
31 December 2017 (Audited)
SAR’000
SAR’000
4,198 156,111 160,309
104,262 156,060 260,322
31 March 2018 (Unaudited)
31 December 2017 (Audited)
SAR’000
SAR’000
Available-for-sale investments
Movement in available-for-sale investment balance is as follows:
Insurance’ operations
Opening balance Purchases during the period / year Disposals during the period / year Changes in fair value of investments Closing balance
Insurance’ operations
Investment in bonds Investment in sukuk Investment in equity shares Investment in mutual funds
104,262 (100,000) (64) 4,198
109,469 85,000 (90,153) (54) 104,262
31 March 2018 (Unaudited)
31 December 2017 (Audited)
SAR’000
SAR’000
3,736 243 219 4,198
15
3,815 100,000 229 218 104,262
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 6.
INVESTMENTS – (continued)
Shareholders’ operations
- Available for sale (note 6.2) - Held to maturity (note 6.3) Total 6.2
31 March 2018 (Unaudited)
31 December 2017 (Audited)
SAR’000
SAR’000
136,377 98,178 234,555
36,624 98,131 134,755
31 March 2018 (Unaudited)
31 December 2017 (Audited)
SAR’000
SAR’000
Available-for-sale investments
Movement in available-for-sale investment balance is as follows:
Shareholders’ operations
Opening balance Purchases during the period / year Disposals during the period / year Changes in fair value of investments Closing balance
Investment in equity shares Investment in bonds Investment in sukuk Investment in mutual funds
36,624 100,000 (2,140) 1,893 136,377
35,355 70,000 (69,631) 900 36,624
31 March 2018 (Unaudited)
31 December 2017 (Audited)
SAR’000
SAR’000
2,478 13,301 100,000 20,598 136,377
16
3,335 13,602 19,687 36,624
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 6.
INVESTMENTS – (continued)
6.3
Held to maturity investments
Movement in held to maturity investment balance is as follows: Insurance operations Opening balance Purchases Disposals Amortization of held to maturity investments Closing balance
Shareholders’ operations Opening balance Purchases Disposals Amortization of held to maturity investments Closing balance 7.
31 March 2018 (Unaudited)
31 December 2017 (Audited)
SAR’000
SAR’000
156,060 51 156,111
119,855 37,405 (1,393) 193 156,060
31 March 2018 (Unaudited)
31 December 2017 (Audited)
SAR’000
SAR’000
98,131 47 98,178
96,198 2,063 (318) 188 98,131
31 March 2018 (Unaudited)
31 December 2017 (Audited)
SAR’000
SAR’000
TECHNICAL RESERVES 7.1 Net outstanding claims and reserves
Net outstanding claims and reserves comprise of the following:
Outstanding claims Claims incurred but not reported Premium deficiency reserve Other technical reserves Less: - Reinsurers’ share of outstanding claims - Reinsurers’ share of claims Incurred but not reported Net outstanding claims and reserves
17
157,428 250,401 407,829 2,706 6,576 417,111
122,927 281,638 404,565 3,566 6,925 415,056
(126,464) (180,601) (307,065) 110,046
(89,384) (202,521) (291,905) 123,151
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 7.
TECHNICAL RESERVES – (continued) 7.2 Movement in unearned premiums
Movement in unearned premiums comprise of the following:
Three-month ended 31 March 2018 (Unaudited) Gross Reinsurance Net SAR’000
Balance as at the beginning of the period Premium written during the period Premium earned during the period
270,374 104,015 (115,583) 258,806
Balance as at the end of the period
(204,792) (76,233) 83,078 (197,947)
65,582 27,782 (32,505) 60,859
Year ended 31 December 2017 (Audited) Gross Reinsurance Net SAR’000
Balance as at the beginning of the year Premium written during the year Premium earned during the year
294,762 580,565 (604,953) 270,374
Balance as at the end of the year 8.
(184,906) (432,272) 412,386 (204,792)
109,856 148,293 (192,567) 65,582
COMMITMENTS AND CONTINGENCIES a.
The Company’s commitments and contingencies are as follows:
Letters of guarantee issued in favour of GAZT Total
31 March 2018 (Unaudited)
31 December 2017 (Audited)
SAR’000
SAR’000
22,500 22,500
22,500 22,500
b.
There were no capital commitments outstanding as at 31 March 2018 (31 December 2017: Nil).
c.
As at 31 March 2018, the Company has a letter of guarantee amounting to SR 22.5 million (31 December 2017: SR 22.5 million) in favour of General Authority of Zakat and Tax (GAZT) (see note 12). A margin of SR 22.5 million (31 December 2017: SR 22.5 million) being deposited with a bank for this purpose and is included in prepayments and other assets in the statement of financial position.
18
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 9.
FAIR VALUES OF FINANCIAL INSTRUMENTS
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction takes place either: - in the accessible principal market for the asset or liability, or - in the absence of a principal market, in the most advantages accessible market for the asset or liability The fair values of on-balance sheet financial instruments are not significantly different from their carrying amounts included in the interim condensed (consolidated) financial information. Determination of fair value and fair value hierarchy The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments: Level 1: quoted prices in active markets for the same or identical instrument that an entity can access at the measurement date; Level 2: quoted prices in active markets for similar assets and liabilities or other valuation techniques for which all significant inputs are based on observable market data; and Level 3: valuation techniques for which any significant input is not based on observable market data. a.
Carrying amounts and fair value
The following table shows the carrying amount and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy for financial instruments measured at fair value. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation to fair value.
19
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 9.
FAIR VALUES OF FINANCIAL INSTRUMENTS – (continued) a. Carrying amounts and fair value
31 March 2018 (Unaudited)
Fair value
Financial assets measured at fair value Equity securities - Insurance operations - Shareholders’ operations Financial assets not measured at fair value Debt securities Insurance operations - Insurance operations - Shareholders’ operations
Level 1 SR’ 000
Level 2 SR’ 000
Level 3 SR’ 000
Total SR’ 000
243 556
219 20,598
1,923
462 23,077
(96,264) 113,301 17,836
100,000 120,817
1,923
3,736 113,301 140,576
31 December 2017 (Audited)
Fair value
Financial assets measured at fair value Equity securities - Insurance operations - Shareholders’ operations Financial assets not measured at fair value Debt securities Insurance operations - Insurance operations - Shareholders’ operations
20
Level 1 SR’ 000
Level 2 SR’ 000
Level 3 SR’ 000
Total SR’ 000
229 1,412
218 19,687
1,923
447 23,022
3,815 13,602 19,058
100,000 119,905
1,923
103,815 13,602 140,886
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 10. OPERATING SEGMENTS Operating segments are identified on the basis of internal reports about components of the Company that are regularly reviewed by the Company’s Board of Directors in their function as chief operating decision maker in order to allocate resources to the segments and to assess its performance. Transactions between the operating segments are on normal commercial terms and conditions. The revenue from external parties reported to the Board is measured in a manner consistent with that in the income statement. Segment assets and liabilities comprise operating assets and liabilities. There have been no changes to the basis of segmentation or the measurement basis for the segment profit or loss since 31 December 2017. Segment assets do not include cash and cash equivalents, term deposits, net premiums and reinsurers’ receivable, net, prepayments and other receivables, investments, furniture, fittings and office equipment. Accordingly, they are included in unallocated assets. Segment liabilities do not include policyholders’ claims, reinsurance payables, accruals and other payables and employees’ end of service indemnities. Accordingly, they are included in unallocated liabilities. These unallocated assets and liabilities are not reported to chief operating decision maker under related segments and are monitored on a centralized basis. The segment information provided to the Company’s Board of Directors for the reportable segments for the Company’s total assets and liabilities at 31 March 2018 and 31 December 2017, its total revenues, expenses, and net income for the three-month period then ended, are as follows:
21
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 10. OPERATING SEGMENTS – (continued) As at 31 March 2018 (Unaudited) Insurance operations SR’ 000
Medical Assets Reinsurers’ share of unearned premiums Reinsurers’ share of outstanding claims Reinsurers’ share of claims Incurred but not reported Deferred policy acquisition costs Unallocated assets
Motor
Energy
Engineering
Others
Shareholders’ operations
Total
29,803 15,028 6,269 2,237
30,597 6,183 25,313 1,856
18,250 9,619 21,033 -
88,378 40,966 77,280 3,125
30,919 54,668 50,706 1,191
197,947 126,464 180,601 8,409 591,910 1,105,331
393,920 393,920
197,947 126,464 180,601 8,409 985,830 1,499,251
47,901 17,988 10,402 -
62,845 5,853 26,104 81,764 3,402
18,570 9,738 21,449 263
92,842 15,192 41,961 81,329 2,264 1,023
36,648 6,393 61,637 55,457 442 1,888
258,806 27,438 157,428 250,401 2,706 6,576 353,770 1,057,125
442,126 442,126
258,806 27,438 157,428 250,401 2,706 6,576 795,896 1,499,251
Total assets Liabilities Unearned premiums Unearned reinsurance commission Outstanding claims Claims incurred but not reported Premium deficiency reserve Other technical reserves Unallocated liabilities
Total Insurance operations
Total liabilities
22
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 10. OPERATING SEGMENTS – (continued) As at 31 December 2017 (Audited) Insurance operations SR’ 000
Medical Assets Reinsurers’ share of unearned premiums Reinsurers’ share of outstanding claims Reinsurers’ share of claims Incurred but not reported Deferred policy acquisition costs Unallocated assets
Motor
Energy
Engineering
Others
Shareholders’ operations
Total
28,142 9,494 2,547 3,040
41,591 5,936 22,929 2,642
6,633 29,066 -
119,454 41,468 99,633 3,815
15,605 25,853 48,346 804
204,792 89,384 202,521 10,301 613,209 1,120,207
384,217 384,217
204,792 89,384 202,521 10,301 997,426 1,504,424
42,740 12,507 6,834 3,069 -
85,196 7,841 27,893 86,622 3,604
6,716 29,611 330
122,873 20,452 42,489 104,812 418 1,261
19,565 3,167 33,322 53,759 79 1,730
270,374 31,460 122,927 281,638 3,566 6,925 340,373 1,057,263
447,161 447,161
270,374 31,460 122,927 281,638 3,566 6,925 787,534 1,504,424
Total assets Liabilities Unearned premiums Unearned reinsurance commission Outstanding claims Claims incurred but not reported Premium deficiency reserve Other technical reserves Unallocated liabilities
Total Insurance operations
Total liabilities
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UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 10. OPERATING SEGMENTS – (continued)
For the three-month period ended 31 March 2018 (Unaudited)
REVENUES Gross premiums written - Direct - Reinsurance Reinsurance premiums ceded - Local - Foreign Excess of loss expenses - Local - Foreign
Net premiums written Changes in unearned premiums, net Net premiums earned Reinsurance commissions Other underwriting income TOTAL REVENUES UNDERWRITING COSTS AND EXPENSES Gross claims paid Reinsurers’ share of claims paid Net claims paid Changes in outstanding claims, net Changes in claims incurred but not reported, net Net claims incurred Premium deficiency reserve Other technical reserves Policy acquisition costs Other underwriting expenses TOTAL UNDERWRITING COSTS AND EXPENSES NET UNDERWRITING (LOSS) / INCOME
Medical SR'000
Motor SR'000
Energy SR'000
Engineering SR'000
Others SR'000
Total SR'000
25,102 25,102
21,089 21,089
30,596 30,596
(8,652) (8,652)
35,880 35,880
104,015 104,015
(14,219) (14,219)
(1,146) (8,994) (10,140)
(30,070) (30,070)
(382) 9,735 9,353
(1,099) (30,058) (31,157)
(2,627) (73,606) (76,233)
(154) (154)
(26) (179) (205)
-
-
(42) (378) (420)
(68) (711) (779)
10,729 (3,500) 7,229 7,229
10,744 11,357 22,101 4,015 26,116
526 (320) 206 481 687
701 (1,044) (343) 4,251 3,908
4,303 (1,769) 2,534 4,331 6,865
27,003 4,724 31,727 13,078 44,805
16,186 (12,045) 4,141 (53)
36,343 (14,312) 22,031 (2,036)
36
764 (630) 134 (26)
821 (628) 193 (500)
54,114 (27,615) 26,499 (2,579)
(154) 3,934 (3,069) 930 452
(7,242) 12,753 (204) 1,292 211
(129) (93) (67) 153
(1,130) (1,022) 1,846 (237) 709 94
(662) (969) 363 159 747 90
(9,317) 14,603 (860) (349) 3,678 1,000
2,247
14,052
(7)
1,390
390
18,072
4,982
12,064
694
2,518
6,475
26,733
24
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 10. OPERATING SEGMENTS – (continued) For the three-month period ended 31 March 2018 (Unaudited) Medical Motor Energy Engineering Others SR’ 000 SR’ 000 SR’ 000 SR’ 000 SR’ 000 OTHER OPERATING (EXPENSES) / INCOME General and administrative expenses Allowance for doubtful debts Board remuneration Dividend income Amortization of held to maturity investments Commission income on investments Dividend and realized gain / (loss) on investments Other income TOTAL OTHER OPERATING EXPENSES
Total SR’ 000
(28,257) (7,612) (373) 6 98 2,940 (1,359) 216 (34,341) (7,608)
NET LOSS FOR THE PERIOD Net income for the period attributable to insurance operations Net loss for the period attributable to the shareholders’
(7,608)
25
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 10. OPERATING SEGMENTS – (continued)
For the three-month period ended 31 March 2017 (Unaudited)
REVENUES Gross premiums written - Direct - Reinsurance Reinsurance premiums ceded - Local - Foreign Excess of loss expenses - Local - Foreign
Net premiums written Changes in unearned premiums, net Net premiums earned Reinsurance commissions Other underwriting income TOTAL REVENUES UNDERWRITING COSTS AND EXPENSES Gross claims paid Reinsurers’ share of claims paid Net claims paid Changes in outstanding claims, net Changes in claims incurred but not reported, net Net claims incurred Policy acquisition costs Other underwriting expenses TOTAL UNDERWRITING COSTS AND EXPENSES NET UNDERWRITING INCOME
Medical SR'000
Motor SR'000
Energy SR'000
Engineering SR'000
Others SR'000
Total SR'000
18,947 18,947
5,654 5,654
25,874 25,874
18,178 (38) 18,140
40,298 40,298
108,951 (38) 108,913
(8,858) (8,858)
(2,733) (2,733)
(25,429) (25,429)
(2,327) (13,252) (15,579)
(2,600) (32,) (35,205)
(4,927) (82,877) (87,804)
-
(33) (231) (264)
-
-
(33) (410) (443)
(66) (641) (707)
10,089 299 10,388 10,388
2,657 42,859 45,516 12,589 58,105
445 (342) 103 97 200
2,561 (826) 1,735 3,710 5,445
4,650 (4,025) 625 3,726 4,351
20,402 37,965 58,367 20,122 78,489
11,117 (1,296) 9,821 1,923
74,012 (28,481) 45,531 (14,668)
-
26,481 (25,968) 513 (397)
1,911 (1,502) 409 (251)
113,521 (57,247) 56,274 (13,393)
(6,587) 5,157 648 258
(31,896) (1,033) 3,054 388
129
116 621 71
13 171 938 105
(38,470) 4,411 5,261 951
6,063
2,409
129
808
1,214
10,623
4,325
55,696
71
4,637
3,137
67,866
26
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 10. OPERATING SEGMENTS – (continued) For the three-month period ended 31 March 2017 (Unaudited) Medical Motor Energy Engineering Others SR’ 000 SR’ 000 SR’ 000 SR’ 000 SR’ 000 OTHER OPERATING (EXPENSES) / INCOME General and administrative expenses Allowance for doubtful debts Board remuneration Amortization of held to maturity investments Commission income on deposits Dividend and realized loss on investments Other income TOTAL OTHER OPERATING EXPENSES
Total SR’ 000
(26,755) (5,347) (275) 94 2,977 (1,649) 1,029 (29,926) 37,940
NET INCOME FOR THE PERIOD Net income for the period attributable to insurance operations Net loss for the period attributable to the shareholders’
(3,720) 34,220
27
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 11. 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 period and the related balances:
Nature of transactions
Transactions for the period Balance receivable / (payable) ended as at 31 March 31 March 31 March 31 December 2018 2017 2018 2017 (Unaudited) (Unaudited) (Unaudited) (Audited) SAR’000
Major shareholders Haji Hussien Ali Reza Saudi Bin Laden – Group
CPC
UCA Lebanon
Premium written Payments received and claims paid Premium written Payments received and claims paid Premium written Payments received and claims paid
3,373
2,986
(940) 9,842
(1,517) 35,503
14,090
11,657 -
(5,121) 3,392
(32,768) 5,512
142,760
138,039
(31)
(3,008)
24,108
20,747
(203)
-
-
203
-
-
(270)
(270)
46
45
35
58 -
821
775
(100) 10
(1,442) 1,618 -
532
597
2
(6) 2
21
11
(41)
-
2
41
Payment received
Associates Najm for insurance services
-
Entities controlled, jointly controlled or significantly influenced by related parties
United Commercial Agencies UCA Workshop
Law Office of Hassan Mahassni
Middle East Group
Premium written Payment made on behalf of company Premium written Payments received and claims paid Claims settled Payment made Premium written Payments received and claims paid Premium written Payments received and claims paid
28
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 11. RELATED PARTY TRANSACTIONS AND BALANCES – (continued)
The compensation of key management personnel during the period is as follows: 31 March 2018 31 March 2017 (Unaudited) (Unaudited) SAR’000 1,293 1,182 46 31 1,339 1,213
Salaries and other allowances End of service indemnities
Remuneration to those charged with governance
373
275
12. ZAKAT AND INCOME TAX a.
Charge for the year
The differences between the financial and the Zakatable results are mainly due to certain adjustments in accordance with the relevant fiscal regulations.
Movements in provision during the year
31 March 31 December 2018 2017 (Unaudited) (Audited) SAR’000 23,708 20,681 1,500 6,000 (2,973) 25,208 23,708
Balance at the beginning of the year Charge for the year Paid during the year Balance at the end of the year
The differences between the financial and the zakatable results are mainly due to certain adjustments in accordance with the relevant fiscal regulations. 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 GAZT could be different from the declarations filed by the Company. b. Status of zakat assessments The Company has filed its zakat declarations for the years ended 31 December 2009 to 2016 and obtained restricted zakat certificates until 31 December 2015 and awaiting for zakat response for the year ended 31 December 2016. During 2013, the Company received the final zakat assessments for the years 2009 to 2011 from the General Authority of Zakat and Income Tax (GAZT) claiming zakat liability amounting to SR 17.69 million. The management believes that the existing provision for zakat is sufficient. The Management has filed an objection against the above assessments and is confident of receiving a favourable ruling. However, during 2014, the Company has paid SR 14.288 million with respect to these assessments. GAZT has not yet raised assessments for the years from 2012 to 2016. The Zakat is applicable on 99% of the shareholders while Income Tax on 1% of the shareholders.
29
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 13. SHARE CAPITAL The authorized and issued share capital of the Company was SR 490 million divided into 49 million ordinary shares of SR 10 each. The Board of Directors at its meeting on 13 Ramadan 1438H corresponding to 08 June 2017 has recommended to reduce the Company's share capital from SR 490,000,000 to SR 400,000,000 divided into 40,000,000 shares. The reduction will be through reduction of 1 share for every 5.44 shares currently held by the shareholder. The purpose of capital reduction is to restructure the capital position of the Company in line with the Companies Law. There will be no impact of capital reduction on the Company’s financial obligations. The Company's capital reduction is conditional upon meeting certain legal requirements, approval from regulators and from the shareholders in extraordinary general meeting. 14. CAPITAL MANAGEMENT Objectives are set by the Company to maintain healthy capital ratios in order to support its business objectives and maximize shareholders’ value. The Company manages its capital requirements by assessing shortfalls between reported and required capital levels on a regular basis. Adjustments to current capital levels are made in light of changes in market conditions and risk characteristics of the Company’s activities. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders or issue shares. In the opinion of the Board of Directors, the Company has fully complied with the externally imposed capital requirements during the reported financial period. 15. (LOSS) / EARNINGS PER SHARE (Loss) / earnings per share for the period has been calculated by dividing the net (loss) / income for the period by the weighted average number of issued and outstanding shares for the period.
30
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 16. SUPPLEMENTARY INFORMATION a) Interim statement of financial position
31 March 2018 (Unaudited) Insurance operations
Shareholders’ operations
31 December 2017 (Audited) Total
Insurance operations
Shareholders’ operations
Total
SAR ’000 ASSETS Cash and cash equivalents Premiums and reinsurers’ receivable – net Reinsurers’ share of unearned premiums Reinsurers’ share of outstanding claims Reinsurers’ share of claims Incurred but not reported Deferred policy acquisition costs Investments Due from insurance operations Prepaid expenses and other assets Property and equipment Goodwill Statutory deposit Accrued income on statutory deposit
93,502 278,269 197,947 126,464
2,528 -
96,030 278,269 197,947 126,464
43,953 253,621 204,792 89,384
94,843 -
138,796 253,621 204,792 89,384
180,601 8,409 160,309 57,472 2,358 1,105,331
234,555 48,206 3,296 78,400 73,500 1,641 442,126
180,601 8,409 394,864 48,206 60,768 2,358 78,400 73,500 1,641 1,547,457
202,521 10,301 260,322 52,646 2,667 1,120,207
134,755 62,944 1,271 78,400 73,500 1,448 447,161
202,521 10,301 395,077 62,944 53,917 2,667 78,400 73,500 1,448 1,567,368
-
(48,206)
(48,206)
-
(62,944)
(62,944)
1,105,331
393,920
1,499,251
1,120,207
384,217
1,504,424
Less: Inter-operations eliminations TOTAL ASSETS
31
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 16.
SUPPLEMENTARY INFORMATION – (continued) a) Interim statement of financial position – continued 31 March 2018 (Unaudited) Insurance operations
Shareholders’ operations
31 December 2017 (Audited) Total
Insurance operations
Shareholders’ operations
Total
SAR ’000 LIABILITIES Policyholders claims payable Accrued and other liabilities Reinsurers' balances payable Unearned premiums Unearned reinsurance commission Outstanding claims Claims incurred but not reported Premium deficiency reserve Other technical reserves Due to shareholders’ operations Due to a related party End-of-service indemnities Insurance operations’ surplus Fair value loss reserve on investments Zakat and income tax Accrued commission income payable to SAMA Less: Inter-operations eliminations TOTAL LIABILITIES
5,064 96,091 196,610 258,806 27,438 157,428 250,401 2,706 6,576 48,206 20,439 36,037 (471) 1,105,331
1,104 270 25,208 1,641 28,223
5,064 97,195 196,610 258,806 27,438 157,428 250,401 2,706 6,576 48,206 270 20,439 36,037 (471) 25,208 1,641 1,133,554
9,177 96,745 178,145 270,374 31,460 122,927 281,638 3,566 6,925 62,944 20,676 36,037 (407) 1,120,207
617 270 23,708 1,448 26,043
9,177 97,362 178,145 270,374 31,460 122,927 281,638 3,566 6,925 62,944 270 20,676 36,037 (407) 23,708 1,448 1,146,250
(48,206)
-
(48,206)
(62,944)
-
(62,944)
1,057,125
28,223
1,085,348
1,057,263
26,043
1,083,306
-
490,000 31,944 (106,620) (1,421) 413,903
490,000 31,944 (106,620) (1,421) 413,903
-
490,000 31,944 (97,512) (3,314) 421,118
490,000 31,944 (97,512) (3,314) 421,118
1,057,125
442,126
1,499,251
1,057,263
447,161
1,504,424
SHAREHOLDERS’ EQUITY Share capital Statutory reserve Accumulated losses Fair value reserve loss on investments TOTAL EQUITY TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
22,500
COMMITMENTS AND CONTINGENCIES
32
22,500
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 16.
SUPPLEMENTARY INFORMATION – (continued) b) Interim statement of income 2018 Insurance operations
2017
Shareholders’ operations
Total
Insurance operations
Shareholders’ operations
Total
SAR ’000 REVENUES Gross premiums written - Direct - Reinsurance
Reinsurance premiums ceded - Local - Foreign Excess of loss expenses - Local - Foreign
Net premiums written Changes in unearned premiums, net Net premiums earned Reinsurance commissions TOTAL REVENUES UNDERWRITING COSTS AND EXPENSES Gross claims paid Reinsurers’ share of claims paid Net claims Changes in outstanding claims and other technical reserves, net Changes in claims incurred but not reported, net Net claims incurred Additional premium reserves Other technical reserves Policy acquisition costs Other underwriting expenses TOTAL UNDERWRITING COSTS AND EXPENSES NET UNDERWRITING INCOME
104,015 104,015
-
104,015 104,015
108,951 (38) 108,913
-
108,951 (38) 108913
(2,627) (73,606) (76,233)
-
(2,627) (73,606) (76,233)
(4,927) (82,877) (87,804)
-
(4,927) (82,877) (87,804)
(68) (711) (779)
-
(66) (641) (707)
-
-
(68) (711) (779)
-
(66) (641) (707)
27,003 4,724 31,727 13,078 44,805
-
27,003 4,724 31,727 13,078 44,805
20,402 37,965 58,367 20,122 78,489
-
20,402 37,965 58,367 20,122 78,489
54,114 (27,615) 26,499
-
54,114 (27,615) 26,499
113,521 (57,247) 56,274
-
113,521 (57,247) 56,274
(2,579)
-
(2,579)
(13,393)
-
(13,393)
(9,317) 14,603 (860) (349) 3,678 1,000
-
(9,317) 14,603 (860) (349) 3,678 1,000
(38,470) 4,411 5,261 951
-
(38,470) 4,411 5,261 951
18,072
-
18,072
10,623
-
10,623
26,733
-
26,733
67,866
-
67,866
33
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 16.
SUPPLEMENTARY INFORMATION – (continued) b) Interim statement of income – continued 2018 Insurance operations
2017
Shareholders’ operations
Total
Insurance operations
Shareholders’ operations
Total
SAR ’000 OTHER OPERATING (EXPENSES) / INCOME Allowance for doubtful debts General and administrative expenses Board remuneration Dividend income Commission income on investments Amortization of held to maturity investments Dividend and realized gain / (loss) on investments Other income
(7,612) (27,729) 1,139
(528) (373) 6 1,801
(7,612) (28,257) (373) 6 2,940
(5,347) (26,521) 1,555
(234) (275) 1,422
(5,347) (26,755) (275) 2,977
51
47
98
47
47
94
216
(1,359) -
(1,359) 216
(1,433) 1,029
(216) -
(1,649) 1,029
(33,935)
(406)
(34,341)
(30,670)
744
(29,926)
(7,202)
(406)
(7,608)
37,196
744
37,940
7,202
406
7,608
(33,476)
(744)
(34,220)
-
-
-
3,720
-
3,720
Earnings / (loss) per share (Expressed in SAR per share) Weighted average number of ordinary shares outstanding (in thousands)
-
49,000
49,000
-
49,000
49,000
Basic and diluted loss per share for the period (SR)
-
(0.16)
(0.16)
-
0.70
0.70
TOTAL OTHER OPERATING (EXPENSES) / INCOME NET (DEFICIT) / SURPLUS FROM INSURANCE OPERATIONS Shareholders’ absorption of deficit / (Surplus transferred to Shareholders) NET RESULT FROM INSURANCE OPERATIONS AFTER ABSROPTION OF DEFICIT / TRANSFER OF SURPLUS TO SHAREHOLDERS
34
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 16.
SUPPLEMENTARY INFORMATION – (continued) c)
Interim statement of comprehensive income 2018 Insurance operations
2017
Shareholders’ operations
Total
Insurance operations
Shareholders’ operations
Total
SAR ’000 NET (LOSS) FOR THE PERIOD ATTRIBUTABLE TO SHAREHOLDERS
-
(7,608)
(7,608)
3,720
34,220
37,940
Other comprehensive (loss) / income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(64)
534
470
(21)
942
921
-
1,359 -
1,359 -
-
-
-
(64)
(5,715)
(5,779)
3,699
35,162
38,861
Items that will not be reclassified to consolidated statement of income in subsequent periods - Changes in the revaluation surplus relating to property and equipment or intangible assets -Changes in share based plan reserves -Actuarial gains / (losses) on defined benefit pension plans Items that are or may be reclassified to consolidated statement of income in subsequent periods Available for sale investments: - Net change in fair value - Net amounts transferred to statement of income Others (to be disclosed if necessary) TOTAL COMPREHENSIVE (LOSS) / INCOME FOR THE PERIOD
35
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 16.
SUPPLEMENTARY INFORMATION – (continued) d) Interim statement of cash flows
2018 Note
Insurance operations
2017
Shareholders’ operations
Total
Insurance operations
Shareholders’ operations
Total
SR ‘000 CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) / income for the period Adjustments for non-cash items: Depreciation of property and equipment Allowance for doubtful debts Realized loss on investments Amortization of held to maturity investments Commission (income) / expense Provision for end-of-service indemnities Changes in operating assets and liabilities: Premiums and reinsurers’ receivable Reinsurers’ share of unearned premiums Reinsurers’ share of outstanding claims Reinsurers’ share of claims Incurred but not reported Deferred policy acquisition costs Prepaid expenses and other assets Accrued commission on statutory deposit Policyholders and accounts payables Accrued and other liabilities Reinsurers' balances payable Unearned premiums Unearned reinsurance commission Outstanding claims Claims incurred but not reported Premium deficiency reserve Other technical reserves Accrued commission on statutory deposit payable to SAMA Due to shareholders operations Due from Insurance Operations Net cash flows used in operating activities
-
(7,608)
(7,608)
3,720
34,220
37,940
336 7,612 (51) (237) 7,660
1,359 (47) (6,296)
336 7,612 1,359 (98) (237) 1,364
396 5,347 (47) 894 10,310
(47) (46) 34,173
396 5,347 (94) (46) 894 44,437
(32,260) 6,845 (37,080)
-
(32,260) 6,845 (37,080)
(33,634) 4,152 13,123
-
(33,634) 4,152 13,123
21,920 1,892 (4,826) (4,113) (654) 18,465 (11,568) (4,022) 34,501 (31,237) (860) (349)
(2,025) (193) 487 -
21,920 1,892 (6,851) (193) (4,113) (167) 18,465 (11,568) (4,022) 34,501 (31,237) (860) (349)
(284) 2,534 (4,861) (2,765) 18,847 (561) (42,117) (1,928) (26,516) (38,186) -
(690) (46) 46 192 -
(284) 2,534 (5,551) (46) (2,719) 19,039 (561) (42,117) (1,928) (26,516) (38,186) -
(14,738) (50,424)
193 14,738 6,904
193 (14,738) 14,738 (43,520)
3,730 (98,156)
46 (3,730) 29,945
46 3,730 (3,730) (68,211)
36
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 16.
SUPPLEMENTARY INFORMATION – (continued) d) Interim statement of cash flows – continued
2018 Insurance operations
Shareholders’ operations
2017 Total
Insurance operations
Shareholders’ operations
Total
SR ‘000 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of long term / fixed income deposits Purchases of investments Proceeds from sale of investments Purchase of property and equipment Net cash flows used in investing activities Net change in cash and cash equivalents Cash and cash equivalents, beginning of the period Cash and cash equivalents, end of the period NON-CASH INFORMATION Change in fair value of available - for - sale investments
100,000 (27) 99,973
(100,000) (100,000) 781 100,781 (27) (99,219) 754
80,000 (60,000) 41,392 (280) 61,112
40,000 120,000 (70,000) (130,000) 3,318 44,710 (280) (26,682) 34,430
49,549 43,953 93,502
(92,315) 94,843 2,528
(42,766) 138,796 96,030
(37,044) 61,736 24,692
3,263 1,268 4,531
(33,781) 63,004 29,223
(64)
534
470
(21)
942
921
17. AMALGAMATION OF SHAREHOLDERS AND INSURANCE OPERATIONS Certain of the comparative figures have been reclassified and regrouped to conform to the in the current period presentation. These changes as summarized below, were mainly to conform with the SAMA requirements:
As discussed in note 2 to these interim condensed financial statements, previously interim statement of financial position, statement of income, and cash flows were presented separately for insurance operations and shareholders operations which are combined together to present one Company level interim statement of financial position, statement of income and statement of cash flows. The amounts “due to / from” shareholders and insurance operations which previously reported separately in the respective statement of financial position, are now eliminated (refer note 16 (a)). Share of insurance operations surplus split in the ratio of 90/10 between shareholders and insurance operations and presented separately is now presented as an expense in interim statement of income (refer note 16 (b)).
18. COMPARATIVE FIGURES Certain prior period figures have been reclassified to conform to current period presentation. 19. APPROVAL OF THE INTERIM CONDENSED FINANCIAL STATEMENTS The interim condensed financial statements have been approved by the Board of Directors, on 22 Sha’ban 1439H, corresponding to 08 May 2018.
37
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) INTERIM CONDENSED FINANCIAL STATEMENTS For the three-month period ended 31 March 2018 INDEX
PAGE
Independent Auditors’ Review Report
1
Interim Statement of Financial Position
3–4
Interim Statement of Income
5–6
Interim Statement of Comprehensive Income
7
Interim Statement of Changes in Shareholders’ Equity
8
Interim Statement of Insurance Operations’ Cash Flows
9
Notes to the Interim Condensed Financial Statements
10 – 37
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 1.
GENERAL
United Cooperative Assurance (“the Company”) is a Saudi Joint Stock Company registered in the Kingdom of Saudi Arabia under Commercial Registration No. 4030179955 dated 6 Jamad-al-Thani 1429H, corresponding to 6 June 2008. Registered Office address of the Company is Al-Mukmal Centre (1st and 4th floor) Prince Saud Al Faisal Street, Khalediya District, P. O. Box 5019, Jeddah 21422, Kingdom of Saudi Arabia. The activities of the Company are to transact cooperative insurance and reinsurance operations and related activities in the Kingdom of Saudi Arabia. On 29 Rabi Al Thani 1429H (5 May 2008), the Company received a license from the Saudi Arabian Monetary Agency (“SAMA”) to engage in insurance and reinsurance in Saudi Arabia. The Company started the operations on 1 January 2009. The Company received the approval letters from the Saudi Arabian Monetary Authority and Ministry of Commerce and Investment regarding the amendment of the Company’s by-laws to be in accordance with the new companies’ regulations. The Company’s extraordinary general assembly was held on 10 August 2017 corresponding to 18 Thul Qeadah 1438H and accordingly the new by-laws was approved. 2.
BASIS OF PREPARATION a.
Basis of presentation
The interim condensed financial information of the Company has been prepared in accordance with ‘International Accounting Standard 34 - Interim Financial Reporting ("IAS 34") 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 the SAMA Circular no. 381000074519 dated 11 April 2017 and subsequent amendments through certain clarifications relating to the accounting for zakat and income tax (“SAMA Circular”), the zakat and income tax are to be accrued on a quarterly basis through shareholders equity under retained earnings. The interim condensed financial information is prepared under the going concern basis and the historical cost convention, except for the measurement of investments (excluding held-to-maturity) at their fair value. The Company’s interim condensed statement of financial position is presented in order of liquidity. Except for property and equipment, statutory deposit, End-of-service indemnities, outstanding claims, claims incurred but not reported, all other assets and liabilities are of short-term nature, unless, stated otherwise. 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 information accordingly. Assets, liabilities, revenues and expenses clearly attributable to either activity are recorded in the respective accounts. Similarly, in the past, the Company’s interim condensed and annual financial statements presented separately the statements of financial position, income, comprehensive income and cash flows for the insurance operations and shareholders operations. The basis of allocation of expenses from joint operations is determined and approved by the management and the Board of Directors.
10
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 2.
BASIS OF PREPARATION – (continued) b. Basis of presentation – (continued)
The interim condensed statement of financial position, statements of income and statement of comprehensive income and cash flows of the insurance operations and shareholders operations which are presented on pages 31 to 37 of the financial statements have been provided as supplementary financial information and to comply with the requirements of the guidelines issued by SAMA implementing regulations. SAMA implementing regulations requires the clear segregation of the assets, liabilities, income and expenses of the insurance operations and the shareholders operations. Accordingly, the interim condensed statements of financial position, statements of income, comprehensive income and 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 IFRS, the balances and transactions of the insurance operations are amalgamated and combined with those of the shareholders’ operations. Interoperation balances, transactions and unrealized gains or losses, if any, 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. The inclusion of separate information of the insurance operations with the financial information of the Company in the interim condensed statements of financial position, statement of income, statement of comprehensive income, statement of cash flows as well as certain relevant notes to the financial statements represents additional supplementary information required as required by the implementing regulations. The interim condensed financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the annual financial statements as of and for the year ended 31 December 2017. The interim condensed financial statements may not be considered indicative of the expected results for the full year. These interim condensed financial statements are expressed in Saudi Arabian Riyals (SAR) and are rounded off to the nearest thousands. c.
Judgment and estimates
The preparation of interim condensed financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these interim condensed financial statements, the significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty including the risk management policies were the same as those that applied to the annual financial statements as at and for the year ended 31 December 2017.
11
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 2.
BASIS OF PREPARATION – (continued) d. Seasonality of operations
There are no seasonal changes that may affect insurance operations of the Company. 3.
SIGNIFICANT ACCOUNTING POLICIES
The accounting policies adopted by the Company for the preparation of these interim condensed financial statements are in accordance with International Financial Reporting Standards (IFRS) as endorsed in the Kingdom of Saudi Arabia and are consistent with those used for the preparation of the annual financial statements for the year ended 31 December 2017 and new amended IFRS and International Financial Reporting Interpretations Committee Interpretations (IFRIC) as mentioned in note 3(a) which had no impact on the financial position or financial performance of the Company. Certain comparative amounts have been reclassified / regrouped to conform with the current period’s presentation. This did not have any impact on interim condensed statement of changes in shareholders’ equity for the period. a.
New IFRS, International Financial Reporting and Interpretations Committee’s interpretations (IFRIC) and amendments thereof, adopted by the Company
The Company has adopted the following new standards, amendments and revisions to existing standards, which were issued by the International Accounting Standards Board (IASB): Standard/ Amendments IFRS 2 IAS 40 IFRIC 22 IFRS 15 IFRS 1 and IAS 28
Description Amendments to IFRS 2 Classification and Measurement of share-based Payment transactions. Amendments to IAS 40 Transfers of investment property Foreign Currency Transactions and Advance consideration Revenue from Contracts with Customers (refer below) Annual Improvements 2016 to IFRS 2014- 2016 cycle.
IFRS 15 – Revenue from Contracts with Customers IFRS 15 outlines a single comprehensive model of accounting for revenue arising from contracts with customers and supersedes current revenue guidance, which is found currently across several Standards and Interpretations within IFRSs. However, IFRS 15 does not apply to “revenue from insurance contracts”. However, entities will need to apply IFRS 15 to non-insurance contracts (or components of insurance contracts). Therefore, insurance entities will need to carefully evaluate the scope of this standard. IFRS 15 established a new five-step model that will apply to revenue arising from contracts with customers. Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring of goods or services to a customer. Though there are changes in accounting policy, however, management assessed and concluded that there is no material impact on the amounts reported at transition to IFRS 15 on 1 January 2018. Further, the adoption of the amended standards and interpretations applicable to the Company did not have any significant impact on these interim condensed financial statements.
12
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 3.
SIGNIFICANT ACCOUNTING POLICIES – (continued) b. 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 are effective. Standard/ Interpretation IFRS 9 IFRS 16 IFRIC 23 IFRS 17
Description Financial Instruments Leases Uncertainty over Income Tax Treatments Insurance Contracts (note below)
Effective from periods beginning on or after the following date Refer below 1 January 2019 1 January 2019 1 January 2021
IFRS 9 and IFRS 17 In July 2014, the IASB published IFRS 9 Financial Instruments which will replace IAS 39 Financial Instruments: Recognition and Measurement. The standard incorporates new classification and measurements requirements for financial assets, the introduction of an expected credit loss (ECL) impairment model which will replace the incurred loss model of IAS 39, and new hedge accounting requirements. Under IFRS 9:
All financial assets will be measured at either amortised cost or fair value. The basis of classification will depend on the business model and the contractual cash flow characteristics of the financial assets. The standard retains most of IAS 39’s requirements for financial liabilities except for those designated at fair value through profit or loss whereby that part of the fair value changes attributable to own credit is to be recognised in other comprehensive income instead of the statement of income. IFRS 9 requires entities to record an allowance for ECLs for all loans and other debt financial assets not held at fair value through statement of income as well we finance lease receivables, together with loan commitments and financial guarantee contracts. The allowance is based on the ECLs associated with the probability of default in the next twelve months unless there has been a significant increase in credit risk since origination. Under IFRS 9, credit losses are recognised earlier than under IAS 39. The hedge accounting requirements are more closely aligned with risk management practices and follow a more principle based approach.
In September 2016, the IASB published amendments to IFRS 4 Insurance Contracts that address the accounting consequences of the application of IFRS 9 to insurers prior to the publication of the forthcoming accounting standard for insurance contracts. The amendments introduce two options for insurers: the deferral approach and the overlay approach. The deferral approach provides an entity, if eligible, with a temporary exemption from applying IFRS 9 until the earlier of the effective date of a new insurance contract standard or 2021. The overlay approach allows an entity to remove from profit or loss the effects of some of the accounting mismatches that may occur before the new insurance contracts standard is applied. Under the temporary exemption as introduced by amendments to IFRS 4, the reporting entities whose activities predominantly relate to “insurance” can defer the implementation of IFRS 9. The Company having assessed the implications and has concluded to defer the implementation of IFRS 9 until a later date which will not be later than 1 January 2021. The impact of the adoption of IFRS 9 on the Company’s interim condensed financial statements will, to a large extent, have to take into account the interaction with the forthcoming insurance contracts standard. As such, it is not possible to fully assess the effect of the adoption of IFRS 9.
13
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 4.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents included in the statement of cash flows comprise the following:
Insurance operations Bank balances and cash Shareholders’ operations Bank balances and cash 5.
31 March 2018 (Unaudited) SAR’000
31 December 2017 (Audited) SAR’000
93,502
43,953
2,528
94,843
31 March 2018 (Unaudited) SAR’000
31 December 2017 (Audited) SAR’000
119,689 38,718 180,982 22,181 361,570 (83,301) 278,269
83,680 42,669 170,495 32,466 329,310 (75,689) 253,621
PREMIUMS AND REINSURERS’ RECEIVABLE – NET
Receivables comprise amounts due from the following:
Policyholders Brokers and agents Related parties (note 11) Receivables from reinsurers’ Provision for doubtful receivables Premiums and reinsurers’ receivable – net
Movement in the allowance for doubtful premiums receivable during the period was as follows:
Balance at beginning of the period / year Provision made during the period / year Balance at end of the period / year
14
31 March 2018 (Unaudited) SAR’000
31 December 2017 (Audited) SAR’000
75,689 7,612 83,301
49,761 25,928 75,689
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 6.
INVESTMENTS
Investment are classified as follows:
Insurance operations
- Available for sale (note 6.1) - Held to maturity (note 6.3) Total 6.1
31 March 2018 (Unaudited)
31 December 2017 (Audited)
SAR’000
SAR’000
4,198 156,111 160,309
104,262 156,060 260,322
31 March 2018 (Unaudited)
31 December 2017 (Audited)
SAR’000
SAR’000
Available-for-sale investments
Movement in available-for-sale investment balance is as follows:
Insurance’ operations
Opening balance Purchases during the period / year Disposals during the period / year Changes in fair value of investments Closing balance
Insurance’ operations
Investment in bonds Investment in sukuk Investment in equity shares Investment in mutual funds
104,262 (100,000) (64) 4,198
109,469 85,000 (90,153) (54) 104,262
31 March 2018 (Unaudited)
31 December 2017 (Audited)
SAR’000
SAR’000
3,736 243 219 4,198
15
3,815 100,000 229 218 104,262
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 6.
INVESTMENTS – (continued)
Shareholders’ operations
- Available for sale (note 6.2) - Held to maturity (note 6.3) Total 6.2
31 March 2018 (Unaudited)
31 December 2017 (Audited)
SAR’000
SAR’000
136,377 98,178 234,555
36,624 98,131 134,755
31 March 2018 (Unaudited)
31 December 2017 (Audited)
SAR’000
SAR’000
Available-for-sale investments
Movement in available-for-sale investment balance is as follows:
Shareholders’ operations
Opening balance Purchases during the period / year Disposals during the period / year Changes in fair value of investments Closing balance
Investment in equity shares Investment in bonds Investment in sukuk Investment in mutual funds
36,624 100,000 (2,140) 1,893 136,377
35,355 70,000 (69,631) 900 36,624
31 March 2018 (Unaudited)
31 December 2017 (Audited)
SAR’000
SAR’000
2,478 13,301 100,000 20,598 136,377
16
3,335 13,602 19,687 36,624
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 6.
INVESTMENTS – (continued)
6.3
Held to maturity investments
Movement in held to maturity investment balance is as follows: Insurance operations Opening balance Purchases Disposals Amortization of held to maturity investments Closing balance
Shareholders’ operations Opening balance Purchases Disposals Amortization of held to maturity investments Closing balance 7.
31 March 2018 (Unaudited)
31 December 2017 (Audited)
SAR’000
SAR’000
156,060 51 156,111
119,855 37,405 (1,393) 193 156,060
31 March 2018 (Unaudited)
31 December 2017 (Audited)
SAR’000
SAR’000
98,131 47 98,178
96,198 2,063 (318) 188 98,131
31 March 2018 (Unaudited)
31 December 2017 (Audited)
SAR’000
SAR’000
TECHNICAL RESERVES 7.1 Net outstanding claims and reserves
Net outstanding claims and reserves comprise of the following:
Outstanding claims Claims incurred but not reported Premium deficiency reserve Other technical reserves Less: - Reinsurers’ share of outstanding claims - Reinsurers’ share of claims Incurred but not reported Net outstanding claims and reserves
17
157,428 250,401 407,829 2,706 6,576 417,111
122,927 281,638 404,565 3,566 6,925 415,056
(126,464) (180,601) (307,065) 110,046
(89,384) (202,521) (291,905) 123,151
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 7.
TECHNICAL RESERVES – (continued) 7.2 Movement in unearned premiums
Movement in unearned premiums comprise of the following:
Three-month ended 31 March 2018 (Unaudited) Gross Reinsurance Net SAR’000
Balance as at the beginning of the period Premium written during the period Premium earned during the period
270,374 104,015 (115,583) 258,806
Balance as at the end of the period
(204,792) (76,233) 83,078 (197,947)
65,582 27,782 (32,505) 60,859
Year ended 31 December 2017 (Audited) Gross Reinsurance Net SAR’000
Balance as at the beginning of the year Premium written during the year Premium earned during the year
294,762 580,565 (604,953) 270,374
Balance as at the end of the year 8.
(184,906) (432,272) 412,386 (204,792)
109,856 148,293 (192,567) 65,582
COMMITMENTS AND CONTINGENCIES a.
The Company’s commitments and contingencies are as follows:
Letters of guarantee issued in favour of GAZT Total
31 March 2018 (Unaudited)
31 December 2017 (Audited)
SAR’000
SAR’000
22,500 22,500
22,500 22,500
b.
There were no capital commitments outstanding as at 31 March 2018 (31 December 2017: Nil).
c.
As at 31 March 2018, the Company has a letter of guarantee amounting to SR 22.5 million (31 December 2017: SR 22.5 million) in favour of General Authority of Zakat and Tax (GAZT) (see note 12). A margin of SR 22.5 million (31 December 2017: SR 22.5 million) being deposited with a bank for this purpose and is included in prepayments and other assets in the statement of financial position.
18
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 9.
FAIR VALUES OF FINANCIAL INSTRUMENTS
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction takes place either: - in the accessible principal market for the asset or liability, or - in the absence of a principal market, in the most advantages accessible market for the asset or liability The fair values of on-balance sheet financial instruments are not significantly different from their carrying amounts included in the interim condensed (consolidated) financial information. Determination of fair value and fair value hierarchy The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments: Level 1: quoted prices in active markets for the same or identical instrument that an entity can access at the measurement date; Level 2: quoted prices in active markets for similar assets and liabilities or other valuation techniques for which all significant inputs are based on observable market data; and Level 3: valuation techniques for which any significant input is not based on observable market data. a.
Carrying amounts and fair value
The following table shows the carrying amount and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy for financial instruments measured at fair value. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation to fair value.
19
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 9.
FAIR VALUES OF FINANCIAL INSTRUMENTS – (continued) a. Carrying amounts and fair value
31 March 2018 (Unaudited)
Fair value
Financial assets measured at fair value Equity securities - Insurance operations - Shareholders’ operations Financial assets not measured at fair value Debt securities Insurance operations - Insurance operations - Shareholders’ operations
Level 1 SR’ 000
Level 2 SR’ 000
Level 3 SR’ 000
Total SR’ 000
243 556
219 20,598
1,923
462 23,077
(96,264) 113,301 17,836
100,000 120,817
1,923
3,736 113,301 140,576
31 December 2017 (Audited)
Fair value
Financial assets measured at fair value Equity securities - Insurance operations - Shareholders’ operations Financial assets not measured at fair value Debt securities Insurance operations - Insurance operations - Shareholders’ operations
20
Level 1 SR’ 000
Level 2 SR’ 000
Level 3 SR’ 000
Total SR’ 000
229 1,412
218 19,687
1,923
447 23,022
3,815 13,602 19,058
100,000 119,905
1,923
103,815 13,602 140,886
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 10. OPERATING SEGMENTS Operating segments are identified on the basis of internal reports about components of the Company that are regularly reviewed by the Company’s Board of Directors in their function as chief operating decision maker in order to allocate resources to the segments and to assess its performance. Transactions between the operating segments are on normal commercial terms and conditions. The revenue from external parties reported to the Board is measured in a manner consistent with that in the income statement. Segment assets and liabilities comprise operating assets and liabilities. There have been no changes to the basis of segmentation or the measurement basis for the segment profit or loss since 31 December 2017. Segment assets do not include cash and cash equivalents, term deposits, net premiums and reinsurers’ receivable, net, prepayments and other receivables, investments, furniture, fittings and office equipment. Accordingly, they are included in unallocated assets. Segment liabilities do not include policyholders’ claims, reinsurance payables, accruals and other payables and employees’ end of service indemnities. Accordingly, they are included in unallocated liabilities. These unallocated assets and liabilities are not reported to chief operating decision maker under related segments and are monitored on a centralized basis. The segment information provided to the Company’s Board of Directors for the reportable segments for the Company’s total assets and liabilities at 31 March 2018 and 31 December 2017, its total revenues, expenses, and net income for the three-month period then ended, are as follows:
21
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 10. OPERATING SEGMENTS – (continued) As at 31 March 2018 (Unaudited) Insurance operations SR’ 000
Medical Assets Reinsurers’ share of unearned premiums Reinsurers’ share of outstanding claims Reinsurers’ share of claims Incurred but not reported Deferred policy acquisition costs Unallocated assets
Motor
Energy
Engineering
Others
Shareholders’ operations
Total
29,803 15,028 6,269 2,237
30,597 6,183 25,313 1,856
18,250 9,619 21,033 -
88,378 40,966 77,280 3,125
30,919 54,668 50,706 1,191
197,947 126,464 180,601 8,409 591,910 1,105,331
393,920 393,920
197,947 126,464 180,601 8,409 985,830 1,499,251
47,901 17,988 10,402 -
62,845 5,853 26,104 81,764 3,402
18,570 9,738 21,449 263
92,842 15,192 41,961 81,329 2,264 1,023
36,648 6,393 61,637 55,457 442 1,888
258,806 27,438 157,428 250,401 2,706 6,576 353,770 1,057,125
442,126 442,126
258,806 27,438 157,428 250,401 2,706 6,576 795,896 1,499,251
Total assets Liabilities Unearned premiums Unearned reinsurance commission Outstanding claims Claims incurred but not reported Premium deficiency reserve Other technical reserves Unallocated liabilities
Total Insurance operations
Total liabilities
22
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 10. OPERATING SEGMENTS – (continued) As at 31 December 2017 (Audited) Insurance operations SR’ 000
Medical Assets Reinsurers’ share of unearned premiums Reinsurers’ share of outstanding claims Reinsurers’ share of claims Incurred but not reported Deferred policy acquisition costs Unallocated assets
Motor
Energy
Engineering
Others
Shareholders’ operations
Total
28,142 9,494 2,547 3,040
41,591 5,936 22,929 2,642
6,633 29,066 -
119,454 41,468 99,633 3,815
15,605 25,853 48,346 804
204,792 89,384 202,521 10,301 613,209 1,120,207
384,217 384,217
204,792 89,384 202,521 10,301 997,426 1,504,424
42,740 12,507 6,834 3,069 -
85,196 7,841 27,893 86,622 3,604
6,716 29,611 330
122,873 20,452 42,489 104,812 418 1,261
19,565 3,167 33,322 53,759 79 1,730
270,374 31,460 122,927 281,638 3,566 6,925 340,373 1,057,263
447,161 447,161
270,374 31,460 122,927 281,638 3,566 6,925 787,534 1,504,424
Total assets Liabilities Unearned premiums Unearned reinsurance commission Outstanding claims Claims incurred but not reported Premium deficiency reserve Other technical reserves Unallocated liabilities
Total Insurance operations
Total liabilities
23
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 10. OPERATING SEGMENTS – (continued)
For the three-month period ended 31 March 2018 (Unaudited)
REVENUES Gross premiums written - Direct - Reinsurance Reinsurance premiums ceded - Local - Foreign Excess of loss expenses - Local - Foreign
Net premiums written Changes in unearned premiums, net Net premiums earned Reinsurance commissions Other underwriting income TOTAL REVENUES UNDERWRITING COSTS AND EXPENSES Gross claims paid Reinsurers’ share of claims paid Net claims paid Changes in outstanding claims, net Changes in claims incurred but not reported, net Net claims incurred Premium deficiency reserve Other technical reserves Policy acquisition costs Other underwriting expenses TOTAL UNDERWRITING COSTS AND EXPENSES NET UNDERWRITING (LOSS) / INCOME
Medical SR'000
Motor SR'000
Energy SR'000
Engineering SR'000
Others SR'000
Total SR'000
25,102 25,102
21,089 21,089
30,596 30,596
(8,652) (8,652)
35,880 35,880
104,015 104,015
(14,219) (14,219)
(1,146) (8,994) (10,140)
(30,070) (30,070)
(382) 9,735 9,353
(1,099) (30,058) (31,157)
(2,627) (73,606) (76,233)
(154) (154)
(26) (179) (205)
-
-
(42) (378) (420)
(68) (711) (779)
10,729 (3,500) 7,229 7,229
10,744 11,357 22,101 4,015 26,116
526 (320) 206 481 687
701 (1,044) (343) 4,251 3,908
4,303 (1,769) 2,534 4,331 6,865
27,003 4,724 31,727 13,078 44,805
16,186 (12,045) 4,141 (53)
36,343 (14,312) 22,031 (2,036)
36
764 (630) 134 (26)
821 (628) 193 (500)
54,114 (27,615) 26,499 (2,579)
(154) 3,934 (3,069) 930 452
(7,242) 12,753 (204) 1,292 211
(129) (93) (67) 153
(1,130) (1,022) 1,846 (237) 709 94
(662) (969) 363 159 747 90
(9,317) 14,603 (860) (349) 3,678 1,000
2,247
14,052
(7)
1,390
390
18,072
4,982
12,064
694
2,518
6,475
26,733
24
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 10. OPERATING SEGMENTS – (continued) For the three-month period ended 31 March 2018 (Unaudited) Medical Motor Energy Engineering Others SR’ 000 SR’ 000 SR’ 000 SR’ 000 SR’ 000 OTHER OPERATING (EXPENSES) / INCOME General and administrative expenses Allowance for doubtful debts Board remuneration Dividend income Amortization of held to maturity investments Commission income on investments Dividend and realized gain / (loss) on investments Other income TOTAL OTHER OPERATING EXPENSES
Total SR’ 000
(28,257) (7,612) (373) 6 98 2,940 (1,359) 216 (34,341) (7,608)
NET LOSS FOR THE PERIOD Net income for the period attributable to insurance operations Net loss for the period attributable to the shareholders’
(7,608)
25
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 10. OPERATING SEGMENTS – (continued)
For the three-month period ended 31 March 2017 (Unaudited)
REVENUES Gross premiums written - Direct - Reinsurance Reinsurance premiums ceded - Local - Foreign Excess of loss expenses - Local - Foreign
Net premiums written Changes in unearned premiums, net Net premiums earned Reinsurance commissions Other underwriting income TOTAL REVENUES UNDERWRITING COSTS AND EXPENSES Gross claims paid Reinsurers’ share of claims paid Net claims paid Changes in outstanding claims, net Changes in claims incurred but not reported, net Net claims incurred Policy acquisition costs Other underwriting expenses TOTAL UNDERWRITING COSTS AND EXPENSES NET UNDERWRITING INCOME
Medical SR'000
Motor SR'000
Energy SR'000
Engineering SR'000
Others SR'000
Total SR'000
18,947 18,947
5,654 5,654
25,874 25,874
18,178 (38) 18,140
40,298 40,298
108,951 (38) 108,913
(8,858) (8,858)
(2,733) (2,733)
(25,429) (25,429)
(2,327) (13,252) (15,579)
(2,600) (32,) (35,205)
(4,927) (82,877) (87,804)
-
(33) (231) (264)
-
-
(33) (410) (443)
(66) (641) (707)
10,089 299 10,388 10,388
2,657 42,859 45,516 12,589 58,105
445 (342) 103 97 200
2,561 (826) 1,735 3,710 5,445
4,650 (4,025) 625 3,726 4,351
20,402 37,965 58,367 20,122 78,489
11,117 (1,296) 9,821 1,923
74,012 (28,481) 45,531 (14,668)
-
26,481 (25,968) 513 (397)
1,911 (1,502) 409 (251)
113,521 (57,247) 56,274 (13,393)
(6,587) 5,157 648 258
(31,896) (1,033) 3,054 388
129
116 621 71
13 171 938 105
(38,470) 4,411 5,261 951
6,063
2,409
129
808
1,214
10,623
4,325
55,696
71
4,637
3,137
67,866
26
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 10. OPERATING SEGMENTS – (continued) For the three-month period ended 31 March 2017 (Unaudited) Medical Motor Energy Engineering Others SR’ 000 SR’ 000 SR’ 000 SR’ 000 SR’ 000 OTHER OPERATING (EXPENSES) / INCOME General and administrative expenses Allowance for doubtful debts Board remuneration Amortization of held to maturity investments Commission income on deposits Dividend and realized loss on investments Other income TOTAL OTHER OPERATING EXPENSES
Total SR’ 000
(26,755) (5,347) (275) 94 2,977 (1,649) 1,029 (29,926) 37,940
NET INCOME FOR THE PERIOD Net income for the period attributable to insurance operations Net loss for the period attributable to the shareholders’
(3,720) 34,220
27
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 11. 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 period and the related balances:
Nature of transactions
Transactions for the period Balance receivable / (payable) ended as at 31 March 31 March 31 March 31 December 2018 2017 2018 2017 (Unaudited) (Unaudited) (Unaudited) (Audited) SAR’000
Major shareholders Haji Hussien Ali Reza Saudi Bin Laden – Group
CPC
UCA Lebanon
Premium written Payments received and claims paid Premium written Payments received and claims paid Premium written Payments received and claims paid
3,373
2,986
(940) 9,842
(1,517) 35,503
14,090
11,657 -
(5,121) 3,392
(32,768) 5,512
142,760
138,039
(31)
(3,008)
24,108
20,747
(203)
-
-
203
-
-
(270)
(270)
46
45
35
58 -
821
775
(100) 10
(1,442) 1,618 -
532
597
2
(6) 2
21
11
(41)
-
2
41
Payment received
Associates Najm for insurance services
-
Entities controlled, jointly controlled or significantly influenced by related parties
United Commercial Agencies UCA Workshop
Law Office of Hassan Mahassni
Middle East Group
Premium written Payment made on behalf of company Premium written Payments received and claims paid Claims settled Payment made Premium written Payments received and claims paid Premium written Payments received and claims paid
28
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 11. RELATED PARTY TRANSACTIONS AND BALANCES – (continued)
The compensation of key management personnel during the period is as follows: 31 March 2018 31 March 2017 (Unaudited) (Unaudited) SAR’000 1,293 1,182 46 31 1,339 1,213
Salaries and other allowances End of service indemnities
Remuneration to those charged with governance
373
275
12. ZAKAT AND INCOME TAX a.
Charge for the year
The differences between the financial and the Zakatable results are mainly due to certain adjustments in accordance with the relevant fiscal regulations.
Movements in provision during the year
31 March 31 December 2018 2017 (Unaudited) (Audited) SAR’000 23,708 20,681 1,500 6,000 (2,973) 25,208 23,708
Balance at the beginning of the year Charge for the year Paid during the year Balance at the end of the year
The differences between the financial and the zakatable results are mainly due to certain adjustments in accordance with the relevant fiscal regulations. 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 GAZT could be different from the declarations filed by the Company. b. Status of zakat assessments The Company has filed its zakat declarations for the years ended 31 December 2009 to 2016 and obtained restricted zakat certificates until 31 December 2015 and awaiting for zakat response for the year ended 31 December 2016. During 2013, the Company received the final zakat assessments for the years 2009 to 2011 from the General Authority of Zakat and Income Tax (GAZT) claiming zakat liability amounting to SR 17.69 million. The management believes that the existing provision for zakat is sufficient. The Management has filed an objection against the above assessments and is confident of receiving a favourable ruling. However, during 2014, the Company has paid SR 14.288 million with respect to these assessments. GAZT has not yet raised assessments for the years from 2012 to 2016. The Zakat is applicable on 99% of the shareholders while Income Tax on 1% of the shareholders.
29
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 13. SHARE CAPITAL The authorized and issued share capital of the Company was SR 490 million divided into 49 million ordinary shares of SR 10 each. The Board of Directors at its meeting on 13 Ramadan 1438H corresponding to 08 June 2017 has recommended to reduce the Company's share capital from SR 490,000,000 to SR 400,000,000 divided into 40,000,000 shares. The reduction will be through reduction of 1 share for every 5.44 shares currently held by the shareholder. The purpose of capital reduction is to restructure the capital position of the Company in line with the Companies Law. There will be no impact of capital reduction on the Company’s financial obligations. The Company's capital reduction is conditional upon meeting certain legal requirements, approval from regulators and from the shareholders in extraordinary general meeting. 14. CAPITAL MANAGEMENT Objectives are set by the Company to maintain healthy capital ratios in order to support its business objectives and maximize shareholders’ value. The Company manages its capital requirements by assessing shortfalls between reported and required capital levels on a regular basis. Adjustments to current capital levels are made in light of changes in market conditions and risk characteristics of the Company’s activities. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders or issue shares. In the opinion of the Board of Directors, the Company has fully complied with the externally imposed capital requirements during the reported financial period. 15. (LOSS) / EARNINGS PER SHARE (Loss) / earnings per share for the period has been calculated by dividing the net (loss) / income for the period by the weighted average number of issued and outstanding shares for the period.
30
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 16. SUPPLEMENTARY INFORMATION a) Interim statement of financial position
31 March 2018 (Unaudited) Insurance operations
Shareholders’ operations
31 December 2017 (Audited) Total
Insurance operations
Shareholders’ operations
Total
SAR ’000 ASSETS Cash and cash equivalents Premiums and reinsurers’ receivable – net Reinsurers’ share of unearned premiums Reinsurers’ share of outstanding claims Reinsurers’ share of claims Incurred but not reported Deferred policy acquisition costs Investments Due from insurance operations Prepaid expenses and other assets Property and equipment Goodwill Statutory deposit Accrued income on statutory deposit
93,502 278,269 197,947 126,464
2,528 -
96,030 278,269 197,947 126,464
43,953 253,621 204,792 89,384
94,843 -
138,796 253,621 204,792 89,384
180,601 8,409 160,309 57,472 2,358 1,105,331
234,555 48,206 3,296 78,400 73,500 1,641 442,126
180,601 8,409 394,864 48,206 60,768 2,358 78,400 73,500 1,641 1,547,457
202,521 10,301 260,322 52,646 2,667 1,120,207
134,755 62,944 1,271 78,400 73,500 1,448 447,161
202,521 10,301 395,077 62,944 53,917 2,667 78,400 73,500 1,448 1,567,368
-
(48,206)
(48,206)
-
(62,944)
(62,944)
1,105,331
393,920
1,499,251
1,120,207
384,217
1,504,424
Less: Inter-operations eliminations TOTAL ASSETS
31
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 16.
SUPPLEMENTARY INFORMATION – (continued) a) Interim statement of financial position – continued 31 March 2018 (Unaudited) Insurance operations
Shareholders’ operations
31 December 2017 (Audited) Total
Insurance operations
Shareholders’ operations
Total
SAR ’000 LIABILITIES Policyholders claims payable Accrued and other liabilities Reinsurers' balances payable Unearned premiums Unearned reinsurance commission Outstanding claims Claims incurred but not reported Premium deficiency reserve Other technical reserves Due to shareholders’ operations Due to a related party End-of-service indemnities Insurance operations’ surplus Fair value loss reserve on investments Zakat and income tax Accrued commission income payable to SAMA Less: Inter-operations eliminations TOTAL LIABILITIES
5,064 96,091 196,610 258,806 27,438 157,428 250,401 2,706 6,576 48,206 20,439 36,037 (471) 1,105,331
1,104 270 25,208 1,641 28,223
5,064 97,195 196,610 258,806 27,438 157,428 250,401 2,706 6,576 48,206 270 20,439 36,037 (471) 25,208 1,641 1,133,554
9,177 96,745 178,145 270,374 31,460 122,927 281,638 3,566 6,925 62,944 20,676 36,037 (407) 1,120,207
617 270 23,708 1,448 26,043
9,177 97,362 178,145 270,374 31,460 122,927 281,638 3,566 6,925 62,944 270 20,676 36,037 (407) 23,708 1,448 1,146,250
(48,206)
-
(48,206)
(62,944)
-
(62,944)
1,057,125
28,223
1,085,348
1,057,263
26,043
1,083,306
-
490,000 31,944 (106,620) (1,421) 413,903
490,000 31,944 (106,620) (1,421) 413,903
-
490,000 31,944 (97,512) (3,314) 421,118
490,000 31,944 (97,512) (3,314) 421,118
1,057,125
442,126
1,499,251
1,057,263
447,161
1,504,424
SHAREHOLDERS’ EQUITY Share capital Statutory reserve Accumulated losses Fair value reserve loss on investments TOTAL EQUITY TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
22,500
COMMITMENTS AND CONTINGENCIES
32
22,500
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 16.
SUPPLEMENTARY INFORMATION – (continued) b) Interim statement of income 2018 Insurance operations
2017
Shareholders’ operations
Total
Insurance operations
Shareholders’ operations
Total
SAR ’000 REVENUES Gross premiums written - Direct - Reinsurance
Reinsurance premiums ceded - Local - Foreign Excess of loss expenses - Local - Foreign
Net premiums written Changes in unearned premiums, net Net premiums earned Reinsurance commissions TOTAL REVENUES UNDERWRITING COSTS AND EXPENSES Gross claims paid Reinsurers’ share of claims paid Net claims Changes in outstanding claims and other technical reserves, net Changes in claims incurred but not reported, net Net claims incurred Additional premium reserves Other technical reserves Policy acquisition costs Other underwriting expenses TOTAL UNDERWRITING COSTS AND EXPENSES NET UNDERWRITING INCOME
104,015 104,015
-
104,015 104,015
108,951 (38) 108,913
-
108,951 (38) 108913
(2,627) (73,606) (76,233)
-
(2,627) (73,606) (76,233)
(4,927) (82,877) (87,804)
-
(4,927) (82,877) (87,804)
(68) (711) (779)
-
(66) (641) (707)
-
-
(68) (711) (779)
-
(66) (641) (707)
27,003 4,724 31,727 13,078 44,805
-
27,003 4,724 31,727 13,078 44,805
20,402 37,965 58,367 20,122 78,489
-
20,402 37,965 58,367 20,122 78,489
54,114 (27,615) 26,499
-
54,114 (27,615) 26,499
113,521 (57,247) 56,274
-
113,521 (57,247) 56,274
(2,579)
-
(2,579)
(13,393)
-
(13,393)
(9,317) 14,603 (860) (349) 3,678 1,000
-
(9,317) 14,603 (860) (349) 3,678 1,000
(38,470) 4,411 5,261 951
-
(38,470) 4,411 5,261 951
18,072
-
18,072
10,623
-
10,623
26,733
-
26,733
67,866
-
67,866
33
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 16.
SUPPLEMENTARY INFORMATION – (continued) b) Interim statement of income – continued 2018 Insurance operations
2017
Shareholders’ operations
Total
Insurance operations
Shareholders’ operations
Total
SAR ’000 OTHER OPERATING (EXPENSES) / INCOME Allowance for doubtful debts General and administrative expenses Board remuneration Dividend income Commission income on investments Amortization of held to maturity investments Dividend and realized gain / (loss) on investments Other income
(7,612) (27,729) 1,139
(528) (373) 6 1,801
(7,612) (28,257) (373) 6 2,940
(5,347) (26,521) 1,555
(234) (275) 1,422
(5,347) (26,755) (275) 2,977
51
47
98
47
47
94
216
(1,359) -
(1,359) 216
(1,433) 1,029
(216) -
(1,649) 1,029
(33,935)
(406)
(34,341)
(30,670)
744
(29,926)
(7,202)
(406)
(7,608)
37,196
744
37,940
7,202
406
7,608
(33,476)
(744)
(34,220)
-
-
-
3,720
-
3,720
Earnings / (loss) per share (Expressed in SAR per share) Weighted average number of ordinary shares outstanding (in thousands)
-
49,000
49,000
-
49,000
49,000
Basic and diluted loss per share for the period (SR)
-
(0.16)
(0.16)
-
0.70
0.70
TOTAL OTHER OPERATING (EXPENSES) / INCOME NET (DEFICIT) / SURPLUS FROM INSURANCE OPERATIONS Shareholders’ absorption of deficit / (Surplus transferred to Shareholders) NET RESULT FROM INSURANCE OPERATIONS AFTER ABSROPTION OF DEFICIT / TRANSFER OF SURPLUS TO SHAREHOLDERS
34
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 16.
SUPPLEMENTARY INFORMATION – (continued) c)
Interim statement of comprehensive income 2018 Insurance operations
2017
Shareholders’ operations
Total
Insurance operations
Shareholders’ operations
Total
SAR ’000 NET (LOSS) FOR THE PERIOD ATTRIBUTABLE TO SHAREHOLDERS
-
(7,608)
(7,608)
3,720
34,220
37,940
Other comprehensive (loss) / income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(64)
534
470
(21)
942
921
-
1,359 -
1,359 -
-
-
-
(64)
(5,715)
(5,779)
3,699
35,162
38,861
Items that will not be reclassified to consolidated statement of income in subsequent periods - Changes in the revaluation surplus relating to property and equipment or intangible assets -Changes in share based plan reserves -Actuarial gains / (losses) on defined benefit pension plans Items that are or may be reclassified to consolidated statement of income in subsequent periods Available for sale investments: - Net change in fair value - Net amounts transferred to statement of income Others (to be disclosed if necessary) TOTAL COMPREHENSIVE (LOSS) / INCOME FOR THE PERIOD
35
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 16.
SUPPLEMENTARY INFORMATION – (continued) d) Interim statement of cash flows
2018 Note
Insurance operations
2017
Shareholders’ operations
Total
Insurance operations
Shareholders’ operations
Total
SR ‘000 CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) / income for the period Adjustments for non-cash items: Depreciation of property and equipment Allowance for doubtful debts Realized loss on investments Amortization of held to maturity investments Commission (income) / expense Provision for end-of-service indemnities Changes in operating assets and liabilities: Premiums and reinsurers’ receivable Reinsurers’ share of unearned premiums Reinsurers’ share of outstanding claims Reinsurers’ share of claims Incurred but not reported Deferred policy acquisition costs Prepaid expenses and other assets Accrued commission on statutory deposit Policyholders and accounts payables Accrued and other liabilities Reinsurers' balances payable Unearned premiums Unearned reinsurance commission Outstanding claims Claims incurred but not reported Premium deficiency reserve Other technical reserves Accrued commission on statutory deposit payable to SAMA Due to shareholders operations Due from Insurance Operations Net cash flows used in operating activities
-
(7,608)
(7,608)
3,720
34,220
37,940
336 7,612 (51) (237) 7,660
1,359 (47) (6,296)
336 7,612 1,359 (98) (237) 1,364
396 5,347 (47) 894 10,310
(47) (46) 34,173
396 5,347 (94) (46) 894 44,437
(32,260) 6,845 (37,080)
-
(32,260) 6,845 (37,080)
(33,634) 4,152 13,123
-
(33,634) 4,152 13,123
21,920 1,892 (4,826) (4,113) (654) 18,465 (11,568) (4,022) 34,501 (31,237) (860) (349)
(2,025) (193) 487 -
21,920 1,892 (6,851) (193) (4,113) (167) 18,465 (11,568) (4,022) 34,501 (31,237) (860) (349)
(284) 2,534 (4,861) (2,765) 18,847 (561) (42,117) (1,928) (26,516) (38,186) -
(690) (46) 46 192 -
(284) 2,534 (5,551) (46) (2,719) 19,039 (561) (42,117) (1,928) (26,516) (38,186) -
(14,738) (50,424)
193 14,738 6,904
193 (14,738) 14,738 (43,520)
3,730 (98,156)
46 (3,730) 29,945
46 3,730 (3,730) (68,211)
36
UNITED COOPERATIVE ASSURANCE COMPANY (A Saudi Joint Stock Company) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (continued) FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018 16.
SUPPLEMENTARY INFORMATION – (continued) d) Interim statement of cash flows – continued
2018 Insurance operations
Shareholders’ operations
2017 Total
Insurance operations
Shareholders’ operations
Total
SR ‘000 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of long term / fixed income deposits Purchases of investments Proceeds from sale of investments Purchase of property and equipment Net cash flows used in investing activities Net change in cash and cash equivalents Cash and cash equivalents, beginning of the period Cash and cash equivalents, end of the period NON-CASH INFORMATION Change in fair value of available - for - sale investments
100,000 (27) 99,973
(100,000) (100,000) 781 100,781 (27) (99,219) 754
80,000 (60,000) 41,392 (280) 61,112
40,000 120,000 (70,000) (130,000) 3,318 44,710 (280) (26,682) 34,430
49,549 43,953 93,502
(92,315) 94,843 2,528
(42,766) 138,796 96,030
(37,044) 61,736 24,692
3,263 1,268 4,531
(33,781) 63,004 29,223
(64)
534
470
(21)
942
921
17. AMALGAMATION OF SHAREHOLDERS AND INSURANCE OPERATIONS Certain of the comparative figures have been reclassified and regrouped to conform to the in the current period presentation. These changes as summarized below, were mainly to conform with the SAMA requirements:
As discussed in note 2 to these interim condensed financial statements, previously interim statement of financial position, statement of income, and cash flows were presented separately for insurance operations and shareholders operations which are combined together to present one Company level interim statement of financial position, statement of income and statement of cash flows. The amounts “due to / from” shareholders and insurance operations which previously reported separately in the respective statement of financial position, are now eliminated (refer note 16 (a)). Share of insurance operations surplus split in the ratio of 90/10 between shareholders and insurance operations and presented separately is now presented as an expense in interim statement of income (refer note 16 (b)).
18. COMPARATIVE FIGURES Certain prior period figures have been reclassified to conform to current period presentation. 19. APPROVAL OF THE INTERIM CONDENSED FINANCIAL STATEMENTS The interim condensed financial statements have been approved by the Board of Directors, on 22 Sha’ban 1439H, corresponding to 08 May 2018.
37
