Alliance Insurance: Condensed Interim Financial Information - 31 March 2022

Transcription

1. ALLIANCE INSURANCE P .S.C. Review report and condensed interim financial information for the three months period ended 31 March 2022
2. ALLIANCE INSURANCE P .S.C. Contents Independent auditor’s review report Condensed statement of financial position Pages 1 2-3 Condensed statement of profit or loss (unaudited) 4 Condensed statement of comprehensive income (unaudited) 5 Condensed statement of changes in equity 6 Condensed statement of cash flows (unaudited) 7 Notes to the condensed interim financial information 8 - 25
3. Deloitte & Touche (M.E.) UAB Tower - Level 13 Al Buhairah Corniche P.O. Box 5470 Sharjah United Arab Emirates Tel: +971 (0) 6 517 9500 Fax:+971 (0) 6 517 9501 www.deloitte.com August 17th, 2016 INDEPENDENT AUDITOR’S REVIEW REPORT The Board of Directors Alliance Insurance P.S.C. Dubai United Arab Emirates Introduction We have reviewed the accompanying condensed statement of financial position of Alliance Insurance P.S.C. (the “Company”), as at 31 March 2022 and the related condensed statements of profit or loss, comprehensive income, changes in equity and cash flows for the three months period then ended and other explanatory notes. Management is responsible for the preparation and presentation of this condensed interim financial information in accordance with International Accounting Standard 34: “Interim Financial Reporting” as issued by International Accounting Standards Board (IASB). Our responsibility is to express a conclusion on these condensed interim financial information based on our review. Scope of Review We conducted our review in accordance with International Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity.” A review of condensed interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed interim financial information is not prepared, in all material respects, in accordance with International Accounting Standard 34: “Interim Financial Reporting”. Deloitte & Touche (M.E.) Signed by: Musa Ramahi Registration No. 872 12 May 2022 Sharjah, United Arab Emirates Akbar Ahmad (1141), Cynthia Corby (995), Georges Najem (809), Mohammad Jallad (1164), Mohammad Khamees Al Tah (717), Musa Ramahi (872), Mutasem M. Dajani (726), Obada Alkowatly (1056), Rama Padmanabha Acharya (701) and Samir Madbak (386) are registered practicing auditors with the UAE Ministry of Economy.
4. ALLIANCE INSURANCE P .S.C. 2 Condensed statement of financial position at 31 March 2022 Notes ASSETS Property and equipment Investment properties Investments at amortised cost Investments at fair value through other comprehensive income (FVOCI) Loans guaranteed by life insurance policies Reinsurance contract assets Deferred acquisition costs Premium and insurance balances receivable Other receivables and prepayments Statutory deposits Deposits Cash and cash equivalents 6 7.1 7.2 8 9 10 11 12 13 Total assets EQUITY AND LIABILITIES Equity Share capital Statutory reserve Regular reserve General reserve Reinsurance reserve Cumulative change in fair value of FVOCI investments Retained earnings 14 15 Total equity Liabilities Provision for employees’ end of service indemnity Accounts payable Insurance liabilities Insurance liabilities Premium collected in advance Deferred commission income 16 17 31 March 2022 (unaudited) AED 31 December 2021 (audited) AED 3,655,012 207,538,000 332,662,546 3,804,097 207,538,000 333,077,974 8,672,887 44,761,007 160,867,142 7,855,515 73,897,889 32,256,787 10,463,189 481,336,551 30,743,904 6,888,342 45,543,850 160,402,854 2,403,699 80,691,232 24,157,887 10,228,125 416,653,053 82,812,969 1,394,710,429 1,374,202,082 100,000,000 93,661,305 84,072,105 222,000,000 1,770,456 (2,090,679) 49,519,531 100,000,000 93,661,305 84,072,105 222,000,000 1,770,456 (3,875,224) 40,988,455 548,932,718 538,617,097 4,494,439 88,861,316 4,713,384 82,837,200 93,355,755 87,550,584 68,286,218 9,992,582 7,635,701 70,672,128 9,525,707 4,685,895 85,914,501 84,883,730 The accompanying notes form an integral part of this condensed interim financial information.
6. ALLIANCE INSURANCE P .S.C. 4 Condensed statement of profit or loss (unaudited) for the three months period ended 31 March 2022 Three months period ended 31 March 2022 2021 AED AED Gross premiums Reinsurers’ share of gross premiums 90,095,016 (52,845,644) 93,800,963 (55,283,909) Net premium Net change in unearned premium/ unexpired risk 37,249,372 (6,495,671) 38,517,054 (440,186) Net premium earned Commissions received Commissions paid Movement in deferred acquisition costs/ commission income – net 30,753,701 7,733,091 (8,662,437) 38,076,868 4,420,730 (4,460,258) 2,502,012 340,410 Gross underwriting income 32,326,367 38,377,750 (16,399,918) (19,168,888) 10,304,259 11,945,689 (6,095,659) (7,223,199) Movement in claims under settlement reserve, incurred but not reported reserve and unallocated loss adjustment expense reserve Earnings and cancellations of life insurance policies Movement in mathematical reserves 692,679 (20,313,546) 2,910,496 (1,888,533) (23,998,586) 7,716,331 Net claims incurred (22,806,030) (25,393,987) Net underwriting income 9,520,337 12,983,763 Income from financial investments Income from investments properties - net Foreign currency exchange gain Other income 7,459,136 2,332,463 80,018 644,491 8,619,115 2,640,897 114,890 507,459 Total investment and other income 10,516,108 11,882,361 Total income 20,036,445 24,866,124 General and administrative expenses Bonuses and rebates (net of reinsurance) Other operating expenses (7,118,330) (3,995,482) (391,557) (6,729,572) (6,753,281) (906,469) (11,505,369) (14,389,322) 8,531,076 10,476,802 8.53 10.48 Gross claims paid Reinsurers’ share of insurance claims and loss adjustment expenses Net claims paid Total expenses Profit for the period Basic and diluted earnings per share (Note 18) The accompanying notes form an integral part of this condensed interim financial information.
7. ALLIANCE INSURANCE P .S.C. 5 Condensed statement of comprehensive income (unaudited) for the three months period ended 31 March 2022 Three months period ended 31 March 2022 2021 AED AED Profit for the period 8,531,076 10,476,802 1,784,545 606,745 10,315,621 11,083,547 Other comprehensive income Items that will not be reclassified subsequently to profit or loss: Net unrealised gain from investments at fair value through other comprehensive income (FVOCI) Total comprehensive income for the period The accompanying notes form an integral part of this condensed interim financial information.
8. ALLIANCE INSURANCE P .S.C. 6 Condensed statement of changes in equity for the nine months period ended 31 March 2022 Share capital AED Balance at 31 December 2020 (Audited) Profit for the period Other comprehensive income for the period Total comprehensive income for the period Balance at 31 March 2021 (Unaudited) Balance at 31 December 2021 (Audited) Profit for the period Other comprehensive income for the period Total comprehensive income for the period Balance at 31 March 2022 (Unaudited) Statutory reserve AED Regular reserve AED General reserve AED Reinsurance reserve AED 869,651 --------------------------- 100,000,000 ------------------------------- 89,549,184 ---------------------------- 79,959,984 ------------------------- 222,000,000 --------------------------- ----------------------------------------------------------100,000,000 ------------------------------100,000,000 ------------------------------- ---------------------------- ---------------------------------------------------- ------------------------89,549,184 79,959,984 ---------------------------- ------------------------93,661,305 84,072,105 ---------------------------- ------------------------- ----------------------------------------------------222,000,000 --------------------------222,000,000 --------------------------- ----------------------------------------------------869,651 --------------------------1,770,456 --------------------------- ----------------------------------------------------------100,000,000 ============= ---------------------------- ---------------------------------------------------- ------------------------93,661,305 84,072,105 ============ ============ -------------------------------------------------------222,000,000 ============= ----------------------------------------------------1,770,456 ============= The accompanying notes form an integral part of this condensed interim financial information. Cumulative change in fair value of FVOCI investments AED Retained earnings AED Total AED (5,588,386) --------------------------- 40,108,173 -----------------------------10,476,802 526,898,606 -----------------------------10,476,802 606,745 --------------------------606,745 --------------------------(4,981,641) --------------------------(3,875,224) --------------------------- -----------------------------10,476,802 -----------------------------50,584,975 -----------------------------40,988,455 -----------------------------8,531,076 606,745 -----------------------------11,083,547 -----------------------------537,982,153 -----------------------------538,617,097 -----------------------------8,531,076 1,784,545 --------------------------1,784,545 --------------------------(2,090,679) ============ 1,784,545 ------------------------------ -----------------------------8,531,076 10,315,621 ------------------------------ -----------------------------49,519,531 548,932,718 ============= =============
9. ALLIANCE INSURANCE P .S.C. 7 Condensed statement of cash flows (unaudited) for the three months period ended 31 March 2022 Three months period ended 31 March 2022 2021 AED AED Cash flows from operating activities Profit for the period Adjustments for: Depreciation of property and equipment Property and equipment written off during the period Interest income from investments at amortised cost Amortisation of fees, premiums and discounts on investments Interest income from deposits Bad debts written off Interest income from loans guaranteed by life insurance policies Income from investment properties Provision for employees’ end of service indemnity 8,531,076 10,476,802 100,120 250,000 (4,678,211) 415,428 (2,149,768) 38,161 183,850 90,020 (4,677,416) 416,227 (3,139,506) - (631,157) (2,332,463) 127,776 (802,193) (2,640,897) 137,248 Operating cash flows before changes in operating assets and liabilities Increase in insurance, other receivables and prepayments (Increase)/decrease in reinsurance contract assets Increase/(decrease) in technical provisions (Decrease)/increase in accounts payable, insurance liabilities and premium collected in advance Increase in deferred acquisition cost Increase in deferred commission income (329,038) (451,637) (464,288) 3,356,784 44,135 (16,839,027) 10,505,646 (15,893,258) (3,491,418) (5,451,816) 2,949,806 1,120,647 (923,632) 583,222 Cash used in operations Employees end of service indemnity paid (3,881,607) (346,721) (21,402,267) (343,278) Net cash used in operating activities (4,228,328) (21,745,545) Cash flows from investing activities Purchase of property and equipment Net increase in loans guaranteed by life insurance policies Income received on deposits Income received from investments at amortised cost Deposits (placed)/encashed during the period Income received from investment properties (201,035) 1,414,000 66,270 5,603,068 (62,835,064) 8,112,024 (4,753) 782,331 489,072 3,945,766 6,771,875 8,106,657 Net cash (used in)/generated from investing activities (47,840,737) 20,090,948 Net decrease in cash and cash equivalents (52,069,065) (1,654,597) Cash and cash equivalents at the beginning of the period 82,812,969 48,691,929 Cash and cash equivalents at the end of the period 30,743,904 47,037,332 The accompanying notes form an integral part of this condensed interim financial information
10. ALLIANCE INSURANCE P .S.C. 8 Notes to the condensed interim financial information for the three months period ended 31 March 2022 1. Segment information For management purposes, the Company is organised into two business segments, property and liability insurance (general insurance) and insurance of persons and fund accumulation operations (life assurance). The general insurance segment comprises motor, marine, fire, engineering, medical, and general accident. The life assurance segment includes only long-term life and group life. These segments are the basis on which the Company reports its primary segment information. Segment-wise information is disclosed below: 1.1 Segment financial position for insurance of persons and fund accumulation operations 31 March 2022 (unaudited) AED 31 December 2021 (audited) AED ASSETS Property and equipment Investment properties Investments at amortised cost Loans guaranteed by life insurance policies Reinsurance contract assets Deferred acquisition costs Premium and insurance balances receivable Other receivables and prepayments Statutory deposits Deposits Cash and cash equivalents Inter-division balance 2,029,087 129,812,500 243,489,815 44,761,007 3,839,283 239,215 1,562,656 15,173,300 2,463,189 224,652,807 2,054,417 137,386,507 2,141,398 129,812,500 243,822,466 45,543,850 3,177,607 159,269 900,533 11,668,759 2,228,125 187,460,175 67,126,616 109,549,634 Total assets 807,463,783 803,590,932 EQUITY AND LIABILITIES Equity Share capital Statutory reserve Regular reserve General reserve Reinsurance reserve Retained earnings 50,000,000 45,155,315 40,360,715 107,552,461 45,856 26,953,363 50,000,000 45,155,315 40,360,715 107,552,461 45,856 21,412,790 Total equity 270,067,710 264,527,137 2,131,637 17,880,650 2,182,683 10,603,976 20,012,287 12,786,659 25,445,073 9,937,891 832 33,085,243 9,525,707 1,669 35,383,796 42,612,619 Liabilities Provision for employees’ end of service indemnity Accounts payable Insurance liabilities Insurance liabilities Premium collected in advance Deferred commission income
11. ALLIANCE INSURANCE P .S.C. 9 Notes to the condensed interim financial information for the three months period ended 31 March 2022 (continued) 1. Segment information (continued) 1.1 Segment financial position for insurance of persons and fund accumulation operations (continued) 31 March 2022 (unaudited) AED 31 December 2021 (audited) AED Insurance contract liabilities – Technical provisions Unearned premium reserve Claims under settlement reserve Incurred but not reported reserve Unallocated loss adjustment expense reserve Unexpired risk reserve Mathematical reserve 2,975,374 2,954,144 611,940 69,189 84,708 475,304,635 1,946,169 2,532,654 792,327 58,521 119,715 478,215,131 Total insurance contract liabilities 481,999,990 483,664,517 Total liabilities 537,396,073 539,063,795 Total equity and liabilities 807,463,783 803,590,932
12. ALLIANCE INSURANCE P .S.C. 10 Notes to the condensed interim financial information for the three months period ended 31 March 2022 (continued) 1. Segment information (continued) 1.2 Segment profit or loss for insurance of persons and fund accumulation operations (unaudited) Three months period ended 31 March 2022 2021 AED AED Gross premium Reinsurers’ share of gross premiums 27,079,728 (1,831,646) 26,632,638 (1,032,391) Net premium Net change in unearned premium/unexpired risk 25,248,082 (425,735) 25,600,247 (224,342) Net premiums earned Commissions received Commissions paid Movement in deferred acquisition costs/ commission income – net 24,822,347 6,432 (1,514,678) 25,375,905 11,697 (1,669,514) 80,783 1,800 Gross underwriting income 23,394,884 23,719,888 Gross claims paid Reinsurers’ share of insurance claims and loss adjustment expenses (911,848) 521,072 823,229 Net claims paid Movement in claims under settlement reserve, incurred but not reported reserve and unallocated loss adjustment expense reserve Earnings and cancellations of life insurance policies Movement in mathematical reserves (390,776) (929,454) (158,560) (20,313,546) 2,910,496 (74,559) (23,998,586) 7,716,331 Net claims incurred (17,952,386) (17,286,268) Net underwriting income 5,442,498 6,433,620 Income from financial investments Income from investments properties - net Foreign currency exchange gain Other income 5,044,353 1,684,738 80,977 40,387 5,722,447 1,753,777 105,992 29,184 Total investment and other income 6,850,455 7,611,400 Total income 12,292,953 14,045,020 General and administrative expenses Bonuses and rebates (net of reinsurance) Other operating expenses (2,676,473) (3,995,482) (80,425) (2,550,204) (6,753,281) (84,641) Total expenses (6,752,380) (9,388,126) 5,540,573 4,656,894 Profit for the period (1,752,683)
13. ALLIANCE INSURANCE P .S.C. 11 Notes to the condensed interim financial information for the three months period ended 31 March 2022 (continued) 1. Segment information (continued) 1.3 Segment financial position for property and liability insurance 31 March 2022 (unaudited) AED 31 December 2021 (audited) AED ASSETS Property and equipment Investment properties Investments at amortised cost Investments at fair value through other comprehensive income (FVOCI) Reinsurance contract assets Deferred acquisition costs Premium and insurance balances receivable Other receivables and prepayments Statutory deposits Deposits Cash and cash equivalents 1,625,925 77,725,500 89,172,731 1,662,699 77,725,500 89,255,508 8,672,887 157,027,859 7,616,300 72,335,233 17,083,487 8,000,000 256,683,744 28,689,487 6,888,342 157,225,247 2,244,430 79,790,699 12,489,128 8,000,000 229,192,878 15,686,353 Total assets 724,633,153 680,160,784 EQUITY AND LIABILITIES Equity Share capital Statutory reserve Regular reserve General reserve Reinsurance reserve Cumulative change in fair value of FVOCI investments Retained earnings 50,000,000 48,505,990 43,711,390 114,447,539 1,724,600 (2,090,679) 22,566,168 50,000,000 48,505,990 43,711,390 114,447,539 1,724,600 (3,875,224) 19,575,665 Total equity 278,865,008 274,089,960 Liabilities Provision for employees’ end of service indemnity Accounts payable Inter-division balance 2,362,802 70,980,666 137,386,507 2,530,701 72,233,224 109,549,634 210,729,975 184,313,559 42,841,145 54,691 7,634,869 37,586,885 4,684,226 50,530,705 42,271,111 Insurance liabilities Insurance liabilities Premium collected in advance Deferred commission income
14. ALLIANCE INSURANCE P .S.C. 12 Notes to the condensed interim financial information for the three months period ended 31 March 2022 (continued) 1. Segment information (continued) 1.3 Segment financial position for property and liability insurance (continued) 31 March 2022 (unaudited) AED 31 December 2021 (audited) AED 79,326,430 87,067,199 17,174,551 865,622 73,663 67,709,511 86,099,455 24,754,106 853,718 69,364 Total insurance contract liabilities 184,507,465 179,486,154 Total liabilities 445,904,549 406,070,824 Total equity and liabilities 724,633,153 680,160,784 Insurance contract liabilities – Technical provisions Unearned premium reserve Claims under settlement reserve Incurred but not reported reserve Unallocated loss adjustment expense reserve Unexpired risk reserve
15. ALLIANCE INSURANCE P .S.C. 13 Notes to the condensed interim financial information for the three months period ended 31 March 2022 (continued) 1. Segment information (continued) 1.4 Segment profit or loss for property and liability insurance (unaudited) Three months period ended 31 March 2022 2021 AED AED Gross premium Reinsurers’ share of gross premiums 63,015,288 (51,013,998) 67,168,325 (54,251,518) Net premium Net change in unearned premium/unexpired risk 12,001,290 (6,069,936) 12,916,807 (215,844) Net premiums earned Commissions received Commissions paid Movement in deferred acquisition costs/ commission income – net 5,931,354 7,726,659 (7,147,759) 12,700,963 4,409,033 (2,790,744) Gross underwriting income Gross claims paid Reinsurers’ share of insurance claims and loss adjustment expenses Net claims paid Movement in claims under settlement reserve, incurred but not reported reserve and unallocated loss adjustment expense reserve Net claims incurred 2,421,229 338,610 8,931,483 14,657,862 (15,488,070) (17,416,205) 9,783,187 11,122,460 (5,704,883) (6,293,745) 851,239 (1,813,974) (4,853,644) (8,107,719) Net underwriting income 4,077,839 6,550,143 Income from financial investments Income from investments properties - net Foreign currency exchange (loss)/gain Other income 2,414,783 647,725 (959) 604,104 2,896,668 887,120 8,898 478,275 Total investment and other income 3,665,653 4,270,961 Total income 7,743,492 10,821,104 General and administrative expenses Other operating expenses (4,441,857) (311,132) (4,179,368) (821,828) Total expenses (4,752,989) (5,001,196) 2,990,503 5,819,908 Profit for the period
16. ALLIANCE INSURANCE P .S.C. 14 Notes to the condensed interim financial information for the three months period ended 31 March 2022 (continued) 2. General information Alliance Insurance P.S.C. (the “Company") is a Public Shareholding Company which was originally established in Dubai on 1 July 1975 as a limited liability company under the name of Credit and Commerce Insurance Company. The Company was subsequently incorporated in Dubai on 6 January 1982 as a limited liability company under an Emiri Decree. The Company was converted to a Public Shareholding Company (P.S.C.) in January 1995, in accordance with the UAE Federal Commercial Companies Law No. (8) of 1984 (as amended). The Company’s shares are listed on the Dubai Financial Market. The licensed activities of the Company are issuing short term and long term insurance contracts. The insurance contracts are issued in connection with property, motor, aviation and marine risks (collectively known as general insurance) and individual life (participating and nonparticipating), group life, personal accident, medical and investment linked products. The registered address of the Company is Warba Centre, P.O. Box 5501, Dubai, United Arab Emirates. 3. Application of new and revised International Financial Reporting Standards (IFRS) 3.1 New and revised IFRS applied with no material effect on the condensed interim financial information The following new and revised IFRSs, which became effective for annual periods beginning on or after 1 January 2022, have been adopted in these financial statements. The application of these revised IFRSs has not had any material impact on the amounts reported for the current and prior years but may affect the accounting for future transactions or arrangements. Description Effective from COVID-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16) Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37) Annual Improvements to IFRS Standards 2018 – 2020 Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16) Reference to the Conceptual Framework (Amendments to IFRS 3) 1 January 2022 1 January 2022 1 January 2022 1 January 2022 1 January 2022 3.2 New and revised IFRS standards and interpretations but not yet effective The Company has not applied the following new and revised IFRSs that have been issued but are not yet effective. Description Effective from Classification of Liabilities as Current or Non-current (Amendments to IAS 1) IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts Definition of Accounting Estimate (Amendments to IAS 8) Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28) 1 January 2023 1 January 2023 1 January 2023 1 January 2023 1 January 2023 Deferred indefinitely
17. ALLIANCE INSURANCE P .S.C. 15 Notes to the condensed interim financial information for the three months period ended 31 March 2022 (continued) 3. Application of new and revised International Financial Reporting Standards (IFRS) (continued) 3.2 New and revised IFRS standards and interpretations but not yet effective (continued) Management anticipates that these new standards, interpretations and amendments will be adopted in the Company’s financial statements as and when they are applicable and adoption of these new standards, interpretations and amendments, except for IFRS 17, mentioned below, may have no material impact on the financial statements of the Company in the period of initial application. Management anticipates that IFRS 17 will be adopted in the Company’s financial statements for the annual period beginning 1 January 2023. The application of IFRS 17 may have significant impact on amounts reported and disclosures made in the Company’s financial statements in respect of its insurance contracts. However, it is not practicable to provide a reasonable estimate of the effects of the application of this standard until the Company performs a detailed review. Management expects that majority of the short-term contracts issued by the Company will be eligible for the premium allocation approach, while for individual life contracts both the general measurement approach and the variable fee approach will be used as applicable. 4. Summary of significant accounting policies 4.1 Basis of preparation This condensed interim financial information has been prepared in accordance with International Accounting Standard (IAS) No. 34 “Interim Financial Reporting”. The condensed interim financial information is presented in U.A.E. Dirham (AED) since that is the currency in which the majority of the Company’s transactions are denominated. This condensed interim financial information has been prepared on the historical cost basis, except for the revaluation of certain financial instruments and investment properties. The Company presents its condensed statement of financial position broadly in the order of liquidity. The accounting policies, presentation and methods in this condensed interim financial information are consistent with those used in the audited financial statements for the year ended 31 December 2021. This condensed interim financial information do not include all the information required for full annual financial statements and should be read in conjunction with the Company’s audited annual financial statements as at and for the year ended 31 December 2021. In addition, results for the three months period ended 31 March 2022 are not necessarily indicative of the results that may be expected for the financial year ending 31 December 2022. 5 Judgements and estimates The preparation of condensed interim financial information requires management to make judgements, estimates and assumptions that effect 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 this condensed interim financial information, the significant judgements made by management in applying the accounting policies and the key sources of estimation uncertainty were the same as those that were applied to the audited financial statements as at and for the year ended 31 December 2021. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.
18. ALLIANCE INSURANCE P .S.C. 16 Notes to the condensed interim financial information for the three months period ended 31 March 2022 (continued) 6. Investment properties Investment properties comprises two commercial buildings in Dubai, UAE. Management estimates that there has been no change in the fair value of investment properties. Investment properties are classified as Level 3 in the fair value hierarchy as at 31 March 2022 (31 December 2021: Level 3). 7. Financial investments 7.1 Investments at amortised cost Investment in securities comprises of the following: Quoted bonds Provision for expected credit losses (Note 7.1.1) 31 March 2022 (unaudited) AED 31 December 2021 (audited) AED 334,294,378 (1,631,832) 334,709,806 (1,631,832) 332,662,546 333,077,974 The bonds carry interest at the rates ranging from 4.75% to 7.5% (2021: 4.75% to 7.5%) per annum and interest is receivable semi-annually. The Company holds these investments with the objective of receiving the contractual cash flows over the instrument’s life. Inside UAE Outside UAE 7.1.1 31 March 2022 (unaudited) AED 31 December 2021 (audited) AED 199,739,362 132,923,184 199,927,331 133,150,643 332,662,546 333,077,974 31 March 2022 (unaudited) AED 31 December 2021 (audited) AED 1,631,832 - 772,000 859,832 1,631,832 1,631,832 Movement in provision for expected credit loss are as follows: Balance at the beginning of the year Charge during the period/year
19. ALLIANCE INSURANCE P .S.C. 17 Notes to the condensed interim financial information for the three months period ended 31 March 2022 (continued) 7. Financial investments (continued) 7.2 Investments at fair value through other comprehensive income (FVOCI) Quoted equity securities in UAE 7.3 31 March 2022 (unaudited) AED 31 December 2021 (audited) AED 8,672,887 6,888,342 Movements in financial investments The gross movements in investments at FVOCI and investments at amortised cost are as follows: FVOCI AED At amortised cost AED Total AED At 31 December 2020 (audited) Amortised Changes in fair value Provision for expected credit losses 5,175,180 1,713,162 335,622,610 (1,684,804) (859,832) 340,797,790 (1,684,804) 1,713,162 (859,832) At 31 December 2021 (audited) Amortised Changes in fair value 6,888,342 1,784,545 333,077,974 (415,428) - 339,966,316 (415,428) 1,784,545 At 31 March 2022 (unaudited) 8,672,887 332,662,546 341,335,433
20. ALLIANCE INSURANCE P .S.C. 18 Notes to the condensed interim financial information for the three months period ended 31 March 2022 (continued) 8. Insurance contract liabilities - Technical provisions 31 March 2022 (unaudited) AED 31 December 2021 (audited) AED Insurance contract liabilities - Technical provisions: Unearned premium reserve Claims under settlement reserve Incurred but not reported reserve (“IBNR”) Unallocated loss adjustment expense reserve (“ULAE”) Unexpired risk reserve Mathematical reserve 82,301,804 90,021,343 17,786,491 934,811 158,371 475,304,635 69,655,680 88,632,109 25,546,433 912,239 189,079 478,215,131 Total technical provisions – gross 666,507,455 663,150,671 64,478,970 82,727,925 13,590,560 69,687 58,362,790 81,745,675 20,228,267 66,122 160,867,142 160,402,854 17,822,834 7,293,418 4,195,931 934,811 88,684 475,304,635 11,292,890 6,886,434 5,318,166 912,239 122,957 478,215,131 505,640,313 502,747,817 31 March 2022 (unaudited) AED 31 December 2021 (audited) AED 55,466,108 5,158,672 16,759,676 (3,486,567) 52,590,134 4,730,505 26,857,160 (3,486,567) 73,897,889 80,691,232 Reinsurance contract assets: Unearned premium reserve Claims under settlement reserve Incurred but not reported reserve (“IBNR”) Unexpired risk reserve Total reinsurers’ share of technical provisions Unearned premium reserve Claims under settlement reserve Incurred but not reported reserve (“IBNR”) Unallocated loss adjustment expense reserve (“ULAE”) Unexpired risk reserve Mathematical reserve Total technical provisions – net 9. Premium and insurance balances receivable Due from policyholders Due from insurance or reinsurance companies Due from brokers or agents Less: Provision for impairment
21. ALLIANCE INSURANCE P .S.C. 19 Notes to the condensed interim financial information for the three months period ended 31 March 2022 (continued) 9. Premium and insurance balances receivable (continued) Within U.A.E. Due from policyholders Due from insurance or reinsurance companies Due from brokers or agents Less: Provision for impairment 31 March 2022 (unaudited) AED 31 December 20201 (audited) AED 55,466,108 2,023,963 16,759,676 (3,486,567) 52,590,134 2,214,276 26,857,160 (3,486,567) 70,763,180 78,175,003 31 March 2022 (unaudited) AED 31 December 2021 (audited) AED 3,134,709 2,516,229 73,897,889 80,691,232 31 March 2022 (unaudited) AED 31 December 2021 (audited) AED 6,707,350 8,179,688 3,825,122 338,738 157,819 14,489,321 (1,441,251) 7,632,207 6,362,750 1,955,764 338,019 166,255 9,182,304 (1,479,412) 32,256,787 24,157,887 Outside U.A.E. Due from insurance or reinsurance companies Total 10. Other receivables and prepayments Accrued interest from investments at amortised cost Rent receivable from tenants Prepayments Receivable from employees Refundable deposits Others Less: Provision for expected credit losses 11. Statutory deposit As at 31 March 2022, deposit of AED 10,463,189 (31 December 2021: AED 10,228,125) has been placed with one of the Company’s bankers, in accordance with Article 42 of UAE Federal Law No. 6 of 2007 on Establishment of the Insurance Authority and Organization of its Operations. This deposit has been pledged to the bank as security against a guarantee issued by the Bank in favor of the Central Bank of the United Arab Emirates (“CBUAE”) for the same amount. This deposit cannot be withdrawn without prior approval of the Central Bank of the United Arab Emirates and bears an interest rate ranging from 0.5% to 1.5% per annum (2021: 3% to 3.5% per annum).
22. ALLIANCE INSURANCE P .S.C. 20 Notes to the condensed interim financial information for the three months period ended 31 March 2022 (continued) 12. Deposits 31 March 2022 (unaudited) AED 31 December 2021 (audited) AED Short term deposits with banks in the UAE Accrued interest on short term deposits 414,447,691 2,793,615 351,847,691 1,488,617 Subtotal A (current portion) 417,241,306 353,336,308 Long term deposits with banks in the UAE Accrued interest on long term deposits 61,600,000 2,815,483 61,600,000 2,036,983 Subtotal B (non-current portion) Less: Provision for expected credit losses (C) 64,415,483 (320,238) 63,636,983 (320,238) 481,336,551 416,653,053 Grand total (A+B+C) Deposits comprise fixed deposits with original maturity term of 12 months and above with banks in UAE bearing annual interest at rates ranging from 0.45% to 5.25% (31 December 2021: 0.45% to 5.25%) 13. Cash and cash equivalents Cash on hand Current accounts with banks Less: Provision for expected credit losses Bank balances are maintained with local banks in UAE. 31 March 2022 (unaudited) AED 31 December 2021 (audited) AED 88,649 30,729,082 (73,827) 241,305 82,645,491 (73,827) 30,743,904 82,812,969
23. ALLIANCE INSURANCE P .S.C. 21 Notes to the condensed interim financial information for the three months period ended 31 March 2022 (continued) 14. Share capital Issued and fully paid: 1,000,000 ordinary shares of AED 100 each 15. 31 March 2022 (unaudited) AED 31 December 2021 (audited) AED 100,000,000 100,000,000 Statutory reserve In accordance with the UAE Federal Decree Law No. 32 of 2021, the Company has established a statutory reserve by appropriation of 10% of the Company’s net profit for each year which will be increased until the reserve equals 50% of the share capital. This reserve is not available for distribution, except as stipulated by the Law. No allocation to the statutory reserve has been made for the three month period ended 31 March 2022, as this will be effected at the year-end based on the Company’s results for the year ending 31 December 2022. 16. Accounts payable Payables inside UAE Payables outside UAE Other payables (note 16.1) 31 March 2022 (unaudited) AED 31 December 2021 (audited) AED 12,742,677 48,227,571 27,891,068 13,198,618 50,260,463 19,378,119 88,861,316 82,837,200 31 March 2022 (unaudited) AED 31 December 2021 (audited) AED 4,480,344 8,262,333 27,891,068 4,509,190 8,689,428 19,378,119 40,633,745 32,576,737 Within U.A.E. Insurance companies Insurance brokers Other payables (note 16.1)
24. ALLIANCE INSURANCE P .S.C. 22 Notes to the condensed interim financial information for the three months period ended 31 March 2022 (continued) 16. Accounts payable (continued) 31 March 2022 (unaudited) AED 31 December 2021 (audited) AED 316,270 47,911,301 490,310 49,770,153 48,227,571 50,260,463 31 March 2022 (unaudited) AED 31 December 2021 (audited) AED 2,213,472 8,448,083 1,851,425 15,378,088 3,852,328 851,584 904,186 13,770,021 27,891,068 19,378,119 31 March 2022 (unaudited) AED 31 December 2021 (audited) AED 16,692,165 7,018,579 1,902,639 42,672,835 22,239,978 9,543,287 3,310,124 35,578,739 68,286,218 70,672,128 Outside U.A.E. Insurance companies Reinsurance companies 16.1 Other payables Provision for staff benefits Rent received in advance Accruals and provision Other payables 17. Insurance liabilities Maturity payable Bonus and surrenders payable Claims payable Other insurance payables
25. ALLIANCE INSURANCE P .S.C. 23 Notes to the condensed interim financial information for the three months period ended 31 March 2022 (continued) 18. Basic and diluted earnings per share Three months period ended 31 March 2022 2021 (unaudited) (unaudited) Profit for the period (in AED) Number of shares 8,531,076 10,476,802 100,000,000 100,000,000 8.53 10.48 Basic and diluted earnings per share (in AED) Basic and diluted earnings per share are calculated by dividing the profit for the period by the number of shares outstanding at the end of the reporting period. Diluted earnings per share is equivalent to basic earnings per share as the Company did not issue any new instrument that would impact earnings per share when executed. 19. Related party transactions Related parties, as defined in International Accounting Standard 24: Related Party Disclosures major shareholders, directors and other key management personnel of the Company, and significantly influenced by such parties. At the end of the reporting period, amounts due from related parties are as follows: 31 March 2022 (unaudited) AED 31 December 2021 (audited) AED 1,466,055 1,264,268 Due from related parties (Key Management personnel and entities under common control) The above balances are included as part of premiums and insurance balances receivables. Transactions: During the period, the Company entered into the following transactions with related parties: Three months period ended 31 March 2022 2021 (unaudited) (unaudited) AED AED Premiums from related parties (Key Management personnel and entities under common control) Claims to related parties (Key Management personnel and entities under common control) Directors’ and key management personnel remuneration including benefits Transactions are entered with related parties at rates agreed with management. 758,142 1,002,095 - 7,000 494,184 530,886
26. ALLIANCE INSURANCE P .S.C. 24 Notes to the condensed interim financial information for the three months period ended 31 March 2022 (continued) 20. Contingent liabilities Letters of guarantee 31 March 2022 (unaudited) AED 31 December 2021 (audited) AED 10,560,942 10,853,330 The Company in common with the significant majority of insures, is subject to litigation in normal course of its business. The Company, based on independent legal advice, does not expect that the outcome of these court cases will have a material impact on the Company’s financial performance or financial position. 21. Financial instruments The fair values of financial assets are determined using similar valuation techniques and assumptions as used in the audited annual financial statements for the year ended 31 December 2021. Financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable. Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). The following table gives information about how the fair values of these financial assets are determined: Financial assets Quoted equity securities – FVOCI Fair value as at 31 March 31 December 2022 2021 (unaudited) (audited) AED AED 8,672,887 6,888,342 Fair value hierarchy Level 1 Valuation inputs techniques and key Quoted bid prices in an active market. There were no transfers between each of level during the period. There are no financial liabilities which should be measured at fair value and accordingly no disclosure is made in the above table. 22. Seasonality of results No income of seasonal nature was recorded in the condensed statement of profit or loss for the three months period ended 31 March 2022 and 2021.
27. ALLIANCE INSURANCE P .S.C. 25 Notes to the condensed interim financial information for the three months period ended 31 March 2022 (continued) 23 Coronavirus (COVID-19) outbreak and its impact on the Company The World Health Organization declared on March 11, 2020 the Novel Coronavirus (Covid-19) as a global pandemic. This event has caused widespread disruptions to businesses and economic activity. The Company has performed an assessment of COVID-19 implications on the financial results of the Company, in light of the available guidance of IFRS, and incorporated the outcome in these condensed interim financial information. The Company has considered the potential impacts of the current economic volatility in determination of the reported amounts of the financial and non-financial assets, and these are considered to represent management's best assessment based on observable information. Markets however remain volatile, and the recorded amounts remain sensitive to market fluctuations. The Company is closely monitoring the situation and has activated its business continuity planning and other risk management practices to manage the potential business disruption COVID-19 outbreak may have on its operations and financial performance. 24. Dividend At the Annual General Meeting held on 12 April 2022, the Shareholders approved a cash dividend of AED 30 million at AED 30 per share for 2021 (2020: AED 30 million at AED 30 per share for 2019). The dividend is not accounted as a liability in this condensed interim financial information as the annual general meeting took place after 31 March 2022. 25. Approval of the condensed interim financial information The condensed interim financial information was approved by the Board of Directors and authorised for issue on 12 May 2022.