Methaq Takaful Insurance Company PSC: Report Of The Board Of Directors and Financial Statements 31 December 2017

Transcription

1. Methaq Takaful Insurance Company PSC REPORT OF THE BOARD OF DIRECTORS AND FINACIAL STATEMENTS 31 DECEMBER 2017
2. Methaq Takaful Insurance Company PSC REPORT OF THE BOARD OF DIRECTORS 31 DECEMBER 2017
3. Methaq Takaiul Insurance Company PSC THE REPORT OF THE BOARD OF DIRECTORS For the year ended 31 December 2017 On behalf of the Board of Company Directors , we are pleased to present the financial results of Methaq Takaful Insurance PSC for the year ended 31 December 2017. succeeded in implementing its plans for the year 2017 based on achievable strategic goals. This is a reflection of the continued confidence and support of its shareholders and customers along with Methaq’s team that is comprised of professionals and technical experts. Our strategic direction focuses on the following key objectives to deliver Methaq enhanced sustainable returns for the Policyholders and the Shareholders: Targeted profitable growth; Performance Management of Takaful portfolios; Operational excellence; and Optimal Retakaful agreements for all takaful portfolios. Company has recognised a net profit of AED 803,700 for the year ended 31 December 2017 compared to a net profit of AED 9,329,883 for the year ended 31 December 2016. The Company has achieved total comprehensive loss of AED 4,512,300 during 2017 that led to the decrease of the shareholders’ equity to AED 75,417,537 as at 31 December 2017 compared to AED 79,929,837 as at 31 December 2016. The Management has implemented successful strategies in the year 2017 in respect of underwriting and claims management process where all takaful portfolios showed positive performance. The results are summarized as below: Brief of the statement of financial 31 December 201 7 2016 AED AED 573,761,507 498,343,970 75,417,537 411,112,589 331,182,752 79,929,837 408,784,811 803,700 264,716,681 9,329,883 0.005 0.062 position: Total assets Total liabilities Total shareholders’ 31 December equity Brief of the income statement: Total revenues (gross Profit for the year Earning per share takaful contributions written) ‘
4. Methaq Takaful Insurance Company PSC lHE REPORT OF THE BOARD OF DIRECTORS continued For the year ended 31 December 2017 Company 's future plans for the year 2017, the Company has developed a budget plan supported by a set of goals especially takaful portfolios and retakaful agreements, operating expenses, and profitability. The expects a significant improvement in performance and results for 2017. As for the ambitious company Methaq has a very sound corporate governance in place and all the regulatory and legislative compliance is made timely, thereby reflecting a positive image of the Company and entrusting strong confidence amongst its customers, staff and all concerned entities. On behalf of the Board of Directors, we reiterate our commitment to the growth and development of the UAE and palticularly to the Abu Dhabi’s 2030 vision under the leadership of His Highness Sheikh Khalifa bin Zayed Al Nahyan, the President of the UAE and the Ruler of Abu Dh'abi and His Highness Sheikh Mohammed bin Rashid Al Maktoum, the Vice President, the Ruler of Dubai, and His and all the Rulers of the UAE. We also take this opportunity to thank and PSC for their continued Highness Sheikh Mohammed Bin the staff and the management of work, and sincerity. We also express appreciate hard efforts, Company Company’s Shareholders, clients, and all those institutions locally, in the region, and at the international level. On Behalf of the Born M(me ”nai l MWAC, 1 ’ Ali Zaal Al-Mansoori Chairman Date: 28th March 2018 fl Zayed Al Nahyan, the Methaq our Crown Prince Takaful Insurance sincere thanks to the and individuals with whom the company deals in the UAE
5. Methaq Takaful Insurance Company PSC FINANCIAL STATEMENTS 31 DECEMBER 2017
6. / EY Building working Young Tel: +971 2 417 4400 P.O. Box: 136 Fax: +971 2 627 3383 27lh Floor, Nation Tower 2 Abu Dhabi Corniche abudhabi®ae.ey.com ey.com/mena Ernst & better world a Abu Dhabi, United Arab Emirates INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF METHAQ Report on TAKAFUL INSURANCE COMPANY PSC the Audit of the Financial Statements Opinion which We have audited the financial statements of Methaq Takaful Insurance Company PSC (the “Company”), of statement of comprise the statement of financial position as at 31 December 2017, and the statement income, and then the ended, year income, statement of changes in equity and statement of cash flows for comprehensive notes to the financial statements, including a summary of significant accounting policies. the financial opinion, the accompanying financial statements present fairly, in all material respects, for the year flows and its cash position of the Company as at 31 December 2017 and its financial performance then ended in accordance with International Financial Reporting Standards (“IFRSs”). In our Material uncertainty related to going concern losses We draw attention to note 2 in the financial statements, which indicate that the Company’s accumulated amounted to AED 72,235,205 at 31 December 2017. This factor indicates the existence of a material uncertainty that may cast a significant doubt about the Company’s ability to continue as a going concern. These financial concern concept as the Directors and management consider these under the statements have been going prepared losses to be temporary and expect the Company to generate is not qualified in respect of this matter. Basis for profits from future takaful operations. Our opinion opinion Our responsibilities our audit in accordance with International Standards on Auditing (“ISAs”). audit the Auditors’ in the of the financial described further for are standards responsibilities under those Ethics International with the in accordance of the We are our of Company statements section independent report. “IESBA Accountants Code”) Ethics together Code (the for Accountants’ Standards Board for Professional of with the ethical requirements that are relevant to our audit of the financial statements in the United Arab Emirates, in accordance with these requirements and the IESBA and we have fulfilled our other ethical We conducted responsibilities Code. We believe that the audit evidence our we have obtained is sufficient and appropriate to provide a basis for oplmon. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in In addition to the matter described in the material our audit of uncertainty the financial statements of the current period. related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. These matters were addressed in the context of our audit of the financial our and in thereon, and we do not provide a separate opinion on these as a statements whole, opinion description of how our audit addressed the matter is provided in that context. forming matters. For each matter below, our financial responsibilities described in the Auditors’ responsibilities for the audit of the the included our audit matters. these to Accordingly, statements section of our report, including in relation of the misstatement material of risks of the assessment performance of procedures designed to respond to our the to address the procedures performed financial statements. The results of our audit procedures, including matters below, provide the basis for our audit opinion on the accompanying financial statements. We have fulfilled the A member firm at Ernst & Young Global Limited
7. ,/ EY Building a better working world INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF METHAQ TAKAFUL INSURANCE COMPANY PSC continued Report on the Audit of the Financial Statements continued Valuation 1) ofoutstanding claims and retakaful share of outstanding claims The estimation of outstanding claims and retakaful share of outstanding claims involve a significant degree of of the ultimate judgement. The liabilities amounting to AED 176,101,206 (note 8) are based on a best estimate cost of all claims incurred but not settled at a given date, whether reported or not, together with the related claims costs. A range of methods may be used to determine these provisions. Underlying these methods are a number of explicit or implicit assumptions relating to the expected settlement amount and settlement patterns of handling claims. outstanding claims amounting to AED 42,008,241 (note 8) are recognised when the related terms relevant to the retakaful contracts and their gross outstanding claims is recognised according to the losses in the event of default by respective and of default the to is probable probability recoverability subject Retakaful share of retakaful counterparties. We assessed performing management’s procedures, audit calculation of outstanding claims and retakaful share of outstanding claims by which included among others: testing of key controls around the claims handling and reserve settling processes of the Company along with the recognition and release of retakafiil share of outstanding claims. We examined evidence of the operation of controls over the valuation of individual claims reserves. 0 The evaluation and II We checked 0 We reviewed the samples of claims reserves and the respective share of retakaful share of outstanding claims to documentation, such as reports from reserve, through comparing the estimated amount of the reserve loss adjusters. subsequent settlement of claims and compared them to the claims reserve as at year end. 0 I We reviewed the actuarial report prepared by the actuary appointed by the Company and involved our actuarial specialist team members, to apply industry knowledge and experience and we compared the methodology, models and assumptions used against recognised actuarial practices. We reviewed the ratios of retakaful share of identify outstanding any variance from retakaful treaty arrangements. claims to gross outstanding claims reserve to
8. ,4- EV Building a better working world INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF TAKAFUL INSURANCE COMPANY PSC continued METHAQ the Audit of the Financial Statements continued Report on 2) Revenue recognition comprise the total contribution receivable for the whole period of cover by contracts accounting period, and are recognised on the date on which the policy commences. At during the end of each year, a proportion of net retained contribution is provided for as an unearned contribution reserve in to cover portions of risk that have not expired at the reporting date. The reserves are required to be calculated accordance with the requirements of the UAE Insurance Law relating to insurance companies. Gross contribution written entered into the We assessed management’s calculation of gross contribution written amounting to AED 408,784,811 and net unearned contribution reserve amounting to AED 206,593,472 (note 8) by performing audit procedures, which included among others: 0 recognition policies complied with IFRS and tested the policies. Specifically, we considered whether the contribution on takaful implementation for on the date of inception of policies by testing a sample of revenue items to policies are accounted We assessed whether the Company’s revenue of those takaful contracts. 0 We evaluated and tested the in the correct t I period. compared the unearned contributions reserve balance computed by the Company’s actuary. We We recalculated takaful contracts 3) operating effectiveness of the internal controls over the recording of revenue balance as per the financial statements to the sample basis the unearned contributions existing as of 31 December 2017. on a Impairment losses on contributions and re reserve based on the reserve earning period of takafitl balance receivables receivables (as disclosed Company estimates the collectible amount of contribution and retakaful balances of whether the This determination no is amount full of the collection when in note 10) longer probable. of the specific evaluation entails are receivables balance Retakaful and Management’s contributions impaired rates. historical their and regularly of the Management recovery credit and liquidity position policyholders are regularly Such balances retakaful and takaful from due of amounts companies. reviews the collectability reconciled by both parties and are settled by on account payments on a regular basis. The We assessed management’s provision for impairment losses calculation by performing audit procedures, which included among others: 0 significant balances outstanding more than the balance outstanding, the history of one year taking into account the existence of any disputes with the same counterparties that reduce the settlement of receivables and the existence of any liabilities We considered the adequacy of provision for bad debts for over net exposure. 0 We discussed with management and reviewed correspondences, where relevant, to identify any disputes and assessed whether such matters were considered in the provision for impairment losses calculation.
9. / EY Building a better working world INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF METHAQ TAKAFUL INSURANCE COMPANY PSC continued Report on the Audit of the Financial Statements continued Other information Other information consists of the information included in the Annual Report and Board of Directors report, other than the financial statements and our auditor’s report thereon. We obtained the Board of Directors Report prior and we expect to obtain the other sections of the Annual Report after the date of to the date of our audit report, our auditor’s Our opinion assurance is opinion. Management on responsible the financial statements does not for the other information. cover the other information and we do not express any form of conclusion thereon. audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our work we have knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the In connection with performed, we our conclude that there is that fact. We have a material misstatement of this other information, to report in this nothing we are required to report regard. Responsibilities of management and those charged with governance for the financial statements statements in accordance Management is responsible for the preparation and fair presentation of the financial of Association and the Articles of the Company’s with IFRSs and in compliance with the applicable provisions such internal control as for 2007 and of No. Law Federal (6) UAE Federal Law No. (2) of 2015, the UAE free from material that are statements financial of management determines is necessary to enable the preparation misstatement, whether due to fraud or error. to continue preparing the financial statements, management is responsible for assessing the Company’s ability basis concern the and concern to going using as a going concern, disclosing, as applicable, matters related going no or has to cease or the operations, Company of accounting unless management either intends to liquidate In realistic alternative but to do Those charged Auditors' so. with governance responsibilities for Our objectives are are responsible the audit for overseeing the Company’s financial reporting process. of the financial statements to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error or in the and are considered material they could reasonably be expected to influence if, individually the economic decisions of users taken As part of skepticism ° error, and assess design aggregate, the basis of these financial statements. audit in accordance with ISAs, throughout the audit. We also: an Identify or on we exercise professional judgment and maintain professional the risks of material misstatement of the financial statements, whether due to fraud perform audit procedures responsive to those risks, and obtain audit evidence that The risk of not detecting a material a basis for our opinion. to and provide appropriate resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. is sufficient and misstatement
10. ,— EY Building a better working world INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF METHAQ TAKAFUL INSURANCE COMPANY PSC continued Report on Auditors - ° ° the Audit of the Financial Statements continued responsibilities for the audit of the financial statements continued Obtain an understanding of internal control relevant to the audit in order to design audit procedures that on the are appropriate in the circumstances, but not for the purpose of expressing an opinion control. internal of the effectiveness Company’s ’ appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Evaluate the use of the going concern basis of accounting and, material uncertainty exists related to events or a whether based on the audit evidence obtained, on the doubt conditions that may cast significant Company’s ability to continue as a going concern. If we are required to draw attention in our auditors’ report we conclude that a material uncertainty exists, Conclude on the appropriateness of management’s disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern. to the related ° Evaluate the overall presentation, structure and content of the financial statements, disclosures, and whether the financial statements represent the manner that achieves fair presentation. underlying charged with governance regarding, among other matters, significant audit findings, including any significant deficiencies We communicate with those timing of the audit and we identify during our audit. including the transactions and events in a the planned scope and in internal control that ethical provide those charged with governance with a statement that we have complied with relevant that other matters and requirements regarding independence, and to communicate with them all relationships and where applicable, related safeguards. may reasonably be thought to bear on our independence, We also with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure From the matters communicated with those about the matter communicated in outweigh the or our public charged when, in extremely rare circumstances, we determine that a matter should not be to report because the adverse consequences of doing so would reasonably be expected interest benefits of such communication.
11. ,4- EV Building a better working world INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF TAKAFUL INSURANCE COMPANY PSC continued METHAQ Report Other on Legal and Regulatory Requirements We report that: i) we have obtained all the information and explanations we considered necessary for the purposes of our audit; the financial statements have been prepared and comply, in all material respects, with the applicable provisions of the UAE Federal Law No. (2) of 2015, the UAE Federal Law No. (6) of 2007 and the ii) Articles of Association of the Company; Company has maintained proper books of account; iii) the iv) the financial information included in the Board of Directors report is consistent with the books of account and records of the Company; v) investments in shares and stocks made by the Company during are included in note 7 to the financial statements and include purchases the year ended 31 December 2017; vi) note 9 reflects material related party transactions and the terms under which vii) based on the information that has been made available to us nothing has they were conducted; come to our and attention which causes us to believe that the Company has contravened, during the financial year ended 31 December 2017, any of the applicable provisions of the UAE Federal Law No. (2) of 2015, the UAE Federal of 2007 or of its Articles of Association which would have a material impact on its activities Law No. (6) or its financial ' ned by Raed Ahmad Partner Ernst & Young Registration No 28 March 2018 Abu Dhabi 811 position as at 31 December 2017.
12. Methaq Takaful Insurance Company PSC STATEMENT OF FINANCIAL POSITION As at 31 December 2017 201 7 2016 AED AED 22 ,528,252 3,418,442 42,008,241 226,076,519 20,885,266 1,385,076 6,576,634 156,403,103 53,977,329 11,677,487 348008.783 196927.566 1,622,074 6,000,000 1,430,659 2,009,122 6,000,000 2,529,012 10,632,000 23,680,465 162,360,000 10,369,086 2,971,526 15,948,000 14,853,276 162,360,000 5,843,748 334,023 6,686,914 4.307.842 Total Shareholders' Assets 225,752,724 214,185,023 TOTAL ASSETS my ammam 50,726,719 176,101,206 19,648,483 6,745,057 44,925,410 101,952,649 20,941,843 486,294 5,119,849 229,121,724 141.667.7611 482,343,189 315093805 477,432 8,623,845 1,844,813 Notes ASSETS Takaful Operating Assets Retakaful share of unearned contributions Prepaid expenses and other assets Retakaful share of outstanding claims Contributions and re- takaful balances receivables Cash and bank accounts Total Takaful Operating Assets Shareholders' assets Property and equipment Statutory deposits designated at fair value through profit or loss designated at fair value through other comprehensive income Deferred policy acquisition costs Investment properties Prepaid expenses and other assets Bank deposits Financial assets Financial assets 13 11 Cash and bank accounts Takaful Operation Liabilities 19 Takaful payables Outstanding claims Retakaful payables 19 Accrued expenses and other liabilities Unearned re takaful commission income — — Uneamed contributions Total Takaful Operations Liabilities Shareholders' Liabilities Accrued expenses and other liabilities Provision for end of service benefits 18 634,432 9,353,761 2,584,017 Islamic 20 3.428.571 5,142,857 16,000,781 16,088,947 mm 131,132,152 Trade payables financing arrangement Total shareholders' Liabilities TOTAL LIABILITIES The attached notes 1 to 29 form part of these financial statements.