Salama Cooperative Insurance Company: Interim Condensed Financial Statements - 31 December 2016

Transcription

1. SALAMA COOPERATIVE INSURANCE COMPANY (A SAUDI JOINT STOCK COMPANY) UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE THREE-MONTH AND TWELVE-MONTH PERIODS ENDED 31 DECEMBER 2016
2. SALAMA COOPERATIVE INSURANCE COMPANY (A SAUDI JOINT STOCK COMPANY) UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE THREE-MONTH AND TWELVE-MONTH PERIODS ENDED 31 DECEMBER 2016 INDEX PAGE Independent Auditors’ Review Report 1 Interim Statement of Financial Position 2–3 Interim Statement of Insurance Operations and Accumulated Surplus 4 Interim Statement of Shareholders’ Operations 5 Interim Statement of Comprehensive Income 6 Interim Statement of Changes in Shareholders’ Equity 7 Interim Statement of Insurance Operations’ Cash Flows 8 Interim Statement of Shareholders’ Operations Cash Flows 9 Notes to the Interim Condensed Financial Statements 10 – 23
12. SALAMA COOPERATIVE INSURANCE COMPANY – A Saudi Joint Stock Company NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (UNAUDITED) FOR THE THREE-MONTH AND TWELVE-MONTH PERIODS ENDED 31 DECEMBER 2016 1. ORGANIZATION AND PRINCIPAL ACTIVITIES Salama Cooperative Insurance Company ("the Company") is a Saudi joint stock company incorporated in the Kingdom of Saudi Arabia as per the Ministry of Commerce and Industry's Resolution number 1121K dated 29 Rabi Al-Thani 1428H (corresponding to 16 May 2007). The Company is registered in Jeddah under Commercial Registration No. 4030169661 dated 6 Jamad Al-Awal I428H (corresponding to 23 May 2007). The Registered Office address of the Company is: Al Amir Muhammed bin Abdulaziz Street, Bin Hamran Center, P.O. Box 122392, Jeddah 21332, Kingdom of Saudi Arabia. The objective of the Company is to transact cooperative insurance operations and related activities in the Kingdom of Saudi Arabia. The Company was listed on the Saudi Stock Exchange on 23 May 2007. The Company started its operations on 1 January 2008. The Company is fully owned by the general public and Saudi shareholders. 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES a) Basis of presentation These interim condensed financial statements have been prepared in accordance with International Accounting Standard 34: Interim Financial Reporting (“IAS 34”). The interim condensed financial statements for the threemonth and twelve-month periods ended 31 December 2016 (the “period”) do not include all information and disclosures required in the annual financial statements and should be read in conjunction with the annual financial statements as at 31 December 2015. 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) and are consistent with those used for the preparation of the annual financial statements of the Company for the year ended 31 December 2015 except for adoption of new and amended IFRS and International Financial Reporting Interpretations Committee Interpretations (IFRIC) as mentioned in note 2(b) which had no impact on the financial position or financial performance of the Company. The Company’s risk management objectives and policies are consistent with those disclosed in the annual financial statements for year ended 31 December 2015. The preparation of interim condensed financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, if any, at the date of the interim condensed financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates and judgments are based on management’s best knowledge of current events and actions, actual results ultimately may differ from those estimates. In the Company’s Board of Directors opinion, the interim condensed financial statements reflect all adjustments (which include normal recurring adjustments) necessary to present fairly the results of operations for the interim periods presented. The Company’s interim results may not be indicative of its annual results. 10
13. SALAMA COOPERATIVE INSURANCE COMPANY – A Saudi Joint Stock Company NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (UNAUDITED) FOR THE THREE-MONTH AND TWELVE-MONTH PERIODS ENDED 31 DECEMBER 2016 2 BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (continued) a) Basis of presentation (continued) The Company follows a fiscal year ending 31 December 2016 The interim condensed financial statements are expressed in Saudi Riyals, being the functional currency of the Company and have been rounded off to the nearest thousand, unless otherwise specified. As required by Saudi Arabian insurance regulations, the Company maintains separate accounts for Insurance Operations and Shareholders’ Operations. The physical custody and title of all assets related to the Insurance Operations and Shareholders’ Operations are held by the Company. Revenues and expenses clearly attributable to either activity are recorded in the respective accounts. The basis of allocation of expenses from joint operations is determined by the management and Board of Directors. As per the by-laws of the Company, surplus arising from the Insurance Operations is distributed as follows: Shareholders Policyholders 90% 10% ────── 100% ══════ If the insurance operations results in a deficit, the entire deficit is transferred to shareholders' operations. In accordance with article 70 of the Saudi Arabian Monetary Agency (“SAMA”) implementing regulations, the Company must obtain SAMA approval before distribution of policyholders surplus directly to policyholders at a time, and according to criteria set by its board of directors, provided that the customer contract is active and paid up to date at the time of settlement of the cooperative distribution account. The Company presents its interim statement of financial position broadly in order of liquidity. All financial assets and financial liabilities except for investments held to maturity are expected to be recovered and settled respectively, within twelve months after the interim reporting date. 11
14. SALAMA COOPERATIVE INSURANCE COMPANY – A Saudi Joint Stock Company NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (UNAUDITED) FOR THE THREE-MONTH AND TWELVE-MONTH PERIODS ENDED 31 DECEMBER 2016 2 BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (continued) b) New IFRS, International Financial Reporting and Interpretations Committee’s interpretations (IFRIC) and amendments thereof, adopted by the Company The Company has adopted the following amendments and revisions to existing standards, which were issued by the International Accounting Standards Board (IASB) with a date of initial application of 1 January 2016: Standard IFRS 11 IFRS 14 IAS 16 and IAS 38 IAS 27 IFRS 10 and IAS 28 IAS 1 IAS 16 and IAS 41 IFRS 10, IFRS 12 and IAS 28 IFRS 5, IFRS 7, IAS 19 and IAS 34 Description Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations Regulatory Deferral Accounts Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation Amendments to IAS 27 Equity Method in Separate Financial Statements Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Amendments to IAS 1 Disclosure initiative Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants. Amendments to IFRS 10, IFRS 12 and IAS 28 Applying the Consolidation Exception Annual Improvements to IFRS 2012-2014 cycle The adoption of the relevant new and amended standards and interpretations applicable to the Company did not have any significant impact on these interim condensed financial statements. c) Standards issued but not yet effective Standards issued but not yet effective up to the date of issuance of the Company 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 Description IAS 12 IAS 7 IFRS 9 IFRS 15 IFRS 16 Amendments to IAS 12 Recognition of Deferred Tax Assets for Unrealised losses Amendments to IAS 7 Disclosure Initiative Financial Instruments Revenue from Contracts with Customers Leases Effective date 1 January 2017 1 January 2017 1 January 2018 1 January 2018 1 January 2019 The Company is currently assessing the implications of adopting the above mentioned standards, amendments or interpretations on the Company’s financial statements. 12
15. SALAMA COOPERATIVE INSURANCE COMPANY – A Saudi Joint Stock Company NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (UNAUDITED) FOR THE THREE-MONTH AND TWELVE-MONTH PERIODS ENDED 31 DECEMBER 2016 3. 4. CASH AND CASH EQUIVALENTS 31 December 2016 (Unaudited) SR’000 31 December 2015 (Audited) SR’000 Insurance Operations Cash in hand and at banks 57,999 2,691 Shareholders’ Operations Cash at banks 11 8 31 December 2016 (Unaudited) SR’000 31 December 2015 (Audited) SR’000 14,783 10,962 TERM DEPOSITS Insurance Operations Term deposits The term deposits are held with the commercial banks. These term deposits are denominated in Saudi Arabian Riyals and have been an original maturity of more than three months and less than twelve months. The carrying amounts of these term deposits reasonably approximate their fair values at the reporting date. 5. PREMIUM RECEIVABLES, NET 31 December 2016 (Unaudited) SR’000 Due from policyholders Due from policy holders – related parties (note 10) Provision for doubtful debts 31 December 2015 (Audited) SR’000 84,051 36,362 (21,369) 42,900 32,707 (15,835) 99,044 59,772 31 December 2016 (Unaudited) SR’000 31 December 2015 (Audited) SR’000 Movements in allowance for doubtful premiums receivable were as follows: Balance at beginning of period / year Provision during the period / year Write off of bad debts Write back of previously written off balance during the year Balance at the end of the period / year 13 15,835 5,534 21,369 22,653 (6,963) (3,174) 3,319 15,835
16. SALAMA COOPERATIVE INSURANCE COMPANY – A Saudi Joint Stock Company NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (UNAUDITED) FOR THE THREE-MONTH AND TWELVE-MONTH PERIODS ENDED 31 DECEMBER 2016 6. INVESTMENTS a) FVIS investments Insurance operations Movement in FVIS investments is as follows: Balance at the beginning of the period / year Changes in fair value of investments Purchased during the period / year Disposals during the period / year Balance at the end of the period / year Twelve-month period ended 31 December 2016 (Unaudited) SR’000 Year ended 31 December 2015 (Audited) SR’000 159,137 2,237 166,162 (73,020) 254,516 85,484 2,964 140,068 (69,379) 159,137 Twelve-month period ended 31 December 2016 (Unaudited) SR’000 Year ended 31 December 2015 (Audited) SR’000 141,684 514 3,012 145,210 14,072 166,126 (40,000) 1,486 141,684 Twelve-month period ended 31 December 2016 (Unaudited) SR’000 Year ended 31 December 2015 (Audited) SR’000 36,100 (153) 35,947 30,641 5,586 (127) 36,100 Shareholders’ operations Movement in FVIS investments is as follows: Balance at the beginning of the period / year Purchases during the period / year Disposals during the period / year Changes in fair value of investments Balance at the end of the period / year b) Held to maturity investments Insurance operations Movement in investments held to maturity is as follows: Balance at the beginning of the period / year Purchases during the period / year Amortized during the period / year Balance at the end of the period / year 14
17. SALAMA COOPERATIVE INSURANCE COMPANY – A Saudi Joint Stock Company NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (UNAUDITED) FOR THE THREE-MONTH AND TWELVE-MONTH PERIODS ENDED 31 DECEMBER 2016 6. INVESTMENTS (continued) b) Held to maturity investments – (continued) Shareholders’ operations Movement in investments held to maturity is as follows: Balance at the beginning of the period / year Purchases during the period / year Amortized during the period / year Balance at the end of the period / year Twelve-month period ended 31 December 2016 (Unaudited) SR’000 Year ended 31 December 2015 (Audited) SR’000 10,147 3,717 (109) 13,755 10,211 (64) 10,147 The fair values of held to maturity investments are not expected to be materially different from their carrying values. c) Available-for-sale investments Shareholders’ operations Movement in available-for-sale investments is as follows: Twelve-month period ended 31 December 2016 (Unaudited) Quoted securities SR’000 Unquoted securities SR’000 Total SR’000 Balance at the beginning of the period - 1,923 1,923 Balance at the end of the period - 1,923 1,923 Quoted securities SR’000 Unquoted securities SR’000 Total SR’000 Balance at the beginning of the year - 1,923 1,923 Balance at the end of the year - 1,923 1,923 Year ended 31 December 2015 (Audited) i. Unquoted available-for-sale investment, having a carrying value of SR 1,923 thousand (31 December 2015: SR 1,923 thousand) are measured at cost as its fair value cannot be reliably measured due to the absence of active market and unavailability of observable market prices for similar instruments. 15
18. SALAMA COOPERATIVE INSURANCE COMPANY – A Saudi Joint Stock Company NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (UNAUDITED) FOR THE THREE-MONTH AND TWELVE-MONTH PERIODS ENDED 31 DECEMBER 2016 7. OUTSTANDING CLAIMS - NET Gross outstanding claims Add: Incurred But Not Reported (IBNR) reserve Less: Reinsurance companies’ share of outstanding claims Net outstanding claims 8. 31 December 2016 (Unaudited) SR’000 31 December 2015 (Audited) SR’000 23,179 123,997 147,176 13,766 84,341 98,107 (6,376) (7,408) 140,800 90,699 ZAKAT The Zakat payable by the Company has been calculated based on the best estimates of the management. Movement in Zakat payable during the twelve-month period ended 31 December 2016 and for the year ended 31 December 2015 is as follows: Balance at the beginning of the period / year Charge for the period / year Balance at the end of the period / year 31 December 2016 (Unaudited) SR’000 31 December 2015 (Audited) SR’000 5,008 9,046 3,808 1,200 14,054 5,008 Zakat status The Company has filed its zakat declarations for the period from 16 May 2007 to 31 December 2008 and for the years ended 31 December 2009 through 2015 and has obtained restricted zakat certificates. General Authority of Zakat and Tax (GAZT) raised assessment for the period from 16 May 2007 to 31 December 2008 and demanded additional Zakat liability of SR 619 thousand. The Company filed an objection against this demand and is confident of a favorable outcome. However during 2015, the GAZT issued initial assessment for the year 2011, disallowing investments and statutory deposit from Zakat base and requested additional Zakat of SR 1.3 million. The Company has filed an appeal against GAZT initial assessment and confident of a favorable outcome. During the period, the Company received Zakat assessments for the years ended 31 December 2008 through 2012 and demanded an additional Zakat and Withholding tax liability of SR 13.7 million. The Company has filed an objection against those assessments and confident of a favorable outcome. Further, the Company has booked an additional liability of SR 4.4 million for withholding tax in interim statement of Insurance Operations and SR 4.0 million for zakat for prior period in the interim statement of shareholders’ operations. 9. SHARE CAPITAL The authorised and issued share capital of the Company was SR 100 million divided into 10 million ordinary shares of SR 10 each. In the extra-ordinary general meeting held on 30 June 2015 corresponding to 13 Ramadan 1436H, the shareholders approved rights issue of SR 150 million. As approved by the regulators, 15 million ordinary shares were offered at an exercise price of SR 10 during the subscription period which was completed during August 2015. The legal formalities have been completed and the share capital has been increased from SR 100 Million to SR 250 Million. The Company incurred a sum of SR 6.97 million as issuance cost to raise additional capital of SR 150 million through rights issue which has been accounted through interim statement of changes in shareholders’ equity during the twelve-month period ended 31 December 2015. 16
19. SALAMA COOPERATIVE INSURANCE COMPANY – A Saudi Joint Stock Company NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (UNAUDITED) FOR THE THREE-MONTH AND TWELVE-MONTH PERIODS ENDED 31 DECEMBER 2016 10. RELATED PARTY TRANSACTIONS AND BALANCES The following are the details of significant related party transactions during the period. Amount of transaction Twelve-month period ended Related party Nature of transaction Balance as at 31 December 2015 (Audited) SR’000 31 December 2016 (Unaudited) SR’000 31 December 2015 (Audited) SR’000 Balance as at 31 December 2016 (Unaudited) SR’000 100 91 - - a) Insurance Operations Major Shareholder Islamic Arab Insurance Company (UAE) Insurance premium Related Parties of key management personnel Tajeer Co. (Affiliate) Insurance policies written 98,661 160,813 36,362 32,707 Chairman of the Board Insurance policies written 312 390 144 - Rusd Global Company Insurance policies written 608 564 191 - Technology Establishment Insurance policies written - 78 - - Al Firdous Group Co. Insurance policies written 1,971 1,407 26 82 Key management personnel Long-term benefits Short term benefits 276 4,423 248 4,657 (1,038) 146 (1,511) 132 b) Shareholders’ Operations Board of Directors Remuneration 104 104 - Board Committees Remuneration 11 140 - Terms of transactions with related parties are approved by the management of the Company. The period end balances of transactions with related parties are disclosed in the interim statement of financial position. 17
20. SALAMA COOPERATIVE INSURANCE COMPANY – A Saudi Joint Stock Company NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (UNAUDITED) FOR THE THREE-MONTH AND TWELVE-MONTH PERIODS ENDED 31 DECEMBER 2016 11. SEGMENTAL INFORMATION All the insurance operations of the Company are carried out in the Kingdom of Saudi Arabia. For management purposes, the operations are monitored in three major lines of business. Segment results do not include general and administration expenses and investment income. Segment assets do not include cash and cash equivalents, term deposits, net premiums receivable, net reinsurance receivable, due from shareholders operations, prepayments and other receivables, amount due from a related party, investments, furniture, fittings and office equipment. Segment liabilities do not include policyholders’ claims, reinsurance payables, accruals and other payables, due to shareholders’ operations and employees’ end of service benefits. Consistent with the Company’s internal reporting process, operating segments have been approved by the management in respect of the Company’s activities, assets and liabilities as stated below: For the three-month period ended 31 December 2016 – unaudited Medical SR’000 Gross premiums written Less: Reinsurance premiums ceded Less: Excess of loss premiums Net premiums written Changes in net unearned premiums Net premiums earned Net reinsurance commissions earned Net revenue Gross claims paid Less: Reinsurers’ share Net claims paid Changes in outstanding claims Net claims incurred Changes in other technical reserves Policy acquisition costs Other operating expenses Net costs and expenses Net results of insurance operations Motor SR’000 Other SR’000 Total SR’000 6,915 - 146,209 (4,777) 2,974 (2,311) (222) 156,098 (2,311) (4,999) 6,915 673 141,432 (24,278) 441 584 148,788 (23,021) 7,588 7,588 117,154 117,154 1,025 940 1,965 3,448 - 76,439 - 1,049 (812) 80,936 (812) 3,448 1,543 76,439 9,213 237 603 80,124 11,359 4,991 (546) 333 689 5,467 2,121 85,652 1,661 4,164 6,674 98,151 19,003 840 (4) 325 44 1,205 760 91,483 1,111 4,822 7,407 104,823 21,884 125,767 940 126,707 General and administrative expenses Provision for doubtful debts Investment income Unallocated other income (13,019) (239) 2,582 1,780 Surplus from insurance operations 12,988 18
21. SALAMA COOPERATIVE INSURANCE COMPANY – A Saudi Joint Stock Company NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (UNAUDITED) FOR THE THREE-MONTH AND TWELVE-MONTH PERIODS ENDED 31 DECEMBER 2016 11. SEGMENTAL INFORMATION (continued) Medical Motor Other Total SR’000 SR’000 SR’000 SR’000 30,016 (732) 523,287 (400) (12,859) 18,050 (13,268) (996) 571,353 (13,668) (14,587) 29,284 (957) 510,028 (109,251) 3,786 75 543,098 (110,133) 28,327 28,327 400,777 70 601 401,448 3,861 3,665 7,526 432,965 3,735 601 437,301 16,683 - 261,901 - 5,174 (3,898) 283,758 (3,898) 16,683 1,925 261,901 47,890 1,276 286 279,860 50,101 18,608 (546) 1,311 2,450 21,823 6,504 309,791 1,661 13,000 12,157 336,609 64,839 1,562 (4) 1,301 235 3,094 4,432 329,961 1,111 15,612 14,842 361,526 75,775 For the twelve-month period ended 31 December 2016 – unaudited Gross premiums written Less: Reinsurance premiums ceded Less: Excess of loss premiums Net premiums written Changes in net unearned premiums Net premiums earned Net reinsurance commissions earned Other underwriting income Net revenue Gross claims paid Less: Reinsurers’ share Net claims paid Changes in outstanding claims Net claims incurred Changes in other technical reserves Policy acquisition costs Other operating expenses Net costs and expenses Net results of insurance operations General and administrative expense Provision for doubtful debts Investment income Unallocated other income (48,826) (5,760) 5,968 2,613 29,770 Surplus from insurance operations As at 31 December 2016 - unaudited Insurance operations’ assets Reinsurers’ share of unearned premiums Reinsurers’ share of outstanding claims Deferred policy acquisition costs Unallocated assets Medical SR’000 Motor SR’000 Other SR’000 Total SR’000 674 - 9,475 - 4,752 6,376 440 - 4,752 6,376 10,590 486,812 508,530 Total insurance operations’ assets Insurance operations’ liabilities and surplus Unearned premiums Outstanding claims Unearned reinsurance commission Other technical reserves Unallocated liabilities and surplus 11,665 7,636 533 Total insurance operations’ liabilities and surplus 19 263,183 129,231 3,140 6,122 10,309 1,287 22 280,969 147,176 1,287 3,695 75,403 508,530
22. SALAMA COOPERATIVE INSURANCE COMPANY – A Saudi Joint Stock Company NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (UNAUDITED) FOR THE THREE-MONTH AND TWELVE-MONTH PERIODS ENDED 31 DECEMBER 2016 11. SEGMENTAL INFORMATION (continued) For the three-month period ended 31 December 2015 – unaudited Gross premiums written Less: Reinsurance premiums ceded Less: Excess of loss premiums Net premiums written Changes in net unearned premiums Net premiums earned Net reinsurance commissions earned Other underwriting income Net revenue Gross claims paid Less: Reinsurers’ share Net claims paid Changes in outstanding claims Net claims incurred Changes in other technical reserves Policy acquisition costs Other operating expenses Net costs and expenses Net results of insurance operations General and administrative expenses Release of provision for doubtful debts Investment income Unallocated other income Medical Motor Other Total SR’000 SR’000 SR’000 SR’000 5,498 (990) 4,508 2,251 6,759 6,759 72,510 (793) 71,717 11,617 83,334 1,362 84,696 2,162 (1,749) (582) (169) 996 827 1,027 1,854 80,170 (1,749) (2,365) 76,056 14,864 90,920 1,027 1,362 9,309 4,340 (1,352) 2,988 40 3,028 1,079 363 519 4,989 1,770 65,239 65,239 16,716 81,955 (2,853) 2,158 1,264 82,524 2,172 2,588 (2,542) 46 253 299 (173) 316 32 474 1,380 72,167 (3,894) 68,273 17,009 85,282 (1,947) 2,837 1,815 87,987 5,322 (11,138) 112 735 252 (4,717) Deficit from insurance operations 20
23. SALAMA COOPERATIVE INSURANCE COMPANY – A Saudi Joint Stock Company NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (UNAUDITED) FOR THE THREE-MONTH AND TWELVE-MONTH PERIODS ENDED 31 DECEMBER 2016 11. SEGMENTAL INFORMATION (continued) Medical Motor Other Total SR’000 SR’000 SR’000 SR’000 Gross premiums written Less: Reinsurance premiums ceded Less: Excess of loss premiums Net premiums written Changes in net unearned premiums Net premiums earned Net reinsurance commissions earned Other underwriting Income 29,688 (1,868) 27,820 4,737 32,557 - 342,733 (74) (5,155) 337,504 (33,788) 303,716 88 1,362 19,319 (14,251) (1,304) 3,764 1,411 5,175 3,679 - 391,740 (14,325) (8,327) 369,088 (27,640) 341,448 3,767 1,362 Net revenue 32,557 305,166 8,854 346,577 Gross claims paid Less: Reinsurers share Net claims paid Changes in outstanding claims Net claims incurred Changes in other technical reserves Policy acquisition costs Other operating expenses Net costs and expenses Net results of insurance operations 20,256 (1,301) 18,955 (741) 18,214 1,079 1,666 2,476 23,435 9,122 254,742 254,742 17,150 271,892 (2,853) 8,323 5,079 282,441 22,725 5,145 (4,265) 880 646 1,526 (173) 1,174 263 2,790 6,064 280,143 (5,566) 274,577 17,055 291,632 (1,947) 11,163 7,818 308,666 37,911 For the twelve-month period ended 31 December 2015 – audited General and administrative expenses Investment income Unallocated other income (41,170) 4,327 735 Surplus from insurance operations As at 31 December 2015 – audited Insurance operations’ assets Reinsurers’ share of unearned premiums Reinsurers’ share of outstanding claims Deferred policy acquisition costs Unallocated assets 1,803 Medical SR’000 Motor SR’000 Other SR’000 Total SR’000 613 4,132 6,063 7,408 470 6,063 7,408 5,215 289,468 Total insurance operations’ assets 308,154 Insurance operations’ liabilities and surplus Unearned premium Outstanding claims Unearned reinsurance commission Other technical reserves Unallocated liabilities and surplus 10,707 5,711 1,079 Total insurance operations’ liabilities and surplus 153,932 81,341 1,478 7,508 11,055 1,553 27 172,147 98,107 1,553 2,584 33,763 308,154 21
24. SALAMA COOPERATIVE INSURANCE COMPANY – A Saudi Joint Stock Company NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (UNAUDITED) FOR THE THREE-MONTH AND TWELVE-MONTH PERIODS ENDED 31 DECEMBER 2016 12. FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair values of on-balance sheet financial instruments, except for investments held to maturity, are not significantly different from the carrying values included in the interim condensed financial statements. The fair values of held to maturity investments are not expected to be materially different from their book values. Determination of fair value and fair value hierarchy The Company, if applicable, uses the following hierarchy for determining and disclosing the fair value of financial instruments: Level 1: quoted prices in active markets for the identical assets or liabilities (i.e. without modification or repacking). Level 2: quoted prices in active markets for similar financial assets and liabilities or other valuation techniques for which all significant inputs are based on observable market data; and Level 3: valuation techniques for which any significant input is not based on observable market data. The table below presents the financial instruments at their fair values as at 31 December 2016 Level 1 Level 2 Level 3 Total Financial assets Financial assets held as FVIS - Insurance Operations 254,516 254,516 Financial assets held as FVIS - Shareholders’ Operations 145,210 145,210 Balance at the end of the period - 399,726 - 399,726 The table below presents the financial instruments at their fair values as at 31 December 2015. Level 1 Level 2 Level 3 Total Financial assets held as FVIS - Insurance Operations - 159,137 - 159,137 Financial assets held as FVIS - Shareholders’ Operations - 141,684 - 141,684 Balance at the end of the year - 300,821 - 300,821 Financial assets The Company determines Level 2 fair values for trading investments based on the net assets value of the respective funds as at the end of the reporting period. 22
25. SALAMA COOPERATIVE INSURANCE COMPANY – A Saudi Joint Stock Company NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS – (UNAUDITED) FOR THE THREE-MONTH AND TWELVE-MONTH PERIODS ENDED 31 DECEMBER 2016 13. EARNINGS PER SHARE Earnings per share for the period has been calculated by dividing the net income for the period by the weighted average number of issued and outstanding shares for the period. 14. COMPARATIVE FIGURES Certain comparative period figures have been reclassified to conform with the current period presentation. 15. BOARD OF DIRECTORS’ APPROVAL These financial statements have been approved by the Board of Directors on 19 January 2017, corresponding to 21 Rabi Al Thani 1438H. 23