Saudi Enaya Cooperative Insurance Co. announces the interim financial results for the period ending on 30-06-2018 (Six Months)

ELEMENTCURRENT QUARTERSIMILAR QUARTER FOR PREVIOUS YEAR% CHANGE CURRENTPREVIOUS QUARTER% CHANGE PREVIOUS
Net profit (loss) before Zakat 23,424 -3,475 - -103,336 -
Surplus (deficit) of insurance transactions less returns of policy holders investment (operating transactions results) 23,720 -4,356 - -103,959 -
Gross written premiums (GWP) 50,673 66,246 -23.51 87,188 -41.88
Net written premiums (NWP) 36,483 65,301 -44.13 82,961 -56.02
Net incurred claims 46,718 20,452 128.43 118,967 -60.73
Net profit (loss) of policy holders investment 0 0 - 0 -
Net profit (loss) of shareholders capital investment 976 1,166 -16.3 925 5.51
All figures are in (Thousands) Saudi Arabia, Riyals
ELEMENTCURRENT PERIODSIMILAR PERIOD FOR PREVIOUS YEAR% CHANGE
Net profit (loss) before Zakat 79,913 -10,031 -
Surplus (deficit) of insurance transactions less returns of policy holders investment (operating transactions results) -80,240 -11,560 -594.12
Gross written premiums (GWP) 137,861 115,241 19.63
Net written premiums (NWP) 119,444 113,108 5.6
Net incurred claims 165,198 40,072 312.25
Net profit (loss) of shareholders capital investment 1,901 1,988 -4.38
Earning or loss per share, Riyals -7.99 -1 -
All figures are in (Thousands) Saudi Arabia, Riyals
ELEMENTEXPLAINATION
Reasons of increase (decrease) for the quarter compared with same quarter last year 'The net profit for Q2 2018 amounting to SR 23,424K, compared to a net loss of SR 3,475K in Q2 2017, has improved by SR 26,899K representing an improvement of 774%. The major reason for improvement in results is the increase in net earned premiums from SR 33,615K in Q2 2017 to 65,807K in Q2 2018 representing an increase of SR 32,192K (95.8%), primarily due to favorable movements in unearned premium reserves. Furthermore, the net claims paid increased by 45,857K in Q2 2018 comparing to Q2 2017 representing 274% but this increase was offset by a reversal of net technical claim reserves by SR 38,410K in Q2 2018 compared to an increase of SR 3,725K in the Q2 2017 representing an improvement of 42,135K SR, 1131%.
Reasons of increase (decrease) for the period compared with same period last year 'The net loss for six months ended 30 June 2018 amounting to SR 79,913K, compared to a net loss of SR 10,031K for same period of 2017, deteriorated by SR 69,882K, representing 697%. This deterioration in results is due to increase in total underwriting costs and expenses from SR 46,013K for six months ended 30 June 2017 to SR 188,563K for six months ended 30 June 2018 representing an increase of SR 142,550K, 310%. This increase in total underwriting costs and expenses is primarily due an increase in net technical claim reserves of SR 42,639K representing 341% when comparing the two periods, to meet the potential claims, as recommended by the actuary. Furthermore, there is an improvement of 20% in GWP in 2018 on comparison to the same period of 2017 .
Reasons of increase (decrease) for the quarter compared with the previous quarter 'The net profit for Q2 2018 amounting to SR 23,424K, compared to a net loss of SR 103,336K in Q1 2018, showed an improvement of SR 126,760K representing 122%. Inspite of the fact that the gross written premiums in Q2 2018 decreased by SR36,515K representing a decrease of 42%, compared to previous quarter but the results were positively impacted by a decrease of SR 72,249K in net claims incurred representing a decrease of 61% in Q2 2018 on comparison to Q1 2018 primarily due to the reversal net technical claim reserves of 38,410K in Q2 2018, as per the advice of the actuary of the Company.
External auditor's report containing reservation The joint auditors interim review report on the interim condensed financial statements mentions that the interim condensed financial statements have been prepared in accordance with International Accounting Standard 34 - Interim Financial Reporting (IAS 34) as modified by SAMA for the accounting of Zakat and Income Tax.
The joint auditors draw attention to Note 4 whereby as on 31 March 2018, the Companys accumulated losses exceeded 74.5% of its share capital. Further, on 9 May 2018, in an Extraordinary General Assembly Meeting it was resolved to reduce the Companys share capital by from SR 200 million to SR 100 million. Accordingly, the Company absorbed SR 100 million of accumulated losses against its share capital of 10 million shares. Subsequent to the reduction, this resulted decline in accumulated losses to 26.19% of the share capital as at 30 June 2018.
On 27 May 2018, Company received a letter from SAMA regarding non-compliance with the solvency requirement. As at 30 June 2018, the Company is not in full compliance with Article 66 of SAMA Insurance Implementing Regulations in relation to its solvency requirements. Subsequent to the period end, on 18 July 2018, the Company received another letter from SAMA indicating issues concerning the material deficiencies in risk assessment procedures, corporate governance, contingency planning and internal control environment among other things. Further, SAMA instructed the Company to hire an independent consultant within maximum 15 working days to perform a detailed review over the weaknesses and observations identified and update SAMA weekly on the progress. Furthermore, Company is to provide final report from the consultant to SAMA within 60 working days from the date of the original letter. The Company has taken necessary actions to comply with SAMAs letter related to the appointment of consultant. Once the report is issued, Company will develop an action plan and will get approval from the Board of Directors. These conditions raise material uncertainty on the Companys ability to continue as a going concern. However, the Companys management has made an assessment of its ability to continue as a going concern and is satisfied that the Companys operations shall continue for foreseeable future under normal course of the business. Accordingly, the interim condensed financial information has been prepared on the going concern basis and do not include any adjustments, which may be required, if the Company is not able to continue as going concern.
The joint auditors conclusion is not qualified in respect of the above matter.
Other notes 1. Total net profit for the current quarter is SR 23,424 K compared to net loss of SR 3,475 K for the same quarter last year, an improvement of 774% and compared to net loss of SR 103,336 K in previous quarter, an improvement of 123%.

2. Total comprehensive loss for the current 6 month period is SR 79,913K compared to SR 10,031K for the same period last year, representing an increase in losses by 697%.

3. Total shareholders' equity (there is no minority interest) for the current period reached SAR 73,815 K compared to SAR 160,416 K for the same period last year, a decrease of 54%.

4. Total accumulated losses amounted to SR 26,185 K, representing 26.19% of share capital. Total accumulated losses at the end of current quarter is SR 26,185 K compared to total accumulated losses of SR 39,584 K at the end of same quarter last year, an improvement of 34% and compared to total accumulated losses of SR 149,008 K at the end of previous quarter, an improvement of 82.4%.

5. Earning per share (EPS) for the three months period ended 30 June 2018 of SR 2.34 per share versus SR (0.35) per share for the same period in 2017, improvement of 768.6%. EPS for six months period ended 30 June 2018 is SR (7.99) per share versus SR (1.0) per share for same period last year, a reduction of 699%.

The Capital Market Authority and the Saudi Stock Exchange take no responsibility for the contents of this disclosure, make no representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this disclosure, and the issuer accepts full responsibility for the accuracy of the information contained in it and confirms, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts or information the omission of which would make the disclosure misleading, incomplete or inaccurate.

 

Additional information