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Gulf Union Cooperative Insurance Company announces the interim financial results for the period ending on 30-09-2016 (Nine Months)

GULF UNION ALAHLIA 8120 -0.79% 12.56 -0.10
Element Current quarter Similar quarter for previous year % Change current Previous quarter % Change previous
Net profit (loss) before Zakat -235 7,209 - 6,417 -
Surplus (deficit) of insurance transactions less returns of policy holders investment (operating transactions results) -513 8,379 - 6,737 -
Gross written premiums (GWP) 46,003 27,491 67.34 55,850 -17.63
Net written premiums (NWP) 26,482 13,250 99.86 29,027 -8.77
Net incurred claims 12,025 26,581 -54.76 11,311 6.31
Net profit (loss) of policy holders investment 785 4 19,525 541 45.1
Net profit (loss) of shareholders capital investment 787 285 176.14 578 36.16
All figures are in (Thousands) Saudi Arabia, Riyals
Element Current period Similar period for previous year % Change
Net profit (loss) before Zakat 7,605 6,244 21.8
Surplus (deficit) of insurance transactions less returns of policy holders investment (operating transactions results) 7,774 7,871 -1.23
Gross written premiums (GWP) 181,377 177,789 2.02
Net written premiums (NWP) 88,018 78,494 12.13
Net incurred claims 38,150 68,365 -44.2
Net profit (loss) of policy holders investment 1,607 510 215.1
Net profit (loss) of shareholders capital investment 1,870 706 164.87
Earning or loss per share, Riyals 0.35 0.28 -
All figures are in (Thousands) Saudi Arabia, Riyals
Element EXPLAINATION
Reasons of increase (decrease) for the quarter compared with same quarter last year The company reported net loss for the third quarter of 2016 amounting to 235 thousand riyals compared to the net profit of same quarter of last year amounting to 7,209 thousand riyals, the decrease in net profit is due to increase in other general and administrative expenses by 8,268 thousand riyals, decrease in net premium earned by 8,006 thousand riyals, decrease in change in unexpired risk reserve by 6,287 thousand riyals, decrease in reinsurance commission income by 2,464 thousand riyals and increase in shareholders general and administrative expenses by 645 thousand riyals which are partly offset by decrease in net claims incurred by 14,557 thousand riyals, decrease in policy acquisition costs by 1,682 thousand riyals, decrease in transfer to shareholders surplus by 811 thousand riyals, increase in other income, net by 685 thousand riyals and increase in shareholders income from investments 502 thousand riyals.
Reasons of increase (decrease) for the period compared with same period last year The company reported net profit for the nine months ended September 30, 2016 amounting to 7,606 thousand riyals compared to the net profit of same period of last year amounting to 6,244 thousand riyals, the increase in net profit is due to decrease in net claims incurred by 30,215 thousand riyals, increase in other income, net by 8,103 thousand riyals, decrease in policy acquisition costs by 4,656 thousand riyals, decrease in change in unexpired risk reserve by 2,272 thousand riyals, increase in shareholders income from investment by 1,164 thousand riyals and increase in policyholders commission income by 1,096 thousand riyals which are partly offset by decrease in net premium earned by 27,272 thousand riyals, increase in other general and administrative expenses by 9,076 thousand riyals, decrease in reinsurance commission income by 4,692 thousand riyals, increase in other reserves by 3,373 thousand riyals, increase in operating and administrative salaries by 928 thousand riyals, increase in shareholders general and administrative expenses by 701 thousand riyals and increase in transfer to shareholders surplus by 100 thousand riyals.
Reasons of increase (decrease) for the quarter compared with the previous quarter The company reported net loss for the third quarter of 2016 amounting to 235 thousand riyals compared to the net profit of the second quarter of the year 2016 amounting to 6,417 thousand riyals, the decrease in net profit is due to decrease in other income - net by 4,836 thousand riyals, increase in other general and administrative expenses by 4,308 thousand riyals, decrease in reinsurance commission income by 999 thousand riyals, increase in unexpired risk reserve by 915 thousand riyals, increase in net claims incurred by 714 thousand riyals and increase in shareholders general and administrative expenses by 556 thousand riyals which are partly offset by decrease in other reserves by 3,373 thousand riyals, decrease in operating and administrative salaries by 1,063 thousand riyals, decrease in transfer to shareholders surplus by 700 thousand riyals, increase in policyholders commission income by 245 thousand riyals and increase in shareholders income from investments by 208 thousand riyals.
External auditor's report containing reservation External Auditors drew attention in their limited review report to the following; Note 1 to the accompanying interim condensed financial statements. On 2 Muharram 1438H (October 3, 2016), the Company has received Saudi Arabian Monetary Agency (SAMA) approval to decrease its share capital in order to absorb the accumulated deficit up to a maximum amount of Saudi Riyals 90 million; Note 7(b) to the accompanying interim condensed financial statements. The Company had a net balance receivable from Gulf Union Insurance and Projects Management Holding Company B.S.C. (c.) (GUIPMC), a shareholder of the Company, amounting to Saudi Riyals 22.29 million as it was under dispute till June 2015. Upon resolution of the dispute and certain adjustments as required in SAMAs Letter, this balance was increased to Saudi Riyals 29.07 million. GUIPMC had earlier confirmed that the balance will be settled by June 30, 2016 which did not happen due to the liquidity position of GUIPMC. The Board of Directors of GUIPMC and the Company are currently negotiating the terms of repayments of the outstanding amount to the Company based on the budgeted cash flows of GUIPMC. Such negotiations are expected to be finalized in the fourth quarter of 2016; and Note 2 to the accompanying interim condensed financial statements. These interim condensed financial statements are prepared in accordance with IAS 34 and not in accordance with the Standard on Interim Financial Reporting issued by SOCPA.
Reclassifications in quarterly financial results In the statement of insurance operations for the three-month and nine-month periods ended September 30, 2015, the unexpired risk reserve and other reserves have been reclassified from the changes in unearned premiums and changes in outstanding claims respectively. There is no impact on the reported surplus from insurance operations for the comparative three-month and nine-month periods ended September 30, 2015 consequent to the aforementioned reclassifications.
Other notes Profit / (loss) per share calculated before Zakat and income tax. Shareholders equity (no minority interest) as at September 30, 2016 is 133,189 thousand riyals compared to 127,007 thousand riyals as at December 31, 2015. There is an increase of 4.9% in Shareholders equity (no minority interest) as at September 30, 2016.

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