Saudi Indian Company for Cooperative Insurance (Wafa Insurance) announces the interim financial results for the period ending on 30-06-2018 (Six Months)
| Element | Current quarter | Similar quarter for previous year | % Change current | Previous quarter | % Change previous |
|---|---|---|---|---|---|
| Net profit (loss) before Zakat | -10,660 | 2,924 | - | -31,802 | 66.48 |
| Surplus (deficit) of insurance transactions less returns of policy holders investment (operating transactions results) | -12,143 | 3,331 | - | -30,356 | 60 |
| Gross written premiums (GWP) | 23,494 | 118,937 | -80.25 | 88,209 | -73.37 |
| Net written premiums (NWP) | 14,260 | 73,100 | -80.49 | 51,837 | -72.49 |
| Net incurred claims | 40,361 | 75,551 | -46.58 | 79,599 | -49.29 |
| Net profit (loss) of policy holders investment | 1,831 | 98 | 1,768.37 | 0 | - |
| Net profit (loss) of shareholders capital investment | 0 | 365 | - | -889 | - |
| All figures are in (Thousands) Saudi Arabia, Riyals | |||||
| Element | Current period | Similar period for previous year | % Change |
|---|---|---|---|
| Net profit (loss) before Zakat | -42,462 | 6,571 | - |
| Surplus (deficit) of insurance transactions less returns of policy holders investment (operating transactions results) | -42,499 | 6,523 | - |
| Gross written premiums (GWP) | 111,703 | 351,956 | -68.26 |
| Net written premiums (NWP) | 66,097 | 225,334 | -70.67 |
| Net incurred claims | 119,960 | 164,427 | -27.04 |
| Net profit (loss) of policy holders investment | 1,831 | 475 | 285.47 |
| Net profit (loss) of shareholders capital investment | -889 | 1,193 | - |
| Earning or loss per share, Riyals | -4.25 | -0.66 | - |
| All figures are in (Thousands) Saudi Arabia, Riyals | |||
| Element | EXPLAINATION |
|---|---|
| Reasons of increase (decrease) for the quarter compared with same quarter last year | The reason of having losses in current quarter of 2018 compared to profit same quarter of 2017 is due to the decrease in Gross Premiums Written by 80.24%, decrease in Net Premiums Written by 80.49%, and the decrease in total revenue by 51.80%. |
| Reasons of increase (decrease) for the period compared with same period last year | The Reason of having losses in current period compared to profit same period of 2017 is due to the decrease in Gross Premiums Written by 68.26%, the decrease in Net Premiums Written by70.67%, and the decrease in total revenue by 44.17%. |
| Reasons of increase (decrease) for the quarter compared with the previous quarter | The reason of decrease in losses in the current quarter of 2018 compared to the previous quarter is due to the decrease in Gross claims paid by 16.05%, the decrease in Net claims paid by 41.07% and the decrease in total underwriting costs and expenses by 45.16% |
| External auditor's report containing reservation | As at 30 June 2018, the Company has accumulated losses of SR 58.88 million (2017: SR 37.32 million), which are 58.88% (2017: 30.59%) of the Company share capital as at that date. The Company reduced its share capital by SR 83 million during the year 2017 and by SR 22 million during the six months period ended 30 June 2018. Further, the Company did not meet the solvency margin requirements as at 31 December 2017 and 30 June 2018 and the Company solvency margin as at 30 June 2018 remained declined substantially. The Company received a final warning from SAMA on 01 May 2018, requiring the Company to maintain the required solvency margin before 30 September 2018 and to appoint an independent consultant at the expense of the Company to provide advice on this matter. In case the Company does not take corrective measures, SAMA will take one or more actions including preventing the Company from accepting subscribers or investors or new subscribers in any of the insurance activities or reduce it. The Board of Directors based on a business plan recommended the extra ordinary general assembly to approve the capital reduction of 22 million and capital injection of SR 100 million. On 29 April 2018 the Company appointed a consultant as a financial advisor to manage the process of reducing the Company capital and carrying out all related procedures. The Company after receiving approval from SAMA and CMA, called for a general assembly meeting and the reduction of capital of SR 22 million was approved by the general assembly on 20 May 2018. On 24 May 2018, SAMA issued a letter regarding the Company failure to meet the minimum solvency margin requirements and suspended the Company from issuing new policies and renewing current policies from 24 May 2018, and directed the Company to appoint a consultant which shall submit weekly report to SAMA. The Chairman of the Board of Directors shall inform all the board members of the receipt of this letter and that they shall take appropriate actions to address the solvency. SAMA may take more actions if the solvency position is not addressed. On 31 May 2018, the Company with the approval of SAMA appointed a consultant to study and analyze the solvency situation of the Company. The consultant report was submitted by the end of July 2018, in which the consultant recommended short term, medium term and long term actions. These recommendations include a minimum capital injection of SR 150 million, fixing the violations as mentioned in SAMA letters and improvement of operations. Subsequently on 29 July 2018, the Company announced that its accumulated losses have exceeded 50% of the share capital of the Company. The Board of Directors of the Company were informed of this significant event and to call for an extra ordinary general assembly meeting as required by Article 150 of Law of Companies by 12 August 2018, to decide either to increase or decrease the share capital of the Company to the extent that the ratio of the losses becomes less than half of the capital or to dissolve the Company. The general assembly will be called within 45 days of the notification to the chairman of the board of directors and the decision of the general assembly of the shareholder must be implemented within 90 days of the general assembly meeting. Failure to implement the decision of general assembly within 90 days as aforesaid will lead to dissolution of the Company as mentioned in article 150 of the Law of Companies. Furthermore, SAMA issued a letter on 29 July 2018 on various controls and governance related matters, requiring the Company to appoint a consultant within 15 days and to submit a report within 60 days from the date of this letter. The Company is yet to appoint a consultant. On 07 August 2018, the Company announced that the board of directors in their meeting held on 06 August 2018, recommended to call for an extra ordinary general assembly in accordance with article 150 of the Law of Companies to study the situation of the Company and take a decision to increase capital or reduce capital or dissolve the Company. The board of directors also clarified that this assembly is only for the purpose of taking decision on the strategy of dealing with the current situation of the Company and choosing one of the options referred to in article 150. The accumulated losses, deficiency in solvency margin, final warning letter from SAMA and subsequent suspension of business of the Company by SAMA, significant decrease in human resource and pending decision of the general assembly meeting, as aforesaid, has created a material uncertainty and cast significant doubt on the Company ability to continue as going concern and therefore, the Company may not be able to realize its assets and discharge its liabilities in the normal course of business. The management with the help of an actuary has prepared a revised business plan which has been approved by the Board of Directors on 06 August 2018, which contains different scenarios and addresses the need of capital injection of SR 200 million, to deal with the solvency situation and ensure going concern status of the Company. Based on this revised business plan and management expectation of favorable arrangements to address the solvency situation which are also dependent upon decision of the general assembly meeting, as aforesaid, and future actions, events and approval of SAMA and CMA, the financial information of the Company for the period ended 30 June 2018 has been prepared by the management on going concern basis of accounting and does not include any adjustments, which may be required, if the Company is not able to continue as going concern. |
| Reclassifications in quarterly financial results | The comparative figures of previous period have been rearranged / reclassified to match with the current presentation |
| Other notes | Basic and diluted earnings per share have been computed by dividing the net income before Zakat and income tax for the relevant periods by the weighed average number of issued outstanding shares. The relevant averages are 10,000,000 for the three and six moth period ended June 30, 2018 and 10,000,000 for the three and six month period ended June 30, 2017. The total comprehensive loss for the current quarter is SAR 10.66 million, compared to total comprehensive profit of SAR 2.84 million for the same quarter last year , compared to total comprehensive loss of SAR 31.8 million for the previous quarter which represents a decrease of 66.47% The total accumulated loss for the period from 01-01-2018 to 30-06-2018 is SAR 42.5 million, compared to total comprehensive income of SAR 6.33 million for the same period last year . Total accumulated losses amounting to SAR 58.88 million, representing 58.88% of capital. The total of shareholder's equity (there are no minority rights) for the current period amounted to SAR 41.1 million compared with SAR 125 million for the same period last year, which is a decrease of 67.1%. The reason of the losses is mainly due to the losses generated from operations. The Company announces that it will implement the procedures and instructions issued by the Capital Market Authority related to listed companies, the accumulated losses of which have amounted to 50 % or more of its paid-up Capital, as per the Capital Market Authority Boards resolution no. 1-130-2016 dated 23/01/1438H corresponding to 24/10/2016. |
Comments