Mubasher TV
Contact Us Advertising   العربية

The Mediterranean and Gulf Insurance and Reinsurance Co. announces its Annual Financial Results for the Period Ending on 2019-12-31

MEDGULF 8030 -0.15% 13.30 -0.02
Element List Current Year Previous Year %Change
Gross Written Premiums (GWP) 2,421,277 2,069,473 16.999
Net Written Premiums (NWP) 1,737,366 1,803,470 -3.665
Net Incurred Claims 1,684,772 1,584,948 6.298
Net Profit (Loss) of Policy Holders Investment 16,794 9,285 80.872
Profit (Loss) Insurance Operations Minus Policy Holders Investments Revenues (Operations Results) -6,839 -222,744 -96.929
Net Profit (loss) of Shareholders Capital Investment 17,705 15,039 17.727
Net Profit (Loss) before Zakat 19,176 -204,527 -
Total Comprehensive Income 24,534 -219,332 -
Total Share Holders Equity (after Deducting Minority Equity) 711,133 686,087 3.65
Perpetrating Expenses (First Operation Year) - - -
Profit (Loss) per Share 0.04 -3.9
All figures are in (Thousands) Saudi Arabia, Riyals
Element List Explanation
Increase (Decrease) in Net Profit for Current Year Compared to Last Year is Attributed to The reason behind the net profit during the current year compared to net loss during the previous year is the increase in net underwriting result by 213.6% due to the increase in net earned premium by 11.5% and increase in Re-insurance commissions income by 83% and the decrease in premium deficiency reserves as recommended by the external actuary. In addition, during the previous year the company has recorded doubtful debt provision amounting to SR 27.1 million compared to reversal of SR 36.9 during the current year.

The reason behind the increase in shareholders investments income during the current year compared to the previous year is the increase in special commission income by 208.8%.

Basis of the External Auditor's Opinion Qualified opinion
Modification, Qualification or Emphasis of a Matter as Stated within the External Auditor Opinion Qualified Opinion

We have audited the financial statements of The Mediterranean and Gulf Cooperative Insurance and Reinsurance Company, (A Saudi Joint Stock Company) (the “Company”), which comprise of Statement of financial position as at 31 December 2019 and statements of comprehensive income and the statements of changes in shareholders’ equity and cash flows for the year then ended, and the accompanying notes which form an integral part of these financial statements.

In our opinion, except for the effects of the matters described in the Basis for Qualified Opinion section of our report, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at 31 December 2019, and the results of its operations and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) as endorsed in the Kingdom of Saudi Arabia and other standards and pronouncements that are issued by Saudi Organization for Certified Public Accountants (“SOCPA”).

Basis of Qualified Opinion

1) As disclosed in note 10 to the accompanying financial statements, all reinsurance treaties up to the underwriting year 2014 were managed by the Medgulf Group Corporate Reinsurance Center (“CRC”), a related party, who dealt with the Company’s transactions, along with those of other related parties, on a consolidated basis with the reinsurers and brokers. All transactions with reinsurers and brokers were routed through CRC and the settlement of balances with these reinsurers and brokers were also made by CRC. The Company, together with CRC, have now initiated an exercise to separate the Company’s transactions and balances with the respective reinsurers and brokers from those of other related parties. This exercise is still on-going and on completion certain parties included in the policyholders’ and reinsurance balances receivable under note 9 amounting to Saudi Riyals 114 million may be identified as receivable from related parties and therefore may need to be disclosed under due from related parties. The underlying transactions with such related parties will then also require disclosure under related party transactions. Accordingly, management is currently unable to provide a complete list of all related parties balances and transactions which impacts both the presentation and disclosure of related party balances and transactions. Consequently, we were unable to determine whether any adjustments to the presentation and disclosure of the related party balances and transactions were necessary in the accompanying financial statements.

2)As disclosed in note 6, the Company is accounting for its reinsurance transactions related to the general line of business based on their understanding of the contractual terms of the reinsurance agreements. However, such accounting of reinsurance transactions may be subject to different interpretations. As a result, the Company’s financial statements may require adjustments, if the terms of reinsurance agreements are interpreted differently. Management is still securing clarity on the terms of the reinsurance agreements. In the absence of information in this regard, we were unable to determine whether adjustments would be required in the accompanying financial statements.

We conducted our audit in accordance with International Standards on Auditing (“ISAs”) as endorsed in the Kingdom of Saudi Arabia. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for

the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the professional code of conduct and ethics, as endorsed in the Kingdom of Saudi Arabia that are relevant to our audit of the financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matters

We draw attention to note 2 to the accompanying financial statements, which details various communications from SAMA to the Company. The Company did not meet the solvency margin requirements as at 31 December 2019. The deficiency in solvency margin along with other matters as set forth in note 2 indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. However, the accompanying financial statements are prepared using the going-concern assumption based on management’s assessment on the company abilities to continue as a going concern. Our opinion is not further modified in respect of this matter.

Reclassification of Comparison Items The basis of preparation has been changed for the year ended 31 December 2019 as a result of the issuance of latest instructions from SAMA dated 23 July 2019. Previously, zakat and income tax were recognized in the statement of changes in equity as per the SAMA circular no 381000074519 dated 11 April 2017. With the latest instructions issued by SAMA dated 23 July 2019, the zakat and income tax shall be recognized in the statement of income. The Company has accounted for this change in the accounting for zakat and income tax retrospectively. The change has resulted in an increase in reported losses of the Company for the year ended 31 December 2018 by SR 4,625 thousand. The change has no impact on the statement of cash flows for the year then ended.

In addition to the above, we reclassified some comparative numbers within the previous year statement of financial information in order to comply with the current year, there was no financial impact on net income before zakat and income tax after the reclassification.

Additional Information Earnings / (loss) per share has been calculated by dividing the net earnings / (loss) after zakat and income tax for the year by the weighted average number of shares outstanding as of the reporting date. The weighted average number of share as at end of 2019 and 2018 are 80,000 thousand and 53,691 thousand respectively. The gain per share for the current year based on the weighted average number of shares is SR 0.04 as compared to loss per share of SR 3.90 during the previous year.

The total insurance operations comprehensive income during the current year is SR 483 thousand comparing to comprehensive loss of SR 4,312 thousand during the previous year. The total shareholders` comprehensive income during the current year is 25,046 thousand compared to comprehensive loss of SR 215,020 thousand during the previous year.

The total shareholders` equity (no minority interest) during the current year is SR 711,113 thousand compared to SR 686,087 thousand during the previous year, an increase of 3.6%.

The accumulated losses has reached SR 256,482 thousand as of 31 December 2019, which consist of 32.06% of the paid capital amounting to SR 800,000 thousand.

The net income after zakat and income tax during the current year is SR 3,124 thousand compared to net loss after zakat and income tax of SR 209,152 thousand during the previous year.

The company has adopted starting 1st January 2019 IFRS (16) Rent Contracts. For more information regarding the impact of implementation kindly refer to note 4 (Change in Accounting Policies and Restatements) in the financial statement for the year ended 31 December 2019.

Comments