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The Mediterranean and Gulf Insurance and Reinsurance Co. announces the interim financial results for the period ending on 30-09-2016 (Nine Months)

Element Current quarter Similar quarter for previous year % Change current Previous quarter % Change previous
Net profit (loss) before Zakat 60,048 51,798 15.93 -19,684 -
Surplus (deficit) of insurance transactions less returns of policy holders investment (operating transactions results) 57,395 51,163 12.18 -41,206 -
Gross written premiums (GWP) 510,966 754,035 -32.24 891,381 -42.68
Net written premiums (NWP) 419,997 637,175 -34.08 744,059 -43.55
Net incurred claims 539,481 725,609 -25.65 657,389 -17.94
Net profit (loss) of policy holders investment 5,544 1,315 321.6 6,483 -14.48
Net profit (loss) of shareholders capital investment 2,432 1,915 27 16,329 -85.11
All figures are in (Thousands) Saudi Arabia, Riyals
Element Current period Similar period for previous year % Change
Net profit (loss) before Zakat 55,626 -135,509 -
Surplus (deficit) of insurance transactions less returns of policy holders investment (operating transactions results) 29,086 -127,269 -
Gross written premiums (GWP) 2,635,929 3,418,455 -22.89
Net written premiums (NWP) 2,239,089 2,910,094 -23.06
Net incurred claims 1,871,096 2,415,604 -22.54
Net profit (loss) of policy holders investment 14,131 3,915 260.95
Net profit (loss) of shareholders capital investment 19,886 -4,096 -
Earning or loss per share, Riyals 0.56 -1.36 -
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 behind the increase in net profit during the current quarter compared to the same quarter of the previous year is the decrease in net claims incurred by 25.6% and the decrease in policy acquisition costs by 22.5%. The reason behind the increase in shareholders investments income during the current quarter compared to the same quarter of the previous year is the increase in special commission income by 49.1%.
Reasons of increase (decrease) for the period compared with same period last year The reason behind the net profit during the current period compared to net loss during the same period of the previous year is the decrease in net claims incurred by 22.5% due to the decrease in outstanding claims reserves, and the increase in special commission income for insurance operations investments by 279.5% . The reason behind the profit in shareholders investments income during the current period compared to loss during the same period of the previous year is the increase in realized gain on sale of available for sale investments by 1700.6% and the increase in special commission income by 43.6%.
Reasons of increase (decrease) for the quarter compared with the previous quarter The reason behind the net profit during the current quarter compared to net loss during the previous quarter is the decrease in net claims incurred by 17.9% and the decrease in general and administrative expenses by 13.6%. The reason behind the decrease in shareholders investments income during the current quarter compared to the previous quarter is the liquidation of some available for sale investments during the previous quarter which led to an increase in realized gain on sale of available for sale investments compared to the current quarter.
External auditor's report containing reservation 1. The auditors report draws attention to the fact that 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 the Saudi Organization for Certified Public Accountants (SOCPA). 2. The auditors draw attention to note (16) of the accompanying interim condensed financial statements which states that during the nine month period ended 30 September 2016, the Saudi Arabian Monetary Agency (SAMA) issued a letter to the Company that highlights the deteriorating solvency margin of the Company and the rectification measures to be taken according to the article (68) of insurance implementing regulations. The Company was not able to meet the solvency margin requirement before 30 September 2016 as instructed by SAMA in its aforesaid letter, however, the Company continues to take the necessary actions as advised by SAMA and believes that it will be able to comply with the underlying requirements in the near future.
Reclassifications in quarterly financial results We reclassified some numbers within the annual financial results for comparative reasons in order to comply with the current period, there was no financial impact on net income or accumulated surplus after the reclassification.
Other notes Basic and diluted earnings per share for the period was calculated by dividing the net income for the period by the weighted average number of shares issued and outstanding during the period amounting to 100 million shares. The total shareholders, equity (no minority interest) at current period is 945,324 thousand comparing to 1,042,170 thousand riyals during the same period of the previous year with a decrease of 9.29%.

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