|Reasons of increase (decrease) for the quarter compared with same quarter last year
||The decline in result in the third quarter of 2016, versus the third quarter of 2015, was mainly due to a an increase in net claims incurred which has resulted in a decrease in net underwriting result by SR68,355, a 11% decrease. The net claims incurred to net earned premium ratio has increased in the third quarter of 2016, compared to the same period of 2015 (adverse by 6.6%, 2016 Q3 at 72.1% versus 2015 Q3 at 65.5%), which was due to claims inflation. The losses were partially offset by an increase in investment and other income in third quarter of Q3, by SR31,203, an increase of 308%. Levies and Commission income were adverse due to higher GWP in 2016 Q3 compared with similar period last year. Gross Written Premium (GWP) was higher by SR321,457K in the third quarter of 2016, versus the third quarter of 2015, an increase of 14%, and net earned premium were higher by SR173,550K, an increase of 10%. Cooperative Distribution has decreased by SR4,299K due to reduced surplus from insurance operations, at SR290,201K for the current quarter versus SR333,186K for the same period of 2015, a reduction of 13%.
|Reasons of increase (decrease) for the period compared with same period last year
||A slight improvement in results for the nine (9) month period ended 30th September 2016, versus the same period of 2015, mainly due to business growth as well as a significant increase in investment and other income. The gains due to business growth and investment income were offset by claim cost inflation and higher operating expenses of (staff cost, levies and commissions). Despite unsupportive economic conditions, there is an improvement in the net earned premium (+15%) in 2016 year to date Q3 compared with 2015 year to date Q3. Net Claims Incurred increase of 20% led to the increase of claims incurred to net earned premium ratio (from %76.6 in 2015 to 79.4% in 2016) limiting net underwriting growth to only 1.5%. The net underwriting result was offset by an increase in growth related operational expenses, such as commissions, levies and staff cost. There is a decrease in Bad debt provision expense (2016 YTD bad debt provision expense of SR72,794K vs. 2015 YTD bad debt provision expense of SR82,763K) and as well as a significant increase in investment and other income (2016 YTD investment and other income of SR67,628K vs. 2015 YTD investment and other income of SR3,088K). The Cooperative Distribution was at SR47,547K for the year to date 2016 Q3, versus year to date 2015 Q3 at SR50,293K due to lower 2016 year to date Q3 surplus from insurance operations. Gross Written Premium (GWP) increased by SR624,385K, an increase of 10% and the net underwriting result for the nine month period ended 30th September 2016, versus the same period of 2015, improved by SR17,574K, representing an increase of 1.5%. The improvement in net earned premium, of SR757,360K, represented an increase of 15%, versus the same period of 2015. The surplus from Insurance Operations of SR475,467K, is a decrease of SR27,458K, versus a surplus of SR502,925K for the same period of 2015, representing a decrease of 5%.
|Reasons of increase (decrease) for the quarter compared with the previous quarter
||The improvement in result in the third quarter of 2016, versus the second quarter of 2016, was mainly due to lower claims in the third quarter of 2016 (due to the seasonality of claims, as reflected by the net claims incurred to net earned premium ratio (2016 Q3 at 72.1% versus 2016 Q2 at 81.1%)) which, combined with an increase in net earned premiums, from SR1,863,826K to SR1,938,701K, an increase of SR74,875K, representing an increase of 4%, resulted in an increase in net underwriting result of SR187,313K, an increase of 53%. This was partially offset by an increase in Selling and Marketing expenses driven by commissions and levies impacted by the seasonality of the Gross Written Premium, GWP higher in Q3. Gross Written Premiums (GWP) were higher by SR750,936K in the third quarter of 2016, an increase of 41% versus the second quarter of 2016. The bad debt provision expense for 2016 Q3 of SR43,377K was lower versus the bad debt provision expense of SR48,585K for 2016 Q2 as well as investment and other income of SR21,057K for 2016 Q3 versus SR34,702K for 2016 Q2.
|External auditor's report containing reservation
||The joint auditors interim review report on the financial statements mentions that the financial statements have been prepared in accordance with International Accounting Standard 34 and not in accordance with the Standard of interim financial reporting issued by SOCPA. However the company assures that there are no significant differences in the results contained within the financial statements due to using International Accounting Standards rather than the SOCPA accounting standards.
|Reclassifications in quarterly financial results
||Some numbers within the annual financial results have been re-classified for comparative reasons.
||The earnings per share (EPS) for the period ended 30-09-2016 (three months and nine months) for the previous year, of SR3.57 and SR5.45 per share, has been calculated based on the new number of shares in issue after the Capital increase, to 80,000,000 (eighty million) shares, as was approved during the Extraordinary General Assembly meeting of its shareholders, held Monday 25th of Safar 1437H (Monday 7th December 2015G). The prior year EPS re-statement is as reflected within the interim financial results and in accordance with the relevant International Accounting Standards.
The total shareholder equity) no minority interest) at current period is 1.921 Million versus 1.466 Million riyals for the same period of 2015 with an increase of 31%.