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Bupa Arabia for Cooperative Insurance Co. announces the interim financial results for the period ending on 31-12-2016 (Twelve Months)

Element Current quarter Similar quarter for previous year % Change current Previous quarter % Change previous
Net profit (loss) before Zakat 193,489 209,327 -7.57 260,354 -25.68
Surplus (deficit) of insurance transactions less returns of policy holders investment (operating transactions results) 149,218 216,608 -31.11 270,447 -44.83
Gross written premiums (GWP) 1,086,223 1,099,994 -1.25 2,578,657 -57.88
Net written premiums (NWP) 1,052,569 1,075,879 -2.17 2,567,358 -59
Net incurred claims 1,664,622 1,437,009 15.84 1,398,649 19.02
Net profit (loss) of policy holders investment 29,264 11,643 151.34 19,754 48.14
Net profit (loss) of shareholders capital investment 33,490 4,010 735.16 1,424 2,251.83
All figures are in (Thousands) Saudi Arabia, Riyals
Element Current period Similar period for previous year % Change
Net profit (loss) before Zakat 630,705 645,077 -2.23
Surplus (deficit) of insurance transactions less returns of policy holders investment (operating transactions results) 573,761 704,915 -18.61
Gross written premiums (GWP) 7,938,630 7,328,016 8.33
Net written premiums (NWP) 7,871,171 7,285,552 8.04
Net incurred claims 6,178,445 5,211,046 18.56
Net profit (loss) of policy holders investment 80,188 26,261 205.35
Net profit (loss) of shareholders capital investment 50,237 -7,714 -
Earning or loss per share, Riyals 7.9 8.07 -
All figures are in (Thousands) Saudi Arabia, Riyals
Element EXPLAINATION
Reasons of increase (decrease) for the quarter compared with same quarter last year The decline in the results for the three (3) month period ended 31 December 2016, versus the same period of 2015, was mainly due to an increase in net claims incurred which has resulted in a decrease in net underwriting result by SR57,055K, a 15% decrease. The net claims incurred to net earned ratio has increased in the fourth quarter of 2016, compared to the same period of 2015 (adverse by 4.6%, 2016 Q4 at 83.9% versus 2015 Q4 at 79.3%), which was due to claims inflation. The losses were partially offset by an increase in investment and other income in fourth quarter, by SR46,603K, an increase of 288%. Commission expense is adverse in 2016 Q4 compared with similar period last year despite lower GWP due to higher broker commission. Gross Written Premium (GWP) was lower by SR13,771K in the fourth quarter of 2016, versus the fourth quarter of 2015, a decrease of 1%, and net earned premium were higher by SR170,558K, an increase of 9.4%. Policyholders' share of surplus from insurance operations (Cooperative Distribution) decreased by SR4,977K due to reduced surplus from insurance operations, at SR17,848K in the current quarter versus SR22,825K for the same period of 2015, a reduction of 22%.
Reasons of increase (decrease) for the period compared with same period last year The decline in the results for the twelve (12) month period ended 31st December 2016, versus the same period of 2015, was mainly due to increase in net claims incurred, which resulted in a decrease in net underlying results. The higher gross written premium for twelve month period ended 31 December 2016, versus the same period of 2015, were offset by, higher, net claims incurred to net earned premium ratio (2016 at 80.5% versus 2015 at 77.3%), resulting from claims inflation. The net results were also adversely affected by other 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 SR35,326K versus 2015 YTD bad debt provision expense of SR38,571K) and as well as a significant increase in investment and other income (2016 YTD investment and other income of SR130,392K versus 2015 YTD investment and other income of SR19,251K). Gross Written Premium (GWP) increased by SR610,614K, an increase of 8%, the net earned premium increased by SR927,918K, an increase of 14%, and the net underwriting result for the twelve month period ended 31st December 2016, versus the same period of 2015, deteriorated by SR39,481K, representing a decrease of 3%. The surplus from Insurance Operations of SR653,949K, is decrease of SR77,227K for the same period of 2015, representing a decrease of 11%. Polcyholders' share of surplus from insurance operations was at SR65,395K for YTD 2016, versus 2015 at SR73,118K, a decrease of SR7,723K, due to lower 2016 surplus from Insurance Operations.
Reasons of increase (decrease) for the quarter compared with the previous quarter The decline in result in the fourth quarter of 2016, versus the third quarter of 2016, by SR66,865K a reduction of 26%, was mainly due to the adverse seasonality of claims in the fourth quarter (third quarter lower claims due to the impact of summer), The Loss Ratio increased in the fourth quarter, of 83.9%, versus the third quarter, of 72.1%. As a result the net underwriting for the three month period ended 31 December 2016, versus the three month period ended 30 September 2016, deteriorated by SR222,255K, a reduction of 41%. The reduction in net underwriting result was partially offset by lower bad debt provision expense, levies (lower written), Cooperative Distribution expense (lower insurance operations surplus), and also favorable Investment Income in the fourth quarter versus the third quarter. In the fourth quarter there was a reduction in Gross Written Premium (GWP), of SR1,492K, a reduction of 58%, due mainly to the third quarter GWP including major account renewals. The net earned premium for the fourth quarter of 2016 increased, versus the third quarter of 2016, by SR43,718, representing an increase of 2%.
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 Certain comparative figures for the previous period have been reclassified to be consistent with the presentation of the current period.
Other notes The earnings per share (EPS) for the three months and Twelve months period ended 31 December 2016 of SR2.42 and SR7.90 per share versus SR2.62 and SR8.07 per share for the previous year, 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 2,027 Million versus 1,667 Million riyals for the same period of 2015 with an increase of 22%.

The Capital Market Authority and the Saudi Stock Exchange take no responsibility for the contents of this disclosure, make no representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this disclosure, and the issuer accepts full responsibility for the accuracy of the information contained in it and confirms, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts or information the omission of which would make the disclosure misleading, incomplete or inaccurate.

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