Cooperative Insurance profits up to SAR230 million during Q3, by 468%

The Company for Cooperative Insurance (TAWUNIYA) recorded a net profit during the third quarter before Zakat of SAR 230 million, compared to SAR 40.4 million in the same quarter of last year, a rate of 468%. This came after the announcement on Sunday of the interim financial results for the period ending on September 30, 2023 (9 months).

The Gross written premiums (GWP) in the third quarter amounted to SAR 3.21 billion, compared to SAR 2.92 billion in the same quarter of the previous year, an increase of 10.2%.

The Net profit before zakat during the 9 months amounted to SAR 607 million, compared to SAR 136.7 million in the same period of the previous year, a growth of 344%.

The Earnings per share in the current period reached SAR 3.51, compared to SAR 0.46 in the same period last year.

The Company has adopted IFRS 17 (Insurance Contracts) and IFRS 9 (Financial Instruments), as endorsed in Saudi Arabia for financial periods beginning on or after 1 January 2023, with retrospective application, which has materially changed the presentation of the financial results for periods starting Q1 2023 onwards with the comparative periods restated under the new standards. As a result, the Company has only reflected the relevant financial information under the latest standards in the attachment to this announcement. Items that are reported as “0” are no longer presented in the new financial statements under IFRS 17 and IFRS 9.

The following explanation will cover the relevant financial information reflected in the announcement along with an explanation of the new presentation of the financial results which are attached to this announcement, noting that the insurance service result – net for the current quarter has improved by SAR 92.035 K compared to the same quarter of the previous year.

This is driven by solid growth in gross written premiums by circa SAR 298,170 K, while gross earned premiums increased by SAR 923,433 K.

The growth in revenues corresponded to an increase in claims incurred and attributable expenses by SAR 1,003,048 K,

Increase in risk adjustment booked during the current quarter by SAR 202,232 K, decrease in changes that relate to past service by SAR 265,715 K,

Decrease in net losses on onerous contracts by SAR 38,683 K and additional acquisition costs of SAR 122,974 K, which enabled the growth in written premiums.

While the net expenses from reinsurance contracts held for the current quarter have decreased by SAR 102,049. The reinsurance program of Tawuniya was instrumental in yielding a net positive Insurance result of SAR 146,038 K. where certain large claims incurred for the P&C line of business are recoverable through the reinsurance program of the Company.

The Company’s investment portfolio has seen an increase in net investment income by SAR 40,886 K during the current quarter compared to the same quarter of the previous year. The increase is in line with the increase in profit rates across the Saudi market. Fair value through profit or loss investment portfolio also performed better to yield higher fair value gains.

Reversal of expected credit loss allowance on financial assets by SAR 91,614 during the current quarter compared to an increase in expected credit loss allowance of SAR 41,104 during the same quarter of the previous year. This is attributed to improved collections of aged receivables during the period.

Net other operating expenses have increased by SAR 52,454 K during the current quarter as the Company continues to invest in strategy 2025-related projects and initiatives.

As a result of the aforementioned, the Company achieved net income before zakat of SAR 229,881 K during the current quarter of the current year.

The Company has adopted IFRS 17 (Insurance Contracts) and IFRS 9 (Financial Instruments), as endorsed in Saudi Arabia for financial periods beginning on or after 1 January 2023, with retrospective application, which has materially changed the presentation of the financial results for periods starting Q1 2023 onwards with the comparative periods restated under the new standards. As a result, the Company has only reflected the relevant financial information under the new standards in the attachment to this announcement. Items that are reported as “0” are no longer presented in the new financial statements under IFRS 17 and IFRS 9.

The following explanation will cover the relevant financial information reflected in the announcement along with an explanation on the new presentation of the financial results which are attached to this announcement:

Insurance service result – net for the current quarter has decreased by SAR 313,673 K compared to the previous quarter due to lower recoveries from reinsurers for claims incurred by SAR 398,196. This came despite the favourable increase in insurance service results before reinsurance contracts held by SAR 57,195.

The Company’s investment portfolio has seen an increase in net investment income by SAR 90,452 K during the current quarter compared to the previous quarter of the current year. The increase is in line with the increase in profit rates across the Saudi market.

Reversal of expected credit loss allowance on financial assets by SAR 91,614 during the current quarter compared to increase in expected credit loss allowance of SAR 114,630 during the previous quarter of the current year. This is due to improved collections of aged receivables during the period.

Net other operating expenses have increased by SAR 20,642 K during the current quarter compared to the previous quarter as the Company continues to invest in strategy 2025-related projects and initiatives.

As a result of the aforementioned, the Company achieved net income before zakat of SAR 229,881 K during the current quarter of the current year.

The Company has adopted IFRS 17 (Insurance Contracts) and IFRS 9 (Financial Instruments), as endorsed in Saudi Arabia for financial periods beginning on or after 1 January 2023, with retrospective application, which has materially changed the presentation of the financial results for periods starting Q1 2023 onwards with the comparative periods restated under the new standards. As a result, the Company has only reflected the relevant financial information under the new standards in the attachment to this announcement. Items that are reported as “0” are no longer presented in the new financial statements under IFRS 17 and IFRS 9.

The following explanation will cover the relevant financial information reflected in the announcement along with an explanation on the new presentation of the financial results which are attached to this announcement:

Insurance service result – net for the current period has improved by SAR 432,132 K compared to the same period of last year. This is driven by strong growth in gross written premiums by circa SAR 3,318,098 K, while gross earned premiums increased by SAR 3,056,697 K. The growth in revenues corresponded to an increase in claims incurred and attributable expenses by SAR 2,596,600K, an increase in risk adjustment booked during the current period by SAR 411,295K, a decrease in changes that relate to past service by SAR 498,042K, an increase in net losses on onerous contracts by SAR 49,536 K and additional acquisition costs of SAR 264,009 K.

While the net income from reinsurance contracts held for the current period was SAR 341,975 K versus net expenses of SAR 196,509 K during the same period of last year, due to the rising cost of buying reinsurance, the allocation of RI premiums increased by SAR 235,511 K. Reinsurance program of Tawuniya was instrumental in yielding a net positive Insurance result of SAR 716,116 K. Certain large claims incurred for P&C line of business have been recovered through the reinsurance program of the Company.

The Company’s investment portfolio performed strongly, with an increase in Investment Income by SAR 193,475 K during the current period compared to the same period last year. The increase is in line with the increase in profit rates across the Saudi market. Fair value through profit or loss investment portfolio also performed better to incur lower fair value loss.

Increase in expected credit loss allowance on financial assets by SAR 19,765 during the current period compared to the same period of the last year. While there is an increase in ECL charges during the current nine months compared to nine months for 2022, Tawuniya has managed to collect aged debtors to slow down the rate of ECL increase.

Net other operating expenses have increased by SAR 91,271K during the current period as the Company continues to invest in strategy 2025-related projects and initiatives.

As a result of the aforementioned, the Company achieved net income before zakat of SAR 607,091 K during the current nine-month period of the current year.