Bupa Arabia Profits Decrease to SR138 mln during 1Q, down 21%

The net profit before zakat of Bupa Arabia for Cooperative Insurance Company decreased to SR138 million during the first quarter, compared to SR175 million during the same quarter of the previous year, by 21%.

This came after Bupa announcement on Wednesday the consolidated preliminary financial results for the period ending on 31.03.2021 (three months).

As for the net profits of shareholders’ funds investments, they amounted to SR56 million during the first quarter, compared to SR36 million during the same quarter of the previous year, an increase of 55%.

The surplus of insurance operations, minus the return on investments of policyholders (the results of operations) amounted to SR49 million during the first quarter, compared to SR121 million during the same quarter of the previous year, a decline of 59%.

Profits per share during the current period amounted to SR0.97, compared to SR1.17 during the same period of the previous year.

The Decrease in profits before Zakat and Income Tax for the quarter of SR37,466K compared with same quarter of the previous year was due to the following main reasons:

• Decrease in underwriting results of SR 53,828K compared with the same quarter of the previous year, a decrease of 18%. This was driven by the increase in net claims incurred of SR436,963K, an increase of 20.4%, and the increase in policy acquisition costs of SR 64,200K, an increase of 113.3%, with both items benefiting the same quarter last year from the Premium Deficiency Reserve (“PDR”) established in 2020 to offset the expected surge in claims post COVID-19 lockdown. These movements were partially offset by an increase in net earned premiums of SR 447,335K, an increase of 17.9%.
• Increase in operating expenses of SR 2,686K compared with the same quarter previous year, an increase of 1.7%.
• Increase in provision for doubtful receivables of SR 14,328K, an increase of 84.2%.

These were partially offset by the following favourable movements:

• Increase in Investment and other income of SR 26,388K compared with the same quarter last year, an increase of 37.6%.
• Decrease in Policyholders share of insurance operations’ surplus of SR 6,988K, a decrease of 48.2% from the same quarter last year.

Gross Written Premiums (GWP) increased by SR 969,637K, an increase of 29.8% from the same quarter last year.

The increase in profits before Zakat and Income Tax for the quarter of SR 144,558K compared with the previous quarter was due to the following main reasons:

• Increase in underwriting results of SR 112,655K compared with the previous quarter, an increase of 84.6%. This was driven by an increase in net earned premiums of SR 106,324K from the previous quarter, an increase of 3.8%, in addition to the decrease in net claims incurred of SR 29,285K, a decrease of 1.1%.
• Decrease in operating expenses of SR 43,774K compared with the previous quarter, a decrease of 20.9%.
• Increase in Investment and other income of SR 43,579K compared with the previous quarter, an increase of 82.2%.

These favorable movements were partially offset by an increase in policy acquisition costs reaching SR 120,868K, an increase of 23.4% from the previous quarter, as well as an increase in the provision for doubtful receivables of SR 43,864K, reaching SR 31,346K in the current quarter.

Policyholders share of insurance operations’ surplus increased by SR 11,586K, reaching SR 7,501K in the current quarter.

Gross Written Premiums (GWP) increased by SR 2,121,508K from the previous quarter, an increase of 101%.

The external auditors interim review report on the financial statements mentions that the financial statements have been prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting” as endorsed in the Kingdom of Saudi Arabia. And other standards and pronouncement issued by Saudi Organization for Certified Public Accountants (“SOCPA”).

Certain comparative figures have been restated and regrouped to conform with the current period’s presentation in these interim condensed financial statements. These restatements have no impact on the net income for the three-month period ended 31 March 2021 and retained earnings for the same period.

Refer to Note 22 of the interim consolidated financial statements for further information about the impact of Article 11 of the Cooperative Health Insurance Law and the Council of Health Insurance’s Circular 965 on the company’s operations and financials, including holding a PDR.

Gross Insurance Operations Comprehensive Income for the current quarter is SR (7,738) K compared to SR 10,756K for the same quarter of the previous year, a decrease of SR 18,494K, and SR (9,319)K for the previous quarter, an increase of SR 1,581K. Total Shareholders Comprehensive Income for the current quarter is SR 92,609K compared to SR 153,455K for the same quarter of the previous year, a decrease of 39.7%, and SR 8,164K for the previous quarter, an increase of 1034.4%.

The profits per share (EPS) for the current quarter is SR 0.79 per share versus SR 1.17 per share for the same quarter of the previous year by dividing the net income attributed to shareholders after zakat and income tax amount of SR 94,068K over the weighted average number of ordinary outstanding shares of 119,497K for the current quarter and SR 139,903K over 119,452K for the same quarter of the previous year.

Gross Shareholder Equity (no minority interest) as at end of current quarter is SR 4,263 million versus SR 4,037 million as at end of same quarter previous year, an increase of 5.6%.

The profits after Zakat and Income Tax for the current quarter reached SR 94,068K compared to SR 139,903K for the same quarter of the previous year, a decrease of 32.8%, and SR 19,993K for the previous quarter, an increase of 370.5%.