United Assurance losses jump 217% to SR20.7 mln in Q2‎

The financial statements of the United Cooperative Insurance Company revealed that the company’s net losses – before zakat – increased by a significant rate of 217.23% at the end of the second quarter of this year, reaching 20.715 million riyals, compared to losses for the same period last year, which amounted to 6.53 million riyals.

The company said in a statement to the Saudi market, “Tadawul”, today, Thursday, that the increase in losses during the comparison periods is mainly due to the increase in the total costs and expenses of underwriting, due to the increase in the net claims incurred.

The company incurred losses of 40.58 million riyals in the first half of this year, compared to losses of 33.52 million riyals for the same period of the previous year, an increase in losses by 21.06%.

The reason behind the increase in net loss before zakat & tax compared to the same quarter last year is due to the increase in the total underwriting costs and expenses as the net claims incurred have increased.

The increase in net loss before zakat & tax for the current quarter compared with the previous quarter is due to the increase in net claims incurred.

Net losses before zakat & tax increased in the current period in comparison to the same period last year, has resulted from the increase in the total underwriting costs and expenses.

Modification, Qualification or Emphasis of a Matter as Stated within the External Auditor Opinion:

Emphasis of matter

“We draw attention to Note 2(b) of the condensed interim financial statements, which indicates that the Company incurred a net loss of SR 42.58 million during the period ended June 30, 2022 and, as of that date, the Company’s accumulated losses amounted to SR 192.33 million which represents 48% of the share capital. Moreover, as at June 30, 2022, the solvency margin of the Company is below the minimum solvency margin requirement prescribed by Article 68(2) of the Implementing Regulations Of The Cooperative Insurance Companies Control Law. These conditions along with other matters as set forth in note 2(b), indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our conclusion is not modified in respect of this matter. We draw attention to Note 2(b) disclosed in the financial statements, which further describes the circumstances and management’s assessment, in relation to the disapproval of certain agenda items by the shareholders of the Company in their General Assembly Meeting held on 28 June 2022. Our conclusion is not modified in this respect”.

Additional Information:

LPS calculated based on loss after Zakat and Income Tax. Zakat and Income Tax is 2 million Saudi riyals for the period ended 30-06-2022 (Six-months),and 4 million Saudi riyals for the period ended 30-06-2021 (Six-months).

The accumulated losses for the period are SAR 192,332 Thousand, which are 48% of the paid- up Capital of SAR 400 million based on the condensed interim Financial Statements for the period ended 30-06-2022. The major reasons which caused this increase in the accumulated losses is the increase in total underwriting costs and expenses. Therefore, the company will apply the procedures and instructions for companies listed in Saudi Capital Market whose accumulated losses are equal to or more than 35% and less than 50% of share capital.