ACR ReTakaful MEA B.S.C. (c) ReTakaful MEA FS... · 2019-08-23 · • Director, BSL Corporation Berhad • Director, Euro Holdings Berhad • Director, Solution Engineering Holdings

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ACR ReTakaful MEA B.S.C. (c)

FINANCIAL STATEMENTS

31 DECEMBER 2018

ACR ReTakaful MEA B.S.C. (c)

FINANCIAL STATEMENTS for the year ended 31 December 2018 CONTENTS Page General information 1 Directors and management 2 Directors’ report 3-5 Directors’ and management’s profile 6-8 Shari’a Committee Report 9 Independent auditors’ report to the shareholders 10-11 Financial statements Statement of financial position 12 Statement of income 13 Statement of policyholders’ revenues and expenses 14 Statement of policyholders’ surplus and deficit 15 Statement of changes in shareholders’ equity 16 Statement of cash flows 17 Notes to the financial statements 18 – 47

ACR ReTakaful MEA B.S.C. (c) 1

General information as at 31 December 2018

Address: Gajria Tower P. O. Box : 1591 8th Floor, Building 452 A Telephone : +973 1738 8350 Road 1010, Block 410 Telefax : +973 1738 8351 Sanabis E-mail : [email protected]

Kingdom of Bahrain Website : www.acrretakaful.com

Commercial registration : 69349 PRINCIPAL BANKERS Standard Chartered Bank Bahrain Al Salam Bank Bahrain Kuwait Finance House CIMB Islamic Bank

AUDITORS KPMG Fakhro P. O. Box : 710 Manama Telephone : +973 1722 4807 Kingdom of Bahrain Telefax : +973 1722 7443


Directors and management as at 31 December 2018

BOARD OF DIRECTORS Datuk Dr Syed Muhamad Bin Syed Abdul Kadir Chairman Sergei Alexeyevich Korol Chan Whye Loon (Appointed: 01 January 2019) Dato Mohd Salleh Bin Hj Harun (Resigned: 01 January 2019) Datuk Mohd. Najib bin Hj. Abdullah (Resigned: 01 January 2019) AUDIT AND COMPLIANCE COMMITTEE Datuk Dr Syed Muhamad Bin Syed Abdul Kadir Chairman Sergei Alexeyevich Korol Chan Whye Loon (Appointed: 01 January 2019) Datuk Mohd. Najib bin Hj. Abdullah (Resigned: 01 January 2019) Dato Mohd Salleh Bin Hj Harun (Resigned: 01 January 2019)

SHARIAH COMMITTEE Dr. Abdulaziz Khalifa Al Qassar GENERAL MANAGEMENT

Vithya Karunakaran Acting Chief Executive Officer


Directors’ report as at 31 December 2018

Dear Shareholders, The Directors of ACR ReTakaful MEA B.S.C. (c) (‘the Company”) have pleasure in submitting their report and the audited financial statements of the Company for the year ended 31 December 2018. Principal Activity The Company is principally involved in the underwriting of general retakaful business. The Company ceased to write new business effective 28 August 2017 upon obtaining the Restricted License from the Central Bank of Bahrain. Transfer of Business Portfolio and Obligations In an extraordinary shareholders meeting held on 28 November 2018, the shareholders approved to transfer the Company’s business portfolio and obligations to Asia Capital Reinsurance Group Pte. Ltd. Currently the Company is awaiting approval from the Central Bank of Bahrain to initiate the transfer. Managed Run-off and Winding up In an extraordinary shareholders meeting held on 5 July 2017, the shareholders approved to put the Company’s insurance activities under the run-off. The Central Bank of Bahrain has approved the shareholders’ resolution and restricted the Company’s licence to service existing business. The company will continue to meet and honour its contractual and regulatory obligations to policyholders through its presence in Bahrain with support from the Group during this own managed run-off period. Upon completion of the run-off, the Group intends to wind up the Company. Company Performance Key financial highlights for the year ended 31 December 2018 are summarized below:

2018 2017 USD 000's USD 000's Shareholders’ loss for the year (2,359) (5,796) Surplus of policyholders' fund for the year 3,539 2,086 Gross contributions written, net off pipeline 2,345 (12,765) Net earned contributions 339 (10,883) Net claims incurred (2,268) (8,941) Profit income of the retakaful fund 342 676

No dividend has been paid or declared by the Company since the end of the previous financial year. The directors do not recommend the payment of any final dividend in respect of the current financial year. Capital adequacy and solvency margin Outstanding The Company maintains adequate capital to run the business in an orderly manner. The capital available and solvency margin are determined as per the provisions of Capital Adequacy Module of the Insurance Rulebook Volume 3 issued by the Central Bank of Bahrain. Shareholders’ gross available capital for the Company is 94.5 USD million (2017: USD 98.8 millions). Required minimum margin of solvency for policyholders' fund is 1.3 USD million (2017: USD 1.5 million). Excess of available assets over required minimum margin as per the valuation rules of CBB Rulebook Volume 3 for policyholders' fund is 17 USD million (2017:USD 6.3 million).


Directors’ report as at 31 December 2018 Corporate Governance Board of Directors and Committees The Board of Directors of the Company operates with the following Board Committees: Audit & Compliance Committee (“ACC”) The Audit & Compliance Committee’s primary responsibility is the oversight relating to the integrity of the Company’s financial statements and financial reporting process and the Company’s systems of internal accounting and financial control. The Audit Committee also oversees compliance by the Company with legal and regulatory requirements and the Company’s code of conduct.

Board of Directors comprise of the following members; Datuk Dr. Syed Muhamad Bin Syed Abdul Kadir Chairman Sergei Alexeyevich Korol Chan Whye Loon (Appointed: 01 January 2019) Dato Mohd Salleh Bin Hj Harun (Resigned: 01 January 2019) Datuk Mohd. Najib bin Hj. Abdullah (Resigned: 01 January 2019

Committee Membership Following table represents Committee membership of the members of the Board of Directors during the year ended 31 December 2018: Audit & Compliance Committee Datuk Dr. Syed Muhamad Bin Syed Abdul Kadir Chairman Sergei Alexeyevich Korol Chan Whye Loon (Appointed: 01 January 2019) Dato Mohd Salleh Bin Hj Harun (Resigned: 01 January 2019) Datuk Mohd. Najib bin Hj. Abdullah (Resigned: 01 January 2019

Board of Directors and Committee meetings held during the year The number of Board of Directors and Committee meetings held during the year ended 31 December 2018 is as follows:

No. of meetings held Board of Directors 4 Audit & Compliance Committee 4

Attendance for each individual member of the board and the committees was more than 75% in all meetings.


Directors’ report as at 31 December 2018 Directors’ shareholding None of the directors of the Company hold shares in the Company. Executive Management of the Company Vithya Karunakaran is the Acting CEO of the Company. Directors’ and Executive Management Compensation Details of compensation paid to the Directors and Executive Management are provided in the Notes to the Financial Statements for the year ended 31 December 2018. The Directors fees for the year ended 31 December 2018 was USD 61 thousands (2017: 41 thousands). Auditors KPMG have expressed their willingness to continue in office as auditors of the Company for the year ending 31 December 2019. Acknowledgements The Board acknowledges with gratitude the co-operation and support extended by clients, the Central Bank of Bahrain, the Ministry of Industry & Commerce and other financial institutions. The Board would like to thank outgoing directors for their valuable contributions, support and guidance during their tenure as Board Members; and in turn welcome their replacements. The Board also wishes to place on record their sincere appreciation of the services rendered by all employees of the Company and is thankful to the Shareholders for their continued support. By order of the Board on the 19 March 2019 _________________________________________ Datuk Dr. Syed Muhamad Bin Syed Abdul Kadir Chairman


Directors and management profiles as at 31 December 2018 Directors Profiles

Datuk Dr. Syed Muhamad bin Syed Abdul Kadir, Independent Non-Executive Director - Date of appointment: 01 April 2010

Qualifications

• Master of Law (Corporate Law), Universiti Teknologi MARA (December 2009) • Advocate and Solicitor of the High Court of Malaya (admitted in July 2009) • Certificate in Legal Practice, the Malaysian Professional Legal Board (2008) • Bachelor of Jurisprudence (Hons.), University of Malaya, Malaysia (2005) • Ph.D (Business Management), Virginia Polytechnic Institute and State University, USA (1986) • Master of Business Management, University of Massachusetts, USA (1977) • B.A. (Hons.), University of Malaya, Malaysia (1971)

Experience

• Secretary General, Ministry of Human Resources, Malaysia (2000-2003) • Deputy Secretary General (Operations), Ministry of Finance (1999-2000) • Secretary, Tax Analysis Division, Ministry of Finance (1997-1999) • Executive Director, Asian Development Bank Manila, Philippines (1995-1997) • Alternate Executive Director, Asian Development Bank Manila, Philippines (1993-1995) • Deputy Secretary (Foreign and Domestic Borrowing, Debt Management) Finance Division,

Federal Treasury (1991-1993) • Secretary of Higher Education Division, Ministry of Education (1988-1991) • Various senior positions, National Institute of Public Administration (INTAN) (1973-1988)

Memberships

• Fellow, The Chartered Institute of Arbitrators Other Directorships

• Director, BSL Corporation Berhad • Director, Euro Holdings Berhad • Director, Solution Engineering Holdings Berhad • Chairman, CIMB-Principal Islamic Asset Management Sdn Bhd • Director, ACR ReTakaful Berhad • Director, SMIB Cycleworld Ventures Sdn Bhd • Director, Malakoff Corporation Berhad • Director, Orissa Wicomm (M) Sdn Bhd • Chairman, Sun Life Malaysia Assurance Berhad • Chairman, Sun Life Malaysia Takaful Berhad • Director, Orissa Wicomm (M) Sdn Bhd • Director, Valuecap Sdn Bhd • Director, Avicennia Capital Sdn Bhd

Dato' Mohd Salleh bin Hj. Harun, Independent Non-Executive Director – Date of appointment: 13 March 2017 (Resigned: 01 January 2019) Qualifications

• Member of the Malaysian Institute of Certified Public Accountants • Fellow of the Institute of Bankers


Directors and management profiles as at 31 December 2018 Experience

• Deputy Governor of Central Bank/ Bank Negara Malaysia from 2000 to 2004 • 32 years of experience in holding various senior positions in Aseambankers Malaysia Berhad,

Bank Rakyat and Malayan Banking Berhad respectively from 1974 to 2000 Other Directorships

• Director, Scicom (MSC) Berhad • Director, Etiqa Insurance Pie Ltd • Director, ACR ReTakaful Berhad

Datuk Mohd Najib Bin Hj. Abdullah, Independent Non-Executive Director - Date of appointment: 01 October 2009 (Resigned: 01 January 2019)

Qualifications

• Master in Business Administration, Northern Illinois University, USA (1983) • Bachelor of Science in Computer Science and Mathematics (Magna Cum Laude), Northern

Illinois University, USA (1982) Experience

• Group Managing Director/Chief Executive Officer, MIDF Amanah Investment Bank Berhad (March 2012 –Present)

• Group Managing Director, Malaysian Industrial Development Finance Berhad (July 2006-Present)

• Chief Operating Officer, Malaysian Industrial Development Finance Berhad (March 2006-July 2006)

• Executive Vice President, Malayan Banking Berhad (2006) • Various senior positions, Malaysia National Insurance Berhad (2002-2005) • Various senior positions, Citibank (1985-2002) • Management Accountant, Hewlett Packard (1984-1985)

Other Directorships

• Group Managing Director, Malaysian Industrial Development Finance Berhad • Non-Executive Director, MIDF Amanah Asset Management Berhad • Chief Executive Officer/Executive Director, MIDF Amanah Investment Bank Berhad • Commissioner, PT. Miel Nusantara Development • Director, ACR ReTakaful Berhad • Board & Exco Member, Asian Banking School Sdn Bhd

Sergei Alexeyevich Korol, Non-Independent Non-Executive Director - Date of appointment: 14 March 2016 Qualifications

• Global Executive MBA (Asia Section), INSEAD, Singapore (December 2013) • Master of Arts in International Studies (International Economics), John Hopkins University,

School of Advanced International Studies – (1998) • Bachelor of Arts, Minsk State University, Minsk, Belarus • Awarded the US Government’s Edmund Muskie Graduate Fellowship • Chartered Financial Analyst (CFA) (2005)


Directors and management profiles as at 31 December 2018 Experience

• Group Chief Financial Officer, ACR Capital Holdings Pte Ltd, Singapore (2015– Present) • Regional Chief Financial Officer, ACE Life Asia Pacific and China (ACE Group, INC, Hong

Kong), (2011 – 2015) • Vice President, Capital Strategy, METLIFE, Inc., New York (2010-2011) • Vice President, Capital Strategy, American Life Insurance Company (ALICO), American

International Group (AIG), (2008-2010) • Vice President, Investment and Finance, American General Life Companies (2008) • Director, Financial Analysis, ALICO (2005-2008) • Various senior position with increasing responsibility, American Life Insurance Company

(ALICO), (1998-2005) • Deputy Country Director, American Council for Collaboration in Education (1993-1996)

Whye Loon Chan, Non-Independent, Executive Director - Date of appointment: 1 January 2019 Whye Loon has over 25 years of experience in insurance worldwide. He has worked in USA, Middle East, Malaysia and Singapore. His insurance knowledge covers both life and general insurance and having roles across the whole insurance organisation in areas as actuarial, underwriting, and product/risk management. Qualifications

• BSc in actuarial science from University of Central Oklahoma, Edmond, Oklahoma, USA (May 1991)

Experience

• Currently Chief Risk Officer, Asia Capital Reinsurance, Singapore • Chief Retrocession Officer, Hannover Re (2011-2013) • Chief Risk Officer, Al Fajer Re, Kuwait (2008-2010) • Regional Senior Manager – Treaty Division, Allianz SE Reinsurance Branch Asia Pacific,

Singapore (2006-2008) • Various senior positions with increasing responsibility, at various insurance and reinsurance

companies in Malaysia (1991-1998) Management Profile

Vithya Karunakaran, Acting Chief Executive Officer Qualifications

• Certified Public Accountant, Malaysia

Experience • Board director, HSBC Amanah Takaful Malaysia (May 2015 to date) • Acting CEO and SVP Finance and Operations, ACR Retakaful MEA Bahrain (2011-2012) • Director audit and assurance services (Financial sector), KPMG Bahrain (2005-2011) • Senior Manager audit and assurance services (Banking sector), KPMG Singapore (2001-

2002) • Department Head and Insurance Practice Manager, KPMG Malaysia (1988-1997) • Manager audit and assurance services (Insurance sector), KPMG London/UK (1991-1993) • VP Credit Risk, Citibank Malaysia (1997-2001) • Head Credit Inspection, RHB Bank Malaysia (2003-2005)


STATEMENT OF FINANCIAL POSITION as at 31 December 2018 USD’000

The financial statements were approved by the Board of directors on 19 March 2019 and signed on its behalf by:

Datuk Dr. Syed Muhamad Bin Syed Abdul Kadir Sergei Alexeyevich KorolChairman Director

The accompanying notes from 1 to 29 form an integral part of these financial statements.

Note

31 December 2018

31 December 2017

ASSETS Cash and bank balances 4 20,036 73,466Retakaful receivables 5 1,338 3,697Accrued contributions receivable 297 787Retrocessionaires' share of retakaful reserves 10 16,852 25,731Deferred acquisition costs 6 627 673Deferred wakala fees expense 7 817 814Investment securities 8 88,478 36,302Other assets 9 2,909 1,686 Total assets 131,354 143,156 LIABILITIES, POLICYHOLDERS’ EQUITY AND SHAREHOLDERS’ EQUITY Liabilities Retakaful reserves 10 24,436 37,321Retakaful balances payable 2,643 5,651Deferred commissions from retrocessions 11 486 510Deferred wakala fees income 7 817 814Other liabilities 12 3,545 2,463Due to related parties 20 523 307

Total liabilities 32,450 47,066 Policyholders’ equity (page 15) 1,272 (4,103) Shareholders’ equity Share capital 13 150,000 150,000Statutory reserve 14 2,425 2,425Investment fair value reserve - 202Accumulated losses (54,793) (52,434)

Total shareholders’ equity (page 16) 97,632 100,193TOTAL LIABILITIES, POLICYHOLDERS’ EQUITY AND SHAREHOLDERS EQUITY 131,354 143,156


STATEMENT OF INCOME for the year ended 31 December 2018 USD’000

2018 2017 Note

Revenues Investment income 15 861 1,599Wakala fee 16 691 (4,603)Mudarib fee 16 136 271

Total revenue 1,688 (2,733) Expenses General and administration expenses 17 (1,368) (2,387)Policy acquisition costs 6 (587) 3,889Foreign exchange loss (223) (252)Qard hassan impairment provision 19 (1,869) (4,880)Recoveries of previous years loss 18 - 567

LOSS FOR THE YEAR (2,359) (5,796)

Datuk Dr. Syed Muhamad Bin Syed Abdul Kadir Sergei Alexeyevich Korol Chairman Director



STATEMENT OF POLICYHOLDERS’ REVENUES AND EXPENSES for the year ended 31 December 2018 USD’000 Note 2018 2017

RETAKAFUL REVENUES Gross booked contributions 2,980 7,618Gross pipeline contributions (635) (20,383)Total gross contributions 21 2,345 (12,765)Retrocessionaires’ share of contributions 21 (1,997) 1,025

348 (11,740)Unearned contributions adjustment – gross 10 (226) 3,416Unearned contributions adjustment - retrocessionaires’ share 10 217 (2,559)

Net earned contributions 339 (10,883)

Commissions from retrocessions 11 581 50

Total retakaful revenues 920 (10,833)Other (expense)/ income (384) 39

Total revenues 536 (10,794)

RETAKAFUK EXPENSES Gross claims paid 5,491 38,317Retrocessionaires’ share of claims paid (3,521) (10,194)Outstanding claims adjustment – gross 10 (13,353) (47,195)Outstanding claims adjustment - retrocessionaires’ share 10 9,115 10,131

Net claims incurred 21 (2,268) (8,941)Wakala fee 16 691 (4,603)(Reversal)/ charge of impairment provision 5 (1,231) 1,132Reversal of provision for contribution deficiency reserve - (308) Total retakaful expenses (2,808) (12,720) SURPLUS FROM RETAKAFUL OPERATIONS 3,344 1,926 Profit income 15 342 676Mudarib fee 16 (136) (271)Non-sharia income paid to charities 26 (10) (245) SURPLUS OF REVENUE OVER EXPENSES FOR THE YEAR 3,540 2,086

Datuk Dr. Syed Muhamad Bin Syed Abdul Kadir Sergei Alexeyevich Korol Chairman Director



STATEMENT OF POLICYHOLDERS’ SURPLUS AND DEFICIT for the year ended 31 December 2018 USD’000

2018 Accumulated surplus

Investment fair value reserve

Total

At 1 January (4,137) 34 (4,103)Surplus for the year 3,540 - 3,540Changes on re-measurement of investments at fair value through equity

- (34) (34)

Qard Hassan impairment ( note19) 1,869 - 1,869 At 31 December

1,272 - 1,272

2017 Accumulated deficit

Investment fair value reserve

Total

At 1 January (11,103) - (11,103)Surplus for the year 2,086 - 2,086Changes on re-measurement of investments at fair value through equity

- 34 34

Qard Hassan impairment ( note19) 4,880 - 4,880 At 31 December

(4,137) 34 (4,103)



STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY for the year ended 31 December 2018 USD’000

2018 Share capital Statutory reserve

Investment Fair value reserve Accumulated losses Total

At 1 January 2018 150,000 2,425 202 (52,434) 100,193 Loss for the year (page 13) - - - (2,359) (2,359) Changes on re-measurement of investment at fair value through equity - - (202) - (202) At 31 December 2018 150,000 2,425 - (54,793) 97,632

2017 Share capital Statutory reserve Investment Fair value reserve Accumulated losses Total

At 1 January 2017 150,000 2,425 - (46,638) 105,787 Loss for the year (page 13) - - - (5,796) (5,796) Changes on re-measurement of investment at fair value through equity - - 202 - 202 At 31 December 2017 150,000 2,425 202 (52,434) 100,193



STATEMENT OF CASH FLOWS for the year ended 31 December 2018 USD’000

Note 2018 2017 OPERATING ACTIVITIES

Combined profit for the year 1,181 (3,710)

Adjustments for non-cash items Depreciation expenses 17 23Change of Investments fair value 1,170 - Qard hassan impairment provision 1,869 4,880 (Reversal) / charge of impairment provision 5 (1,231) 1,132 Amortisation of sukuks (43) 124 Change in unearned contribution reserve 10 226 (3,416) Changes in retrocessionaires’ share of contributions (217) 2,559Changes in contribution deficiency reserve - (308) Profit income (2,330) (2,400)

Operating income/(loss) before changes in operating assets and liabilities 642 (1,116) Changes in operating assets and liabilities Retakaful receivables 3,590 835Pipeline contributions receivable 490 13,241 Deferred acquisition costs 46 1,184 Deferred wakala fees expense (3) 1,355 Retrocessionaires' share of outstanding claims 9,096 10,075 Other assets (1,240) 2,847 Outstanding claims (13,111) (47,020)Deferred wakala fees income 3 (1,355) Deferred commissions from retrocessions (24) (1,029) Retakaful balances payable (3,008) (6,531) Other liabilities 1,082 (1,541) Due to related parties 216 (518)

Net cash used in operating activities (2,221) (29,573)

INVESTING ACTIVITIES

Profit income 2,330 2,063 Placements with banks with original maturities of more than three months -

95,717

Purchase of investment securities (94,527) (60,681) Proceeds from matured investments 6,000 - Proceeds from sale of investment securities 34,989 35,000 Change in statutory deposit (10) (9)

Net cash (used in) / generated from investing activities (51,218) 72,090

Net (decrease) / increase in cash and cash equivalents (53,439) 42,517

Cash and cash equivalents at 1 January 4 73,014 30,497

Cash and cash equivalents at 31 December 4 19,575 73,014 The accompanying notes from 1 to 29 form an integral part of these financial statements.


NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2018 USD’000

1 REPORTING ENTITY ACR ReTakaful MEA B.S.C. (c) ("the Company") is a closed joint stock company incorporated in the Kingdom of Bahrain and registered with the Ministry of Industry and Commerce under commercial registration number 69349 on 16 July 2008. The registered office of the Company is at 8th Floor, Building 452A, Road 1010, Block 410, Sanabis, Kingdom of Bahrain. The Company is licensed by the Central Bank of Bahrain as a retakaful entity and is engaged in retakaful activities in accordance with Islamic Shariah principles. On of 28 August 2017, the Company’s license has been restricted by the CBB and the company is in a “run off” stage. The Company is a wholly owned subsidiary of ACR ReTakaful Holdings Limited, a company limited by shares, incorporated in the Dubai International Financial Centre, Dubai, United Arab Emirates. On 2 February 2017, ACR Capital Holdings Pte Ltd, a company incorporated in Singapore (the “Group”) has become the ultimate parent company after its acquisition of the 100% of the paid up shares of the parent company. The Group has decided to streamline and simplify its organization structure and operations. One strategic measure involves the Company ceasing to write new business. In an extraordinary shareholders meeting held on 5 July 2017, the shareholders approved to put the Company’s insurance activities under the run-off. The Central Bank of Bahrain has approved the shareholders resolution and restricted the Company licence to service existing business. The Company will continue to meet and honour its contractual and regulatory obligations to policyholders through its presence in Bahrain with support from the Group during this managed run-off period. Upon completion of the run-off, the Group intends to wind up the Company, and accordingly these financial statements have not been prepared on going concern basis. On 28 November 2018, Extraordinary General Meeting of the shareholders approved the transfer of the business of the Company to Asia Capital Reinsurance Group Pte Ltd a company whose parent is ACR Capital Holding Pte Ltd (registered in Singapore) subject to obtaining the approval of the Central Bank of Bahrain. 2 BASIS OF PREPARATION

a) Statement of compliance

The financial statements of the Company have been prepared in accordance with the Financial Accounting Standards (“FAS”) issued by the Accounting and Auditing Organisation for Islamic Financial Institutions (“AAOIFI”). In line with the requirements of AAOIFI and the CBB Rulebook, for matters that are not covered by AAOIFI standards, the Company uses guidance from the relevant International Financial Reporting Standards.

b) Basis of measurement

As mentioned in note 1, since the shareholders have resolved to wind off the Company’s operations and then liquidate the Company, The Company will not be able to continue as going concern, accordingly recorded assets and liabilities are stated at realisable values/ settlement amounts.



2 BASIS OF PREPARATION (continued)

c) Principal financial statements

As per FAS 12 General Presentation and Disclosure in the Financial Statements of Islamic Takaful Companies issued by the AAOIFI, the Company is required to present the statement of financial position comprising shareholder and policyholder assets and liabilities, shareholders’ statement of income, the statement of policyholders’ revenues and expenses, the statement of policyholders’ surplus and deficit, the statement of changes in shareholders’ equity, and the statement of cash flows.

d) Use of estimates and judgments

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: Ultimate contributions The estimate of ultimate contributions is based on contribution income estimates provided by policyholders, which is then adjusted to reflect management's judgement taking into account market conditions and historical data. Provision for outstanding claims Considerable judgement by management is required in the estimation of amounts due to policyholders arising from claims made under retakaful contracts. Such estimates are necessarily based on significant assumptions about several factors involving varying, and possibly significant, degrees of judgement and uncertainty and actual results may differ from management’s estimates resulting in future changes in estimated reserves. In particular, estimates have to be made both for the expected ultimate cost of claims reported at the reporting date and for the expected ultimate cost of claims incurred but not yet reported [IBNR] at the reporting date. The primary technique adopted by management in estimating the cost of notified and IBNR claims, is that of using judgements having regard to the range of uncertainty as to the eventual outcome for each category of business and loss ratios of each class of business. Claims requiring court or arbitration decisions are estimated individually on a case to case basis. Management reviews its provisions for claims incurred and claims incurred but not reported, on a quarterly basis. The Company's retakaful reserves are reviewed annually for adequacy by a qualified actuary registered with the Central Bank of Bahrain. All retakaful contracts are subject to a liability adequacy test, which reflect management's best current estimate of future cash flows. Retakaful The Company is exposed to disputes with, and possibility of defaults by, its retakaful counterparties. The Company monitors on a regular basis the evolution of disputes with and the strength of its retakaful counterparties. Impairment of Qard Hassan The Company assesses the recoverability of Qard Hassan on an annual basis. This assessment of impairment requires judgement. In making this judgement, the Company estimates the business performance of policyholders' revenues and expenses for the next five years, taking into consideration the discounted future cash flows and comparing the results with the carrying value of the Qard Hassan as at the reporting date.



2 BASIS OF PREPARATION (continued)

e) New standards, amendments and interpretations effective from 1 January 2018 There are no AAOIFI accounting standards or interpretations that are effective for the first time for the financial year beginning on or after 1 January 2018 that have a material impact on the Company.

f) New Standards, amendments and interpretations issued but not yet effective FAS 30 – Impairment, credit losses and onerous commitments AAOIFI has issued FAS 30 Impairment, Credit losses and onerous commitments in 2017. The objective of this standard is to establish the principles of accounting and financial reporting for the impairment and credit losses on various Islamic financing, investment and certain other assets of Islamic financial institutions (the institutions), and provisions against onerous commitments enabling in particular the users of financial statements to fairly assess the amounts, timing and uncertainties with regard to the future cash flows associated with such assets and transactions. FAS 30 will replace FAS 11 “Provisions and Reserves” and parts of FAS 25 “Investment in Sukuk”, shares and similar instruments that deals with impairment. FAS 30 classifies assets and exposures into three categories based on the nature of risks involved (i.e. credit risk and other risks) and prescribes three approaches for assessing losses for each of these categories of assets 1) Credit Losses approach, 2) Net Realizable Value approach (“NRV”) and 3) Impairment approach. For the purpose of this standard, the assets and exposures shall be categorized, as under: a) Assets and exposures subject to credit risk (subject to credit losses approach):

i. Receivables; and ii. Off-balance sheet exposures;

b) Other financing and investment assets and exposures subject to risks other than credit risk

(subject to impairment approach), excluding inventories; and

Credit losses approach for receivables and of balance sheet exposures uses a dual measurement approach, under which the loss allowance is measured as either a 12-month expected credit loss or a lifetime expected credit loss.

Expected credit losses FAS 30 introduces the credit losses approach with a forward-looking ‘expected credit loss’ model. The new impairment model will apply to financial assets which are subject to credit risk. A number of significant judgements are also required in applying the accounting requirements for measuring ECL, such as: - Determining criteria for significant increase in credit risk (SICR); - Choosing appropriate models and assumptions for the measurement of ECL; - Establishing the number and relative weightings of forward-looking scenarios for each type of

product/market and the associated ECL; and - Establishing Banks of similar financial assets for the purposes of measuring ECL.

The standard shall be effective from the financial periods beginning on or after 1 January 2020. Early adoption is permitted.



3 SIGNIFICANT ACCOUNTING POLICIES

a) Foreign currency

(i) Functional and presentation currency The financial statements have been presented in United States Dollars ("USD") which is also the functional currency of the Company. The figures have been rounded to the nearest thousand [USD 000s] except where otherwise indicated.

(ii) Transactions and balances Monetary assets and liabilities are translated into USD at exchange rates ruling at the balance sheet date. Transactions in foreign currencies during the year are converted at average exchange rates. Foreign exchange gains and losses are recognized in the statement of income and the statement of policyholders’ revenue and expenses.

b) Retakaful

(i) Classification of agreements The Company issues agreements to manage the retakaful risk on the basis of solidarity. Retakaful agreements are those agreements where the retakaful operator accepts to manage the retakaful fund of the policyholders by agreeing to compensate the policyholder if a specified uncertain future event adversely affects the policyholder. The Company defines "adversely affects" as the possibility of having to compensate the policyholder on the occurrence of an event as per the terms of the agreement. Takaful risk is risk other than financial risk that is managed by the retakaful operator on behalf of the takaful operator.

Financial risk is the risk of a possible future change in one or more of a security price, index of prices or rates or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the agreement. Takaful risk is significant if, and only if, a covered event could cause the Company to pay significant additional benefits. Once an agreement is classified as a takaful agreement it remains classified as a takaful agreement until all rights and obligations are extinguished or expired.

(ii) Gross contributions Gross contributions written comprise the total contributions in relation to contracts incepting during the financial year, together with adjustments arising in the financial year to contributions receivable. It includes an estimate of pipeline contributions, being those contributions written but not reported to the Company at the reporting date. Pipeline contributions are reported as accrued contributions and the corresponding receivable is disclosed as pipeline contributions receivable. Contributions are taken to income over the terms of the related contracts or policies. Unearned contributions are those proportions of the contributions accounted for, which relate to periods of risk that extend beyond the end of the financial year; they are calculated based on a time apportionment basis over the exposure to contracts. A provision for contribution deficiency is made for estimated amounts required over and above provisions for unearned contributions to meet future claims and related expenses on business in force at the reporting date. Refund of contributions i.e. cancellations and surrenders of policies are accounted for in the statement of policyholders' revenues and expenses on the basis of intimation by the policyholders subject to contract conditions.

(iii) Retrocessionaires’ share of contributions Retrocessionaires’ share of contributions depicts amounts paid to retrocessionaires in accordance with the retrocession contracts of the Company.



3 SIGNIFICANT ACCOUNTING POLICIES (continued)

(iv) Unearned contribution reserves Unearned contributions are those proportions of the contributions accounted for, which relate to periods of risk that extend beyond the end of the financial year; they are calculated based on a time apportionment basis over the exposure to contracts. A provision for contribution deficiency is made for estimated amounts required over and above provisions for unearned contributions to meet future claims and related expenses on business in force at the reporting date. Retrocessionaires’ share of unearned contributions reserve is calculated according to the contractual conditions on the basis of the gross unearned contribution reserves.

(v) Policy acquisition costs and deferred acquisition costs Commissions paid to intermediaries and other incremental direct costs incurred in relation to the acquisition and renewal of retakaful contracts are deferred to the extent that these costs are recoverable out of future premiums. The deferred policy acquisition costs are subsequently amortised over the terms of the retakaful contracts to which they relate as contributions are earned.

(vi) Claims Gross claims are recognised in the policyholders’ statement of revenue and expenses when the claim amount payable to policyholders and third parties is determined as per the terms of the retakaful agreements. Claims incurred comprise the settlement and the handling costs of paid and outstanding claims arising from events occurring during the financial period.

Claims recovered include amounts recovered from retrocessionaires’ in respect of the gross claims paid by the Company, in accordance with the retrocession contracts held by the Company. It also includes salvage and other claim recoveries.

Loss reserves represent estimates of the ultimate cost of settling all claims incurred but unpaid at the reporting date whether reported or not. Provision for outstanding claims reported is based on estimates of the loss, which will eventually be payable on each unpaid claim, established by the management based on currently available information and past experience modified for changes reflected in current conditions, increased exposure, rising claims costs and the severity and frequency of recent claims, as appropriate. The loss reserves are based on estimates that may diverge from the actual amounts payable. The methods used, and the estimates made, are reviewed regularly. The provision for claims incurred but not reported (“IBNR”) is calculated based on actuarial valuations of historic claims developments.

(vii) Retakaful receivables Retakaful receivables comprise the accounts receivable under retakaful business which are carried at cost less impairment. A provision for impairment is established when there is evidence that the Company may not be able to collect the full amounts due according to the terms of the receivables. Bad debts are written off during the year in which they are identified. Please refer to Note 19 b) (iv) regarding the provision for impairment.

(viii) Liability adequacy test At each reporting date, the Company reviews its unearned contributions and a liability adequacy test is performed to determine whether there is any overall excess of expected claims and deferred acquisition costs over unearned contributions. This calculation uses current estimates of future contractual cash flows after taking account of the investment return expected to arise on assets relating to the relevant retakaful reserves. If these estimates show that the carrying amount of the unearned contributions (less related deferred acquisition costs and deferred wakala fee) is inadequate, the deficiency is recognised in the statement of policyholders' revenues and expenses by setting up a contribution deficiency reserve.




(ix) Retrocession contracts Retrocession contracts are contracts entered into by the Company with reinsurers for the purpose of limiting its net loss potential through the diversification of its risks, under which the Company is compensated for losses on retakaful agreements issued. Assets, liabilities and income and expenses arising from ceded retakaful agreements are presented separately from the assets, liabilities, income and expenses from the related retakaful agreements because the retrocession contracts do not relieve the Company from its direct obligations to its policyholders. The benefits, to which the Company are entitled under its retrocession contracts held, are recognised as retakaful assets. These assets consist of balances due from reinsurers on settlement of claims and other receivables such as reinsurers’ share of outstanding claims that are dependent on the expected claims and benefits arising under the related reinsured retakaful agreements. Amounts recoverable from or due to reinsurers are recognised consistently with the amounts associated with the underlying retakaful agreements and in accordance with the terms of each retrocession contract. Retakaful liabilities are primarily contributions payable for retrocession contracts and are recognised as an expense when due. c) Wakala fee

The Company manages the general operations on behalf of the policyholders for a wakala fee calculated as a proportion of gross contributions. Wakala fee as a proportion of unearned contributions is deferred and recognised over the subsequent periods. Wakala fee rates are approved by the Sharia Supervisory Board.

d) Surplus / deficit in policyholders’ funds

Surplus in policyholders’ funds represents surplus of revenues over expenses arising from retakaful activities and are distributed among the policyholders by calendar year on development of business. The policy for Surplus distribution must be approved by the Sharia Supervisory Board as well as the Board of directors. The surplus distribution or remedial action for deficit reduction must be recommended by the actuary and endorsed by the Sharia Supervisory Board and the board of directors. Distribution of surpluses from the policyholders' fund is subject to the CBB's prior written approval Deficiency in policyholders’ funds is made good by an interest free loan (Qard Hassan) from the shareholders’ funds to the extent required to meet the policyholders’ claims and liabilities as and when they arise. This loan is to be repaid from future surplus arising from retakaful operations. This loan is tested at each reporting date for impairment and any portion of the loan considered impaired will be charged to the income statement. On liquidation of the Company, the surplus, if any after repayment of Qard Hassan, in the policyholders’ fund will be donated to charity or distributed to policyholders in accordance with the decision of the Sharia Supervisory Board.



3 SIGNIFICANT ACCOUNTING POLICIES (continued) e) Investment securities

Investment securities comprise investments in sukuk (Islamic bonds) issued by entities where the Company holds less than 20% of the equity. Investment securities exclude investments in subsidiaries, associates and jointly controlled entities.

(i) Classification Investment securities are classified as fair value through income statement or at fair value through equity. Management determines the appropriate classification of investments at the time of purchase. Securities are classified as at fair value through income statement if they are acquired for the purpose of generating a profit from short-term fluctuations in price or if so designated by management. Equity type instruments that are not designated as fair value through income statement are classified as at fair value through equity. (ii) Recognition and derecognition Investment securities are recognised at the trade date i.e. the date at which the Company becomes party to the contractual provisions of the instrument. Investment securities are derecognised when the rights to receive cash flows from the financial assets have expired or where the Company has transferred substantially all risk and rewards of ownership. (iii) Measurement Investment securities are measured initially at fair value, which is the value of the consideration given. Trading investments are initially recognised at fair value and transaction costs are expensed in the income statement. Other investment securities are recognised initially at fair value, plus attributable transaction costs.

(iv) Subsequent measurement Investment designated at fair value through equity shall be re-measured at their fair value at the end of each reporting period. The resultant re-measurement gain or loss, if any, shall be recognised in the equity under “investments fair value reserves” taking into consideration the split between the portion to shareholder’s equity and the portion related to the policyholders’s fund. (v) Measurement principles Fair value measurement Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction on the measurement date. The Company measures the fair value of quoted investments using the market bid-prices in an active market for that instrument. g) Provisions

Provisions are recognised when the Company has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made.




h) Zakat

As per the requirements of AAOIFI standards, disclosure of Zakat due per share is required to be made in the financial statements. However, all shareholders of the Company are non-Muslim corporates and not obliged to pay Zakat, hence the Company does not collect or pay Zakat on behalf of its shareholders.

i) Statutory reserve

The Bahrain Commercial Companies Law and the insurance regulations contained in Volume 3 of the Central Bank of Bahrain (CBB) Rulebook, require 10% of the Company's annual profit to be transferred to a statutory reserve. The Company's shareholders may resolve to discontinue such annual transfers when the reserve equals 50% of the paid up share capital. The reserve is not available for distribution except in such circumstances as stipulated in the Bahrain Commercial Companies Law and following approval of the Central Bank of Bahrain. j) Employees’ end of service benefits

Employees are covered by the pension schemes prevailing in the Kingdom of Bahrain. Eligible employees are entitled to end of service benefits as per the labour law in the Kingdom of Bahrain, based on length of service and final remuneration. The Company accrues for its liability annually on the basis as if all employees left the Company at the reporting date.

k) Cash and bank balances Cash and bank balances are recognised at amortised cost and comprise cash on hand and all balances with banks. Cash and cash equivalents comprise cash on hand and balances in current accounts and short term placements with banks with an original maturity period of 3 months or less. l) Statutory deposit

In accordance with the regulations of the Central Bank of Bahrain Law, the Company maintains a deposit with a designated national bank which cannot be withdrawn, except with the prior approval of the CBB.

m) Impairment

(i) Financial assets The Company assesses at each reporting date whether there is objective evidence that an asset is impaired. Objective evidence that investment securities / other assets (including equity securities) are impaired can include the disappearance of an active market for a security, or other observable data relating to a group of assets such as adverse changes in the payment status of issuers in the group, or economic conditions that correlate with defaults in the group. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment. (ii) Qard Hassan Qard Hassan is a funding by shareholders to policyholders computed based on solvency margin and capital adequacy rules of the Central Bank of Bahrain. Qard Hassan is tested annually for impairment. In the statement of financial position, Qard Hassan receivables by shareholders are eliminated against Qard Hassan payables by the policyholders for presentation. Impairment, if any, is recognised in the statement of income.

4 CASH AND BANK BALANCES



The cash and bank balances include a statutory deposit of USD 461 thousands (2017: USD 452 thousands) placed with a bank in Kingdom of Bahrain in accordance with the provisions of the Central Bank of Bahrain (CBB) Law and can not be withdrawn except with prior approval of the Central Bank of Bahrain. Effective annual profit margin in respect bank balances range from 0.75% to 2.1% (2017: 0.75% to 2.15%).

5 RETAKAFUL RECEIVABLES 2018 2017

Retalaful receivables 1,511 2,020 Retakaful recoveries receivable 10 2,778 Gross receivables 1,521 4,798 Less: Provision for impairment (358) (1,589) Contributions and loss deposits 175 488

1,338 3,697

Movement in the provision for impairment

2018 2017 At January 1,589 457Charge for the year - 1,132 Reversal of provision (1,231) -

358 1,589

6 DEFERRED ACQUISITION COSTS

31 December 2018 Shareholders Policyholders Total Placements with financial institutions with original maturities of three months or less - Murabaha 5,500 2,500 8,000

Cash in hand and banks 6,843 4,732 11,575Cash and cash equivalents 12,343 7,232 19,575Statutory deposit 461 - 461

Cash and bank balances 12,804 7,232 20,036

31 December 2017 Shareholders Policyholders Total Placements with financial institutions with original maturities of three months or less - Murabaha 44,291 24,514 68,805- Wakala 1 - 1

Cash in hand and banks 1,188 3,020 4,208Cash and cash equivalents 45,480 27,534 73,014Statutory deposit 452 - 452

Cash and bank balances 45,932 27,534 73,466



2018 2017

At 1 January 673 1,856 Acquisition costs during the year 546 (5,060) Amortisation for the year (587) 3,889 Exchange difference (5) (12)

627 673

7 DEFERRED WAKALA FEES

2018 2017 At 1 January 814 2,169 Wakala fees for the year 699 (2,028) Amortisation for the year (691) 673 Exchange difference arising on revaluation (5) -

817 814

8 INVESTMENT SECURITIES

2018 2017 Share-

holders Policy-holders

Total

Share-holders

Policy-holders

Total

Debt type instruments

Fair value through income statement: Quoted instruments 65,521 22,957 88,478 27,373 - 27,373

Equity type instruments Fair value through equity: unquoted instruments - - - 5,750 3,179 8,929 Investment securities 65,521 22,957 88,478 33,123 3,179 36,302

9 OTHER ASSETS

2018 2017 Share-

holders Policy-holders

Total

Share-holders

Policy-holders

Total

Wakala fee and mudarib share due from policyholders fund 1,604 - 1,604 1,048 - 1,048Accrued interest 602 199 801 311 81 392Prepayments and other receivables 125 379 504 229 - 229Property and equipment - - - 17 - 17 2,331 578 2,909 1,605 81 1,686

10 RETAKAFUL RESERVES



2018 2017

GrossRetro-ceded Net Gross

Retro-ceded Net

Unearned contribution reserve 2,434 (2,434) - 2,215 (2,222) (7)

Outstanding claims:

- reported 15,907 (9,961) 5,946 19,270 (11,843) 7,427

- IBNR 6,095 (4,457) 1,638 15,836 (11,666) 4,170

At 31 December 24,436 (16,852) 7,584 37,321 (25,731) 11,590 a) Unearned contributions reserve

2018 2017

Gross Retro-ceded Net Gross

Retro-ceded Net

At 1 January 2,215 (2,222) (7) 5,624 (4,764) 860

Contributions written 2,345 (1,997) 348 (12,764) 1,025 (11,739)

Contributions earned (2,119) 1,780 (339) 9,348 1,533 10,881 Foreign exchange (losses) / gains (7) 5 (2) 7 (16) (9)

At 31 December 2,434 (2,434) - 2,215 (2,222) (7)

b) Outstanding claims

2018 2017 Gross Retroceded Net Gross Retroceded Net

Outstanding claims reported 19,270 (11,843) 7,427 48,587 (18,878) 29,709 IBNR reserves 15,836 (11,666) 4,170 33,547 (14,722) 18,825

35,106 (23,509) 11,597 82,134 (33,600) 48,534 Claims incurred (7,862) 5,594 (2,268) (8,878) (63) (8,941)Claims paid (5,491) 3,521 (1,970) (38,317) 10,194 (28,123) Foreign exchange gains/(losses) 249 (24) 225 167 (40) 127

At 31 December 22,002 (14,418) 7,584 35,106 (23,509) 11,597 Outstanding claims reported 15,907 (9,961) 5,946 19,270 (11,843) 7,427 IBNR reserves 6,095 (4,457) 1,638 15,836 (11,666) 4,170 At 31 December 22,002 (14,418) 7,584 35,106 (23,509) 11,597



10 RETAKAFUL RESERVES (continued)

Claims development data

The table below shows the loss reserves in the years 2013 to 2017 as the operations of the Company has been ceased in 2017. The bottom half of the table reconciles the cumulative claims to the amount appearing in the statement of financial position.

Underwriting year 2013 2014 2015 2016 2017 Total Gross

Estimate of incurred claims costs:

- End of underwriting year 6,562 18,034 16,090 1,430 182 42,298

- One year later 10,286 30,952 29,707 2,349 282 73,576- Two years later 12,221 28,463 27,718 2,501 - 70,903- Three years later 11,096 25,189 25,965 - - 62,250- Four years later 11,416 23,166 - - - 34,582- Five years later 11,237 - - - - 11,237 Current estimate of incurred claims 11,237 23,166 25,965 2,501 282 63,151

Cumulative payments to date (7,858) (19,436) (20,643) (111) (44) (48,092)

Liability recognised 3,379 3,730 5,322 2,390 238 15,059 Liability in respect of prior years

7,001

Total liability included in the statement of financial position

22,060

Foreign exchange adjustments (58) Total liability included in the statement of financial position 22,002

Underwriting year 2013 2014 2015 2016 2017 Total Net

Estimate of incurred claims costs:

- End of underwriting year 1,873 9,777 9,022 109 11 20,792

- One year later 2,808 19,041 17,896 220 16 39,981- Two years later 2,843 17,604 14,365 210 - 35,022- Three years later 2,800 13,160 14,187 - - 30,147- Four years later 3,343 13,115 - - - 16,458- Five years later 3,421 - - - - Current estimate of incurred claims 3,421 13,115 14,187 210 16 30,949

Cumulative payments to date (2,266) (12,351) (13,560) (7) (3) (28,187)

Liability recognised 1,155 764 627 203 13 2,762 Liability in respect of prior years

4,780

Total liability included in the statement of financial position

7,542

Foreign exchange adjustments 42 Total liability included in the statement of financial position 7,584



11 DEFERRED COMMISSION FROM RESTROCESSION

2018 2017

At 1 January 510 1,540 Commission receivable 558 (979) Commission earned (581) (50) Exchange difference (1) (1)

486 510

12 OTHER LIABILITIES

2018 2017

Share-holders

Policy-holders

Total

Share-holders

Policy-holders

Total

Wakala and mudarib fee due to shareholders fund - 1,604 1,604 - 1,048 1,048Accrued expenses and other 1,763 110 1,873 1,340 7 1,347Employees’ end of service benefit 68 - 68 68 - 68 1,831 1,714 3,545 1,408 1,055 2,463

13 SHARE CAPITAL

2018 2017

Authorised equity share capital of 525,000,000 (2017: 525,000,000) shares of USD 1 each 525,000 525,000 Issued, subscribed and paid up capital comprising 200,000,000 (2017: 200,000,000) shares of USD 0.75 each 150,000 150,000

14 STATUTORY RESERVE

The Bahrain Commercial Companies Law and the insurance regulations contained in Volume 3 of the Central Bank of Bahrain (CBB) Rulebook require, 10% of the Company's annual profit to be transferred to a statutory reserve. The Company's shareholders may resolve to discontinue such annual transfers when the reserve equals 50% of the paid up share capital. The reserve is not available for distribution except in such circumstances as stipulated in the Bahrain Commercial Companies Law and following approval of the CBB. No transfer was made during the year (2017: nil) since the Company's incurred a loss for the year.



15 INVESTMENT INCOME

2018 2017

Share-holders

Policy-holders

Total

Share-holders

Policy-holders

Total

Profit on murabaha 162 75 237 489 474 963Profit of sale of investment securities 41 24 65 190 146 336Profit on sukuk 1,689 618 2,307 731 - 731Fair value movement (1,031) (375) (1,406) - - -Profit on mudarabah - - - 187 54 241Profit on wakala - - - 2 2 4 861 342 1,203 1,599 676 2,275

16 WAKALA FEE AND MUDARIB SHARE

The shareholders of the Company manage takaful operations on behalf of the policyholders and charge 5% of gross contributions in addition to the policy acquisition cost (2017: 5% of gross contributions) as a wakala fee. The maximum chargeable wakala fee as approved by the Shariah Committee, is 14% (2017:14%) of gross contributions and the policy acquisition costs to be included in the wakala fee as incurred. The shareholders also manage the policyholders' investments and charge 40% (2017 : 40%) of profit income earned by the policyholders' funds as mudarib share. The maximum mudarib fee, as approved by the Shariah Committee, is 40% (2017 : 40%) .

17 GENERAL AND ADMINISTRATIVE EXPENSES

2018 2017

Staff cost 613 1,064 Legal and professional fees 254 373 Services fee (note 20) 281 273 Business travel and hotel accommodation 11 40 Rent charge 44 82 Repairs and maintenance 42 57 Employees’ end of service benefits 37 70 Depreciation 17 23 Run off expenses - 300 Other expenses 69 105

1,368 2,387

18 RECOVERY OF PREVIOUS YEARS LOSS In year 2015, the Company faced a third party fraud in relation to a fund transfer amounting to USD 10,581 thousand. The Company recovered Nil amount this year ( 2017: USD 567 thousands) from the fraud loss, with the combined efforts of the Company's management and its legal counsel, which has been recognized in the statement of income. The outstanding amount not recovered is USD 5,424 thousands.



19 QARD HASSAN

2018 2017

At beginning of the year 26,267 26,267 Provision for impairment (6,749) (4,880)

19,518 21,387

Movement in the provision for impairment

2018 2017

At beginning of the year 4,880 - Provision for Impairment 1,869 4,880

6,749 4,880

Over the years from 2011 to 2013, the Shareholders’ fund gave a Qard Hassan of USD 84,550 thousands to Policyholders’ fund of which USD 58,283 thousands was written off in 2015. On 16 March 2015 the Board of Directors approved a repayment of Qard Hassan of USD 7,500 thousand from the policyholders' fund to the shareholders’ fund. The Company made a request to the CBB for approval of this payment on 12 April 2015 which is pending approval as of the date of approval of these financial statements.

20 RELATED PARTY TRANSACTIONS

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related parties include other group companies, directors and key management personnel of the Company. Key management personnel comprise of the Board of Directors and key members of management having authority and responsibility for planning, directing and controlling the activities of the Company.

Certain transactions were approved by the Board of Directors under Article 189(b) of the Commercial Companies Law in the financial year ended 31 December 2018 where the chairman, directors or managers had a direct or indirect interest in the contracts or transactions which have been approved by the Board.

a) Transactions with related parties

2018

2017

Shareholders

Entities related to the shareholders

Shareholders Entities

related to the shareholders

Gross contributions - (69) 24 (12,260)

Retakaful contributions - 1,978 91 (1,174)Gross claims paid 4 191 879 25,733 Retakaful share of claims paid - 1,627 2,459 7,539 Acquisition costs - (34) 6 (3,939)Retakaful commissions - 379 (77) (724)



General and administration expenses - 281 -

273

20 RELATED PARTY TRANSACTIONS (continued)

b) Outstanding balances with related parties

Balances with related parties included in the condensed statement of financial position are as follows:

2018

2017

Shareholders

Entities related to the shareholders

Shareholders Entities related

to the shareholders

Retakaful receivables - - 2,186 593Retakaful balances payable - 916 - 2,927Due to related parties - 523 54 254

c) Compensation of directors and key management personnel The remuneration of directors and other members of key management during the period was as follows:

2018

2017

Salaries and benefits 285 336

Directors' fees 61 41 Employees' end of service benefits 18 16

364

393

ACR ReTakaful MEA B.S.C. (c) NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2018 USD’000

34

21 SEGMENT INFORMATION

The Company’s activities are classified into two business segments namely Shareholders’ fund and policyholders’ fund.

a) Shareholders’ fund

The results of the shareholders’ fund activities are presented in page 13 of the financial statements. Assets and liabilities relating to shareholders’ fund activities are presented in note 21 d) of the condensed interim financial information.

b) Policyholder’s takaful funds The results of the policyholders’ takaful funds are set out in note 21 c) and the assets and liabilities are presented in note 21 d) of the condensed interim financial information.

c) Policyholders’ revenues and expenses

2018 2017

Engineering Property Motor Casualty Other Total Engineering Property Motor Casualty Other Total TAKAFUL REVENUE

Gross contributions 972 106 1,160 90 17 2,345 (2,912) (4,928) 390 (2,210) (3,105) (12,765)Retrocessionaires’ share of contributions (930) (108) (842) (76) (41) (1,997) 75 382 (810) 148 1,230 1,025Net contributions 42 (2) 318 14 (24) 348 (2,837) (4,546) (420) (2,062) (1,875) (11,740)Unearned contributions adjustment 33 (11) - (25) (6) (9) 963 144 12 13 33 1,165Net earned contribution 75 (13) 318 (11) (30) 339 (1,874) (4,402) (408) (2,049) (1,842) (10,575)Net claim incurred 234 697 702 18 617 2,268 2,141 3,635 475 380 2,310 8,941Wakala fee (336) (82) (160) (53) (60) (691) 449 2,136 107 529 1,381 4,602

Commission income 270 15 153 39 104 581 407 (33) 162 (27) (458) 51

Other income / (loss) 351 38 418 33 7 847 (250) (423) 34 (190) (264) (1,093)Surplus / (deficit) from operations 594 655 1,431 26 638 3,344 873 913 370 (1,357) 1,127 1,926


35

21 SEGMENT INFORMATION (continued) a) Analysis of segment assets and segment liabilities

2018 2017 Shareholders Policyholders Elimination Total Shareholders Policyholders Elimination Total ASSETS

Cash and bank balances 12,804 7,232 - 20,036 45,932 27,534 - 73,466 Retakaful receivables - 1,338 - 1,338 - 3,697 - 3,697 Accrued contributions receivable - 297 - 297 - 787 - 787 Retrocessionaires' share of retakaful reserves - 16,852 - 16,852 - 25,731 - 25,731 Deferred acquisition costs 627 - - 627 673 - - 673 Deferred wakala fees expense - 817 - 817 - 814 - 814 Investment securities 65,521 22,957 - 88,478 33,123 3,179 - 36,302 Other assets 2,331 578 - 2,909 1,605 81 - 1,686 Qard hassan due from policyholders' fund 19,518 - (19,518) - 21,389 - (21,389) - TOTAL ASSETS 100,801 50,071 (19,518) 131,354 102,722 61,823 (21,389) 143,156

LIABILITIES, POLICYHOLDERS' FUND AND EQUITY Liabilities Retakaful reserves - 24,436 - 24,436 - 37,321 - 37,321 Retakaful balances payable - 2,643 - 2,643 - 5,651 - 5,651 Deferred commissions from retrocessions - 486 - 486 - 510 - 510 Deferred wakala fees income 817 - - 817 814 - - 814 Other liabilities 1,831 1,714 - 3,545 1,408 1,055 - 2,463 Due to related parties 523 - - 523 307 - - 307 Qard hassan due to shareholders' fund - 19,518 (19,518) - - 21,389 (21,389) - Total liabilities 3,171 48,797 (19,518) 32,450 2,529 65,926 (21,389) 47,066


36

21 SEGMENT INFORMATION (continued)

2018 2017 Shareholders Policyholders Elimination Total Shareholders Policyholders Elimination Total

Surplus / (deficiency) in policyholder' fund - 1,272 - 1,272 - (4,103) - (4,103) Equity Share capital 150,000 - - 150,000 150,000 - - 150,000 Statutory reserve 2,425 - - 2,425 2,425 - - 2,425 Investment fair value reserve - - - - 202 - - 202 Accumulated losses (54,793) - - (54,793) (52,434) - - (52,434) Total equity 97,632 - - 97,632 100,193 - - 100,193

TOTAL LIABILITIES, POLICYHOLDERS’ EQUITY AND SHAREHOLDERS EQUITY 100,803 50,069 (19,518) 131,354 102,722 61,823 (21,389) 143,156


37

22 CAPITAL MANAGEMENT

The Board’s policy is to maintain a strong capital base so as to maintain cedant and market confidence and to sustain the future development of the business. The Board of Directors monitors contribution income and profit earned during the period as key indicators for capital management. The Company’s objectives for managing capital are:

• to safeguard the entity's ability to continue as a going concern, so that it can continue to provide

returns for shareholders and benefits for other stakeholders

• to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

The CBB supervises the Company through a set of regulations that set out certain minimum capital requirements. It is the Company’s policy to hold capital as an aggregate of the capital requirement of the relevant supervisory body and a specified margin, to absorb changes in both capital and capital requirements. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.

The Company maintains adequate capital to run its business in an orderly manner. The capital available and solvency margin are determined in accordance with the provisions of the Capital Adequacy Module of the Insurance Rulebook Volume 3 issued by the Central Bank of Bahrain. The following table presents the Company's capital adequacy and solvency margin:

Excess of general takaful net assets over the required minimum margin excludes Qard Hassan payable to shareholders of USD 19,518 thousands (2017: USD 21,389 thousands).

23 FINANCIAL RISK MANAGEMENT

Risk governance The Company's risk governance is manifested in a set of established policies, procedures and controls which uses the existing organisational structure to meet strategic targets. The Company's philosophy revolves on willing and knowledgeable risk acceptance commensurate with the risk appetite and strategic plan approved by the Board of Directors. The Company is exposed to retakaful, credit, liquidity, market and regulatory framework risks. Risk management structure A cohesive organisational structure is established within the Company in order to identify, assess, monitor,and control risks. Board of Directors The apex of risk governance is the centralised oversight of the Board of Directors providing direction and the necessary approvals of strategies and policies in order to achieve defined corporate goals.

2018

2017

Shareholders' available regulatory capital 94,474 98,803Minimum margin of solvency 1,326 1,464Excess of general takaful net assets over the required minimum margin 16,692

6,276


38

23 FINANCIAL RISK MANAGEMENT (continued) Senior management Senior management is responsible for the day-to-day operations towards achieving the strategic goals within the Company's pre-defined risk appetite.

a) Overview

The Company has exposure to the following risks from its use of financial instruments: • Retakaful risk • credit risk • liquidity risk • market risk This note presents information about the Company’s exposure to each of the above risks, and the Company’s objectives, policies and processes for measuring and managing risk. Further quantitative disclosures are included throughout these financial statements. b) Retakful risk Retakaful risks Risks under retakaful contracts arise from uncertainty regarding the occurrence of the insured event and the amount of the resulting claim. Underwriting risks Underwriting risks are managed principally through policies and guidelines for accepting risks and retakaful arrangements. Risks are accepted based on an evaluation of pricing and prior underwriting experience in accordance with underwriting guidelines that have been laid out for each line of business. Underwriting guidelines are constantly reviewed and updated to take account of market developments, performance and opportunities. Accumulation limits are set to control exposures to natural hazards and catastrophes. Various approval limit are specified for accepting risks. The reinsurance strategy is designed to protect exposures to individual and event risks based on current risk exposures through cost effective reinsurance arrangements. Reserving risks are addressed by ensuring prudent and appropriate reserving for business written, thus ensuring that sufficient funds are available to cover future claims. Reserving practices involve the application of underwriting judgement and loss ratios.


39

23 FINANCIAL RISK MANAGEMENT (continued)

a) Sensitivity analysis

The following table provides an analysis of the sensitivity of profit and policyholder equity to changes in the assumptions used to measure retakaful agreement provisions and retakaful assets at the reporting date. The analysis has been prepared for a change in one variable at a time with other assumptions remaining constant. The effect is shown before and after retakaful.

2018

Statement of policyholders’ revenues and expenses Policyholders’ equity Gross of retakaful Net

Gross of retakaful Net

Expense rate 1 % increase 84 28 84 281 % decrease (84) (28) (84) (28)

Expected loss ratio 1 % increase 79 23 79 23 1 % decrease (79) (23) (79) (23)

2017

Expense rate 1 % increase 127 127 127 1271 % decrease (127) (127) (127) (127)

Expected loss ratio 1 % increase 89 89 89 891 % decrease (89) (89) (89) (89)

The nature of the Company’s exposures to retakaful risk and its objectives, policies and processes for managing retakaful risk have not changed significantly from the prior period.

c) Credit risk

Credit risk is the risk of financial loss to the Company if a counterparty fails to meet its contractual obligations. The Company’s key areas of exposure to credit risk include cash and cash equivalents, statutory deposit, investment securities - debt type, retrocessionaires’ share of loss reserves and retakaful receivables.


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(i) Management of credit risk The Company only enters into takaful and retakaful contracts with recognised, credit worthy third parties. In addition, receivables from takaful and retakaful contracts are monitored on an ongoing basis in order to manage the Company’s exposure to bad debts. The Company limits its credit risk with regard to murabaha receivables by only dealing with reputable banks. The Companys' investment in Sukuk have good credit rating. Credit risk is controlled through terms of trade for receipt of contribution and in certain cases enforcement of contribution warranty conditions. Most of the counterparties are takaful cooperatives, Islamic insurance companies or conventional insurance companies having reasonable credit rating. (ii) Overall exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. The credit exposure at the reporting date was:

Total financial assets

Shareholders Policyholders 2018 2017 2018 2017

Cash and bank balances 12,804 45,932 7,232 27,534Contribution receivables - - 1,338 3,697Retrocessionaires' share of retakaful reserves – reported claims

- - 9,962 11,843

Investment securities- debt securities

65,521 27,373 22,957 -

Other assets 2,331 1,359 578 81 80,656 74,664 42,067 43,155

(iii) Concentration of credit risk Of the above exposure to credit risk, the Company has entered into placements with banks for USD 8,461 thousands (2017: USD 69,258 thousands).

(iv) Assets that are past due

The nature of the Company’s exposures to credit risk and its objectives, policies and processes for managing credit risk have not changed significantly from the prior period.


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23 FINANCIAL RISK MANAGEMENT (continued) The ageing of retakaful receivables at the end of the reporting period was as follows;

2018 Neither past

due nor impaired

Less than 180 days

181 to 365 days

More than 365 days

Total

Gross 427 1,116 79 74 1,696Impairment allowance - (205) (79) (74) (358) 427 911 - - 1,338

2017 Neither past due nor impaired

Less than 180 days

181 to 365 days

More than 365 days

Total

Gross 293 3,423 158 1,412 5,286Impairment allowance - (19) (158) (1,412) (1,589) 293 3,404 - - 3,697

The credit quality of retakaful receivables is assessed based on credit policy established by the risk management committee of the Group. The Company has monitored customer credit risk by analysing the credit quality of retakaful receivables periodically.

(v) As per the Volume 3 of CBB Rulebook, the Company has made provision for the Qard Hassan during the year amounting to USD 1,869 thousands (2017: USD 4,880 thousands).

d) Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations from its financial and retakaful liabilities that are settled by delivering cash or another financial asset. The Company is exposed to calls on its available cash resources mainly from claims arising from retakaful agreements. Liquidity risk may arise from a number of potential areas, such as a duration mismatch between assets and liabilities and unexpectedly high levels of lapses/surrenders. The natures of Company’s exposure to liquidity risk and its objective, policies and processes for managing liquidity risk have not changed significantly from the prior period.

(i) Management of liquidity risk

Management monitors liquidity requirements on a regular basis and ensures that sufficient funds are available to meet any commitments as they arise. The Company has sufficient liquidity and, therefore, does not resort to borrowings in the normal course of business.


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(ii) Exposure to liquidity risk

An analysis of the contractual maturities of the Company’s financial liabilities (including contractual undiscounted profit payments) is presented below.

2018 6 months or less

6 to 12 months

1 to 5 years No terms Total

ASSETS Cash and bank balances 19,575 - - 461 20,036Contributions receivable 1,338 - - - 1,338Retakaful share of reported claims

- - - 9,962 9,962

Investments securities - - 88,478 - 88,478Other assets 2,109 - - - 2,109TOTAL ASSETS 23,022 - 88,478 10,423 121,923LIABILITIES Retakaful reserves - reported claims

- - - 15,907 15,907

Retakaful balances payable

- - - 2,643 2,643

Due to related party 523 - - - 523Other liabilities 1,604 - - 68 1,672TOTAL LIABILITIES 2,127 - - 18,618 20,745

2017 6 months or less

6 to 12 months

1 to 5 years No terms Total

ASSETS Cash and bank balances 73,015 - - 451 73,466Contributions receivable 3,697 - - - 3,697Retakaful share of reported claims

- - - 11,843 11,843

Investments securities - - 27,373 8,929 36,302Other assets 1,269 - - - 1,269TOTAL ASSETS 77,981 - 27,373 21,223 126,577LIABILITIES Retakaful reserves - reported claims

- - - 19,270 19,270

Retakaful balances payable

- - - 5,651 5,651

Due to related party 307 - - - 307Other liabilities 1,048 - - 68 1,116TOTAL LIABILITIES 1,355 - - 24,989 26,344

(iii) Disclosures of non-financial assets and liabilities Disclosures relating to financial assets and liabilities - current and non-current, are provided throughout these financial statements. Disclosures relating to non-financial assets and liabilities representing best estimates are as stated below.


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Non-financial assets 2018 2017

Policyholders

Accrued contribution receivable 297 787 Deferred wakala fee 817 814Retrocessionaires’ share of unearned contribution reserve 2,433

2,222

Retrocessionaires’ share of IBNR 4,457 11,666

8,004

15,489Shareholders

Deferred acquisition costs 627 673 Equipment and other assets - 254

627

927

Non-financial liabilities

Policyholders

Unearned contribution reserve 2,434 2,215Commission reserve 486 510Loss reserves – IBNR 6,095 15,836

9,015 18,561 Shareholders

deferred wakala fee 817 814Other liabilities - 1,415

817 2,229

e) Market risk

Market risk is the risk that changes in market prices, such as profit rates, foreign exchange rates and equity prices will affect the value of the Company’s assets, the amount of its liabilities and / or the Company’s income. Market risk affects in the Company due to fluctuations in the value of liabilities and the value of investments held. The Company is exposed to market risk on all of its financial assets. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. The nature of the Company’s exposures to market risks and its objectives, policies and processes for managing market risk have not changed significantly from the prior period.


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(i) Management of market risk

All entities in the ACR Group manage market risks locally in accordance with their asset/liability management framework. For each of the major components of market risk, the Hannover Re Group has policies and procedures in place which detail how each risk should be managed and monitored. The management of each of these major components of risk and the exposure of the Company at the reporting date to each major risk are addressed below.

(ii) Currency risk

Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company's principal balances and transactions are denominated in United States Dollars, Bahraini Dinars, Malaysian Ringgit, other currencies. The table below indicates the currencies to which the Company had exposure at 31 December 2018 and 31 December 2017 on its monetary assets and liabilities:

31 December 2018 US dollars Bahraini Dinar

Malaysian Ringgit Others Total

Net assets / (liabilities) 108,635 232 - (9,963) 98,904

31 December 2017 US dollars Bahraini

Dinar Malaysian

Ringgit Others Total

Net assets / (liabilities) 167,168 (18,314) (1,263) (51,501) 96,090

The assets and liabilities above were translated at exchange rates at the reporting date. A 5% variance in Malaysian Ringgit exchange rate will have an impact of USD Nil thousands (2017: USD 63 thousands) on the statement of policyholders’ revenue and expenses, statement of income, policyholders’ equity and shareholders’ equity respectively.

(iii) Profit rate risk

Profit rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market profit rates. The Company does not have material exposure to variations in profit rates as it invests primarily in fixed income instruments. A 50 basis point change in the profit rates would increase/decrease the profit income by USD 485 thousand (2017: USD 734 thousand).

(iv) Other market price risk The primary goal of the Company’s investment strategy is to ensure low risk returns and invest excess surplus funds available with the Company in low risk securities. Market price risk arises from the sukuk investments held by the Company. The Investment Guidelines prescribe the acceptable limits in market price movement of securities. The Managing Director and Chief Risk Officer are responsible for ensuring compliance with the Investment Guidelines and reporting on the performance of the portfolio to the Investment Committee of the Company’s Board of Directors.


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24 FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or broker price quotations. For all other financial instruments, the Company determines fair values using other valuation techniques. Fair value hierarchy The Company measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements: Level 1: Inputs that are quoted market prices (unadjusted) in active markets for identical instruments. Level 2: Inputs other than quoted prices included with in level 1 that are observable either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data. Level 3: Inputs that are unobservable. This category includes all instruments for which the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted market prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments. The table below analyses financial instruments measured at fair value at the reporting date by the level in the fair value hierarchy into which the fair value measurement is categorised. The amounts are based on the values recognised in the statement of financial position. All fair value measurements below are recurring:

Level 1 Level 2 Level 3 Total

31 December 2018 Debt instruments 88,478 - - 88,478 88,478 - - 88,478

Level 1 Level 2 Level 3 Total

31 December 2017 Equity instruments - 8,929 - 8,929Debt instruments 27,373 - - 27,373

27,373 8,929 - 36,302

No transfers out of, or into, the level 3 measurement classification occurred during the year ended 31 December 2018 (31 December 2017: Nil).


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24 FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

The table below sets out the Company’s classification of each class of financial assets and liabilities, and their fair values:

31 December 2018 Fair value

through equity

Fair value through income

statement

Loans and receivable

s

Total carrying

value Fair

value Cash and bank balances - - 20,036 20,036 20,036Retakaful receivables - - 1,338 1,338 1,338Accrued contributions receivable - - 297 297 297Retrocessionaires' share of outstanding reported claims - - 9,962 9,962 9,962Investment securities - 88,478 - 88,478 88,478Other assets - - 2,405 2,405 2,405Total financial assets - 88,478 34,038 122,516 122,516

Reported outstanding claims - - 15,907 15,907 15,907Retakaful payables - - 2,643 2,643 2,643Other liabilities - - 1,604 1,604 1,604Due to related party - - 607 607 607Total financial liabilities - - 20,761 20,761 20,761

31 December 2017 Fair value

through equity

Fair value through income

statement Loans and receivables

Total carrying

value Fair

value Cash and bank balances - - 73,466 73,466 73,466Retakaful receivables - - 3,697 3,697 3,697Accrued contributions receivable - - 787 787 787Retrocessionaires' share of outstanding reported claims - - 11,843 11,843 11,843Investment securities 36,302 - - 36,302 36,302Other assets - - 1,440 1,440 1,440Total financial assets 36,302 - 91,233 127,535 127,535

Reported outstanding claims - - 19,270 19,270 19,270Retakaful payables - - 5,651 5,651 5,651Other liabilities - - 1,048 1,048 1,048Due to related party - - 307 307 307Total financial liabilities - - 26,276 26,276 26,276

*The carrying values of cash and bank balances, retakaful receivables, accrued contribution receivables, other assets, retakaful payables, due to related party and other liabilities are a reasonable approximation of fair value due to their short term nature.


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25 SHARIA SUPERVISORY BOARD

The Company’s business activities are subject to the supervision of the Sharia Board consisting of three scholars appointed by the General Assembly for a period of three years. The Sharia Supervisory Board has the power to review the Company’s business operations and activities in order to confirm that the Company is complying with Sharia rules and principles. The Sharia Supervisory Board has access to all the Company’s records, transactions and information sources.

26 NON-SHARIA INCOME PAID TO CHARITIES During the year, the Company paid non-sharia compliance income related to 2015 and before to charities of USD 11 thousands (2017: USD 245 thousands). There were no earnings realised during the year from transactions which are not permitted by Shariah

27 ZAKAT

The Shariah Committee has approved the calculation of Zakat according to Shariah standard no. 36 and accounting standard no. 9 on Zakat calculation of the AAOIFI, which is computed on net invested funds method and the amount of Zakat is USD 0.0043 (2017: USD 0.0085) per share. Zakat due is advised to shareholders from the date of incorporation to 31 December 2018 and is payable directly by the shareholders.

28 COMMITMENTS As discussed in note 19 - Capital adequacy and solvency margin requirements, the shareholders have committed to provide further Qard Hassan to participants to meet the cash deficiency, if any. Further, the policyholders are committed to repay the previously written off Qard Hassan amounting to USD 58,283 thousand in the event that policyholders' fund generate surplus in the future.

29 COMPARATIVES

The comparative figures for the previous year have been regrouped, where necessary, in order to conform to the current year’s presentation. Such regrouping does not affect the previously reported profit, comprehensive income or equity.

Documents

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