AL RAJHI COMPANY FOR COOPERATIVE INSURANCE

FINANCIAL STATEMENTS

AND

INDEPENDENT AUDITORS’ REPORT

FOR THE YEAR ENDED 31 DECEMBER 2023

(A SAUDI JOINT STOCK COMPANY)

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Index Page

Independent auditors’ report 1-7

Statement of financial position 8

Statement of income 9

Statement of comprehensive income 10

Statement of changes in equity 11

Statement of cash flows 12

Notes to the financial statements 13 - 126

Financial statements and independent auditors’ report

for the year ended 31 December 2023

Independent Auditors’ Report on the Audit of the Financial Statements

To the Shareholders of Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Al Rajhi Company for Cooperative Insurance – a

Saudi Joint Stock Company (“the Company”), which comprise the statement of financial position

as at 31 December 2023, and the related statement of income, statement of comprehensive income,

statement of changes in equity and statement of cash flows for the year then ended, and notes to

the financial statements, including material accounting policy information and other explanatory

information.

In our opinion, the accompanying financial statements present fairly, in all material respects, the

financial position of the Company as at 31 December 2023, and its financial performance and its

cash flows for the year then ended in accordance with IFRS Accounting Standards that are

endorsed in the Kingdom of Saudi Arabia and other standards and pronouncements that are

endorsed by Saudi Organization for Chartered and Professional Accountants (“SOCPA”) (referred

to as “IFRS as endorsed in Kingdom of Saudi Arabia”).

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (“ISAs”) that are

endorsed in the Kingdom of Saudi Arabia. Our responsibilities under those standards are further

described in the Auditors’ responsibilities for the audit of the financial statements section of our

report. We are independent of the Company in accordance with the requirements of International

Code of Ethics for Professional Accountants (including International Independence Standards),

endorsed in the Kingdom of Saudi Arabia (the “Code”), that are relevant to our audit of the

Company’s financial statements, and we have fulfilled our other ethical responsibilities in

accordance with the Code’s requirements. We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance

in our audit of the financial statements of the current period. These matters were addressed in the

context of our audit of the financial statements as a whole, and in forming our opinion thereon,

and we do not provide a separate opinion on these matters.

Independent Auditors’ Report on the Audit of the Financial Statements

To the Shareholders of Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company) (Continued)

Key Audit Matter How our audit addressed the key audit matter

Valuation of Insurance Contract assets

and Liabilities, and Reinsurance Contract

Assets and Liabilities

We focused on this area because:

 Insurance contract assets/liabilities and

reinsurance contract assets/liabilities as at

31 December 2023 involve:

- complex accounting requirements,

including the inputs, assumptions estimate

techniques used for contract assets and

liabilities and measuring components of

insurance contract assets and liabilities

that include:



The estimate of future cash flows within

the asset and liability for remaining

coverage and asset and liability for

incurred claims.



Discounting applied to the estimates of

future cash flows to reflect the time value

of money and financial risk



Estimation of the non-financial risk

adjustment.



Contractual service margin (CSM), loss

component, and loss recovery component



Asset and liability for remaining coverage

for contracts measured under PAA.

-

Susceptibility to management bias and

estimation uncertainty when making

judgements to determine insurance

contract liabilities; and

-

Complex disclosure requirements.

We performed the following procedures:

 Understand, evaluated and tested key

controls around the claims and premium

administration and valuation of technical

insurance reserves;

 Engaged our actuarial specialists to

assess the methodology and

reasonableness of the key assumptions

and judgments used by the management

in determining the technical insurance

reserves;

 Evaluated the competence, capabilities

and objectivity of the management's

actuarial expert based on their

professional qualifications and

experience and assess their

independence;

 Performed substantive tests, on sample

basis, on the amounts recorded for claims

notified and paid; including comparing

the outstanding claims amount to

appropriate source documentation;

 Tested and reconciled key data inputs

into the IFRS 17 engine with primary

insurance data and reconciled IFRS 17

engine output numbers to the financial

statements and actuarial reports;

 Inspected the reconciliation between

investments held to cover unit-linked

liabilities and the unit reserves; and

 Assessed the adequacy and

appropriateness of disclosures made in

the financial statements.

Independent Auditors’ Report on the Audit of the Financial Statements

To the Shareholders of Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company) (Continued)

Adoption of IFRS 17

During the year, the Company has adopted

IFRS 17 “Insurance Contracts”, as endorsed

in the Kingdom of Saudi Arabia (IFRS 17),

which replaces IFRS 4 “Insurance

Contracts”, as endorsed in the Kingdom of

Saudi Arabia (IFRS 4) and is effective for

annual periods beginning on or after 1

January 2023, with early adoption permitted.

IFRS 17 establishes principles for the

recognition, measurement, presentation and

disclosure of insurance contracts,

reinsurance contracts and investment

contracts with direct participation features

(“DPF”). The Company has applied the full

retrospective approach to each group of

insurance contracts, except for ‘protection

and savings’ portfolio to which modified

retrospective approach was applied.

The adoption of IFRS 17 resulted in a

transition adjustment to the Company's

equity as at 1 January 2022 amounting to

SAR 56.46 million. IFRS 17 introduced new

nomenclature for significant insurance-

related balances as well as new measurement

principles for insurance-related liabilities

and insurance revenue recognition.

We performed the following procedures:

 Obtained an understanding of the Company's

implementation process for determining the

impact of adoption of the standard, including

understanding of the changes to the

Company's accounting policies, systems,

processes and controls.

 Evaluated and assessed management’s

process to identify insurance contracts, to

determine the appropriate grouping for such

contracts and to determine whether the use of

the premium allocation approach (PAA)/

under IFRS 17 was appropriate.

 Evaluated whether management’s allocation

of expenses under IFRS 17 was appropriate

and tested, on a sample basis, such expenses.

 Evaluated the risk adjustment for non

financial risk under IFRS 17 and tested, on a

sample basis, the underlying data supporting

the adjustment.

 Assessed the adequacy of the transition

adjustments impact for IFRS 17 on the

opening retained earnings as at 1 January

2022.

Independent Auditors’ Report on the Audit of the Financial Statements

To the Shareholders of Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company) (Continued)

Due to first year adoption, which resulted in

fundamental changes to classification and

measurement of the main transactions and

balances of the Company along with

significant changes to presentation and

disclosures that were required in the

financial statements for the year ended 31

December 2023, we have considered this as

a key audit matter.

Refer to note 2.5 for critical accounting

judgements, estimates and assumptions

adopted by the Company. The impact of

transition is explained in note 4 to the

financial statements.



Assessed the appropriateness of the

transition and accounting policies

disclosures in relation to IFRS 17 made in the

financial statements.

 Assessed the Company’s methods,

assumptions and accounting policies adopted

under IFRS 17, with the assistance of our

actuarial and accounting specialists and

experts.

Other information

Other information consists of the information included in the Company’s 2023 annual report, other

than the financial statements and our auditors’ report thereon. Management is responsible for the

other information. The Company’s annual report is expected to be made available to us after the

date of this auditors’ report.

Our opinion on the financial statements does not cover the other information and we do not express

any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other

information identified above when it becomes available and, in doing so, consider whether the

other information is materially inconsistent with the financial statements or our knowledge

obtained in the audit, or otherwise appears to be materially misstated.

When we read the Company’s annual report, if we conclude that there is a material misstatement

therein, we are required to communicate the matter to those charged with governance.

Independent Auditors’ Report on the Audit of the Financial Statements

To the Shareholders of Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company) (Continued)

Responsibilities of Management and Those Charged with the Governance for the Financial

Statements

Management is responsible for the preparation and fair presentation of the financial statements in

accordance with IFRS Accounting Standards as endorsed in Kingdom of Saudi Arabia, the

applicable requirements of the Regulations for Companies, and the Company’s By-laws, and for

such internal control as the management determines is necessary to enable the preparation of

financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the management is responsible for assessing the Company’s

ability to continue as a going concern, disclosing, as applicable, matters related to going concern

and using the going concern basis of accounting unless management either intends to liquidate the

Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance i.e., the Company’s Board of Directors, are responsible for

overseeing the Company’s financial reporting process.

Auditors’ Responsibility for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a

whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’

report that includes our opinion. Reasonable assurance is a high level of assurance but is not a

guarantee that an audit conducted in accordance with International Standards on Auditing, that are

endorsed in the Kingdom of Saudi Arabia will always detect a material misstatement when it

exists. Misstatements can arise from fraud or error and are considered material if, individually or

in the aggregate, they could reasonably be expected to influence the economic decisions of users

taken on the basis of these financial statements.

As part of an audit in accordance with International Standards on Auditing, that are endorsed in

the Kingdom of Saudi Arabia, we exercise professional judgment and maintain professional

skepticism throughout the audit. We also:

 Identify and assess the risks of material misstatement of the financial statements, whether

due to fraud or error, design and perform audit procedures responsive to those risks, and

obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.

The risk of not detecting a material misstatement resulting from fraud is higher than for

one resulting from error, as fraud may involve collusion, forgery, intentional omissions,

misrepresentations, or the override of internal control.

Independent Auditors’ Report on the Audit of the Financial Statements

To the Shareholders of Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company) (Continued)

Auditors’ Responsibility for the Audit of the Financial Statements (Continued)

 Obtain an understanding of internal control relevant to the audit in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control.

 Evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made by the management.

 Conclude on the appropriateness of management’s use of the going concern basis of

accounting and based on the audit evidence obtained, whether a material uncertainty exists

related to events or conditions that may cast significant doubt on the Company’s ability to

continue as a going concern. If we conclude that a material uncertainty exists, we are

required to draw attention in our auditors’ report to the related disclosures in the financial

statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions

are based on the audit evidence obtained up to the date of our auditors’ report. However,

future events or conditions may cause the Company to cease to continue as a going concern.

 Evaluate the overall presentation, structure and content of the financial statements,

including the disclosures, and whether the financial statements represent the underlying

transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned

scope and timing of the audit and significant audit findings, including any significant deficiencies

in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with

relevant ethical requirements regarding independence, and to communicate with them all

relationships and other matters that may reasonably be thought to bear on our independence, and

where applicable, actions taken to eliminate threats or safeguards applied.

Independent Auditors’ Report on the Audit of the Financial Statements

To the Shareholders of Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company) (Continued)

Auditors’ Responsibility for the Audit of the Financial Statements (Continued)

From the matters communicated with those charged with governance, we determine those matters

that were of most significance in the audit of the financial statements of the current year and are

therefore the key audit matters. We describe these matters in our auditor’s report unless law or

regulation precludes public disclosure about the matter or when, in extremely rare circumstances,

we determine that a matter should not be communicated in our report because the adverse

consequences of doing so would reasonably be expected to outweigh the public interest benefits

of such communication.

For Dr. Mohamed Al-Amri

& Co.

For EI Sayed EI Ayouty &

Co.

P. O. Box 8736

P. O. Box 780

Riyadh 11491

Jeddah 21421

Kingdom of Saudi Arabia

Gihad Al-Amri Abdullah Ahmed Balamesh

Certified Public Accountant

Registration No. 362 Registration No. 345

Date: 06 March 2024

Corresponding to: 25 Shaban 1445H

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements

For the year ended 31 December 2023

1. General

2. Basis of preparation

2.1 Statement of compliance

These financial statements of the Company for the year ended 31 December 2023, have been prepared in accordance with

International Financial Reporting Standards (IFRSs) as endorsed in the Kingdom of Saudi Arabia and other standards and

pronouncements issued by the Saudi Organization for Chartered and Professional Accountants (“SOCPA”) and in

compliance with Regulations for Companies in the Kingdom of Saudi Arabia and By-Laws of the Company.

This is the first set of the Company’s financial statements in which IFRS 17 “Insurance Contracts”, as endorsed in Kingdom

of Saudi Arabia have been applied and the resultant changes to the significant accounting policies are described in Note 3.

The Company’s statement of financial position is presented in order of liquidity but not using current / non-current

classification. However, except for property and equipment, intangible assets, statutory deposit, accrued income on statutory

deposit, some components of investments (measured at amortized cost, investments measured at FVOCI, long-term

deposits), right of use assets, lease liabilities, end-of-service benefits and accrued income payable to Insurance Authority, all

other assets and liabilities are of short-term nature, unless, stated otherwise.

As required by the Saudi Arabian Insurance Regulations, the Company maintains separate books of accounts for Takaful

Operations and Shareholders’ Operations and presents the financial information accordingly. Assets, liabilities, revenues and

expenses clearly attributable to either activity is recorded in the respective accounts. The basis of the allocation of expenses

from joint operations is determined and approved by the management and the Board of Directors.

Al Rajhi Company for Cooperative Insurance (a Saudi Joint Stock Company incorporated in Kingdom of Saudi Arabia), “the

Company”, was formed pursuant to Royal Decree No. (M/35) dated 27 Jumada al thani 1429, (1 January 2008). The

Company operates under Commercial Registration no. 1010270371 dated 5 Rajab 1430, corresponding to 28 June 2009. The

registered address of the Company's head office is as follows:

Al Rajhi Company for Cooperative Insurance

P.O. Box 67791

Riyadh 11517

Kingdom of Saudi Arabia

The purpose of the Company is to conduct takaful operations and all related activities including retakaful / reinsurance and

agency activities. Its principal lines of business include motor, medical, protection & savings, marine, fire, engineering and

casualty insurance.

On 2 Jumada al thani 1424, corresponding to 31 July 2003, Insurance Authority then known as SAMA, as the principal

authority responsible for the application and administration of the Insurance Law and its Implementing Regulations, granted

the Company a license to transact insurance activities in the Kingdom of Saudi Arabia. On 1 Rabi' al-awwal 1425,

corresponding to 20 April 2004, the Law on the Supervision of Cooperative Insurance Companies (“Insurance Law”) was

promulgated by Royal Decree Number (M/32).

As a commitment from the Company for its activities to be in compliance with Islamic Shari’a legislations, since its

inception, the Company has established a Shari’a Authority to review and approve the activities and the products of the

Company.

13

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

2.

Basis of preparation (continued)

2.1

Statement of compliance (continued)

2.2 Basis of measurement

2.3 Functional & presentation currency

2.4 Seasonality of operations

There are no seasonal changes that may affect the takaful operations of the Company.

2.5 Critical accounting judgments, estimates and assumptions

Estimates and judgments are continually evaluated and based on historical experience and other factors, including

expectations of future events that are believed to be reasonable under the circumstances.

These financial statements are prepared under the historical cost convention, except for the measurement of investments

carried at fair value through profit or loss (FVTPL) and investments carried at fair value through other comprehensive

income (FVOCI), employees' end of service benefits (EOSB) recorded at the present value using the projected unit credit

method and liability of incurred claims (LIC) and assets for incurred claims (AIC) recorded at the present value at the current

discount rates.

In preparing the Company-level financial statements in compliance with IFRS, the balances and transactions of the takaful

operations are amalgamated and combined with those of the shareholders’ operations. Interoperation balances, transactions

and unrealized gains or losses, if any, are eliminated in full during amalgamation. The accounting policies adopted for the

takaful operations and shareholders’ operations are uniform for like transactions and events in similar circumstances.

These financial statements are presented in Saudi Arabian Riyals (SAR), which is also the functional currency of the

Company. Amounts in these financial statements are rounded-off to the nearest thousands except where otherwise

mentioned.

The statement of financial position, statements of income, comprehensive income and cash flows of the takaful operations

and shareholders' operations which are presented in Note 32 of the financial statements have been provided as supplementary

financial information to comply with the requirements of the Insurance Implementing Regulations and is not required under

IFRSs. The implementing regulations requires the clear segregation of the assets, liabilities, income and expenses of the

insurance operations and the shareholders operations. Accordingly, the statements of financial position, statements of

income, comprehensive income and cash flows prepared for the insurance operations and shareholders operations as referred

to above, reflect only the assets, liabilities, income, expenses and comprehensive gains or losses of the respective operations.

The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect

the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results

may differ from these estimates.

14

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

2.

Basis of preparation (continued)

2.5

Critical accounting judgments, estimates and assumptions (continued)

Following are the accounting judgments and estimates that are critical in preparation of these financial statements:

i)

PAA eligibility assessment

ii)

Liability for remaining coverage (LRC)

Acquisition cash flows

Significant financing component

Expected premium receipts adjustment

iii)

Liability for incurred claims

The Company has applied the Premium Allocation Approach (PAA) only for contracts with a coverage period of 12 months

or less. As this policy applies uniformly to all contracts based on their length, assessments to identify material differences

between the model outcomes, for contracts where the coverage period was more than one year, have been deemed

unnecessary.

Liability for incurred claims: The ultimate cost of incurred claims is estimated by using a range of standard actuarial claims

projection techniques, such as Chain Ladder and Bornheutter-Ferguson methods. The main assumption underlying these

techniques is that a Company’s past claims development experience can be used to project future claims development and

hence ultimate claims costs. These methods extrapolate the development of paid and incurred losses, average costs per claim

(including claims handling costs), and claim numbers based on the observed development of earlier years and expected loss

ratios. Historical claims development is mainly analysed by accident years, as well as by significant business lines and claim

types. Large claims are usually separately addressed, either by being reserved at the face value of loss adjuster estimates or

separately projected in order to reflect their future development. In most cases, no explicit assumptions are made regarding

future rates of claims inflation or loss ratios. Instead, the assumptions used are those implicit in the historical claims

development data on which the projections are based.

For insurance acquisition cash flows, the Company is eligible whether to recognise insurance acquisition cash flows as an

expense when it incurs those costs or to include those cash flows within the liability for remaining coverage (and hence

amortise those cash flows over the coverage period).

The Company has opted to recognise an asset for insurance acquisition cash flows paid and amortise those cash flows over

the coverage period.

The Company has determined that there is no significant financing component in contracts with a coverage period of one

year or less and hence, the Company does not discount the LRC to reflect the time value of money and financial risk for such

insurance and reinsurance contracts. The Company has adjusted the carrying amount of the LRC and ARC to reflect the time

value of money and the effect of financial risk using the discount rates, for contracts with a coverage period longer than one

year.

Insurance revenue will be adjusted with the amounts of expected premium receipts adjustment calculated on premiums not

yet collected as of the date of the statement of financial position. The computation is performed using IFRS 9 simplified

approach to calculate Expected Credit Loss (ECL) allowance. The corresponding impact of this adjustment is recorded in

the LRC.

15

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

2.

Basis of preparation (continued)

2.5

Critical accounting judgments, estimates and assumptions (continued)

iii)

Liability for incurred claims (continued)

iv)

Onerosity determination

-

- Any relevant inputs from underwriters;

- Other external factors such as inflation and change in market claims experience or change in regulations; and

-

Based on above assessment, certain Group of contracts have been identified as onerous under Medical portfolios.

v)

Expense attribution

Instead, the assumptions used are those implicit in the historical claims development data on which the projections are

based. Additional qualitative judgement is used to assess the extent to which past trends may not apply in future, (e.g., to

reflect one-off occurrences, changes in external or market factors such as public attitudes to claiming, economic conditions,

levels of claims inflation, judicial decisions and legislation, as well as internal factors such as portfolio mix, policy features

and claims handling procedures) in order to arrive at the best estimate ultimate cost of claims. Estimates of salvage

recoveries and subrogation reimbursements are considered as an allowance in the measurement of ultimate claims costs.

These are projected using a combination of chain ladder technique and as a proportion of the corresponding claims.

For subsequent measurement, the Company also relies on the same group of contracts’ weighted actual emerging

experience.

The Company identifies expenses which are directly attributable towards acquiring insurance contracts (acquisition costs)

and fulfilling /maintaining (other attributable expenses) such contracts and those expenses which are not directly attributable

to such contracts (non-attributable expenses). Acquisition costs, such as underwriting costs, are no longer recognized in the

statement of income when incurred and instead spread over the lifetime of the group of contracts based on the passage of

time.

Other attributable expenses are allocated to the groups of contracts using an allocation mechanism considering the activity-

based costing principles. The Company has determined costs directly identified to the groups of contracts, as well as costs

where a judgement is applied to determine the share of expenses as applicable to that group.

On the other hand, non-directly attributable expenses and overheads are recognized in the statement of income immediately

when incurred.

For contracts measured under GMM and VFA, a group of contracts is onerous at initial recognition if there is a net outflow

of fulfilment cash flows. As a result, a liability for the net outflow is recognized as a loss component within the liability for

remaining coverage and a loss is recognized immediately in the statement of income in insurance service expense. The loss

component is then amortized to statement of income over the coverage period to offset incurred claims in insurance service

expense.

For contracts measured under PAA, the Company assumes that no contracts in the portfolio are onerous at initial recognition

unless facts and circumstances indicate otherwise.

The Company also considers facts and circumstances to identify whether a group of contracts are onerous based on the

following key inputs:

Pricing information: Underwriting combined ratios and price adequacy ratios. This input is most relevant for the Medical,

Motor and P&C insurance portfolio;

Historical combined ratio of similar and comparable sets of contracts for Medical, Motor and P&C portfolios in

particular;

16

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

2.

Basis of preparation (continued)

2.5

Critical accounting judgments, estimates and assumptions (continued)

vi)

Estimates of future cash flows

The following assumptions were used when estimating future cash flows:

-

Mortality and morbidity rates

-

Expenses

-

Lapse and surrender rates

2023 2022

Life insurance contracts issued

- Males

100.00%

- Females

100.00%

The assumptions that have the greatest effect on the expected cash flows are listed below. The table sets out the percentage

assumed to apply to industry mortality and morbidity tables in estimating fulfilment cash flows:

Portfolio assumptions by type of business

impacting net liabilities

Mortality and morbidity rates

Lapses relate to the termination of policies due to non–payment of premiums. Surrenders relate to the voluntary

termination of policies by policyholders. Policy termination assumptions are determined using statistical measures based

on the Company’s experience and vary by product type, policy duration and sales trends. An increase in lapse rates early

in the life of the policy would tend to reduce profits of the Company, but later increases are broadly neutral in effect.

The Company primarily uses deterministic projections to estimate the present value of future cash flows and for some groups

it uses stochastic modelling techniques. A stochastic model is a tool for estimating probability distributions of potential

outcomes by allowing for random variation in one or more inputs over time. The random variation is usually based on

fluctuations observed in historical data for a selected period using standard time-series techniques.

An increase in the expected level of expenses will reduce future expected profits of the Company. The cash flows within

the contract boundary include an allocation of fixed and variable overheads directly attributable to fulfilling insurance

contracts. (Such overheads are allocated to groups of contracts using methods that are systematic and rational, and are

consistently applied to all costs that have similar characteristics).

Assumptions are based on AM 80 for Individual Life business and reinsurance rates for group life business. An

appropriate, but not excessive, allowance is made for expected future improvements. Assumptions are differentiated by

policyholder gender. An increase in expected mortality and morbidity rates will increase the expected claim cost which

will reduce future expected profits of the Company.

Operating expenses assumptions reflect the projected costs of maintaining and servicing in–force policies and associated

overhead expenses. The current level of expenses is taken as an appropriate expense base, adjusted for expected expense

inflation if appropriate.

17

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

2.

Basis of preparation (continued)

2.5

Critical accounting judgments, estimates and assumptions (continued)

vi)

Estimates of future cash flows (continued)

2023 2022

Life insurance contracts issued

- Males

100.00%

- Females

100.00%

vii)

Discount rates

Life Non-life Life Non-life

1 year 6.26% 6.26% 6.26% 6.26%

5 years 5.00% 5.00% 5.00% 5.00%

10 years 4.95% 4.95% 4.95% 4.95%

20 years 4.96% 4.96% 4.96% 4.96%

30 years 4.73% 4.73% 4.73% 4.73%

vii)

Risk adjustment for non-financial risk

Risk adjustment reflects the compensation that is required for bearing the uncertainty about the amount and timing of the

cash flows from non-financial risk as the Company fulfils insurance contracts. For reinsurance contracts held, the risk

adjustment for non-financial risk represents the amount of risk being transferred by the Company to the reinsurer.

Mack and Bootstrap methods, being stochastic methods were preferred over Solvency II factors where ever possible. The

large volume of data that was available that allowed fitting a lognormal distribution on reserve estimates using paid triangles.

Therefore, for all lines except for Life portfolio, Mack method provided reasonable results and was adopted.

The additional volatility of the equity market mentioned above is used as a proxy for the illiquidity premium. Therefore, no

additional illiquidity premium is explicitly added on top of the country risk premium. The country risk premiums is

periodically updated, and the latest published figures are used.

Lapse and surrender rates

A bottom-up approach was applied in the determination of the discount rates for different products. Under this approach, the

discount rate, in the absence of a KSA specific yield curve for the region, the EIOPA USD risk free rates, adjusted with the

Country Risk Rate for Saudi Arabia are used. This is consistent with the approach taken in the market. The country default

spread is calculated using Moody’s local currency sovereign rating (or S&P equivalent). This is then adjusted for the

additional volatility of the equity market. To achieve this, the country default spread is multiplied with the relative equity

market volatility for the Kingdom of Saudi Arabia (calculated by dividing the standard deviation in country equity market by

the standard deviation in country bond). This is the Country Risk Premium which is added to the EIOPA risk free rates.

The yield curves that were used to discount the estimates of future cash flows that do not vary based on the returns of the

underlying items are as follows:

Insurance contracts issued

Reinsurance contracts held

18

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

2.

Basis of preparation (continued)

2.5

Critical accounting judgments, estimates and assumptions (continued)

vii)

Risk adjustment for non-financial risk (continued)

ix)

Amortization of the contractual service margin

- Identifying the coverage units in the group

-

- Recognizing in statement of income the amount allocated to coverage units provided in the period.

x)

Sensitivities on major assumptions considered while applying IFRS 17

The sensitivity analysis performed during the year and has been presented under Note 30.

Allocating the CSM at the end of the period (before recognizing any amounts in statement of income to reflect the services

provided in the period) equally to each coverage unit provided in the current period and expected to be provided in the

future

The number of coverage units in a group is the quantity of coverage provided by the contracts in the group, which the

Company determines by considering the quantity of the benefits provided and the expected coverage duration. For groups of

life insurance contracts, the coverage units are proportional to the fund value. The total coverage units of each group of

insurance contracts are reassessed at the end of each reporting period to adjust for the reduction of remaining coverage for

claims paid, expectations of lapses and cancellation of contracts in the period. The Company then allocates them based on

probability-weighted average duration of each coverage unit provided in the current period and expected to be provided in

the future.

The sensitivity analysis is done to evaluate the impact on gross and net liabilities, profit / loss before tax and equity for

reasonably possible movements in key assumptions with all other assumptions in notes 2 and 3 held constant. The correlation

of assumptions will have a significant effect in determining the ultimate impacts, but to demonstrate the impact due to

changes in each assumption, assumptions had to be changed on an individual basis. It should be noted that movements in

these assumptions are nonlinear.

For Life portfolio the stochastic methods exhibited very high volatility in results due to reasons not associated with the

timing and amount risk of the claims. Therefore, the reserve risk factors from Solvency II were used.

All the reserve risk factors on 99.5th percentile were combined and SII correlation matrix was used to calculate the post-

diversification risk adjustment at the entity level. This total risk adjustment was brought down to the selected percentile and

allocated back to the individual lines based on the pre-diversification risk adjustment amounts. The Company decided to

adopt the 80th percentile risk adjustment figures based on their risk appetite. The risk adjustment percentages will be re-

computed at each valuation period based on the updated data and amount of claim reserves.

Under GMM/ VFA approach, the CSM is a component of the asset or liability for the group of insurance contracts that

represents the unearned profit the Company will recognize as it provides services in the future. The amount of the CSM for a

group of insurance contracts is recognized in the statement of income as insurance revenue in each period to reflect the

services provided under the group of insurance contracts in that period. The amount is determined by:

The Company disaggregates changes in the risk adjustment for non-financial risk between insurance service result and

insurance finance income or expenses.

19

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

2.

Basis of preparation (continued)

2.5

Critical accounting judgments, estimates and assumptions (continued)

xi)

Impairment losses on financial assets

2.6

- IFRS 17 Insurance Contracts

-

- Definition of Accounting Estimates (Amendments to IAS 8)

-

2.7

-

- IFRS S2 Climate-related Disclosures

-

The measurement of impairment losses under IFRS 9 across relevant financial assets requires judgement, in particular, for

the estimation of the amount and timing of future cash flows when determining impairment losses and the assessment of a

significant increase in credit risk. These estimates are driven by the outcome of modelled ECL scenarios, and the relevant

inputs used.

New accounting standards / amendments and IFRS interpretations that are not yet effective

Effective from annual period

beginning on or after:

1 January 2023

The following standards, amendments and interpretations are effective for the year ended 31 December 2023. These

standards, interpretations and amendments are either not relevant to the Company's operations or are not expected to have

significant impact on the Company's financial statements other than certain additional disclosures and impact of IFRS 17 as

disclosed in note 3.1.

Deferred Tax related to Assets and Liabilities arising from a

Single Transaction (Amendments to IAS 12)

1 January 2023

International Tax Reform – Pillar Two Model Rules

(Amendments to IAS 12)

1 January 2023

Initial Application of IFRS 17 and IFRS 9 — Comparative

Information (Amendment to IFRS 17)

Issued on 23 May 2023 with

immediate effectiveness

Standards, interpretations and amendments to accounting and reporting standards which are effective in current

year

Effective from annual period

beginning on or after:

1 January 2023

Disclosure of Accounting Policies (Amendments to IAS 1

and IFRS Practice Statement 2)

1 January 2023

IFRS S1 General Requirements for Disclosure of

Sustainability-related Financial Information

1 January 2024

The following new accounting standards, interpretations and amendments have been issued by the IASB that are effective in

future accounting periods. The Company intends to adopt these new and amended standards and interpretations, if

applicable, when they become effective.

Non-current Liabilities with Covenants (Amendments to

IAS 1)

1 January 2024

Supplier Finance Arrangements (Amendments to IAS 7 and

IFRS 7)

1 January 2024

Classification of Liabilities as Current or Non-Current

(Amendments to IAS 1)

Lease Liability in a Sale and Leaseback (Amendments to

IFRS 16)

1 January 2024

20

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

3. Material accounting policy information

3.1

IFRS 17 Insurance Contracts

Changes to classification and measurement

-

The key measurement principles of the GMM used by the Company under IFRS 4 in the following key areas:

- Recognises and measures groups of insurance contracts at:

b) An amount representing the unearned profit in the group of contracts (the contractual service margin or CSM)

-

Measurement of the liability for remaining coverage involves an explicit evaluation of risk adjustment for non-financial

risk when a group of contracts is onerous in order to calculate a loss component (previously these may have formed part

of the unexpired risk reserve provision)

Measurement of the liability for incurred claims (previously claims outstanding and incurred-but-not reported (IBNR)

claims) is determined on a discounted probability-weighted expected value basis, and includes an explicit risk adjustment

for non-financial risk. The liability includes the Company’s obligation to pay other incurred insurance expenses.

Measurement of the asset for remaining coverage (reflecting reinsurance premiums paid for reinsurance held) is adjusted

to include a loss-recovery component to reflect the expected recovery of onerous contract losses where such contracts

reinsure onerous direct contracts.

The Company capitalises insurance acquisition cash flows for all product lines. The Company allocates the acquisition cash

flows to groups of insurance contracts issued or expected to be issued using a systematic and rational basis. Insurance

acquisition cash flows include those that are directly attributable to a group and to future groups that are expected to arise

from renewals of contracts in that group. Where such insurance acquisition cash flows are paid (or where a liability has

been recognised applying another IFRS standard) before the related group of insurance contracts is recognised, an asset for

insurance acquisition cash flows is recognised. When insurance contracts are recognised, the related portion of the asset for

insurance acquisition cash flows is derecognised and subsumed into the measurement at initial recognition of the insurance

liability for remaining coverage of the related group.

The accounting policies set out below have been applied consistently to all periods presented in these financial statements,

except for the changes as explained in note 3.1 to these financial statements:

IFRS 17 replaces IFRS 4 Insurance Contracts for annual periods on or after 1 January 2023. The Company has restated

comparative information for 2022 applying the transitional provisions in to IFRS 17. The nature of the changes in

accounting policies can be summarized, as follows:

The adoption of IFRS 17 did not change the classification of the Company’s insurance contracts. IFRS 17 establishes

specific principles for the recognition and measurement of insurance contracts issued and reinsurance contracts held by the

Company.

The measurement principles of the PAA differ from the ‘earned premium approach’ used by the Company under IFRS 4 in

the following key areas:

The liability for remaining coverage reflects premiums received less deferred insurance acquisition cash flows and less

amounts recognised in revenue for insurance services provided;

a) A risk-adjusted present value of the future cash flows (the fulfilment cash flows) that incorporates all available

information about the fulfilment cash flows; plus

Recognises profit from a group of insurance contracts over each period the Company provides insurance contract

services, as the Company is released from risk. If a group of contracts is expected to be onerous (i.e., loss-making) over

the remaining coverage period, the Company recognises the loss immediately.

21

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

3.

Material accounting policy information (continued)

3.1

IFRS 17 Insurance Contracts (continued)

3.1.1

Insurance and reinsurance contracts classification

-

Insurance contracts are contracts under which the Company accepts significant insurance risk from a policyholder by

agreeing to compensate the policyholder if a specified uncertain future event adversely affects the policyholder. In making

this assessment, all substantive rights and obligations, including those arising from law or regulation, are considered on a

contract-by-contract basis. The Company uses judgement to assess whether a contract transfers insurance risk (i.e., if there is

a scenario with commercial substance in which the Company has the possibility of a loss on a present value basis) and

whether the accepted insurance risk is significant.

Some investment contracts issued by the Company contain discretionary participation feature (DPF), whereby the investor

has the right and is expected to receive, as a supplement to the amount not subject to the Company’s discretion, potentially

significant additional benefits based on the return of specified pools of investment assets. The Company accounts for these

contracts under IFRS 17.

The Company issues certain insurance contracts that are substantially investment-related service contracts where the return

on the underlying items is shared with policyholders. Underlying items comprise specified portfolios of investment assets

that determine amounts payable to policyholders. The Company’s policy is to hold such investment assets.

An insurance contract with direct participation features is defined by the Company as one which, at inception, meets the

following criteria:

the contractual terms specify that the policyholders participate in a share of a clearly identified pool of underlying items;

Direct participating contracts issued by the Company are contracts with direct participation features where the Company

holds the pool of underlying assets and accounts for these Groups of contracts under the VFA.

the Company expects to pay to the policyholder an amount equal to a substantial share of the fair value returns on the

underlying items; and

the Company expects a substantial proportion of any change in the amounts to be paid to the policyholder to vary with the

change in fair value of the underlying items.

Investment components in Protection & Savings products comprise policyholder account values less applicable surrender

fees.

Insurance contracts with direct participation features are viewed as creating an obligation to pay policyholders an amount

that is equal to the fair value of the underlying items, less a variable fee for service. The variable fee comprises the

Company’s share of the fair value of the underlying items, which is based on a fixed percentage of investment management

fees (withdrawn annually from policyholder account values based on the fair value of underlying assets and specified in the

contracts with policyholders) less the FCF that do not vary based on the returns on underlying items. The measurement

approach for insurance contracts with direct participation features is referred to as the VFA.

The VFA modifies the accounting model in IFRS 17 (referred to as the GMM) to reflect that the consideration an entity

receives for the contracts is a variable fee.

22

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

3.

Material accounting policy information (continued)

3.1

IFRS 17 Insurance Contracts (continued)

3.1.1

Insurance and reinsurance contracts classification (continued)

All other insurance contracts originated by the Company are without direct participation features.

3.1.2

Level of aggregation

- A group of contracts that are onerous at initial recognition (if any)

-

- A group of the remaining contracts in the portfolio (if any)

Fair Value Gains on Unit-Linked Investments: In accordance with our accounting policies, fair value gains on unit-linked

investments have been included within the "Investment income" section of the statement of income. These gains are directly

related to insurance contracts issued and may not represent realized gains on investments.

In the normal course of business, the Company uses reinsurance to mitigate its risk exposures. A reinsurance contract

transfers significant risk if it transfers substantially all the insurance risk resulting from the insured portion of the underlying

insurance contracts, even if it does not expose the reinsurer to the possibility of a significant loss.

All references to insurance contracts in these financial statements apply to insurance contracts issued or acquired,

reinsurance contracts held and investment contracts with DPF, unless specifically stated otherwise.

A group of contracts that, at initial recognition, have no significant possibility of becoming onerous subsequently (if any)

IFRS 17 requires a company to determine the level of aggregation for applying its requirements. The level of aggregation for

the Company is determined firstly by dividing the business written into portfolios. Portfolios comprise groups of contracts

with similar risks which are managed together. Portfolios are further divided based on expected profitability at inception into

three categories: onerous contracts, contracts with no significant risk of becoming onerous, and the remainder. This means

that for determining the level of aggregation, the Company identifies a contract as the smallest ‘unit’, i.e., the lowest

common denominator. However, the Company makes an evaluation of whether a series of contracts need to be treated

together as one unit based on reasonable and supportable information, or whether a single contract contains components that

need to be separated and treated as if they were stand-alone contracts. As such, what is treated as a contract for accounting

purposes may differ from what is considered as a contract for other purposes (i.e., legal or management). IFRS 17 also

requires that no group for level of aggregation purposes may contain contracts issued more than one year apart.

The Company has defined portfolios of insurance issued and reinsurance contracts held based on its product lines. The

Company applied a full retrospective approach for transition to IFRS 17 for non-life portfolios. The groups of contracts for

which the modified retrospective has been adopted on transition include contracts issued more than one year apart. The

portfolios are further divided by year of issue and profitability for recognition and measurement purposes. Hence, within

each year of issue, portfolios of contracts are divided into three groups, as follows:

23

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

3.

Material accounting policy information (continued)

3.1

IFRS 17 Insurance Contracts (continued)

3.1.2

Level of aggregation (continued)

- Pricing information

- Results of similar contracts it has recognised

- Environmental factors, e.g., a change in market experience or regulations

3.1.3

Recognition

The Company recognises groups of insurance contracts it issues from the earliest of the following:

- The beginning of the coverage period of the group of contracts

-

- For a group of onerous contracts, if facts and circumstances indicate that the group is onerous

The Company recognises a group of reinsurance contracts held it has entered into from the earlier of the following:

-

3.1.4

Contract boundary

The Company adds new contracts to the group in the reporting period in which that contract meets one of the criteria set out

above.

The Company uses the concept of contract boundary to determine what cash flows should be considered in the measurement

of Groups of insurance contracts. This assessment is reviewed every reporting period. The Company includes in the

measurement of a group of insurance contracts all the future cash flows within the boundary of each contract in the group.

Cash flows are within the boundary of an insurance contract if they arise from substantive rights and obligations that exist

during the reporting period in which the Company can compel the policyholder to pay the premiums, or in which the

Company has a substantive obligation to provide the policyholder with insurance contract services.

The expected profitability of groups of contracts is assessed by actuarial valuation models that take into consideration

existing and new business. The Company assumes that no contracts in the portfolio are onerous at initial recognition unless

facts and circumstances indicate otherwise. For contracts that are not onerous, the Company assesses, at initial recognition,

that there is no significant possibility of becoming onerous subsequently by assessing the likelihood of changes in applicable

facts and circumstances. The Company considers facts and circumstances to identify whether a group of contracts are

onerous based on:

The Company divides portfolios of reinsurance contracts held applying the same principles set out above, except that the

references to onerous contracts refer to contracts on which there is a net gain on initial recognition. For some groups of

reinsurance contracts held, a group can comprise a single contract.

The date when the first payment from a policyholder in the group is due or when the first payment is received if there is

no due date

The beginning of the coverage period of the group of reinsurance contracts held. (However, the Company delays the

recognition of a group of reinsurance contracts held that provide proportionate coverage until the date any underlying

insurance contract is initially recognised, if that date is later than the beginning of the coverage period of the group of

reinsurance contracts held; and

The date the Company recognises an onerous group of underlying insurance contracts if the Company entered into the

related reinsurance contract held in the group of reinsurance contracts held at or before that date.

24

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

3.

Material accounting policy information (continued)

3.1

IFRS 17 Insurance Contracts (continued)

3.1.4

Contract boundary (continued)

-

- Both of the following criteria are satisfied:

3.1.5

Measurement Model Application

The Company uses different measurement approaches, depending on the type of contracts, as follows:

Insurance contracts issued

All non-life contracts except for engineering contracts

Engineering contracts

All life contracts except for group-life and Individual family takaful policy

Group-life

Individual family takaful policy

Retakaful / reinsurance contracts held

All life and non-life contracts

A substantive obligation to provide insurance contract services ends when:

The Company has the practical ability to reassess the risks of the particular policyholder and, as a result, can set a price or

level of benefits that fully reflects those risks; or

Measurement model

The Company does not have any retakaful / reinsurance contracts issued to compensate another entity for claims arising

from one or more insurance contracts issued by that other entity.

a) The Company has the practical ability to reassess the risks of the portfolio of insurance contracts that contain the

contract and, as a result, can set a price or level of benefits that fully reflects the risk of that portfolio

b) The pricing of the premiums up to the date when the risks are reassessed does not take into account the risks that relate

to periods after the reassessment date

A liability or asset relating to expected premiums or claims outside the boundary of the insurance contract is not recognised.

Such amounts relate to future insurance contracts.

For life contracts with renewal periods, the Company assesses whether premiums and related cash flows that arise from the

renewed contract are within the contract boundary. The pricing of the renewals are established by the Company by

considering all the risks covered for the policyholder by the Company, that the Company would consider when underwriting

equivalent contracts on the renewal dates for the remaining service. The Company reassesses contract boundary of each

group at the end of each reporting period.

PAA

GMM

VFA

PAA

GMM

25

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

3.

Material accounting policy information (continued)

3.1

IFRS 17 Insurance Contracts (continued)

3.1.6

Insurance contracts measured under the PAA

3.1.7

Insurance contracts not measured under the PAA

On initial recognition, the Company measures a group of insurance contracts as the total of:

-

- the CSM.

The fulfilment cash flows of a group of insurance contracts do not reflect the Company’s non-performance risk.

- the fulfilment cash flows,

- any cash flows arising at that date and

-

the fulfilment cash flows, which comprise estimates of future cash flows, adjusted to reflect the time value of money and

the associated financial risks, and a risk adjustment for non-financial risk; and

The risk adjustment for non-financial risk for a group of insurance contracts, determined separately from the other estimates,

is the compensation required for bearing uncertainty about the amount and timing of the cash flows that arises from non-

financial risk.

is a net inflow, then the group is not onerous. In this case, the CSM is measured as the equal and opposite amount of the net

inflow, which results in no income or expenses arising on initial recognition.

any amount arising from the derecognition of any assets or liabilities previously recognised for cash flows related to the

group (including assets for insurance acquisition cash flows)

The CSM of a group of insurance contracts represents the unearned profit that the Company will recognise as it provides

services under those contracts. On initial recognition of a group of insurance contracts, if the total of

If at any time during the coverage period, facts and circumstances indicate that a group of contracts is onerous, then the

Group recognises a loss in profit or loss and increases the liability for remaining coverage to the extent that the current

estimates of the fulfilment cash flows that relate to remaining coverage exceed the carrying amount of the liability for

remaining coverage.

The Company recognises the liability for incurred claims of a group of insurance contracts at the amount of the fulfilment

cash flows relating to incurred claims. The future cash flows are discounted unless they are expected to be paid in one year

or less from the date the claims are incurred.

The Company applies the premium allocation approach (PAA) to all the insurance contracts mentioned in Note 3.1.4, that it

issues.

On initial recognition of each group of contracts, the carrying amount of the liability for remaining coverage is measured at

the premiums received on initial recognition minus any insurance acquisition cash flows allocated to the group at that date,

and adjusted for any amount arising from the derecognition of any assets or liabilities previously recognised for cash flows

related to the group (including assets for insurance acquisition cash flows). The Company has chosen not to expense

insurance acquisition cash flows when they are incurred.

Subsequently, the carrying amount of the liability for remaining coverage is increased by any premiums received and the

amortisation of insurance acquisition cash flows recognised as expenses, and decreased by the amount recognised as

insurance revenue for services provided and any additional insurance acquisition cash flows allocated after initial

recognition. On initial recognition of each group of contracts, the Company expects that the time between providing each

part of the services and the related premium due date is no more than a year. Accordingly, the Company has chosen not to

adjust the liability for remaining coverage to reflect the time value of money and the effect of financial risk.

26

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

3.

Material accounting policy information (continued)

3.1

IFRS 17 Insurance Contracts (continued)

3.1.7

Insurance contracts not measured under the PAA (continued)

The liability for remaining coverage comprises

- the fulfilment cash flows that relate to services that will be provided under the contracts in future periods and

- any remaining CSM at that date.

-

- Changes relating to current or past services – Recognised in the insurance service result in profit or loss

-

The CSM of each group of contracts is calculated at each reporting date as follows.

Insurance contracts without direct participation features

The carrying amount of the CSM at each reporting date is the carrying amount at the start of the year, adjusted for:

- the CSM of any new contracts that are added to the group in the year;

-

- changes in fulfilment cash flows that relate to future services, except to the extent that:

- the effect of any currency exchange differences on the CSM; and

- the amount recognised as insurance revenue because of the services provided in the year

If the total is a net outflow, then the group is onerous. In this case, the net outflow is recognised as a loss in profit or loss. A

loss component is created to depict the amount of the net cash outflow, which determines the amounts that are subsequently

presented in profit or loss as reversals of losses on onerous contracts and are excluded from insurance revenue.

The carrying amount of a group of insurance contracts at each reporting date is the sum of the liability for remaining

coverage and the liability for incurred claims.

The liability for incurred claims includes the fulfilment cash flows for incurred claims and expenses that have not yet been

paid, including claims that have been incurred but not yet reported.

interest accreted on the carrying amount of the CSM during the year, measured at the discount rates on nominal cash

flows that do not vary based on the returns on any underlying items determined on initial recognition;

b) any decreases in the fulfilment cash flows are allocated to the loss component, reversing losses previously recognised

in profit or loss (see (viii));

a) any increases in the fulfilment cash flows exceed the carrying amount of the CSM, in which case the excess is

recognised as a loss in profit or loss and creates a loss component; or

The fulfilment cash flows of groups of insurance contracts are measured at the reporting date using current estimates of

future cash flows, current discount rates and current estimates of the risk adjustment for non-financial risk. Changes in

fulfilment cash flows are recognised as follows.

Changes relating to future services – Adjusted against the CSM (or recognised in the insurance service result in profit or

loss if the group is onerous)

Effects of the time value of money, financial risk and changes therein on estimated future cash flows – Recognised as

insurance finance income or expenses

27

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

3.

Material accounting policy information (continued)

3.1

IFRS 17 Insurance Contracts (continued)

3.1.7

Insurance contracts not measured under the PAA (continued)

Changes in fulfilment cash flows that relate to future services comprise:

-

- differences between

b) the actual amount that becomes payable in the year;

-

changes in the risk adjustment for non-financial risk that relate to future services.

Changes in discretionary cash flows are regarded as relating to future services and accordingly adjust the CSM.

Direct participating contracts

Direct participating contracts are contracts under which the Group’s obligation to the policyholder is the net of:

the obligation to pay the policyholder an amount equal to the fair value of the underlying items; and

The carrying amount of the CSM at each reporting date is the carrying amount at the start of the year, adjusted for:

- the CSM of any new contracts that are added to the group in the year;

-

experience adjustments arising from premiums received in the year that relate to future services and related cash flows,

measured at the discount rates determined on initial recognition;

changes in estimates of the present value of future cash flows in the liability for remaining coverage, measured at the

discount rates determined on initial recognition, except for those that arise from the effects of the time value of money,

financial risk and changes therein;

When measuring a group of direct participating contracts, the Company adjusts the fulfilment cash flows for the whole of the

changes in the obligation to pay policyholders an amount equal to the fair value of the underlying items. These changes do

not relate to future services and are recognised in profit or loss. The Company then adjusts any CSM for changes in the

amount of the Company’s share of the fair value of the underlying items, which relate to future services, as explained below.

the change in the amount of the Company’s share of the fair value of the underlying items and changes in fulfilment cash

flows that relate to future services, except to the extent that:

the Company has applied the risk mitigation option to exclude from the CSM changes in the effect of financial risk on the

amount of its share of the underlying items or fulfilment cash flows;

a) any investment component expected to become payable in the year, determined as the payment expected at the start of

the year plus any insurance finance income or expenses related to that expected payment before it becomes payable; and

differences between any loan to a policyholder expected to become repayable in the year and the actual amount that

becomes repayable in the year; and

a variable fee in exchange for future services provided by the contracts, being the amount of the Company’s share of the

fair value of the underlying items less fulfilment cash flows that do not vary based on the returns on underlying items. The

Company provides investment services under these contracts by promising an investment return based on underlying

items, in addition to insurance coverage.

28

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

3.

Material accounting policy information (continued)

3.1

IFRS 17 Insurance Contracts (continued)

3.1.7

Insurance contracts not measured under the PAA (continued)

Direct participating contracts (continued)

- the effect of any currency exchange differences on the CSM; and

- the amount recognised as insurance revenue because of the services provided in the year

3.1.8 Reinsurance contracts not measured under the PAA

- the fulfilment cash flows that relate to services that will be received under the contracts in future periods and

- any remaining CSM at that date.

- the fulfilment cash flows that relate to services that will be received under the contracts in future periods and

- any remaining CSM at that date.

To measure a group of reinsurance contracts, the Company applies the same accounting policies as are applied to insurance

contracts without direct participation features, with the following modifications.

The carrying amount of a group of reinsurance contracts at each reporting date is the sum of the asset for remaining coverage

and the asset for incurred claims. The asset for remaining coverage comprises:

The Company measures the estimates of the present value of future cash flows using assumptions that are consistent with

those used to measure the estimates of the present value of future cash flows for the underlying insurance contracts, with an

adjustment for any risk of non-performance by the reinsurer. The effect of the non-performance risk of the reinsurer is

assessed at each reporting date and the effect of changes in the non-performance risk is recognised in profit or loss.

The Company measures the estimates of the present value of future cash flows using assumptions that are consistent with

those used to measure the estimates of the present value of future cash flows for the underlying insurance contracts, with an

adjustment for any risk of non-performance by the reinsurer. The effect of the non-performance risk of the reinsurer is

assessed at each reporting date and the effect of changes in the non-performance risk is recognised in profit or loss.

a decrease in the amount of the Company’s share of the fair value of the underlying items, or an increase in the fulfilment

cash flows that relate to future services, exceeds the carrying amount of the CSM, giving rise to a loss in profit or loss

(included in insurance service expenses) and creating a loss component; or

an increase in the amount of the Company’s share of the fair value of the underlying items, or a decrease in the fulfilment

cash flows that relate to future services, is allocated to the loss component, reversing losses previously recognised in profit

or loss (included in insurance service expenses)

Changes in fulfilment cash flows that relate to future services include the changes relating to future services specified above

for contracts without direct participation features (measured at current discount rates) and changes in the effect of the time

value of money and financial risks that do not arise from underlying items – e.g. the effect of financial guarantees.

To measure a group of reinsurance contracts, the Company applies the same accounting policies as are applied to insurance

contracts without direct participation features, with the following modifications.

The carrying amount of a group of reinsurance contracts at each reporting date is the sum of the asset for remaining coverage

and the asset for incurred claims. The asset for remaining coverage comprises:

29

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

3.

Material accounting policy information (continued)

3.1

IFRS 17 Insurance Contracts (continued)

3.1.8

Reinsurance contracts not measured under the PAA (continue)

The risk adjustment for non-financial risk is the amount of risk being transferred by the Company to the reinsurer.

- the fulfilment cash flows;

-

- any cash flows arising at that date; and

- any income recognised in profit or loss because of onerous underlying contracts recognised at that date.

The carrying amount of the CSM at each reporting date is the carrying amount at the start of the year, adjusted for:

- the CSM of any new contracts that are added to the group in the year;

-

- income recognised in profit or loss in the year on initial recognition of onerous underlying contracts;

-

- the effect of any currency exchange differences on the CSM; and

- the amount recognised in profit or loss because of the services received in the year.

Reinsurance of onerous underlying insurance contracts

The adjustment to the CSM is determined by multiplying:

- the amount of the loss that relates to the underlying contracts; and

- the percentage of claims on the underlying contracts that the Group expects to recover from the reinsurance contracts.

On initial recognition, the CSM of a group of reinsurance contracts represents a net cost or net gain on purchasing

reinsurance. It is measured as the equal and opposite amount of the total of:

However, if any net cost on purchasing reinsurance coverage relates to insured events that occurred before the purchase of

the group, then the Company recognises the cost immediately in profit or loss as an expense.

any amount arising from the derecognition of any assets or liabilities previously recognised for cash flows related to the

group;

If the reinsurance contract covers only some of the insurance contracts included in an onerous group of contracts, then the

Company uses a systematic and rational method to determine the portion of losses recognised on the onerous group of

contracts that relates to underlying contracts covered by the reinsurance contract.

A loss-recovery component is created or adjusted for the group of reinsurance contracts to depict the adjustment to the CSM,

which determines the amounts that are subsequently presented in profit or loss as reversals of recoveries of losses from the

reinsurance contracts and are excluded from the allocation of reinsurance premiums paid.

interest accreted on the carrying amount of the CSM during the year, measured at the discount rates on nominal cash

flows that do not vary based on the returns on any underlying items determined on initial recognition;

reversals of a loss-recovery component to the extent that they are not changes in the fulfilment cash flows of the group of

reinsurance contracts;

changes in fulfilment cash flows that relate to future services, measured at the discount rates determined on initial

recognition, unless they result from changes in fulfilment cash flows of onerous underlying contracts, in which case they

are recognised in profit or loss and create or adjust a loss-recovery component;

The Group adjusts the CSM of the group to which a reinsurance contract belongs and as a result recognises income when it

recognises a loss on initial recognition of onerous underlying contracts, if the reinsurance contract is entered into before or at

the same time as the onerous underlying contracts are recognised.

30

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

3.

Material accounting policy information (continued)

3.1

IFRS 17 Insurance Contracts (continued)

3.1.9 Insurance acquisition costs

- costs directly attributable to individual contracts and Groups of contracts; and

-

3.1.10 Insurance revenue

For contracts not measured under the PAA, insurance revenue comprises the following:

- Amounts relating to the changes in the LRC:

i. amounts related to the loss component;

ii. repayments of investment components;

iii. amounts of transaction-based taxes collected in a fiduciary capacity; and

iv. insurance acquisition expenses;

b) changes in the risk adjustment for non-financial risk, excluding:

i. changes included in insurance finance income (expenses);

ii. changes that relate to future coverage (which adjust the CSM); and

iii. amounts allocated to the loss component;

c) amounts of the CSM recognized in statement of income for the services provided in the period; and

-

The Company includes the following acquisition cash flows within the insurance contract boundary that arise from selling,

underwriting and starting a Group of insurance contracts and that are:

costs directly attributable to the portfolio of insurance contracts to which the group belongs, which are allocated on a

reasonable and consistent basis to measure the group of insurance contracts.

Before a group of insurance contracts is recognized, the Company could pay directly attributable acquisition costs to

originate them. When such prepaid costs are refundable in case of insurance contracts termination, they are recorded as a

prepaid insurance acquisition cash flows asset within other assets and allocated to the carrying amount of a Group of

insurance contracts when the insurance contracts are subsequently recognized.

d) experience adjustments arising from premiums received in the period that relate to past and current service and related

cash flows such as insurance acquisition cash flows and premium-based taxes.

Insurance acquisition cash flows recovery is determined by allocating the portion of premiums related to the recovery of

those cash flows on the basis of the passage of time over the expected coverage of a Group of contracts.

The acquisition costs are generally capitalized and recognized in the statement of income over the life of the contracts.

However, for contracts under PAA approach, there is an option to recognize any insurance acquisition cash flows as an

expense when the Company incurs those costs. The company has elected not to choose the option and has capitalized the

costs which would then be recognized over the life of contracts. No separate asset is recognized for deferred acquisition

costs. Instead, qualifying insurance acquisition cash flows are subsumed into the insurance liability for remaining coverage.

As the Company provides services under the group of insurance contracts, it reduces the LRC and recognizes insurance

revenue. The amount of insurance revenue recognized in the reporting period depicts the transfer of promised services at an

amount that reflects the portion of consideration the Company expects to be entitled to in exchange for those services.

a) insurance claims and expenses incurred in the period measured at the amounts expected at the beginning of the period,

excluding:

31

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

3.

Material accounting policy information (continued)

3.1

IFRS 17 Insurance Contracts (continued)

3.1.10

Insurance revenue (continued)

3.1.11 Insurance service expenses

Insurance service expenses include the following:

- incurred claims and benefits excluding investment components;

- other incurred directly attributable insurance service expenses;

- amortization of insurance acquisition cash flows;

- changes that relate to past service (i.e. changes in the FCF relating to the LIC); and

-

Other expenses not meeting the above categories are included in other operating expenses in the statement of income.

3.1.12 Insurance finance income or expenses

- the effect of the time value of money and changes in the time value of money; and

- the effect of financial risk and changes in financial risk.

For contracts measured under the GMM, the main amounts within insurance finance income or expenses are:

- interest accreted on the FCF and the CSM;

- the effect of changes in interest rates and other financial assumptions; and

- foreign exchange differences arising from contracts denominated in a foreign currency.

For contracts measured under the VFA, the main amounts within insurance finance income or expenses are:

- changes in the fair value of underlying items;

- interest accreted on the FCF relating to cash flows that do not vary with returns on underlying items; and

-

For contracts measured under the PAA, the main amounts within insurance finance income or expenses are:

- interest accreted on the LIC; and

- the effect of changes in interest rates and other financial assumptions.

the effect of changes in interest rates and other financial assumptions on the FCF relating to cash flows that do not vary

with returns on underlying items.

The Company does not disaggregates insurance finance income or expenses on insurance contracts issued between profit or

loss and OCI because the related financial assets are managed on a fair value basis and measured at FVTPL.

Insurance finance income or expenses comprise the change in the carrying amount of the group of insurance contracts

arising from:

For Groups of insurance contracts measured under the PAA, the Company recognizes insurance revenue based on the

passage of time over the coverage period of a Group of contracts.

Insurance revenue is adjusted to allow for policyholders’ default on future premiums. The default probability is derived

from the expected loss model prescribed under IFRS 9.

changes that relate to future service (i.e. losses/reversals on onerous Groups of contracts from changes in the loss

components).

32

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

3.

Material accounting policy information (continued)

3.1

IFRS 17 Insurance Contracts (continued)

3.1.13 Net income (expenses) from reinsurance contracts held

- reinsurance expenses;

- incurred claims recovery;

- other incurred directly attributable insurance service expenses;

- effect of changes in risk of reinsurer non-performance;

-

- changes relating to past service (i.e. adjustments to incurred claims).

-

- changes in the risk adjustment for non-financial risk, excluding:

changes included in finance income (expenses) from reinsurance contracts held; and

changes that relate to future coverage (which adjust the CSM);

- amounts of the CSM recognized in statement of income for the services received in the period; and

- ceded premium experience adjustments relating to past and current service.

3.2

Financial assets and liabilities

3.2.1

Measurement methods

Profit income

The Company presents financial performance of groups of reinsurance contracts held separately between the amounts

recoverable from reinsurers and allocation of the premiums for reinsurance contracts held, comprising the following

amounts:

for contracts measured under the GMM, changes that relate to future service (i.e. changes in the FCF that do not adjust

the CSM for the group of underlying insurance contracts); and

The effective profit rate is the rate that exactly discounts estimated future cash payments or receipts through the expected

life of the financial asset or financial liability to the gross carrying amount of a financial asset (i.e. its amortised cost before

any impairment allowance) or to the amortised cost of a financial liability. The calculation does not consider expected

credit losses and includes transaction costs, contributions or discounts and fees and points paid or received that are integral

to the effective profit rate, such as origination fees.

Profit income is recognised using the effective profit rate to the gross carrying amount of a financial asset, except for

financial assets that have subsequently become credit-impaired. For financial assets that have subsequently become credit-

impaired, profit income is recognised by applying the effective profit rate to the net carrying value of the financial asset. If,

in subsequent reporting periods, the credit risk on the credit-impaired financial instrument improves so that the financial

asset is no longer credit-impaired, profit income is recognised by applying the effective profit rate to the gross carrying

amount of the financial asset.

Reinsurance expenses are recognized similarly to insurance revenue. The amount of reinsurance expenses recognized in the

reporting period depicts the transfer of received services at an amount that reflects the portion of ceding premiums the

Company expects to pay in exchange for those services.

For contracts not measured under the PAA, reinsurance expenses comprise the following amounts relating to changes in the

remaining coverage:

insurance claims and other expenses recovery in the period measured at the amounts expected to be incurred at the

beginning of the period, excluding repayments of investment components;

33

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

3.

Material accounting policy information (continued)

3.2.1

Measurement methods (continued)

Initial recognition and measurement

3.2.2

Classification and subsequent measurement of financial assets

- Amortised cost;

-

Fair value through other comprehensive income (FVOCI); or

- fair value through profit or loss (FVTPL)

The classification requirements for debt and equity instruments are described below:

Debt instruments

Classification and subsequent measurement of debt instruments depend on:

- the Company’s business model for managing the financial assets; and

- the contractual cash flow characteristics of the financial assets.

Business model:

The business model reflects how the Company manages the assets in order to generate cash flows. That is, whether the

Company’s objective is solely to collect the contractual cash flows from the assets or is to collect both the contractual cash

flows and cash flows arising from the sale of assets. If neither of these is applicable (e.g. financial assets are held for

trading purposes), then the financial assets are classified as part of ‘other’ business model and measured at FVTPL.

Factors considered by the Company in determining the business model for a group of assets include past experience on how

the cash flows for these assets were collected, how the asset’s performance is evaluated and reported to key management

personnel, how risks are assessed and managed and how managers are compensated. For example, the liquidity portfolio of

assets, which is held by the Company as part of liquidity management and is generally classified within the hold to collect

and sell business model. Securities held for trading are held principally for the purpose of selling in the near term or are

part of a portfolio of financial instruments that are managed together and for which there is evidence of a recent actual

pattern of short-term profit-taking. These securities are classified in the ‘other’ business model and measured at FVTPL.

Investments in sukuks (other than Tier 1 sukuks), murabaha deposits, balances with banks, statutory deposits and

contribution and retakaful balances receivables are classified as held at amortized cost. Investment in shares are designated

as FVOCI. Investment in the mutual funds and tier 1 sukuks are classified as FVTPL.

The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the

principal repayments, plus the cumulative amortization using the effective profit method of any difference between that

initial amount and the maturity amount, adjusted for any loss allowance. On the other hand, the gross carrying amount of a

financial asset is the amortised cost of a financial asset before adjusting for any loss allowance.

The Company exercises judgment in determining whether the contractual terms of financial assets it originates or acquires

give rise on specific dates to cash flows that are solely payments of principal and profit income on the principal outstanding

and so may qualify for amortised cost measurement. In making the assessment the Company considers all contractual terms,

including any prepayment terms or provisions to extend the maturity of the assets, terms that change the amount and timing

of cash flows and whether the contractual terms contain leverage.

The Company classifies all of its financial assets based on the business model for managing the assets and the asset’s

contractual terms. The categories include the following:

34

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

3.

Material accounting policy information (continued)

3.2

Financial assets and liabilities (continued)

3.2.2

Classification and subsequent measurement of financial assets (continued)

Solely payments of principal and profit:

-

Equity instruments

The Company reclassifies debt investments when and only when its business model for managing those assets changes. The

reclassification takes place from the start of the first reporting period following the change. Such changes are expected to be

very infrequent and none occurred during the year ended 2023.

Equity instruments are instruments that meet the definition of equity from the issuer’s perspective; that is, instruments that

do not contain a contractual obligation to pay and that evidence a residual interest in the issuer’s net assets.

The Company classifies all equity investments at FVTPL, except where the Company’s management has elected, at initial

recognition, to irrevocably designate an equity investment at FVOCI. The Company’s policy is to designate equity

investments as FVOCI when those investments are held for purposes other than to generate investment returns. When this

election is used, transaction costs are made part of the cost at initial recognition and subsequent fair value gains and losses

(unrealized) are recognized in OCI and are not subsequently reclassified to the statement of income, including on disposal.

Dividends, when representing a return on such investments, continue to be recognized in the statement of income as

‘Dividend income’ when the Company’s right to receive payments is established.

Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely

payments of principal and profit, and that are not designated at FVTPL, are measured at amortised cost. The carrying

amount of these assets is adjusted by any expected credit loss allowance recognised and measured. Profit income from

these financial assets is included in ‘Special commission income’ using the effective profit method.

Where the business model is to hold assets to collect contractual cash flows or to collect contractual cash flows and sell, the

Company assesses whether the financial instruments’ cash flows represent solely payments of principal and profit. In making

this assessment, the Company considers whether the contractual cash flows are consistent with the financing agreement i.e.

profit includes only consideration for the time value of resources, credit risk, other basic lending risks and a profit margin

that is consistent with a basic lending arrangement. Where the contractual terms introduce exposure to risk or volatility that

are inconsistent with a basic lending arrangement, the related financial asset is classified and measured at FVTPL.

Based on these factors, the Company classifies its debt instruments into one of the following three measurement categories:

Fair value through other comprehensive income (FVOCI): Financial assets that are held for collection of contractual cash

flows and for selling the assets, where the assets’ cash flows represent solely payments of principal and profit, and that are

not designated at FVTPL, are designated as fair value through other comprehensive income (FVOCI). Movements in the

carrying amount are taken through OCI, except for the recognition of impairment gains or losses, special commission

income and foreign exchange gains and losses on the instrument’s amortised cost which are recognised in the statement of

income. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified

from equity to statement of income. Profit income from these financial assets is included in ‘Special commission income’

using the effective profit rate method.

Fair value through profit or loss (FVTPL): Assets that are held for trading purpose or assets that do not meet the criteria

for amortised cost or FVOCI are measured at FVTPL. A gain or loss on a debt investment that is subsequently measured

at FVTPL presented in the statement of income in the period in which it arises.

35

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

3.

Material accounting policy information (continued)

3.2

Financial assets and liabilities (continued)

3.2.2

Classification and subsequent measurement of financial assets (continue)

Equity instruments (continued)

3.2.3 Impairment of financial assets

- An unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;

- The time value of resources; and

-

3.2.4 Derecognition of financial assets

- the Company transfers substantially all the risks and rewards of ownership, or

-

3.2.5 Classification and subsequent measurement of financial liabilities

In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model as opposed to an incurred

credit loss model under IAS 39. The Company applies the expected credit losses (‘ECL’) on its financial assets measured at

amortised cost and FVOCI, which are in the scope of IFRS 9 for impairment. The Company recognises a loss allowance for

such losses at each reporting date. The measurement of ECL reflects:

Reasonable and supportable information that is available without undue cost or effort at the reporting date about past

events, current conditions and forecasts of future economic conditions.

Gains and losses on equity investments at FVTPL (both realized and unrealized) are included in the ‘Net gains on

investments mandatorily measured at FVTPL’ line in the statement of income.

Financial liabilities are classified and subsequently measured at amortised cost, except for financial liabilities at fair value

through profit or loss (FVTPL): this classification is applied to financial liabilities at FVTPL at initial recognition. Gains or

losses on financial liabilities designated at FVTPL are presented partially in other comprehensive income (the amount of

change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability, which is

determined as the amount that is not attributable to changes in market conditions that give rise to market risk) and partially

in statement of income (the remaining amount of change in the fair value of the liability). This is unless such a presentation

would create, or enlarge, an accounting mismatch, in which case the gains and losses attributable to changes in the credit risk

of the liability are also presented in the statement of income.

If there is objective evidence that an impairment loss on a financial asset exists, the impairment for assets carried at

amortized cost, impairment is based on estimated future cash flows that are discounted at the original effective commission

rate.

Financial assets, or a portion thereof, are derecognised when the contractual rights to receive the cash flows from the assets

have expired, or when they have been transferred and either:

the Company neither transfers nor retains substantially all the risks and rewards of ownership and the Company has not

retained control.

The Company enters into transactions where it retains the contractual rights to receive cash flows from assets but assumes a

contractual obligation to pay those cash flows to other entities and transfers substantially all of the risks and rewards.

On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the

sum of the consideration received and receivable is recognised in statement of income.

36

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

3.

Material accounting policy information (continued)

3.2

Financial assets and liabilities (continued)

3.2.6 Derecognition of financial liabilities

3.2.7 Offsetting

3.3 Property and equipment

Years

- Office and electrical equipment 5

- Furniture and fixtures 6-7

- Motor vehicles 5

- Computer hardware and software 3 - 5

- Digital transformation 3 - 5

3.4 Statutory deposit

Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and

only if, there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis,

or to realise the assets and settle the liability simultaneously. Income and expense is not offset in the statement of income

unless required or permitted by any accounting standard or interpretation, as specifically disclosed in the accounting policies

of the Company.

Financial liabilities are derecognised when they are extinguished (i.e. when the obligation specified in the contract is

discharged, cancelled or expires).

In accordance with the Cooperative Insurance Companies Control Law issued by the Insurance Authority, the Company is

required to maintain a deposit in a bank account equal to 10% of the paid up share capital of the Company. This statutory

deposit cannot be withdrawn without the consent of Insurance Authority. Statutory deposit is classified as a financial asset

and is carried at amortized cost.

Property and equipment is measured at cost net of accumulated depreciation and accumulated impairment in value if any.

Cost includes expenditure that is directly attributable to the acquisition of the assets. Expenditure for repair and maintenance

is charged to the statement of income. Improvements that increase the value or materially extend the life of the related assets

are capitalised. Depreciation is charged to the statement of income on a straight line basis over the estimated useful lives of

the assets. The estimated useful lives of the assets are:

Any gain or loss on disposal of an item of property and equipment (calculated as the difference between the net proceeds

from disposal and the carrying amount of the item) is recognised in statement of income.

An item of property and equipment and any significant part initially recognised is derecognised upon disposal or when no

future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset

(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the

statement of income when the asset is derecognised.

The carrying values of property and equipment are reviewed for impairment when events or changes in circumstances

indicate that the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed

the estimated recoverable amount, the assets are written down to their recoverable amount.

The residual values, useful lives and methods of depreciation of property, equipment are reviewed at each financial year end

and adjusted prospectively, if appropriate.

37

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

3.

Material accounting policy information (continued)

3.5 Provision for end of service benefits

3.6 Zakat

3.7 Payables to Insurance Authority

3.8 Statutory reserves

3.9 Foreign currencies

3.10 Dividend distribution

Dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s financial statements in the

period in which the dividends are approved by the Company’s shareholders.

The Company operates an end of service benefit plan for its employees based on the prevailing Saudi Labor Laws. Accruals

are made at the present value of expected future payments in respect of services provided by the employees up to the end of

the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels,

experience of employee departures and periods of service. Expected future payments are discounted using market yields at

the end of the reporting period of high-quality corporate bonds with terms and currencies that match, as closely as possible,

the estimated future cash outflows. The benefit payments obligation is discharged as and when it falls due. Re-measurements

(actuarial gains/ losses) as a result of experience adjustments and changes in actuarial assumptions are recognised in other

comprehensive income.

The Company is subject to zakat in accordance with the regulations of the Zakat, Tax and Customs Authority (“ZATCA”).

Zakat is computed on the Saudi shareholders’ share of equity or net income using the basis defined under the Zakat

regulations.

This represents accrued income on statutory deposit and Insurance Authority levy accrual. The Company is carrying this

liability at amortized cost.

In accordance with the Company’s by-laws, the Company shall allocate 20% of its net income from shareholders operations

each year to the statutory reserve until it has built up a reserve equal to the share capital. The reserve is not available for

distribution.

Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are re-translated at the functional currency rate of

exchange ruling at the reporting date. Non-monetary items that are measured in terms of historical cost in a foreign currency

are translated using the exchange rate as at the date of the initial transaction and are not subsequently restated. Non-

monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair

value was determined. All foreign exchange differences are taken to the statement of income, except when they relate to

items where gains or losses are recognized directly in other comprehensive income and the gain or loss is recognised net of

the exchange component in equity.

38

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

3.

Material accounting policy information (continued)

3.11 Segmental reporting

- Medical

- Motor

- Property and casualty

- Protection and savings

3.12 Leases

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement

date, discounted using the finance rate implicit in the lease or, if that rate cannot be readily determined, the Company’s

incremental financing rate. Generally, the Company uses its incremental financing rate as the discount rate. Variable lease

payments that do not depend on an index or rate are not included in the measurement of the lease liability. The lease liability

is measured at amortized cost using the incremental financing cost. It is remeasured when there is a change in future lease

payments arising from a change in an index or rate, if there is a change in the Company’s estimate of the amount expected to

be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase,

extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to

the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset

has been reduced to zero.

The Company has elected to apply the practical expedient not to recognize right-of-use assets and lease liabilities for short-

term leases that have a lease term of 12 months or less and leases of low-value assets. The lease payments associated with

these leases are recognized as an expense on a straight-line basis over the lease term.

Operating segments do not include shareholders' operations of the Company. Income earned from investments is the only

revenue generating activity in shareholders operations. Certain direct operating expenses and other overhead expenses are

allocated to this segment on an appropriate basis.

A segment is a distinguishable component of the Company that is engaged in providing products or services (a business

segment), which is subject to risk and rewards that are different from those of other segments. For management purposes, the

Company is organized into business units based on their products and services and has four reportable segments as follows:

Operating segments are reported in a manner consistent with the internal reporting to the Chief Executive Officer. The Chief

Executive Officer is the key decision maker and is responsible for allocating resources, assessing performance and making

strategic decisions of the operating segments.

At inception of a contract, the Company assesses whether a contract is, or contains, a lease based on whether the contract

conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company

has elected to apply the practical expedient to account for each lease component and any non-lease components as a single

lease component. The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The

right-of-use asset is initially measured based on the initial amount of the lease liability adjusted for any lease payments made

at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove

the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The assets are depreciated to the earlier of the end of the useful life of the right-of-use asset or the lease term using the

straight-line method as this most closely reflects the expected pattern of consumption of the future economic benefits. The

lease term includes periods covered by an option to extend if the Company is reasonably certain to exercise that option.

Lease terms range from 2 to 10 years for offices, vehicles and equipment. In addition, the right-of-use asset is periodically

reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

39

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

4. Transitional note

- Insurance contract assets

- Retakaful / reinsurance contract assets

- Insurance contract liabilities

- Retakaful / reinsurance contract liabilities

Year of Issue Transition Approach

From Inception All group of contracts except for Protection & Savings:

- Full retrospective approach

2015-2022 Protection & Savings:

- Full retrospective approach was impracticable;

As at 1 January 2022, the Company applied the following approaches to identify and measure certain groups of contracts in

the Protection & Savings, Property & Casualty, Motor and Medical / Health segments on transition to IFRS 17.

- Modified retrospective approach (Child Education Takaful

Plan and Individual Retirement Policy)

As stated in note 2, this is the Company’s first annual financial report prepared in accordance with the requirements of IFRS

17.

The accounting policies set out in note 3 have been applied in preparing the financial statements for year ended 31

December 2023 and 31 December 2022 and in the preparation of an opening IFRS 17 and IFRS 9 statement of financial

position at 1 January 2022 (the Company’s date of transition) and 31 December 2022.

In preparing its opening IFRS 17 statement of financial position, the Company has adjusted amounts reported previously in

financial statements under IFRS 4.

Presentation is driven by portfolios which are composed of groups of contracts covering similar risks and which are

managed together. Portfolios of insurance and retakaful / reinsurance contracts are presented separately between:

40

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

4.

Transitional note (continued)

Reclassification impact on statement of income on adoption of IFRS 17

- Gross written premium

- Retakaful / reinsurance premiums ceded

- Excess of loss expenses (XOL)

- Changes in unearned contribution – net

- Gross claims paid

- Retakaful / reinsurance share of claims paid

- Changes in outstanding claims, net

- Changes in claims incurred but not reported, net

- Changes in premium deficiency reserves

- Changes in other technical reserves

- Policy acquisition costs

- Allowance for doubtful receivables

- General and administrative expenses

Instead, IFRS 17 requires separate presentation of:

- Insurance revenue

- Insurance service expenses

- Allocation of retakaful / reinsurance contributions

- Amounts recoverable from retakaful / reinsurance for incurred claims

- Other operating expenses

The line-item descriptions in the statement of income have been changed significantly compared with prior periods.

Previously, the Company reported the following line items:

41

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

4.

Transitional note (continued)

4.1 Transitional impact on the statement of financial position on adoption of IFRS 17

SAR '000

Impact on equity

Drivers of changes

Changes in measurement of insurance contract liabilities 36,187

Changes in measurement of retakaful / reinsurance contract assets 20,273

Total impact

56,460

Impact on insurance contract liabilities

Drivers of changes

Risk adjustment (127,921)

Loss component on onerous contracts 1,967

Discounting on LIC 18,413

Reserve adjustments - LIC 63,362

Impact from LRC 83,373

Others (3,007)

Total impact

36,187

Impact on retakaful / reinsurance contract assets

Drivers of changes

Reinsurance risk adjustment 44,294

Discounting of AIC (1,102)

Impact from ARC (16,156)

Others (6,763)

Total impact

20,273

Impact on transition

to IFRS 17 as on 1

January 2022

42

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

4.

Transitional note (continued)

4.2 Reconciliation of statement of financial position as at 1 January 2022

Reclassification Remeasurement

Assets

Cash and cash equivalents 500,070 - - 500,070

414,546 (414,546) - -

227,284 (227,284) - -

207,122 (207,122) - -

60,387 (60,387) - -

31 (31) - -

Deferred policy acquisition costs 109,940 (109,940) - -

Investments mandatorily measured at FVTPL 486,068 - - 486,068

Investments designated as FVOCI 435,284 - - 435,284

Investments held at amortised cost 1,749,465 - - 1,749,465

Investment for unit linked contracts 214,184 - - 214,184

Prepayments and other assets 54,391 (10,800) - 43,591

Property and equipment, net 83,216 - - 83,216

Statutory deposit 39,971 - - 39,971

Accrued income on statutory deposit 3,626 - - 3,626

Right-of-use assets 55,733 - - 55,733

Insurance contract assets - 30,201 (7) 30,194

Retakaful / reinsurance contract assets - 402,812 28,559 431,371

Total Assets

4,641,318 (597,097) 28,552 4,072,773

Liabilities

Payables, accruals and other liabilities 180,208 (97,960) - 82,248

Retakaful / reinsurance balances payable 179,530 (179,530) - -

Unearned contributions 1,168,466 (1,168,466) - -

20,457 (20,457) - -

Gross outstanding claims 471,282 (471,282) - -

Claims incurred but not reported 881,625 (881,625) - -

Contribution deficiency reserve 64,301 (64,301) - -

Unit linked liabilities at FVSI 217,611 (217,611) - -

End-of-service benefits (EOSB) 24,635 - - 24,635

Provision for zakat 51,341 - - 51,341

Payables to Insurance Authority 8,336 - - 8,336

Lease liabilities 54,482 - - 54,482

Takaful operations' surplus payable 48,628 (48,628) - -

Insurance contract liabilities - 2,435,892 (36,194) 2,399,698

Retakaful / reinsurance contract liabilities - 116,871 8,286 125,157

Total Liabilities

3,370,902 (597,097) (27,908) 2,745,897

Equity

Share capital 400,000 - - 400,000

Statutory reserve 178,186 - - 178,186

Retained earnings 595,551 - 56,460 652,011

Remeasurement reserve for EOSB (7,327) - - (7,327)

104,006 - - 104,006

Equity

1,270,416 - 56,460 1,326,876

Total liabilities and equity

4,641,318 (597,097) 28,552 4,072,773

Fair value reserve - investments designated as FVOCI

Contributions and re-takaful / reinsurance balances

receivable, net

Retakaful / reinsurance share of unearned contributions

Retakaful / reinsurance share of outstanding claims

Retakaful / reinsurance share of claims incurred but not

reported

Retakaful / reinsurance share of mathematical reserve at

FVSI

Unearned retakaful / reinsurance commission income

1 January 2022

Pre-adoption of

IFRS 17

Post adoption of

IFRS 17

SAR '000

43

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

4.

Transitional note (continued)

4.3 Reconciliation of statement of financial position as at 31 December 2022

Reclassification Remeasurement

Assets

Cash and cash equivalents 620,410 - - 620,410

683,950 (683,950) - -

320,424 (320,424) - -

186,097 (186,097) - -

93,146 (93,146) - -

45 (45) - -

Deferred policy acquisition costs 164,633 (164,633) - -

Investments mandatorily measured at FVTPL 503,167 - - 503,167

Investments designated as FVOCI 429,926 - - 429,926

Investments held at amortised cost 1,927,755 - - 1,927,755

Investment for unit linked contracts 268,506 - - 268,506

Prepayments and other assets 53,702 - - 53,702

Property and equipment, net 81,041 - - 81,041

Statutory deposit 39,971 - - 39,971

Accrued income on statutory deposit 5,026 - - 5,026

Right-of-use assets 48,371 - - 48,371

Insurance contract assets - 307 9 316

Retakaful / reinsurance contract assets - 234,849 118,134 352,983

Total Assets

5,426,170 (1,213,139) 118,143 4,331,174

Liabilities

Payables, accruals and other liabilities 277,606 (204,235) - 73,371

Retakaful / reinsurance balances payable 311,837 (311,837) - -

Unearned contributions 1,603,783 (1,603,783) - -

28,780 (28,780) - -

Gross outstanding claims 125,150 (125,150) - -

Claims incurred but not reported 1,294,170 (1,294,170) - -

Contribution deficiency reserve 52,587 (52,587) - -

Unit linked liabilities at FVSI 275,118 (275,118) - -

End-of-service benefits (EOSB) 22,812 - - 22,812

Provision for zakat 49,925 - - 49,925

Payables to Insurance Authority 9,735 - - 9,735

Lease liabilities 49,222 - - 49,222

Takaful operations' surplus payable 37,318 (37,318) - -

Insurance contract liabilities - 2,716,293 77,127 2,793,420

Retakaful / reinsurance contract liabilities - 3,546 1,783 5,329

Total Liabilities

4,138,043 (1,213,139) 78,910 3,003,814

Equity

Share capital 400,000 - - 400,000

Statutory reserve 196,109 - - 196,109

Retained earnings 667,246 - 39,233 706,479

Remeasurement reserve for EOSB (5,423) - - (5,423)

30,195 - - 30,195

Equity

1,288,127 - 39,233 1,327,360

Total liabilities and equity

5,426,170 (1,213,139) 118,143 4,331,174

Fair value reserve - investments designated as FVOCI

31 December 2022

Pre-adoption of

IFRS 17

Post adoption of

IFRS 17

SAR '000

Contributions and re-takaful / reinsurance balances

receivable, net

Retakaful / reinsurance share of unearned contributions

Retakaful / reinsurance share of outstanding claims

Retakaful / reinsurance share of claims incurred but not

reported

Retakaful / reinsurance share of mathematical reserve at

FVSI

Unearned retakaful / reinsurance commission income

44

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

4.

Transitional note (continued)

4.4 Reconciliation of statement of income for the period ended 31 December 2022

Reclassification Remeasurement

Revenues

Gross contribution written 3,470,070 (3,470,070) - -

(2,996) 2,996 - -

(668,064) 668,064 - -

Excess of loss expenses (XOL) (13,003) 13,003 - -

Net contributions written

2,786,007 (2,786,007) - -

Changes in unearned contributions, net (342,178) 342,178 - -

Net contributions earned

2,443,829 (2,443,829) - -

Retakaful / reinsurance commission income 39,515 (39,515) - -

Other underwriting income 6,334 (6,334) - -

Total Revenues

2,489,678 (2,489,678) - -

Insurance revenue - 2,934,503 - 2,934,503

Insurance service expenses - (2,491,494) - (2,491,494)

- 443,009 - 443,009

Allocation of retakaful / reinsurance contributions - (464,378) - (464,378)

- 80,184 - 80,184

- (384,194) - (384,194)

Insurance service result

- 58,815 - 58,815

Underwriting costs and expenses

Gross claims paid and loss adjustment expenses (1,864,802) 1,864,802 - -

Surrenders and maturities (45,173) 45,173 - -

Expenses incurred related to claims (36,783) 36,783 - -

Retakaful / reinsurance share of claims paid 171,166 (171,166) - -

Net claims and other benefits paid

(1,775,592) 1,775,592 - -

Changes in outstanding claims, net 325,107 (325,107) - -

(379,786) 379,786 - -

Change in contribution deficiency reserve 11,714 (11,714) - -

Net claims and other benefits incurred

(1,818,557) 1,818,557 - -

Change in unit linked liabilities at FVSI, net (68,173) 68,173 - -

Policy acquisition costs (341,884) 341,884 - -

Other underwriting income - - - -

Other underwriting expenses, net (17,306) 17,306 - -

Total underwriting costs and expenses

(2,245,920) 2,245,920 - -

Net underwriting income 243,758 (243,758) - -

Retakaful / reinsurance contributions ceded - domestic

Insurance service result before retakaful /

reinsurance contracts held

Amounts recoverable from retakaful / reinsurance for

incurred claims

Net expense from retakaful / reinsurance contracts

held

Changes in incurred but not reported (IBNR) claims, net

Retakaful / reinsurance contributions ceded - foreign

31 December 2022

Pre-adoption of

IFRS 17

Post adoption of

IFRS 17

SAR '000

45

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

4.

Transitional note (continued)

4.4

Reconciliation of statement of income for the period ended 31 December 2022 (continued)

Reclassification Remeasurement

- 41,647 - 41,647

- (12,481) - (12,481)

Dividend income - 48,663 - 48,663

Special commission income - - - -

Reversal / impairment loss on financial assets - (242) - (242)

Net investment income

- 77,587 - 77,587

Finance income from insurance contracts issued - 25,359 - 25,359

- 6,655 - 6,655

Net finance income - 32,014 - 32,014

Net insurance and investment result - 168,416 - 168,416

Other operating (expenses)/ income

20,846 (20,846) - -

General and administrative expenses (259,641) 259,641 - -

Special commission income 60,711 (60,711) - -

16,570 (16,570) - -

Dividend income 13,029 (13,029) - -

Reversal / impairment loss on financial assets (242) 242 - -

Other income 12,726 (12,726) - -

Total other operating expenses

(136,001) 136,001 - -

Other operating expenses - (98,501) - (98,501)

Other income - 12,726 - 12,726

Net income for the period before zakat 107,757 (25,116) - 82,641

(7,889) 7,889 - -

99,868 (17,227) - 82,641

Provision for zakat (10,250) - - (10,250)

89,618 (17,227) - 72,391

Net income for the year before zakat attributable to

the shareholders

Net income for the year after zakat attributable to

the shareholders

Net gains on investments mandatorily measured at

FVTPL

Finance income from retakaful / reinsurance contracts

held

Reversal of allowance for doubtful debts - contributions

and retakaful / reinsurance balances receivable

Net gains on investments mandatorily measured at

FVTPL

Net income for the year attributable to takaful

operations

Fair value gain of unit-linked investments

31 December 2022

Pre-adoption of

IFRS 17

Post adoption of

IFRS 17

SAR '000

46

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

4.

Transitional note (continued)

4.5 Reconciliation of statement of comprehensive income for the year ended 31 December 2022

Reclassification Remeasurement

89,618 (17,227) - 72,391

(73,811) - - (73,811)

Remeasurement of EOSB 1,904 - - 1,904

Total comprehensive income for the period 17,711 (17,227) - 484

Items that will not be reclassified to statement of

income in subsequent periods

Net fair value changes on investments designated as

FVOCI

31 December 2022

Pre-adoption of

IFRS 17

Post adoption of

IFRS 17

SAR '000

Net income for the period after zakat attributable to

the shareholders

47

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

5.

Cash and cash equivalents

Cash and cash equivalents comprise the following:

31 December

2023

31 December

2022

1 January 2022

Restated Restated

Note

Cash and bank balances 5.1

393,039

341,683 431,362

Short term deposits 5.2

474,746

175,000 -

Accrued profit on short term deposits

2,481

42 -

870,266

516,725 431,362

Expected credit loss allowance

(364)

(126) -

Total cash and cash equivalents

869,902

516,599 431,362

Deposits against letters of guarantee

39,956

61,318 40,190

909,858

577,917 471,552

31 December

2023

31 December

2022

1 January 2022

Restated Restated

Note

Cash and bank balances

30,536

37,784 23,809

Cash balance with Al Rajhi Capital

-

- -

5.1

30,536

37,784 23,809

Cash at banks (statutory deposit income)

4,709

4,709 4,709

35,245

42,493 28,518

Cash and bank balances

945,103

620,410 500,070

5.1

5.2

Bank balances are placed with counterparties with sound credit ratings under Standard and Poor's and Moody’s ratings

methodology.

The deposits are held with banks and financial institution registered with Capital Market Authority in the Kingdom of Saudi

Arabia. These deposits are denominated in Saudi riyals and have an original maturity of less than three months. These earn

profit at an average rate of 6.25% per annum as of 31 December 2023 (31 December 2022: 4.35% per annum).

Takaful operations

Shareholders’ operations

SAR '000

Cah and bank balances - total cash and cash

equivalents in the statement of cash flows

SAR '000

Total cash and cash equivalents in the statement

of cash flows

48

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

6. Investments

Investments are classified as follows:

31 December

2023

31 December

2022

1 January 2022

Restated Restated

Note

Investments measured at FVTPL 6.1

482,828

447,965 380,246

Investment measured at FVOCI 6.2

57,494

80,404 33,893

Investment measured at amortized cost 6.3

1,833,889

1,200,685 1,387,154

Investment for unit linked contracts 6.4

1,163,230

268,506 214,184

3,537,441

1,997,560 2,015,477

31 December

2023

31 December

2022

1 January 2022

Restated Restated

Note

Investments measured at FVTPL 6.1

44,880

55,202 105,822

Investment measured at FVOCI 6.2

401,718

349,522 401,391

Investment measured at amortized cost 6.3

666,906

727,070 362,311

1,113,504

1,131,794 869,524

31 December

2023

31 December

2022

1 January 2022

Restated Restated

Note

Investments measured at FVTPL 6.1

527,708

503,167 486,068

Investment measured at FVOCI 6.2

459,212

429,926 435,284

Investment measured at amortized cost 6.3

2,500,795

1,927,755 1,749,465

Investment for unit linked contracts 6.4

1,163,230

268,506 214,184

Total investments 4,650,945

3,129,354 2,885,001

Total

SAR '000

Takaful operations

SAR '000

Shareholders’ operations

SAR '000

49

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

6.

Investments (continued)

6.1 Investments measured at FVTPL

6.1.1 The movement in investments measured at FVTPL is as follows:

31 December

2023

31 December

2022

1 January 2022

Restated Restated

Note

Opening balance

447,965

380,246 322,477

Purchases

1,192,010

1,483,000 1,658,838

Disposals

(1,147,746)

(1,417,264) (1,603,023)

Accrued investment income

2,534

1,668 1,097

Changes in fair value of investments, net

(11,935)

315 857

Closing balance

482,828

447,965 380,246

31 December

2023

31 December

2022

1 January 2022

Restated Restated

Note

Opening balance

55,202

105,822 82,098

Purchases

153,565

369,500 807,162

Disposals

(155,909)

(420,159) (783,886)

Accrued investment income

39

39 39

Changes in fair value of investments, net

(8,017)

- 409

Closing balance

44,880

55,202 105,822

Total 527,708

503,167 486,068

6.1.2 Investments measured at FVTPL including accrued investment income comprise the following:

31 December

2023

31 December

2022

1 January 2022

Restated Restated

Mutual funds

120,018

154,085 216,937

Sukuk

360,276

292,212 162,212

Accrued investment income

2,534

1,668 1,097

482,828

447,965 380,246

SAR '000

Takaful operations

SAR '000

Shareholders’ operations

SAR '000

Takaful operations

50

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

6.

Investments (continued)

6.1

Investments measured at FVTPL (continued)

31 December

2023

31 December

2022

1 January 2022

Restated Restated

Mutual funds

35,132

45,163 95,783

Sukuk

9,709

10,000 10,000

Accrued investment income

39

39 39

44,880

55,202 105,822

6.2 Investment measured at FVOCI

6.2.1 The movement in investments measured at FVOCI is as follows:

31 December

2023

31 December

2022

1 January 2022

Restated Restated

Note

Opening balance

80,404

33,893 30,107

Purchases

30,000

68,453 -

Disposals

(68,568)

- -

Changes in fair value of investments, net

15,658

(21,942) 3,786

Closing balance

57,494

80,404 33,893

31 December

2023

31 December

2022

1 January 2022

Restated Restated

Note

Opening balance

349,522

401,391 296,341

Purchases

-

- 65,023

Disposals

-

- (15,326)

Changes in fair value of investments, net

52,196

(51,869) 55,353

Closing balance

401,718

349,522 401,391

Total 459,212

429,926 435,284

Takaful operations

SAR '000

Shareholders’ operations

SAR '000

Shareholders’ operations

SAR '000

51

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

6.

Investments (continued)

6.2

Investment measured at FVOCI (continued)

6.2.2 Investments measured at FVOCI comprise the following:

31 December

2023

31 December

2022

1 January 2022

Restated Restated

Listed equity securities 57,494 80,404 33,893

Unlisted equity securities

-

- -

57,494

80,404 33,893

31 December

2023

31 December

2022

1 January 2022

Restated Restated

Listed equity securities

362,015

341,980 393,849

Unlisted equity securities

39,703

7,542 7,542

401,718

349,522 401,391

6.2.3 The investment measured at FVOCI includes investment in Najm that has been valued as follows:

31 December

2023

31 December

2022

1 January 2022

Restated Restated

Note

Cost of investment

1,923

1,923 1,923

Fair value reserve

Opening balance

5,619

5,619 5,619

Changes in fair value

32,161

- -

Fair value reserve - closing balance

37,780

5,619 5,619

Total investment at fair value 39,703

7,542 7,542

The fair value of Najm is based on the independent valuation report dated 31 March 2023. The independent valuer has

been appointed by the Najm.

SAR '000

Shareholders’ operations

SAR '000

Takaful operations

SAR '000

52

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

`

Notes to the financial statements (continued)

For the year ended 31 December 2023

6.

Investments (continued)

6.3 Investment measured at amortized cost

6.3.1 The movement in investments measured at amortized cost is as follows:

31 December

2023

31 December

2022

1 January 2022

Restated Restated

Note

Opening balance

1,201,731

1,388,061 1,229,834

Purchases

1,693,149

1,475,590 329,810

Disposals / maturities

(1,090,347)

(1,687,505) (201,226)

Accrued investment income

30,510

25,585 29,643

Expected credit losses

(1,154)

(1,046) (907)

Closing balance

1,833,889

1,200,685 1,387,154

31 December

2023

31 December

2022

1 January 2022

Restated Restated

Note

Opening balance

727,206

362,434 140,075

Purchases

-

785,659 339,965

Disposals / maturities

(70,520)

(427,533) (120,074)

Accrued investment income

10,315

6,646 2,468

Expected credit losses

(95)

(136) (123)

Closing balance

666,906

727,070 362,311

Total 2,500,795

1,927,755 1,749,465

6.3.2 Investments measured at amortized cost including accrued investment income comprise the following:

31 December

2023

31 December

2022

1 January 2022

Restated Restated

Murabaha deposits

1,552,438

1,024,190 1,099,307

Sukuk

250,941

150,910 258,204

Accrued investment income

30,510

25,585 29,643

1,833,889

1,200,685 1,387,154

SAR '000

Takaful operations

SAR '000

Shareholders’ operations

SAR '000

Takaful operations

53

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

`

Notes to the financial statements (continued)

For the year ended 31 December 2023

6.

Investments (continued)

6.3

Investment measured at amortized cost (continued)

31 December

2023

31 December

2022

1 January 2022

Restated Restated

Murabaha deposits

-

- 99,978

Sukuk

656,591

720,424 259,865

Accrued investment income

10,315

6,646 2,468

666,906

727,070 362,311

6.4 Investment for unit linked contracts

6.4.1

Investment for unit linked contracts are measured at FVTPL. The movement in unit-linked investments is as follows:

31 December

2023

31 December

2022

1 January 2022

Restated Restated

Note

Opening balance

268,506

214,184 139,144

Purchases

780,715

66,803 49,382

Disposals

-

- -

Changes in fair value of investments, net

114,009

(12,481) 25,658

Closing balance

1,163,230

268,506 214,184

6.4.2 Unit-linked investments, measured at FVTPL, represents investment made in mutual funds only.

Shareholders’ operations

SAR '000

The murabaha deposits having original maturity exceeding three months have been placed with reputable commercial

banks and financial institutions both local and foreign. They are denominated in Saudi Arabian Riyals. These deposits earn

yield at rates ranging from 5.10 % to 6.67 % per annum (2022: 2.75% to 6.00 %). These are placed with counterparties

with sound credit ratings under Standard and Poor's and Moody’s ratings methodology.

Takaful operations

SAR '000

54

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

7. Insurance and retakaful / reinsurance contracts

Assets Liabilities Assets Liabilities Assets Liabilities

Note

Motor 7.1.1 (a) PAA

- 2,213,562

34 1,550,200 2,906 1,448,012

Medical / Health 7.1.1 (b) PAA

- 492,109

282 310,987 - 209,907

Property & casualty 7.1.1 (c) PAA

174,213 439,336

- 279,687 - 278,418

Protection & savings 7.1.1 (d) PAA

- 122,971

- 212,014 27,288 180,855

Total – PAA

7.1.1

174,213 3,267,978

316 2,352,888 30,194 2,117,192

Property & casualty 7.1.2 (a) GMM

- 229,323

- 174,548 - 74,917

Protection & savings 7.1.2 (b)

GMM / VFA

29 1,151,825

- 265,984 - 207,589

Total – GMM/VFA

7.1.2

29 1,381,148

- 440,532 - 282,506

174,242 4,649,126

316 2,793,420 30,194 2,399,698

Motor 7.2.1 (a) GMM

12,015 5,992

11,864 - 11,782 490

Medical / Health 7.2.1 (b) GMM

- -

- - - -

Property & casualty 7.2.1 (c) GMM

529,692 159,422

227,211 - 279,537 -

Protection & savings 7.2.1 (d) GMM

104,417 30,941

113,908 5,329 140,052 124,667

Total – GMM

7.2.1

646,124 196,355

352,983 5,329 431,371 125,157

The breakdown of the Company’s insurance contracts issued, and retakaful / reinsurance contracts contracts held, that are in an asset position and those in a liability position is set out in

the table below:

Retakaful / reinsurance contract

assets & liabilities

Insurance contracts assets &

liabilities

Valuation

Approach

SAR '000

31 December 2023

31 December 2022

1 January 2022

55

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

7.

Insurance and retakaful / reinsurance contracts (continued)

7.1 Movements in insurance contract balances

7.1.1 Insurance contracts measured under PAA

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Opening insurance contract liabilities 797,634 109,753 1,350,860 94,641 2,352,888 661,692 62,342 1,266,168 126,990 2,117,192

Opening insurance contract assets (282) - (34) - (316) (30,194) - - - (30,194)

Net balance as at 1 January - restated

797,352 109,753 1,350,826 94,641 2,352,572 631,498 62,342 1,266,168 126,990 2,086,998

Insurance revenue

(3,991,241) - - - (3,991,241) (2,776,863) - - - (2,776,863)

Insurance service expenses

Incurred claims - - 2,754,455 78,943 2,833,398 - 62,342 2,366,515 56,106 2,484,963

Directly attributable non-acquisition expenses - - 187,908 - 187,908 - - 156,694 - 156,694

Changes relating to liabilities for incurred claims - - (16,765) (2,840) (19,605) - - (417,739) (89,164) (506,903)

Losses / (loss reversals) on onerous contracts - (60,930) - - (60,930) - (14,931) - - (14,931)

Insurance acquisition costs incurred 448,735 - - - 448,735 319,673 - - - 319,673

Surplus distribution to policyholders - - 37,547 - 37,547 - - 7,889 - 7,889

448,735 (60,930) 2,963,145 76,103 3,427,053 319,673 47,411 2,113,359 (33,058) 2,447,385

Insurance service result

(3,542,506) (60,930) 2,963,145 76,103 (564,188) (2,457,190) 47,411 2,113,359 (33,058) (329,478)

Finance expenses from insurance contracts issued - - 43,221 7,008 50,229 - - (5,617) 709 (4,908)

Total amounts recognised in statement of income

(3,542,506) (60,930) 3,006,366 83,111 (513,959) (2,457,190) 47,411 2,107,742 (32,349) (334,386)

Investment components - - - - - - - - - -

Cash flows

Premiums received 4,204,404 - - - 4,204,404 2,892,721 - - - 2,892,721

Claims paid - - (2,310,183) - (2,310,183) - - (1,866,389) - (1,866,389)

Directly attributable non- acquisition expenses paid - - (187,909) - (187,909) - - (156,695) - (156,695)

Insurance acquisition cash flows (451,160) - - - (451,160) (269,677) - - - (269,677)

3,753,244 - (2,498,092) - 1,255,152 2,623,044 - (2,023,084) - 599,960

Net balance as at 31 December

1,008,090 48,823 1,859,100 177,752 3,093,765 797,352 109,753 1,350,826 94,641 2,352,572

Closing insurance contract liabilities 1,182,303 48,823 1,859,100 177,752 3,267,978 797,634 109,753 1,350,860 94,641 2,352,888

Closing insurance contract assets (174,213) - - - (174,213) (282) - (34) - (316)

Net balance as at 31 December

1,008,090 48,823 1,859,100 177,752 3,093,765 797,352 109,753 1,350,826 94,641 2,352,572

SAR '000

31 December 2022

LRC

LIC

Total

SAR '000

31 December 2023

LRC

LIC

Total

56

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

7.

Insurance and retakaful / reinsurance contracts (continued)

7.1

Movements in insurance contract balances (continued)

7.1.1 Insurance contracts measured under PAA

a) Motor

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Opening insurance contract liabilities 628,495 93,679 778,768 49,258 1,550,200 502,952 46,385 835,840 62,835 1,448,012

Opening insurance contract assets - - (34) - (34) (2,906) - - - (2,906)

Net balance as at 1 January

628,495 93,679 778,734 49,258 1,550,166 500,046 46,385 835,840 62,835 1,445,106

Insurance revenue

(2,304,745) - - - (2,304,745) (1,500,361) - - - (1,500,361)

Insurance service expenses

Incurred claims - - 1,675,071 35,357 1,710,428 - 46,385 1,620,388 22,203 1,688,976

Directly attributable non-acquisition expenses - - 96,677 - 96,677 - - 64,586 - 64,586

Changes relating to liabilities for incurred claims - - (133,630) 2,992 (130,638) - - (287,905) (35,745) (323,650)

Losses / (loss reversals) on onerous contracts - (93,679) - - (93,679) - 909 - - 909

Insurance acquisition costs incurred 310,248 - - - 310,248 183,197 - - - 183,197

Surplus distribution to policyholders - - 20,294 - 20,294 - - 6,311 - 6,311

310,248 (93,679) 1,658,412 38,349 1,913,330 183,197 47,294 1,403,380 (13,542) 1,620,329

Insurance service result

(1,994,497) (93,679) 1,658,412 38,349 (391,415) (1,317,164) 47,294 1,403,380 (13,542) 119,968

Finance expenses from insurance contracts issued - - 29,381 3,671 33,052 - - (6,740) (35) (6,775)

Total amounts recognised in statement of income

(1,994,497) (93,679) 1,687,793 42,020 (358,363) (1,317,164) 47,294 1,396,640 (13,577) 113,193

Investment components - - - - - - - - - -

Cash flows

Premiums received 2,804,822 - - - 2,804,822 1,681,125 - - - 1,681,125

Claims paid - - (1,369,173) - (1,369,173) - - (1,389,160) - (1,389,160)

Directly attributable non- acquisition expenses paid - - (96,677) - (96,677) - - (64,586) - (64,586)

Insurance acquisition cash flows (317,213) - - - (317,213) (235,512) - - - (235,512)

2,487,609 - (1,465,850) - 1,021,759 1,445,613 - (1,453,746) - (8,133)

Net balance as at 31 December

1,121,607 - 1,000,677 91,278 2,213,562 628,495 93,679 778,734 49,258 1,550,166

Closing insurance contract liabilities 1,121,607 - 1,000,677 91,278 2,213,562 628,495 93,679 778,768 49,258 1,550,200

Closing insurance contract assets - - - - - - - (34) - (34)

Net balance as at 31 December

1,121,607 - 1,000,677 91,278 2,213,562 628,495 93,679 778,734 49,258 1,550,166

SAR '000

31 December 2023

31 December 2022

LRC

LIC

Total

LRC

LIC

Total

57

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

7.

Insurance and retakaful / reinsurance contracts (continued)

7.1

Movements in insurance contract balances (continued)

7.1.1

Insurance contracts measured under PAA (continued)

b) Medical / Health

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Opening insurance contract liabilities - 16,074 274,580 20,333 310,987 40,137 15,957 137,677 16,136 209,907

Opening insurance contract assets (282) - - - (282) - - - - -

Net balance as at 1 January

(282) 16,074 274,580 20,333 310,705 40,137 15,957 137,677 16,136 209,907

Insurance revenue

(985,282) - - - (985,282) (550,293) - - - (550,293)

Insurance service expenses

Incurred claims - - 868,938 29,598 898,536 - 15,957 457,996 16,563 490,516

Directly attributable non-acquisition expenses - - 68,370 - 68,370 - - 59,952 - 59,952

Changes relating to liabilities for incurred claims - - (14,394) (15,598) (29,992) - - (33,211) (12,552) (45,763)

Losses / (loss reversals) on onerous contracts - 32,749 - - 32,749 - (15,840) - - (15,840)

Insurance acquisition costs incurred 40,015 - - - 40,015 25,955 - - - 25,955

Surplus distribution to policyholders - - 10,824 - 10,824 - - 528 - 528

40,015 32,749 933,738 14,000 1,020,502 25,955 117 485,265 4,011 515,348

Insurance service result

(945,267) 32,749 933,738 14,000 35,220 (524,338) 117 485,265 4,011 (34,945)

Finance expenses from insurance contracts issued - - 9,265 1,523 10,788 - - 730 186 916

Total amounts recognised in statement of income

(945,267) 32,749 943,003 15,523 46,008 (524,338) 117 485,995 4,197 (34,029)

Investment components - - - - - - - - - -

Cash flows

Premiums received 985,732 - - - 985,732 507,644 - - - 507,644

Claims paid - - (767,673) - (767,673) - - (289,140) - (289,140)

Directly attributable non- acquisition expenses paid - - (68,370) - (68,370) - - (59,952) - (59,952)

Insurance acquisition cash flows (14,293) - - - (14,293) (23,725) - - - (23,725)

971,439 - (836,043) - 135,396 483,919 - (349,092) - 134,827

Net balance as at 31 December

25,890 48,823 381,540 35,856 492,109 (282) 16,074 274,580 20,333 310,705

Closing insurance contract liabilities 25,890 48,823 381,540 35,856 492,109 - 16,074 274,580 20,333 310,987

Closing insurance contract assets - - - - - (282) - - - (282)

Net balance as at 31 December

25,890 48,823 381,540 35,856 492,109 (282) 16,074 274,580 20,333 310,705

SAR '000

31 December 2023

31 December 2022

LRC

LIC

Total

LRC

LIC

Total

58

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

7.

Insurance and retakaful / reinsurance contracts (continued)

7.1

Movements in insurance contract balances (continued)

7.1.1

Insurance contracts measured under PAA (continued)

c) Property & casualty

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Opening insurance contract liabilities 126,284 - 140,614 12,789 279,687 118,603 - 125,193 34,622 278,418

Opening insurance contract assets - - - - - - - - - -

Net balance as at 1 January

126,284 - 140,614 12,789 279,687 118,603 - 125,193 34,622 278,418

Insurance revenue

(535,438) - - - (535,438) (353,539) - - - (353,539)

Insurance service expenses

Incurred claims - - 162,888 9,688 172,576 - - 108,123 9,796 117,919

Directly attributable non-acquisition expenses - - 15,533 - 15,533 - - 15,873 - 15,873

Changes relating to liabilities for incurred claims - - 174,085 20,440 194,525 - - (73,767) (32,003) (105,770)

Losses / (loss reversals) on onerous contracts - - - - - - - - - -

Insurance acquisition costs incurred 11,745 - - - 11,745 9,468 - - - 9,468

Surplus distribution to policyholders - - 5,306 - 5,306 - - 637 - 637

11,745 - 357,812 30,128 399,685 9,468 - 50,866 (22,207) 38,127

Insurance service result

(523,693) - 357,812 30,128 (135,753) (344,071) - 50,866 (22,207) (315,412)

Finance expenses from insurance contracts issued - - 3,403 934 4,337 - - 213 374 587

Total amounts recognised in statement of income

(523,693) - 361,215 31,062 (131,416) (344,071) - 51,079 (21,833) (314,825)

Investment components - - - - - - - - - -

Cash flows

Premiums received 228,953 - - - 228,953 358,826 - - - 358,826

Claims paid - - (90,811) - (90,811) - - (19,784) - (19,784)

Directly attributable non- acquisition expenses paid - - (15,533) - (15,533) - - (15,874) - (15,874)

Insurance acquisition cash flows (5,757) - - - (5,757) (7,074) - - - (7,074)

223,196 - (106,344) - 116,852 351,752 - (35,658) - 316,094

Net balance as at 31 December

(174,213) - 395,485 43,851 265,123 126,284 - 140,614 12,789 279,687

Closing insurance contract liabilities - - 395,485 43,851 439,336 126,284 - 140,614 12,789 279,687

Closing insurance contract assets (174,213) - - - (174,213) - - - - -

Net balance as at 31 December

(174,213) - 395,485 43,851 265,123 126,284 - 140,614 12,789 279,687

SAR '000

31 December 2023

31 December 2022

LRC

LIC

Total

LRC

LIC

Total

59

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

7.

Insurance and retakaful / reinsurance contracts (continued)

7.1

Movements in insurance contract balances (continued)

7.1.1

Insurance contracts measured under PAA (continued)

d) Protection & savings

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Opening insurance contract liabilities 42,855 - 156,898 12,261 212,014 - - 167,458 13,397 180,855

Opening insurance contract assets - - - - - (27,288) - - - (27,288)

Net balance as at 1 January

42,855 - 156,898 12,261 212,014 (27,288) - 167,458 13,397 153,567

Insurance revenue

(165,776) - - - (165,776) (372,670) - - - (372,670)

Insurance service expenses

Incurred claims - - 47,558 4,300 51,858 - - 180,008 7,544 187,552

Directly attributable non-acquisition expenses - - 7,328 - 7,328 - - 16,283 - 16,283

Changes relating to liabilities for incurred claims - - (42,826) (10,674) (53,500) - - (22,856) (8,864) (31,720)

Losses / (loss reversals) on onerous contracts - - - - - - - - - -

Insurance acquisition costs incurred 86,727 - - - 86,727 101,053 - - - 101,053

Surplus distribution to policyholders - - 1,123 - 1,123 - - 413 - 413

86,727 - 13,183 (6,374) 93,536 101,053 - 173,848 (1,320) 273,581

Insurance service result

(79,049) - 13,183 (6,374) (72,240) (271,617) - 173,848 (1,320) (99,089)

Finance expenses from insurance contracts issued - - 1,172 880 2,052 - - 180 184 364

Total amounts recognised in statement of income

(79,049) - 14,355 (5,494) (70,188) (271,617) - 174,028 (1,136) (98,725)

Investment components - - - - - - - - - -

Cash flows

Premiums received 184,897 - - - 184,897 345,126 - - - 345,126

Claims paid - - (82,526) - (82,526) - - (168,305) - (168,305)

Directly attributable non- acquisition expenses paid - - (7,329) - (7,329) - - (16,283) - (16,283)

Insurance acquisition cash flows (113,897) - - - (113,897) (3,366) - - - (3,366)

71,000 - (89,855) - (18,855) 341,760 - (184,588) - 157,172

Net balance as at 31 December

34,806 - 81,398 6,767 122,971 42,855 - 156,898 12,261 212,014

Closing insurance contract liabilities 34,806 - 81,398 6,767 122,971 42,855 - 156,898 12,261 212,014

Closing insurance contract assets - - - - - - - - - -

Net balance as at 31 December

34,806 - 81,398 6,767 122,971 42,855 - 156,898 12,261 212,014

SAR '000

31 December 2023

31 December 2022

LRC

LIC

Total

LRC

LIC

Total

60

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

7.

Insurance and retakaful / reinsurance contracts (continued)

7.1

Movements in insurance contract balances (continued)

7.1.2 Insurance contracts measured under measured under GMM & VFA

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Opening insurance contract liabilities 392,276 132 41,721 6,403 440,532 273,393 2 8,178 933 282,506

Opening insurance contract assets - - - - - - - - - -

Net balance as at 1 January

392,276 132 41,721 6,403 440,532 273,393 2 8,178 933 282,506

Insurance revenue

(245,229) - - - (245,229) (157,640) - - - (157,640)

Insurance service expenses

Incurred claims - (120) 13,491 957 14,328 - (8) 38,694 5,505 44,191

Directly attributable non-acquisition expenses - - 8,337 - 8,337 - - 5,229 - 5,229

Changes relating to liabilities for incurred claims - - 77,794 6,653 84,447 - - 4,451 (18) 4,433

Losses / (loss reversals) on onerous contracts - 794 - - 794 - 138 - - 138

Insurance acquisition costs incurred 5,008 - - - 5,008 (9,882) - - - (9,882)

Surrenders and maturities - - - - - - - - - -

5,008 674 99,622 7,610 112,914 (9,882) 130 48,374 5,487 44,109

Insurance service result

(240,221) 674 99,622 7,610 (132,315) (167,522) 130 48,374 5,487 (113,531)

Finance expenses from insurance contracts issued 122,626 2 1,435 493 124,556 (7,753) - (200) (17) (7,970)

Total amounts recognised in statement of income

(117,595) 676 101,057 8,103 (7,759) (175,275) 130 48,174 5,470 (121,501)

Investment components (69,377) - 69,377 - - (45,911) - 45,911 - -

Cash flows

Premiums received 1,148,653 - - - 1,148,653 364,668 - - - 364,668

Claims paid - - (82,462) - (82,462) - - (55,313) - (55,313)

Directly attributable non- acquisition expenses paid - - (8,337) - (8,337) - - (5,229) - (5,229)

Insurance acquisition cash flows (109,508) - - - (109,508) (24,599) - - - (24,599)

1,039,145 - (90,799) - 948,346 340,069 - (60,542) - 279,527

Net balance as at 31 December

1,244,449 808 121,356 14,506 1,381,119 392,276 132 41,721 6,403 440,532

Closing insurance contract liabilities 1,244,478 808 121,356 14,506 1,381,148 392,276 132 41,721 6,403 440,532

Closing insurance contract assets (29) - - - (29) - - - - -

Net balance as at 31 December

1,244,449 808 121,356 14,506 1,381,119 392,276 132 41,721 6,403 440,532

SAR '000

31 December 2023

31 December 2022

LRC

LIC

Total

LRC

LIC

Total

61

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

7.

Insurance and retakaful / reinsurance contracts (continued)

7.1

Movements in insurance contract balances (continued)

7.1.2

Insurance contracts measured under measured under GMM & VFA (continued)

a) Property & casualty

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Opening insurance contract liabilities 126,324 100 41,721 6,403 174,548 65,806 - 8,178 933 74,917

Opening insurance contract assets - - - - - - - - - -

Net balance as at 1 January

126,324 100 41,721 6,403 174,548 65,806 - 8,178 933 74,917

Insurance revenue

(196,831) - - - (196,831) (133,547) - - - (133,547)

Insurance service expenses

Incurred claims - (102) 8,988 957 9,843 - - 36,245 5,505 41,750

Directly attributable non-acquisition expenses - - 3,186 - 3,186 - - 1,019 - 1,019

Changes relating to liabilities for incurred claims - - 77,794 6,653 84,447 - - 4,451 (18) 4,433

Losses / (loss reversals) on onerous contracts - 214 - - 214 - 101 - - 101

Insurance acquisition costs incurred 2,868 - - - 2,868 4,068 - - - 4,068

Surrenders and maturities - - - - - - - - - -

2,868 112 89,968 7,610 100,558 4,068 101 41,715 5,487 51,371

Insurance service result

(193,963) 112 89,968 7,610 (96,273) (129,479) 101 41,715 5,487 (82,176)

Finance expenses from insurance contracts issued 8,605 1 1,435 493 10,534 2,094 (1) (200) (17) 1,876

Total amounts recognised in statement of income

(185,358) 113 91,403 8,103 (85,739) (127,385) 100 41,515 5,470 (80,300)

Investment components - - - - - - - - - -

Cash flows

Premiums received 154,825 - - - 154,825 191,772 - - - 191,772

Claims paid - - (8,582) - (8,582) - - (6,953) - (6,953)

Directly attributable non- acquisition expenses paid - - (3,186) - (3,186) - - (1,019) - (1,019)

Insurance acquisition cash flows (2,543) - - - (2,543) (3,869) - - - (3,869)

152,282 - (11,768) - 140,514 187,903 - (7,972) - 179,931

Net balance as at 31 December

93,248 213 121,356 14,506 229,323 126,324 100 41,721 6,403 174,548

Closing insurance contract liabilities 93,248 213 121,356 14,506 229,323 126,324 100 41,721 6,403 174,548

Closing insurance contract assets - - - - - - - - - -

Net balance as at 31 December

93,248 213 121,356 14,506 229,323 126,324 100 41,721 6,403 174,548

SAR '000

31 December 2023

31 December 2022

LRC

LIC

Total

LRC

LIC

Total

62

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

7.

Insurance and retakaful / reinsurance contracts (continued)

7.1

Movements in insurance contract balances (continued)

7.1.2

Insurance contracts measured under measured under GMM & VFA (continued)

b) Protection & savings

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Opening insurance contract liabilities 265,952 32 - - 265,984 207,587 2 - - 207,589

Opening insurance contract assets - - - - - - - - - -

Net balance as at 1 January

265,952 32 - - 265,984 207,587 2 - - 207,589

Insurance revenue

(48,398) - - - (48,398) (24,093) - - - (24,093)

Insurance service expenses

Incurred claims - (18) 4,503 - 4,485 - (8) 2,449 - 2,441

Directly attributable non-acquisition expenses - - 5,151 - 5,151 - - 4,210 - 4,210

Changes relating to liabilities for incurred claims - - - - - - - - - -

Losses / (loss reversals) on onerous contracts - 580 - - 580 - 37 - - 37

Insurance acquisition costs incurred 2,140 - - - 2,140 (13,950) - - - (13,950)

Surrenders and maturities - - - - - - - - - -

2,140 562 9,654 - 12,356 (13,950) 29 6,659 - (7,262)

Insurance service result

(46,258) 562 9,654 - (36,042) (38,043) 29 6,659 - (31,355)

Finance expenses from insurance contracts issued 114,021 1 - - 114,022 (9,847) 1 - - (9,846)

Total amounts recognised in statement of income

67,763 563 9,654 - 77,980 (47,890) 30 6,659 - (41,201)

Investment components (69,377) - 69,377 - - (45,911) - 45,911 - -

Cash flows

Premiums received 993,828 - - - 993,828 172,896 - - - 172,896

Claims paid - - (73,880) - (73,880) - - (48,360) - (48,360)

Directly attributable non- acquisition expenses paid - - (5,151) - (5,151) - - (4,210) - (4,210)

Insurance acquisition cash flows (106,965) - - - (106,965) (20,730) - - - (20,730)

886,863 - (79,031) - 807,832 152,166 - (52,570) - 99,596

Net balance as at 31 December

1,151,201 595 - - 1,151,796 265,952 32 - - 265,984

Closing insurance contract liabilities 1,151,230 595 - - 1,151,825 265,952 32 - - 265,984

Closing insurance contract assets (29) - - - (29) - - - - -

Net balance as at 31 December

1,151,201 595 - - 1,151,796 265,952 32 - - 265,984

SAR '000

31 December 2023

31 December 2022

LRC

LIC

Total

LRC

LIC

Total

63

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

7. Insurance and retakaful / reinsurance contracts (continued)

7.1 Movements in insurance contract balances (continued)

7.1.3

Reconciliation of insurance contract assets and liabilities by components for contracts measured under GMM & VFA (continued)

a) Property & casualty

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Contractual

Service Margin

Total

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Contractual

Service Margin

Total

Opening insurance contract liabilities - 9,755 191,981 201,736 - 2,311 83,939 86,250

Opening insurance contract assets (27,188) - - (27,188) (11,333) - - (11,333)

Net balance as at 1 January

(27,188) 9,755 191,981 174,548 (11,333) 2,311 83,939 74,917

Changes that relate to current service

CSM recognised for the services received - - (169,618) (169,618) - - (23,503) (23,503)

Change in the risk adjustment for the risk expired - (2,394) - (2,394) - 2,372 - 2,372

Experience adjustments (8,922) - - (8,922) (65,579) - - (65,579)

(8,922) (2,394) (169,618) (180,934) (65,579) 2,372 (23,503) (86,710)

Changes that relate to future service

Changes in estimates that adjust the CSM 11,917 521 (11,568) 870 25,650 2,894 (28,901) (357)

Changes in estimates that result in onerous contract losses or reversal of losses 192 23 - 215 102 - - 102

Contracts initially recognised in the period (139,427) 188 139,239 - (108,972) 2,196 106,776 -

Experience adjustments (20,350) - 19,480 (870) (50,921) - 51,278 357

(147,668) 732 147,151 215 (134,141) 5,090 129,153 102

Changes that relate to past service

Changes relating to liabilities for incurred claims 77,794 6,653 - 84,447 4,451 (18) - 4,433

Experience adjustments - - - - - - - -

77,794 6,653 - 84,447 4,451 (18) - 4,433

Insurance service result

(78,796) 4,991 (22,467) (96,272) (195,269) 7,444 105,650 (82,175)

Finance expenses from insurance contracts issued (3,361) 744 13,151 10,534 (516) - 2,392 1,876

Total amounts recognised in statement of income

(82,157) 5,735 (9,316) (85,738) (195,785) 7,444 108,042 (80,299)

Investment components - - - - - - - -

Cash flows

Premiums received 154,825 - - 154,825 191,772 - - 191,772

Claims paid (8,582) - - (8,582) (6,953) - - (6,953)

Directly attributable non- acquisition expenses paid (3,186) - - (3,186) (1,019) - - (1,019)

Insurance acquisition cash flows (2,543) - - (2,543) (3,870) - - (3,870)

140,514 - - 140,514 179,930 - - 179,930

Net balance as at 31 December

31,169 15,490 182,665 229,324 (27,188) 9,755 191,981 174,548

Closing insurance contract liabilities 31,169 15,490 182,665 229,324 - 9,755 191,981 201,736

Closing insurance contract assets - - - - (27,188) - - (27,188)

Net balance as at 31 December

31,169 15,490 182,665 229,324 (27,188) 9,755 191,981 174,548

31 December 2023

31 December 2022

SAR '000

64

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

7. Insurance and retakaful / reinsurance contracts (continued)

7.1 Movements in insurance contract balances (continued)

7.1.3

Reconciliation of insurance contract assets and liabilities by components for contracts measured under GMM & VFA (continued)

b) Protection & savings

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Contractual

Service Margin

Total

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Contractual

Service Margin

Total

Opening insurance contract liabilities 187,053 10,801 68,183 266,037 151,996 14,376 65,217 231,589

Opening insurance contract assets (53) - - (53) - - - -

Net balance as at 1 January

187,000 10,801 68,183 265,984 151,996 14,376 65,217 231,589

Changes that relate to current service

CSM recognised for the services received - - (5,558) (5,558) - - (2,443) (2,443)

Change in the risk adjustment for the risk expired - (12,222) - (12,222) - (10,175) - (10,175)

Experience adjustments (18,841) - - (18,841) (18,774) - - (18,774)

(18,841) (12,222) (5,558) (36,621) (18,774) (10,175) (2,443) (31,392)

Changes that relate to future service

Changes in estimates that adjust the CSM (19,283) 8,008 11,276 1 (42,163) 6,156 36,044 37

Changes in estimates that result in onerous contract losses or reversal of losses 2,137 (1,557) - 580 (9) 9 - -

Contracts initially recognised in the period (227,737) 15,119 212,618 - (12,461) 2,937 9,524 -

Experience adjustments 108,455 - (108,455) - 22,917 - (22,917) -

(136,428) 21,570 115,439 581 (31,716) 9,102 22,651 37

Changes that relate to past service

Changes relating to liabilities for incurred claims - - - - - - - -

Experience adjustments - - - - - - - -

- - - - - - - -

Insurance service result

(155,269) 9,348 109,881 (36,040) (50,490) (1,073) 20,208 (31,355)

Finance expenses from insurance contracts issued (14,529) 1,165 127,386 114,022 9,898 (2,502) (17,242) (9,846)

Total amounts recognised in statement of income

(169,798) 10,513 237,267 77,982 (40,592) (3,575) 2,966 (41,201)

Investment components - - - - - - - -

Cash flows

Premiums received 993,856 - - 993,856 148,896 - - 148,896

Claims paid (73,881) - - (73,881) (48,360) - - (48,360)

Directly attributable non- acquisition expenses paid (5,151) - - (5,151) (4,210) - - (4,210)

Insurance acquisition cash flows (106,965) - - (106,965) (20,730) - - (20,730)

807,859 - - 807,859 75,596 - - 75,596

Net balance as at 31 December

825,061 21,314 305,450 1,151,825 187,000 10,801 68,183 265,984

Closing insurance contract liabilities 825,126 21,314 305,450 1,151,890 187,053 10,801 68,183 266,037

Closing insurance contract assets (65) - - (65) (53) - - (53)

Net balance as at 31 December

825,061 21,314 305,450 1,151,825 187,000 10,801 68,183 265,984

31 December 2023

31 December 2022

SAR '000

65

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

7.

Insurance and retakaful / reinsurance contracts (continued)

7.2 Movements in retakaful / reinsurance contracts

7.2.1 Retakaful / reinsurance contracts measured under measured under GMM

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Opening retakaful / reinsurance contract assets 25,340 32 296,258 31,353 352,983 123,504 - 263,574 44,293 431,371

Opening retakaful / reinsurance contract liabilities (5,329) - - - (5,329) (125,157) - - - (125,157)

Net balance as at 1 January

20,011 32 296,258 31,353 347,654 (1,653) - 263,574 44,293 306,214

Allocation of retakaful / reinsurance contributions

Expected amount of claim recoverable in the year (193,715) - - - (193,715) (101,005) - - - (101,005)

Change in risk adjustment for non-financial risk (18,393) - - - (18,393) (26,800) - - - (26,800)

CSM recognised for services received (614,893) - - - (614,893) (511,693) - - - (511,693)

Reversal of loss recovery that does not adjust CSM 16 - - - 16 1 - - - 1

Experience adjustments for premium paid - - - - - 175,119 - - - 175,119

(826,985) - - - (826,985) (464,378) - - - (464,378)

Amounts recoverable from retakaful / reinsurance

Incurred claims and other expenses - - 260,370 13,750 274,120 - - 219,309 18,970 238,279

Changes in amounts recoverable on incurred claims - - 154,345 20,172 174,517 - - (125,081) (32,387) (157,468)

Loss recovery / (reversals) for onerous contracts - 595 - - 595 - 31 - - 31

Change in provision for risk of non-performance - - - - - - - (658) - (658)

- 595 414,715 33,922 449,232 - 31 93,570 (13,417) 80,184

Insurance service result

(826,985) 595 414,715 33,922 (377,753) (464,378) 31 93,570 (13,417) (384,194)

Finance expenses from insurance contracts issued 19,464 - 6,653 2,445 28,562 6,006 1 171 477 6,655

Total amounts recognised in statement of income

(807,521) 595 421,368 36,367 (349,191) (458,372) 32 93,741 (12,940) (377,539)

Investment components - - - - - - - - - -

Cash flows

Premiums paid net of ceding commissions 596,988 - - - 596,988 480,036 - - - 480,036

Claims and other recoveries - - (145,682) - (145,682) - - (61,057) - (61,057)

596,988 - (145,682) - 451,306 480,036 - (61,057) - 418,979

Net balance as at 31 December

(190,522) 627 571,944 67,720 449,769 20,011 32 296,258 31,353 347,654

Closing retakaful / reinsurance contract assets

- 627 577,777 67,720 646,124 25,340 32 296,258 31,353 352,983

Closing retakaful / reinsurance contract liabilities (190,522) - (5,833) - (196,355) (5,329) - - - (5,329)

Net balance as at 31 December

(190,522) 627 571,944 67,720 449,769 20,011 32 296,258 31,353 347,654

SAR '000

31 December 2023

31 December 2022

ARC

AIC

Total

ARC

AIC

Total

66

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

7.

Insurance and retakaful / reinsurance contracts (continued)

7.2

Movements in retakaful / reinsurance contracts (continued)

7.2.1

Retakaful / reinsurance contracts measured under measured under GMM (continued)

a) Motor

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Opening retakaful / reinsurance contract assets 2 - 10,882 980 11,864 - - 10,909 873 11,782

Opening retakaful / reinsurance contract liabilities - - - - - (490) - - - (490)

Net balance as at 1 January

2 - 10,882 980 11,864 (490) - 10,909 873 11,292

Allocation of retakaful / reinsurance contributions

Expected amount of claim recoverable in the year - - - - - 2,294 - - - 2,294

Change in risk adjustment for non-financial risk - - - - - 184 - - - 184

CSM recognised for services received (13,052) - - - (13,052) (9,623) - - - (9,623)

Reversal of loss recovery that does not adjust CSM - - - - - - - - - -

Experience adjustments for premium paid - - - - - (2,268) - - - (2,268)

(13,052) - - - (13,052) (9,413) - - - (9,413)

Amounts recoverable from retakaful / reinsurance

Incurred claims and other expenses - - (314) - (314) - - 2,422 (1) 2,421

Changes in amounts recoverable on incurred claims - - (245) 231 (14) - - (62) 97 35

Loss recovery / (reversals) for onerous contracts - - - - - - - - - -

Change in provision for risk of non-performance - - - - - - - (12) - (12)

- - (559) 231 (328) - - 2,348 96 2,444

Insurance service result

(13,052) - (559) 231 (13,380) (9,413) - 2,348 96 (6,969)

Finance expenses from insurance contracts issued (284) - 97 70 (117) 79 - 64 11 154

Total amounts recognised in statement of income

(13,336) - (462) 301 (13,497) (9,334) - 2,412 107 (6,815)

Investment components - - - - - - - - - -

Cash flows

Premiums paid net of ceding commissions 7,342 - - - 7,342 9,826 - - - 9,826

Claims and other recoveries - - 314 - 314 - - (2,439) - (2,439)

7,342 - 314 - 7,656 9,826 - (2,439) - 7,387

Net balance as at 31 December

(5,992) - 10,734 1,281 6,023 2 - 10,882 980 11,864

Closing retakaful / reinsurance contract assets

- - 10,734 1,281 12,015 2 - 10,882 980 11,864

Closing retakaful / reinsurance contract liabilities (5,992) - - - (5,992) - - - - -

Net balance as at 31 December

(5,992) - 10,734 1,281 6,023 2 - 10,882 980 11,864

SAR '000

31 December 2023

31 December 2022

ARC

AIC

Total

ARC

AIC

Total

67

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

7.

Insurance and retakaful / reinsurance contracts (continued)

7.2

Movements in retakaful / reinsurance contracts (continued)

7.2.1

Retakaful / reinsurance contracts measured under measured under GMM (continued)

b) Medical / Health

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Opening retakaful / reinsurance contract assets - - - - - - - - - -

Opening retakaful / reinsurance contract liabilities - - - - - - - - - -

Net balance as at 1 January

- - - - - - - - - -

Allocation of retakaful / reinsurance contributions

Expected amount of claim recoverable in the year - - - - - - - - - -

Change in risk adjustment for non-financial risk - - - - - - - - - -

CSM recognised for services received - - - - - - - - - -

Reversal of loss recovery that does not adjust CSM - - - - - - - - - -

Experience adjustments for premium paid - - - - - - - - - -

- - - - - - - - - -

Amounts recoverable from retakaful / reinsurance

Incurred claims and other expenses - - - - - - - - - -

Changes in amounts recoverable on incurred claims - - - - - - - - - -

Loss recovery / (reversals) for onerous contracts - - - - - - - - - -

Change in provision for risk of non-performance - - - - - - - - - -

- - - - - - - - - -

Insurance service result

- - - - - - - - - -

Finance expenses from insurance contracts issued - - - - - - - - - -

Total amounts recognised in statement of income

- - - - - - - - - -

Investment components - - - - - - - - - -

Cash flows

Premiums paid net of ceding commissions - - - - - - - - - -

Claims and other recoveries - - - - - - - - - -

- - - - - - - - - -

Net balance as at 31 December

- - - - - - - - - -

Closing retakaful / reinsurance contract assets

- - - - - - - - - -

Closing retakaful / reinsurance contract liabilities - - - - - - - - - -

Net balance as at 31 December

- - - - - - - - - -

SAR '000

31 December 2023

31 December 2022

ARC

AIC

Total

ARC

AIC

Total

68

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

7.

Insurance and retakaful / reinsurance contracts (continued)

7.2

Movements in retakaful / reinsurance contracts (continued)

7.2.1

Retakaful / reinsurance contracts measured under measured under GMM (continued)

c) Property & casualty

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Opening retakaful / reinsurance contract assets 25,338 - 179,839 22,034 227,211 123,504 - 122,988 33,045 279,537

Opening retakaful / reinsurance contract liabilities - - - - - - - - - -

Net balance as at 1 January

25,338 - 179,839 22,034 227,211 123,504 - 122,988 33,045 279,537

Allocation of retakaful / reinsurance contributions

Expected amount of claim recoverable in the year (113,638) - - - (113,638) (103,016) - - - (103,016)

Change in risk adjustment for non-financial risk (12,061) - - - (12,061) (26,961) - - - (26,961)

CSM recognised for services received (610,021) - - - (610,021) (489,500) - - - (489,500)

Reversal of loss recovery that does not adjust CSM - - - - - - - - - -

Experience adjustments for premium paid - - - - - 187,243 - - - 187,243

(735,720) - - - (735,720) (432,234) - - - (432,234)

Amounts recoverable from retakaful / reinsurance

Incurred claims and other expenses - - 207,387 8,379 215,766 - - 155,406 14,851 170,257

Changes in amounts recoverable on incurred claims - - 209,813 26,050 235,863 - - (78,272) (26,186) (104,458)

Loss recovery / (reversals) for onerous contracts - - - - - - - - - -

Change in provision for risk of non-performance - - - - - - - (625) - (625)

- - 417,200 34,429 451,629 - - 76,509 (11,335) 65,174

Insurance service result

(735,720) - 417,200 34,429 (284,091) (432,234) - 76,509 (11,335) (367,060)

Finance expenses from insurance contracts issued 17,992 - 5,331 1,765 25,088 4,482 - (148) 324 4,658

Total amounts recognised in statement of income

(717,728) - 422,531 36,194 (259,003) (427,752) - 76,361 (11,011) (362,402)

Investment components - - - - - - - - - -

Cash flows

Premiums paid 538,801 - - - 538,801 329,586 - - - 329,586

Claims and other recoveries - - (136,739) - (136,739) - - (19,510) - (19,510)

538,801 - (136,739) - 402,062 329,586 - (19,510) - 310,076

Net balance as at 31 December

(153,589) - 465,631 58,228 370,270 25,338 - 179,839 22,034 227,211

Closing retakaful / reinsurance contract assets

- - 471,464 58,228 529,692 25,338 - 179,839 22,034 227,211

Closing retakaful / reinsurance contract liabilities (153,589) - (5,833) - (159,422) - - - - -

Net balance as at 31 December

(153,589) - 465,631 58,228 370,270 25,338 - 179,839 22,034 227,211

SAR '000

31 December 2023

31 December 2022

ARC

AIC

Total

ARC

AIC

Total

69

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

7.

Insurance and retakaful / reinsurance contracts (continued)

7.2

Movements in retakaful / reinsurance contracts (continued)

7.2.1

Retakaful / reinsurance contracts measured under measured under GMM (continued)

d) Protection & savings

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Excluding loss

component

Loss component

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Opening retakaful / reinsurance contract assets - 32 105,537 8,339 113,908 - - 129,677 10,375 140,052

Opening retakaful / reinsurance contract liabilities (5,329) - - - (5,329) (124,667) - - - (124,667)

Net balance as at 1 January

(5,329) 32 105,537 8,339 108,579 (124,667) - 129,677 10,375 15,385

Allocation of retakaful / reinsurance contributions

Expected amount of claim recoverable in the year (80,077) - - - (80,077) (283) - - - (283)

Change in risk adjustment for non-financial risk (6,332) - - - (6,332) (23) - - - (23)

CSM recognised for services received 8,180 - - - 8,180 (12,570) - - - (12,570)

Reversal of loss recovery that does not adjust CSM 16 - - - 16 1 - - - 1

Experience adjustments for premium paid - - - - - (9,856) - - - (9,856)

(78,213) - - - (78,213) (22,731) - - - (22,731)

Amounts recoverable from retakaful / reinsurance

Incurred claims and other expenses - - 53,297 5,371 58,668 - - 61,481 4,120 65,601

Changes in amounts recoverable on incurred claims - - (55,223) (6,109) (61,332) - - (46,747) (6,298) (53,045)

Loss recovery / (reversals) for onerous contracts - 595 - - 595 - 31 - - 31

Change in provision for risk of non-performance - - - - - - - (21) - (21)

- 595 (1,926) (738) (2,069) - 31 14,713 (2,178) 12,566

Insurance service result

(78,213) 595 (1,926) (738) (80,282) (22,731) 31 14,713 (2,178) (10,165)

Finance expenses from insurance contracts issued 1,756 - 1,225 610 3,591 1,445 1 255 142 1,843

Total amounts recognised in statement of income

(76,457) 595 (701) (128) (76,691) (21,286) 32 14,968 (2,036) (8,322)

Investment components - - - - - - - - - -

Cash flows

Premiums paid 50,845 - - - 50,845 140,624 - - - 140,624

Claims and other recoveries - - (9,257) - (9,257) - - (39,108) - (39,108)

50,845 - (9,257) - 41,588 140,624 - (39,108) - 101,516

Net balance as at 31 December

(30,941) 627 95,579 8,211 73,476 (5,329) 32 105,537 8,339 108,579

Closing retakaful / reinsurance contract assets

- 627 95,579 8,211 104,417 - 32 105,537 8,339 113,908

Closing retakaful / reinsurance contract liabilities (30,941) - - - (30,941) (5,329) - - - (5,329)

Net balance as at 31 December

(30,941) 627 95,579 8,211 73,476 (5,329) 32 105,537 8,339 108,579

SAR '000

31 December 2023

31 December 2022

ARC

AIC

Total

ARC

AIC

Total

70

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

7. Insurance and retakaful / reinsurance contracts (continued)

7.2 Movements in retakaful / reinsurance contracts (continued)

7.2.2 Reconciliation of retakaful / reinsurance contract assets and liabilities by components for contracts measured under GMM & VFA

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Contractual

Service Margin

Total

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Contractual

Service Margin

Total

Opening retakaful / reinsurance contract assets 72,174 34,917 241,639 348,730 133,635 71,757 101,387 306,779

Opening retakaful / reinsurance contract liabilities - - - - (107) - - (107)

Net balance as at 1 January

72,174 34,917 241,639 348,730 133,528 71,757 101,387 306,672

Changes that relate to current service

CSM recognised for the services received - - (614,893) (614,893) - - (511,693) (511,693)

Change in risk adjustment for non-financial risk - (4,644) - (4,644) - (7,830) - (7,830)

Experience adjustments 66,656 - - 66,656 118,304 - - 118,304

66,656 (4,644) (614,893) (552,881) 118,304 (7,830) (511,693) (401,219)

Changes that relate to future service

Changes in estimates that adjust the CSM (60,888) (6,591) 70,522 3,043 14,499 (930) (12,397) 1,172

Contracts initially recognised during the year (396,943) 28,819 368,124 - (441,833) 3,875 437,958 -

Reversal of loss-recovery component - - 611 611 - - (5) (5)

Changes that do not adjust the CSM - - - - - - -

Experience adjustments (293,131) - 290,089 (3,042) (222,876) - 221,703 (1,173)

(750,962) 22,228 729,346 612 (650,210) 2,945 647,259 (6)

Changes that relate to past service

Changes in amounts recoverable on incurred claims 154,345 20,172 - 174,517 (125,081) (32,387) - (157,468)

Experience adjustments - - - - 175,119 - - 175,119

Change in provision for risk of non-performance - - - - - - - -

154,345 20,172 - 174,517 50,038 (32,387) - 17,651

Insurance service result

(529,961) 37,756 114,453 (377,752) (481,868) (37,272) 135,566 (383,574)

Finance income from retakaful / reinsurance contract held 14,815 2,701 11,046 28,562 1,535 432 4,686 6,653

Total amounts recognised in statement of income

(515,146) 40,457 125,499 (349,190) (480,333) (36,840) 140,252 (376,921)

Investment components - - - - - - - -

Cash flows

Premiums paid 596,987 - - 596,987 480,035 - - 480,035

Claims and other recoveries (145,681) - - (145,681) (61,056) - - (61,056)

451,306 - - 451,306 418,979 - - 418,979

Net balance as at 31 December

8,334 75,374 367,138 450,846 72,174 34,917 241,639 348,730

Closing retakaful / reinsurance contract assets 18,440 75,374 367,138 460,952 72,174 34,917 241,639 348,730

Closing retakaful / reinsurance contract liabilities (10,106) - - (10,106) - - - -

Net balance as at 31 December

8,334 75,374 367,138 450,846 72,174 34,917 241,639 348,730

31 December 2023

31 December 2022

SAR '000

71

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

7. Insurance and retakaful / reinsurance contracts (continued)

7.2 Movements in retakaful / reinsurance contracts (continued)

7.2.2 Reconciliation of retakaful / reinsurance contract assets and liabilities by components for contracts measured under GMM & VFA

a) Motor

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Contractual

Service Margin

Total

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Contractual

Service Margin

Total

Opening retakaful / reinsurance contract assets 10,903 981 - 11,884 10,428 873 - 11,301

Opening retakaful / reinsurance contract liabilities - - - - - - - -

Net balance as at 1 January

10,903 981 - 11,884 10,428 873 - 11,301

Changes that relate to current service

CSM recognised for the services received - - (13,052) (13,052) - - (9,623) (9,623)

Change in risk adjustment for non-financial risk - - - - - 182 - 182

Experience adjustments (314) - - (314) 4,716 - - 4,716

(314) - (13,052) (13,366) 4,716 182 (9,623) (4,725)

Changes that relate to future service

Changes in estimates that adjust the CSM - - 41 41 (2,278) (182) 2,460 -

Contracts initially recognised during the year (7,006) - 7,006 - (7,059) - 7,059 -

Reversal of loss-recovery component - - - - - - - -

Changes that do not adjust the CSM - - - - - - -

Experience adjustments (6,321) - 6,279 (42) - - - -

(13,327) - 13,326 (1) (9,337) (182) 9,519 -

Changes that relate to past service

Changes in amounts recoverable on incurred claims (245) 231 - (14) (62) 97 - 35

Experience adjustments - - - - (2,268) - - (2,268)

Change in provision for risk of non-performance - - - - - - - -

(245) 231 - (14) (2,330) 97 - (2,233)

Insurance service result

(13,886) 231 274 (13,381) (6,951) 97 (104) (6,958)

Finance income from retakaful / reinsurance contract held 87 70 (274) (117) 38 11 104 153

Total amounts recognised in statement of income

(13,799) 301 - (13,498) (6,913) 108 - (6,805)

Investment components - - - - - - - -

Cash flows

Premiums paid 7,342 - - 7,342 9,826 - - 9,826

Claims and other recoveries 314 - - 314 (2,439) - - (2,439)

7,656 - - 7,656 7,387 - - 7,387

Net balance as at 31 December

4,760 1,282 - 6,042 10,902 981 - 11,883

Closing retakaful / reinsurance contract assets 4,760 1,282 - 6,042 10,902 981 - 11,883

Closing retakaful / reinsurance contract liabilities - - - - - - - -

Net balance as at 31 December

4,760 1,282 - 6,042 10,902 981 - 11,883

31 December 2023

31 December 2022

SAR '000

72

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

7. Insurance and retakaful / reinsurance contracts (continued)

7.2 Movements in retakaful / reinsurance contracts (continued)

7.2.2 Reconciliation of retakaful / reinsurance contract assets and liabilities by components for contracts measured under GMM & VFA

b) Medical / Health

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Contractual

Service Margin

Total

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Contractual

Service Margin

Total

Opening retakaful / reinsurance contract assets - - - - - - - -

Opening retakaful / reinsurance contract liabilities - - - - - - - -

Net balance as at 1 January

- - - - - - - -

Changes that relate to current service

CSM recognised for the services received - - - - - - - -

Change in risk adjustment for non-financial risk - - - - - - - -

Experience adjustments - - - - - - - -

- - - - - - - -

Changes that relate to future service

Changes in estimates that adjust the CSM - - - - - - - -

Contracts initially recognised during the year - - - - - - - -

Reversal of loss-recovery component - - - - - - - -

Changes that do not adjust the CSM - - - - - - -

Experience adjustments - - - - - - - -

- - - - - - - -

Changes that relate to past service

Changes in amounts recoverable on incurred claims - - - - - - - -

Experience adjustments - - - - - - - -

Change in provision for risk of non-performance - - - - - - - -

- - - - - - - -

Insurance service result

- - - - - - - -

Finance income from retakaful / reinsurance contract held - - - - - - - -

Total amounts recognised in statement of income

- - - - - - - -

Investment components - - - - - - - -

Cash flows

Premiums paid - - - - - - - -

Claims and other recoveries - - - - - - - -

- - - - - - - -

Net balance as at 31 December

- - - - - - - -

Closing retakaful / reinsurance contract assets - - - - - - - -

Closing retakaful / reinsurance contract liabilities - - - - - - - -

Net balance as at 31 December

- - - - - - - -

31 December 2023

31 December 2022

SAR '000

73

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

7. Insurance and retakaful / reinsurance contracts (continued)

7.2 Movements in retakaful / reinsurance contracts (continued)

7.2.2 Reconciliation of retakaful / reinsurance contract assets and liabilities by components for contracts measured under GMM & VFA

c) Property & casualty

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Contractual

Service Margin

Total

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Contractual

Service Margin

Total

Opening retakaful / reinsurance contract assets (36,262) 24,968 239,564 228,270 127,288 59,699 93,091 280,078

Opening retakaful / reinsurance contract liabilities - - - - (107) - - (107)

Net balance as at 1 January

(36,262) 24,968 239,564 228,270 127,181 59,699 93,091 279,971

Changes that relate to current service

CSM recognised for the services received - - (610,021) (610,021) - - (489,500) (489,500)

Change in risk adjustment for non-financial risk - (3,683) - (3,683) - (12,110) - (12,110)

Experience adjustments 93,750 - - 93,750 52,390 - - 52,390

93,750 (3,683) (610,021) (519,954) 52,390 (12,110) (489,500) (449,220)

Changes that relate to future service

Changes in estimates that adjust the CSM (66,354) (6,969) 77,108 3,785 16,497 (603) (15,031) 863

Contracts initially recognised during the year (350,005) 18,917 331,088 - (424,849) 3,616 421,233 -

Reversal of loss-recovery component - - - - - - - -

Changes that do not adjust the CSM - - - - - - -

Experience adjustments (292,924) - 289,138 (3,786) (226,041) - 225,178 (863)

(709,283) 11,948 697,334 (1) (634,393) 3,013 631,380 -

Changes that relate to past service

Changes in amounts recoverable on incurred claims 209,813 26,050 - 235,863 (78,272) (26,186) - (104,458)

Experience adjustments - - - - 187,243 - - 187,243

Change in provision for risk of non-performance - - - - - - - -

209,813 26,050 - 235,863 108,971 (26,186) - 82,785

Insurance service result

(405,720) 34,315 87,313 (284,092) (473,032) (35,283) 141,880 (366,435)

Finance income from retakaful / reinsurance contract held 11,259 2,624 11,204 25,087 (487) 552 4,593 4,658

Total amounts recognised in statement of income

(394,461) 36,939 98,517 (259,005) (473,519) (34,731) 146,473 (361,777)

Investment components - - - - - - - -

Cash flows

Premiums paid 538,801 - - 538,801 329,586 - - 329,586

Claims and other recoveries (136,739) - - (136,739) (19,510) - - (19,510)

402,062 - - 402,062 310,076 - - 310,076

Net balance as at 31 December

(28,661) 61,907 338,081 371,327 (36,262) 24,968 239,564 228,270

Closing retakaful / reinsurance contract assets - 61,907 338,081 399,988 - 24,968 239,564 264,532

Closing retakaful / reinsurance contract liabilities (28,661) - - (28,661) (36,262) - - (36,262)

Net balance as at 31 December

(28,661) 61,907 338,081 371,327 (36,262) 24,968 239,564 228,270

31 December 2023

31 December 2022

SAR '000

74

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

7. Insurance and retakaful / reinsurance contracts (continued)

7.2 Movements in retakaful / reinsurance contracts (continued)

7.2.2 Reconciliation of retakaful / reinsurance contract assets and liabilities by components for contracts measured under GMM & VFA

d) Protection & savings

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Contractual

Service Margin

Total

Present value of

future cash flows

Risk adjustment

for non-financial

risks

Contractual

Service Margin

Total

Opening retakaful / reinsurance contract assets 97,531 8,969 2,077 108,577 (4,081) 11,185 8,296 15,400

Opening retakaful / reinsurance contract liabilities - - - - - - - -

Net balance as at 1 January

97,531 8,969 2,077 108,577 (4,081) 11,185 8,296 15,400

Changes that relate to current service

CSM recognised for the services received - - 8,180 8,180 - - (12,570) (12,570)

Change in risk adjustment for non-financial risk - (961) - (961) - 4,098 - 4,098

Experience adjustments (26,779) - - (26,779) 61,197 - - 61,197

(26,779) (961) 8,180 (19,560) 61,197 4,098 (12,570) 52,725

Changes that relate to future service

Changes in estimates that adjust the CSM 5,466 377 (6,628) (785) 279 (145) 174 308

Contracts initially recognised during the year (39,932) 9,902 30,031 1 (9,926) 259 9,667 -

Reversal of loss-recovery component - - 611 611 - - (5) (5)

Changes that do not adjust the CSM - - - - - - -

Experience adjustments 6,114 - (5,329) 785 3,165 - (3,474) (309)

(28,352) 10,279 18,685 612 (6,482) 114 6,362 (6)

Changes that relate to past service

Changes in amounts recoverable on incurred claims (55,223) (6,109) - (61,332) (46,747) (6,298) - (53,045)

Experience adjustments - - - - (9,856) - - (9,856)

Change in provision for risk of non-performance - - - - - - - -

(55,223) (6,109) - (61,332) (56,603) (6,298) - (62,901)

Insurance service result

(110,354) 3,209 26,865 (80,280) (1,888) (2,086) (6,208) (10,182)

Finance income from retakaful / reinsurance contract held 3,469 6 116 3,591 1,984 (130) (11) 1,843

Total amounts recognised in statement of income

(106,885) 3,215 26,981 (76,689) 96 (2,216) (6,219) (8,339)

Investment components - - - - - - - -

Cash flows

Premiums paid 50,845 - - 50,845 140,624 - - 140,624

Claims and other recoveries (9,257) - - (9,257) (39,108) - - (39,108)

41,588 - - 41,588 101,516 - - 101,516

Net balance as at 31 December

32,234 12,184 29,058 73,476 97,531 8,969 2,077 108,577

Closing retakaful / reinsurance contract assets 32,234 12,184 29,058 73,476 97,531 8,969 2,077 108,577

Closing retakaful / reinsurance contract liabilities - - - - - - - -

Net balance as at 31 December

32,234 12,184 29,058 73,476 97,531 8,969 2,077 108,577

31 December 2023

31 December 2022

SAR '000

75

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

`

Notes to the financial statements (continued)

For the year ended 31 December 2023

7.

Insurance and retakaful / reinsurance contracts (continued)

7.3 Impact of contracts recognized in the year for contracts measured under GMM / VFA

7.3.1 Impact on insurance contract liabilities

Non-onerous

contracts

originated

Onerous

contracts

originated

Total

- insurance acquisition costs 170,954 - 170,954

- claims incurred 3,111,698 - 3,111,698

- directly attributable non-acquisition expenses 72,969 - 72,969

- premium tax payable 2,205 - 2,205

3,357,826 - 3,357,826

Estimates of the present value of future cash inflows

(3,724,990) - (3,724,990)

Risk adjustment for non-financial risk

15,307 - 15,307

CSM

351,857 - 351,857

Increase in insurance contract liabilities - - -

Non-onerous

contracts

originated

Onerous contracts

originated

Total

- insurance acquisition costs 44,145 - 44,145

- claims incurred 424,931 - 424,931

- directly attributable non-acquisition expenses 28,139 - 28,139

- premium tax payable 698 - 698

497,913 - 497,913

Estimates of the present value of future cash inflows

(619,346) - (619,346)

Risk adjustment for non-financial risk

5,133 - 5,133

CSM

116,300 - 116,300

Increase in insurance contract liabilities - - -

SAR '000

Estimates of the present value of future cash

outflows

Contracts written by the Company

31 December 2023

SAR '000

Estimates of the present value of future cash

outflows

31 December 2022

76

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

`

Notes to the financial statements (continued)

For the year ended 31 December 2023

7.

Insurance and retakaful / reinsurance contracts (continued)

7.3

Impact of contracts recognized in the year for contracts measured under GMM / VFA (continued)

7.3.2 Impact on retakaful / reinsurance contract assets

Non-onerous

contracts

originated

Onerous

contracts

originated

Total

Estimates of the present value of future cash outflows 173,975 123,241 297,216

Estimates of the present value of future cash inflows (530,986) (163,173) (694,159)

Risk adjustment for non-financial risk

18,917 9,902 28,819

CSM

- 30,030 30,030

Increase in retakaful / reinsurance contract assets (338,094) - (338,094)

Non-onerous

contracts

originated

Onerous contracts

originated

Total

Estimates of the present value of future cash outflows 23,978 1,005 24,983

Estimates of the present value of future cash inflows (465,074) (1,742) (466,816)

Risk adjustment for non-financial risk

3,616 259 3,875

CSM

- 478 478

Increase in retakaful / reinsurance contract assets (437,480) - (437,480)

SAR '000

Contracts held by the Company

31 December 2023

SAR '000

31 December 2022

77

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

`

Notes to the financial statements (continued)

For the year ended 31 December 2023

7.

Insurance and retakaful / reinsurance contracts (continued)

7.4 Insurance revenue and the CSM by transition method for contracts measured under GMM / VFA

New contracts

and contracts

measured under

the full

retrospective

approach at

transition

Contracts

measured under

the modified

retrospective

approach at

transition

Contracts

measured under

the fair value

approach at

transition

Total

Insurance revenue

(236,070) (9,160)

- (245,230)

Opening CSM as of 1 January

217,748 42,415 - 260,163

CSM recognised for the services provided (173,334) (1,842) - (175,176)

Changes in estimates that adjust the CSM 28,952 (29,244) - (292)

Contracts initially recognised in the period 351,857 - - 351,857

Experience adjustments (80,752) (8,222) - (88,974)

126,723 (39,308) - 87,415

Finance expenses from insurance contracts issued

114,321 26,216 - 140,537

Total amounts recognised as income 241,044 (13,092) - 227,952

Closing CSM as of 31 December 458,792 29,323 - 488,115

New contracts and

contracts measured

under the full

retrospective

approach at

transition

Contracts

measured under

the modified

retrospective

approach at

transition

Contracts

measured under

the fair value

approach at

transition

Total

Insurance revenue (145,593) (12,048) - (157,641)

Opening CSM as of 1 January 108,685 40,471 - 149,156

CSM recognised for the services provided (23,929) (2,017) - (25,946)

Changes in estimates that adjust the CSM (17,575) 24,718 - 7,143

Contracts initially recognised in the period 116,300 - - 116,300

Experience adjustments 38,520 (10,159) - 28,361

113,316 12,542 - 125,858

Finance expenses from insurance contracts issued

(4,252) (10,598) - (14,850)

Total amounts recognised as income 109,064 1,944 - 111,008

Closing CSM as of 31 December

217,749 42,415 - 260,164

31 December 2022

SAR '000

31 December 2023

SAR '000

78

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

7.

Insurance and retakaful / reinsurance contracts (continued)

7.5 Expected recognition of the contractual service margin for contracts measured under GMM / VFA

1 year 2 years 3 years 4 years 5 years 6 to 10 years

More than 10

years

Total

Property & casualty

116,412 39,511 15,842 10,900 - - - 182,665

Protection & savings

19,667 19,788 265,995 - - - - 305,450

Total CSM for insurance contracts issued 136,079 59,299 281,837 10,900 - - - 488,115

Motor

- - - - - - - -

Medical / Health

- - - - - - - -

Property & casualty

(83,939) (211,931) (15,324) (26,889) - - - (338,083)

Protection & savings

85,302 (6,172) (16,735) (13,136) (19,588) (58,765) - (29,094)

Total CSM for retakaful contracts held 1,363 (218,103) (32,059) (40,025) (19,588) (58,765) - (367,177)

1 year 2 years 3 years 4 years 5 years 6 to 10 years

More than 10

years

Total

Property & casualty 104,394 79,825 7,762 - - - - 191,981

Protection & savings (1,332) 788 2,321 3,212 3,853 26,005 33,336 68,183

Total CSM for insurance contracts issued 103,062 80,613 10,083 3,212 3,853 26,005 33,336 260,164

Motor - - - - - - - -

Medical / Health - - - - - - - -

Property & casualty (76,962) (179,264) 6,715 6,428 3,519 - - (239,564)

Protection & savings (277) (239) (206) (184) (170) (682) (356) (2,114)

Total CSM for retakaful contracts held (77,239) (179,503) 6,509 6,244 3,349 (682) (356) (241,678)

31 December 2022

Number of years until expected to be

recognized

SAR '000

Insurance contracts issued

Retakaful contracts held

Insurance contracts issued

Retakaful contracts held

31 December 2023

Number of years until expected to be

recognized

SAR '000

79

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

8. Prepayments and other assets

31 December

2023

31 December

2022

1 January 2022

Restated Restated

Advances and differed payments

92,888

14,311 20,278

Prepayments - Computer Software, workshop & others

16,912

20,151 6,258

Prepayment Medical Staff Policy

15,823

12,806 10,331

Input Tax

12,682

- 2,274

Others

12,289

6,434 4,450

150,594

53,702 43,591

9. Statutory deposit

10. Right-of-use assets

Following are the details of right-of-use assets recognised and the movements during the period:

Leasehold

Property

Office

Equipment

31 December

2023

31 December

2022

Cost

Opening 65,282 - 65,282 64,678

Additions - 446 446 4,103

Disposals (1,306) - (1,306) (3,499)

Closing 63,976 446 64,422 65,282

Accumulated depreciation

Opening 16,911 - 16,911 8,945

Depreciation for the year 6,563 446 7,009 8,403

Disposals (163) - (163) (437)

Closing 23,311 446 23,757 16,911

Net book value

31 December 2023 40,665 - 40,665

31 December 2022 48,371 - 48,371

SAR '000

Statutory deposit amounting to SAR 100 million (31 December 2022: SAR 40 million) kept with a local bank, represents

10% of the paid up share capital of the Company which is maintained in accordance with the Cooperative Insurance

Companies Control Law issued by the Insurance Authority. This statutory deposit cannot be withdrawn without the consent

of SAMA. Under ECL method the Company charged an impairment loss amounting to SAR 0.026 million (31 December

2022: SAR 0.029 million)

SAR '000

80

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

11. Property and equipment, net

Office and

electrical

equipment

Furniture

and

Fixtures

Motor vehicles

Computer

hardware

Computer

software

Digital

Transformation

31 December

2023

31 December

2022

Cost

Opening 2,147 50,753 1,719 6,569 48,867 37,349 147,404 129,599

Additions 114 253 - 10,676 15,205 33,855 60,103 28,877

Disposals - - - - - - - (11,072)

Closing 2,261 51,006 1,719 17,245 64,072 71,204 207,507 147,404

Accumulated depreciation

Opening 1,324 16,336 1,719 1,253 36,940 8,791 66,363 46,383

Depreciation for the year 306 7,623 - 3,356 4,780 15,002 31,067 23,906

Disposals - - - - - - - (3,926)

Closing 1,630 23,959 1,719 4,609 41,720 23,793 97,430 66,363

Net book value

31 December 2023 631 27,047 - 12,636 22,352 47,411 110,077

31 December 2022 823 34,417 - 5,316 11,927 28,558 81,041

11.1

Digital transformation includes projects relating to implementation of new systems and digital platforms. These are depreciated over 3 to 5 years.

SAR '000

81

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

12. Payable, accruals and other liabilities

31 December

2023

31 December

2022

1 January 2022

Restated Restated

Payable to ZATCA

38,952

26,331 27,662

Withholding Tax

17,908

13,334 15,379

Accrued Expenses

27,645

9,992 8,294

Payable to vendors

11,897

6,992 7,301

Accrual for Staff related expenses

19,886

15,392 21,019

Others

1,510

1,330 2,593

117,798

73,371 82,248

13. Provision for employee end of service benefits

31 December

2023

31 December

2022

Present value of defined benefit obligation

29,543

22,812

13.1 Movement of defined benefit obligation

Opening balance 22,812

24,635

Charge to statement of income

9,064

4,673

Charge to statement of other comprehensive income

489

(1,904)

Payment of benefits during the year

(2,822)

(4,592)

Closing balance 29,543

22,812

13.2 Reconciliation of present value of defined benefit obligation

Present value of defined benefit obligation as of 1 January

22,812

24,635

Current service costs

7,944

3,533

Financial costs

1,120

1,140

Actuarial (loss)/ gain from experience adjustments

489

(1,904)

Benefits paid during the year

(2,822)

(4,592)

Present value of defined benefit obligation as of 31 December

29,543

22,812

13.3 Principal actuarial assumptions

31 December

2023

31 December

2022

Valuation discount rate

4.55%

4.00%

Expected rate of increase in salary level across different age bands

4.00%

SAR '000

The Company operates an end of service benefit plan for its employees based on the prevailing Saudi Labor Laws. Accruals

are made in accordance with the actuarial valuation under projected unit credit method while the benefit payments

obligation is discharged as and when it falls due. The amounts recognized in the statement of financial position and

movement in the obligation during the year based on its present value are as follows:

SAR’000

The following range of significant actuarial assumptions was used by the Company for the valuation of post-employment

benefit liability:

82

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

`

Notes to the financial statements (continued)

For the year ended 31 December 2023

13.

Employee end of service benefits (continued)

13.3

Principal actuarial assumptions (continued)

The impact of changes in sensitivities on present value of defined benefit obligation is as follows:

31 December

2023

31 December

2022

Net discount rate

Increase by 1%

27,372

21,778

Decrease by 1%

32,056

23,122

Future salary growth

Increase by 1%

32,045

23,937

Decrease by 1%

27,342

26,267

14. Zakat

31 December

2023

31 December

2022

1 January 2022

Opening balance

49,925

51,341 47,904

Provided during the year

9,443

10,250 24,158

Payments during the year

(3,444)

(11,666) (20,721)

Closing balance

55,924

49,925 51,341

Status of assessments

Based on the appeals and as per the update from tax consultant, the Company does not expect any negative outcome from

the additional assessed amounts.

SAR’000

Impact on defined benefit obligation

SAR '000

The Company had filed zakat and income tax returns with the Zakat, Tax and Customs Authority (“ZATCA”) for the years

from 2010 to 2022.

ZATCA has issued assessments for the years 2015 to 2018, demanding an additional Zakat as assessed by them amounting

to SAR 11.73 million pertains to these years. The Company paid an amount of SAR 1.42 million and has filed objections

for SAR 10.07 million with the authority. Further, ZATCA issued initial assessment for the years 2019 & 2020, demanding

additional assessed amount of SAR 10.03 million and SAR 12.10 million respectively. The company paid 10% of the

assessed amounts and appealed against the additional assessed amounts in full for those years.

83

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

`

Notes to the financial statements (continued)

For the year ended 31 December 2023

14.

Zakat (continued)

Provision for zakat

The provision for zakat is based on the following:

31 December

2023

31 December

2022

Opening equity 1,395,214 1,270,416

Opening allowances and other adjustments 148,185 90,362

Book value of long term assets (1,897,445) (1,249,204)

(354,046) 111,574

Adjusted income for the year 377,709 287,650

Zakat base 377,709 399,224

Zakat due at 2.5% 9,443 10,250

15.

Lease liabilities

31 December

2023

31 December

2022

1 January 2022

Opening balance

49,222

54,482 42,714

Additions

-

4,103 21,494

Finance cost

2,379

2,639 2,589

Lease payments

(10,119)

(12,002) (12,315)

Closing balance

41,482

49,222 54,482

31 December

2023

31 December

2022

1 January 2022

Up to 1 year

5,804

6,887 7,623

More than one year

35,678

42,335 46,859

Total

41,482

49,222 54,482

15.1

These are related to lease contracts of head-office and other branch buildings.

SAR '000

Provision for zakat has been made at 2.5776% of the higher of approximate zakat base or adjusted net income and 2.5% on

adjusted net income attributable to the Saudi shareholders of the Company.

SAR '000

The differences between the financial and zakatable results are mainly due to provisions, which are not allowed in the

calculation of adjusted income.

SAR '000

The table below summarized the maturity profile of the lease liabilities based on the contractual payments:

84

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

`

Notes to the financial statements (continued)

For the year ended 31 December 2023

16.

Share Capital

Paid-up

Number of Shares

Al Rajhi Banking and Investment Corporation

35,000,000 350,000 350,000

Others

65,000,000 650,000 650,000

100,000,000 1,000,000 1,000,000

Paid-up

Number of Shares

Al Rajhi Insurance Co. Ltd. (Bahrain) 10,600,000 106,000 106,000

Al Rajhi Banking and Investment Corporation 14,000,000 140,000 140,000

Others 15,400,000 154,000 154,000

40,000,000 400,000 400,000

Paid-up

Number of Shares

Al Rajhi Insurance Co. Ltd. (Bahrain) 10,600,000 106,000 106,000

Al Rajhi Banking and Investment Corporation 14,000,000 140,000 140,000

Others 15,400,000 154,000 154,000

40,000,000 400,000 400,000

17.

Statutory reserve

18.

Commitments and contingencies

18.1

The Company’s commitments and contingencies are as follows:

31 December

2023

31 December

2022

1 January 2022

Letters of guarantee

39,956

61,318 40,190

18.2

The authorised, issued and paid-up capital of the Company is SAR 1000 million at 31 December 2023 (31 December

2022: SAR 400 million) consisting of 100 million shares (31 December 2022: 40 million shares) of SAR 10 each. The

shareholders of the Company are subject to zakat. Shareholding structure of the Company is as below.

The Company enters into takaful contracts and is subject to legal proceedings in the normal course of business. While it is

not practicable to forecast or determine the final results of all the pending and threatened legal proceedings, management

does not believe that any such proceedings (including litigation) that are in progress at reporting date will have a material

effect on its results and financial position.

1 January 2022

31 December 2022

Authorised and issued

SAR '000

As required by the Saudi Arabian Insurance Regulations, 20% of the shareholders’ income shall be set aside as a statutory

reserve until this reserve amounts to 100% of the paid-up share capital. The Company carries out this transfer on an annual

basis at 31 December. As at 31 December 2023, SAR 283.017 million (31 December 2022: SAR 196.109 million) had

been set aside as a statutory reserve, equal to 28.40% (31 December 2022: 49.03%) of the paid-up share capital.

SAR '000

Authorised and issued

SAR '000

31 December 2023

Authorised and issued

SAR '000

85

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

`

Notes to the financial statements (continued)

For the year ended 31 December 2023

19. Insurance service result

19.1 Insurance revenue

Motor

Medical /

Health

Property &

casualty

Protection &

savings

Total

Contracts not measured under the PAA

Amounts relating to the changes in the LRC

-

Expected incurred claims - - 21,287 18,100 39,387

-

- - - 10,395 10,395

-

Expected allocation to loss component - - (87) (1,183) (1,270)

-

- - 3,337 13,388 16,725

-

CSM recognised for the services provided - - 169,618 5,558 175,176

-

Premium experience adjustment - - 62 - 62

-

Recovery of insurance acquisition cashflows - - 2,614 2,140 4,754

- - 196,831 48,398 245,229

Contracts measured under the PAA

-

Premium earned on insurances contracts issued 2,310,798 995,424 551,971 167,027 4,025,220

-

Movement in expected credit loss for the year (6,053) (10,142) (16,533) (1,251) (33,979)

2,304,745 985,282 535,438 165,776 3,991,241

Total insurance revenue

2,304,745 985,282 732,269 214,174 4,236,470

Motor

Medical /

Health

Property &

casualty

Protection &

savings

Total

Contracts not measured under the PAA

Amounts relating to the changes in the LRC

-

Expected incurred claims - - 22,471 4,852 27,323

-

- - 12,435 6,457 18,892

-

Expected other insurance service expenses - - - (18) (18)

-

- - 3,134 10,186 13,320

-

Premium experience adjustment - - 23,503 2,443 25,946

-

Premium experience adjustment - - 70,004 - 70,004

-

Recovery of insurance acquisition cashflows - - 2,000 173 2,173

- - 133,547 24,093 157,640

Contracts measured under the PAA

-

Premium earned on insurances contracts issued 1,500,535 550,560 353,708 372,724 2,777,527

-

Movement in expected credit loss for the year (174) (267) (169) (54) (664)

1,500,361 550,293 353,539 372,670 2,776,863

Total insurance revenue

1,500,361 550,293 487,086 396,763 2,934,503

SAR '000

Expected incurred claims other directly

attributable expenses

Change in risk adjustment for non-financial risk

for risk expired

31 December 2023

SAR '000

Expected incurred claims other directly

attributable expenses

Change in risk adjustment for non-financial risk

for risk expired

31 December 2022

86

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

`

Notes to the financial statements (continued)

For the year ended 31 December 2023

19.

Insurance service result (continued)

19.2 Insurance service expenses

Motor

Medical /

Health

Property &

casualty

Protection &

savings

Total

Incurred claims (1,710,428) (898,536) (182,419) (56,343) (2,847,726)

Directly attributable non-acquisition expenses (96,677) (68,370) (18,719) (12,479) (196,245)

Changes relating to liabilities for incurred claims 130,638 29,992 (278,972) 53,500 (64,842)

Losses / (loss reversals) on onerous contracts 93,679 (32,749) (214) (580) 60,136

Insurance acquisition costs incurred (310,248) (40,015) (14,613) (88,867) (453,743)

Surplus distribution to policyholders (20,294) (10,824) (5,306) (1,123) (37,547)

(1,913,330) (1,020,502) (500,243) (105,892) (3,539,967)

Motor

Medical /

Health

Property &

casualty

Protection &

savings

Total

Incurred claims (1,688,976) (490,516) (159,669) (189,993) (2,529,154)

Directly attributable non-acquisition expenses (64,586) (59,952) (16,892) (20,493) (161,923)

Changes relating to liabilities for incurred claims 323,650 45,763 101,337 31,720 502,470

Losses on onerous contracts and reversal of the losses

(909) 15,840 (101) (37) 14,793

Insurance acquisition costs incurred (183,197) (25,955) (13,536) (87,103) (309,791)

Surplus distribution to policyholders (6,311) (528) (637) (413) (7,889)

(1,620,329) (515,348) (89,498) (266,319) (2,491,494)

31 December 2022

SAR '000

31 December 2023

SAR '000

87

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

`

Notes to the financial statements (continued)

For the year ended 31 December 2023

19.

Insurance service result (continued)

19.3 Income or expenses from retakaful / reinsurance contracts held

Motor

Medical /

Health

Property &

casualty

Protection &

savings

Total

Contracts not measured under the PAA

-

Expected claims and other expenses recovery - - (113,638) (80,077) (193,715)

-

Change in risk adjustment for non-financial risk - - (12,061) (6,332) (18,393)

-

CSM recognised for the services received (13,052) - (610,021) 8,180 (614,893)

-

- - - 16 16

-

Experience adjustments - - - - -

(13,052) - (735,720) (78,213) (826,985)

Contracts measured under the PAA - - - - -

(13,052) - (735,720) (78,213) (826,985)

(314) - 215,766 58,668 274,120

(14) - 235,863 (61,332) 174,517

- - - 595 595

- - - - -

(328) - 451,629 (2,069) 449,232

(13,380) - (284,091) (80,282) (377,753)

Losses recovered on onerous contracts and reversal

of those loss recoveries

Movement in non-performing assets related to

reinsurance contracts held

Net income from retakaful / reinsurance

contracts held

31 December 2023

SAR '000

Amounts relating to the changes in the remaining

coverage

Amounts recoverable for incurred claims and other

expenses

Changes relating to amounts recoverable on

incurred claims

Allocation of retakaful / reinsurance

contributions

Reversal of loss recovery that does not adjust

CSM

Allocation of retakaful / reinsurance

contributions

Amounts recoverable from retakaful /

reinsurance

Amounts recoverable from retakaful /

reinsurance

88

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

`

Notes to the financial statements (continued)

For the year ended 31 December 2023

19.

Insurance service result (continued)

19.3

Income or expenses from retakaful / reinsurance contracts held (continued)

Motor

Medical /

Health

Property &

casualty

Protection &

savings

Total

Contracts not measured under the PAA

-

Expected claims and other expenses recovery 2,294 - (103,016) (283) (101,005)

-

Change in risk adjustment for non-financial risk 184 - (26,961) (23) (26,800)

-

CSM recognised for the services received (9,623) - (489,500) (12,570) (511,693)

-

- - - 1 1

-

Experience adjustments (2,268) - 187,243 (9,856) 175,119

(9,413) - (432,234) (22,731) (464,378)

Contracts measured under the PAA - - - - -

(9,413) - (432,234) (22,731) (464,378)

2,421 - 170,257 65,601 238,279

35 - (104,458) (53,045) (157,468)

- - - 31 31

(12) - (625) (21) (658)

2,444 - 65,174 12,566 80,184

(6,969) - (367,060) (10,165) (384,194)

Losses recovered on onerous contracts and reversal

of those loss recoveries

Movement in non-performing assets related to

reinsurance contracts held

Net income from retakaful / reinsurance

contracts held

31 December 2022

SAR '000

Amounts relating to the changes in the remaining

coverage

Amounts recoverable for incurred claims and other

expenses

Changes relating to amounts recoverable on

incurred claims

Allocation of retakaful / reinsurance

contributions

Reversal of loss recovery that does not adjust

CSM

Amounts recoverable from retakaful /

reinsurance

Allocation of retakaful / reinsurance

contributions

Amounts recoverable from retakaful /

reinsurance

89

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

`

Notes to the financial statements (continued)

For the year ended 31 December 2023

20. Investment income

Details on investment income for the year are as follows:

Takaful

operations

Shareholders’

operations

Total

Income on financial assets at fair value

Un-realized loss on investments at fair value

(11,935) (8,017) (19,952)

Realized gain on investments at fair value

13,308 2,505 15,813

Commission income on investments at fair value

13,840 450 14,290

Dividend income on investments at fair value

2,704 12,640 15,344

17,917 7,578 25,495

100,203 29,546 129,749

118,120 37,124 155,244

Takaful

operations

Shareholders’

operations

Total

Income on financial assets at fair value

Un-realized loss on investments at fair value - 315 315

Realized gain on investments at fair value

11,880 4,375 16,255

Commission income on investments at fair value 11,598 450 12,048

Dividend income on investments at fair value - 13,029 13,029

23,478 18,169 41,647

38,073 10,590 48,663

61,551 28,759 90,310

31 December 2023

SAR '000

Income on financial assets at amortised cost and

short-term deposits

Income on financial assets at amortised cost and

short-term deposits

Commission income on investments at amortized

cost

Commission income on investments at amortized

cost

31 December 2022

SAR '000

90

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

`

Notes to the financial statements (continued)

For the year ended 31 December 2023

21. Insurance & retakaful / reinsurance finance income / expenses

21.1 Finance (expense) / income from insurance contracts issued

Motor

Medical /

Health

Property &

casualty

Protection &

savings

Total

Interest accreted (30,546) (6,124) (16,150) (23,528) (76,348)

(2,506) (4,664) 1,279 28,771 22,880

- - - (121,306) (121,306)

- - - (11) (11)

(33,052) (10,788) (14,871) (116,074) (174,785)

Motor

Medical /

Health

Property &

casualty

Protection &

savings

Total

Interest accreted (6,849) (1,000) (3,357) (1,590) (12,796)

13,624 84 894 (4,500) 10,102

- - - 28,053 28,053

- - - - -

6,775 (916) (2,463) 21,963 25,359

21.2 Finance (expense) / income from retakaful / reinsurance contracts held

s

Motor

Medical /

Health

Property &

casualty

Protection &

savings

Total

Interest accreted (76) - 25,923 874 26,721

(41) - (835) 1,059 183

- - - 1,658 1,658

(117) - 25,088 3,591 28,562

Motor

Medical /

Health

Property &

casualty

Protection &

savings

Total

Interest accreted 155 - 8,709 483 9,347

(1) - (4,051) 1,298 (2,754)

- - - 62 62

154 - 4,658 1,843 6,655

Effect of changes in FCF at current rates when CSM

is unlocked at locked-in rates

SAR '000

Effect of changes in interest rates and other financial

assumptions

Effect of changes in FCF at current rates when CSM

is unlocked at locked-in rates

31 December 2022

SAR '000

Effect of changes in interest rates and other financial

assumptions

31 December 2023

Effect of changes in interest rates and other financial

assumptions

Changes in fair value of underlying assets of

contracts measured under the VFA

Effect of changes in FCF at current rates when CSM

is unlocked at locked-in rates

31 December 2023

SAR '000

31 December 2022

SAR '000

Effect of changes in interest rates and other financial

assumptions

Changes in fair value of underlying assets of

contracts measured under the VFA

Effect of changes in FCF at current rates when CSM

is unlocked at locked-in rates

91

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

`

Notes to the financial statements (continued)

For the year ended 31 December 2023

22. Other operating expenses

31 December

2023

31 December 2022

Policy acquisition cost

453,743

309,791

Staff cost

191,357

158,107

Depreciation and amortization

31,066

23,905

Professional and legal costs

4,914

12,340

Communication and technology

39,516

34,357

Premises and related cost

15,547

16,871

Advertisement and marketing expenses

6,850

2,820

Others

10,970

12,024

753,963

570,215

Allocation of expenses is as follows:

Takaful

operations

Shareholders’

operations

Total

Takaful

operations

Shareholders’

operations

Total

Policy acquisition cost 453,743 - 453,743 309,791 - 309,791

196,245 - 196,245 161,923 - 161,923

Non-attributable expenses - 103,975 103,975 - 98,501 98,501

649,988 103,975 753,963 471,714 98,501 570,215

23. Earnings per share

31 December

2023

31 December 2022

Restated

Net income attributable to the shareholders after zakat (SAR '000)

328,061

72,391

Weighted-average number of ordinary shares

100,000,000

Basic and diluted earning per share (SAR)

3.28

0.72

Directly attributable non-

acquisition expenses

Earnings per share for the periods ended 31 December 2023 and 31 December 2022 are calculated by dividing the net

income for the period attributable to the equity holders by 100 million shares. There were no dilutive potential shares in

issue as at 31 December 2023 and 31 December 2022.

SAR '000

31 December 2023

31 December 2022

SAR '000

92

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

`

Notes to the financial statements (continued)

For the year ended 31 December 2023

24. Gross premium written and reinsurance premiums ceded

Premium written during the year is as follows:

Customers' category

Motor

Medical /

Health

Property &

casualty

Protection

& savings

Total

Gross contribution written

Retail 1,576,441 54,473 17,831 982,494 2,631,239

Very small 254,435 9,360 - - 263,795

Small 27,929 11,387 - - 39,316

Medium 71,407 62,098 205 - 133,710

Corporate 870,300 1,027,055 899,502 157,940 2,954,797

Total gross contribution written 2,800,512 1,164,373 917,538 1,140,434 6,022,857

Customers' category

Motor

Medical /

Health

Property &

casualty

Protection &

savings

Total

Gross contribution written

Retail 818,387 62,867 11,637 148,605 1,041,496

Very small 71,597 4,696 - - 76,293

Small 67,669 11,800 - - 79,469

Medium 70,747 31,759 124 - 102,630

Corporate 694,198 555,201 543,906 376,877 2,170,182

Total gross contribution written 1,722,598 666,323 555,667 525,482 3,470,070

24.1

Premium ceded during the year with local and foreign entities as follows:

Motor

Medical /

Health

Property &

casualty

Protection

& savings

Total

Local - - 32,113 - 32,113

Foreign 3,543 - 834,253 107,185 944,981

Total 3,543 - 866,366 107,185 977,094

Motor

Medical /

Health

Property &

casualty

Protection &

savings

Total

Local - - 2,996 - 2,996

Foreign 9,701 - 516,014 155,352 681,067

Total 9,701 - 519,010 155,352 684,063

31 December 2022

SAR '000

31 December 2023

SAR '000

31 December 2022

31 December 2023

SAR '000

93

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

`

Notes to the financial statements (continued)

For the year ended 31 December 2023

25. Fair values of financial instruments

-

in the accessible principal market for the asset or liability, or

-

in the absence of a principal market, in the most advantageous accessible market for the asset or liability

Determination of fair value and fair value hierarchy

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments:

-

Level 3: valuation techniques for which any significant input is not based on observable market data.

Carrying amounts and fair value

Level 1 Level 2 Level 3

Financial assets measured at fair value

Investments measured at FVTPL 1,690,938 - 1,283,230 407,708 1,690,938

Investments measured at FVOCI 459,212 419,509 - 39,703 459,212

2,150,150 419,509 1,283,230 447,411 2,150,150

Level 1 Level 2 Level 3

Financial assets measured at fair value

Investments measured at FVTPL 771,673 - 422,591 349,082 771,673

Investments measured at FVOCI 429,926 422,384 - 7,542 429,926

1,201,599 422,384 422,591 356,624 1,201,599

Total

SAR '000

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between

market participants at the measurement date. The fair value measurement is based on the presumption that the transaction

takes place either:

Level 1: financial instruments with quoted prices in active markets for the same or identical instrument that an entity can

access at the measurement date;

Level 2: quoted prices in active markets for similar assets and liabilities or other valuation techniques for which all

significant inputs are based on observable market data; and

The following table shows the carrying amount and fair values of financial assets and financial liabilities, including their

levels in the fair value hierarchy for financial instruments measured at fair value. It does not include fair value information

for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation to

fair value.

31 December 2023

SAR '000

Total

Fair value

Carrying

value

31 December 2022

Carrying

value

Fair value

94

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

`

Notes to the financial statements (continued)

For the year ended 31 December 2023

25.

Fair values of financial instruments (continued)

Level 1 Level 2 Level 3

Financial assets measured at fair value

Investments measured at FVTPL 700,252 - 412,002 288,250 700,252

Investments measured at FVOCI 435,284 427,742 - 7,542 435,284

1,135,536 427,742 412,002 295,792 1,135,536

Level 3 fair values

The following table shows a reconciliation from the opening balances to the closing balances for Level 3 fair values:

Financial assets at FVTPL – Unquoted securities

Balance at 1 January 2023 302,212

Purchases 80,000

Changes in fair value of investments, net (12,227)

Balance at 31 December 2023 369,985

Financial assets at FVOCI – Unquoted securities

Balance at 1 January 2023

Gain included in OCI

Balance at 31 December 2023

SAR’000

7,542

32,161

39,703

The fair values of the financial assets not measured at fair value are not materially different from their carrying values.

SAR’000

31 December 2023

SAR '000

1 January 2022

Carrying

value

Fair value

Total

95

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

26. Operating segments

Motor Medical / Health

Property &

casualty

Protection &

savings

Un-allocated Total

Assets

Insurance contract assets - - 174,213 29 - 174,242

Retakaful / reinsurance contract assets 12,015 - 529,692 104,417 - 646,124

Cash and cash equivalents - - - - 945,103 945,103

Investments - - - - 4,650,945 4,650,945

Other unallocated assets - - - - 407,773 407,773

Total assets

12,015 - 703,905 104,446 6,003,821 6,824,187

Liabilities

Insurance contract liabilities 2,213,562 492,109 668,659 1,274,796 - 4,649,126

Retakaful / reinsurance contract liabilities 5,992 - 159,422 30,941 - 196,355

Other unallocated liabilities, equity and surplus - - - - 1,978,706 1,978,706

Total liabilities, accumulated surplus and equity

2,219,554 492,109 828,081 1,305,737 1,978,706 6,824,187

SAR '000

Operating segments are identified on the basis of internal reports about components of the Company that are regularly reviewed by the Company’s chief executive officer in their

function as chief operating decision maker in order to allocate resources to the segments and to assess its performance.

Transactions between the operating segments are on normal commercial terms and conditions. The revenue from external parties reported to the chief executive officer is measured in a

manner consistent with that in the income statement. Segment assets and liabilities comprise operating assets and liabilities.

Segment assets do not include takaful operations’ bank balances and cash, net contributions receivable, investments etc., accordingly, they are included in unallocated assets. Segment

liabilities do not include takaful operations’ payables accruals and other liabilities and re-takaful / re-insurance balances payable etc., accordingly, they are included in unallocated

liabilities. These unallocated assets and liabilities are not reported to chief operating decision maker under related segments and are monitored on a centralized basis.

The segment information provided to the Company’s chief executive officer for the reportable segments for the Company’s total assets and liabilities as of 31 December 2023 and 31

December 2022, its total revenues, expenses, and net income for the year then ended, are as follows:

31 December 2023

96

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

26.

Operating segments (continued)

Motor Medical / Health

Property &

casualty

Protection &

savings

Un-allocated Total

Assets

Insurance contract assets 34 282 - - - 316

Retakaful / reinsurance contract assets 11,864 - 227,211 113,908 - 352,983

Cash and cash equivalents - - - - 620,410 620,410

Investments - - - - 3,129,354 3,129,354

Other unallocated assets - - - - 228,111 228,111

Total assets 11,898 282 227,211 113,908 3,977,875 4,331,174

Liabilities

Insurance contract liabilities 1,550,200 310,987 454,235 477,998 - 2,793,420

Retakaful / reinsurance contract liabilities 5,992 - - - - 5,992

Other unallocated liabilities, equity and surplus - - - - 1,531,762 1,531,762

Total liabilities, accumulated surplus and equity 1,556,192 310,987 454,235 477,998 1,531,762 4,331,174

Motor Medical / Health

Property &

casualty

Protection &

savings

Un-allocated Total

Assets

Insurance contract assets 2,906 - - 27,288 - 30,194

Retakaful / reinsurance contract assets 11,782 - 279,537 140,052 - 431,371

Cash and cash equivalents - - - - 500,070 500,070

Investments - - - - 2,885,001 2,885,001

Other unallocated assets - - - - 226,137 226,137

Total assets 14,688 - 279,537 167,340 3,611,208 4,072,773

Liabilities

Insurance contract liabilities 1,448,012 209,907 353,335 388,444 - 2,399,698

Retakaful / reinsurance contract liabilities 490 - - 124,667 - 125,157

Other unallocated liabilities, equity and surplus - - - - 1,547,918 1,547,918

Total liabilities, accumulated surplus and equity 1,448,502 209,907 353,335 513,111 1,547,918 4,072,773

1 January 2022 - Restated

SAR '000

31 December 2022 - Restated

SAR '000

97

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

26.

Operating segments (continued)

Motor Medical / Health

Property &

casualty

Protection &

savings

Un-allocated Total

Insurance revenue 2,304,745 985,282 732,269 214,174 - 4,236,470

Insurance service expenses (1,913,330) (1,020,502) (500,243) (105,892) - (3,539,967)

391,415 (35,220) 232,026 108,282 - 696,503

Allocation of retakaful / reinsurance contributions (13,052) - (735,720) (78,213) - (826,985)

(328) - 451,629 (2,069) - 449,232

(13,380) - (284,091) (80,282) - (377,753)

Insurance service result

378,035 (35,220) (52,065) 28,000 - 318,750

Finance expense from insurance contracts issued (33,052) (10,788) (14,871) (116,074) - (174,785)

Finance income from retakaful / reinsurance contracts held (117) - 25,088 3,591 - 28,562

Net finance (expenses) / income

(33,169) (10,788) 10,217 (112,483) - (146,223)

Income on financial assets at fair value - - - - 25,495 25,495

- - - - 129,749 129,749

Fair value gain of unit-linked investments - - - 114,009 - 114,009

Net credit impairment losses on financial assets - - - - (391) (391)

Net investment income

- - - 114,009 154,853 268,862

Net insurance and investment result

344,866 (46,008) (41,848) 29,526 154,853 441,389

Other operating expenses - - - - (103,975) (103,975)

Other income - - - - 90 90

Net income for the period before zakat

344,866 (46,008) (41,848) 29,526 50,968 337,504

Provision for zakat - - - - (9,443) (9,443)

Net income for the period after zakat

344,866 (46,008) (41,848) 29,526 41,525 328,061

Income on financial assets at amortised cost and short-term

deposits

31 December 2023

Insurance service result before retakaful / reinsurance

contracts held

Amounts recoverable from retakaful / reinsurance for

incurred claims

Net (expense) / income from retakaful / reinsurance

contracts held

SAR '000

98

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

26.

Operating segments (continued)

Motor Medical / Health Property & casualty

Protection &

savings

Un-allocated Total

Insurance revenue 1,500,361 550,293 487,086 396,763 - 2,934,503

Insurance service expenses (1,620,329) (515,348) (89,498) (266,319) - (2,491,494)

(119,968) 34,945 397,588 130,444 - 443,009

Allocation of retakaful / reinsurance contributions (9,413) - (432,234) (22,731) - (464,378)

2,444 - 65,174 12,566 - 80,184

(6,969) - (367,060) (10,165) - (384,194)

Insurance service result (126,937) 34,945 30,528 120,279 - 58,815

Finance expense from insurance contracts issued 6,775 (916) (2,463) 21,963 - 25,359

Finance income from retakaful / reinsurance contracts held 154 - 4,658 1,843 - 6,655

Net finance (expenses) / income 6,929 (916) 2,195 23,806 - 32,014

Income on financial assets at fair value - - - - 41,647 41,647

- - - - 48,663 48,663

Fair value gain of unit-linked investments - - - (12,481) - (12,481)

Net credit impairment losses on financial assets - - - - (242) (242)

Net investment income - - - (12,481) 90,068 77,587

Net insurance and investment result (120,008) 34,029 32,723 131,604 90,068 168,416

Other operating expenses - - - - (98,501) (98,501)

Other income - - - - 12,726 12,726

Net income for the period before zakat

(120,008) 34,029 32,723 131,604 4,293 82,641

Provision for zakat - - - - (10,250) (10,250)

Net income for the period after zakat (120,008) 34,029 32,723 131,604 (5,957) 72,391

Income on financial assets at amortised cost and short-term

deposits

31 December 2022 - Restated

SAR '000

Insurance service result before retakaful / reinsurance

contracts held

Amounts recoverable from retakaful / reinsurance for

incurred claims

Net (expense) / income from retakaful / reinsurance

contracts held

99

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

`

Notes to the financial statements (continued)

For the year ended 31 December 2023

27. Related party transactions and balances

31

December

2023

31 December

2022

31

December

2023

31 December

2022

1 January

2022

Major shareholders

Gross contribution written

679,227

718,691

111,608

121,709 95,806

Claims paid

250,747

497,413

-

- -

422,076

587,154

(522,390)

(351,061) (101,720)

Reimbursement from related party

-

- -

Bank Balance

-

401,627

294,200 255,485

-

63,027

54,793 64,575

Gross contribution written

28,657

23,318

1,939

1,215 1,529

Claims paid

2,656

2,633

-

- -

(2,370)

19,300

21,320

(26,345) (9,679)

Investments managed by affiliates

11,604

10,396

1,220,724

302,591 292,003

8,900

10,082

-

- -

3,386

2,694

-

- -

The compensation of key management personnel during the year is as follows:

31

December

2023

31 December

2022

Salaries and other allowances 1,835 5,711

End of service benefits 1,126 418

2,961 6,129

Board remuneration 2,700 2,347

Shariah committee remuneration 240 280

Entities controlled, jointly controlled or

significantly influenced by related parties

Claims incurred and notified during the period

Income received from sale of investment in Al

Rajhi Capital commodity fund

Investment management fee paid to Al Rajhi

Capital Company

SAR '000

Related parties represent major shareholders, directors, and key management personnel of the Company, and companies of

which they are principal owners and any other entities controlled, jointly controlled or significantly influenced by them.

Pricing policies and terms of these transactions are approved by the Company’s management and Board of Directors. The

following are the details of the major related party transactions during the year and the related balances:

Transactions for the year

ended

Balance receivable / (payable) as of

Claims incurred and notified during the period

Investment in shares of Al Rajhi Banking and

Investment Corporation

SAR '000

100

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

`

Notes to the financial statements (continued)

For the year ended 31 December 2023

28. Capital management

- Minimum Capital Requirement of SAR 200 million

- Premium Solvency Margin

- Claims Solvency Margin

29. Takaful operations' surplus payable

31 December

2023

31 December

2022

1 January 2022

Opening balance

37,318

48,628 48,316

Income attributable to takaful operations during the year

37,547

7,889 10,118

Surplus paid to policyholders during the year

(665)

(19,199) (9,806)

Closing balance

74,200

37,318 48,628

SAR '000

As a result of the adoption of IFRS 17, net surplus payable to policyholders is reported as part of insurance contract

liabilities. Also, income attributable to insurance operations is expensed as part of insurance service expenses.

In the opinion of the Board of Directors, the Company has fully complied with the externally imposed capital requirements

during the reported financial year.

The capital structure of the Company as of 31 December 31 2023 consists of paid-up share capital of SAR 1,000 million,

statutory reserves of SAR 283.017 million and accumulated profit of SAR 347.632 million (31 December 2022: paid-up

share capital of SAR 400 million, statutory reserves of SAR 196.109 million and accumulated profits of SAR 706.479

million) in the statement of financial position.

Objectives are set by the Company to maintain healthy capital ratios in order to support its business objectives and

maximize shareholders’ value.

The Company manages its capital requirements by assessing shortfalls between reported and required capital levels on a

regular basis. Adjustments to current capital levels are made in light of changes in market conditions and risk characteristics

of the Company’s activities. In order to maintain or adjust the capital structure, the Company may adjust the amount of

dividends paid to shareholders or issue shares.

The Company manages its capital to ensure that it is able to continue as going concern and comply with the regulators’

capital requirements of the markets in which the Company operates while maximizing the return to stakeholders through the

optimization of the debt and equity balance. The capital structure of the Company consists of equity attributable to equity

holders comprising paid share capital, reserves and retained earnings.

As per guidelines laid out by Insurance Authority (IA) previously known as SAMA in Article 66 of the Insurance

Implementing Regulations detailing the solvency margin required to be maintained, the Company shall maintain solvency

margin equivalent to the highest of the following three methods as per Insurance Implementing Regulations:

101

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

`

Notes to the financial statements (continued)

For the year ended 31 December 2023

30. Risk management

Risk management covers mainly the followings:

- Insurance Risks

- Financial Risks

Insurance Risks

For life insurance contracts, the main risks that the Company is exposed to are, as follows:

- Mortality risk – risk of loss arising due to the incidence of policyholder death being different than expected

- Morbidity risk – risk of loss arising due to policyholder health experience being different than expected

- Expense risk – risk of loss arising from expense experience being different than expected

-

To minimize its exposure to significant losses from reinsurer insolvencies, the Company evaluates the financial condition of

its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities or economic

characteristics of the reinsurers.

For non-life insurance contracts, the most significant risks arise from climate changes, natural disasters and manmade

accidents. For longer tail claims that take some years to settle, there is also inflation risk.

Policyholder decision risk – risk of loss arising due to policyholder experiences (lapses and surrenders) being different

than expected

For the life insurance contracts for which death or disability is the insured risk, the significant factors that could increase the

overall frequency of claims are epidemics, widespread changes in lifestyle and natural disasters, resulting in earlier or more

claims than expected.

The objective of the Company is to ensure that sufficient reserves are available to cover the liabilities associated with these

insurance and reinsurance contracts that it issues. The risk exposure is mitigated by diversification across the portfolios of

insurance contracts. The variability of risks is also improved by careful selection and implementation of underwriting

strategy guidelines, as well as the use of reinsurance arrangements. Furthermore, strict claim review policies to assess all

new and ongoing claims, regular detailed review of claims handling procedures and frequent investigation of possible

fraudulent claims are established to reduce the risk exposure of the Company. The Company further enforces a policy of

actively managing and promptly settling claims, to reduce its exposure to unpredictable future developments that can

negatively impact the business. Inflation risk is mitigated by taking expected inflation into account when estimating

insurance contract liabilities and pricing appropriately.

In order to minimize its financial exposure to potential losses arising from large claims, the Company enters into agreements

with other parties for re-takaful purposes. Such re-takaful arrangements provide for greater diversification of business,

allow management to control exposure to potential losses arising from large risks, and provide additional capacity for

growth. Reinsurance held (outward reinsurance) is placed on both a proportional and non–proportional basis. The majority

of proportional reinsurance is quota–share reinsurance which is taken out to reduce the overall exposure of the Company to

certain classes of business. Retention limits for non-proportional excess–of–loss reinsurance vary by product line.

102

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

30.

Risk management (continued)

Insurance Risks (continued)

The following tables show the concentration of net insurance contract liabilities by type of contract:

Insurance

contracts issued

Reinsurance

contracts held

Net

Motor

2,213,562 (6,023) 2,207,539

Medical / Health

492,109 - 492,109

Property & casualty

494,446 (370,270) 124,176

Protection & savings

1,274,767 (73,476) 1,201,291

4,474,884 (449,769) 4,025,115

Insurance

contracts issued

Reinsurance

contracts held

Net

Motor 1,550,166 (11,864) 1,538,302

Medical / Health 310,705 - 310,705

Property & casualty 454,235 (227,211) 227,024

Protection & savings 477,998 (108,579) 369,419

2,793,104 (347,654) 2,445,450

Insurance

contracts issued

Reinsurance

contracts held

Net

Motor 1,445,106 (11,292) 1,433,814

Medical / Health 209,907 - 209,907

Property & casualty 353,335 (279,537) 73,798

Protection & savings 361,156 (15,385) 345,771

2,369,504 (306,214) 2,063,290

Furthermore, the financial strength and managerial and technical expertise as well as historical performance of the reinsurers,

wherever applicable, are thoroughly reviewed by the Company and agreed to pre-set requirements before approving them for

exchange of reinsurance business. As of 31 December 2023, 31 December 2022 and 1 January 2022, there is no significant

concentration of reinsurance balances.

31 December 2022

SAR '000

1 January 2022

SAR '000

Reinsurance ceded contracts do not relieve the Company from its obligations to policyholders and as a result the Company

remains liable for the portion of outstanding claims reinsured to the extent that the reinsurer fails to meet the obligations

under the reinsurance agreements.

The nature of the Company’s exposure to insurance risks and its objectives, policies and processes used to manage and

measure the risks have not changed from the previous period.

31 December 2023

SAR '000

103

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

`

Notes to the financial statements (continued)

For the year ended 31 December 2023

30. Risk management (continued)

Insurance Risks (continued)

Motor

Medical /

Health

Property &

casualty

Protection

& savings

Total

Within KSA

Western region

68,184 23,309 23,678 58,927 174,098

Eastern region

11,109 77,197 62,793 25,653 176,752

Central region

2,134,269 391,603 407,975 1,190,187 4,124,034

2,213,562 492,109 494,446 1,274,767 4,474,884

Motor

Medical /

Health

Property &

casualty

Protection &

savings

Total

Within KSA

Western region 85,293 18,335 14,659 - 118,287

Eastern region 9,790 - 119,788 - 129,578

Central region 1,455,083 292,370 319,788 477,998 2,545,239

1,550,166 310,705 454,235 477,998 2,793,104

Motor

Medical /

Health

Property &

casualty

Protection &

savings

Total

Within KSA

Western region 68,299 10,825 6,099 40,095 125,318

Eastern region 13,700 22,740 24,925 5,635 67,000

Central region 1,363,107 176,342 322,311 315,426 2,177,186

1,445,106 209,907 353,335 361,156 2,369,504

Sensitivities on major assumptions considered while applying IFRS 17

The method used for deriving sensitivity information and significant assumptions did not change from the previous year.

The following sensitivity analysis shows the impact on gross and net liabilities, profit / loss before tax and equity for

reasonably possible movements in key assumptions with all other assumptions in notes 2 and 3 held constant. The correlation

of assumptions will have a significant effect in determining the ultimate impacts, but to demonstrate the impact due to

changes in each assumption, assumptions had to be changed on an individual basis. It should be noted that movements in

these assumptions are non–linear.

31 December 2022

SAR '000

The geographical concentration of the Company’s insurance contract liabilities is noted below. The disclosure is based on the

region where the business is written:

31 December 2023

SAR '000

1 January 2022

SAR '000

104

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

30.

Risk management (continued)

Insurance Risks (continued)

Sensitivities on major assumptions considered while applying IFRS 17 (continued)

Insurance

contract

liabilities

Impact on

profit/(loss)

before zakat

Impact on equity

Insurance contract liabilities 4,474,884

Expenses increase by 5% 4,477,354 (2,223) (2,166)

Expenses decrease by 5% 4,472,400 2,236 2,178

Yields curve shift up by 0.5% 4,474,418 419 408

Yields curve shift down by 0.5% 4,475,350 (419) (408)

Loss reserve increase by 5% 4,601,776 (114,203) (111,260)

Loss reserve decrease by 5% 4,347,979 114,214 111,271

Lapse rate increase by 5% 4,474,009 787 767

Lapse rate decrease by 5% 4,475,747 (777) (757)

Mortality rate increase by 10% 4,474,794 81 79

Mortality rate decrease by 10% 4,474,962 (70) (68)

Insurance

contract

liabilities

Impact on

profit/(loss)

before zakat

Impact on equity

Insurance contract liabilities 2,793,104

Expenses increase by 5% 2,828,169 (31,558) (30,745)

Expenses decrease by 5% 2,758,024 31,572 30,758

Yields curve shift up by 0.5% 2,795,025 (1,729) (1,684)

Yields curve shift down by 0.5% 2,791,153 1,756 1,711

Loss reserve increase by 5% 2,858,399 (58,765) (57,251)

Loss reserve decrease by 5% 2,666,925 113,561 110,635

Lapse rate increase by 5% 2,794,883 (1,601) (1,560)

Lapse rate decrease by 5% 2,791,311 1,614 1,572

Mortality rate increase by 10% 2,795,272 (1,951) (1,901)

Mortality rate decrease by 10% 2,793,097 6 6

Following are the sensitivities derived before risk mitigation by reinsurance contracts held:

31 December 2023

SAR '000

31 December 2022

SAR '000

105

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

30.

Risk management (continued)

Insurance Risks (continued)

Sensitivities on major assumptions considered while applying IFRS 17 (continued)

Insurance contract

liabilities

Impact on

profit/(loss)

before zakat

Impact on equity

Insurance contract liabilities 4,474,884

Reinsurance contract Assets 449,769

Net insurance contract liabilities 4,025,115

Expenses increase by 5% 4,026,684 (1,412) (1,376)

Expenses decrease by 5% 4,023,531 1,426 1,389

Yields curve shift up by 0.5% 4,024,666 404 393

Yields curve shift down by 0.5% 4,025,562 (402) (391)

Loss reserve increase by 5% 4,117,978 (83,577) (81,423)

Loss reserve decrease by 5% 3,932,239 83,588 81,434

Lapse rate increase by 5% 4,024,298 735 716

Lapse rate decrease by 5% 4,025,920 (725) (706)

Mortality rate increase by 10% 4,025,077 34 33

Mortality rate decrease by 10% 4,025,141 (23) (22)

Insurance contract

liabilities

Impact on

profit/(loss)

before zakat

Impact on equity

Insurance contract liabilities 2,793,104

Reinsurance contract Assets 347,654

Net insurance contract liabilities 2,445,450

Expenses increase by 5% 2,457,819 (11,132) (10,845)

Expenses decrease by 5% 2,433,066 11,146 10,858

Yields curve shift up by 0.5% 2,447,397 (1,752) (1,706)

Yields curve shift down by 0.5% 2,443,459 1,792 1,746

Loss reserve increase by 5% 2,471,108 (23,092) (22,497)

Loss reserve decrease by 5% 2,313,782 118,501 115,448

Lapse rate increase by 5% 2,447,302 (1,667) (1,624)

Lapse rate decrease by 5% 2,443,584 1,680 1,636

Mortality rate increase by 10% 2,447,621 (1,954) (1,904)

Mortality rate decrease by 10% 2,445,440 9 9

Following are the sensitivities derived after risk mitigation by reinsurance contracts held:

31 December 2023

SAR '000

31 December 2022

SAR '000

106

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

30.

Risk management (continued)

Insurance Risks (continued)

Claims development table

Accident year

2018 & earlier 2019 2020 2021 2022 2023 Total

Undiscounted liabilities for incurred claims, gross of reinsurance:

At end of accident year 3,470,991 2,272,583 1,568,163 1,949,840 2,249,458 2,821,835 14,332,870

1 year later 4,585,399 2,209,133 1,463,133 1,928,213 2,359,109 12,544,987

2 years later 4,532,614 2,095,496 1,454,879 1,903,428 9,986,417

3 years later 4,399,165 2,113,762 1,444,586 7,957,513

4 years later 4,539,793 2,109,305 6,649,098

5 years later 4,448,567 4,448,567

Gross estimates of the undiscounted amount of the claims 4,448,567 2,109,305 1,444,586 1,903,428 2,359,109 2,821,835 15,086,830

Cumulative gross claims and other directly attributable expenses paid 4,272,586 2,024,684 1,375,884 1,776,466 1,871,110 1,931,833 13,252,563

Gross undiscounted liabilities for incurred claims 175,981 84,621 68,702 126,962 487,999 890,002 1,834,267

Effect of discounting 907 4,117 3,568 6,675 25,838 37,413 78,518

175,074 80,504 65,134 120,287 462,161 852,589 1,755,749

Effect of the risk adjustment margin for non-financial risk 50,826 6,247 4,871 10,062 45,843 74,406 192,255

Gross liabilities for incurred claims before reserve & surplus payable

225,900 86,751 70,005 130,349 508,004 926,995 1,948,004

Other reserve 150,510

Takaful operations' surplus payable 74,200

Gross liabilities for incurred claims 2,172,714

Gross discounted liabilities for incurred claims excluding risk adjustment

The following tables show the estimates of cumulative incurred claims, including both claims notified and IBNR for each successive accident year at each reporting date, together with cumulative payments

to date. As required by IFRS 17, in setting claims provisions, the Company gives consideration to the probability and magnitude of future experience being more adverse than assumed which is reflected in

the risk adjustment.

In general, the uncertainty associated with the ultimate cost of settling claims is greatest when the claim is at an early stage of development. As claims develop, the ultimate cost of claims becomes more

certain. The Company aims to maintain adequate reserves in respect of its insurance business in order to protect against adverse future claims experience and developments. Claims triangulation analysis is

by accident years, spanning a number of financial years.

31 December 2023

SAR '000

107

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

30.

Risk management (continued)

Insurance Risks (continued)

Claims development table (continued)

Accident year

2018 &

earlier

2019 2020 2021 2022 2023 Total

At end of accident year 3,382,289 2,211,525 1,494,624 1,715,703 1,978,858 2,539,926 13,322,925

1 year later 4,173,839 2,161,688 1,379,654 1,724,454 1,919,197 11,358,832

2 years later 4,124,059 2,044,083 1,384,927 1,713,101 9,266,170

3 years later 3,981,776 2,066,581 1,374,206 7,422,563

4 years later 4,148,536 2,064,474 6,213,010

5 years later 4,059,273 4,059,273

Net estimates of the undiscounted amount of the claims 4,059,273 2,064,474 1,374,206 1,713,101 1,919,197 2,539,926 13,670,177

Cumulative net claims and other directly attributable expenses paid 3,883,883 1,980,626 1,311,823 1,606,851 1,785,858 1,827,763 12,396,804

Net undiscounted liabilities for incurred claims 175,390 83,848 62,383 106,250 133,339 712,163 1,273,373

Effect of discounting 866 4,269 3,301 5,168 9,157 45,732 68,493

174,524 79,579 59,082 101,082 124,182 666,431 1,204,880

Effect of the risk adjustment margin for non-financial risk 42,377 6,110 3,442 7,743 10,298 54,563 124,533

Net liabilities for incurred claims before reserve & surplus payable

216,901 85,689 62,524 108,825 134,480 720,994 1,329,413

Other reserve 129,437

Takaful operations' surplus payable 74,200

Net liabilities for incurred claims

1,533,050

31 December 2023

SAR '000

Net discounted liabilities for incurred claims excluding risk

adjustment

Undiscounted liabilities for incurred claims, net of reinsurance:

108

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

30.

Risk management (continued)

Insurance Risks (continued)

Claims development table (continued)

Accident year

2018 & earlier 2019 2020 2021 2022 Total

Undiscounted liabilities for incurred claims, gross of reinsurance:

At end of accident year 3,470,991 2,272,583 1,568,163 1,949,840 2,249,458 11,511,035

1 year later 4,585,399 2,209,133 1,463,133 1,928,213 10,185,878

2 years later 4,532,614 2,095,496 1,454,879 8,082,989

3 years later 4,399,165 2,113,762 6,512,927

4 years later 4,539,793 4,539,793

Gross estimates of the undiscounted amount of the claims 4,539,793 2,113,762 1,454,879 1,928,213 2,249,458 12,286,105

Cumulative gross claims and other directly attributable expenses paid 4,376,939 2,003,647 1,358,640 1,731,417 1,467,070 10,937,713

Gross undiscounted liabilities for incurred claims

162,854 110,115 96,239 196,796 782,388 1,348,392

Effect of discounting 839 5,357 4,998 10,347 41,424 62,965

Gross discounted liabilities for incurred claims excluding risk adjustment 112,124 74,868 65,442 133,987 532,873 1,285,427

Effect of the risk adjustment margin for non-financial risk 26,712 3,283 2,560 5,288 63,198 101,041

Gross liabilities for incurred claims before reserve & surplus payable 138,836 78,151 68,002 139,275 596,071 1,386,468

Other reserve 69,805

Takaful operations' surplus payable 37,318

Gross liabilities for incurred claims 1,493,591

31 December 2022

SAR '000

109

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

30.

Risk management (continued)

Insurance Risks (continued)

Claims development table (continued)

Accident year

2018 & earlier 2019 2020 2021 2022 Total

Undiscounted liabilities for incurred claims, net of reinsurance:

At end of accident year 3,382,289 2,211,525 1,494,624 1,715,703 1,978,858 10,782,999

1 year later 4,173,839 2,161,688 1,379,654 1,724,454 9,439,635

2 years later 4,124,059 2,044,083 1,384,927 7,553,069

3 years later 3,981,776 2,066,581 6,048,357

4 years later 4,148,536 4,148,536

Net estimates of the undiscounted amount of the claims 4,148,536 2,066,581 1,384,927 1,724,454 1,978,858 11,303,356

Cumulative net claims and other directly attributable expenses paid 4,003,033 1,959,666 1,295,203 1,577,040 1,399,264 10,234,206

Net undiscounted liabilities for incurred claims 145,503 106,915 89,724 147,414 579,594 1,069,150

Effect of discounting 718 5,443 4,747 7,170 39,805 57,883

Net discounted liabilities for incurred claims excluding risk adjustment 144,785 101,472 84,977 140,244 539,789 1,011,267

Effect of the risk adjustment margin for non-financial risk 23,714 3,419 1,926 4,333 36,296 69,688

Net liabilities for incurred claims before reserve & surplus payable 168,499 104,891 86,903 144,577 576,085 1,080,955

Other reserve 47,707

Takaful operations' surplus payable 37,318

Net liabilities for incurred claims 1,165,980

31 December 2022

SAR '000

110

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

30.

Risk management (continued)

Financial risk

Financial risk comprises of the followings:

- Liquidity risk

- Market risk

- Credit risk

These risks have been briefly explained below:

Liquidity risk

The following policies and procedures are in place to mitigate the Company’s exposure to liquidity risk:

-

Maturity profiles

Maturity analysis for insurance and reinsurance contract liabilities (present value of future cash flows basis)

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial

asset. In respect of catastrophic events, there is also a liquidity risk associated with the timing differences between gross cash outflows and expected reinsurance recoveries.

The Company’s liquidity risk policy sets out the assessment and determination of what constitutes liquidity risk for the Company. Compliance with the policy is monitored and

exposures and breaches are reported to the Company’s risk committee. The policy is regularly reviewed for pertinence and for changes in the risk environment.

The Company maintains a portfolio of highly marketable and diverse assets that can be easily liquidated in the event of an unforeseeable interruption of cash flow. The Company also

has committed lines of credit that it can access to meet liquidity needs.

The following table summarizes the maturity profile of groups of insurance contracts issued and reinsurance contracts held that are liabilities of the Company based on the estimates of

the present value of the future cash flows expected to be paid out in the periods presented.

111

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

30.

Risk management (continued)

Financial risk (continued)

Liquidity risk (continued)

Maturity profiles (continued)

Up to 1

Year

1–2 years 2-3 years 3-4 years 4-5 years >5 years Total

Insurance contract Liabilities

Motor takaful comprehensive policy 314,653 157,513 52,114 22,858 10,790 1,678 559,606

Motor takaful extended warranties policy - - - - - - -

Motor takaful third party liability 213,700 88,267 47,429 29,585 11,277 1,198 391,456

Corporate health 292,660 25,526 1,012 92 - - 319,290

SME 19,640 3,245 191 14 - - 23,090

Pools - - - - - - -

Visit visa certificate 1,928 104 15 - - - 2,047

Accident and liability 85,721 17,899 3,423 - - - 107,043

Engineering 51,668 (23,924) 3,132 140 135 18 31,169

Marine 47,432 4,006 192 - - - 51,630

Property 215,078 13,019 279 - - - 228,376

Group credit life plan 68,843 1,811 - - - - 70,654

Group term takaful plan 8,078 41 - - - - 8,119

Child education takaful Plan (25,297) (20,859) (15,446) (13,783) (12,633) 107,848 19,830

Individual family takaful plan 26 22 12 5 1 66

Individual retirement plan (583,843) (497,554) (375,932) (303,108) (285,954) 2,227,681 181,290

Individual single contribution plan 42,978 70,723 63,431 50,950 389,558 6,320 623,960

753,265 (160,161) (220,148) (213,247) 113,174 2,344,743 2,617,626

31 December 2023

SAR '000

112

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

30.

Risk management (continued)

Financial risk (continued)

Liquidity risk (continued)

Maturity profiles (continued)

Up to 1

Year

1–2 years 2-3 years 3-4 years 4-5 years >5 years Total

Reinsurance contract assets

General accident 66,740 9,077 3,039 703 34 1 79,594

Engineering (30,730) 15,314 907 1 - - (14,508)

Marine 45,764 4,436 200 4 - - 50,404

Marine XOL (1,461) - - - - - (1,461)

Non-marine risk (8,726) 81 - - - - (8,645)

Property (155,169) 20,456 652 15 - - (134,046)

Group credit 74,690 1,172 (5,944) (6,060) (19,542) - 44,316

Motor XOL 723 1,730 1,455 854 8 (11) 4,759

Individual 931 1,037 1,021 992 1,012 7,089 12,082

(7,238) 53,303 1,330 (3,491) (18,488) 7,079 32,495

31 December 2023

SAR '000

113

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

30.

Risk management (continued)

Financial risk (continued)

Liquidity risk (continued)

Maturity profiles (continued)

Up to 1

Year

1–2 years 2-3 years 3-4 years 4-5 years >5 years Total

Insurance contract Liabilities

Motor takaful comprehensive policy 338,113 100,069 39,142 13,686 5,903 1,776 498,689

Motor takaful extended warranties policy (30) (4) - - - - (34)

Motor takaful third party liability 135,331 52,109 31,952 20,771 9,539 521 250,223

Corporate health 191,090 17,438 649 67 - - 209,244

SME 36,063 6,261 404 22 - - 42,750

Umrah - - - - - - -

Visit visa certificate 4,823 793 58 4 - - 5,678

Accident and liability 27,849 8,043 3,205 1,827 476 24 41,424

Engineering (8,044) (20,999) 2,223 (382) 14 - (27,188)

Marine 10,473 670 71 2 - - 11,216

Property 78,642 5,842 306 - - - 84,790

Group credit life 147,095 2,552 - - - - 149,647

Group term takaful plan 5,517 216 - - - - 5,733

Child education takaful Plan (20,363) (16,790) (12,433) (11,095) (10,169) 86,811 15,961

Individual family takaful plan (21) (18) (10) (4) (1) - (54)

Individual retirement plan (550,846) (469,434) (354,685) (285,977) (269,793) 2,101,779 171,044

Individual Single contribution plan - - - - - - -

395,692 (313,252) (289,118) (261,079) (264,031) 2,190,911 1,459,123

31 December 2022

SAR '000

114

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

30.

Risk management (continued)

Financial risk (continued)

Liquidity risk (continued)

Maturity profiles (continued)

Up to 1

Year

1–2 years 2-3 years 3-4 years 4-5 years >5 years Total

Reinsurance contract liabilities

General accident 14,482 9,009 5,752 4,180 992 48 34,463

Engineering (123,242) 10,097 1,829 172 6 - (111,138)

Marine 8,825 640 68 2 - - 9,535

Marine XOL 8,649 49 7 - - - 8,705

Non-marine risk 4,995 107 3 - - - 5,105

Property 11,436 5,345 289 - - - 17,070

Group credit 103,892 2,050 (385) (3,613) (2,338) - 99,606

Motor XOL 10,903 - - - - - 10,903

Individual (160) (178) (175) (170) (174) (1,216) (2,073)

39,780 27,119 7,388 571 (1,514) (1,168) 72,176

31 December 2022

SAR '000

115

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

30.

Risk management (continued)

Financial risk (continued)

Liquidity risk (continued)

Maturity analysis for financial assets

Up to 1

Year

More than one

year

Total

Cash and cash equivalents 909,858 - 909,858

482,828 - 482,828

- 57,494 57,494

30,510 1,803,379 1,833,889

1,163,230 - 1,163,230

2,586,426 1,860,873 4,447,299

Cash and cash equivalents 35,245 - 35,245

44,880 - 44,880

- 401,718 401,718

10,315 656,591 666,906

90,440 1,058,309 1,148,749

Total 2,676,866 2,919,182 5,596,048

Up to 1

Year

More than one

year

Total

Cash and cash equivalents 577,917 - 577,917

268,506 - 268,506

- 80,404 80,404

25,585 1,175,100 1,200,685

268,506 - 268,506

1,140,514 1,255,504 2,396,018

Financial assets measured at amortized cost

Investment for unit linked contracts

31 December 2022 - Restated

SAR '000

Takaful operations - financial assets

Financial assets measured at FVTPL

Financial assets measured at FVOCI

31 December 2023

SAR '000

The following table summarizes the maturity profile of financial assets of the Company based on the remaining undiscounted

contractual cash flows, including commission receivable:

Takaful operations - financial assets

Shareholders’ operations - financial assets

Financial assets measured at FVTPL

Financial assets measured at FVOCI

Financial assets measured at amortized cost

Financial assets measured at FVTPL

Financial assets measured at FVOCI

Financial assets measured at amortized cost

Investment for unit linked contracts

116

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

30.

Risk management (continued)

Financial risk (continued)

Liquidity risk (continued)

Maturity analysis for financial assets

Up to 1

Year

More than one

year

Total

Cash and cash equivalents 42,493 - 42,493

55,202 - 55,202

- 349,522 349,522

6,646 720,424 727,070

104,341 1,069,946 1,174,287

Total 1,244,855 2,325,450 3,570,305

Market risk

- Currency risk;

- Commission rate risk; and

- Price risk

Currency risk

The following table summarizes the maturity profile of financial assets of the Company based on the remaining undiscounted

contractual cash flows, including commission receivable:

31 December 2022 - Restated

SAR '000

Management believes that there is minimal risk of significant losses due to exchange rate fluctuation as the majority of

monetary assets and liabilities are in currencies linked to the SAR. In addition, Company’s foreign currency transactions are

primarily in US dollars which is pegged with SAR and therefore the financial instruments are not sensitive to currency

fluctuations.

Market risk is the risk that the fair value or future cash flows of a financial instrument, insurance contract issued, or

reinsurance contract held will fluctuate because of changes in market prices. Market risk comprises three types of risk:

Currency risk is the risk that the fair value of future cash flows of a financial instrument, insurance contract assets and/or

liabilities will fluctuate because of changes in foreign exchange rates. The Company’s principal transactions are carried out in

SAR and its exposure to foreign exchange risk arises primarily with respect to the US dollar. The Company’s financial assets

are primarily denominated in the SAR.

Financial assets measured at amortized cost

Shareholders’ operations - financial assets

Financial assets measured at FVTPL

Financial assets measured at FVOCI

117

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

30.

Risk management (continued)

Financial risk (continued)

Market risk (continued)

Commission rate risk

Price risk

Credit risk

Credit risk measurement

-

- If the financial instrument is credit-impaired, the financial instrument is then moved to ‘Stage 3’.

-

A pervasive concept in measuring ECL in accordance with IFRS 9 is that it should consider forward looking information.

Commission rate risk arises from the possibility that changes in commission rates will affect future profitability or the fair

values of financial instruments. The Company has no significant concentration of commission rate risk.

The sensitivity of the income is the effect of the assumed changes in the commission rates, with all other variable held

constant, on the Company’s income for one year. Based on the floating rate financial assets held at 31 December 2023, an

increase or decrease of 50 basis points in commission rates would result in a change in the loss or gain for the year of SAR

6.475 million (31 December 2022: SAR 3.975 million)

Price risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in

market prices (other than those arising from commission rate risk or currency risk), whether those changes are caused by

factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded

in the market

The Company has investment in the mutual funds (classified as FVTPL). A 5% change in the net asset value of funds, with all

other variables held constant, would impact the net income for the year by increase / decrease of SAR 7.758 million (31

December 2022: SAR 9.962 million) .

The Company has investment in the Saudi companies equities listed on Tadawul (Classified as FVOCI). A 5% change in the

market value of these investments, with all other variables held constant, would impact the shareholders' equity by increase /

decrease of SAR 20.975 million (31 December 2022: SAR 21.119 million).

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to

incur a financial loss. For all classes of financial instruments held by the Company, the maximum credit risk exposure to the

Company is the carrying value as disclosed in the statement of financial position.

IFRS 9 outlines a ‘three-stage’ model for impairment based on changes in credit quality since initial recognition as

summarised below:

A financial instrument that is not credit-impaired on initial recognition is classified in ‘Stage 1’ and has its credit risk

continuously monitored by the Company.

If a significant increase in credit risk since initial recognition is identified, the financial instrument is moved to ‘Stage 2’

but is not yet deemed to be credit-impaired.

Financial instruments in Stage 1 have their ECL measured at an amount equal to the portion of lifetime expected credit

losses that result from default events possible within the next 12 months. Instruments in Stages 2 or 3 have their ECL

measured based on expected credit losses on a lifetime basis.

118

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

30.

Risk management (continued)

Financial risk (continued)

Credit risk (continued)

Significant increase in credit risk

Quantitative criteria:

- Downward movement in the external credit rating by two notches;

-

- Contractual payments are more than 30 days past due ;

Qualitative criteria:

-

Definition of default and credit-impaired assets

Quantitative criteria:

- Contractual payments are more than 90 days past due;

- Counterparty’s refusal to pay the amounts due.

Qualitative criteria:

- Information about the bankruptcy of the counterparty;

- Legal case on recovery proceedings;

The criteria above have been applied to all financial assets. An instrument is considered to no longer be in default (i.e. to

have cured) when it no longer meets any of the default criteria for a consecutive period of twelve month. This period has been

determined based on an analysis which considers the likelihood of a financial instrument returning to default status after cure

using different possible cure definitions.

The Company incorporates forward-looking information into both its assessment of whether the credit risk of an instrument

has increased significantly since its initial recognition and its measurement of ECL. Based on consideration of a variety of

external actual and forecast information, the Company formulates a 'base case' view of the future direction of relevant

economic variables as well as a representative range of other possible forecast scenarios. This process involves developing

two or more additional economic scenarios and considering the relative probabilities of each outcome. External information

includes economic data and forecasts published by governmental bodies and monetary authorities in the KSA and selected

private-sector and academic forecasters. The base case represents a most-likely outcome. The other scenarios represent more

optimistic and more pessimistic outcomes.

Downward movement in the external credit rating by one notch if the revised external credit rating becomes below

“investment grade”;

An actual or expected significant adverse change in the regulatory, economic, or technological environment of the

counterparty that results in a significant decrease in the counterparty’s ability to meet its obligations to the Company;

The key judgements and assumptions adopted by the Company in addressing the requirements of IFRS 9 are discussed below:

The Company considers a financial instrument to have experienced a significant increase in credit risk when one or more of

the following quantitative and qualitative criteria have been met.

A group company of the counterparty has defaulted and in the Company’s opinion repayment capacity of the counterparty

would also be significantly impacted.

The Company defines a financial instruments as in default, which is fully aligned with the definition of credit-impaired, when

it meets one or more of the following criteria:

119

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

30.

Risk management (continued)

Financial risk (continued)

Credit risk (continued)

- Low credit risk of default;

- The counterparties have a strong capacity to meet their obligations in the near term;

-

Measuring expected credit losses

-

Loss Given Default (LGD) represents the Company’s expectation of the extent of loss on a defaulted exposure. LGD is

expressed as a percentage loss per unit of exposure at the time of default (EAD). LGD is calculated on a 12-month or

lifetime basis, where 12-month LGD is the percentage of loss expected to be made if the default occurs in the next 12

months and Lifetime LGD is the percentage of loss expected to be made if the default occurs over the remaining expected

lifetime of the exposure.

The Company considers scenarios in range of 3-5 years horizon (consistent with forecast available from public sources)

beyond which long term average macroeconomic conditions prevail. Externally available macroeconomic forecast from

Global Rating Agencies and the Insurance Authority are used for making base case forecast. For other scenarios, adjustment

are made to base case forecast based on expert judgement. The Company uses multiple scenarios and probabilities are

assigned to each scenario based on expert judgement.

Based on the detailed analysis of the Companies exposures to the credit risk, the management of the Company have opted to

benefit from the practical expedient in calculating the expected credit losses provided by IFRS 9 for financial assets with low

credit risk. The management of the Company measures impairment using 12-month expected credit losses for its financial

assets subject to impairment. The low credit risk financial assets of the Company meet the following requirements of IFRS 9

to measure impairment using 12-month expected credit losses:

Adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of

the counterparties to fulfil their contractual cash flow obligations.

The Company uses external credit risk ratings of well-known and reputable rating agencies to assess the probability of default

of individual counterparties.

The Company does not recognise lifetime expected credit losses on a financial instrument simply because it was considered

to have low credit risk in the previous reporting period and is not considered to have low credit risk at the reporting date. In

such a case, the Company will determine whether there has been a significant increase in credit risk since initial recognition

and thus whether lifetime expected credit losses are required to be recognised.

The Expected Credit Loss (ECL) is measured on either a 12-month or lifetime basis depending on whether a significant

increase in credit risk has occurred since initial recognition or whether an asset is considered to be credit-impaired. Expected

credit losses are the discounted product of the Probability of Default (PD), Exposure at Default (EAD), and Loss Given

Default (LGD), defined as follows:

The PD represents the likelihood of a borrower defaulting on its financial obligation, either over the next 12 months (12-

month PD), or over the remaining lifetime (Lifetime PD) of the obligation.

EAD is based on the amounts the Company expects to be owed at the time of default, over the next 12 months (12M EAD)

or over the remaining lifetime (Lifetime EAD).

120

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

30.

Risk management (continued)

Financial risk (continued)

Credit risk (continued)

Maximum exposure to credit risk – financial instruments subject to ECL

Financial statement line item Stage 1 Stage 2 Stage 3 Total

Bank balances 910,222 - - 910,222 578,043

Investments held at amortised cost 1,835,043 - - 1,835,043 1,201,731

Gross carrying amount

2,745,265 - - 2,745,265 1,779,774

Loss allowance (1,518) - - (1,518) (1,172)

Carrying amount

2,743,747 - - 2,743,747 1,778,602

Credit grade Stage 1 Stage 2 Stage 3 Total

Investment grade 2,745,265 - - 2,745,265 1,779,774

Gross carrying amount

2,745,265 - - 2,745,265 1,779,774

Loss allowance (1,518) - - (1,518) (1,172)

Carrying amount

2,743,747 - - 2,743,747 1,778,602

Financial statement line item Stage 1 Stage 2 Stage 3 Total

Bank balances 35,245 - - 35,245 42,493

Investments held at amortised cost 667,001 - - 667,001 727,206

Statutory deposit 100,000 - - 100,000 40,000

Gross carrying amount

802,246 - - 802,246 809,699

Loss allowance (121) - - (121) (165)

Carrying amount

802,125 - - 802,125 809,534

Credit grade Stage 1 Stage 2 Stage 3 Total

Investment grade 802,246 - - 802,246 809,699

Gross carrying amount

802,246 - - 802,246 809,699

Loss allowance (121) - - (121) (165)

Carrying amount

802,125 - - 802,125 809,534

Shareholders’ operations

31 December 2023

31 December

2022

SAR '000

31 December

2022

SAR '000

Shareholders’ operations

31 December 2023

31 December

2022

SAR '000

Takaful operations

31 December 2023

The following tables contains an analysis of the credit risk exposure of financial instruments for which an ECL allowance is

recognised. The gross carrying amount of financial assets measured at amortised cost below, also represents the Company’s

maximum exposure to credit risk on these assets.

Takaful operations

31 December 2023

31 December

2022

SAR '000

121

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

30.

Risk management (continued)

Financial risk (continued)

Credit risk (continued)

Loss allowance

The loss allowance recognised during the year may be impacted by a variety of factors, as described below:

-

Stage 1 Stage 2 Stage 3 Total

Opening loss allowance

1,172 - - 1,172 907

Transfers:

Transfer from stage 1 to stage 2 - - - - -

Transfer from stage 1 to stage 3 - - - - -

Transfer from stage 2 to stage 1 - - - - -

New financial assets originated or purchased 673 - - 673 1,044

Net re-measurement of loss allowance (327) - - (327) (779)

Write-offs - - - - -

Total loss allowance for the year

346 - - 346 265

Closing loss allowance

1,518 - - 1,518 1,172

Stage 1 Stage 2 Stage 3 Total

Opening loss allowance

165 - - 165 151

Transfers:

Transfer from stage 1 to stage 2 - - - - -

Transfer from stage 1 to stage 3 - - - - -

Transfer from stage 2 to stage 1 - - - - -

New financial assets originated or purchased 60 - - 60 91

Net re-measurement of loss allowance (104) - - (104) (77)

Write-offs - - - - -

Total loss allowance for the year

(44) - - (44) 14

Closing loss allowance

121 - - 121 165

Shareholders’ operations

31 December 2023

31 December

2022

SAR '000

Movements with the statement of income

Transfers between Stage 1 and Stages 2 or 3 due to financial instruments experiencing significant increases (or decreases)

of credit risk or becoming credit-impaired in the period, and the consequent “step up” (or “step down”) between 12-month

and Lifetime ECL;

Additional allowances for new financial instruments recognised during the period, as well as releases for financial

instruments de-recognised in the period;

Impact on the measurement of ECL due to changes in PDs, EADs and LGDs in the period, arising from regular refreshing

of inputs to models;

Movements with the statement of income

Takaful operations

31 December 2023

31 December

2022

SAR '000

122

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

30.

Risk management (continued)

Financial risk (continued)

Credit risk (continued)

The analysis of the credit ratings of the investment in sukuks and murabaha deposit is as follows:

Takaful operations

Shareholders’

operations

S & P equivalent (A+) - 536,650

S & P equivalent (A) 628,337 20,000

S & P equivalent (A-) 1,983,426 60,000

S & P equivalent (BBB+) 3,788 -

S & P equivalent (BBB-) 22,500 50,000

2,638,051 666,650

Takaful operations

Shareholders’

operations

S & P equivalent (AAA) - 585,524

S & P equivalent (A) 175,000

S & P equivalent (A+) 22,495 -

S & P equivalent (A-) - -

S & P equivalent (BBB+) 1,444,817 144,900

1,642,312 730,424

31. Approval of the financial statements

31 December 2023

SAR '000

31 December 2022

SAR '000

These financial statements were approved by the Board of Directors of the Company, on 18 Shaʻban 1445, corresponding

28 February 2024.

123

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

32. Supplementary information

Statement of financial position as of:

Takaful

operations

Shareholders’

operations

Total

Total assets 4,881,875 1,942,312 6,824,187

Total liabilities 4,885,304 216,097 5,101,401

Total equity (3,429) 1,726,215 1,722,786

Takaful

operations

Shareholders’

operations

Total

Total assets 2,819,327 1,511,847 4,331,174

Total liabilities 2,838,414 165,400 3,003,814

Total equity (19,087) 1,346,447 1,327,360

Takaful

operations

Shareholders’

operations

Total

Total assets 2,570,751 1,502,022 4,072,773

Total liabilities 2,567,896 178,001 2,745,897

Total equity 2,855 1,324,021 1,326,876

SAR '000

31 December 2022 - Restated

SAR '000

1 January 2022 - Restated

31 December 2023

SAR '000

124

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

32.

Supplementary information (continued)

Statement of income for the year ended:

Takaful

operations

Shareholders’

operations

Total

Takaful

operations

Shareholders’

operations

Total

Insurance revenue 4,236,470 - 4,236,470 2,934,503 - 2,934,503

Insurance service expenses (3,539,967) - (3,539,967) (2,491,494) - (2,491,494)

696,503 - 696,503 443,009 - 443,009

(826,985) - (826,985) (464,378) - (464,378)

-

449,232 - 449,232 80,184 - 80,184

(377,753) - (377,753) (384,194) - (384,194)

Insurance service result 318,750 - 318,750 58,815 - 58,815

Income on financial assets at fair value 17,917 7,578 25,495 23,478 18,169 41,647

100,203 29,546 129,749 38,073 10,590 48,663

Fair value gain of unit-linked investments 114,009 - 114,009 (12,481) - (12,481)

(399) 8 (391) (265) 23 (242)

Net investment income 231,730 37,132 268,862 48,805 28,782 77,587

(174,785) - (174,785) 25,359 - 25,359

28,562 - 28,562 6,655 - 6,655

Net insurance finance (expenses) / income (146,223) - (146,223) 32,014 - 32,014

Net insurance and investment result 404,257 37,132 441,389 139,634 28,782 168,416

Other operating expenses - (103,975) (103,975) - (98,501) (98,501)

Other income - 90 90 - 12,726 12,726

404,257 (66,753) 337,504 139,634 (56,993) 82,641

Provision for zakat - (9,443) (9,443) - (10,250) (10,250)

404,257 (76,196) 328,061 139,634 (67,243) 72,391

31 December 2022 - Restated

SAR '000

Insurance service result before retakaful /

reinsurance contracts held

Allocation of retakaful / reinsurance

contributions

Net income for the year attributable to the

shareholders before zakat

Net income for the year attributable to the

shareholders after zakat

31 December 2023

Amounts recoverable from retakaful /

reinsurance for incurred claims

Income on financial assets at amortised cost

and short-term deposits

Net credit impairment losses on financial

assets

Finance (expense) / income from insurance

contracts issued

Finance income from retakaful / reinsurance

contracts held

Net (expense) / income from retakaful /

reinsurance contracts held

125

Al Rajhi Company for Cooperative Insurance

(A Saudi Joint Stock Company)

Notes to the financial statements (continued)

For the year ended 31 December 2023

32.

Supplementary information (continued)

Statement of income for the year ended:

Takaful

operations

Shareholders’

operations

Total

Takaful

operations

Shareholders’

operations

Total

- 337,504 337,504 - 82,641 82,641

Net cash from operating activities

1,475,204 361,593 1,836,797 351,586 119,077 470,663

Net cash used in investing activities

(1,422,257) (58,128) (1,480,385) (16,330) (347,096) (363,426)

300,594 (310,713) (10,119) (249,893) 241,994 (7,899)

353,541 (7,248) 346,293 85,363 13,975 99,338

516,725 37,784 554,509 431,362 23,809 455,171

870,266 30,536 900,802 516,725 37,784 554,509

Cash and cash equivalents at the beginning

of the period

Cash and cash equivalents at the end of

the period

31 December 2023

31 December 2022 - Restated

SAR '000

Net income for the year attributable to

the shareholders before zakat

Net change in cash and cash equivalents

Net cash from / (used in) financing

activities

126