2013 annual report - qgirco.com · annual report for 2013 that witnessed a continuation of the...

2013 ANNUAL REPORT |

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| QATAR GENERAL INSURANCE & REINSURANCE CO.

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H.H. Sheikh Tamim bin Hamad Al-ThaniEmir of the State of Qatar

H.H. Sheikh Hamad bin Khalifa Al-ThaniThe Father Emir

QATAR GENERAL INSURANCE & REINSURANCE COMPANY S.A.Q.

CONTENTS Chairman’s Message 4

Board of Directors 7

Board of Directors’ Report 8

Financial Highlights 11

Future Plan 12 Corporate Governance 16 Human Capital Development 16

Consolidated Financial Statements 18

Annual Report 2013

In The Name Of Allah The Most Merciful And The Most Gracious


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the rating upgrades reflect QGIRC’ s strong risk-adjusted capitalization, sound track record of operating performance and enhanced risk management capabilities

I am pleased to present you the Company’s annual report for 2013 that witnessed a continuation of the strong performance of the Qatar General Group. I pay special tribute to the achievements of Qatar General Insurance and Reinsurance Company and its subsidiaries for the achievements in insurance industry as well as the investments in both financial and real estate sectors in light of the economic growth that the State of Qatar witnesses under the wise leadership of His Highness The Emir Sheikh Tamim Bin Hamad Bin Khalifa Al Thani.

I am also pleased to convey to you that our Company by grace of Allah managed to achieve an upgrade in its rating to A- by A.M. Best Company. This rating reflects the solvency and the financial strength the Company enjoys as well as the strength of the capital base and operational performance and risk management policy and what the Company offers as integrated insurance services to individuals and corporate clients.

In regards of the development of administrative and technical performance of the Company, the Company has worked to achieve the best levels of performance in field of insurance services as well as in fields of financial and real estate investments. Therefore, the Company focused on reinforcing different departments of the Group by highly experienced and qualified professionals to carry out the Company’s strategy and achieve its goals and objectives. In the field of human resources development, which is based on the Qatar vision 2030 and Qatarization policy pursued by the Company, the focus was on Qatari cadres whereby the Company recruited many Qatari employees.

In the meantime, to affirm the Board of Directors’ commitment to the principles and rules of corporate governance, the Company issues its annual report which confirms its commitment to those principles and rules. We are pleased to invite you to view the corporate governance report for 2013 which is published on the Company’s website.

As for the future plan, World Trade Center Tower has been fully completed on Doha Corniche. The Company is willing to build landmark projects through development of its own land in the Lusail area and Qatar General Towers project (formerly known as Asia Towers).

The Company is currently working on substantial amendments to restructure the Group’s companies based on the Group’s future business strategy through splitting the investment activities from the

insurance activity to strengthen the financial and administrative condition and the competitiveness of the Group’s companies.

It is an honor on behalf of the Board ofDirectors, all shareholders and employeesof the Company to convey our sinceregratitude and devotion to His HighnessThe Emir Sheikh Tamim Bin Hamad BinKhalifa Al Thani, and to His ExcellencyPrime Minister and Interior Minister SheikhAbdullah Bin Nasser Bin Khalifa Al Thani,His Excellency Minister of Finance Mr. Ali Sherif Al Emadi, His Excellency Minister of Economy and Trade Sheikh Ahmed Bin Jassim Bin Mohammed Al Thani, and His Excellency Governor of Qatar Central Bank Sheikh Abdullah Bin Saud Al Thani for their continuous and generous support to the Company and all economic activities in our country Qatar.

I extend my thanks on this occasion to Shareholders and valued clients for their trust and continuous support of the Company. I would also like to thank the executive management and all employees of the Group for their dedicated efforts in implementing the Group’s strategy and for the good results that have been achieved during this year.

In conclusion, I reiterate our ongoing commitment to all Shareholders, clients and our determination to devote all efforts in 2014 and the coming years to further strengthen the leading position of the Group.

Peace be upon you and Allah’s mercy and blessings,,

CHAIRMAN’S MESSAGEA.M. Best upgraded the Company’s financial strength rating to A- (Excellent) from B++ (Good) and issuer credit rating to “a-” from “bbb+” with “stable” outlook for both ratings.

Nasser Bin Ali Bin Saud Al ThaniChairman & Managing Director

According to A.M. Best,


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Sh. Nasser Bin Ali Bin Saud Al ThaniChairman & Managing Director

Sh. Mohammed Bin Ali Bin Saud Al ThaniDeputy Chairman

Sh. Jassim Bin Khalifa Al ThaniMember

Mr. Mohammed Hamad Al ManaMember

Mr. hamad Mohammad Al ManaMember

Sr. Rashid Faisal Al NumaimiMember for Al Faisal

Trading & Contracting Co.

Mr. Khalifa Bin Ali Al KaabiMember for Ali Bin Saad Al Kaabi

Trading & Contracting Co.

Mr. Jamal Kamel Abu NahlMember for Al Sari Trading Co.

BOARD OF DIRECTORS

a real partner to rely on.Years of Success...

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Dear Shareholders,

Peace be upon you and Allah’s mercy and blessings,,

I am pleased to welcome you on behalf of the Board of Directors and present our annual report for the year ended 31 December 2013 and the future business plan to achieve the best returns for our Shareholders with the help of Allah.

Qatar General Insurance and Reinsurance group of companies was able to preserve its leadership position in the Qatari insurance market and to develop its investment activities capitalizing on the economic growth and prosperity State of Qatar witnesses under the wise leadership

of His Highness Sheikh Tamim Bin Hamad Bin Khalifa Al Thani, the Emir of the State of Qatar.

The Company managed to achieve an upgrade for its Financial Strength Rating (FSR) and Issuer Credit Rating (ICR) to “A-“ & “a-“ respectively with “Stable” outlook from A.M. Best Company. This reflects the Company’s extremely strong capital, solid operating performance, risk management policy as well as the quality of insurance services provided by the Company to its individual and corporate clients.

The Group by grace of Allah achieved satisfactory results in the insurance business through offering high quality insurance products and excellent services. A growth of +12% was achieved in gross written premiums in spite of the strong competition in the Qatari market. Also, an immense growth of +33% in the gross written premiums was achieved for the Takaful business, which reflects the strong performance and constant achievement by the Group in the Takaful insurance market.

The Group also continued to outperform in its investment activities through the development of exceptional real estate projects, diversification of the investment portfolio and income resources, and the mitigation of the associated risks while maintaining sufficient and stable returns. World Trade Centre project has been fully completed and is considered as one of the real estate edifices in Dafna area - Doha Corniche.

In this regard, the Group continues to exploit the investment opportunities in bond markets with good credit rating to provide stable returns and necessary liquidity for the Company’s activities.

The local investment portfolio of the Group of listed companies in Qatar Exchange also maintained a balanced performance derived from cash dividends, gain from sales and capital appreciation, supported by the robust performance in the capital markets and in view of the stable and attractive investment environment in the Country. The foreign strategic investments portfolio of the Group in the Arab region also achieved an outstanding performance in spite of the political situations witnessed in the region, reflecting the perspicacity and the prudent management of the objectives of such investments.

Financial Strength RatingFSr

Issuer Credit RatingICr OuTlOOk

growth in gross written premiums

A-Excellent

a-Excellent Stable

+12%

BOARD OF DIRECTORS’ REPORT


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The Group achieved an enormous saving in borrowings cost during the current year through restructuring of credit facilities related to investments and real estate activities with better financing terms and more competitive interest rates.

Regarding the development of the administrational and technical management and prudent corporate governance of the Group, the principles of corporate governance were strengthened through activating and developing the performance of the Board by means of Audit, Risk Management, Nomination and Remuneration Committees. In addition, different departments of the Group were supported by qualified and experienced professionals to assume the responsibilities of developing the Group businesses.

In the meantime, work is underway to restructure the companies within the Group to cope up with the development requirements of the business based on the Group’s future business strategy, whereby the Company conducted a thorough study

to change the legal structure of Qatar General Holding Company, to manage the investment activities apart from the Company’s main activity being insurance, and aims to strengthen the financial and organizational position, and to boost the competitiveness of the Group’s companies.

Meanwhile, the Group has taken large steps towards the development of the national cadres by means of encouraging and attracting Qatari youth to join the insurance industry and by providing necessary training both internally and externally including university education to empower and develop them.

work is underway to restructure the companies within the Group to cope up with the development requirements of the business based on the Group’s future business strategy

NET PROFIT GROSS WRITTEN PREMIUM(INCLUDING TAKAFUL BUSINESS)

2013QR 2,131 million

2012QR 176 million

2013QR 763 million

2012QR 653 million

INVESTMENT INCOME

TOTAL ASSET GENERAL TAKAFUL COMPANY’STOTAL ASSET

TOTAL EQUITY

2013QR 70 million

2012QR 58 million

2013QR 7.12 billion

2012QR 4.71 billion

2013QR 280 million

2012QR 242 million

2013QR 4.78 billion

2012QR 2.58 billion

• The Group achieved net profit of QR 2,131 million for the year ended 31/12/2013 compared with QR 176 million for the year 2012, representing an increase of QR 1,955 million, whilst the net profit of the Group after deducting the fair value gains from revaluation of investment properties amounted to QR 129 million compared with QR 136 million for the year 2012.

• The gross written premium (including Takaful business) reached QR 763 million compared with QR 653 million for the year 2012, representing an increase of 17%.

• The Group achieved earnings per share of QR 36.96 compared with QR 3.04 for the year 2012.

• The Group achieved investment income of QR 70 million compared with QR 58 million for the year 2012, representing an increase of 21%.

• The total assets of the Group reached QR 7.12 billion as at 31/12/2013 compared with QR 4.71 billion as at 31/12/2012, representing an increase of 51%.

• The total assets of General Takaful Company (Shareholder and Policyholders) reached QR 280 million as at 31/12/2013 compared with QR 242 million as at 31/12/2012, an increase of 16%.

• Total equity reached QR 4.78 billion as at 31/12/2013 compared with QR 2.58 billion as at 31/12/2012, representing an increase of 85%. Return on equity reached 83% compared with 7% for the year 2012.

Here we summarize the financial results of the Group for the year 2013:

FINANCIAL HIGHLIGHTS


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During 2013, the Company opened its fully fledged branch in Al Khor City and started construction of another branch in Doha City - Al Murrah Area.

A. Insurance activity

The Company’s business plan in the coming phase emphasizes on developing the insurance activities and boost up its competitiveness in the present environment that is characterized by increased competition from companies that recently entered into domestic insurance market through Qatar Financial Centre (QFC). This plan includes the development and modernization of the various insurance products with excellent customer service by increasing the number of local branches and creating strategic partnerships with leading insurance companies.

The Company also works on enhancing the insurance business through strategic acquisitions in other insurance companies in the region.

1. Future Plan B. General Takaful Company

Since its inception in 2008, General Takaful Company has achieved outstanding results and attained an exceptional rank among the local Takaful companies in the Country as its gross premiums increased by 33%, and total assets increased by 16% compared with the year 2012, and achieved return on equity of 29%.

The plan in the coming phase for the Takaful business is to increase the client base as well as the Company’s market share through opening new branches and introducing new products in compliance with the Shariaa principles, as well as providing competitive insurance products to clients of Islamic banks.

Based on the results and in light of the future financial requirements of the business, the Board recommend its esteemed General Assembly to endorse the following:

1. Approval of statement of balance sheet and profit and loss accounts for the financial year ended 31/12/2013.

2. Distribution of 15% cash dividends of the share’s nominal value, equivalent to QR 1.5 per share, and bonus shares of 20% of share capital, equivalent to one share for every five shares.

growth in Takaful gross written premiums

increase in General Takaful’s total assets

+33%

+16%


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ALGERIATrust Bank AlgeriaTrust Investment Holding AlgeriaTrust Algeria Assurances & Reassurances

LIBYATrust Libya Insurance

SYRIATrust Syria InsuranceArabian Insurance Institute

QATAR

Qatar General Insurance & Reinsurance Qatar General Holding General Takaful General Real Estate World Trade Center Mazoon Insurance Marketing Services Mazoon Real Estate General Water and Beverages International Financial Securities Qatari Unified Bureau Insurance Gulf Petroleum Limited

BAHRAINGulf Assist

OMANOman Reinsurance

C. Investment activity

The investment policy of the Group in the coming phase will continue to diversify income sources of the portfolio and the risks geographically and through the concentration on liquid investments aimed to diversify income sources and decrease the risks of financial market fluctuations.

As part of the Group’s strategic drive to develop its real estate portfolio, and since the development of the World Trade Center Qatar Tower project on Doha Corniche has now been completed, the Group finalized the preliminary works and obtained approvals and permits necessary to commence the development of Qatar General Towers (formally known as Asian Towers) in the West Bay area in addition to proceeding with preliminary designs for the development of land owned by the Company in Lusail area.

D. regional Expansion

The Group adopted an expansion strategy outside the State of Qatar in the insurance, banking and real estate fields to enhance its position regionally as it participated in a number of important investments in Syria, Algeria, Libya, Oman and Bahrain.

Regarding the Group’s foreign investments, the Group has laid down an imminent strategy to provide technical and administrative support to the companies the Group has invested in within the countries of the region and to develop these strategic alliances to capitalize on the economic resurgence witnessed in the region, sustaining the State of Qatar’s prudent policy to support economies of neighboring Arab countries.

In this regard, we hereby confirm that all transactions with affiliated companies like Al Sari Trading Company and Trust Group of companies that provide technical support to the Company and the related parties disclosed in the consolidated financial statements are executed in the best interest of the Company, and are disclosed as required in the annual report and in the consolidated financial statements and presented with all transparency to the General Assembly.


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Attracting and training Qatari cadres to prepare the future leaders of the Company

2. Corporate Governance

The corporate governance rules and regulations are abided by in accordance with the corporate governance code of listed companies in financial markets which are under the supervision of Qatar Financial Market Authority and that the Company issues an annual report confirming its conformity with the principles of corporate governance and we are pleased to invite you to view our report which is published on the Company’s website.

3. Human Capital Development

In its continuing efforts to employ Qatari cadres, the Group worked on developing its human resources through attracting and training young Qatari talent that joined the Company in coordination with the Ministry of Labor. These efforts have led to maintain the advanced Qatarization percentage and the completion of training programs to prepare the future leaders of the Company.

We look with great confidence for the near future in which our cherished nation Qatar shall by Allah’s willing in the next few years a lot of mega projects including but not limited to Qatar Rail project and the projects associated with Qatar’s hosting of the FIFA World Cup 2022.

The Board of Directors would like to congratulate you for the continued success of the Group and its leading position in the local insurance market and international reinsurance markets and would like to thank the executive management and all

staff members for their dedicated efforts to produce these results based on the Group’s strategy.

Finally, it is an honor on behalf of the Board of Directors to convey my sincere gratitude and devotion to His Highness Sheikh Tamim Bin Hamad Bin Khalifa AI Thani, the Emir of the State of Qatar, and to our wise government for their continuous and generous support to our Company.We ask Allah to help us to serve our Shareholders and to serve our clients and achieve greater successes.

Peace be upon you and Allah’s mercy and blessings.


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ANNUAL REPORT |

QATAR GENERAL INSURANCE & REINSURANCE COMPANY S.A.Q.

CONTENTS Independent auditors’ report 19

Consolidated statement of financial position 20

Consolidated statement of income 21

Consolidated statement of comprehensive income 22

Consolidated statement of changes in equity 23-24

Consolidated statement of cash flows 25

Notes to the consolidated financial statements 26-89

Consolidated Financial Statements31 December 2013

INDEPENDENT AuDITOrS’ rEPOrT TO THE SHArEHOlDErS OF QATAr GENErAl INSurANCE & rEINSurANCE COMPANY S.A.Q.

report on the Financial StatementsWe have audited the accompanying consolidated financial statements of Qatar General Insurance & Reinsurance Company S.A.Q. (the ‘Company’) and its subsidiaries (together referred to as the “Group”), which comprise the consolidated statement of financial position as at 31 December 2013 and the consolidated statement of income, comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Board of Directors’ responsibility for the consolidated financial statementsThe Board of Directors is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards and for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate for the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as of 31 December 2013 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

report on legal and Other regulatory MattersFurthermore, in our opinion proper books of account have been kept by the Group and the consolidated financial statements comply with the Qatar Commercial Companies’ Law No. 5 of 2002 and the Company’s Articles of Association.

We have obtained all the information and explanations we required for the purpose of our audit, and are not aware of any violations of the above mentioned law or the Articles of Association having occurred during the year which might have had a material effect on the business of the Group or on its financial position.

Ziad Naderof Ernst & YoungAuditor’s Registration No. 258

Date: 9 February 2014 Doha

| QATAR GENERAL INSURANCE & REINSURANCE CO. 2013 ANNUAL REPORT |

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AssetsProperty and equipmentInvestment propertiesEquity accounted investeesFinancial assets: Available-for-sale financial assets Financial assets at fair value through profit or loss Receivables from related parties Insurance receivablesReinsurance assetsTakaful participants' assetsOther assetsCash and cash equivalentsTotal assets Equity and liabilitiesEquity attributable to equity holders of the parentIssued share capitalRetained earningsLegal reserveRevaluation reserves Non-controlling interestsTotal equity LiabilitiesInsurance contract liabilitiesFinancial liabilities: Borrowings Derivative financial instruments Payables to a related party Insurance payablesEmployees' end-of-service benefitsTakaful participants' liabilitiesOther liabilitiesTotal liabilities

Total equity and liabilities

Notes 456

7(a)7(b)7(c)7(d)

89(a)1011

12

13 14

17

18

1920212223

9(a)24

QR ‘000

63,626

4,277,199392,366

1,023,184171,623

9,141228,843483,770205,119118,113151,083

7,124,067

576,4613,224,192

348,497628,433

4,777,5831,847

4,779,430

688,322

982,99439,129

53295,65328,908

205,119104,459

2,344,637

7,124,067

QR ‘000

100,082

2,139,173288,903

878,455131,83216,906

236,887436,209191,186234,47760,700

4,714,810

501,2701,433,648

135,399506,563

2,576,8801,295

2,578,175

623,067

896,585 51,029

68 227,115 26,875

191,186 120,710

2,136,635

4,714,810

Nasser Bin Ali Bin Saud Al ThaniChairman and Managing Director

Jamal Kamel Abu NahlChief Executive Officer and Board Member

20122013

CONSOlIDATED STATEMENT OF FINANCIAl POSITIONAs at 31 December 2013

Gross written premiumsChange in unearned premiums provisionGross earned premiumsPremiums ceded to reinsurersNet earned premiums Fees and commission incomeInvestment incomeNet realised gains Fair value gains Other operating revenueOther revenue Total revenue Gross claims paidClaims ceded to reinsurersGross change in insurance contract liabilitiesChange in insurance contract liabilities ceded to reinsurersNet claims Finance costsOther operating and administrative expensesOther expenses Total expenses

Profit before share of profits of associates Share of profits of associates

Profit for the year

Profit attributable to:Equity holders of the parentNon-controlling interests

Earnings per shareBasic and diluted profit for the year attributable to ordinary equity holders of the parent (in Qatari Riyals per share)

Notes

26(a)26(a)26(a)26(b)

27282930 31

32(a)32(b)32(c)32(d)

3334

6

35

QR ‘000

560,255(42,103)518,152

(312,163)205,989

15,56270,20122,280

2,039,28412,182

2,159,509

2,365,498

(231,249)105,999(23,152)

7,265(141,137)

(16,886)(101,136)(118,022)

(259,159)

2,106,339

24,6462,130,985

2,130,433552

2,130,985

36.96

QR ‘000

500,180(26,206)473,974

(278,345)195,629

24,63057,72550,61128,61917,721

179,306

374,935

(192,227)79,790

(51,134)34,568

(129,003)

(16,266)(110,635)(126,901)

(255,904)

119,031

56,529175,560

174,999561

175,560

3.04

20122013

CONSOlIDATED STATEMENT OF INCOMEFor the Year Ended 31 December 2013

The attached notes 1 to 44 form part of these consolidated financial statements. The attached notes 1 to 44 form part of these consolidated financial statements.


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Profit for the year Other comprehensive incomeExchange differences on translating foreign operationsNet gain (loss) on cash flow hedgesNet gain (loss) on available-for-sale financial assetsOther comprehensive income for the year Total comprehensive income for the year

Total comprehensive income attributable to: Equity holders of the parent Non-controlling interests

Note

363636

QR ‘000

2,130,985

(20,600)11,900

130,570121,870

2,252,855

2,252,303552

2,252,855

QR ‘000

175,560

(10,124)(1,277)

(71,549)(82,950)

92,610

92,049561

92,610

20122013

CONSOlIDATED STATEMENT OF COMPrEHENSIVE INCOMEFor the Year Ended 31 December 2013

At 1

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201

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637,

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1,

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552 - - - -

1,84

7

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576,

880

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312

1,87

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4,77

7,58

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QR

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77,3

55 - - - - - - -

77,3

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5,39

9 - - - -21

3,09

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348,

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QR

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- - - -

(39,

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2,

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175

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0,98

512

1,87

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4,77

9,43

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1,

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75,1

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576,

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s 12 13 15 16

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The attached notes 1 to 44 form part of these consolidated financial statements.

The

atta

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4 fo

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24 | | 25

CO

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77

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77,3

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135,

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44

7,56

3 - - -

53,7

07- - -

501,

270

Not

es 12 13 15 16

Issu

ed

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ned

earn

ings

Lega

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ash

flow

hed

ging

Ava

ilabl

e-fo

r-sa

lefin

anci

alas

sets

Fore

ign

curr

ency

tra

nsla

tion

rese

rve

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ry

shar

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ders

'eq

uity

Non

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inte

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ty

Operating activitiesProfit for the yearAdjustment for:Net change in operating assetsNet change in operating liabilities

Non-cash items included in profit for the yearFair value gains Impairment (reversals) loss on receivablesShare of profits of associatesDepreciation of property and equipmentEmployees' end of service benefitsNet cash flows from operating activities

Investing activitiesNet movement in available-for-sale financial assetsNet movement in financial assets at fair value through profit or lossPurchase of property and equipmentPurchase of investment propertiesInvestments in equity accounted investeesDividends received from equity accounted investeesNet cash flows used in investing activities

Financing activitiesProceeds from bank loansFinance costs paid on bank loansDividends paid to equity holders of the parentNet cash flows from financing activities

Net increase/ (decrease) in cash and cash equivalentsCash and cash equivalents at the beginning of yearCash and cash equivalents at the end of year

Operational cash flows from interest and dividendsInterest paidInterest receivedDividends received

Notes

3737

303464

4566

3315

11

33

QR ‘000

2,130,985

(6,637)116,055

(2,039,284)(7,367)

(24,646)4,6142,033

175,753

(14,159)(2,339)(7,607)

(96,745)(11,668)

10,867(121,651)

123,063(14,618)(50,127)

58,318

112,42042,256

154,676

14,92712,80845,513

QR ‘000

175,560

(159,561)66,691

(28,619)6,555

(56,529)4,8476,802

15,746

(58,684)14,420

(983)(241,867)(39,916)

13,024(314,006)

262,810(14,949)(58,183)189,678

(108,582)150,83842,256

15,2628,365

37,525

20122013

CONSOlIDATED STATEMENT OF CASH FlOWSFor the Year Ended 31 December 2013

The attached notes 1 to 44 form part of these consolidated financial statements.The

atta

ched

not

es 1

to 4

4 fo

rm p

art o

f the

se c

onso

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ed fi

nanc

ial s

tate

men

ts.


26 | | 27

Name of the subsidiary Ownership Principal activitiesCountry of incorporation

Qatar General Holding Company S.P.C.

General Takaful Company S.P.C.

General Real Estate Company S.P.C.

World Trade Center S.P.C.

Mazoon Insurance Marketing Services S.P.C.

Mazoon Real Estate Company W.L.L.

General Water and Beverages Company W.L.L. (formally known as Arab Danish Diary W.L.L.)

Primarily engaged in managing investments of the Group

Primarily engaged in Islamic insurance

Primarily engaged in real estate investment and management

Official recognized licensee of the World Trade Center Association.

Insurance marketing services

Real estate investment and development

Water bottling and foodstuff trading

100 %

100 %

100 %

100 %

100 %

50 %

60 %

State of Qatar

State of Qatar

State of Qatar

State of Qatar

State of Qatar

State of Qatar

State of Qatar

NOTES TO THE CONSOlIDATED FINANCIAl STATEMENTSFor the Year Ended 31 December 2013

1. COrPOrATE INFOrMATION Qatar General Insurance and Reinsurance Company S.A.Q. (the “Company” or the “Parent Company”) is a public shareholding company incorporated by Emiri Decree No. 52 of 1978 under commercial registry number 7200 and governed by the provisions of the Qatar Commercial Companies Law No. 5 of 2002. The Company and its subsidiaries (together referred to as the “Group”) are engaged in the business of general insurance and reinsurance including Islamic Takaful insurance, real estate and investment management. The shares of the Company are listed on the Qatar Exchange. The Company has seven local branches in Qatar and one overseas branch in United Arab Emirates (in Dubai). The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries and the Group’s interest in the associates. The subsidiaries are:

During 2013, the legal name of the Arab Danish Diary W.L.L. was changed to General Water & Beverages W.L.L. This change had been duly approved by its partners and the required legal and regulatory approvals have been obtained.

These consolidated financial statements of the Group for the year then ended 31 December 2013 were authorized for issue by the Board of Directors on 9 February 2014.


2. BASIS OF PrEPArATION AND ACCOuNTING POlICIES

2.1 Basis of Preparation

Statement of complianceThese consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), and applicable provisions of the Qatar Commercial Companies Law No. 5 of 2002.

Basis of measurementThe consolidated financial statements are prepared under the historical cost convention, except for the following material items in the consolidated statement of financial position which are carried at fair value:

• derivative financial instruments;• non derivative financial instruments carried at fair value through profit or loss;• available-for-sale financial assets;• investment properties.

The methods used to measure fair values are discussed further in Note 3.

Functional and presentation currencyThe consolidated financial statements are presented in Qatari Riyal (QR), which is the Group’s functional currency. All financial information presented in Qatari Riyal has been rounded to the nearest thousands (QR ‘000), except where otherwise indicated.

2.2 use of estimates and judgements

The preparation of the consolidated financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that effect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses and disclosure of contingent liabilities at the reporting date. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

Information about significant areas of estimates and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial statements are included under Note 42 and 43.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimates are revised.

2.3 Changes in accounting policies and disclosures

The accounting policies adopted are consistent with those of the previous financial year, except for the following amendments to IFRS effective as of 1 January 2013:


28 | | 29


2. BASIS OF PrEPArATION AND ACCOuNTING POlICIES (continued)

2.3 Changes in accounting policies and disclosures (continued)

Standard IFRS 1

IFRS 7

IFRS 10IFRS 11IFRS 12IFRS 13IAS 1 IAS 19

Content First-time Adoption of International Financial Reporting Standards - Government Loans - Amendments to IFRS 1

Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities – Amendments o IFRS 7Consolidated Financial Statements, IAS 27 Separate Financial StatementsJoint Arrangements, IAS 28 Investments in Associates and Joint VenturesDisclosure of Interests in Other EntitiesFair Value MeasurementPresentation of Items of Other Comprehensive Income – Amendments to IAS 1Employee Benefits (Revised 2011)

IFrS 1 Government loans – Amendments to IFrS 1 These amendments require first-time adopters to apply the requirements of IAS 20 Accounting for Government Grants and Disclosure of Government Assistance, prospectively to government loans existing at the date of transition to IFRS. Entities may choose to apply the requirements of IFRS 9 (or IAS 39, as applicable) and IAS 20 to government loans retrospectively if the information needed to do so had been obtained at the time of initially accounting for that loan. The exception would give first-time adopters relief from retrospective measurement of government loans with a below-market rate of interest. The amendment is effective for annual periods on or after 1 January 2013.

IFrS 7 Disclosures - Offsetting Financial Assets and Financial liabilities - Amendments to IFrS 7 These amendments require an entity to disclose information about rights to set-off and related arrangements (e.g., collateral agreements). The disclosures would provide users with information that is useful in evaluating the effect of netting arrangements on an entity’s financial position. The new disclosures are required for all recognized financial instruments that are set off in accordance with IAS 32 Financial Instruments: Presentation.

The disclosures also apply to recognized financial instruments that are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are set off in accordance with IAS 32. These amendments become effective for annual periods beginning on or after 1 January 2013 and are not expected to impact the Group’s financial position or performance.

IFrS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. It also addresses the issues raised in SIC-12 Consolidation — Special Purpose Entities. IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgment to determine which entities are controlled and therefore are required to be consolidated by a parent, compared with the requirements that were in IAS 27. This standard becomes effective for annual periods beginning on or after 1 January 2013



2.3 Changes in accounting policies and disclosures (continued)

IFrS 11 Joint Arrangements IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities — Non-monetary Contributions by Venturers. IFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method. This standard becomes effective for annual periods beginning on or after 1 January 2013, and is to be applied retrospectively for joint arrangements held at the date of initial application.

IAS 28 Investments in Associates and Joint Ventures (as revised in 2012)As a consequence of the new IFRS 11 Joint Arrangements, and IFRS 12 Disclosure of Interests in Other Entities, IAS 28 Investments in Associates, has been renamed IAS 28 Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates. The revised standard becomes effective for annual periods beginning on or after 1 January 2013.

IFrS 12 Disclosure of Interests in Other Entities IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28. These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. This standard becomes effective for annual periods beginning on or after 1 January 2013.

IFrS 13 Fair Value Measurement IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The Group is currently assessing the impact that this standard will have on the financial position and performance, but based on the preliminary analyses, no material impact is expected. This standard becomes effective for annual periods beginning on or after 1 January 2013.

IAS 1 Presentation of Items of Other Comprehensive Income – Amendments to IAS 1The amendments to IAS 1 change the grouping of items presented in other comprehensive income (OCI). Items that could be reclassified (or ‘recycled’) to profit or loss at a future point in time would be presented separately from items that will never be reclassified (for example, net loss or gain on available-for-sale financial assets). The amendment affects presentation only and is effective for annual periods beginning on or after 1 July 2012.

IAS 19 Employee Benefits (Revised)The IASB has issued numerous amendments to IAS 19. These range from fundamental changes such as removing the corridor mechanism and the concept of expected returns on plan assets to simple clarifications and re-wording. The amendment becomes effective for annual periods beginning on or after 1 January 2013.


30 | | 31



2.4 Standards issued but not yet effective

Standards issued but not yet effective up to the date of issuance of the Group’s consolidated financial statements are listed below. This listing of standards and interpretations issued are those that the Group reasonably expects to have an impact on disclosures, financial position or performance when applied at a future date. The Group intends to adopt these standards when they become effective.

The Group is currently considering the implications of the new IFRSs which are effective for future accounting periods and has not early adopted any of the new Standards as listed below:

IFrS 10, IFrS 12 and IAS 27 Investment Entities (Amendments)The concept of an investment entity is new to IFRS. The amendments represent a significant change for investment entities, which are currently required to consolidate investees that they control. Significant judgment of facts and circumstances may be required to assess whether an entity meets the definition of investment entity. These amendments become effective for annual periods beginning on or after 1 January 2014.

IAS 32 Offsetting Financial Assets and Financial liabilities - Amendments to IAS 32These amendments clarify the meaning of “currently has a legally enforceable right to set-off”. The amendments also clarify the application of the IAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. These amendments become effective for annual periods beginning on or after 1 January 2014 and are not expected to impact the Group’s financial position or performance.

IAS 36 recoverable Amount Disclosures for Non- Financial Assets - Amendments to IAS 36The amendments clarify the disclosure requirements in respect of fair value less costs of disposal. The amendments no longer require the disclosure of information that was regarded as commercially sensitive by preparers. This might be a valid reason for entities to early adopt the amendments. Nevertheless, additional information needs to be provided. In general, it is likely that the information required to be disclosed will be readily available. These amendments become effective for annual periods beginning on or after 1 January 2014.

IAS 39 Novation of Derivatives and Continuation of Hedge Accounting - Amendments to IAS 39The amendments provide an exception to the requirement to discontinue hedge accounting in certain circumstances in which there is a change in counterparty to a hedging instrument in order to achieve clearing for that instrument. The amendments cover novations to central counterparties, as well as to intermediaries such as clearing members, or clients of the latter that are themselves intermediaries. These amendments become effective for annual periods beginning on or after 1 January 2014.



2.4 Standards issued but not yet effective (continued)

IFrIC 21 leviesIFRIC 21 is applicable to all levies other than outflows that are within the scope of other standards (e.g., IAS 12) and fines or other penalties for breaches of legislation. The interpretation clarifies that an entity recognises a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. It also clarifies that a levy liability is accrued progressively only if the activity that triggers payment occurs over a period of time, in accordance with the relevant legislation. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability is recognized before the specified minimum threshold is reached. These amendments become effective for annual periods beginning on or after 1 January 2014.

IFRS 9 Financial Instruments: Classification and Measurement IFRS 9, as issued, reflects the first phase of the IASB’s work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. The standard was initially effective for annual periods beginning on or after 1 January 2013, but Amendments to IFRS 9 Mandatory Effective Date of IFRS 9 and Transition Disclosures, issued in December 2012, moved the mandatory effective date to 1 January 2015. In subsequent phases, the IASB will address hedge accounting and impairment of financial assets. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Group’s financial assets, but will not have an impact on classification and measurements of financial liabilities. The Group will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued.

2.5 Annual Improvements May 2013

These improvements are effective for annual periods beginning on or after 1 January 2013. These improvements will not have an impact on the Group, but include:

IFrS 1 First-time Adoption of International Financial reporting Standards

repeated application of IFrS 1This improvement clarifies that an entity that stopped applying IFRS in the past and chooses, or is required, to apply IFRS, has the option to re-apply IFRS 1. If IFRS 1 is not re-applied, an entity must retrospectively restate its financial statements as if it had never stopped applying IFRS.

IAS 1 Presentation of Financial StatementsThis improvement clarifies the difference between voluntary additional comparative information and the minimum required comparative information. Generally, the minimum required comparative information is the previous period.

IAS 16 Property, Plant and EquipmentThis improvement clarifies that major spare parts and servicing equipment that meet the definition of property; plant and equipment are not inventory.


32 | | 33



2.5 Annual Improvements May 2013 (continued)

IAS 32 Financial Instruments, PresentationThis improvement clarifies that income taxes arising from distributions to equity holders are accounted for in accordance with IAS 12 Income Taxes.

IAS 34 Interim Financial reportingThe amendment aligns the disclosure requirements for total segment assets with total segment liabilities ininterim financial statements. This clarification also ensures that interim disclosures are aligned with annual disclosures.

3. SIGNIFICANT ACCOuNTING POlICIES

The accounting policies set out below have been applied by the Group consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities.

Basis of consolidationThe consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December 2013.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the Parent Company, using consistent accounting policies. All intra-group balances, transactions, recognized gains and losses resulting from intra-group transactions and dividends are eliminated in full.

Total comprehensive income within a subsidiary is attributed to the non-controlling interest even if it results in a deficit balance.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

• Derecognises the assets (including goodwill) and liabilities of the subsidiary• Derecognises the carrying amount of any non-controlling interests• Derecognises the cumulative translation differences recorded in equity• Recognises the fair value of the consideration received• Recognises the fair value of any investment retained• Recognises any surplus or deficit in profit or loss• Reclassifies the parent’s share of components previously recognized in other

comprehensive income to profit or loss or retained earnings, as appropriate.


3. SIGNIFICANT ACCOuNTING POlICIES (continued)

Basis of consolidation (continued)

Investment in subsidiary companiesSubsidiaries are defined as companies that are controlled by the Group, namely companies in which the Group has the power to govern the financial and operating policies so as to obtain benefits from their activities.

The consolidated financial statements comprise the financial statements of Qatar General Insurance and Reinsurance Company S.A.Q and its subsidiary companies as at 31 December 2013. The financial statements of the subsidiary companies are prepared for the same reporting year as the Parent Company, using consistent accounting policies.

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

One of the Group’s subsidiaries, General Takaful Company S.P.C, is an operator of Islamic insurance business operating under Islamic Shari’a principles. In accordance with applicable Shari’a principles, participants’ (policyholders’) funds are maintained distinct from the operator’s (shareholders’) funds. Accordingly, the participants’ assets and liabilities including the fund balances are shown separately as ‘Takaful participants’ assets’ and ‘Takaful participants’ liabilities’ respectively in the consolidated statement of financial position as supplementary information. Takaful participants’ fund accounts comprising of statement of financial position and statement of comprehensive income (policyholders) is set out in Note 9. The Group manages the takaful funds on behalf of the policy holders under the Hybrid model.

The Hybrid model uses the principles of both Wakala and Mudaraba, whereby the shareholder receives a fixed Wakala fee of 15% (2012: 20%) of gross insurance premiums, in addition to the 70% share in the realised investment gains on the policyholders’ contributions. The administrative costs of underwriting are covered by the Wakala fee and borne by the shareholder.

Investment in associate companiesAssociate companies are those entities in which the Group has significant influence, but not control, over the financial and operating policies. The consolidated financial statements include the Group’s share of total recognised gains and losses of associates on an equity accounted basis, from the date that significant influence commences until the date that significant influence ceases.

All subsequent changes to the Group’s share of interest in the equity of the associate are recognised in the Group’s carrying amount of the investment. Changes resulting from the profit and loss generated by the associate are reported in the consolidated statement of income and therefore affect net results of the Group.

Amounts reported in the consolidated financial statements of associates have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee.

When the Group’s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest, including any long term investments, is reduced to zero and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.


34 | | 35



Foreign currency

Foreign operations For the purpose of the consolidated financial statements, the results and financial position of the foreign branch is expressed in the functional currency of the parent company at the exchange rate prevailing at the reporting date. Income and expenses are translated at the average exchange rates for the year unless exchange rates fluctuated significantly during the year in which case the exchange rates at the dates of the transactions are used. Investment in foreign associates is translated at the closing exchange rates. Foreign currency translation differences are recognised directly in other comprehensive income. When a foreign operation is disposed of in part or full, the relevant amount in the reserve is transferred to the consolidated statement of income for the corresponding period.

Foreign currency transactionsForeign currency transactions are initially recorded in Qatari Riyals at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to Qatari Riyal at the exchange rate at that date.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to Qatari Riyal at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured based on historical cost are translated using the exchange rate at the date of the transactions. The resultant exchange differences are included in the consolidated statement of income.

Financial instruments Financial instruments represent the Group’s financial assets and liabilities. Financial assets include cash and cash equivalents, insurance and other receivables, receivables from related parties, reinsurance assets and investments. Financial liabilities include insurance payables, borrowings, derivative financial instruments, insurance contract liabilities, payables to a related party and other liabilities.

recognitionThe financial assets and liabilities are recognised on the date they are generated and on the date at which the Group becomes a party to the contractual provisions of the instrument.

All financial assets are recognised initially at fair value plus transaction costs, except in the case of financial assets recorded at fair value through profit or loss.

De-recognitionThe Group derecognises the financial asset when the contractual rights to receive cash flows from that asset expire or it transfers the right to receive the contractual cash flow of that asset in a transaction in which substantially all the risks and rewards of ownership of the financial assets are transferred.

The Group also derecognizes certain assets when it expenses balances pertaining to assets deemed to be uncollectible. The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expired.



Measurement Available-for-sale financial assets The Group’s investments in equity securities, fund accounts and certain debt securities are classified as available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses, and foreign currency differences on available-for-sale monetary items, are recognised directly in other comprehensive income and presented within equity in the fair value reserve. When an investment is derecognised, the cumulative gain or loss in equity is transferred to profit or loss. All purchases and sales of investments are recognised at the settlement date.

Financial assets at fair value through profit and lossAn instrument is classified at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. Financial instruments are held for trading if the Group manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Group’s investment strategy. Upon initial recognition, attributable transaction costs are recognised in profit or loss as incurred. Financial instruments at fair value through profit or loss are measured at fair value, and changes therein are recognised in profit or loss.

Cash and cash equivalentsCash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less as on the consolidated statement of financial position date.

Insurance and other receivablesInsurance and other receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in the consolidated statement of income when there is objective evidence of that the asset is impaired.

Reinsurance assetsThe Group cedes insurance risk in the normal course of business for its businesses. Reinsurance assets represent balances recoverable from reinsurance companies. Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding claims provision or settled claims associated with the reinsurers’ policies and are in accordance with the related reinsurance contract.


36 | | 37



Measurement (continued) Insurance contract liabilitiesInsurance contract liabilities include the outstanding claims provision, provision for claims incurred but not reported and the provision for unearned premium.

Amounts payable for insurance claims reported up to the reporting period end and the amount payable to reinsurance companies are accrued as a liability payable. The insurance claims are accrued on the basis of the actual losses reported against the policies underwritten by the Group during the period.

Provision for claims incurred but not reported are computed based on actuarial review after considering current assumptions, historical trends and empirical data which is not discounted for the time value of money.

Unearned premiums represent the portion of net premiums written relating to the unexpired period of coverage calculated on the actual number of days method (daily pro rata basis). The change in the provision for unearned premium is taken to the consolidated statement of income in order that revenue is recognised over the period of risk.

BorrowingsAll borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After the initial recognition, borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the profit or loss when liabilities are derecognised.

OthersOther non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.

Derivative financial instrumentsThe Group uses interest rate swap contracts to hedge its risk associated with interest rate fluctuations relating to the interest payments on the Group’s term loan. These interest rate swap contracts are stated at fair value. The Group classifies a hedge as a cash flow hedge where it hedges the exposure to variability in cash flows that are either attributable to a particular risk associated with a recognised asset or liability or a forecasted transaction. The interest rate swap contract has been classified as a cash flow hedge and meets the conditions for hedge accounting.

Derivatives are initially recognized at fair value at the date a derivative contract is entered into and are subsequently re-measured to their fair value at each statement of financial position date. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

Cash flow hedgesThe effective portion of changes to the fair value of derivatives that are designated and qualify as cash flow hedges are deferred in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the consolidated statement of income.



Measurement (continued) Fair values Amounts deferred in other comprehensive income are transferred to the consolidated statement of income in the periods when the hedged item is recognized in the consolidated statement of income.

Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting.

Fair value is the amount for which an asset could be exchanged or a liability settled between knowledgeable willing parties on an arm’s length transaction on the measurement date. Differences can therefore arise between the book values under the historical cost method and fair value estimates.

Underlying the definition of fair value is a presumption that an enterprise is a going concern without any intention or need to liquidate, curtail materially the scale of its operations or undertake a transaction on adverse terms.

Financial assets at fair value through profit or loss and available-for-sale financial assetsThe fair value of financial instruments that are actively traded in organized financial markets is determined by reference to quoted market bid prices for assets and offer prices for liabilities, at the close of business on the statement of financial position date. If the fair value cannot be measured reliably using any of the methods mentioned, then these financial instruments are measured at cost, being the fair value of the consideration paid for the acquisition of the investment or the amount received on issuing the financial liability until a reliable measure of the fair value is available. All transaction costs directly attributable to the acquisition are also included in the cost of the investment (Refer to Note 40 for fair value hierarchy).

Investment propertiesThe fair value of investment property is determined by independent real estate valuation experts with recent experience in the location and category of property being valued. The fair values are based on market values, being the estimated amount for which a property could be exchanged on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein parties had each acted knowledgeably.

Transfers are made to or from investment property only whem there is a change in use evidenced by the end of owner-occupation, commencement of an operating lease to another party or completion of construction or development. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner-occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under property and equipment up to the date of the change in use.

Interest rate swap agreementsThe fair value of interest rate swap contracts is calculated by discounting the expected future cash flows at the prevailing interest rate based on broker’s quotes.


38 | | 39



Impairment Financial assetsA financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. If such evidence exists, the estimated recoverable amount of that asset is determined and any impairment loss is recognised in the consolidated statement of income.

For assets carried at fair value, impairment is the difference between cost and fair value, less any impairment loss previously recognized in the consolidated statement of income. For an investment in equity security classified under available-for-sale, a significant or prolonged decline in its fair value below its cost provides objective evidence of impairment. Reversal of impairment losses in respect of equity investments classified as available-for-sale are treated as increases in fair value through the consolidated statement of comprehensive income. Reversal of impairment losses on debt instruments are done through the consolidated statement of income, when the increase in fair value can be objectively related to an event occurring after the impairment loss was recognised in the consolidated statement of income.

For assets carried at cost, impairment is the difference between carrying value and the present value of future cash flows discounted at the current market rate of return for a similar financial asset.

For assets carried at amortised cost, impairment is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the financial asset’s original effective interest rate.

Non-financial assetsThe carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

Other assets and liabilitiesAll other assets and liabilities which are financial instruments are stated at cost, being the fair value and recognized at amounts to be received or to be paid in the future.

Investment propertiesInvestment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business or use in the production or supply of goods and services or for administrative purposes. Investments in property are measured by applying the fair value model.

Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, any other cost directly attributable to bringing the investment property to a working condition for their intended use and capitalised borrowing cost. These properties are constructed for future use as investment properties and hence are considered as investment properties and accounted at fair value.

Any gain or loss on disposal of any investment property (calculated as a difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss.

When the use of a property changes such that it is reclassified as property and equipment, its fair value at the date of reclassification becomes its cost for subsequent accounting.



Property and equipment Recognition and measurementProperty and equipment are stated at cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, and the costs of dismantling and removing the items and restoring the site on which they are located.

Gains and losses on disposal of an item of property and equipment are determined by comparing the proceeds from disposal with the carrying amount of property and equipment, and are recognised net within other income in profit or loss.

Subsequent costsThe cost of replacing part of an item of property and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property and equipment are recognised in profit or loss as incurred.

DepreciationDepreciation is provided on cost by the straight-line method on all property and equipment other than land which is determined to have an indefinite life and is charged to the consolidated statement of income, at annual rates which are intended to write off the cost of the assets over their estimated useful lives as follows:

Buildings 20 yearsFurniture and fixtures 4 yearsComputers 3 – 5 yearsMotor vehicles 3 – 5 years

Depreciation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.

ProvisionsProvisions are recognised in the consolidated statement of financial position when the Group has a legal or constructive obligation as a result of a past event that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.

Employee benefits

Local employees With respect to the local employees, the Group makes contributions to the government pension fund to the respective local regulatory authorities as a percentage of the employees’ salaries in accordance with the requirements of respective local laws pertaining to retirement and pensions, wherever required. The Group’s share of contributions to these schemes, which are defined contribution schemes under International Accounting Standard (IAS) – 19 Employee Benefits are charged to the consolidated statement of income in the year to which they relate.


40 | | 41



Employee benefits (continued) Expatriate employees For the expatriate employees, the Group provides for employees’ end of service benefits determined in accordance with the requirements of respective local laws of Group entities pertaining to retirement and pensions, wherever required. These unfunded charges are made by the Group on the basis of employees’ salaries and the number of years of service at the statement of financial position date. Although the expected costs of these benefits are accrued over the period of employment, these are paid to employees only on completion of their term of employment with the Group.

Share capital

Ordinary share capitalOrdinary shares are classified as equity. The bonus shares issued during the year are shown as an addition to the share capital and deducted from the accumulated retained earnings of the Group.

Dividends on ordinary share capitalDividends on ordinary shares are recognised as a liability and deducted from retained earnings when they are approved by the Company’s shareholders. Dividends for the year that are approved after the consolidated statement of financial position date are dealt with as an event after the consolidated statement of financial position date.

Fair value reserveThis represents the unrealised gain or loss on year-end fair valuation of available-for-sale financial assets. In the event of sale or impairment, the cumulative gains or losses recognised under the investments fair value reserve are recycled to the consolidated statement of income for the year. Income recognition

Gross premiumsGross premiums written comprise the total premiums receivable for the whole period of cover provided by the contracts entered into during the accounting period and are recognised on the date on which the policy commences.

Net earned premiumsPremiums, net of reinsurance, are taken to income over the terms of the related contracts or policies. The portion of premium received on in-force contracts that relates to unexpired risks at the statement of financial position date is reported as the unearned premium liability. Unearned premiums are calculated principally on the basis of actual number of day’s method (daily pro rata basis).



Income recognition (continued) Reinsurance arrangements As part of managing its insurance risks, the Group enters into contracts with other reinsurers for compensation of losses on insurance contracts issued by the Group. A proportionate amount of the gross premiums, in proportion to the amount of risk reinsured on an individual policy basis are paid to the reinsurance companies according to the rates agreed in the reinsurance contracts, as reinsurance premiums.

In the ordinary course of business, the Group assumes and cedes reinsurance. Such reinsurance 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.

A significant portion of the reinsurance is affected under treaty, facultative and excess-of-loss reinsurance contracts. The amounts payable to reinsurance companies are accrued on the basis of reinsurance premium payable on individual policy basis. Unearned reinsurance premiums are those proportions of premiums written in a year that relate to periods of risk after the consolidated statement of financial position date and are deferred over the term of the underlying direct insurance policies.

Net commission incomeA proportionate amount of reinsurance premium paid to the reinsurance company is paid back to the Group as commission for undertaking the business. This commission percentage is agreed according to the reinsurance contract entered on individual line of business with different reinsurance companies. The amount of commission is recognised according to the reinsurance commission receivable on an individual policy basis.

Fees Insurance contract policy holders are charged for policy administration services, management services and other contract fees. This income is recognised during the period when the policy is underwritten or the service is provided.

Investment income Rental income from investment properties is recognised in the consolidated statement of income on a straight line basis over the period of the lease. Investment income also includes dividends, which are recognised when the right to receive the same is established. Interest income is recognised in the consolidated statement of income as it accrues.

Income from associate companies is recognised as per the equity accounting method. Changes resulting from the profit or loss generated by the associates is reported under the consolidated statements of income.

Claims and related expenses

Gross claims paidClaims and related expenses are accounted for based on reports received and subsequent review on an individual case basis. Provision is made to cover the estimated ultimate cost of settling claims arising out of events, which have occurred by the end of the financial year, including unreported losses, and claims handling expenses.


42 | | 43



Claims and related expenses (continued) Provision for unreported claimsProvision for unreported claims is established based on actuarial analysis and application of underwriting judgment having regard to the range of uncertainty as to the eventual outcome for each category of business.

Reinsurance and other recoveriesCompensations receivable from reinsurers are estimated in a manner consistent with the corresponding claim liability. The obligations arising under reinsurance contracts are recognised in income and the related liabilities are recognised as accounts receivable or deducted from reinsurers’ share of technical reserves. Hence, a portion of the reinsurance premium payable is provided as a reserve for future claims in order to provide additional liquidity for the Group, which is finally settled at the end of the reinsurance period.

Movement in outstanding claims

Claims reported but not settled (RBNS)Provision for outstanding claims is recognized at the date the claims are known and covers the liability for loss and loss adjustment expenses based on loss reports from independent loss adjusters and management’s best estimate.

Claims incurred but not reported (IBNR)Claims provision also includes a liability for claims incurred but not reported as at the consolidated statement of financial position date. An independent actuarial firm is appointed every subsequent year to assess the adequacy of reserves to meet future outstanding liabilities. The liability is generally calculated at the reporting date, which is within the range of 13% to15% of gross claims outstanding, after considering the independent actuarial report, historic trends, empirical data and current assumptions that may include a margin for adverse deviations. The liability is not discounted for the time value of money.

Reserve for unexpired risksThe reserve for unexpired risk represents the estimated portion of net premium income which relates to periods of insurance subsequent to the consolidated statement of financial position date. The reserve is calculated using actual number of day’s method.

The reinsurers’ share on estimated liability of RBNS, IBNR and unexpired insurance premium is separately classified as reinsurance assets in the consolidated statement of financial position.

Earnings per shareThe Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit attributable to ordinary equity holders of the parent by the weighted number of ordinary shares outstanding during the year.

Segment reportingSegment results that are reported to senior management includes items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets and head office expenses.



Finance costsThe finance costs incurred on qualified assets are capitalised being part of cost of construction. All other finance costs are recognised on an accrual basis in the consolidated statement of income during the year in which they arise.

Events after the reporting periodThe consolidated financial statements are adjusted to reflect events that occurred between the consolidated statement of financial position date and the date when the consolidated financial statements are authorised for issue, provided they give evidence of conditions that existed at the consolidated statement of financial position date. There were no subsequent events which required either adjustments or disclosures in the consolidated financial statements except for the proposed dividend.


44 | | 45

Cost

: A

t 1 J

anua

ry

Tra

nsfe

rs to

inve

stm

ent p

rope

rties

Add

ition

s D

ispo

sals

At 3

1 D

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ber

Accu

mul

ated

dep

reci

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n: A

t 1 J

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ry D

epre

ciat

ion

for t

he y

ear

Tra

nsfe

rs to

inve

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ent p

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Dis

posa

ls

At 3

1 D

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Net c

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ing

amou

nts:

At 3

1 De

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013

At 3

1 D

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012

NO

TES

TO T

HE

CO

NSO

LID

ATED

FIN

AN

CIA

L ST

ATEM

ENTS

For t

he Y

ear E

nded

31

Dec

embe

r 201

3

4. P

RO

PER

TY A

ND

EQ

UIP

MEN

T

QR

‘000

140,

140 -

983

(26)

141,

097

36,1

944,

847 -

(26)

41,0

15

100,

082

Tota

l 20

12

QR

‘000

141,

090

(40,

871)

7,60

7 -

107,

826

41,0

084,

614

(1,4

22) -

44,2

00

63,6

26

Tota

l 20

13Q

R ‘0

00 531 -

44-

575

521 15- -

536 39 10

Mot

or

Vehi

cles

QR

‘000

12,6

33-

1,05

6 -

13,6

89

9,36

91,

579 - -

10,9

48

2,74

1

3,26

4

Com

pute

rsQ

R ‘0

00

11,8

16-

869 -

12,6

85

11,4

24 532 - -

11,9

56 729

392

Furn

iture

&

fixtu

res

QR

‘000

47,4

60(1

1,37

5)5,

638 -

41,7

23

19,6

942,

488

(1,4

22) -

20,7

60

20,9

63

27,7

66

Build

ings

QR

‘000

68,6

50(2

9,49

6) - -

39,1

54

- - - - -

39,1

54

68,6

50

Free

hold

la

nd


5. INVESTMENT PrOPErTIES

As at 31 December 2013, the fair values of the properties are based on valuations performed by accredited independent valuers who are specialists in valuing these types of investment properties. The valuation models used are in accordance with that recommended industry practice.

The Group has no restrictions on the realisability of its investment properties and no contractual obligations to either purchase, construct or develop investment properties or for repairs, maintenance and enhancements.

The fair value of the investment properties were estimated based on fair valuation techniques and assumptions with reference to recent sales transactions of similar properties in an active market, as well as, discounted cash flows valuation techniques with reference to rental income.

6. EQuITY ACCOuNTED INVESTEES

Effective 2013, the Group increased its equity investment in Trust Bank Algeria from 8% to 20%. The increase in the equity investment is pending approval from the Central Bank of Algeria.

At 1 JanuaryAdditionsReclassification from property and equipmentFair value gains

At 31 December

Note

30

QR ‘000

2,139,17396,74539,449

2,001,832

4,277,199

QR ‘000

1,857,446241,867

-39,860

2,139,173

20122013

At 1 JanuaryEquity accounted investeesIncrease in investment in equity accounted investeeShare of profits of associatesDividends received from equity accounted investeesExchange differences on translating foreign operations

At 31 December

Notes

10

36

QR ‘000

288,90311,66898,61624,646

(10,867)(20,600)

392,366

QR ‘000

215,60639,916

-56,529

(13,024)(10,124)

288,903

20122013


46 | | 47


6. EQuITY ACCOuNTED INVESTEES (continued)

7. FINANCIAl ASSETS

The following table illustrates summarised financial information of the Group’s equity accounted investees:

Share of the associates statement of financial position:Non-current assetsCurrent assetsNon-current liabilities Current liabilities

Net assets

Share of the associates revenues and profit:Revenues

Profit

QR ‘000

214,047 592,287(372,140)(41,828)

392,366

37,957

24,646

QR ‘000

171,609378,030

(223,877)(36,859)

288,903

24,272

56,529

20122013

Available-for-sale financial assetsFinancial assets at fair value through profit or lossReceivables from related partiesInsurance receivables

Notes

(a)(b)(c)(d)

QR ‘000

1,023,184171,623

9,141228,843

1,432,791

QR ‘000

878,455 131,832

16,906236,887

1,264,080

20122013

(a) Available-for-sale financial assets

Equity securitiesDebt securitiesManaged funds

QR ‘000

835,851148,11239,221

1,023,184

QR ‘000

690,348144,69843,409

878,455

20122013


7. FINANCIAl ASSETS (continued)

(b) Financial assets at fair value through profit or loss

(c) receivables from related parties

Equity securities

QR ‘000

171,623

QR ‘000

131,832

20122013

Trust Insurance Company - AmmanGulf Petroleum Limited W.L.L.International Financial SecuritiesOthers

QR ‘000

3,7983,571

71,765

9,141

QR ‘000

4,040 3,732 3,527 5,607

16,906

20122013

(d) Insurance receivables

Due from policyholdersDue from insurers and reinsurersDue from agents, brokers and intermediariesClaims recoveries

Impairment allowance

At 1 JanuaryImpairment charge for the yearReversals during the year

At 31 December

Note

(e)

QR ‘000

202,22216,0534,7945,774

228,843

53,158 20,827

(28,194)

45,791

QR ‘000

188,00634,2549,2375,390

236,887

46,603 6,555

-

53,158

20122013


48 | | 49


7. FINANCIAl ASSETS (continued)

8. rEINSurANCE ASSETS

(e) Impairment of receivablesAs at the reporting date, the aging of unimpaired trade receivables was as follows:

Unimpaired receivables are expected to be fully recoverable. It is not the practice of the Group to obtain collateral over receivables and the vast majority is therefore unsecured.

(f) Determination of fair value and fair values hierarchy

All financial instruments for which fair value is recognised or disclosed are categorised within Level 1 of the fair value hierarchy whereby the fair value is determined according to quoted market prices in an active market (that are unadjusted) for identical assets or liabilities.

31 December 201331 December 2012

Neither past due

nor impairedQR ‘000

18,45425,447

3 – 9 monthsQR ‘000

78,34878,969

< 3 monthsQR ‘000

23,35025,541

TotalQR ‘000

228,843236,887

> 9 monthsQR ‘000

108,691106,930

Past due but not impaired

Reinsurance of insurance contracts

Note

18

QR ‘000

483,770

QR ‘000

436,209

20122013


9. TAkAFul PArTICIPANTS’ FuND ACCOuNTS

(a) Statement of financial position - Policyholders

AssetsInvestment propertiesFurniture and equipmentAvailable-for-sale financial assetsReceivables from related partiesInsurance receivablesReinsurance assetsOther assetsCash and cash equivalents

LiabilitiesInsurance contract liabilitiesPayables to a related partyInsurance payablesEmployees' end of service benefitsOther liabilitiesFair value reserve Surplus at the end of the year

QR ‘000

98,3832,720

28,28812,23238,15913,7057,1404,492

205,119

151,813604

24,8703,3939,739(640)

189,77915,340

205,119

QR ‘000

- 2,296 33,398

-38,75413,8563,723 99,159

191,186

114,727143

27,929 3,030

31,810 (174)

177,46513,721

191,186

20122013


50 | | 51

10. OTHEr ASSETS

Staff receivablesPrepaymentsAccrued interestAdvance payments against investmentsOther receivables

Notes

(a)(b)

QR ‘000

1,097921

1,88463,45250,759

118,113

QR ‘000

1,128 899

1,127 135,68095,643

234,477

20122013

(a) During the year, the Group has transferred an amount of QR 98.62 million from payments in advances included in other assets to equity accounted investees representing the payment for the additional equity investment purchased in Trust Bank Algeria (Note 6).

(b) Other receivables include an amount of QR 13.67 million (2012: QR 46.96 million) which represents balances due from the disposal of the Group’s investment in the Lebanese Canadian Bank in 2011.

Gross contributionsReinsurance cessionsWakala feeRetained premiumUnearned premium adjustmentCommission expense, netOther income

Net contributions

Claims paidClaims recoveredReinsurance cessionsOutstanding claims adjustmentNet claimsInsurance profits (losses)Other income

Surplus (deficit) for the year

QR ‘000

202,649(21,057)(30,397)151,195(27,667)(7,241)

203116,490

(124,150)13,8343,698

(9,570)(116,188)

3021,317

1,619

QR ‘000

152,803 (22,776)(30,561)99,466

(28,849)(2,160)

191 68,648

(71,200)14,006

443 (13,311)(70,062)(1,414)

577

(837)

20122013


9. TAkAFul PArTICIPANTS’ FuND ACCOuNTS (continued)

(b) Statement of revenue and expenses - Policyholders


11. CASH AND CASH EQuIVAlENTS

12. ISSuED SHArE CAPITAl

The cash and cash equivalents position for cash flow purposes, net of the Group overdraft is as follows:

Authorized, issued and fully paid up share capital of 57,646,050 shares of QR 10 each (2012: 50,127,000 shares of QR 10 each).

Cash and cash equivalentsCash facility (bank overdrafts)

Note

19

QR ‘000

151,0833,593

154,676

QR ‘000

60,700(18,444)

42,256

20122013

QR ‘000

576,461

QR ‘000

501,270

20122013

During the year, the Group issued 7,519,050 bonus shares of QR 10 each (2012: 5,370,750 shares of QR 10 each).

13. lEGAl rESErVE

The Qatar Commercial Companies Law No.5 of 2002 requires that 10% of the net profit for each year should be appropriated to a legal reserve until the balance therein equals to 50% of the paid up capital. The balance under this reserve is not available for distribution, except in the circumstances specified in the above law. During the year, the Group has transferred an amount of QR 213.10 million (2012: QR 17.56 million) from retained earnings to the legal reserve.

During 2013, as a result of the transfer, the Group’s legal reserve exceeds 50% of share capital. However, in accordance with Qatar Central Bank’s Law No. 33 of 2006 as amended, 10% of net profit for the year is required to be transferred to legal reserve until the legal reserves equals 100% of the paid up capital.


52 | | 53

Available-for-sale financial assetsRevaluation surplusCash flow hedgingForeign currency translation reserve

Notes

(a)(b)(c)(d)

QR ‘000

637,54977,355

(39,129)(47,342)

628,433

QR ‘000

506,97977,355

(51,029)(26,742)

506,563

20122013


14. rEVAluATION rESErVES

(a) Available-for-sale financial assetsThe fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets until the investments are derecognised or impaired. The movement in the balances are as follows:

At 1 JanuaryFair value change during the yearTransferred to consolidated statement of income on sale of investments

At 31 December

QR ‘000

506,979152,219

(21,649)

637,549

QR ‘000

578,528(25,054)

(46,495)

506,979

20122013

(b) revaluation surplus

One of the associate companies of the Group has revalued its properties and a revaluation surplus was directly recognized in the statement of other comprehensive income of the associate. The Group has recognized its proportionate share of the revaluation surplus amounting to QR 77.36 million, in equity under the revaluation reserve.

(c) Cash flow hedging

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedges related to hedge transactions that have not yet affected profit or loss.

(d) Foreign currency translation reserve

The translation reserve comprises of all foreign currency differences arising from the translation of investments in foreign associates, at the closing exchange rates.


15. DIVIDEND PAID AND PrOPOSEDThe Board of Directors has proposed a cash dividend of 15% of the nominal share value (QR 1.50 per share) and a bonus share of 20% of the share capital for the year ended 31 December 2013 (2012: cash dividend of 10% of the nominal share value (QR 1 per share) and a bonus share of 15% of the share capital were approved and paid). The amounts are subject to the approval of the general assembly.

16. CONTrIBuTION TO SOCIAl AND SPOrTS ACTIVITIES FuND

Pursuant to the Qatar Law No. 13 of 2008 and the related clarifications issued in 2012, which is applicable for all Qatari listed shareholding companies with publicly traded shares, the Group has made an appropriation of 2.5% of its net profit for the year after adjustment for amounts overpaid during prior years, resulting in a net amount of QR 1.47 million being its contribution to the social and sports activities fund for the year 2013 (2012: QR 4.39 million).

17. NON-CONTrOllING INTErESTS

The non-controlling interests relate to the subsidiaries Mazoon Real Estate Company W.L.L and the General Water and Beverages Company W.L.L


54 | | 55

Prov

isio

n fo

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rsPr

ovis

ion

for c

laim

s IB

NR

Out

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prov

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for u

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s

NO

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FIN

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L ST

ATEM

ENTS

For t

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31

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3

18.

INSU

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R ‘0

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403,

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53,0

7645

6,74

723

1,57

5

688,

322

QR

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(3

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(344

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00)

(483

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QR

‘000

84

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27,6

3211

2,07

792

,475

204,

552

QR

‘000

37

7,98

055

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433,

595

189,

472

623,

067

QR

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(3

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96)

(29,

109)

(337

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)(9

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4)

(436

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)

QR

‘000

69

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26,5

0696

,190

90,6

68

186,

858

Note

s

(a) 1

8(b

) 18

Rein

sura

nce

of li

abili

ties

Net

Insu

ranc

e co

ntra

ct

liabi

litie

sR

eins

uran

ce

of li

abilit

ies

Net

2013

2012

At 1

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Gro

ss/ c

eded

cha

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in c

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ct li

abilit

ies

At 3

1 De

cem

ber

Insu

ranc

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ntra

ct

liabi

litie

sQ

R ‘0

00

433,

595

23,1

52

456

,747

QR

‘000

(3

37,4

05)

(7,2

65)

(344

,670

)

QR

‘000

96

,190

15,8

87

112,

077

QR

‘000

38

2,46

1 51

,134

433,

595

QR

‘000

(3

02,8

37)

(34,

568)

(337

,405

)

QR

‘000

79

,624

16,5

66

96,1

90

Note 32

Rein

sura

nce

of li

abili

ties

Net

Insu

ranc

e co

ntra

ct

liabi

litie

sR

eins

uran

ce

of li

abilit

ies

Net

2013

2012

At 1

Jan

uary

Prem

ium

s w

ritte

n du

ring

the

year

Prem

ium

s ea

rned

dur

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the

year

At 3

1 De

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ber

Insu

ranc

e co

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ct

liabi

litie

sQ

R ‘0

00

189,

472

560,

255

(518

,152

)

231,

575

QR

‘000

(9

8,80

4)(3

52,4

59)

312,

163

(139

,100

)

QR

‘000

90

,668

207,

796

(205

,989

)

92,4

75

QR

‘000

16

3,26

6 50

0,18

0 (4

73,9

74)

189,

472

QR

‘000

(7

9,50

3)(2

97,6

46)

278,

345

(98,

804)

QR

‘000

83

,763

202,

534

(195

,629

)

90,6

68

Note

s 26 26

Rein

sura

nce

of li

abili

ties

Net

Insu

ranc

e co

ntra

ctlia

bilit

ies

Rei

nsur

ance

of li

abilit

ies

Net

2013

2012

NO

TES

TO T

HE

CO

NSO

LID

ATED

FIN

AN

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L ST

ATEM

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For t

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ear E

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31

Dec

embe

r 201

3

18.

INSU

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NC

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LIA

BIL

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S (c

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(b) P

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for u

near

ned

prem

ium

s


56 | | 57

2009

and

befo

re20

1020

1120

12

QR

‘000

81

5,23

881

3,51

780

8,54

780

1,25

083

5,29

9

835,

299

(826

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)

8,90

0

Estim

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of c

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s A

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of t

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One

yea

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year

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Thr

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ive

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ms

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ulat

ive

paym

ents

to d

ate

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l cum

ulat

ive

clai

ms

reco

gniz

ed in

the

cons

olid

ated

sta

tem

ent o

f fina

ncia

l pos

ition

as

at 3

1 D

ecem

ber 2

013

QR

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dent

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r

NO

TES

TO T

HE

CO

NSO

LID

ATED

FIN

AN

CIA

L ST

ATEM

ENTS

For t

he Y

ear E

nded

31

Dec

embe

r 201

3

18.

INSU

RA

NC

E C

ON

TRA

CT

LIA

BIL

ITIE

S (c

ontin

ued)

Clai

ms

deve

lopm

ent 2

013

The

follo

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g ta

ble

show

s th

e es

timat

e cu

mul

ativ

e in

curr

ed c

laim

s, in

clud

ing

both

cla

ims

notifi

ed a

nd IB

NR

for e

ach

succ

essi

ve a

ccid

ent y

ear a

t the

end

of

each

repo

rting

per

iod,

toge

ther

with

cum

ulat

ive

paym

ents

to d

ate:

2008

and

befo

re20

0920

1020

11

QR

‘000

61

0,18

665

2,40

964

3,53

464

2,33

163

6,99

5

636,

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(628

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8,11

5

Estim

ate

of c

umul

ativ

e cl

aim

s A

t end

of t

he a

ccid

ent y

ear

One

yea

r lat

er T

wo

year

s la

ter

Thr

ee y

ears

late

r F

our y

ears

late

r

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rent

est

imat

e of

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ulat

ive

clai

ms

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ulat

ive

paym

ents

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ate

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l cum

ulat

ive

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ms

reco

gniz

ed in

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cons

olid

ated

stat

emen

t of fi

nanc

ial p

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s at

31

Dec

embe

r 201

2

QR

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16

2,82

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9,98

316

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164,

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QR

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129,

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5

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Tota

l

QR

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5,56

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1 - - -

120,

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(109

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11,4

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QR

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3,92

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143,

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iden

t yea

r

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TES

TO T

HE

CO

NSO

LID

ATED

FIN

AN

CIA

L ST

ATEM

ENTS

For t

he Y

ear E

nded

31

Dec

embe

r 201

3

18.

INSU

RA

NC

E C

ON

TRA

CT

LIA

BIL

ITIE

S (c

ontin

ued)

Cla

ims

deve

lopm

ent 2

012

The

follo

win

g ta

ble

show

s th

e es

timat

e cu

mul

ativ

e in

curr

ed c

laim

s, in

clud

ing

both

cla

ims

notifi

ed a

nd IB

NR

for e

ach

succ

essi

ve a

ccid

ent y

ear a

t the

end

of

each

repo

rting

per

iod,

toge

ther

with

cum

ulat

ive

paym

ents

to d

ate:


58 | | 59

Term loans(Cash facility) bank overdrafts

(a) Current borrowings

Term loans(Cash facility) bank overdrafts

(b) Non-current borrowings

Term loans

Note

11

Note

11

QR ‘000

986,587(3,593)

982,994

2013 QR ‘000

528,346(3,593)

524,753

2013 QR ‘000

458,241

QR ‘000

878,14118,444

896,585

2012 QR ‘000

878,14118,444

896,585

2012 QR ‘000

-

20122013

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the Year Ended 31 December 2013

19. BORROWINGS

Deriv

ativ

es h

eld

as c

ash

flow

hed

ges:

Inte

rest

rate

sw

ap

Deriv

ativ

es h

eld

as tr

adin

g:Pu

t opt

ions

NO

TES

TO T

HE

CO

NSO

LID

ATED

FIN

AN

CIA

L ST

ATEM

ENTS

For t

he Y

ear E

nded

31

Dec

embe

r 201

3

20.

DER

IVA

TIVE

FIN

AN

CIA

L IN

STR

UM

ENTS

Asse

ts

QR

‘000

- -

QR

‘000

39

,129

-

QR

‘000

45

6,25

0

4,94

4

Liab

ilitie

sNo

tiona

lam

ount

Ass

ets

QR

‘000

- -

QR

‘000

51

,029

-

QR

‘000

30

1,12

5 -

Liab

ilitie

sN

otio

nal

amou

nt

2013

2012

Inte

rest

rate

sw

aps

The

Gro

up e

nter

ed in

to in

tere

st ra

te s

wap

con

tract

s de

sign

ated

as

a he

dge

of e

xpec

ted

futu

re L

IBO

R in

tere

st ra

te p

ayab

le. U

nder

the

term

s of

the

inte

rest

rate

sw

ap c

ontra

cts,

the

Gro

up p

ays

a fix

ed ra

te o

f int

eres

t and

rece

ives

floa

ting

LIB

OR

rate

s. T

he te

rms

of th

e in

tere

st ra

te s

wap

con

tract

s ha

ve b

een

nego

tiate

d to

mat

ch th

e te

rms

of th

e un

derly

ing

com

mitm

ents

. As

at 3

1 D

ecem

ber 2

013,

the

mea

sure

men

t of t

he fa

ir va

lue

of th

e he

dge

resu

lted

in a

n am

ount

of Q

R

39.1

3 m

illion

(201

2: Q

R 5

1.03

milli

on) b

eing

reco

gniz

ed in

equ

ity a

s a

cash

flow

hed

ge re

serv

e.

Opt

ions

Opt

ions

are

con

tract

ual a

gree

men

ts th

at c

onve

y th

e rig

ht, b

ut n

ot th

e ob

ligat

ion,

for t

he p

urch

aser

eith

er to

buy

or s

ell a

spe

cifie

d am

ount

of a

fina

ncia

l ins

tru-

men

t at a

fixe

d pr

ice,

eith

er a

t a fi

xed

futu

re d

ate

or a

t any

tim

e w

ithin

a s

peci

fied

perio

d.

The

Gro

up p

urch

ases

and

sel

ls o

ptio

ns th

roug

h re

gula

ted

exch

ange

s an

d in

the

over

–the

–cou

nter

mar

kets

. Opt

ions

pur

chas

ed b

y th

e G

roup

pro

vide

the

Gro

up w

ith th

e op

portu

nity

to p

urch

ase

(cal

l opt

ions

) or s

ell (

put o

ptio

ns) t

he u

nder

lyin

g as

set a

t an

agre

ed–u

pon

valu

e ei

ther

on

or b

efor

e th

e ex

pira

tion

of th

e op

tion.

The

Gro

up is

exp

osed

to c

redi

t ris

k on

pur

chas

ed o

ptio

ns o

nly

to th

e ex

tent

of t

heir

carr

ying

am

ount

, whi

ch is

thei

r fai

r val

ue.

Opt

ions

writ

ten

by th

e G

roup

pro

vide

the

purc

hase

r the

opp

ortu

nity

to p

urch

ase

from

or s

ell t

o th

e G

roup

the

unde

rlyin

g as

set a

t an

agre

ed–u

pon

valu

e ei

ther

on

or b

efor

e th

e ex

pira

tion

of th

e op

tion.

The

put o

ptio

ns e

xpire

d in

Jan

uary

201

4 an

d w

ere

not e

xerc

ised

.


60 | | 61

Trust Insurance Company – Bahrain

QR ‘000

53

QR ‘000

68

20122013

Due to policyholdersDue to insurers and reinsurersDue to agents, brokers and intermediaries

QR ‘000 139,785 140,09715,771

295,653

QR ‘000

111,537109,574

6,004

227,115

20122013

Staff payablesAccrued expensesContribution to social and sports activities fundOther payables

QR ‘000

5,27211,9611,473

85,753

104,459

QR ‘000

11,54210,3334,389

94,446

120,710

20122013

At 1 JanuaryProvided during the yearEnd of service benefits paid

At 31 December

QR ‘000

26,8752,560(527)

28,908

QR ‘000

20,0738,751

(1,949)

26,875

20122013

Movements in the provision recognized in the consolidated statement of financial position are as follows:


21. PAYABLES TO A RELATED PARTY

22. INSURANCE PAYABLES

23. EMPLOYEES’ END OF SERVICE BENEFITS

24. OTHER LIABILITIES

Conv

entio

nal

insu

ranc

eTa

kafu

lin

sura

nce

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stm

ents

incl

udin

gre

al e

stat

e

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stm

ents

an

del

imin

atio

nsTo

tal

QR

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13

,874

43,3

674,

074

130,

000

618,

540

110,

028

4,37

122

8,84

348

3,77

0 -1,

458,

911

127,

897

3,22

3,67

5

Asse

tsPr

oper

ty a

nd e

quip

men

tIn

vest

men

t pro

perti

esEq

uity

acc

ount

ed in

vest

ees

Inve

stm

ents

in s

ubsi

diar

ies

Fina

ncia

l ass

ets:

Ava

ilabl

e-fo

r-sa

le fi

nanc

ial a

sset

s F

inan

cial

ass

ets

at fa

ir va

lue

thro

ugh

profi

t or l

oss

Rec

eiva

bles

from

rela

ted

parti

es I

nsur

ance

rece

ivab

les

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nsur

ance

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ets

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ful p

artic

ipan

ts' a

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ther

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ets

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h an

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sh e

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alen

ts

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l ass

ets

QR

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-34

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14,6

97- - - -

205,

119

5,43

620

,142

279,

572

QR

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49

,752

4,19

9,65

438

8,29

2 - 38

9,94

761

,595

4,77

0 - - -(1

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)3,

044

3,75

0,82

0

QR

‘000

- - -(1

30,0

00) - - - - - - - -

(130

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QR

‘000

63

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4,27

7,19

939

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023,

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8,84

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3,77

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5,11

911

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315

1,08

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7,12

4,06

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NO

TES

TO T

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CO

NSO

LID

ATED

FIN

AN

CIA

L ST

ATEM

ENTS

For t

he Y

ear E

nded

31

Dec

embe

r 201

3

Segm

ent s

tate

men

t of fi

nanc

ial p

ositi

on a

t 31

Dece

mbe

r 201

3:

25.

SEG

MEN

T IN

FOR

MA

TIO

N


62 | | 63

Equi

ty a

nd li

abili

ties

Equi

ty a

ttrib

utab

le to

equ

ity h

olde

rs o

f par

ent

Issu

ed s

hare

cap

ital

Ret

aine

d ea

rnin

gsLe

gal r

eser

veR

eval

uatio

n re

serv

es No

n-co

ntro

lling

inte

rest

sTo

tal e

quity

Liab

ilitie

sIn

sura

nce

cont

ract

liab

ilitie

sFi

nanc

ial l

iabi

litie

s: B

orro

win

gs D

eriv

ativ

e fin

anci

al in

stru

men

ts P

ayab

les

to a

rela

ted

party

Ins

uran

ce p

ayab

les

Empl

oyee

s' e

nd-o

f-ser

vice

ben

efits

Taka

ful p

artic

ipan

ts' l

iabi

litie

sO

ther

liab

ilitie

sTo

tal l

iabi

litie

s

Tota

l equ

ity a

nd li

abili

ties

Conv

entio

nal

insu

ranc

eTa

kafu

lin

sura

nce

Inve

stm

ents

incl

udin

gre

al e

stat

e

Adju

stm

ents

an

del

imin

atio

nsTo

tal

NO

TES

TO T

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CO

NSO

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ATED

FIN

AN

CIA

L ST

ATEM

ENTS

For t

he Y

ear E

nded

31

Dec

embe

r 201

3

Segm

ent s

tate

men

t of fi

nanc

ial p

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on a

t 31

Dece

mbe

r 201

3 (c

ontin

ued)

:

25.

SEG

MEN

T IN

FOR

MA

TIO

N (c

ontin

ued)

QR

‘000

57

6,46

13,

224,

192

348,

497

628,

433

4,77

7,58

31,

847

4,77

9,43

0 68

8,32

2 98

2,99

439

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295,

653

28,9

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5,11

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4,45

92,

344,

637

7,12

4,06

7

QR

‘000

(1

30,0

00)

(121

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) -12

1,76

3(1

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(130

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) - - - - - - - - -

(130

,000

)

QR

‘000

10

0,00

02,

856,

748 -

156,

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0,73

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- -2,

706 -

73,1

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5,75

0

3,75

0,82

0

QR

‘000

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15,1

59-

3,14

248

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- - - - - -20

5,11

926

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231,

271

279,

572

QR

‘000

57

6,46

147

4,04

834

8,49

734

7,05

31,

746,

059 -

1,74

6,05

9 68

8,32

2 46

2,25

5 -53

295,

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02-

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11,

477,

616

3,22

3,67

5

Ass

ets

Prop

erty

and

equ

ipm

ent

Inve

stm

ent p

rope

rties

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ty a

ccou

nted

inve

stee

sIn

vest

men

ts in

sub

sidi

arie

sFi

nanc

ial a

sset

s: A

vaila

ble-

for-

sale

fina

ncia

l ass

ets

Fin

anci

al a

sset

s at

fair

valu

e th

roug

h pr

ofit o

r los

s R

ecei

vabl

es fr

om re

late

d pa

rties

Ins

uran

ce re

ceiv

able

sR

eins

uran

ce a

sset

sTa

kafu

l par

ticip

ants

' ass

ets

Oth

er a

sset

sC

ash

and

cash

equ

ival

ents

Tota

l ass

ets

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vent

iona

lin

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nce

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ful

insu

ranc

e

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stm

ents

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al e

stat

e

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ustm

ents

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atio

nsTo

tal

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TES

TO T

HE

CO

NSO

LID

ATED

FIN

AN

CIA

L ST

ATEM

ENTS

For t

he Y

ear E

nded

31

Dec

embe

r 201

3

Segm

ent s

tate

men

t of fi

nanc

ial p

ositi

on a

t 31

Dec

embe

r 201

2:

25.

SEG

MEN

T IN

FOR

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TIO

N (c

ontin

ued)

QR

‘000

10

0,08

22,

139,

173

288,

903 -

878,

455

131,

832

16,9

0623

6,88

743

6,20

919

1,18

623

4,47

760

,700

4,71

4,81

0

QR

‘000

- - -(1

20,0

00) - - - - - - - -

(120

,000

)

QR

‘000

82

,395

2,12

9,39

528

2,49

4 - 31

4,77

444

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12,2

93- - -

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887

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1,52

4,28

046

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3,03

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6


64 | | 65

Equi

ty a

nd li

abilit

ies

Equi

ty a

ttrib

utab

le to

equ

ity h

olde

rs o

f par

ent

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ed s

hare

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aine

d ea

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eval

uatio

n re

serv

es N

on-c

ontro

lling

inte

rest

sTo

tal e

quity

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ilitie

sIn

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nce

cont

ract

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sFi

nanc

ial l

iabi

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s: B

orro

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l equ

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ful

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L ST

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31

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r 201

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Segm

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on a

t 31

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r 201

2 (c

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:

25.

SEG

MEN

T IN

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N (c

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QR

‘000

50

1,27

01,

433,

648

135,

399

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563

2,57

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295

2,57

8,17

5

623,

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896,

585

51,0

29 6822

7,11

526

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191,

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120,

710

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5

4,71

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0

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66 | | 67

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68 | | 69

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Year ended 31 December 2013Gross written premiumsNon-current assets Year ended 31 December 2012Gross written premiumsNon-current assets

QR ‘000

46,59511,700

50,9909,930

QR ‘000

560,2554,733,191

500,1802,528,158

TotalQR ‘000

513,6604,721,491

449,1902,518,229

(b) Premiums ceded to reinsurers

Reinsurance commission incomePolicyholders administration fees

QR ‘000

15,201361

15,562

QR ‘000

22,8751,755

24,630

20122013

27. FEES AND COMMISSION INCOME

United ArabEmiratesQatar


Geographic information:

25. SEGMENT INFORMATION (continued)

Insurance contractsChange in unearned premiums provision

QR ‘000 560,255(42,103)

518,152

Note

18(b)

18(b)

QR ‘000

500,180(26,206)

473,974

20122013

(a) Gross earned premiums

26. NET EARNED PREMIUMS

Insurance contractsChange in unearned premiums provision

Net earned premiums

QR ‘000 352,459(40,296)

312,163

205,989

Note

18(b)

18(b)

QR ‘000

297,646(19,301)

278,345

195,629

20122013


70 | | 71

Investment properties Rental income Financial assets at fair value through profit or loss Dividend incomeAvailable-for-sale financial assets Interest income Dividend incomeCash and cash equivalents Interest income

QR ‘000

11,880

6,492

9,55539,021

3,253

70,201

QR ‘000

11,835

9,368

6,57528,157

1,790

57,725

20122013

Note

5

Financial assets at fair value through profit or lossRealised gainsAvailable-for-sale financial assetsRealised gains Equity securities net of impairment Debt securities

Total net realised gains

QR ‘000

631

17,5404,109

21,649

22,280

QR ‘000

654

48,6081,349

49,957

50,611

2013 2012

29. NET REALISED GAINS

Fair value gains on investment propertiesFair value gains (losses) on financial assets at fair value through profit or loss other than derivatives

QR ‘000

2,001,83237,452

2,039,284

QR ‘000

39,860(11,241)

28,619

2013 2012

30. FAIR VALUE GAINS


28. INVESTMENT INCOME

Shareholders’ income from Takaful operationsMiscellaneous income

QR ‘000

9,6882,494

12,182

QR ‘000

13,1644,557

17,721

20122013

Note

18(a)

18(a)

Interest expenseInterest on reinsurance premium reserves

Bank charges

QR ‘000

14,618309

14,927

1,959

16,886

QR ‘000

14,949313

15,262

1,004

16,266

20122013

33. FINANCE COSTS

(a) Gross claims paidGross claims paidClaims recovered

(b) Claims ceded to reinsurersClaims ceded to reinsurers

(c) Gross change in insurance contract liabilitiesProvision for reported claims by policyholdersProvision for claims IBNR

(d) Change in insurance contract liabilities ceded to reinsurersProvision for reported claims by policyholders

Net claims

QR ‘000 254,021(22,772)

231,249

(105,999)

26,598(3,446)

23,152

(7,265)

141,137

QR ‘000

217,925(25,698)

192,227

(79,790)

46,3034,831

51,134

(34,568)

129,003

2013 2012

32. NET CLAIMS


31. OTHER OPERATING REVENUE


72 | | 73

Employee benefits expensesBoard of Directors’ remunerationDepreciation on property and equipmentOccupancy expensesMarketing expensesConsultancy expensesTravel expensesNet foreign exchange adjustments Impairment (reversals) on receivablesOther expenses

QR ‘000

72,8515,9534,6143,9632,6782,6081,127

53(7,367)14,656

101,136

QR ‘000

76,1325,6804,8402,7822,5401,7611,206

(43)6,5559,182

110,635

20122013

Profit attributable to the ordinary equity holders of the parentWeighted average number of shares

Earnings per share (in Qatari Riyals)

QR ‘000

2,130,43357,646

36.96

QR ‘000

174,99957,646

3.04

20122013

35. EARNINGS PER SHARE

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

34. OTHER OPERATING AND ADMINISTRATIVE EXPENSES

For the Year Ended 31 December 2013

Net change in receivables from related partiesNet change in insurance receivablesNet change in reinsurance assetsNet change in other assets

Net change in operating assets

Net change in insurance contract liabilitiesNet change in payables to a related partyNet change in insurance payablesNet change in other liabilities

Net change in operating liabilities

QR ‘000

(7,765)(16,146)

47,561(17,013)

6,637

65,255(15)

68,538(17,723)

116,055

QR ‘000

(76,426)67,62353,868

114,496

159,561

77,341(1,522)47,987

(57,115)

66,691

20122013

37. CASH GENERATED FROM OPERATING ASSETS AND LIABILITIES

Exchange differences on translating of foreign operationsCash flow hedges: Gains (losses) arising during the year Available-for-sale financial assets:Gains (losses) arising during the year Other comprehensive income for the year

QR ‘000 (20,600)

11,900

130,570

121,870

QR ‘000

(10,124)(1,277)

(71,549)

(82,950)

20122013Note

6


36. COMPONENTS OF OTHER COMPREHENSIVE INCOME


74 | | 75

Letters of guarantee

QR ‘000

11,430

QR ‘000

13,833

20122013

related party transactions Related parties consist of shareholders, related companies and key management personnel of the Group, and entities controlled, jointly controlled or significantly influenced by such parties. Pricing policies and terms of these transactions are approved by the Group’s management.

Compensation of key management personnelThe compensation of key management personnel during the year are as follows:

related party balancesThe receivables from and payables to related parties are disclosed in Note 7(c) and Note 21, respectively. These amounts are unsecured, interest free and settlement normally occurs in cash. There have been no guarantees provided or received for any related party receivables.

39. CONTINGENT lIABIlITIES AND CONTrACT COMMITMENTS

Contingent liabilities:

Contract commitments:The Group entered into a construction contract for the construction of the World Trade Centre Tower in the State of Qatar. The total contract commitment is QR 520 million, of which QR 468 million (2012: QR 407 million) has been paid as at the reporting date. The outstanding commitment amounts to QR 52 million (2012: QR 113 million).

40. ClASSIFICATION AND FAIr VAluES

Fair value is the amount for which an asset could be exchanged or a liability settled between knowledgeable and willing parties on an arm’s length basis. Since the accompanying consolidated financial statements have been prepared under the historical cost convention, carrying values of certain financial instruments as recorded could therefore be different from the fair value. However, in the opinion of management, the fair values of the financial assets and liabilities are not considered significantly different from their book values as most of these items are either short-term in nature or re-valued frequently.

Board of Directors’ remunerationSalaries and other short-term benefitsEnd of service benefits

QR ‘000

5,95321,296

476

27,725

QR ‘000

5,68024,664

482

30,826

20122013


38. rElATED PArTY DISClOSurES


40. ClASSIFICATION AND FAIr VAluES (continued)

Fair value hierarchy:The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities • Level 2: inputs other than quoted prices included within Level 1 that are observable for the

asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices) • Level 3: inputs for the asset or liability that are not based on observable market data

(unobservable inputs)

31 December 2013Financial assetsAvailable-for-saleAt fair value through profit or loss

Financial liabilityDerivative financial instruments

31 December 2012Financial assetsAvailable-for-saleAt fair value through profit or loss

Financial liabilityDerivative financial instruments

QR ‘000

1,020,264171,623

1,191,887

39,129

875,535131,832

1,007,367

51,029

TotalQR ‘000

--

-

-

--

-

-

Level 3QR ‘000

21,800-

21,800

39,129

25,572-

25,572

51,029

Level 2QR ‘000

998,464171,623

1,170,087

-

849,963131,832

981,795

-

Level 1Notes

7 (a)7 (b)

20

7 (a)7 (b)

20

41. rISk MANAGEMENT

The Group, in the normal course of business derives its revenue mainly from assuming and managing insurance and investments. The Group’s lines of business are exposed to the following risks:

• Insurance risk• Credit risk• Liquidity risk• Market risk, and • Operational risk

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk, and the Group’s management of capital. Further quantitative disclosures are included throughout these consolidated financial statements.

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Board of Directors approves the Group risk


76 | | 77

management policies and meets regularly. These policies define the Group’s identification of risk and its interpretation, limit structure to ensure the appropriate quality and diversification of assets, align underwriting and reinsurance strategy to the corporate goals, and specify reporting requirements. The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.

The Group Audit and Compliance Committee oversees how management monitors compliance with the Group’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Group Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

Insurance riskThe risk under any insurance contract is the possibility that the insured event occurs and the uncertainty of the amount of the resulting claim. By the very nature of an insurance contract, this risk is random and therefore unpredictable. The insurance contracts issued by the Group for various risks are homogeneous.

For a portfolio of insurance contracts where the theory of probability is applied to pricing and provisioning, the principal risk that the Group faces under its insurance contracts is that the actual claims and benefit payments exceed the carrying amount of the insurance liabilities. This could occur when the frequency or severity of claims and benefits are greater than estimated. Insurance events are random and the actual number and amount of claims and benefits will vary from year to year from the level established using statistical techniques.

Experience shows that the larger the portfolio of similar insurance contracts, the smaller the relative variability of the expected outcome will be. In addition, a more diversified portfolio is less likely to be affected by a change in any subset of the portfolio. The Group has developed its insurance underwriting strategy to diversify the type of insurance risks accepted and within each of these categories to achieve a sufficiently large population of risks to reduce the variability of the expected outcome.

Risks are accepted based on an evaluation of pricing and prior underwriting experience in accordance with underwriting guidelines that have been laid out for each line of business. Underwriting guidelines are constantly reviewed and updated to take account of market developments, performance and opportunities. Accumulation limits are set to control exposures to natural hazards and catastrophes. Various underwriting and approval limits are specified for accepting risks. The reinsurance strategy of the Group is designed to protect exposures to individual and event risks based on current risk exposures through cost effective reinsurance arrangements. The recoverable amounts from reinsurers are estimated in a manner consistent with the outstanding claims provision and are in accordance with the reinsurance contracts.

Even though the Group has reinsurance arrangements, the direct obligation to its policy holders is shown as a liability and thus to the extent the reinsurer is not able to meet its obligations under the reinsurance arrangement, a credit exposure exists. The management ensures that the Group’s reinsurance placement is diversified within a range of reinsurers and is not concentrated or dependent on any single reinsurer.


41. rISk MANAGEMENT (continued)

Frequency and severity of claimsThe frequency and severity of claims can be determined after consideration of several factors as follows:

• Past experience of the claims;• Economic level;• Laws and regulations; and• Public awareness

The Group manages these risks through its underwriting strategy, adequate reinsurance arrangements and proactive claims handling. The underwriting strategy attempts to ensure that the underwritten risks are well diversified in terms of type and amount of risk, industry and geography.

Underwriting limits are in place to enforce appropriate risk selection criteria. For example, the Group has the right not to renew individual policies, it can impose deductibles and it has the right to reject the payment of a fraudulent claim. The Group has the right to re-price the risk on renewal. Insurance contracts also entitle the Group to pursue third parties for payment of some or all costs (for example, subrogation).

The reinsurance arrangements include proportional, non-proportional and catastrophic coverage. The effect of such reinsurance arrangements is that the Group should not suffer major insurance losses.

The Group has specialised claims units dealing with the mitigation of risks surrounding general insurance claims. This unit investigates and adjusts all general insurance claims. The general insurance claims are reviewed individually monthly and adjusted to reflect the latest information on the underlying facts, current law, jurisdiction, contractual terms and conditions, and other factors. The Group actively manages settlements of general insurance claims to reduce its exposure to unpredictable developments.

Sources of uncertainty in the estimation of future claim paymentsClaims on general insurance contracts are payable on a claims-occurrence basis. The Group is liable for all insured events that occurred during the term of the contract, even if the loss is discovered after the end of the contract term. As a result, a larger element of the claims provision relates to incurred but not reported claims (IBNR) which are settled over a short to medium term period.

There are several variables that affect the amount and timing of cash flows from these contracts. These mainly relate to the inherent risks of the business activities carried out by individual contract holders and the risk management procedures adopted. The compensation paid on these contracts is the monetary awards granted for the loss suffered by the policy holders or third parties (for third party liability covers).

The estimated cost of claims includes direct expenses to be incurred in settling claims, net of the expected subrogation values and other recoveries. The Group takes all reasonable steps to ensure that it has appropriate information regarding its claims exposures. However, given the uncertainty in establishing claims provisions, it is likely that the final outcome will prove to be different from the original liability established. The liability for these contracts comprise a provision for IBNR, a provision for reported claims not yet paid and a provision for unexpired risks as at the statement of financial position date.




78 | | 79

Sources of uncertainty in the estimation of future claim payments (continued)

In calculating the estimated cost of unpaid claims (both reported and not), the Group’s estimation techniques are a combination of loss-ratio-based estimates (where the loss ratio is defined as the ratio between the ultimate cost of insurance claims and insurance premiums earned in a particular financial year in relation to such claims) and an estimate based upon actual claims experience using predetermined formula where greater weight is given to actual claims experience as time passes. An actuarial valuation is done every subsequent year to ensure the adequacy of the reserves.

Claims developmentThe Group maintains strong reserves in respect of its insurance business in order to protect against adverse future claims experience and developments. The uncertainties about the amount and timing of claim payments are generally resolved within one year (Note 18).

Process used to decide on assumptionsThe risks associated with these insurance contracts are complex and subject to a number of variables that complicate quantitative sensitivity analysis. The exposure of the Group to claims associated with general insurance is material. This exposure is concentrated in Qatar where significant transactions take place.

The Group uses assumptions based on a mixture of internal and actuarial reports to measure its general insurance related claims liabilities. Internal data is derived mostly from the Group’s monthly claims reports and screening of the actual insurance contracts carried out at year-end to derive data for the contracts held. The Group has reviewed the individual contracts and their actual exposure to claims. This information is used to develop scenarios related to the latency of claims that are used for the projections of the ultimate number of claims.

Sensitivity analysisThe reasonableness of the estimation process is tested by an analysis of sensitivity around several scenarios. The sensitivity of the Group’s income to insurance risks is as follows:

Loss ratio

QR ‘000

(10,299)10,299

+5%-5%

Impact on netprofit

QR ‘000

(10,299)10,299

Impact onequity

2013 2012

QR ‘000

(9,781)9,781

Impact on netprofit

QR ‘000

(9,781)9,781

Impact onequity

Change inassumptions



The sensitivity to a 5% increase/decrease in gross loss ratios is the same both net and gross of reinsurance as this increase does not result in any material excess of loss reinsurance limits being reached.

Credit riskCredit risk is the risk that one party to a financial instrument will cause a financial loss to the other party by failing to discharge an obligation.

Reinsurance arrangements are effected with reinsurers whose creditworthiness is assessed on the basis of satisfying minimum rating and financial strength criteria. Reinsurance is made with different reinsurance companies’ in order to reduce the risk of concentration.

The Group’s exposure to credit risk is limited to the carrying amount of financial assets recognised at the statement of financial position date.

The Group continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls. Where available at reasonable cost, external credit ratings and/or reports on customers and other counterparties are obtained and used. The Group’s policy is to deal only with creditworthy counterparties.

The Group’s management considers that all the financial assets that are not impaired for each of the reporting dates under review are of good credit quality. In respect of insurance and other receivables, the Group is not exposed to any significant credit risk exposure to any single counterparty or any company of counterparties having similar characteristics. The credit risk for liquid funds and other short-term financial assets is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

Impaired financial assetsAt 31 December 2013 there are impaired insurance and reinsurance assets of QR 41.05 million (2012: QR 49.16 million) and other assets of QR 4.74 million (2012: QR 4 million). The Group records all impairment allowances in separate impairment allowances accounts.

A reconciliation of all the allowances for impairment losses are as follows:



At 1 JanuaryCharge for the yearReversals

At 31 December

QR ‘000

49,15620,091

(28,194)

41,053

Impairment on insurance andreinsurance assets

QR ‘000

42,6016,555

-

49,156

2013 2012QR ‘000

4,002736

-

4,738

Impairment on otherreceivables

QR ‘000

4,002--

4,002

2013 2012


80 | | 81

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QR

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223,

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QR

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76,3

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QR

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231,

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168,

342 -

266,

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QR

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- -9,

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155,

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164,

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168,

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275,

328 -

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4,37

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R ‘0

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400,

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8,32

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QR

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187,

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QR

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183,

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82 | | 83

Fair value sensitivity analysis for fixed rate instrumentsThe Group does not account for any fixed rate financial assets at fair value through profit or loss, and the Group does not designate interest rate swaps as hedging instruments under the fair value hedge accounting model. Therefore a change in interest rate at the reporting date would not affect profit or loss.

Cash flow sensitivity analysis for variable rate instrumentsA change of 50 basis points in interest rate at the reporting date would have increased (decreased) profit or loss by the amount shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

Equity price risks The Group is exposed to other market price risk in respect of its listed equity securities and bonds. Equity price risk is the risk that the fair values of equities decrease as a result of changes in the levels of equity and the value of individual stocks. The effect on equity due to a reasonably possible change in equity indices by (+/-) 10%, with all other variables held constant is as follows:

Fixed and variable rate instruments

Financial assets

Financial liabilities

QR ‘000

320,861

1,022,122

2013

Carrying amounts

2012QR ‘000

243,925

947,615

31 December 2013Variable rate instrumentsInterest rate swap

Cash flow sensitivity (net)

31 December 2012Variable rate instrumentsInterest rate swap

Cash flow sensitivity (net)

QR ‘000

(4,933)2,281

(2,652)

(4,487)2,061

(2,426)

50 bpsincrease

Profit or loss

50 bpsdecreaseQR ‘000

4,933(2,281)

2,652

4,487(2,061)

2,426

Market risk (continued)The Group’s policy is to minimise interest rate risk exposures on term financing. The Group is exposed to changes in the market interest rates through its financial assets and liabilities which are subject to variable interest rates.



Market riskMarket risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Currency riskMost of the Group’s transactions are carried out in Qatari Riyals. Exposures to currency exchange rates arise from the Group’s overseas investments. The Qatari Riyal is effectively pegged to the United States Dollar and thus currency risk occurs only in respect of currencies other than the United States Dollar.

Foreign currency denominated financial assets and liabilities, translated into Qatari Riyals at the closing rate, are as follows:

The impact that exchange rates fluctuations would have on the Group’s net results is considered to be not significant. The analysis below is performed for reasonably possible movements in key variables with all other variables held constant, showing the impact on profit and equity due to changes in the fair value of currency sensitive monetary assets and liabilities including insurance contract claim liabilities.

Nominal amounts

Financial assets

Short -term exposure

Financial assetsFinancial liabilities

Long-term exposure

QR ‘000

1,096

1,096

8,639(9,598)

(959)

2013 2012

QR ‘000

42,359

42,359

--

-

Euro OtherQR ‘000

1,156

1,156

9,369(10,159)

(790)

QR ‘000

29,841

29,841

--

-

Euro Other

CurrencyEUROthers Total

EUROthers

Total

QR ‘000

(850)331

(519)

850(331)

519

2013 2012

QR ‘000

8643,905

4,769

(864)(3,905)

(4,769)

Impact onprofit

+10%+10%

-10%-10%

Changes invariables

Impact onequity

QR ‘000

(900)(14)

(914)

90014

914

QR ‘000

9372,998

3,935

(937)(2,998)

(3,935)

Impact onprofit

Impact onequity




84 | | 85

Capital management (continued)



Equity excluding cash flow hedge reserveLess : Cash and cash equivalents

Capital

EquityAdd: Loan and borrowings

Overall financing

Capital to overall financing

QR ‘000

4,818,559(151,083)

4,667,476

4,779,430982,994

5,762,424

1:1.23

2013 2012QR ‘000

2,629,204(60,700)

2,568,504

2,578,175896,585

3,474,760

1:1.35

42. CrITICAl JuDGEMENTS IN APPlYING THE GrOuP’S ACCOuNTING POlICIES

In the process of preparing these consolidated financial statements, management has made use of a number of judgments relating to the application of accounting policies which are described in note 2. Those which have the most significant effect on the reported amounts of assets, liabilities, income and expense are listed below (apart from those involving estimations which are dealt with in Note 43).

These judgments are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Management believes that the following discussion addresses the accounting policies that require judgments.

Classification of investmentsQuoted securities could be classified either as available-for-sale or at fair value through profit or loss. The Group invests substantially in quoted securities either locally or overseas and management has primarily decided to account for these investments based on their potential for long term growth rather than on the short term profit basis. Consequently, the majority of such investments are recognized as available-for-sale rather than at fair value through profit or loss. Financial assets are classified as fair value through profit or loss where the assets are either held for trading or initially designated at fair value through profit or loss.

Impairment of financial assetsThe Group determines that available-for-sale financial assets are impaired when there has been a ‘significant’ or ‘prolonged’ decline in the fair value below its cost. The determination of what is ‘significant’ or ‘prolonged’ requires judgment and is assessed based on qualitative and quantitative factors, for each available-for-sale financial asset separately. In making a judgment on impairment, the Group evaluates among other factors, evidence of deterioration in the financial health of the entity, impact of delay in execution, industry and sector performance, changes in technology and operational and financing cash flows.

Operational riskOperational risk is the risk of loss arising from systems and control failures, fraud and human errors, which can result in financial and reputation loss, and legal and regulatory consequences. The Group manages operational risk through appropriate controls, instituting segregation of duties and internal checks and balances, including internal audit and compliance.

Capital managementThe Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital, which the Group defines as net operating income divided by total shareholders’ equity. The Group’s objectives when managing capital is:

• To safeguard the Group’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders; and

• To provide an adequate return to shareholders by pricing insurance and investment contracts commensurately with the level of risk.

The Group monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face of the consolidated statement of financial position. The Group’s goal in capital management is to maintain a capital-to-overall financing structure ratio of 1:1.5. Capital for the reporting periods under review is summarized as follows:

Qatar MarketInternational Markets

Qatar MarketInternational Markets

QR ‘000

16,874288

(16,874)(288)

+10%+10%

-10%-10%

Impact on netprofit

QR ‘000

79,79222,527

(79,792)(22,527)

Impact on othercomprehensive

income

QR ‘000

12,910273

(12,910)(273)

Impact on netprofit

QR ‘000

67,06920,777

(67,069)(20,777)

Impact on othercomprehensive

income

2013 2012

Changes invariables

Equity price risks (continued)




86 | | 87


43. kEY SOurCES OF ESTIMATES AND uNCErTAINTY (continued)

Interest rate swap valuationThe fair value of interest rate swaps is based on broker quotes. Those quotes are tested for reasonableness by discounting estimated future cash flows based on the terms and maturity of each contract and using market interest rates for a similar instrument at the measurement date. Fair values reflect the credit risk of the instruments and include adjustments to take account of the credit risk of the Group and counterparty when appropriate.

Investment property valuationThe fair value of investment property is determined by independent real estate valuation experts with recent experience in the location and category of property being valued. The fair values are based on market values, being the estimated amount for which a property could be exchanged on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein parties had each acted knowledgeably.

The key assumptions concerning the future, and other key sources of estimating uncertainty at the statement of financial position date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Claims made under insurance contracts Claims and loss adjustment expenses are charged to the consolidated statement of income as incurred based on the estimated liability for compensation owed to contract holders or third parties damaged by the contract holders. Liabilities for unpaid claims are estimated using the input of assessments for individual cases reported to the Group and management estimations for the claims incurred but not reported (IBNR). The method for making such estimates and for establishing the resulting liability is continually reviewed. Any difference between the actual claims and the provisions made are included in the consolidated statement of income in the year of settlement.

unearned premiumsThe provision for unearned premiums represents that portion of premiums received or receivable that relates to risks that have not yet expired at the reporting date. The provision is recognised when contracts are entered into and premiums are charged, and is brought to account as premium income over the term of the contract in accordance with the pattern of insurance service provided under the contract. Unearned premiums are calculated on a daily pro rata basis.

Impairment of insurance and other receivables An estimate of the collectible amount of insurance and other receivables is made when collection of the full amount is no longer probable. The determination of whether insurance and other receivables are impaired, involves the Group evaluating, the credit and liquidity position of the policy holders and the insurance companies, historical recovery rates including detailed investigations carried out during 2013 and feedback received from the legal department. The difference between the estimated collectible amount and the book amount is recognized as an expense in the consolidated statement of income. Any difference between the amounts actually collected in future periods and the amounts expected will be recognized in the consolidated statement of income at the time of collection.

useful lives, residual values and depreciation charges of property and equipmentThe Group’s management determines the estimated useful lives, residual values and related depreciation charges of its property and equipment. These estimates are determined after considering the expected usage of the asset, physical wear and tear and technical or commercial obsolescence.

liability adequacy testAt each statement of financial position date, liability adequacy tests are performed to ensure the adequacy of insurance contract liabilities. The Group makes use of the best estimates of future contractual cash flows and claims handling and administration expenses, as well as investment income from the assets backing such liabilities in evaluating the adequacy of the liability. Any deficiency is immediately charged to the consolidated statement of income.


43. kEY SOurCES OF ESTIMATES AND uNCErTAINTY


88 | | 89


44. rEClASSIFICATION OF COMPArATIVE AMOuNTS (continued)

Property and equipmentInvestment properties

Insurance and other receivablesDue from related partiesInsurance receivablesReceivables from related partiesOther assets

Reinsurance assets

Cash and cash equivalentsStatutory deposits

Insurance contract liabilitiesBorrowingsDerivative financial instrumentsPayables to a related partyInsurance payablesOther liabilities

Legal reserveFair value reserveRevaluation reserveForeign currency translation reserveCash flow hedge reserveRetained earnings

Total

QR ‘000

83(5)78

(421,470)(73,335)236,88716,906

234,477(6,535)

3,590

5,645(6,000)

(355)

(8,981)730

(51,029)33,597

(39,590)68,4953,222

(17,556)506,898

(429,208)(26,661)(51,029)

17,556-

-

Amount of theReclassification

QR ‘000

99,9992,139,1782,239,177

421,47073,335

---

494,805

432,619

55,0556,000

61,055

(614,086)(897,315)

-(33,665)

(187,525)(189,205)

(1,921,796)

(117,843)(506,898)(77,355)

26,66151,029

(1,451,204)(2,075,610)

(769,750)

Previous31 December 2012

QR ‘000

100,0822,139,1732,239,255

--

236,88716,906

234,477488,270

436,209

60,700-

60,700

(623,067)(896,585)(51,029)

(68)(227,115)(120,710)

(1,918,574)

(135,399)-

(506,563)--

(1,433,648)(2,075,610)

(769,750)

Reclassified31 December 2012

Consolidated statement of financial position

Fee andFee and commission incomeNet commission incomeOther incomeOther income - technical

Investment income

Net realized gains and losses

Fair value gain on investment propertiesFair value gains and losses

Other operating revenue

Finance costs

Impairment loss on available-for-sale investmentsGeneral and administrative expenses

Total

QR ‘000

24,630(22,876)(32,979)(1,488)

(32,713)

(47,249)

50,611

(39,860)28,619

(11,241)

17,721

(1,307)

5,75618,42224,178

-

Amount of theReclassification

QR ‘000

-22,87632,9791,488

57,343

104,974

-

39,860-

39,860

-

(14,959)

(5,756)(129,057)(134,813)

52,405

Previous31 December 2012

QR ‘000

24,630---

24,630

57,725

50,611

-28,61928,619

17,721

(16,266)

-(110,635)(110,635)

52,405

Reclassified31 December 2012Consolidated statement of income


44. rEClASSIFICATION OF COMPArATIVE AMOuNTS

Certain comparative figures have been reclassified to conform to the presentation in the current year’s financial statements. However, such reclassifications did not have any effect on the net profit, total assets and equity of the comparative period.

The reclassifications are summarised below:


90 | | 91

QGIRC MAIN OFFICE TEL: +974 442 82222 (NEW BUILDING)TEL: +974 444 17800 (OLD BUILDING)FAX: +974 444 37302EMAIL: [email protected]

INDUSTRIAL AREAP.O. BOX 4500, DOHA – QATARTEL: +974 446 02725FAX: +974 446 03057

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AL WAKRATEL : +974 446 45223

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املنطقة الصناعية

الرويس

طريق سلوى

اخلور

Contact Usاتصـل بنـا

UNITED ARAB EMIRATESM11 ROYAL HOUSEAL WUHAIDA RDP.O.BOX 8080DUBAI, UNITED ARAB EMIRATESEMAIL: [email protected]: +971 4 2688 688FAX: +971 4 2688 118/288

ا�مارات العربية املتحدة

الوكرة

الشـركـة القـطـريةالعامةللتأمني وإعادة التأمني ش.م.ق

QATAR GENERALINSURANCE & REINSURANCE CO. S.A.Q

www.qgi rco.com©2014 Qatar General Insurance & Reinsurance Co. S.A.Q.All rights reserved.

©٢٠١٤ الشـركــة القـطــرية العـامــة للتــأميــن وإعــادة التــأميــن.

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