The Company for Cooperative Insurance (Tawuniya)
Year 2022 Audit Committee Report to the General Assembly
The Audit Committee of the Company for Cooperative Insurance (Tawuniya) is pleased to present to the honorable shareholders of the Company its annual report for the fiscal year ending on December 31, 2022. The comprises the Committee opinion on the adequacy of the internal control systems in the Company, and the work carried out by the Committee that falls within the scope of its competence, and based on the relevant statutory requirements in accordance with Article (88) of the Corporate Governance Regulations issued by the Capital Market Authority (CMA) on January 18, 2023.
During year 2022, the Audit Committee held 10 meetings, whether through the meeting in person or via video communication, as the attendance rate of its members reached (97.5%), as indicated in the attendance records contained in the Board of Directors Annual Report.
The Audit Committee (hereinafter referred to as “the Committee”) accomplished its tasks and activities in accordance with its terms of reference, and pursuant to the relevant regulations, as indicated in the Committee’s charter, which included the following:
Financial Reports
The Committee has thoroughly studied and discussed the preliminary annual and quarterly financial statements with the external auditors and made recommendations to the Board of Directors in this regard. In addition, the Committee studied the reports of the external auditors, including “management letter”, and made recommendations to the Board of Directors in this regard. The Committee also discussed with the executive management and the external auditors the management’s plans to address the deficiencies in the control aspects, if any.
The Committee evaluated the professional expertise, performance and independence of the external auditors, and then studied the offers submitted by the auditors to review the annual financial statements for year 2022 and recommended contracting with KPMG and BDO to audit the Company’s annual financial statements for the year 2022, as well as for the second and third quarters of year 2022 and the first quarter of year 2023. The Committee followed up and discussed with the executive management the stages and results of implementing the draft International Financial Reporting Standard (IFRS 17) for insurance contracts, as well as the International Standard for Financial Instruments (IFRS 9). Moreover, the Committee reviewed the accounts receivable, performance of collections, and ensuring the adequacy of doubtful debts provisions.
Internal Audit
The Committee followed up the performance of the Internal Audit Department (IAD) during the year to ensure the efficiency and objectivity of its work. It also reviewed and approved IAD’s work plan and budget for the fiscal year 2022. It also followed up on the implementation of the plan and the necessary modifications thereto. In addition, the Committee followed up the performance IAD and reviewed the reports issued by it. It analyzed the fundamental observations, perused the Board of Directors of them, and followed up on their implementation by the executive management. It also recommended the appointment of the chief internal auditor and the secretary of the Committee during the year, as this has been duly approved by the Board of Directors and the Saudi Central Bank (SAMA).
Furthermore, the Committee followed up with the Company management to find qualified cadres for vacant positions in the management. It nominated an external consultant to measure the quality assurance of IAD, according to the international standards for internal auditing, which require the nomination of an independent body to measure the quality of internal auditing every five years.
The Committee has ensured the independence of IAD, and verified that there is no restriction on their work or the existence of anything that could negatively affect its function.
Regulatory Compliance
During the fiscal year, the Committee studied the Compliance Department’s work plan, approved it, and followed up on its implementation. The Committee also reviewed the reports of the Compliance Department and made recommendations thereon. The Committee followed up the Department’s progress in implementing the automation projects in the areas of regulatory compliance, combating money laundering and terrorist financing, reporting violations, transactions with related parties and distribution of surplus to ensure perfect reporting and full compliance in line with the regulatory requirements and the Company’s digital transformation strategy. In addition, the Committee approved the proposed organizational structure for the Compliance Department and the separation of reporting functions from the Anti-Money Laundering Department. It also followed up the reports issued by the Saudi Central Bank and the relevant supervisory and regulatory authorities, and recommended them to the Board. Moreover, the Committee nominated an external consultant to evaluate the Compliance Department and AML/CFT and follow up on the corrective plan for the observations.
The Internal Control System
As the Company management is the concerned party responsible for preparing a comprehensive and effective control system that takes into account the nature of the Company’s business and the risks related to it; the Committee was briefed on the improvements made by the executive management in the internal control system, the results of the internal audit activity and the systems of risk management and cyber security. The Committee also:
- reviewed quarterly performance reports related to customer complaints filed.
- has been informed of all major lawsuits filed by or versus the Company.
- reviewed the presentation of the Cybersecurity Department on a quarterly basis, which included the status of maturity according to the framework provided by the Saudi Central Bank, and followed up the status of implementation of observations issued by the Central Bank and the National Cybersecurity Authority.
- supervised the various reports prepared by IAD and the external auditors on the effectiveness of the internal controls related to the financial reporting system, as the Committee concluded that none of them caused material weaknesses in the financial preparation and reporting system.
Accordingly, the Committee did not find any fundamental weakness in the Company’s internal control systems. The Committee also believes that the internal control system needs to make further improvements to keep pace with the Company’s growth and its strategic directions, and the Committee will follow up on such improvements.
Description of the main types of activities of the Company and its subsidiary, and each activity’s effect on the size of the Company’s businesses and contributions to the result.
Description of the Company’s main activities:
Tawuniya - the Company for Cooperative Insurance, is the first licensed Saudi insurance company. The principal lines of business of Tawuniya include medical, motor, marine, fire, engineering, energy, aviation, Takaful and casualty insurance, as well as, many other types of insurance out of more than 60 insurance classes.
The Company consists of business units, according to its products and services, and it has segments for which reports are submitted as follows:
- Medical Insurance Segment - coverage for health insurance.
- Medical Umrah Segment - coverage for health insurance for pilgrims.
- Motor Insurance Segment - coverage for motor insurance and for Manafeth third party liability insurance for foreign vehicles.
- Property and Casualty Insurance Segment - coverage for property, engineering, marine, aviation, energy and general accidents insurance.
- General Accident - Umrah Segment - coverage of general accident insurance for pilgrims
- Travel and Covid-19 Insurance Segment - coverage of compulsory travel insurance in addition to other coverages related to COVID-19 for citizens travelling abroad.
- Protection and Saving Segment - coverage of life insurance.
- Teejan Al-Khaleej Segment - reporting of Teejan Al-Khaleej operations as well as its income earned from consulting services extended to the insurance and healthcare businesses.
- Shareholders’ segment - reporting shareholder operations of the Group includes balances of its subsidiary “Tree Digital Company.” The revenues shareholders’ earned from investment income along with operations of its subsidiary “Tree Digital Company”. Certain direct operating expenses and other overhead expenses are allocated to this segment on an appropriation basis. The surplus or loss from the insurance operations is allocated to this segment on an appropriation basis.
The contribution of these main activities to Tawuniya’s business results for the year under review are as follows:
| Main Business Line/Operating Segment | Activity/Segment Revenue |
Percentage of Total (SAR ’000) |
| Medical | 8,710,530 | 81.33 |
| Medical-Umrah | 414,801 | 3.87 |
| Motor | 785,460 | 7.33 |
| Property & Casualty | 285,929 | 2.67 |
| General Accidents-Umrah | 378,044 | 3.53 |
| Travel and Covid-19 | 125,161 | 1.17 |
| Protection and Savings | 9,854 | 0.09 |
| Total Underwriting Revenues | 10,709,779 | 100 |
Name of each affiliate company, its capital, the Company’s ownership percentage, main scope of business, country of operation and country of incorporation
| Subsidiary/Associate Name | Capital | Company's Ownership Percentage | Main Scope of Business | Country of Operation | Country of Incorporation |
| Teejan Al-Khaleej Company (Subsidiary) | SAR 7,500,000 | 100 | Developing technology-based solutions and extending consultancy services for the insurance and healthcare businesses. | Kingdom of Saudi Arabia | Kingdom of Saudi Arabia |
| Tree Digital Company (Subsidiary) | SAR 7,500,000 | 100 | Introducing innovative products and services with an end-to-end digital journey to drive insurance penetration in the Kingdom of Saudi Arabia (e.g. convenience of choice, behavior change based products, rewards program), while building an ecosystem of partnerships to fulfil growing customer needs and provide a differentiating proposition versus local and regional competitors. | Kingdom of Saudi Arabia | Kingdom of Saudi Arabia |
| United Insurance Company B.S.C. (Associate Company) | BD 5,000,000 | 50 | Providing insurance for all motor vehicles passing through the King Fahad Causeway in accordance with the Bahrain Insurance Company Law. | Kingdom of Bahrain | Kingdom of Bahrain |
| Waseel Application Service Provider Limited (Associate Company) | SAR 24,000,000 | 45 | Providing internet-based connectivity, information services, and B2B e-commerce capabilities for the healthcare insurance market. | Kingdom of Saudi Arabia | Kingdom of Saudi Arabia |
The contribution of subsidiaries/affiliates to Tawuniya’s business results during the year under review are as follows:
| Subsidiary/Affiliate | Activity Revenues |
Percentages |
| United Insurance Company | 90,097 | 66.37 |
| Waseel Application Services Provider | 45,662 | 33.63 |
| Total Revenues | 135,759 | 100 |
*The business of the subsidiaries Teejan Al-Khaleej and Tree Digital Company directly contribute to the main business income.
Description of the Company’s significant plans and decision and future expectations
- The implementation of the Tawuniya’s Strategy 2025 with an ambitious vision to be the leading insurance company in the Kingdom, the Middle East and North Africa, and also aims to keep pace with the fundamental changes in the market, and contribute more to supporting the national economy and serving the Saudi society.
- Building a new organizational structure that is in harmony with the Company’s strategic directions and supports its implementation, as it focuses on developing all insurance products according to market changes and customer needs.
- Launching a number of important digital initiatives, following the establishment of a digital factory that includes an effective team and smooth work procedures, as well as, building a unified platform for digital experiences in order to provide integrated digital solutions for all stages of customer service, and improve their journeys. The new mobile app has been launched along with the launch of the new website as part of these initiatives.
- Developing Tawuniya’s health program “Vitality”, which was rolled-out by the company over the last two years, and had a positive impact in raising the level of health services provided to customers, improving their quality of life, and thereby enhancing the brand and supporting financial performance.
- Developing Tawuniya’s “Drive” program that contributes to improving driving behavior, reducing accident rates, enhancing safety, and rewarding committed drivers, thus improving the quality of vehicle insurance operations by reducing the loss ratio, increasing customer retention rates, and creating an attractive factor for new customers.
- Embarking on the execution of the company’s Environment, Social, and Governance (ESG) strategy, which was approved and issued during the year 2021/22 setting commitments towards a set of Sustainable Development Goals (SDGs) as issued by the United Nations. (A complete report on Tawuniya’s ESG strategy is available in the 2021 Sustainability Report.)
- Developing the governance of the implementation of transformation projects, building internal capabilities, and attracting distinguished competencies and expertise, which contribute to raising the quality of work and the speed of completion.
- Evaluation of customer experience by conducting a number of opinion polls, and improving the level of services provided according to the results of these surveys.
- Developing a performance management system to be more effective in achieving the company’s objectives and promoting a culture of performance.
- Concluding strategic agreements and partnerships with major companies in tandem with the mega projects linked to Saudi Arabia’s Vision 2030, promoting joint work, delivering cooperative services, and introducing its products to various customers to meet their needs by issuing an Owner Controlled Insurance Program (OCIP) which will help increase of retention of property & casualty insurance within the Kingdom and improve client awareness of risks related to such projects.
- Launching attractive insurance products, for example, but not limited to, the “Vehicle Mechanical Breakdown Insurance” product, which is its latest innovation for vehicle owners and the first of its kind in the Kingdom, as it provides customers with more insurance options for their vehicles, and to translate one of the pillars of Tawuniya’s Strategy 2025 by providing innovative insurance solutions integrated into the automotive sector.
- Continue to lead the industry through the innovation and bring-to-market strategy of new risk management solutions akin to the national program to provide COVID-19 insurance for Saudi citizens traveling abroad, launching the first digital insurance company in the Kingdom “Tree Digital Insurance Company”, offering a full end-to-end digital journey for clients, among other programs and innovations.
Details of the Company’s social contributions in 2022
- Tawuniya and its employees participated in a campaign during Ramadan with SAR 100,000 through the “Ehsan” platform, demonstrating the Company’s active social role, and belief in the values of the Kingdom.
- Under slogan of “Stop your life a moment” Tawuniya launched a breast cancer awareness campaign, promoting early checkups with a checkup station for its employees.
