2022 saw a broad recovery in the healthcare insurance sector from 2021 with notable growth in premiums and contribution figures despite a surge in medical inflation and claims. Results were further supported by strong investment income results which benefited from the high interest rate environment as global central banks continue tightening their monetary policies to curb persistent inflationary pressures.

Bupa Arabia continued generating stellar financial results in 2022 with a 22% growth in GWP to SR 13.9 billion, and 40.5% growth in profit before zakat and tax to SR 1.03 billion.

Revenues and Segment Contribution

Bupa Arabia maintained its market leadership position within the healthcare insurance sector. In addition to healthy increases in new subscriptions, GWP growth was driven by price increases to minimize the impact of unprecedented medical inflation levels.

More than 66% of GWP was generated through our Major Customers segment (representing members of large corporates), which grew by 24%, while the Non-Major segment grew by more than 18% in 2022. Contribution results were very robust and grew by 22% across all customer segments.

Costs and Earnings

Despite the 21% surge in claims, Bupa Arabia managed to control its loss ratio, which remained relatively flat from 2021 levels at 85.1%. Price increases played a critical role in protecting our loss ratio and curbing inflationary pressures from regulatory-induced drivers such as new table of benefits, NPHIES fees, Covid coverage and government providers’ billings, as well as notable increases in seasonal flu. Separately, net profit before zakat and tax grew by 40.5% and was driven by record investment income results of SR 553 million given higher deposits rates as well as capital gains from equity investments.

Return to Shareholders

In 2022, Bupa Arabia reported a 38.3% growth in earnings per share (EPS) to SR 5.78 compared to SR 4.2 in 2021, supported by record earnings. Moreover, the Board of Directors has approved dividend distribution of SR 4.5 per share for the fiscal year 2021.

In 2022 Bupa Arabia increased its capital to SR 1,500 million by capitalizing SR 300 million from the retained earnings account, thereby increasing the capital by 25%, and thereby increasing the number of shares to 150 million shares by offering one bonus share for every four shares owned.

Five-Year Summary

Statement of Operations (12 Months)	2018 SR ’000	2019 SR ’000	2020 SR ’000	2021 SR ’000	2022 SR ‘000
Gross Written Premiums (GWP)	8,566,648	10,410,868	10,447,353	11,382,194	13,896,883
Net Earned Premiums (NEP)	8,150,242	9,371,291	10,734,482	10,617,715	12,836,761
Total Revenue	8,348,460	9,630,246	10,979,020	10,920,727	13,455,250
Gross Claims Paid	6,708,524	7,655,078	8,262,050	9,114,251	10,565,431
Net Claims Incurred (NCI)	6,788,985	7,749,297	8,719,928	9,046,569	10,924,527
Total Expenses	985,317	1,101,460	1,355,283	1,085,117	1,438,539
Surplus from Insurance Operations	487,272	668,341	801,410	583,469	653,031
Shareholders’ Net Income before Zakat and Income Tax	525,431	712,654	823,669	730,701	1,026,881
Loss Ratio	83.30%	82.69%	81.23%	85.20%	85.10%
Earnings Per Share (EPS)*	3.51	3.98	4.66	4.18	5.78

* EPS were adjusted retrospectively for the increase in outstanding shares due to the issuance of bonus shares in 2022.

Summary of Financial Position

Assets	2018 SR ’000	2019 SR ’000	2020 SR ’000	2021 SR ’000	2022 SR’000
Cash and Cash Equivalents	290,413	665,709	633,251	960,758	1,288,297
Term Deposits	4,715,281	5,063,976	2,796,547	3,093,720	6,408,489
Investments	1,621,491	1,840,832	6,029,446	5,703,773	3,374,302
Prepayments and Other Assets	202,985	276,643	85,086	113,254	147,763
Premiums Receivable – Gross	1,119,902	1,886,564	1,542,567	1,992,656	2,403,549
Allowance for Doubtful Premiums Receivable	-169,231	-197,187	-222,524	-231,356	-244,366
Premiums Receivable – Net	950,671	1,689,377	1,320,043	1,761,300	2,159,183
Reinsurer’s Share of Unearned Premium	6,320	20,625	20,108	27,935	48,265
Reinsurer’s Share of Outstanding Claims	3,014	5,190	7,936	15,036	19,823
Deferred Policy Acquisition Costs (DAC)	118,323	134,022	68,214	201,042	264,931
Amount Due from Insurance Operations	–	–	–	–	–
Goodwill	98,000	98,000	98,000	98,000	98,000
Tangible and Intangible Assets (prev. furniture, fittings and equipment)	138,516	225,686	265,977	249,664	295,003
Accrued Interest on Statutory Deposit	6,882	10,820	13,806	14,885	16,235
Statutory Deposit	120,000	120,000	120,000	120,000	150,000
Deferred Tax Asset	25,552	30,216	37,941	39,735	40,151
TOTAL ASSETS	8,271,896	10,181,096	11,496,355	12,399,102	14,310,442

Bupa Arabia's total assets have seen a steady growth, reflecting its strong and expanding business activities. Total assets in 2022 grew by 15% to SR 14.3 billion with strong underwriting results reflected in the increase in premiums receivables and in term deposits. The reallocation from investments to term deposits reflects views to benefit from high interest rates expectations during 2022.

Liabilities and Surplus	2018 SR ’000	2019 SR ’000	2020 SR ’000	2021 SR ’000	2022 SR’000
Unearned Premiums (UEP)	3,428,131	4,376,219	4,023,331	4,709,555	5,695,725
Outstanding Claims Provision (OCP)	1,472,681	1,627,708	2,109,319	2,111,455	2,514,835
Reinsurance Balance Payable	50,636	54,413	4,873	25,397	2,605
Accrued Expenses and Other Liabilities	367,204	545,028	816,062	882,393	1,210,296
Amount Due to Shareholders’ Operations	–	–	–	–	–
Policyholders’ share of Surplus from Insurance Operations	139,755	168,454	200,391	190,060	208,021
Accrued Zakat and Income Tax	199,784	274,709	317,199	236,610	326,566
Accrued Interest on Statutory Deposit	6,882	10,820	13,806	14,885	16,235
Amount Due to Related Parties	41,095	78,848	108,521	33,723	42,280
TOTAL LIABILITIES	5,706,168	7,136,199	7,593,502	8,204,078	10,016,563
TOTAL EQUITY	2,591,280	3,044,897	3,902,853	4,195,024	4,293,879
TOTAL LIABILITIES AND EQUITY	8,297,448	10,181,096	11,496,355	12,399,102	14,310,442

Total liabilities grew by SR 1.8 billion in 2022 to SR 10.0 billion, due to the increase in unearned premiums and outstanding claims, while total equity grew by SR 99 million to reach SR 4.3 billion, supporting a strong solvency position well above regulatory thresholds.

Statutory Payments and Payable to Regulatory Bodies

Description	Paid		Paid Change	Payable		Payable Change
	2021 SR ’000	2022 SR ’000	2021 vs 2022 SR ’000	2021 SR ’000	2022 SR ’000	2021 vs 2022 SR ’000
ZATCA: Zakat and Income Taxes	187,515	74,770	-112,745	236,610	326,566	89,956
ZATCA: Value Added Tax (VAT)	591,517	728,158	136,641	85,516	116,160	30,644
ZATCA: Withholding Taxes (WHT)	11.7	25.6	13.9	7.4	8.2	0.8
ZATCA: TOTAL	779,044	802,954	23,910	322,133	442,734	120,601
SAMA: Levies	54,696	67,505	12,809	10,504	12,484	1,980
CHI: Levies and License Fees	162,586	135,009	-27,577	21,009	24,968	3,959
TOTAL: LEVIES AND LICENSE FEES	217,282	202,514	-14,768	31,513	37,452	5,939
CMA/Tadawul: Service and License Fees	1,221	1,418	197	0	0	0
GOSI	35,475	35,971	496	2,961	3,347	386
TOTAL	36,696	37,389	693	2,961	3,347	386

Zakat, Tax and Customs Authority: Zakat and Income Tax (ZATCA)

Total zakat and income tax payments during 2022 were SR 74.7 million, of which SR 23.7 million was for the 2021 tax and zakat returns and SR 51 million for 2022 advance tax.

Bupa Arabia paid SR 728.2 million in 2022 to ZATCA for VAT payments with SR 116 million VAT payable at the end of the year. Additionally, SR 25.6 million was paid during 2022 for withholding taxes, and SR 8.2 million provided in the 2022 results was related to withholding taxes payable in 2023.

The SR 442.3 million payable to the ZATCA includes SR 162.5 million payable in 2023 for 2022 zakat and tax returns, while the remainder is predominantly additional provisions for zakat matters.

Saudi Central Bank (SAMA)

Total levies paid to SAMA during 2022 were SR 67.5 million, of which SR 10.5 million were for the fourth quarter of 2021 while SR 57 million were for the three quarters of 2022. The SR 12.5 million payable amount for 2022 includes the normal provisioning for Q4 2022.

Council of Health Insurance (CHI)

Total levies paid to the CHI for 2022 were SR 135 million, of which SR 21 million were for the settlement of Q4 levies of 2021, and SR 114 million were for the first three quarters of 2022. The SR 25 million payable amount for 2022 includes the normal provisioning for Q4 2022.

The General Organization for Social Insurance (GOSI)

Total 2022 payments to GOSI were SR 36 million, of which SR 3 million was related to 2021. An amount of SR 3.3 million was provided for, reflecting 2022 related GOSI commitments, which are payable in 2023.

Tadawul and the Capital Market Authority (CMA)

The Company paid SR 1.4 million to Tadawul/CMA during 2022, which included SR 400 thousand for service fees, SR 1 million for annual listing fees, and SR 17.2 thousand for other fees.

Regulatory Penalties

During 2022, the Company paid to SAMA SR 100,000 for a fine imposed related to re-insurance rules violations.

Dividends and the Company’s Policy for the Distribution of Profits

The Company’s By-Laws state the following with respect to the calculation and distribution of profits:

1. The exclusion of zakat and income tax
2. That 20% of net profits are allocated to form a statutory reserve. The General Assembly has the authority to cease this transfer once the statutory reserve is equivalent to the paid-up capital of the Company
3. Based on the Board’s recommendation, the General Assembly can also hold a percentage of the annual net profit to form a reserve and may allocate it to purposes of its choosing
4. The balance shall be distributed as a first payment amounting to no less than 5% of paid-up capital to the shareholders
5. The remaining balance shall be distributed to the shareholders as a share in the profits or transferred to the retained profits account
6. The Board may issue a decision to distribute periodical profits to be deducted from annual profits as specified in point 4 above, and in accordance with the relevant regulatory rules issued by the concerned authorities

In addition to that stated within the Company By-Laws, during 2017, the Company approved the following as an added dividend policy:

In addition to the distribution of profits requirements, as reflected within the Company By-Laws (Articles of Association), the Company Dividend Policy is as reflected below:

To distribute any excess cash as dividends to shareholders subject to:

1. maintaining a solvent position at the end of each quarter as per local laws and regulations,
2. receiving the requisite regulatory and shareholder approvals for the dividend(s) wherever applicable and,
3. having accounted for the Company’s requirements in meeting its Capital Management Policy and relevant risk management policies; policies that cover the business and investment requirements

Dividend History – Last Five Fiscal Years

Description	2017* SR ’000	2018 SR ’000	2019** SR ’000	2020 SR ’000	2021 SR’000
Retained Income (pre-Zakat and inc. taxes)	500,614	525,431	712,654	823,669	730,701
Dividend Amount	160,000	180,000	0	408,000	540,000
Pre-Zakat and inc. Taxes Dividend Pay-Out Ratio	32.0%	34.3%	N/A	49.5%	74.0%
Number of Shares in Issue	80,000*	120,000	120,000	120,000	120,000
Saudi Riyals Dividends per Share	2.00	1.50	N/A	3.40	4.50
Distribution Period	2019Q3	N/A	N/A	2021Q3	2022Q3

*At the time of the dividends issue, there were 80 million shares in issue. Bonus shares were issued during November 2018, one bonus share for every two shares held, using SR 400 million of the 2017 retained earnings, to increase Bupa Arabia’s share capital by 50%, resulting in 120 million shares in issue at 31 December 2018.

**No dividends were declared in 2020 due to the uncertainties surrounding COVID-19.