NOTES TO FINANCIAL STATEMENT

Capital and reserves

Share capital

	2023	2022
	AED	AED
Authorised, issued and fully paid:
118,780,500 shares of AED 1 each	118,780,500	118,780,500

Tier 1 capital

On 14 January 2019, the Company’s Board of Directors approved the issuance of Tier 1 perpetual bonds non-convertible into shares amounting to AED 15,000,000 for the purpose of strengthening the Company’s capital adequacy and assets and to support its financial position to achieve the Company’s growth strategy and to be compatible with the instructions of the CBUAE.

Statutory reserve

In accordance with the UAE Federal Law No. 32 of 2021, concerning Commercial Companies and the Company’s Articles of Association, 10% of net profit for each year were to be transferred to a non-distributable legal reserve until the balance of the legal reserve equals 50% of the Company’s paid up share capital. The Company has not made any transfer to the reserve as it has incurred loss during the year. This reserve is not available for any distribution to the shareholders.

Reinsurance reserve

In accordance with Article (34) to Insurance Authority’s Board of Directors Decision No (23) of 2019, insurance companies incorporated in the State and licensed by the Central Bank of the United Arab Emirates (“CBUAE”) shall bind in the preparation of its annual financial statements and its final accounts to allocate an amount equal to 0.5% (Five per thousand) of the total reinsurance premiums ceded by them in all classes in order to create a provision for the probability of failure of any of the reinsurers with whom the Company deals to pay what is due to the Company or default in its financial position. The provision shall be accounted for year after year based on the reinsurance premiums ceded and may not be disposed of without the written approval of the Assistant Governor of the Banking and Insurance Supervision Department of CBUAE. The decision was effective from 01 December 2020. Accordingly, an amount of AED 1,181,192 (31 December 2022: 650,848) has been recorded in equity as a reinsurance default risk reserve.

Treasury shares

During the previous year, the Company bought back a total number of 5.3 million outstanding shares with AED 4,660,318.