Al Khazna Announces Strong Third Quarter Results and Comments on its Intention to Provide Market-Leading Transparency

Published November 17th, 2009 - 09:53 GMT

Al Khazna Insurance Company PSC (AKIC.ADX) released
its third quarter financial reports for 2009 together with condensed
consolidated interim financial information for the 9 months ended 30
September 2009. The financial statements were accompanied by a report from
Mohammed Jassim Al Jassim, Al Khazna's General Manager, which described the
results as very encouraging considering the volatile market conditions that
continued to impact global markets.

 

    At the same time, in line with Al Khazna's strategic vision to lead the
market in transparency and operational excellence, Khalifa Mohamed Abdulaziz
Rubaya Al Muhairi, Al Khazna's Chairman, issued a statement announcing Al
Khazna's intention to be the first UAE listed insurance company to indicate
its commitment to being fully IFRS (International Financial Reporting
Standards) compliant by the end of 2009.

 

    Statement of Khalifa M. A. Rubaya Al Muhairi:

 

    "Al Khazna has issued its third quarterly report of 2009 together with
condensed consolidated interim financial information for the nine months
ended 30 September 2009. Mohammed Jassim Al Jassim, Al Khazna's General
Manager, also issued his report commenting on Al Khazna's encouraging
financial results

 

    Separately, I, on behalf of the Board of Directors of Al Khazna Insurance
Company PSC, would like to announce a significant step to market-leading
transparency and operational excellence, the intention of Al Khazna to be
fully IFRS compliant by the end this year. I believe we are the first UAE
listed insurance company to make this commitment to the public.

 

    This year has been a year of volatility and transition for all UAE
insurance companies. Volatility because of the ups and downs of the
investment environment, which clearly affect all insurance company
performance. Transition because some accounting principles and regulatory
reporting requirements here in the UAE, which affect most industries, have
changed.

 

    One new regulatory requirement, that all listed companies begin to adhere
to IFRS reporting standards, offers its own opportunities and challenges.
IFRS compliance is an opportunity to increase transparency because IFRS is
used worldwide and allows investors to understand and compare company
financials around the globe. This is a wonderful achievement, and we welcome
the opportunity to make it easier for our investors to understand our
performance versus our peers, domestic and international.

 

    The challenge of IFRS compliance, especially on a quarterly basis, is
that, unfortunately, the fluctuations in investment values are reported and
many hit the income statement in an unbalanced way. It is unbalanced because
increases in investment values will not necessarily result in profits, as the
increase will be booked in reserves, but reductions in value are booked
directly as losses, hurting company performance and creating a large amount
of accounting "noise" that will not be easy to understand for the typical
investor.

 

    In fact, in order to deliver the utmost value to our investors, Al Khazna
is in the process of developing deep team expertise in investment structuring
and will seek ways to reduce the impact of these particular impairment rules
on its investments. In addition, our team will lend a hand in educating
investors, industry players, and local regulators on the UAE-specific impacts
of recent changes. We welcome any questions or requests for additional
information on this subject.

 

    Thankfully our results for this year so far have been very encouraging
given the market conditions, and while next year will no doubt also be a year
of change for the industry as improved corporate governance requirements come
into force in the UAE, Al Khazna has not only mobilized to reach full
regulatory compliance, we have already invested in all required systems to
ensure that we will be fully compliant with IFRS in respect of our accounts
for the twelve month period ending on 31 December 2009. Aligned with our
vision of market-leading transparency and operational excellence, we welcome
the new financial transparency and corporate governance standards being
implemented by the Emirates Securities and Commodities Authority."

 

    Dated November 15 2009. Signed Khalifa Mohamed Abdulaziz Rubaya Al
Muhairi.

 

    Commenting on Mr. Rubaya Al Muhairi's statement, Jacques Fakhoury of
PriceWaterhouseCoopers, the auditors of Al Khazna, welcomed the commitment to
being fully IFRS compliant. "IFRS is a global standard. Some of its
requirements can have short-term implications for companies and can be
difficult in the current environment. Against that background we welcome Mr
Al Muhairi's comments and the commitment of Al Khazna to be fully IFRS
compliant in time for its annual results for the twelve month period ended 31
December 2009. We have worked closely with the Board and Management of Al
Khazna to achieve this objective and we applaud the great efforts made by the
company in this respect."


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