Appendix 1 - Licensed Insurance Companies Practicing Insurance Business

Appendix No. (1) Licensed Insurance Companies Practicing Insurance Business
Company ....................................
(Public Joint Stock Company)
Amman - Hashemite Kingdom of Jordan
Consolidated Financial Statements and the Report of the External Auditor
For the Year Ended December 31, ............

Contents
Page
External Auditor's Report
-
Consolidated Statement of Financial Position
Consolidated Statement of Profit or Loss
-
Consolidated Statement of Profit or Loss - Life Insurance - Consolidated Statement of Other Comprehensive Income - Consolidated Statement of Changes in Equity - Consolidated Statement of Cash Flows - Notes to the Consolidated Financial Statements and form an integral part thereof - Consolidated Statement of Financial Position
As at December 31, ............
Note No.
December 31 Current Year
December 31 Comparative Year
Assets
Deposits with banks
Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets at amortized cost Investments in associates Investments in subsidiaries and associates (in unconsolidated statements only) Investment property Right-of-use assets Total investments

Cash in hand and at banks
Insurance contract assets
12-13
Reinsurance contract assets
Deferred tax assets
Property and equipment
Intangible assets
Other assets
Assets of discontinued operations
Total Assets
Note No.
December 31 Current Year
December 31 Comparative Year
Liabilities and Equity
Liabilities
Insurance contract liabilities
12-13
Reinsurance contract liabilities
Creditor banks / Accounts payable
Accrued expenses
Lease liabilities
Income tax provision
Deferred tax liabilities
Various provisions
Loans
Other liabilities
Subordinated loans
Liabilities of discontinued operations
Total Liabilities
Equity
Authorized and paid-up capital
Less: Treasury shares
Issuance premium (discount)
Mandatory reserve
Voluntary reserve
Special reserve
Foreign currency translation differences
Fair value reserve
(Retained earnings) losses
Total Equity - Company Shareholders
Subordinated loan
Non-controlling interests

Total Equity
Total Liabilities and Equity
Chairman of the Board of Directors
The notes from () to () are an integral part of these financial statements and should be read together with them and with the attached External Auditor's Report.

Consolidated Statement of Profit or Loss
For the Year Ended December 31, ............
Note No.
December 31
Current Year
December 31
Comparative Year
Revenues
Insurance contract revenues
Insurance contract expenses
Results of insurance contract business
Reinsurance contract expenses
Reinsurance contract revenues
Results of reinsurance contract business

Net results of insurance and reinsurance contract business Financing expenses / revenues - Insurance contracts Financing expenses / revenues - Reinsurance contracts

Net financing results of insurance and reinsurance contracts Net results of insurance and reinsurance contract business and financing Interest income Net gains (losses) on financial assets and investments Dividends received from subsidiaries and associates Other revenues Total Revenues

Unallocated administrative and general expenses Unallocated depreciation and amortization Expected credit losses on financial assets and investments Company's share of results of subsidiaries / separate Company's share of results of associates Financing expenses - Lease contracts Gains (losses) on sale of property and equipment Other expenses Total Expenses

Profit (Loss) for the Year from Continuing Operations before Income Tax Income Tax Profit (Loss) for the Year from Continuing Operations after Income Tax

Profit (Loss) for the Year after Tax from Discontinued Operations Profit for the Year Attributable to Company Shareholders Profit for the Year Attributable to Non-controlling Interests Earnings per Share from Profit (Loss) for the Year

Chairman of the Board of Directors
The notes from () to () are an integral part of these financial statements and should be read together with them and with the attached External Auditor's Report.

Consolidated Statement of Profit or Loss - Life Insurance
For the Year Ended December 31, ............
Note No.
Current Year
Comparative Year
Revenues
Insurance contract revenues
Insurance contract expenses
Results of insurance contract business
Reinsurance contract expenses
Reinsurance contract revenues
Results of reinsurance contract business

Net results of insurance and reinsurance contract business Financing expenses / revenues - Insurance contracts Financing expenses / revenues - Reinsurance contracts

Net financing results of insurance and reinsurance contracts Net results of insurance and reinsurance contract business and financing Interest income Net gains (losses) on financial assets and investments Dividends received from subsidiaries and associates Other revenues Total Revenues

Unallocated administrative and general expenses Unallocated depreciation and amortization Expected credit losses on financial assets and investments Company's share of results of subsidiaries / separate Company's share of results of associates Financing expenses - Lease contracts Gains (losses) on sale of property and equipment Other expenses Total Expenses

Profit (Loss) for the Year from Continuing Operations before Income Tax Income Tax Profit (Loss) for the Year from Continuing Operations after Income Tax

Profit (Loss) for the Year after Tax from Discontinued Operations Profit for the Year Attributable to Company Shareholders Profit for the Year Attributable to Non-controlling Interests Earnings per Share from Profit (Loss) for the Year

Chairman of the Board of Directors
The notes from () to () are an integral part of these financial statements and should be read together with them and with the attached External Auditor's Report.

Consolidated Statement of Other Comprehensive Income
For the Year Ended December 31, ............
Note No.
December 31
Current Year
December 31
Comparative Year
Profit (Loss) for the Year
Add: Items of Other Comprehensive Income
Foreign currency translation differences
Change in fair value reserve through Other Comprehensive Income Effect of change in discount rate Effect of change in actuarial assumptions Total Other Comprehensive Income for the Year

Chairman of the Board of Directors
The notes from () to () are an integral part of these financial statements and should be read together with them and with the attached External Auditor's Report.

Consolidated Statement of Changes in Equity
For the Year Ended December 31, ............
Capital
Reserve
Reserve
Issuance Discount
Mandatory Reserve
Voluntary Reserve
Fair Value Reserve
Retained Earnings (Losses)
Total
Authorized and Paid-up
Current Year
Balance January 1
Transferred to Reserves
Total Comprehensive Income for the Year
Foreign currency translation differences
Change in Fair Value of Financial Assets at Fair Value through Other Comprehensive Income Dividends Increase in Capital Others Balance as at December 31 - - - - - - - Comparative Year Balance January 1 Effect of Accounting Standards Adjustments Balance as at January 1 of Comparative Year after Adjustment Comprehensive Income for the Year "Restated" Transferred to Reserves Change in Fair Value of Financial Assets at Fair Value through Other Comprehensive Income Dividends Increase in Capital Others Balance as at December 31 - - - - - - - Chairman of the Board of Directors The notes from () to () are an integral part of these financial statements and should be read together with them and with the attached External Auditor's Report.

Consolidated Statement of Cash Flows
For the Year Ended December 31, ...........
Note No.
December 31 Current Year
December 31 Comparative Year
Cash Flows from Operating Activities
Profit (Loss) for the Year from Continuing Operations before Tax Profit (Loss) for the Year from Discontinued Operations before Tax Adjustments:
Depreciation and amortization
Interest income
Loss on impairment of intangible assets
Depreciation of right-of-use assets
Financing costs of lease contract
End-of-service compensation expense
Dividend distributions
Gains (losses) on sale of property and equipment Change in Fair Value of Financial Assets through Profit or Loss Expected credit losses on financial assets at amortized cost Reversal of expected credit losses no longer needed Reversal of investment property impairment no longer needed Cash Flows from Operating Activities before Changes in Working Capital Items Insurance contract assets Reinsurance contract assets held Other assets Insurance contract liabilities Reinsurance contract liabilities held Other liabilities Accrued expenses Various provisions Cash Flows from Operating Activities before Taxes and Paid Provisions Paid from end-of-service compensation provision Income tax paid Net Cash Flows from Operating Activities Cash Flows from Investing Activities Deposits with banks maturing after three months Purchase / Sale of property and equipment Purchase / Sale of intangible assets Purchase / Sale of investment property Purchase / Sale of financial assets Dividends received Interest income received Net Cash Flows from Investing Activities Cash Flows from Financing Activities Repayment of subordinated loan Dividends paid Lease payments Creditor banks / Any item according to company activity Net Cash Flows from Financing Activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents Beginning of Year Cash and Cash Equivalents End of Year Others The notes from () to () are an integral part of these financial statements and should be read together with them and with the attached External Auditor's Report.

Notes to the Consolidated Financial Statements and form an integral part thereof
For the Year Ended December 31, ............
(1) General
Company .......... was established in ............ and registered as a Jordanian public joint stock company under number ( ) with authorized capital amounting to ............ dinars, divided into ............... shares, each share value ............ Jordanian dinars. The Company (state the nature of insurance business, branches of the Company and state other purposes of the Company). The attached Financial Statements were approved by the Board of Directors in its meeting No. ( ) held on date ............ and are subject to the approval of the General Assembly of Shareholders. The financial statements were approved by the Company's regional management on date ......... (for foreign companies). (1.2) Basis of Preparation of Financial Statements The consolidated financial statements of the Company and its subsidiaries were prepared in accordance with standards issued by the International Accounting Standards Board and in accordance with local laws in force and according to forms established by the Central Bank of Jordan. The consolidated financial statements were prepared in accordance with the historical cost principle, except for financial assets at fair value through profit or loss or other comprehensive income, the details of which are shown in their specific accounting policies. Jordanian Dinar is the presentation currency of the consolidated financial statements, which represents the functional currency of the Company. The most important accounting policies followed in preparing the consolidated financial statements, which have been disclosed, have been applied consistently for all years presented unless stated otherwise. Preparing the consolidated financial statements in accordance with International Financial Reporting Standards requires the use of important and specific accounting estimates, and also requires management to use its own estimates in the process of applying the Company's accounting policies. (2.2) Basis of Consolidation The consolidated financial statements represent the financial statements of the Company and its subsidiaries under its control. Control is achieved when the Company has the ability to control the financial and operating policies of the subsidiaries in order to obtain benefits from their activities, and transactions, balances, revenues, and expenses between the Company and its subsidiaries are eliminated in full (names of all subsidiaries, their capital, ownership percentage, nature of business, and date of acquisition are stated). The results of operations of subsidiaries are consolidated in the Consolidated Statement of Profit or Loss from the date of acquisition, which is the date when the Company actually transfers control to the subsidiaries, and the results of operations of subsidiaries that have been disposed of are consolidated in the Consolidated Statement of Profit or Loss until the date of disposal, which is the date when the Company loses control over the subsidiaries. The financial statements of the
Company / for subsidiaries of the same financial year for the insurance company are prepared using the same accounting policies followed by the insurance company. If the Company / subsidiaries follow accounting policies different from those followed by the insurance company, necessary adjustments are made to the financial statements of the Company / subsidiaries to conform to the accounting policies followed by the insurance company. Non-controlling interests represent that part of equity in subsidiaries not owned by the Company. Non-controlling interests are shown in the net assets of subsidiaries in a separate line item within the Group's equity. In the event that separate financial statements are prepared for the Company as an independent entity, investments in subsidiaries are shown at cost. (3.2) Application of New and Amended International Financial Reporting Standards The Company applied the following new and amended standards during the year:
The application of these new and amended standards and their interpretations did not result in a material effect on the financial amounts for the current and prior accounting periods (or resulted from the application of these new and amended standards and their interpretations changes in the accounting policies followed by the Company in the following areas which had an effect on the financial amounts for the current year and previous years). (4,2) Changes in Accounting Policies
(1,4,2) New standards, interpretations, and amendments effective from January 1, ...........
The Company applied International Financial Reporting Standard No. 17 "Insurance Contracts" where it assessed the impact of applying the standard, determined the gap between the previous situation and the standard's requirements, and prepared a risk assessment system through actuarial statistical models for different insurance contracts, in addition to updating information technology systems to ensure the availability of all necessary databases to apply actuarial models and prepare systems for estimating future cash flows of contracts, determining the present value of cash, in addition to updating accounting policies and procedures and updating other operational policies, which had an effect on the financial statements. The Company also re-evaluated the models used to recognize insurance contract revenues according to the standard's requirements as shown in the applied policies in Note No. (5.2). The transition provisions for applying the standard require retrospective application by following one of the following methods by the Company (Full Retrospective / Modified Retrospective / Fair Value). (The transitional method followed by the Company is stated), with recognizing the cumulative effect of applying the standard as an adjustment to the opening balance of retained earnings (or any other component of equity, if necessary) at the beginning of the year. The effect of applying the standard and the adjustment to the opening balance of retained earnings is disclosed in the Consolidated Statement of Changes in Shareholders' Equity.
The effect of application is also disclosed, along with a summary of restated financial statement items for the year ended as of December 31, for ............
Disclosure of accounting policies classification of current and non-current liabilities (amendments to International Accounting Standard No. 1) "Presentation of Financial Statements") Disclosure of accounting policies (amendments to International Accounting Standard No. 1) "Presentation of Financial Statements" and IFRS Practice Statement 2) Definition of Accounting Estimates (amendments to International Accounting Standard No. 8) "Accounting Policies, Changes in Accounting Estimates and Errors") Deferred Taxes related to Assets and Liabilities arising from a Single Transaction (amendments to International Accounting Standard No. 12) "Income Taxes"). The Company disclosed accounting policies in line with the requirements of the International Accounting Standards Board and its amendments regarding the presentation of financial statements "Practice Statement 2" under the requirements of the Central Bank of Jordan. (Disclosure of the effect of other new policies and standards according to the insurance licenses held by the Company) (2,4,2) New standards, interpretations, and amendments not yet effective Non-effective standards are added when announced by the International Accounting Standards Board. (5.2) Use of Estimates and Assumptions Preparing the consolidated financial statements and applying accounting policies requires the Company's management to make estimates and judgments that affect the amounts of financial assets and liabilities and disclosure of contingent liabilities. These estimates and judgments also affect revenues, expenses, and provisions, as well as changes in fair value shown in the Statement of Profit or Loss and within shareholders' equity. Specifically, it requires the Company's management to issue important judgments and estimates to estimate the amounts and timing of future cash flows. The mentioned estimates are necessarily based on assumptions and multiple factors with varying degrees of estimation and uncertainty, and actual results may differ from estimates due to changes resulting from the conditions and circumstances of those estimates in the future. (Disclosure of the nature and amount of changes in estimates of amounts included in previous financial year reports, if these changes have a material effect on current statements) Our estimates within the consolidated financial statements are reasonable and detailed as follows:
(1.5.2) Expected Credit Losses
The Company applies (state the method used by the Company in calculating expected credit losses) which is mandated by International Financial Reporting Standard No. (9) for recognizing impairment by measuring expected credit losses over the life of receivables and contractual assets based on credit risk and homogeneous ages. Expected loss rates are based on the Company's historical credit losses encountered during the previous three years up to the date of the end of the current year. Historical loss rates are then adjusted for current and future information on macroeconomic factors affecting the Company's customers. (State the factors the Company relied on in determining expected credit losses) in accordance with instructions issued by the Central Bank of Jordan on this matter. (2.5.2) Impairment of Financial Assets The Company reviews the values recorded in the records for financial assets at the date of the financial statements to determine if there are indicators indicating impairment individually or as a group. In the event of such indicators, the fair value is estimated to determine the impairment loss. (3.5.2) Income Tax The financial year is charged with its share of income tax expense according to systems, laws, and international financial reporting standards. Taxes Payable Expenses of taxes payable are calculated based on taxable profits. Taxable profits differ from profits declared in the income statement because declared profits include non-taxable revenues or expenses not deductible in the financial year but in subsequent years, or accumulated losses accepted for tax purposes, or items not taxable or accepted for deduction for tax purposes. Taxes are calculated according to the tax rates prescribed by laws, regulations, and instructions in the Hashemite Kingdom of Jordan. Deferred Taxes Deferred taxes are taxes expected to be paid or recovered as a result of temporary timing differences between the value of assets or liabilities in the financial statements and the value on which taxable profit is calculated. Taxes are calculated using the liability method, and deferred taxes are calculated according to the tax rates expected to be applied when settling the tax liability or realizing deferred tax assets. The balance of deferred tax assets is reviewed at the date of the financial statements and reduced in the event of expecting that it is not possible to benefit from those tax assets partially or fully, or by settling the tax liability or the need for it ceases. (4.5.2) Property, Equipment, and Intangible Assets Management periodically re-estimates the productive lives of tangible and intangible assets for the purpose of calculating annual depreciation and amortization, depending on the general condition of those assets and estimates of expected productive lives in the future. Impairment loss (if any) is recorded in the Statement of Profit or Loss. (5.5.2) Present Value of Future Cash Flows Flows are defined as all amounts expected to
be collected and paid within the limits of the insurance contract / reinsurance contract held after adjusting them to reflect the timing and uncertainty of those amounts, based on actuarial assumptions and the Company's experience in managing the portfolio of insurance contracts / reinsurance contracts held. Future cash flows are recognized at present value (State the assumptions followed in estimating future cash flows and future cash flows considered, the method used to discount those flows, the discount rate, and the yield curve used, in addition to the justification for adopting the method used in calculating discount rates and the mechanism for handling insurance financing income or expense (through the Statement of Profit or Loss or Statement of Other Comprehensive Income)). When setting assumptions regarding the estimation of cash flows for groups of insurance contracts, the Company must consider the following:
Inherent risks.
Level of aggregation.
Probability of natural disasters occurring.
Probability of contract termination before the end of insurance coverage, and other expected practices from the insured.
Factors that will affect estimates, and information sources for these factors.
(6.5.2) Non-financial Risk Adjustments
A financial amount set aside by the Company against the uncertainty of the amount and timing of cash flows arising from non-financial risks, based on actuarial assumptions and the Company's experience in managing the portfolio of insurance contracts / reinsurance contracts held (State the method to be followed in evaluating non-financial risk adjustments such as Value at Risk method, or cost of capital methods, and appropriate confidence level if any). The Company must disclose details of calculation and assumptions. (7.5.2) Non-Insurance Components The Company discloses the following aspects:
Definition of insurance risk.
Definition of an insurance contract, and identification of insurance contracts issued based on that definition.
Statement of contracts issued by the Company that do not conform to the definition of an insurance contract.
Mechanism for separating non-insurance components (investment component, service component, etc.) from the insurance contract, if any, stating the most specific standard to be applied to address those components. Mechanism for determining the relative importance of insurance contract risks. (8.5.2) Issues Litigation against the Company A provision is recorded against litigation against the Company based on a legal study prepared by the Company's lawyers, through which potential risks occurring in the future are determined, and those studies are reviewed periodically. (9.5.2) Fair Value Levels Disclosure of the fair value hierarchy level classifies fair value measurements in full, and fair value measurements are also separated according to the levels specified in International Financial Reporting Standards. The difference between Level 2 and Level 3 of fair value measurements represents the evaluation of whether information or inputs can be observed and the significance of unobservable information, which requires making judgments and detailed analysis of the inputs used to measure fair value, including taking into account all factors pertaining to assets or liabilities. (6,2) Most Important Accounting Policies Followed (1.6.2) Segment Information Business segment represents a group of assets and operations that jointly provide products or services subject to risks and returns different from those related to other segments, which are measured according to the reports used by the Company. Geographic segment is related to providing products or services in a specific economic environment subject to risks and returns different from those related to segments operating in other economic environments. (2.6.2) Goodwill Goodwill is recorded at cost, representing the increase in the cost of acquiring or purchasing a subsidiary or companies owned jointly with other companies over the Company's share in the net fair value of assets and liabilities arising from that company at the date of acquisition. Goodwill resulting from investment in subsidiaries is recorded in a separate line item as intangible assets. Goodwill resulting from investment in associates appears as part of the investment account in the associate company, and the cost of goodwill is subsequently reduced by any impairment in the value of the investment. Goodwill is allocated to one or more cash-generating units for the purpose of impairment testing. A test for the value of goodwill is performed at the date of each financial statement, and the value of goodwill is reduced if there is an indication that the value of goodwill has impaired, which is the case if the estimated recoverable amount of the cash-generating unit(s) to which the goodwill belongs is less than the carrying amount of the cash-generating unit(s). Impairment value is recorded in the Statement of Profit or Loss. Impairment loss for goodwill is not reversed in the subsequent period. - In the event of selling the subsidiary or the
company owned jointly with other companies, the value of goodwill is taken into account when determining the amount of profit or loss from the sale process. (3.6.2) Definition of Insurance Contract A contract under which the insurance company accepts significant insurance risk from the insured, and agrees to compensate the insured / beneficiary in the event of a certain future and uncertain event (subject matter of insurance) so that it negatively affects the insured / beneficiary. The insurance contract is recognized according to the following deadlines, whichever is earlier:
Beginning of the coverage period for the contract.
Date of due date of the first premium for the contract.
Date the insurance contract is considered a loss-making contract.
(Disclosure of the mechanism for recognizing a group of insurance contracts) As for insurance contracts containing a direct participation feature and having economic characteristics similar to an insurance contract (long coverage period, recurring premiums, and amount or timing of return according to the issuer's estimate) and linked to the same assets or participating in the performance of insurance contracts, and contracts containing that feature at the beginning of the contract include the following:
Participation of insureds / beneficiaries in a share of the insurance contract portfolio.
Probability of the Company paying to insureds / beneficiaries a large share of the returns of the fair value of investments related to the group of insurance contracts. High probability of changing the amounts paid to insureds / beneficiaries by changing the fair value of investments related to the group of insurance contracts. (Disclosure of insurance contracts containing the direct participation feature, if any) As for contracts that are not classified as insurance contracts, they are, for example, as follows:
Investment contracts that have a legal form similar to an insurance contract but do not transfer significant insurance risk to the insurance company and include financial risks such as implicit derivatives or change in the fair value of a financial instrument, or change in interest rates, or change in exchange rates, or credit classification, so they are classified as investment contracts according to International Financial Reporting Standard No. (9). Investment contracts containing an optional participation feature, which are investment contracts with a legal form similar to an insurance contract but do not transfer significant insurance risk to the issuer and do not meet the definition of an insurance contract, but are classified according to International Financial Reporting Standard No. 17. Self-insurance (i.e., retaining risks that could have been covered by an insurance contract within the Company, meaning there is no other party to the contract) such as the Company issuing an insurance contract in the name of the Company or a subsidiary or an associate company, classified according to International Financial Reporting Standard No. 15. (4.6.2) Held Reinsurance Contracts These are contracts concluded with reinsurers to compensate...