Report of accumulated losses March 31,2025 published on 26/5/2025

Date:

13-05-2025

Listed company name:

Union Insurance Company PJSC

Define the period of the

financial statement

For the period ending 31-03-2025

Accumulated losses:

AED 130,210,000

Accumulated losses to

capital ratio:

39.3%

The main reasons leading

to these accumulated

losses and their history:

• Provision made for real estate properties:

During the period ended 30 June 2021, the Company had provided an amount of AED 72.30 million as a provision towards Investment properties and provided appropriate disclosures in the Financial Statements for the period ended 30 June 2021 and the Board of Directors Report. Subsequently, the company has treated this as prior period adjustments, and this has resulted in increase in accumulated losses as of 1st January 2020 by AED 72.3 million. The investment properties (AED 72.3 million) represent purchased assets from a related party during the years 2013 & 2014. The purchased assets comprise of 60 residential units in a single building and a plot of land of 150,000 square feet with integrated infrastructure. The counterparty (a related party) to the above transactions never fulfilled their obligation to the Company (the Buyer) since purchase date. Accordingly, the Company neither has the title deeds nor a possession of the said properties. As a prudent measure, the new Board of Directors of the Company has decided to book a full provision (AED 72.3 million) against the said assets. The Company is pursuing legal action against the involved parties to recover the Company's rights, in accordance with the resolution of Shareholders Assembly Meeting held on 30 September 2021.

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• Impairment of free hold land:

In prior years, the Company had recorded free hold land at an amount of AED 82,045 thousand. The land was obtained in an exchange transaction which occurred on 15 July 2018. The previous asset was recorded at an amount of AED 82,045 thousand and as part of

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the exchange the Company received the land for the fair va|ue of AED 59,210 thousand. The Company received the title deeds for the land and the exchange was considered to have commercial substance. On the date of exchange, the land should have been recorded at AED 59,210 thousand. The Company restated the prior period cost of the free hold land to AED 59,210 thousand. This correction resulted in AED 22,834 thousand reduction in "property and equipment" and AED 22,834 thousand increase in "accumulated losses" as at each of 1 January 2020 and 31 December 2020.

• Allowance for doubtful receivable for

former major shareholder (Related party):

The company has made a bad debt provision of AED 26.2 million against insurance receivables from former major shareholders during the years 2019 (AED 4.7 million) and 2020 (AED

21.5 million).

• Initial adoption of IFRS 17 and IFRS 9.

Due to the adoption of IFRS 17 for the first time, the financial statements of previous periods have been restated. The adoption led to accumulated losses increasing by AED 35.7 million, while the adoption of IFRS 9 resulted in an increase of accumulated losses by AED 10.6 million. The impact of IFRS 17 on AED 35.7 million is in the form of a deferred liability. This amount will be released to the profit and loss statement during the subsequent accounting period.

The IFRS 9 (Expected Credit Loss) is an estimate adopted for the first time during 2023 on the receivables. With the implementation of speedier and more effective collection processes, this provision is expected to reduce.

" "

Measures to be taken to address accumulated losses:

Please refer to our Accumulated losses

recovery plan submitted on 05-01-2024 which were disclosed to the financial market and as an update to the said recovery plan, we are pleased to submit that Union Insurance Company, with the reported profits for the first quarter 2025 reduced the accumulated losses

% to 39.3% from the 43.too as at 31 December 2024. The Solvency position of the company stands at 147% ( SCR). The details are tabled as follows:

In AED '000 As at 31 March 2025

Solvency Capital 108,477

Re uirement SCR

basic own funds 159,240

SCR Solvency Margin- 50,763

Sur lus/(Heficit

(SCR) i 08,477

159,240

50,763

SCR Solvency Margin-

Surplus /(Deficit) % 147%

147%

The Company has been focusing on its core business and with the management restructuring achieved a net profit of AED 13M after tax as per attached Financial Statements for the period ended 31 March 2025. This result surpasses the approved business plan of the company.

During the General Assembly meeting held on 21st April 2025, the shareholders approved the Board of Directors' proposal to offset the total accumulated losses through the share capital, legal reserve, and special reserve. The company has obtained the initial approvals and is currently proceeding with the necessary procedures in accordance with the applicable regulatory frameworks And laws.