Islamic Finance & Investment Symposium by Sohail Jaffar
The Role of International Insurance Companies
in the opening of frontiers: development of
new products
(Takaful)
Sohail Jaffer
Partner, FWU Group
FWU group won the Euromoney Islamic Finance Award
for being the "Best Islamic white label service provider“.
Contents
FWU’s International Business Model
International Bank Distribution and Strategic Product
Partners
Product Highlights and customer benefits
Dynamic Fund Selection and Allocation Model
FWU’s Value Added
FWU’s Retakaful Pooling Arrangement
FWU Group
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FWU’s definition of Bancassurance
«Bancassurance is defined as
the delivery and distribution of
a suitable range of tailored
‘bankable’ protection and long
term savings and pension
products designed to meet the
lifecycle needs of the
customer base of a bank or
other financial institution.»
3
FWU-GROUP‘s Core Business Competencies
Bancassurance - Asset Management - Factoring
Germany
Luxembourg The group is well
Austria positioned to meet the life
Italy assurance, investment
France
Saudi Arabia
and pension needs of
institutional and private
United Arab Emirates clients in Europe, Middle
Kuwait East and Asia with state of
Pakistan the art bancassurance &
Malaysia
Shari‘a compliant Life
products.
4
FWU Group’s International Business Model
Strategic Product
Clone international
Bancassurance Partners
success
FWU Shari’ah Board
&
Expertise Structured asset
management approach
Product &
process innovation Web-based POS &
Admin System
customer convenience commission factoring solution
tailored ‘white label’ solutions exclusive Retakaful solution
quality training and sales support selection of service providers incl.
custodian bank
5
Benefits of ‘White label’ Bancassurance Solution
Tailored customer Bank defines own
solutions commission level
Bank offers choice of
both conventional
Bancassurance and
Takaful products Structured asset
Seamless integration
mgt. approach
into Bank’s own brand
linked to open inv.
architecture
Bank has choice to participate in other
modules of the service value chain
(custodian, brokerage, transaction banking)
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Contents
FWU’s International Business Model
International Bank Distribution and Strategic Product
Partners
Product Highlights and customer benefits
Dynamic Fund Selection and Allocation Model
FWU’s Value Added
FWU’s Retakaful Pooling Arrangement
FWU Group
7
FWU Group‘s international Bank distribution and
Strategic product partners
Bank Distribution Partners
FWU's existing distribution partners
Al Safat Takaful include: NCB in KSA and ADCB in
Company UAE
Kuwait
Bank Customers
EFU Life Insurance Aman Insurance
UAE
Pakistan
Takaful Ikhlas Al Ahli Takaful
Company
Malaysia Bank is Custodian of all customer
KSA
funds in the Savings Plan
Product administration, New product development,
and claims management Product launch support
Product management,
Customer statements Marketing & Training
Local Life support
Financial accounting
Insurance Product Partner Structured asset mgt.
Filing with local regulatory apporach
authorities Systems support to
Strategic Product Partner
FWU Int. Network and Bank Distribution
Dubai, KL Partner
Product enhancements &
& Luxembourg Shari’ah compliance
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Contents
FWU’s International Business Model
International Bank Distribution and Strategic Product
Partners
Product Highlights and customer benefits
Dynamic Fund Selection and Allocation Model
FWU’s Value Added
FWU’s Retakaful Pooling Arrangement
FWU Group
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Main product features and customer benefits
FWU Group‘s "White Label" Savings, Education and Retirement Plans –
Product Highlights
Product features Customer Benefits
Plan benefits are available to all bank
All bank customers are insurable
customers
No medical examination of bank
Eliminates important psychological
customer required (up to a defined
barrier
limit)
Transparent and cost efficient
Greater customer comfort
structure
Accelerated sales process using
Immediate risk cover for bank
FWU’s Point of Sale and
customer
Administration technology
Plan benefits are available
Bank customer convenience
immediately to all bank customers
10
Bank Annuity Income: Attractive Dynamics
Bank Income Growth – 5 year period
7,000
6,000
USD ('000)
5,000
4,000
Conservative
3,000 Average
Best
2,000
1,000
-
Year 1 Year 2 Year 3 Year 4 Year 5
Conservative Average Best
Base Assumptions:
Number of Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000 40,000 50,000
Average duration 15 years
Average monthly contribution $ 200
Lapsation rate 2 to 10 % p.a
Fund growth rate 7 % p.a
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Cumulative Bank Income over a 5 year period
20
US $ in Millions
15
10
5
0
Conservative Average Best 12
Contents
FWU’s International Business Model
International Bank Distribution and Strategic Product
Partners
Product Highlights and customer benefits
Dynamic Fund Selection and Allocation Model
FWU’s Value Added
FWU’s Retakaful Pooling Arrangement
FWU Group
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Structured Asset Management Approach
Objective Agreed funds
Investment target universe
process
FWU’s fund
selection and
allocation
model
Overweights the winners & Enhance return by
underweights the losers 15% to 25% p.a
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FWU‘s Dynamic Fund Selection
and Allocation Model
Fund Selection Process
Based on Funds’ returns, risk and
correlation amongst each other,
funds are ranked from best to
worst => Each fund is given a
score, based on its ranking.
Using the above rankings
=> Top eight funds are selected.
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FWU‘s Dynamic Fund Selection
and Allocation Model
Allocation model (key value added)
Overweighting of the outperformer
Underweighting of the underperformer
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Investment Proposal for Regular and Single Premium
Savings Plans
FWU‘s Dynamic Fund Select & Allocation Model
Strategy 1 Strategy 2 Strategy 3 Strategy 4
Conservative Balanced Growth Dynamic
Portfolio Portfolio Portfolio Portfolio
Investment in External Islamic Mutual Funds
Launched as internal funds of
FWU‘s local Takaful Product Partner
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Investment Advantages of Pooling
Conservative Balanced Growth Dynamic
portfolio portfolio portfolio portfolio
25:75 50:50 80:20 0-100
Cash
Custodian Equivalent
Bank
Equity Pool
Pool
Direct Investment in:
Sukuk
Murabaha
Trade-Finance 18
Contents
FWU’s International Business Model
International Bank Distribution and Strategic Product
Partners
Product Highlights and customer benefits
Dynamic Fund Selection and Allocation Model
FWU’s Value Added
FWU’s Retakaful Pooling Arrangement
FWU Group
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The value added – why FWU Group
ENTREPRENEURIAL INNOVATION
PARTNER
Customised Sophisticated Point of
product design Sale and Administration
System
Product training
Dynamic funds select and
and sales support
allocation model
Business simulation
model Cost efficient Agency structure
Regional service Unique Retakaful arrangement
hubs
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Contents
FWU’s International Business Model
International Bank Distribution and Strategic Product
Partners
Product Highlights and customer benefits
Dynamic Fund Selection and Allocation Model
FWU’s Value Added
FWU’s Retakaful Pooling Arrangement
FWU Group
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FWU-Group‘s Exclusive Retakaful Pooling Arrangement
Hannover Re
(„AAA rated“,
3rd largest
FWU – GROUP life Reinsurance)
Pooling
Administrator Wakeel/Trustee
-Data processing Arrangement - Fee Basis
and administration - 100% profit redistribution
Asset Management - Quard Hasna
- Shari‘ah compliant Investments
Establishment of insurance provider through joint venture or strategic cooperation
agreement
Dubai Islamic Eastern
Insurance Al Ahli Takaful
Company Insurance & Al Safat Takaful Federal
Takaful
Ikhlas
Partners NCB/FWU / IFC Reinsurance Company Union Life
SDN BHD
AMAN EFU
Bank distribution partners in the following markets
KSA UAE Kuwait Pakistan Malaysia
Distribution- The National Abu Dhabi
Commercial Bank Commercial Major Bank Major Bank Major Bank
Partners Jeddah Bank
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Contents
FWU’s International Business Model
International Bank Distribution and Strategic Product
Partners
Retakaful Pooling Arrangement
Structured Asset Management Approach
FWU’s Value Added
FWU’s Retakaful Pooling Arrangement
FWU Group
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FWU-GRUPPE
An entrepreneurial and institutional partnership
Dr. Manfred J. Dirrheimer and Swiss Re Frankona
Rückvers. AG,
Partners Munich
95% 5%
FWU AG
Munich, Luxembourg, Dubai, Kuala Lumpur
74,9% 80% 100% 100% 13,25% 10%
ATLANTICLUX Life PREMIUM SELECT Branch Luxemburg FWU Commission FWU Payment Al Ahli Takaful Wave Asset
Insurances S.A. LUX S.A. Factoring GmbH Services GmbH Company Management AG
Luxembourg Luxembourg International HQ Munich Munich Jeddah, KSA Hamburg
25,1% 25,1% Branch Dubai 13,25% 30% 7,5% 90%
Regional HQ ME
Branch VHV IFC International Finance National Commercial VHV
Versicherungen, Cooperation Bank, Versicherungen,
Bolzano
Hanover Washington Jeddah, KSA Hanover
Branch Kuala
Lumpur
Regional HQ FE
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FWU Group – Profile
The FWU Group is an entrepreneurial financial services group with
headquarters in Munich, Germany.
Further offices are located in Luxembourg and Dubai Internet City (DIC).
Group shareholders include GE Frankona Re AG, an international re-
insurer, and European banks and insurance companies.
Core activities are Bancassurance, Savings & Pension Plans and Asset
Management.
Group subsidiaries include:
– an Asset Management Company (PREMIUM SELECT LUX S.A.)
– a Life Insurance Company (ATLANTICLUX S.A.)
Both are based and regulated in Luxembourg.
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Contact
Mr. Sohail Jaffer
Partner, FWU Group
2, Rue Sainte Zithe
L-2763 Luxembourg
Email: s.jaffer@fwugroup.com
Tel: +352 – 2 61 97 700
Fax: +352 – 2 61 97 800
Internet: www.fwugroup.com
The information in this presentation does not constitute a sales offer, investment advice or an offer for the
acquisition of financial products or instruments, and shall not in this regard imply legal obligations for the
FWU Group or anybody else towards the readers of this presentation.
This presentation is solely intended to provide information on matters of interest for the readers and such
information is not meant to replace the knowledge and the judgment of the readers who should make all
appropriate inquiries.
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