The Role of International Insurance Companies in the opening of frontiers: development of new products (Takaful)

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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
Awardfor being the "Best Islamic white label
service provider.
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Contents

• FWUs International Business Model
• International Bank Distribution and Strategic
  Product Partners
• Product Highlights and customer benefits
• Dynamic Fund Selection and Allocation Model
• FWUs Value Added
• FWUs Retakaful Pooling Arrangement
• FWU Group

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FWUs 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.

Customer Demand Driven
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FWU-GROUPs Core Business Competencies
Bancassurance - Asset Management - Factoring
The group is well positioned to meet the life
assurance, investment and pension needs of
institutional and private clients in Europe,
Middle East and Asia with state of the art
bancassurance Sharia compliant Life products.
Germany Luxembourg Austria Italy Fra
nce Saudi Arabia
United Arab Emirates

Pakistan Malaysia
Kuwait
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FWU Groups International Business Model

• Strategic Product
• Partners

• Clone international Bancassurance success

FWU Shariah Board Expertise

• Structured asset management approach

• Product process innovation

• Web-based POS Admin System

• customer convenience
• tailored white label solutions
• quality training and sales support

• commission factoring solution
• exclusive Retakaful solution
• selection of service providers incl.
  custodian bank

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Benefits of White label Bancassurance Solution

• Bank defines own commission level

• Tailored customer solutions

Bank offers choice of both conventional
Bancassurance and Takaful products

• Structured asset mgt. approach linked to open
  inv. architecture

• Seamless integration into Banks own brand

• Bank has choice to participate in other modules
  of the service value chain (custodian, brokerage,
  transaction banking)

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Contents

• FWUs International Business Model
• International Bank Distribution and Strategic
  Product Partners
• Product Highlights and customer benefits
• Dynamic Fund Selection and Allocation Model
• FWUs Value Added
• FWUs Retakaful Pooling Arrangement
• FWU Group

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FWU Groups international Bank distribution and
Strategic product partners
Bank Distribution Partners

• FWU's existing distribution partners include NCB
  in KSA and ADCB in UAE

Al Safat Takaful Company Kuwait
Bank Customers
Aman Insurance UAE
EFU Life Insurance Pakistan
Al Ahli Takaful Company KSA
Takaful Ikhlas Malaysia
Bank is Custodian of all customer funds in the
Savings Plan

• Product administration, and claims management
• Customer statements
• Financial accounting
• Filing with local regulatory authorities

• New product development,
• Product launch support
• Product management, Marketing Training support
• Structured asset mgt. apporach
• Systems support to Strategic Product Partner and
  Bank Distribution Partner
• Product enhancements Shariah compliance

Local Life Insurance Product Partner
FWU Int. Network Dubai, KL Luxembourg
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Contents

• FWUs International Business Model
• International Bank Distribution and Strategic
  Product Partners
• Product Highlights and customer benefits
• Dynamic Fund Selection and Allocation Model
• FWUs Value Added
• FWUs Retakaful Pooling Arrangement
• FWU Group

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Main product features and customer benefits
FWU Groups "White Label" Savings, Education and
Retirement Plans Product Highlights
Product features
Customer Benefits

• Plan benefits are available to all bank customers

• All bank customers are insurable

• No medical examination of bank customer required
  (up to a defined limit)

• Eliminates important psychological barrier

• Transparent and cost efficient structure

• Greater customer comfort

• Accelerated sales process using FWUs Point of
  Sale and Administration technology

• Immediate risk cover for bank customer

• Plan benefits are available immediately to all
  bank customers

• Bank customer convenience

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Bank Annuity Income Attractive Dynamics
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
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Contents

• FWUs International Business Model
• International Bank Distribution and Strategic
  Product Partners
• Product Highlights and customer benefits
• Dynamic Fund Selection and Allocation Model
• FWUs Value Added
• FWUs Retakaful Pooling Arrangement
• FWU Group

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Structured Asset Management Approach

• Agreed funds target universe

• Objective Investment process

FWUs fund selection and allocation model

• Overweights the winners underweights the
  losers

• Enhance return by 15 to 25 p.a

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FWUs 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 gt Each fund is
  given a score, based on its ranking.
• Using the above rankings gt Top eight funds
  are selected.

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FWUs 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
FWUs Dynamic Fund Select Allocation Model
Strategy 1ConservativePortfolio
Strategy 2BalancedPortfolio
Strategy 3GrowthPortfolio
Strategy 4DynamicPortfolio
Investment in External Islamic Mutual Funds
Launched as internal funds ofFWUs local Takaful
Product Partner
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Investment Advantages of Pooling
Conservative portfolio
Balanced portfolio
Growth portfolio
Dynamic portfolio
0-100
8020
5050
2575
Cash Equivalent Pool
Equity Pool
Custodian Bank

• Direct Investment in
• Sukuk
• Murabaha
• Trade-Finance

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Contents

• FWUs International Business Model
• International Bank Distribution and Strategic
  Product Partners
• Product Highlights and customer benefits
• Dynamic Fund Selection and Allocation Model
• FWUs Value Added
• FWUs Retakaful Pooling Arrangement
• FWU Group

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The value added why FWU Group
INNOVATION
ENTREPRENEURIAL PARTNER

• Sophisticated Point of Sale and Administration
  System

• Customised product design

• Product training and sales support

• Dynamic funds select and allocation model

• Business simulation model

• Cost efficient Agency structure

• Regional service hubs

• Unique Retakaful arrangement

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Contents

• FWUs International Business Model
• International Bank Distribution and Strategic
  Product Partners
• Product Highlights and customer benefits
• Dynamic Fund Selection and Allocation Model
• FWUs Value Added
• FWUs Retakaful Pooling Arrangement
• FWU Group

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FWU-Groups Exclusive Retakaful Pooling
Arrangement
Hannover Re (AAA rated, 3rd largest life
Reinsurance)
FWU GROUP
Pooling Arrangement
Wakeel/Trustee
Administrator

• Data processing
• and administration Asset Management

• Fee Basis
• 100 profit redistribution
• Quard Hasna
• Shariah compliant Investments

Establishment of insurance provider through joint
venture or strategic cooperation agreement
InsurancePartners
Al Ahli TakafulCompany NCB/FWU / IFC
Dubai Islamic Insurance Reinsurance AMAN
Eastern Federal Union Life EFU
Takaful Ikhlas SDN BHD
Al Safat Takaful Company
Bank distribution partners in the following
markets
Malaysia
UAE
Pakistan
Kuwait
KSA
Distribution-Partners
The National Commercial Bank Jeddah
Abu Dhabi CommercialBank
Major Bank
Major Bank
Major Bank
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Contents

• FWUs International Business Model
• International Bank Distribution and Strategic
  Product Partners
• Retakaful Pooling Arrangement
• Structured Asset Management Approach
• FWUs Value Added
• FWUs Retakaful Pooling Arrangement
• FWU Group

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FWU-GRUPPE
An entrepreneurial and institutional partnership
Dr. Manfred J. Dirrheimer andPartners
Swiss Re FrankonaRückvers. AG,Munich
95
5
FWU AG Munich, Luxembourg, Dubai, Kuala Lumpur
74,9
100
13,25
80
10
100
PREMIUM SELECT LUX S.A.Luxembourg
ATLANTICLUX Life Insurances S.A.Luxembourg
FWU Payment Services GmbH Munich
FWU Commission Factoring GmbHMunich
Al Ahli Takaful Company Jeddah, KSA
Wave Asset Management AGHamburg
Branch Luxemburg International HQ
Branch Dubai Regional HQ ME
7,5
25,1
25,1
13,25
30
90
VHVVersicherungen,Hanover
National Commercial Bank, Jeddah, KSA
IFC International Finance CooperationWashington
Branch Bolzano
VHVVersicherungen,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_at_fwugroup.com Tel [phone]
700 Fax [phone]
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.