1. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Copyright © 2011 Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved. Overview of Takaful Insurance from a credit perspective Ali Karakuyu Associate Director Financial Institutions Ratings Istanbul – 13 November 2012

2. 2. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Standard & Poor’s GCC Insurance Ratings Coverage* BAHRAINICR/OutlookKINGDOM of SAUDI ARABIA (KSA)ICR/Outlook Hannover ReTakaful B.S.C. A/Stable Al Sagr Cooperative Insurance Co.BBB/Stable Saudi National Insurance Co. BBB/Stable Malath Cooperative Insurance & Reinsurance Co.BBB/Positive Takaful International Co. BSC BBB/Negative Mediterranean & Gulf Co-op. Insurance & Reins. Co.A-/Stable HASHEMITE KINGDOM of JORDAN Saudi Re for Cooperative Reinsurance Co. BBB+/Stable Euro Arab Insurance Group P.S.C BB/Negative Stellar Insurance Ltd. (Bermuda)AA-/Stable International General Insurance Co Ltd BBB+/StableTAWUNIYA / Company for Cooperative InsuranceA/Stable KUWAIT Wataniya Insurance Co.BBB/Stable Al-Ahleia Insurance Co. S.A.K. BBB+/Stable Weqaya Takaful Insurance & Reinsurance Co.BBB/Stable Arab Investment & Export Credit G’tee. Corp. AA/Stable UNITED ARAB EMIRATES (UAE) Gulf Insurance Co. K.S.C. A-/Stable Abu Dhabi National Insurance Co. (PSC)A-/Positive Kuwait Reinsurance Co. K.S.C. BBB+/Stable Al Buhaira National Insurance Co. (PSC)BB+/Stable Wethaq Takaful Insurance Co. K.S.C. (Closed) BB/Stable (Arab) Orient Insurance Co. (PSC)A/Stable OMAN BEST RE (L) LimitedA-/Stable Oman United Insurance Co. S.A.O.G.BBB-/Positive BEST RE Family (L) LimitedA-/Stable QATAR Dubai Islamic Insurance & Reinsurance Co. (Aman)BBB-/Stable Doha Bank Assurance Co. LLCBBB/StableNational General Insurance Co. (PSC)BBB+/Stable Doha Insurance Co. Q.S.C.BBB+/StableNoor Takaful Family PJSCBB+/Stable Qatar Insurance Co. S.A.Q.A/StableNoor Takaful General PJSCBB+/Stable QIC International LLC A/Stable Oman Insurance Co. (PSC)BBB+/Stable Q-Life & Medical LLCA/StableSALAMA / Islamic Arab Insurance Co. (P.S.C.)A-/Stable Q-Re LLCA/Stable Takaful Re Ltd.BBB/Stable *Ratings as at 30 October 2012.

3. 3. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Rating Methodology – Takaful Operators Corporate & Management Strategy ERM Competitive Position Investment Operating Performance Capitalization Liquidity Financial Flexibility Industry & Economic Risks Blue: Make up Business Risk Profile Red: Make up Financial Risk Profile Our focus is to assess claims paying ability No distinction between the models

4. 4. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Generally Good Business Profile GCC is likely to account for about 65% of the forecasted Takaful premium for 2012 according to E&Y Much of the growth in sharia-compliant insurance GCC region is dominated by cooperative insurance in Saudi Arabia, Mainly Medical Strong growth potential (c.25% CAGR in GCC over the past 5 years)

5. 5. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Generally Good Business Profile (Cont.) Highly competitive market Cross border activities remains limited Regulatory requirement – tightening but still inconsistent among regions Lack of global standard – different Takaful models Improving but still less sophisticated risks management and governance

6. 6. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Generally Good Financial Profile Underwriting margin pressured due to fierce competitions in GCC but more stable performance in SE Asia (mainly Malaysia). Relatively higher expense ratio reflecting smaller scale in GCC. GCC investment performance showed volatility, with significant risky assets, reflecting less developed Sukuk market But SE Asia investment performance more stable thanks to Sukuk (over 50%). Strong Capitalization although could be deficit in Takaful funds

7. 7. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Summary Potential growth remain strong over longer term although slowing down currently Operating performance under pressure –Lowered investment yield –Pressure on underwriting margin due to fierce competition Supported by strong capitalization Ratings on rated insurers remain relatively stable

8. 8. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. S&P’s Research & Articles 24 Sep 2012Article: “Diverging Models Shape The Growth Prospects For Takaful” 11-Aug-2011Article: “Takaful Insurance Markets Continue To Grow Despite Operational Differences” 03-Oct-2011Article: “S&P's Analysis Of Sharia-Compliant Cooperative And Takaful Insurers In Middle East Mostly Focuses On Financial Strength” 30-Mar-2009Criteria: “Standard & Poor's Approach To Rating Takaful And Retakaful (Islamic Re/Insurance) Companies” 20-Feb-2009Article: “Rated Gulf Islamic Financial Institutions And Takaful Companies Have Shown Resilience To Global Market Dislocation, But They Are Not Risk Immune” 05-Apr-2007Article: “Takaful: A New And Viable Insurance Business Model Or Just A Marketing Opportunity” 04-Jun-2007Article: “Established Regulatory & Legal Environment Gives Malaysian Takaful Market The Edge Over Gulf Cooperation Council, But Competition Will Hit Earlier”

9. 9. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Questions

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