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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 Award for being the "Best Islamic white label service provider“.
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2 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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3 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.» Customer Demand Driven
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4 Bancassurance - Asset Management - Factoring FWU-GROUP‘s Core Business Competencies FWU-GROUP‘s Core Business Competencies 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 & Shari‘a compliant Life products. Germany Luxembourg Austria Italy France Saudi Arabia United Arab Emirates Pakistan Malaysia Kuwait
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5 FWU Group’s International Business Model Clone international Bancassurance success customer convenience tailored ‘white label’ solutions quality training and sales support FWU Shari’ah Board & Expertise commission factoring solution exclusive Retakaful solution selection of service providers incl. custodian bank Web-based POS & Admin System Strategic Product Partners Structured asset management approach Product & process innovation
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6 Benefits of ‘White label’ Bancassurance Solution Bank defines own commission level Tailored customer solutions Bank offers choice of both conventional Bancassurance and Takaful products Bank has choice to participate in other modules of the service value chain (custodian, brokerage, transaction banking) Structured asset mgt. approach linked to open inv. architecture Seamless integration into Bank’s own brand
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7 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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8 FWU Group‘s international Bank distribution and Strategic product partners 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 & Shari’ah compliance FWU Int. Network Dubai, KL & Luxembourg Aman Insurance UAE Al Ahli Takaful Company KSA EFU Life Insurance Pakistan Takaful Ikhlas Malaysia Bank is Custodian of all customer funds in the Savings Plan Bank Customers Al Safat Takaful Company Kuwait Bank Distribution Partners FWU's existing distribution partners include: NCB in KSA and ADCB in UAE Local Life Insurance Product Partner
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9 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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10 Main product features and customer benefits FWU Group‘s "White Label" Savings, Education and Retirement Plans – Product Highlights Plan benefits are available to all bank customers No medical examination of bank customer required (up to a defined limit) Transparent and cost efficient structure Accelerated sales process using FWU’s Point of Sale and Administration technology Plan benefits are available immediately to all bank customers All bank customers are insurable Eliminates important psychological barrier Greater customer comfort Immediate risk cover for bank customer Product featuresCustomer Benefits Bank customer convenience
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11 - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 USD ('000) Year 1Year 2Year 3Year 4Year 5 Bank Income Growth – 5 year period Conservative Average Best Bank Annuity Income: Attractive Dynamics Conservative Average Best Base Assumptions: Number of Plans.............................25,00040,00050,000 Average duration15 years Average monthly contribution$ 200 Lapsation rate2 to 10 % p.a Fund growth rate7 % p.a
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12 Cumulative Bank Income over a 5 year period
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13 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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14 FWU’s fund selection and allocation model Structured Asset Management Approach Overweights the winners & underweights the losers Objective Investment process Agreed funds target universe Enhance return by 15% to 25% p.a
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15 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. FWU‘s Dynamic Fund Selection and Allocation Model
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16 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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17 Investment Proposal for Regular and Single Premium Savings Plans FWU‘s Dynamic Fund Select & Allocation Model Investment in External Islamic Mutual Funds Strategy 1 Strategy 1 Conservative Portfolio Strategy 2 Strategy 2 Balanced Portfolio Strategy 3 Strategy 3 Growth Portfolio Launched as internal funds of FWU‘s local Takaful Product Partner Strategy 4 Strategy 4 Dynamic Portfolio
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18 Investment Advantages of Pooling 0-10080:2050:5025:75 Conservative portfolio Balanced portfolio Growth portfolio Dynamic portfolio Equity Pool Cash Equivalent Pool Direct Investment in: Sukuk Murabaha Trade-Finance Custodian Bank
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19 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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20 The value added – why FWU Group Customised product design Product training and sales support Business simulation model Regional service hubs Sophisticated Point of Sale and Administration System Dynamic funds select and allocation model Cost efficient Agency structure Unique Retakaful arrangement ENTREPRENEURIALPARTNER INNOVATION
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21 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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22 FWU-Group‘s Exclusive Retakaful Pooling Arrangement FWU – GROUP Administrator -Data processing and administration Asset Management Hannover Re („AAA rated“, 3rd largest life Reinsurance) Wakeel/Trustee - Fee Basis - 100% profit redistribution - Quard Hasna - Shari‘ah compliant Investments PoolingArrangement The National Commercial Bank Jeddah Abu Dhabi Commercial Bank Major Bank Distribution- Partners Major Bank KSA UAEPakistan Malaysia Bank distribution partners in the following markets Insurance Partners Al Ahli Takaful Company NCB/FWU / IFC Dubai Islamic Insurance & Reinsurance AMAN Eastern Federal Union Life EFU Takaful Ikhlas SDN BHD Establishment of insurance provider through joint venture or strategic cooperation agreement Major Bank Kuwait Al Safat Takaful Company
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23 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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24 Dr. Manfred J. Dirrheimer and Partners VHV Versicherungen, Hanover 95% FWU AG Munich, Luxembourg, Dubai, Kuala Lumpur 80% 74,9%100% 10% 25,1% 5% 100% PREMIUM SELECT LUX S.A. Luxembourg ATLANTICLUX Life Insurances S.A. Luxembourg FWU Payment Services GmbH Munich FWU Commission Factoring GmbH Munich Al Ahli Takaful Company Jeddah, KSA Swiss Re Frankona Rückvers. AG, Munich 13,25% 30% An entrepreneurial and institutional partnership 90% National Commercial Bank, Jeddah, KSA VHV Versicherungen, Hanover IFC International Finance Cooperation Washington Wave Asset Management AG Hamburg 13,25% FWU-GRUPPE Branch Bolzano Branch Bolzano Branch Luxemburg International HQ Branch Dubai Regional HQ ME Branch Dubai Regional HQ ME Branch Kuala Lumpur Regional HQ FE Branch Kuala Lumpur Regional HQ FE 7,5%
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25 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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26 Contact 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. 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
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