1 بسم الله الرحمن الرحيم by: chakib abouzaid ceo - takaful re new retakaful: is...
TRANSCRIPT
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الرحمن الله بسمالرحيم
By: Chakib Abouzaid CEO - Takaful Re
New Retakaful:
Is it time to convert from conventional?
ICMIF, Bahrain - 5th & 6th of May 2009
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Agenda
Introduction
Islamic Takaful industry today
Retakaful
Technical & Shari'a requirements
Existing Retakaful
Capacity & demand Challenges for Retakaful
Conclusions: is it time to convert to Retakaful?
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Introduction
Three main questions:
Size of the Takaful market?
Is the existing Retakaful financially sound and reliable?
Are they having enough capacity?
Is the “darura” still the rule?
Is the increasing number of Retakaful and additional capacities a threat for established companies?
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The need for Retakaful
Technical requirement to spread the risk and avoid the insolvency risk;
Takaful companies cannot survive within Retakaful and/or reinsurance;
Is Retakaful a risk transfer or risk sharing? Takaful & Retakaful are risk sharing operations even if formally
the operation appears as a risk transfer; however:
Takaful & Retakaful is liable for all the claims occurred and falling under the contract,
In case of deficit, Takaful or Retakaful can only:• Ask the shareholders for “Qard al hassan”, • and/or adjust the pricing for the new or renewed
contracts.
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Shari’a requirement
Takaful are obliged to comply with all Shari'a requirements including the Retakaful;
Retakaful is completing the Takaful operation chain;
Using conventional when unnecessary is harmful for the credibility of Takaful;
Is “darura” still the rule? 10 Retakaful:
USD 1,150 Paid up capital 7 “A” rated, 2 “BBB”,1 Non rated Treaty capacity > USD 67,5 – 77.5 Million Fac. Capacity :
Non Marine >USD 165.5 Million Marine > USD
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Region 2005 2006 2007 Est.
Africa 181.1 215.2 246.4
East Indian Sub-Continent 7.8 11.2 12.8
Far East 536.7 695.4 872.4
GCC 1,547.1 2,088.5 2,560.8
Levant 14.7 17.7 21.7
Middle East (Non Arab) 2,372.4 2,880.1 3,505.0
Grand Total 4,659.8 5,908.1 7,219.1
Contributions per Region
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Africa3%
East Indian Sub-Continent
0%Far East
12%
GCC35%
Levant0%
Middle East (Non Arab)50%
Africa East Indian Sub-Continent Far East GCC Levant Middle East (Non Arab)
Contributions by Region
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Number of Islamic/Takaful companies
Africa, 26
East Indian Sub-Continent, 12
Far East, 35
GCC, 72
Levant, 9
Middle East (Non Arab), 18
Others, 7
Africa East Indian Sub-Continent Far East GCC Levant Middle East (Non Arab) Others
179 companies
* GCC: 72 companies including all licensed companies in KSA
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Motor42%
Property & Accident25%
Marine & Aviation8%
Family & Medical25%
Motor Property & Accident Marine & Aviation Family & Medical
Contribution Split 2007 by Line of business
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Contributions volume and split by LOB
Islamic insurance is growing all over the world: The contribution increased in 2007 from USD 5.9 to 7.2 billion There is no major change in the split by geographical area;
Cooperative KSA is the main component of the GCC Islamic/ Takaful markets;
The Iranian market represents over all 48%;
Motor remain the main line of business 42%, property 25% and Family + Medical 25%
The differences in statistics comes from the definition and whether cooperative Saudi model and Iranian markets are included or not.
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ARIL BEST Re Takaful Re Hanover Re
Labuan Re
Takaful
MNRBTakaful
Incorporation
1997 1985 Dec 2005 2006 Company - 1992
Retakaful Division –
2007
Dec 2006
Capital ($ million)
Authorized : USD 50Paid-up : USD14.1
100 125 Paid up500
Authorized
55 paid up135
Authorized
150 - Issued & Paid Up
50 – allotted but not called
(US 31m)
Rating Not Rated BBB+ (S&P)A- (AM Best)
BBB stable (S&P)
A stable(S&P)
AM Best A-
Fitch IFS A-(stable)
Parent company
A-
Existing Retakaful(*)
(*) Retakaful windows are not included in this presentation
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ARIL BEST Re Takaful Re Hanover Re
Labuan Re MNRBTakaful
GWP(Takaful) ($ Million)
10.876 (2005/06)
10 – 12 (2005
Estimate)
34.2 (2008) 15 (2007) 11.0 (2007 Estimate)
Start operation
Aug 1st 07
Takaful Model
Mudharaba - Wakala policyholder’sMudharaba
for investment
Wakala/
Mudharaba
Wakalah for both retakaful and investment
(Window)
Wakalah, optional
mudharabah/wakalah on
investment
Business Model
Takaful /Conventional
Mix
Conventional / Takaful Mix
Takaful Co’s only
Outsourcing agreement
with Arig
Retakaful only
Conventional
+
Takaful
Takaful Cos only for treaty. Allowed fac on halal risks from conventional
Existing Retakaful
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Existing Retakaful
ACRME + SEA
AL FAJER Re SAUDI Re Tokio Marine
Incorporation 2008 May2008
2008 September 2004
Capital Mln $ 300 188 270 Auth 170Paid 17
Shareholders Khazana + Dubai Group
GFH + Dubai Group
Al Ghosaibi, Jordan Islamic Bank (listed)
Tokyo Marine Holding
RATING A- AM BEST
A-AM BEST
BBB+S & P
AAS & P
GWP na 36 million2008
2009 first year of complete operations
na
Takaful model
Wakala+ Mudharaba
Wakala + Mudharaba
Cooperative
Business Model
Takaful + Conventional
Takaful+ Conventional
Takaful+ Conventional
Life only
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ARIL BEST Re
Takaful
Re
Hanover Re
Labuan Re
MNRBTakafu
l
ACR Saudi Re
Al Fajer
Re
Prop/Eng•Prop•N. Prop
23
22
55
30 3 1
3 5-155-10
7.53
Variable
Marine•Prop•N. Prop
23
24
30 1.5 1.5
3 3
5-155-10
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Variable
Family 0.1 1/Life
1/Life
1.66 to 3.33
0.7 no
Fac.
•Property
•Marine
12 PML12
6 20 PML
430
PML3 3 50
20255
7.5
Million USD
Available Capacities (*)
(*) Tokio Marine write only Family Takaful, and capacity non available(**) Retakaful windows are not included in this presentation
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Cedant Property Engineering Accident Marine N.M XL Marine XL Motor XL
• Africa
Sudan 30 12,5 9 0.5 10
• Middle East
KSA 1 122 122 26 13
KSA2 60 60 10 8 4
Kuwait 11,2 11,2 1,5 1,5 1,5
UAE 1 34 34 2,5 8,5 2,5
UAE 2 17,75 17,75 20,5 2,4 4
• Far East
Company 1 30 9 7 5
Company 2 39 16,8 2,4 16,2 9
Company 3 73,80 29,7 9 15,7 7,5 6
Mln USD
Sample for requested capacities
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Treaties: few big players are asking for huge capacities: USD + 67 million Only 2 companies needs capacity exceeding USD 45 million
Facultative: Property & Engineering: Available capacity 156.5 million, which
can accommodate more than 95% of the Facultative business Marine: USD 81.5 million
The need for conventional capacity will only remain for very large risks or special lines; as Retakaful/ Reinsurance are global activities by nature
Capacity vs. demand
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The Retakaful must:
Provide the needed capacity for the development of the industry;
To move from the follower position to lead the companies programs;
To be able to price all lines of business; To have a dual strategy:
For personal lines: to develop Family Takaful offer, For industrial risks, to have the expertise, the tools & the
pricing models,
Retrotakaful: Till now “darura” is still the rule (with limitations to XOL only)
to complete the chain: 2 options; GTG Lloyd syndicate; And/or Retakaful pool
Challenges for Retakaful
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The Takaful operators are required to cede to the existing Shari’a compliant capacities and “Darura” cannot/no longer invokes as a rule:
The obligation to cede to Retakaful will be implemented gradually by Takaful; Takaful will continue relaying on conventional and London market for some LOB
and for retrocession.
Treaty capacity exceeds the need for almost 90% of the existing Takaful / cooperative operators, and can absorb almost all the treaty programs.
However, there is still a gap to be fulfilled by Retakaful: Specialty lines Aviation Energy, petrochemical Very large property and engineering risks
The 10 Retakaful and the global players’ windows are now operational.
The available Retakaful is encouraging the Takaful companies to convert to Retakaful.
The time o convert to Retakaful has come; and it is up to the Retakaful by
their professionalism and commitment to attract Takaful.
Conclusion
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Thank you