FWU Group was founded in 1989 by Dr Manfred Dirrheimer, an international entrepreneur, and counts over 160 qualified professionals encompassing 26 different nationalities and speaking 40 different languages.
FWU Group is a global leader in the fast expanding Takaful industry and has generated significant production in the various markets it has a presence in: Saudi Arabia; the United Arab Emirates (UAE); Kuwait; Pakistan; and Malaysia. Today, FWU Group is recognised as the largest global producer of BancaTakaful in those five markets combined.
FWU Group specialises in white label family Takaful unit-linked investments and offers the Takaful operator a customised product family, which includes savings, education, and marriage plans.
Besides product and process innovation, FWU Group also prides itself in giving advice and support regarding regulatory matters, partnership with custodians and ReTakaful operators, full after sales services including training, customer risk profiling and deployment of the bank's call centre in referring potential customer leads to the trained financial planners.
FWU Group is at the forefront of the efforts to raise the performance bar by working closely with prominent Shari'ah scholars such as Sheikh Dr Mohamed Ali Elgari, Chairman of FWU Group's Shari'ah Board, national regulators, international actuaries, global reinsurers and international accounting firms. FWU Group's aim is to create a Family Takaful business not only for the worldwide Muslim community but also for conventional consumers. FWU Group has an independent international advisory board for its international Takaful business. FWU Group is an observer member of Islamic Financial Services Board (IFSB) and an active member of their Takaful working group.
What have been FWU Group's most important achievements over the last 12 months?
This year, FWU Group has expanded its geographical and business footprint considerably. Business has achieved granularity with 15 bank distribution partners in the five markets we have a presence in: Saudi Arabia; Kuwait; UAE; Pakistan; and Malaysia.
More specifically focused on the UAE market, FWU Group has also introduced a new Shari'ah-compliant product called the Dynamic Protection Plan (DPP), which is an additional tool to our existing family Takaful product suite (savings, education and marriage). The product is added to the actively managed underlying equity portfolio of the FWU Group family Takaful programmes. The combination of the DPP with the existing equity portfolio allows the Takaful participants the opportunity to invest a relatively higher portion into equity. The concept offers not only capital protection for the total invested contribution component at the end of the contribution payment period, but also a continuous and innovative fixing of protected unit prices at maturity within the family Takaful programme. The DPP offers the full upside and protects downside developments, not only in the form of a capital protection but also by an additional gain. That is why DPP is the ideal programme to protect any savings plan if the client has a midterm investment orientation. The product was introduced in the UAE on 7 July 2010.
What are your aims over the next 12 months?
Despite having a footprint in five different markets, we would like to consolidate all FWU Group's Family Takaful business into one single location. Logically, our choice was the UAE and we are currently in the process of registering in the DIFC. FWU Group's international executive team is expected to operate from the DIFC as of 4Q 2010.
What initiatives are in place for you to achieve this?
All FWU Group's international business activities including product and business development, operations and after sales services are currently being consolidated into Dubai. FWU Group's international management believes that it will be more efficient as the activities will be streamlined therefore we will gain efficiency by operating from one location. Benefits also include proximity to bank distribution partners in the GCC and South East Asia (we also have a regional presence in Kuala Lumpur) as well as an enhanced ability to react to regulatory and market changes.
What do you think your biggest challenges are going to be over the next year?
Product innovation in response to evolving customer needs. We feel that innovation is at the cornerstone of Islamic finance and without it, the industry cannot evolve. Its potential is enormous (estimated at $5 billion by experts) but in order to be achieved, more products need to be developed in order to attract investors.
However, Islamic finance also presents some ethical constraints in the way products are designed due to some Shari'ah principles. Also, there is a huge potential to be developed in markets such as Indonesia, Egypt and Turkey, where the Muslim population is a majority. Despite that fact, Islamic finance is still at an embryonic stage, there is significant untapped potential in both the emerging and developed markets. The way Takaful is distributed can also present a challenge. The increasingly popular way is BancaTakaful. However, in order for it to truly work, simplicity of product design and the incentives offered by the bank for selling Takaful must be similar to the ones for selling any other product.
You have received much recognition for your BancaTakaful products how important is BancaTakaful to the Takaful industry?
We have received nine awards over the past four years, which FWU Group is very proud of. It is the recognition of hard work from our team, Takaful product partners, bank distribution and ReTakaful partners as well as service providers who work closely with us. I think BancaTakaful is the primary distribution channel because consumers still view their banks as trusted advisors and especially so in the emerging markets.
Why do you think you've enjoyed such success in this area?
Because of our capacity to innovate, we have been able to make the process of applying for a family Takaful policy as easy as it is possible to be. Our focus is the individual customer and our policy application and management system facilitates the sale process and policy administration. Also, due to white labelling, banks have been able to sell family Takaful investment linked plans under their own brand, which means that again, customers will trust them as reliable providers of financial services.
Banks such as ADCB, Emirates NBD (ENBD) or Dubai Islamic Bank (DIB) all distribute Takaful products designed by FWU Group: ADCB selected "Meethaq" Takaful Programmes; Emirates NBD has branded the products with its own name (white labelling) and Dubai Islamic Bank distributes Takaful under the Al Islami brand. Also, FWU Group has the competitive advantage of redistributing 100 per cent of the ReTakaful surplus to the individual policy holders annually.
Are there any markets in which you would particularly like to increase your presence?
Yes, we are currently focused on Indonesia, Egypt, Turkey and Morocco.Each market has distinct characteristics and poses some interesting challenges and opportunities. For example, Turkey is a secular market and although there are four participation savings banks (Shari'ah-compliant FIs) and one general Takaful company, the four banks only have a five per cent market share and one needs to think of creative distribution strategies.
How have client demands changed over the last 12 months?
More and more people in the emerging markets have increased purchasing power and consequently, they are increasingly interested in lifestyle solutions such as savings, education, marriage and retirement plans. Also, there is a huge potential for us to offer life Takaful solutions to corporates. However, due to the global crisis of 2008, and similar to conventional investors, consumers are more risk averse. This is why FWU Group has developed the DPP.
Have you seen any greater interest from non-Muslims in Takaful?
There is a recognised convergence between Islamic finance and ethical investing. Similar to SRI (or socially-responsible investments), Shari'ah-compliant investments are based on fairness, transparency and are ethical. They both are relatively nascent and have their roots in an alternative way of thinking (whether it be ethical or religious) and because of this, they still have to develop globally recognised standards so that understanding is facilitated and risk decreased.
One other common feature is the screening of investments: socially responsible and Islamic funds both have boards (ethical or Shari'ah) whose role is to ensure the money is not invested in unethical sectors. France (which has changed its legislation to enable the issue of Sukuk), the UK (which counts five Islamic banks and one Takaful company), Luxembourg (16 Sukuk listed on its Stock Exchange, several Shari'ah-compliant mutual funds and one Takaful company) as well as Germany - all have huge untapped potential. In Malaysia, 60 per cent of Takaful buyers are non-Muslims.
What do you think are the biggest challenges for Takaful companies at the moment?
I think the greatest challenge for a Takaful company is to expand beyond its national market. Organic growth is unfortunately not enough to enable this and I believe it is through strategic alliances as well as M&A activity that Takaful will reach its potential. Examples of strategic alliances include Fortis with Maybank, CIMB with Aviva, Hong Leong Bank with Tokio Marine and Prudential with BSN, to name but a few.
Growth rates for the Takaful industry seem to vary hugely but are mostly positive - do you think that they are realistic?
Takaful is demand led versus insurance supply push. It has grown from a relatively small base of $8 - $10 billion in annual contributions. Insurance premiums in most emerging markets are relatively small (0.5 per cent to 1.5 per cent of GDP).
According to Ernst & Young's World Takaful Report, it is estimated that family and medical Takaful represents 49 per cent of the overall premiums in MENA and it goes up to 71 per cent in South East Asia. Also, Malaysia has just issued four new Takaful licences, which will expand the Takaful offering considerably in South East Asia. According to the Saudi Arabia Insurance Market to 2012 report, the protection and savings insurance is the fastest growing line in the country and is expected to grow a CAGR of 55 per cent over the period 2010-2013.
Alpen Capital, in its report GCC Takaful Industry, reported that life insurance premiums in the Middle East and central Asia grew at a CAGR of 9.3 per cent in 2008, well above the global average of 4.1 per cent and -3.5 per cent respectively. Evidence from the developed world shows that non-life insurance grows faster at the early stages of the development of the insurance industry, whereas the life insurance industry develops at a later stage.
FWU Group specialises in white label Family Takaful unit-linked investments and offers the Takaful Operator a customised product family, which includes savings, education, marriage and pension plans
Source : http://www.zawya.com/story.cfm/sidZAWYA20100928072115 - Sept 2010
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