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| Summary of Project Information (SPI) |
| This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
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| Project number | 23917 |
| Project name | Al-Ahli Takaful Company |
| Country | Saudi Arabia |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | AlAhli Takaful Company |
| Environmental category | C |
| Date SPI disclosed | December 20, 2004 |
| Projected board date | January 24, 2005 |
| Status | Active |
| Previous Events | Invested: May 30, 2007
Signed: April 15, 2006
Approved: April 13, 2005 |
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| Description of company and purpose of project |
The project involves the establishment of a new Shariah compliant life insurance (Takaful) company to be named Al-Ahli Life Takaful Company (Al Ahli Takaful or the company) in Saudi Arabia with an IFC equity investment of up to $4.67 million (up to 17.5% shareholding). The company will be sponsored by National Commercial Bank (NCB), the largest commercial bank in Saudi Arabia as well as the Arab world. The technical partner will be the FWU AG Group Germany, a financial services group that is primarily active in the unit linked life insurance and asset management and has been in operation since 1989. FWU has developed an extensive knowledge base and know how of Takaful Industry and has been working with NCB on this project over the last year. NCB being the largest player in the mutual funds market with a customer base of over one million customers, will manage the investment strategy, marketing, sales and distribution, whereas FWU will assist in product
development, provide actuarial and IT support. |
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| Project sponsor and major shareholders of project company |
Prior to the expected Initial Public Offering (within 3 months of inception), the company is expected to have the following shareholding structure:
- The National Commercial Bank (NCB) - 40.0%
- FWU - 25.0%
- IFC - 17.5%
- Other Saudi Corporates - 17.5%
- Total - 100.0%
The National Commercial Bank (NCB): NCB is the largest Arab commercial bank with total asset of over $31 billion. Net income during 2003 totaled $827 million and Shareholders’ equity at year-end 2003 totaled $2.8 billion. The bank currently has 252 domestic branches out of which 111 branches exclusively offer Islamic banking services. NCB is the market leader in the mutual funds market in the Kingdom with a total market share of 43.5% at the end of FY 2003. The total assets under NCB’s fund management amounts to $6 billion, of which over 75% are Sharia Compliant.
The FWU-Group: FWU is a small, diversified, German financial services group that has been in operation since 1989. The group is 95% owned by its executive management with its founder Manfred Dirheimer holding a controlling interest. The remaining 5% is held by GE Capital. Its primary activities are unit linked life insurance and asset management offered through subsidiaries based in Luxemburg. |
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| Total project cost and proposed IFC investment |
| The company will have an initial capital of $26.695 million. IFC is expected to have up to 17.5% equity stake in the company (about $4.67 million). |
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| Location of project and description of site |
| Jeddah, Saudi Arabia. |
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| Project Development Impact and IFC's Role |
This will be IFC’s first investment in a Takaful company and will provide an opportunity to IFC to better understand this nascent but growing industry and help develop this model in other parts of the region. The proposed project will have a strong development impact in the sense that it will contribute to the creation of a life insurance market in Saudi Arabia. Up till now, the insurance industry in Saudi Arabia has been only represented by the National Company for Cooperative Insurance, a company that is owned by the Government of the KSA. The project will fit very well within the entire range of financial planning product that needs to be available to the Saudi market which has so far not been developed due to several elements of the Saudi financial sector which in turn have constrained the development of the Saudi economy. The creation of a new licensed Shariah compliant life insurance company, the first of its kind in Saudi Arabia, will be essential to kick-start an industry that is still miniscule by comparison to regional and global standards. In addition, the establishment of Takaful Life is expected to allow a greater degree of private sector participation in the Saudi Arabian economy leading to a number of benefits to consumers, including enhanced service quality.
IFC’s Role
Through this project, IFC’s investment will help address one of the most under-served industries in the market. IFC’s presence as a shareholder should provide counter balance to the other two significant shareholders and help provide confidence to and protect the other smaller shareholders both before and during the IPO process. IFC’s presence will also assist the company in its application process, (SAMA has already indicated that it would welcome IFC as a shareholder), which should provide a reputational enhancement for the company in the eyes of potential policyholders - an important issue in an emergent market. |
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| Environmental and social issues - Category C |
This is an environmental and social category C project. No further environmental or social analysis is required.
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| To contact the project company, please write to: |
Mr. Khalid G. Allagany, Head of Insurance Dept.
E-mail: k.allagany@alahli.com
Phone: +966 2 643 0555 ext. 3700 |
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