23917 - Al-Ahli Takaful Company

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Summary of Proposed Investment

Project Number

23917

Company Name

ALAHLI TAKAFUL COMPANY

Date SPI Disclosed

Dec 20, 2004

Country

Saudi Arabia

Industry

Financial Markets

Projected Board Date

Jan 24, 2005

Status

Completed

Sector

Life Insurance

Department

Global Industry, Financial Markets

Environmental Category

C - No Impact

Previous Events

Approved : Apr 13, 2005
Signed : Apr 15, 2006
Invested : May 30, 2007

Project Description

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.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	4.67

Development Impact

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.

Contacts

For Inquiries About the Project, Contact

Mr. Khalid G. Allagany, Head of Insurance Dept.
E-mail: k.allagany@alahli.com
Phone: +966 2 643 0555 ext. 3700

This Summary of Project Information (SPI) 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. The following SPI is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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