Islamic Banking & Finance

Islamic Banking & Finance
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Submitted To:
Sir Azeem Pirani
Submitted By:
Kashif Dayo MBABF-1156103
Shaheed Zulfikar Ali Bhutto Institute of Science & Technology
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S.No:
Acknowledgment 1. i. ii. 2. 3. 4. i. ii. iii. 5. 6. Introduction The subsidiaries, associates and joint venture of the Solidarity Group. The Sharia Supervisory Board Area of specialization Financial positions Product line General Takaful Family Takaful Asset Management Future plans Customer/Public/shareholders/regulators view about the Solidarity Group Bibliography
Topic
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7.
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Acknowledgment
All the praise to Almighty Allah the most beneficent and merciful who gave me this opportunity to compile this term project of Islamic & Banking Finance Course. I would like to express my gratitude to all the people that were involved both directly and indirectly in the preparation of this report. I apologize to the people whose names that I have not mentioned, but their contribution is highly appreciated by me. I would like to thank my course instructor Azeem Pirani for guiding me and for giving me the opportunity to initiate this project. More specifically, I would like to thank him for imparting his time and wisdom. This IBF report is made with a great deal of my efforts, I worked hard on this project and gave my best for making this report best one.
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1. Introduction
Solidarity Group Holding is committed to becoming the worlds leading international Islamicoriented financial-service group in the world. The company plans to offer superior returns, world-class customer service, avant-grade packages and innovative thinking to its shareholders. During 2009, the Group had three key areas of activity; General Takaful, Family Takaful, and Asset Management and Investments. These were supported by centralized Corporate Services covering Human Resources, Information Technology, Legal and Compliance, Finance and Corporate Communications. 2009 marked the first full year of operation post the 2008 restructuring of companys two main subsidiaries, Solidarity General Takaful and Solidarity Family Takaful. Groups both entities have witnessed healthy growth and have further strengthened their positioning in its home market despite the prevailing challenges.
Solidarity Group's authorized capital of $500 million and its paid-up capital of $220 million are being invested toward further improving its performance and quality of client services. As a responsible corporate member of the communities it serves, the company values innovation, integrity, social responsibility, teamwork and partnership as well as transparency as part of its day-to-day operations. Solidaritys vision is to be a leading international Islamic-oriented financial services group generating superior returns to shareholders. On the regional and international fronts, the Group continued its strategic positioning and consolidation, especially in the markets of Jordan, Saudi Arabia, Malaysia and Egypt
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i. The subsidiaries, associates and joint venture of the Solidarity Group. Entity
Subsidiaries Solidarity General Takaful BSC (c) Solidarity Family Takaful BSC (c) Takaful Islamic Insurance Company EC (TIIC) Islamic Takaful and ReTakaful Company (Bahamas) Ltd (ITRC) Solidarity Takaful S.A. Luxembourg Solidarity Fund Company (SFC) and related funds: Solidarity International Real Estate Fund Solidarity Leasing Fund Solidarity Global Growth Fund Solidarity European Real Estate Fund Solidarity Aman Fund BSC (c) (SAF) Solidarity Asia Takaful Fund
Holding
Country of incorporation
Kingdom of Bahrain Kingdom of Bahrain Kingdom of Bahrain Bahamas Luxembourg Kingdom of Bahrain
Nature of activities
Takaful Takaful Takaful ReTakaful Takaful Investment Management
1. 2. 3. 4. 5. 6.
100% 100% 100% 100% 100% 100%
7. 8. 9.
100% 100%
Kingdom of Bahrain Cayman Islands Egypt Kingdom of Bahrain Jordan Malaysia
Solidarity Family Takaful Egypt Co 100% Associates 10. Ensurion WLL 25% 11. First Insurance Company Joint venture 12. MAA Takaful Berhad 26.14% 25%
Investment management Investment Management Takaful Insurance management Takaful Takaful

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ii. The Sharia Supervisory Board
The Sharia Supervisory Board reviews all the companys operations in accordance with the Balance Sheet of every year. The board reviews and confirms the implementations of the principles and guidelines governing the relationship between the policyholders and shareholder in order to identify the right of each side. The Board gives its Sharia directives for Takaful transactions and answers the queries made by the management. The companys management is responsible for ensuring that the company conducts its business in accordance with Islamic Sharia rules and principles. It is The Sharia Supervisory Boards responsibility to insure that all the Takaful transaction is Sharia Complaint.
2. Area of specialization
Solidarity group is one of the largest Takaful Group of the world. Group basically specialized in Takaful, and group has been proved to be a successful Takaful company in the world. The awards are the witnesses of groups success, i.e. Bahrain Based Solidarity accepts two Prestigious Awards including Takaful Insurer of the Year for the second consecutive year (201011).
3. Financial positions
The Group showed good turn around despite continued global economic meltdown and an extremely challenging operational environment. The Group achieved an operational breakeven point during 2009; however, the creation of conservative and prudent exceptional investment provisions to the extent of US$7.20 million has resulted in a loss of US$7.24 million for the year ended 31.12.2009. Most of these provisions relate to re-evaluation of real estate properties across geographies; given the slow paced yet steady improvement in the world economy, likely future pick up in values can easily result in the reversal of these provisions to the benefit of the Group. The Gross contributions of Family Takaful increased by 11% compared to 2008. The Family Takaful Business in Bahrain has achieved a sizeable market share in Group Life & Medical portfolios. The gross contributions of General Takaful increased by 50% from US$14.00 million in 2008 to US$20.96 million in 2009. The operations continue to show remarkable growth since commencement of operations in Bahrain in 2004. The Company has achieved this growth by
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acquiring the insurance program of major clients like Gulf Petrochemical Industries Company (GPIC) as well as through enhanced market penetration using diverse distribution channels.
4. Product line
The Group primarily operated as a Takaful provider and its primary lines of business comprise general Takaful, family Takaful and asset management and Investments operations. These were supported by centralized Corporate Services covering Human Resources, Information Technology, Legal and Compliance, Finance and Corporate Communications. i. General Takaful
Solidarity General Takaful includes Marine, Non-Marine & Motor Takaful. Solidarity General Takaful continued to expand its retail distribution through a mix of brokers and financial institutions. It opened a sales desk at various distributor locations during 2009. The success of implementing a toll free 24x7 service for assisting its motor insurance customers is very much appreciated by customers. This service includes road side assistance and in the event of a claim, car replacement service. In order to facilitate the renewal of motor policies and registration at Traffic Department, Solidarity General is one of the few companies that have teamed up with Bahrain Governments e-gov. ii. Family Takaful
Solidarity Family Takaful BSC(c), Bahrain has continued to achieve impressive results during the year 2009. The gross written contribution for the year amounted to US$16.81 million of which individual Takaful policies comprised US$ 3.09 million; savings and investments US$2.63 million; as well as US$11.09 million from group life, credit life and medical policies. Compared to the full year operations of these classes of business in 2008, this represents a growth of 9% (2008 US$15.43 million). The company provides Family Takaful protection and savings plans, Group Life Takaful and Medical Takaful covers. With this increased market presence, SFT has established itself as a full fledged family Takaful and medical Takaful provider in the Kingdom. SFT has expanded its distribution channels and modified some product features in order to become more competitive.
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iii. Asset Management
Solidaritys Sharia-compliant portfolio of investments, which covers proprietary investment funds regulated by the CBB, external funds and strategic investments, performed well during the year, with no impairment. As a result, the Companys Asset Management activities continued to make a sizeable contribution to the Groups overall income.
The Groups diversified Fund portfolio, with a well balanced risk profile, comprises mudaraba, leasing, sukuk, real estate, equities and other Islamic instruments. In addition, the Asset Management division continued to manage the Companys liquidity requirements; monitor the progress of Solidaritys strategic investments; provide structuring advisory services to support the Companys ventures and acquisitions; and develop new investment products for policyholders, including bundled products related to Takaful and standalone investments such as mutual funds.
5. Future plans
Saudi Arabia remains a particularly promising market. It is the largest market in the Arab Worldand the Group remains as committed as ever to establishing a long, mutually-rewarding presence there. Group is planning for the IPO of its joint venture Solidarity Saudi Takaful Company (under formation) and hope to obtain the final operational license from the Saudi Arabian Monetary Agency (SAMA) soon thereafter. The Group is also planning to further increase its stake in First Insurance Co., Jordan and to explore lucrative inorganic growth opportunities in that promising market. MAA Takaful Berhad, the Malaysian associate company of the Group, has firmly established itself as one the leading Takaful players in the Malaysian market, and has performed well over the period; where significant growth in overall revenue and profitability are also expected in future. The Group also looks forward to unlocking the great potential in the Egyptian market through its fully owned subsidiary. A full review of the financial investments portfolio of the Group will be carried out to streamline this portfolio and optimize its risk/reward profile. Looking ahead, the Group can now confidently consolidate its earlier growth and continue to explore potentially unique expansion opportunities. The operations in Bahrain are geared for higher levels of growth, stronger market visibility and presence and a solid positioning as a comprehensive provider of Takaful insurance solutions.
Shaheed Zulfikar Ali Bhutto Institute of Science & Technology Page 8

6. Customer/Public/shareholders/regulators view about the Solidarity Group
The Solidarity Group considered as a Sharia Complaint Takaful group. The performance of the Solidarity Group and its brand equity, strengths and capabilities as a leading Takaful operator has been duly recognized by its peers and clients. Solidarity was the recipient of the 2010 Gulf Insurance Award, hosted by Gulf Insurance Review Magazine. The award is a testimony to the efforts of the company in enhancing its brand image in offering value added Sharia compliant Takaful services and in reinforcing a strong commitment to their customers.
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7. Bibliography
Google www.solidarity
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