1. THE ROLE OF ACTUARIES IN
THE TAKAFUL INDUSTRIES
Ibrahim Muhanna FCAA, MSAA, FLAA
Managing Director & Actuary
21 & 22 September 2004 Jeddah, Saudi Arabia

2. Actuaries make
financial sense of the
future

3. WHAT IS AN ACTUARY?
An actuary applies mathematical skills to
financial and business problems, especially
those which involve uncertain future events,
such as in Takaful - life insurance, general
insurance, risk management, health care
financing, investment, corporate finance,
banking, pensions and social security

4. ACTUARIAL TRAINING
 mathematics
 statistics
 modelling
 investment
 finance
 financial management

5. MAJOR FIELDS OF
ACTUARIAL WORK
 life insurance
 general insurance
 pensions
 social security
 investment
 health care financing
 corporate finance
 government service
 personal financial
advice
 education

6. ROLE OF ACTUARIES IN
THE TAKAFUL INDUSTRY –
1/5
 product design
 pricing
 reserving
 investment strategy
 reinsurance/securitisation

7. ROLE OF ACTUARIES IN
THE TAKAFUL INDUSTRY –
2/5
 profitability measurement
 control of bonus systems
 assessing shareholder value
 disclosure to policyholders
 dynamic financial analysis

8. ROLE OF ACTUARIES IN
THE TAKAFUL INDUSTRY –
3/5
DYNAMIC FINANCIAL ANALYSIS
(STRESS-TESTING)
 realistic future cash-flows
 impact of regulatory requirements
 alternative scenarios
 use of stochastic modelling
 identification of risks
 risk management strategies

9. ROLE OF ACTUARIES IN THE
TAKAFUL INDUSTRY – 4/5
ACTUARIES IN INVESTMENT
 portfolio management
 research and analysis
 portfolio performance measurement
 asset/liability management
 strategic asset allocation
 investment indices
 complex financial instruments

10. ROLE OF ACTUARIES IN
THE TAKAFUL INDUSTRY –
5/5
PERSONAL FINANCIAL PLANNING
 assessment of needs
 insurance solutions
 pension products
 cost of care

11. ROLE OF APPOINTED
ACTUARY
 adviser to Board and senior management
 responsible for assets as well as liabilities
 continuous financial monitoring
 annual valuation of assets and liabilities
 hot line to supervisor in case of
difficulties
 operating under professional standards

12. WHISTLE-BLOWING
 professional responsibility
 underpinned by legislation
 interests of policyholders
 responsibility to company
 responsibility to regulator

13. PUBLIC INTEREST
 quasi regulatory functions
 protection of policyholders
 protection of pension scheme members
 serving the public
 pursuit of excellence

14. Overview on:
i.e. Muhanna Group & its Founder
The 1st
& Largest Actuarial Consulting Firm in
the Arab World
The 2nd
Actuarial Foundation in the World
The 4th
Largest Actuarial Firm in Social
Insurance Consulting in the World
The 1st
& only Regional Insurance Rating
Agency

15. Concluding Remarks
 Transparency
 Fairness
 Development of Human Resources

16. Overview of The Muhanna Group
 Actuarial consultancy - established in 1986
 Life, P&C & Health Insurance
 Pensions & Social Insurance
 Insurance supervision
 Management Consulting ( Risk Management - Mergers &
Acquisitions)
 Software solutions - established in 1990
 Actuarial Education - established in 1994
 Rating services - established in 2000
As of end 2003 Services were rendered in 32 countries
 Provided services to 41 government & semi-government organizations
 Advised 52 life & general Insurance companies
 Provide services to 94 other private institutions
 Financed & sponsored 23 actuarial students
 Delivered & published 67 actuarial and insurance papers & studies

17. Points of Strength
 Observer member of IAIS since 2001
 Active member of IAA insurance regulation
committee since 1999
 Advisor to SAMA between 2000 – 2003
 Large team of professionals including life actuaries
 Appointed actuaries to major Takaful Companies
 Unique perspectives and insights
 Corporate Governance
 Strategy Formulation
 Structuring of Groups – Optimization of Value
 Largest Data Base on Saudi Arabia

18. Sites to note:
 i.e Muhanna & co.
 www.muhanna.com
 The Muhanna Foundation
 www.muhanna.org
 Address
 1501-B Gefinor Center
 Beirut – Lebanon
 Tel +9611 752 999
 Fax +9611 751 292
 E-mail actuarial@muhanna.com