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Presentation to 3 rd Islamic Banks & Financial Institutions Conference

Globally Secure. Role of Export Credit and Political Risk Insurance in mitigating risks in Islamic finance structures. By Muhammad Azam ICIEC. Presentation to 3 rd Islamic Banks & Financial Institutions Conference Damascus – March 10-11, 2008. ICIEC – A Background.

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Presentation to 3 rd Islamic Banks & Financial Institutions Conference

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  1. Globally Secure Role of Export Credit and Political Risk Insurance in mitigating risks in Islamic finance structures By Muhammad Azam ICIEC Presentation to 3rd Islamic Banks & Financial Institutions Conference Damascus – March 10-11, 2008

  2. ICIEC – A Background • Member of the Islamic Development Bank* Group • (* “AAA” rated by Moodys, FITCH, and S&P; Zero EU & BIS risk weighting) • Owned by IDB and 35 OIC Member Countries – Total capital USD 158 million (ID 150 million) • Multilateral insurance company that provides Export Credit Insurance, Political Risk Insurance and Reinsurance services according to Islamic Shariah • Created in 1994 with a mandate to promote trade from and investment flows into ICIEC members countries by providing: • Investment Insurance; • Export Credit Insurance; and, • Reinsurance

  3. Board of Governors Board of Executive Directors ITFC IDB Group Structure

  4. 35 members 16 ARAB Countries • ALGERIA • BAHRAIN • EGYPT • JORDAN • KUWAIT • LEBANON • LIBYA • MAURITANIA • MOROCCO • QATAR • SAUDI ARABIA • SUDAN • SYRIA • TUNISIA • U.A.E • YEMEN 11 AFRICAN Countries 8 ASIAN Countries • BENIN • BURKINA FASO • CAMEROON • CHAD • DIJIBOUTI • GAMBIA • GUINEA • MALI • NIGER • SENEGAL • UGANDA • BANGLADESH • BRUNEI • IRAN • INDONESIA • KAZAKHSTAN • MALAYSIA • PAKISTAN • TURKEY

  5. Export Credit Insurance Investment Insurance • To Encourage Flow of • Capital and Investments • from any country • to Member Country • To Encourage Exports • from Member Country • to rest of the world Member Country Member Country ICIEC Mission

  6. ICIEC Services • Export Credit Insurance Covers • Buyer / Seller credits • Documentary Credits (letters of credit, etc) • Project related credits / finance • Routine export credits • Sovereign obligations • Political Risk Insurance Covers • Equity Investments • Financing Facility investments • Loan guarantees investments • Technical Assistance Services • Advisory on Investment Promotion • Advisory on Investment / Business Climate Reform Insures non-payment risks Insures Country risks

  7. Business Profile Solid Capital Base… (as at end of 1428H, corresponding to 9 Jan. 2008) • $154 million Subscribed • $115 million Paid-up • $164 million Total Assets Shareholders… IDB 50% Member Countries 50%

  8. Business Profile Strong growth prospects…

  9. Business Profile Diversified portfolio…

  10. International Partnerships • ICIEC has strategic partnerships with major international insurers, including MIGA, COFACE and Atradius, Catlin and Lloyods. • -AON • IFC • E&Y Consultancy - MIGA - Credit Alliance (COFACE) - Berne Union Tech. Support - Lloyds (FirstCity) - MIGA - Treaty (Atradius, Catlin) Reinsurance ICIEC Credit Info • COFACE • Atradius • - Others

  11. Eligible Islamic Finance Structures Common modes of Islamic Finance covered in ICIEC include: • Ijarah (Lease) • Murabaha

  12. ICIEC PRI Structures- Leasing Proceeds Request for Finance Equipment Finance Premium  Enterprisein Member Country Commodity Exports Foreign buyers  Proceeds balance   Escrow Account in 1st Class Int. bank   Commercial Risk Mitigant Lease Payments Islamic Bank in Member Country (Lessor)  Political Risk Insurance

  13. L/C Confirmation  Importer In Sudan Export Contract Exporter In UAE   L/C application Default of payment Open L/C  Importer’s Bank Exporter’s Bank Confirm L/C  Comp. in case of default  Doc. Cr. Ins. Policy Compensation 

  14. Exports of goods CSTP/ SMTP  Exporter From MC (Supplier) Default-payment  Buyer From M&NMC     Insurance Policy (CSTP – SMTP) Assignment of rights  Compensation Claim Premium Bank  Compensation Enhances Exporter’s Competitiveness

  15. BMP Murabaha Exports of goods (Exporter) From Member Country (Buyer) To Foreign Buyer Purchase Contract Islamic Bank (Lender)   Sale Contract   or default payment Mortgage of goods + Repayments  Premium  BMP  Claim  Compensation

  16. ICIEC BUSINESS MODEL Continue… Reinsurance Market Credit Information IDB & Member Countries Brokers & Local Agents Credible sources Quota Share Treaty & Facultative Strong leverage Marketing Support Political Risk Insurance Inward Reinsurance Investors From member & non-member Countries Insurers From member & non-member Countries Credit & Political Risk Insurance Credit and Political Risk Insurance Inward Reinsurance Exporters From Member Countries Banks National ECAs

  17. ICIEC’s Strategic Partners

  18. SEP ICIEC’s Strategic Customers

  19. Globally Secure Thank You www.iciec.com

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