Islamic finance in Bermuda - Bermuda: Islamic finance hub in the western hemisphere

 
Islamic finance in Bermuda - Bermuda: Islamic finance hub in the western hemisphere
www.pwc.com/bermuda/islamicfinance

                   Islamic finance
                   in Bermuda

Bermuda: Islamic
finance hub
in the western
hemisphere
Islamic finance in Bermuda - Bermuda: Islamic finance hub in the western hemisphere
Islamic finance in Bermuda - Bermuda: Islamic finance hub in the western hemisphere
Contents
                                                                              Page

  1.    Bermuda: Islamic finance hub in the western hemisphere                  2

  2. Why Bermuda                                                                3

  3. Retakaful and captive Takaful                                              4

  4. Shariah-compliant funds                                                    6

  5. Sukuk and Shariah-compliant structured products                            8

  6. Private wealth management                                                 10

  7.    Work with you                                                          11

  8. Contacts                                                                  12

Note
The term ‘Shariah-compliant’ in this document refers to financial products
and structures that are compliant with Islamic financial principles.         PwC 1
Islamic finance in Bermuda - Bermuda: Islamic finance hub in the western hemisphere
Bermuda: Islamic finance hub
      in the western hemisphere
   The Bermuda Government welcomes                   standards and ensures high standards
   Islamic finance.                                  of behaviour, while fostering an
                                                     environment that remains attractive to
   The Bermuda Government is actively                business and enables them to grow and
   engaged in promoting the development              develop successfully.
   of Islamic finance in Bermuda and
   ways to support its growth. These                 Bermuda’s legislation is robust, but
   initiatives build on the existing                 flexible enough to accommodate
   relationship between Bermuda and                  Islamic financial products and
   the Gulf Cooperation Council (GCC).               structures.
   Investors from the GCC already invest
   heavily in Bermuda-based investment
   funds, including Shariah-compliant
   funds, and have significant interests in
   the local hospitality industry. Financing
   vehicles originating from the GCC use
   Bermuda exempt companies and trusts
   in Sukuk, investment holding and
   wealth management structures.

   Bermuda is attractive as an
   international finance jurisdiction
   because it seeks to strike the right
   balance between maintaining an
   effective regulatory framework
   that meets relevant international

2 Bermuda: Islamic finance hub in the western hemisphere
Islamic finance in Bermuda - Bermuda: Islamic finance hub in the western hemisphere
Why Bermuda
Recognition - Bermuda is a transparent
and very well-regulated jurisdiction.
Bermuda has executed over 20 Tax
Information Exchange Agreements and
has received international recognition
for its successful efforts to get onto the
Organization of Economic Cooperation
and Development (OECD) “white list”.
Bermuda has been elected Joint Vice-
Chairman of the Steering Group of the
OECD’s Global Forum for Economic
Cooperation and Development, and
hosted the 2011 Global Forum Plenary.

Bermuda’s financial sector regulator, the
Bermuda Monetary Authority (BMA),
adopts a principle-based regulatory
regime. The BMA has been appointed a
member of the Executive Committee of
the International Association of Insurance
Supervisors.

Political stability – Bermuda is a self-
governing British Overseas Territory; the
legal system is based on English common
law, the doctrines of equity and Bermuda
statute law dating from 1612.                  over its onshore competitors. As more
                                               innovative and complex Islamic financial
Experience and expertise – Bermuda             products are developed by the global
has unrivalled talent and intellectual         market, Bermuda offers promoters the
capital in key sectors, including              advantages of effective tax structuring
insurance, investment funds and financial      and speed to market.
services.
                                               Bermuda has signed a double tax
Infrastructure – A substantial                 agreement with the Kingdom of Bahrain
infrastructure of IT, high quality transport   which provides structuring opportunities
links, and professional services have          for investors accessing the GCC region.
been developed to support the financial
industry in Bermuda.                           Accessibility – Bermuda’s situation
                                               geographically (with easy access to and
Economic stability – Over the past             from New York and London) makes it an
decade, Bermuda’s economic growth              important hub for the global insurance/
has surpassed that of the US and UK;           reinsurance and asset management
Bermuda enjoys a high standard of living       industries.
with all the amenities and conveniences
of an advanced economy.                        Modern legislation – Bermuda has
                                               modern corporate and trust laws
Potential tax benefits – Bermuda’s tax         which are attractive for Islamic finance
neutrality is a competitive advantage          structures.

                                                                                          PwC 3
Islamic finance in Bermuda - Bermuda: Islamic finance hub in the western hemisphere
operator provides an interest-free loan to
   Retakaful and captive Takaful                                                                                                                             the policyholders’ fund that is repaid out
                                                                                                                                                             of future surplus in the fund. The diagram
Innovation, entrepreneurialism and the               Takaful and Retakaful arrangements.                                                                     in figure 2 shows how a Wakala model
leadership of Bermuda insurers with the              Specific Retakaful and captive Takaful                                                                  might work in Bermuda.
cooperation of the Bermuda Government                requirements are addressed in the
has fostered a highly successful                     entity’s business plan and constitutional                                                               The hybrid model is a mix of the
reinsurance industry. Today, Bermuda is              documents. The most widely used                                                                         Mudharaba and Wakala models. In this
home to more than 50 major international             Takaful/Retakaful models which are                                                                      model, the operator receives a Wakala
insurance and reinsurance firms and                  Mudharaba, Wakala and the hybrid                                                                        fee for managing the insurance operation
there are 1200 international insurers and            model can be structured under Bermuda                                                                   of the policyholders’ fund as well as
reinsurers licensed here.                            laws.                                                                                                   a Mudharaba fee for managing the
                                                                                                                                                             investment fund. The diagram in figure 3
As the largest offshore reinsurance and              Mudharaba is known as the profit-sharing                                                                shows how a hybrid model might work in
insurance domicile, Bermuda offers a                 model. The shareholders share in the                                                                    Bermuda.
range of opportunities for Retakaful                 profit or loss with the policyholders.
(including retrotakaful) operators to                The diagram in figure 1 shows how                                                                       In the Wakala Waqf model the
assist in the growth and expansion of                a Mudharaba model might work in                                                                         policyholders’ fund is replaced by a trust,
the global Takaful market. A number                  Bermuda.                                                                                                which is the Waqf fund. Part of the capital
of Bermuda-based insurance and                                                                                                                               of the shareholders’ fund is used to create
reinsurance companies as well as global                                                                                                                      this trust, which is considered charitable
                                                     In the Wakala model, the operator acts
insurance firms with a Bermuda presence                                                                                                                      under local law.
                                                     as an agent of the participants. In this
are establishing relationships with GCC              model, shareholders are paid a pre-
countries.                                           agreed proportion of the contributions
                                                     paid by the policyholders in return for
Bermuda is also the world’s leading                  running the insurance operations of the
captive insurance market, with over 900              business on behalf of the policyholders. If
captive insurers, making it an attractive            the policyholders’ fund makes a loss, the
center to service the relatively untapped
captive Takaful market.
                                                     Figure 1: Mudharaba model
Structuring Retakaful and captive
Takaful in Bermuda                                                                                                                                                                                  Operating
                                                                                                                                          Participants                                              expenses
                                                           Balance of surplus after paying portion to shareholders’ fund

The captive insurance and reinsurance
industry is regulated by the BMA. The                                                                                                      Contributions                Policy
Insurance Act provides the statutory                                                                                                                                   benefits
basis for regulating insurance and
                                                                                                                              Islamic    Policyholders’             Reinsurance/                 Shareholders’
reinsurance in Bermuda, dealing with the                                                                                   investments       funds                                                  funds
                                                                                                                                                                      retakaful
establishment, operation and regulation
of captive insurance and reinsurance                                                                                                                                  Reserves
companies. The Insurance Act also
provides for the licensing and supervision                                                                                 Investment
of Bermuda insurance managers.                                                                                                profit                                             Interest-free loan
                                                                                                                                                                                if there is a deficit

The same principles and requirements
under the Bermuda Insurance Act
                                                                                                                                           Surplus/
apply to Retakaful and captive Takaful.                                                                                                                    Base management fee plus percentage share of any surplus
                                                                                                                                           (deficit)
Bermuda law provides significant
flexibility with respect to corporate                              Source: PwC
structures and governance, which allow
for establishing and operating of captive

4 Bermuda: Islamic finance hub in the western hemisphere
Islamic finance in Bermuda - Bermuda: Islamic finance hub in the western hemisphere
Bermuda: Unique value                        • A Bermuda Segregated Accounts                             • The Companies Act 1981 makes
proposition for structuring                    Company (SAC) is a useful Retakaful                         provision for mutual companies which
Retakaful and captive Takaful                  structuring tool for ring-fencing the                       is beneficial for structuring Bermuda
                                               shareholders’ fund from the funds                           Retakaful by virtue of their mutuality.
• Bermuda’s strong reinsurance and             belonging to the operator. A SAC could
  captive industry, well regarded              be used wholly for Retakaful business,                    • A number of Bermuda reinsurers and
  regulatory environment, speed to             or by a conventional reinsurer who                          financial institutions are governed
  market and talent pool makes it a            wishes to operate a Retakaful window                        by private act. It is therefore possible
  natural home for Retakaful and captive       without having to incorporate and                           for Retakaful and captive Takaful to
  Takaful.                                     license a new entity.                                       petition the Bermuda Parliament for
                                                                                                           private bespoke legislation to give
• Rapid expansion in the global Takaful                                                                    enhanced flexibility.
  market and the limited availability
  of Retakaful capacity make it very         Figure 2: Wakala model
  attractive for reinsurance companies in
                                                                                                                                               Operating
  Bermuda to develop Retakaful models.
                                                                                     Participants                                              expenses
                                                                                                          Wakala Fee (percentage
                                                                                                             of contributions)
• Bermuda’s established reinsurance
  companies have access to significant                                                Contributions               Policy
  capital resources and are at the leading                                                                       benefits
  edge of the conventional reinsurance                                   Islamic    Policyholders’            Reinsurance/                  Shareholders’
                                                100% of any surplus

  industry. There are clear synergies                                 investments       funds                   retakaful                      funds
  to develop partnerships between
  Bermuda’s conventional reinsurance                                                                            Reserves
  operators and global Retakaful
  operators which have the requisite                                  Investment
                                                                                                                            Interest-free loan
  expertise and market knowledge.                                        profit                                            if there is a deficit

• Either a fully-fledged Retakaful
  company or a Retakaful unit of a                                                    Surplus/
  conventional reinsurer are attractive                                               (deficit)
  options in Bermuda.
                                                      Source: PwC
• Bermuda offers opportunities to
  develop Retakaful for a nascent US         Figure 3: Hybrid model
  Takaful market.
                                                                                                                                               Operating
                                                                                     Participants                                              expenses
• Bermuda as the world’s leading                                                                          Wakala Fee (percentage
  domicile for captives provides                                                                             of contributions)

  opportunities for GCC corporations to                                               Contributions               Policy
  form Bermuda captive Takaful.                                                                                  benefits
                                                                         Islamic    Policyholders’            Reinsurance/                  Shareholders’
                                                100% of any surplus

Other key structuring                                                 investments       funds                   retakaful                      funds
considerations
                                                                                                                Reserves
• Bermuda insurers are allowed
  considerable flexibility in their                                   Investment
                                                                                                                            Interest-free loan
                                                                         profit
  investment policies. This is an                                                                                          if there is a deficit

  important consideration for Shariah-
  compliant asset classes.
                                                                                      Surplus/
                                                                                      (deficit)
                                                                                                      Share of investment return paid for managing investment

                                                  Source: PwC

                                                                                                                                                                PwC 5
administration professionals. Bermuda
   Shariah-compliant funds                                                                         has long recognized the changing needs
                                                                                                   of investors, including calls for greater
                                                                                                   transparency and regulatory oversight,
                                                     Bermuda provides a favourable                 while maintaining an efficient and
                                                     environment for the establishment of          entrepreneurial environment that allows
                                                     Shariah-compliant funds given its position    funds and fund managers to flourish.
                                                     as one of the world’s leading jurisdictions
                                                     for the asset management industry and         Bermuda Monetary Authority
                                                     the Government’s receptive attitude to        Guidance Notes on Islamic
                                                     new entrants to the market. Bermuda
                                                                                                   Collective Investment Schemes
                                                     offers an excellent and very stable
                                                     platform from which fund promoters and
                                                                                                   The BMA recently published its
                                                     investment managers seeking to expand
                                                                                                   Guidance Notes on Islamic Collective
                                                     their Shariah-compliant product offerings
                                                                                                   Investment Schemes (‘Guidance Notes’),
                                                     globally can confidently launch, manage
                                                                                                   strengthening Bermuda’s case as a
                                                     and administer such products.
                                                                                                   favourable domicile for the establishment
                                                                                                   of Islamic investment funds. The
                                                     The investment fund industry is regulated
                                                                                                   Guidance Notes are principle-based,
       Shariah-compliant                             by the BMA. The Investment Funds Act
                                                                                                   non-discriminatory (providing level
                                                     provides the statutory basis for regulating
       innovative investment                         funds in Bermuda, dealing with the
                                                                                                   playing field with conventional funds),
                                                                                                   hence adding to Bermuda’s competitive
       funds and global                              establishment, operation and regulation
                                                                                                   advantages by offering flexibility to
                                                     of investment funds. The Investment
       investment fund                               Funds Act also provides for the licensing
                                                                                                   Islamic investment fund promoters who
                                                                                                   can confidently structure, manage and
       platforms                                     and supervision of Bermuda fund
                                                                                                   administer such funds in Bermuda,
                                                     administrators.
                                                                                                   bringing innovative investment products,
                                                                                                   such as Sukuk funds and ETFs, to the
                                                     Structures commonly used in the
                                                                                                   global market.
                                                     investment fund industry can be created
                                                     and utilized in Bermuda. Common
                                                                                                   There are no impediments to authorising
                                                     structures include:
                                                                                                   Islamic investment funds in Bermuda
                                                                                                   under the current framework. The
                                                     •     Exempted companies;
                                                                                                   Guidance Notes provide clarity on a
                                                     •     Segregated account companies;
                                                                                                   number of issues which such funds may
                                                     •     Exempted partnerships; and
                                                                                                   need to consider in complying with the
                                                     •     Unit trusts.
                                                                                                   existing regulatory framework, such
                                                                                                   as required disclosures, notification
                                                     Shariah-compliant fund sponsors benefit
                                                                                                   of material changes, and the role
                                                     from the presence in Bermuda of world-
                                                                                                   and responsibilities of the ‘Shariah
                                                     class asset management firms, fund
                                                                                                   Supervisory Board’, an independent
                                                     administrators and other professionals.
                                                                                                   governance body to ensure such fund
                                                     Funds can be listed on the Bermuda Stock
                                                                                                   products conform to Islamic financial
                                                     Exchange (BSX), and Bermuda umbrella
                                                                                                   principles.
                                                     funds can be created as SACs.

                                                     Bermuda boasts a wealth of expertise in       Structuring Shariah-compliant
                                                     the area of mutual funds, hedge funds,        investment funds in Bermuda
                                                     private equity funds and real estate funds.
                                                     Bermuda is home to hundreds of fund           Shariah-compliant funds are similar
                                                     managers, nearly two thousand funds           in their set up to conventional funds
                                                     are registered here, and still thousands      and compliance with Islamic financial
                                                     more administered by its world class fund     principles can be viewed very much

6 Bermuda: Islamic finance hub in the western hemisphere
as an overlay, comparable to a fund
established with a “socially responsible”
investment ethos. The same principles
and requirements under the Bermuda
Investment Fund Act apply to Shariah-
compliant funds. Generally there are no
restrictions in the investment objectives
under the Bermuda’s Companies Act
and Investment Fund Act. The specific
Shariah-compliant requirements and
restrictions can easily be incorporated
into a fund’s offering memorandum/
prospectus.

Structuring Shariah-compliant
private equity/venture
capital, real estate and global
infrastructure funds in Bermuda

A Shariah-compliant private equity/
                                              Asia regions who are seeking to diversify     investment products targeting emerging
venture capital, real estate or global
                                              their global Islamic investment portfolios    markets. To facilitate such cross-border
infrastructure fund is typically structured
                                              and access US investments can do so           investment flows, it is vital to have tax
as a limited partnership. Bermuda’s
                                              by investing in Shariah-compliant US          efficient global fund platforms in a
limited partnership rules accommodate
                                              securities such as Sukuk, listed securities   reputable jurisdiction such as Bermuda
both the Mudharaba and Musharakah
                                              screened for Shariah-compliance and           and benefit from its highly regarded
structures. The Bermuda Partnership Act
                                              private equity.                               regulatory environment, high quality
does not attempt to regulate the affairs
                                                                                            infrastructure, and world-class fund
of a partnership to any great extent.
                                              Innovative alternative Shariah-               administrators and other professionals.
The specific requirements of either
structure can easily be incorporated into     compliant investment funds –
                                              Bermuda, as a centre of excellence for the    The key benefits of having Bermuda-
the partnership agreement. Bermuda
                                              alternative fund industry, can assist in      based global fund platforms are as
structures are also suitable parallel
                                              the development of innovative Shariah-        follows:
vehicles to accommodate both Muslim
and non-Muslim investors.                     compliant alternative investment funds
                                              such as hedge funds, exchange traded          • They provide access to alternative asset
                                              funds and fund of funds, commodities            classes in emerging markets.
Bermuda: Unique value                                                                       • They are attractive to US/global ethical
                                              funds and Sukuk funds.
proposition for structuring                                                                   investors seeking access to socially-
Shariah-compliant funds                       Global Shariah-compliant fund                   responsible investments in emerging
                                                                                              markets.
                                              platforms – US/global investors seeking       • They are attractive to US/global
Access to US investments -                    geographic and product diversification
Investors such as sovereign wealth                                                            investors seeking global Islamic
                                              may invest in Sukuk issuances (either           investment diversification.
funds, institutions and high net worth
                                              directly or via Sukuk funds) and other
individuals from GCC and South East

      Bermuda is a leading jurisdiction in innovative
      investment products focusing on reinsurance risk
      such as insurance-linked securities, catastrophe
      bonds, insurance swaps, and weather derivatives

                                                                                                                                 PwC 7
finance), Wakala (agency), Ijara wa Iqtina
   Sukuk and Shariah-compliant                                                                     (finance lease), Salam (payment for
                                                                                                   future delivery), Arbun (pre-purchase of
   structured products                                                                             right to acquire asset).

                                                                                                   Bermuda offers administrative and cost
                                                     The recent credit crisis did much to          efficiencies in that issuers may structure
                                                     strengthen the case for alternative           and list Sukuk in a single jurisdiction.
                                                     investment approaches and ways of
                                                     raising capital in the global capital         Bermuda: Unique value
                                                     markets. Sukuk is one of the fastest          proposition for structuring global
                                                     emerging alternative instruments and is
                                                                                                   Sukuk transactions
                                                     increasingly used by governments and
                                                     corporations in the GCC and South East
                                                                                                   Sukuk structured and listed in Bermuda
                                                     Asia to access global capital markets.
                                                                                                   are particularly attractive for the
                                                     Investors invest in Sukuk for their
                                                                                                   following cross-border transactions:
                                                     attractive yields and institutions can use
                                                     Sukuk for liquidity management. The
                                                     Sukuk market is rapidly permeating the        Access to global capital markets
                                                     global capital markets as many Western
                                                     jurisdictions are also tapping into it.       • European and US-based corporations
                                                                                                     seeking alternative ways of raising
                                                                                                     capital globally (mainly from GCC and
                                                     Structuring global Sukuk                        South East Asia) may structure and
        The GE Capital                               transactions in Bermuda                         list a Bermuda-based Sukuk. Bermuda
                                                                                                     corporate and trust vehicles have been
        Sukuk, offered under                         Sukuk and other Shariah-compliant               trusted by investors and capital markets
        Regulation S and                             structured products often involved an           globally for many years.
                                                     offshore structure in the form of a special
        structured using a                           purpose vehicle (SPV), which typically        • Sukuk issuers from GCC and South
        Bermuda limited                              takes the form of an exempted company           East Asia seeking to raise capital from
                                                     in Bermuda under the Companies Act
        liability exempted                           1981.
                                                                                                     Western economies may structure
                                                                                                     and list a Bermuda-based Sukuk to
        company, represents                                                                          benefit from Bermuda’s reputation as
                                                     Already recognized as a centre of
        a significant                                excellence for the domicile, management,
                                                                                                     a jurisdiction of choice for structuring
                                                                                                     cross-border transactions.
        development for the                          administration and listing of investment
                                                     funds and financing structures, Bermuda
        global Sukuk market                          is a natural choice as a jurisdiction
                                                     for Sukuk issuers. The GE Capital
                                                     Sukuk, offered under Regulation S and
                                                     structured using a Bermuda limited
                                                     liability exempted company, represents
                                                     a significant development for the global
                                                     Sukuk market.

                                                     Bermuda SPVs and trusts are attractive
                                                     for various Shariah-compliant structured
                                                     products created under common
                                                     Islamic contracts such as Mudharaba
                                                     (partnership/ finance trusteeship),
                                                     Musharaka (joint venture), Ijara
                                                     (leasing), Murabaha (purchase order),
                                                     Istisna (manufacturing or project

8 Bermuda: Islamic finance hub in the western hemisphere
Listing of Sukuk on the Bermuda                Key benefits of using Bermuda
Stock Exchange                                 SPVs for structuring Sukuk                           BSX with its
                                               and other Shariah-compliant                          innovative and
Besides its modern corporate and               structured products
trust laws, Bermuda also offers listing                                                             flexible approach is
facilities for Sukuk on the BSX, which
has developed into a major offshore
                                               • Bermuda offers SPVs that are tax                   an attractive location
                                                 efficient, based under common
exchange for the listing of international        law principles, where the rights of
                                                                                                    for cross-border
securities. The BSX specializes in listing       all parties are clearly understood,                Sukuk listing
and trading capital market instruments           recognized and consistently applied.
such as stocks, bonds, mutual funds
(including hedge fund structures),             • The GE Capital Sukuk is proof that
insurance-linked products and depository         Bermuda’s laws are tried and tested            be licensed under Bermuda trust
receipt programs. It provides high               by rating agencies, regulators and             legislation, provided that by the terms
regulatory standards, visibility for issuers     investors globally for Sukuk structures.       of its memorandum of association it is
and transparency for investors, which                                                           empowered to act as trustee of only a
facilitates cross-border flow of capital and   • Bermuda-based SPVs and trusts                  limited number of identifiable trusts.
bridges cross-border investment gaps.            vehicles are suitable for financing
                                                 structures for the acquisition of global     • Financiers/institutions benefit from
The BSX’s fully electronic capabilities          portfolios of assets.                          effective structuring of Shariah-
offer attractive opportunities for                                                              compliant structured products through
Regulation S Sukuk offerings. The BSX          • There are no restrictions in the ‘objects’     a combination of Bermuda SPVs and
adopts a non-discriminatory, religion            of a company under Bermuda company             trusts, for example to create ‘off balance
neutral regime for Sukuk listing under its       law. An entity may apply the principles        sheet’ or ‘bankruptcy remoteness’
Specialized Debt listing rules. The BSX is       of Islamic finance to its business             structures.
suitable for the listing of a diverse range      dealings to achieve its objects.
of Islamic financial products, including                                                      • There is no exchange control for
investment funds and ETFs.                     • Bermuda companies may adopt a                  non-resident undertakings and no
                                                 secondary name in non-roman script             restriction on repatriation of funds.
PwC recommends that Sukuk listing is             such as Arabic with the approval of the
viewed as a four step process:                   Registrar of Companies.                      • There is no stamp duty on any
                                                                                                instrument affecting or relating to
• Listing strategy                             • Bermuda’s private trust company                international businesses in Bermuda.
• Filing and communication with the              legislation is attractive for Islamic          This is a key consideration for global
  competent authorities                          finance structures. A private trust            Sukuk issuances.
• Continuous reporting                           company is a company with trustee
• Coordination of the listing process            powers which is not required to

                                                   Review
      Guidance on          Set up vehicle        regulatory &             Submit
       strategy              structure            comliance                 file

                                      Admission

                                        Support
                                      continuous
                                      reporting &
                                      compliance

                                 Project management

                                                                                                                                   PwC 9
excellent charitable structure for Islamic
                                                                                                     philanthropy such as Waqf.

                                                                                                     Bermuda has a pool of talented people
                                                                                                     and service providers including trust
                                                                                                     administrators, lawyers and accountants
                                                                                                     who have expertise in dealing with
                                                                                                     complex estate planning, providing
                                                                                                     investment services and day-to-
                                                                                                     day administration. As a high-end,
                                                                                                     sophisticated jurisdiction, Bermuda is
                                                                                                     also an attractive location for family
                                                                                                     offices, philanthropy and foundations.

                                                                                                     Bermuda also benefits from the
                                                                                                     presence of the world’s top investment
                                                                                                     management firms, as well as large
                                                                                                     independent hedge fund and private
                                                                                                     equity fund managers. Asset managers

   Private wealth management                                                                         locate their operations in Bermuda
                                                                                                     because it offers one of the world’s
                                                                                                     highest standards of living and low taxes
                                                     Bermuda provides sophisticated solutions        together in a prestigious international
                                                     designed for wealthy individuals and            financial centre. Bermuda is a perfect
                                                     families and their advisers, for example:       location for Shariah-compliant asset
                                                                                                     managers to expand globally, access
                                                     • Family wealth management- wealth              the US market and develop a globally
       Bermuda is a                                    creation, enhancement, protection and         recognized Shariah-compliant asset
                                                       distribution.                                 management brand.
       premium private                               • Family offices or asset managers
       wealth management                               seeking a cross border platform               The presence of asset managers and
                                                       complementary to their local providers.       a significant number of alternative
       centre                                        • Investments outside of the Gulf:              investment funds domiciled in Bermuda
                                                       real estate, private equity, financial        offer investment opportunities to
                                                       instruments, foreign direct investments.      HNWIs, pension funds, sovereign wealth
                                                     • Entrepreneurs wanting to                      funds, financial institutions, Waqf and
                                                       internationalize their business.              endowments. Bermuda-domiciled funds
                                                     • Philanthropy.                                 and fund managers offer HNWIs and
                                                                                                     institutions significant choice of tax
                                                     Bermuda offers various types of trust           efficient investment strategies, with
                                                     structures which can be customized to           product and geographical diversification.
                                                     accommodate varying personal estate
                                                     planning objectives. Bermuda trusts,            Bermuda’s major banking groups and
                                                     when properly structured, can offer             other wealth management firms offer
                                                     tax-efficient global solutions, whereby         advisory and discretionary investment
                                                     assets are legally entrusted to a politically   services, and make available a wide
                                                     stable environment, with high level             range of investment vehicles from around
                                                     protection and confidentiality. A Bermuda       the world, including bonds, equities,
                                                     foundation is a corporate alternative           derivatives, structured products, mutual
                                                     to the creation of a trust. Aside from          funds, and hedge funds.
                                                     serving family estate planning matters,
                                                     Bermuda trust or foundation can be an

10 Bermuda: Islamic finance hub in the western hemisphere
assets. As companies start to develop their
  Work with you                                                                            fund ranges, PwC can offer staff training
                                                                                           on Shariah principles.

PwC Bermuda is the leading provider of         has carried out work for all elements       For administrators, PwC can review the
assurance, advisory and tax services to        of Takaful/Retakaful business, from         existing administration cycle of funds in
Bermuda’s banking, asset management,           reviewing business plans and helping        order to identify gaps and to implement
reinsurance and financial services             people deal with investors, to financial    changes required to be within the scope of
industry. We provide audit services to         modeling of Takaful business on an IFRS     Shariah precepts, covering custody, cash
a significant proportion of the leading        basis and on an AAOIFI basis. PwC has       management, fund accounting, financial
insurance and reinsurance companies in         helped Takaful/Retakaful businesses         reporting, trustee/fiduciary oversight,
Bermuda and have ongoing advisory and          at all stages of their development; from    transfer agency, ancillary services and
other relationships with a vast majority       helping companies get established to        ‘Shariah’ board support.
of the remainder. Our asset management         reviewing and optimizing their reserving,
clients include investment partnerships        underwriting and finance processes and      Sukuk
and trusts, private equity funds, hedge        controls and helping CEOs plan their
funds, pension funds, treasury operations      strategies for growth.                      PwC has a dedicated, multi-disciplinary
and investment managers, advisors, and                                                     global team of industry experts,
banks.                                                                                     including tax and advisory specialists,
                                                                                           who specialize in Sukuk and have the
PwC’s global network has a dedicated,                                                      knowledge to assist with a variety of
multi-disciplinary team of industry                                                        areas including structuring, operations,
experts, including actuaries, tax and                                                      compliance, and tax.
advisory specialists, who specialize in
Islamic finance. PwC industry experts                                                      PwC can support clients throughout
have extensive global experience in                                                        the Sukuk listing value chain, starting
offering assurance and advisory services                                                   from guidance on strategy to the final
within the Islamic finance industry. PwC                                                   admission on the Bermuda Stock
bring to the table the global resources                                                    Exchange.
of one of the world’s largest networks
of Islamic finance experts, with centers
of excellence in Bermuda, Malaysia,
the Middle East and North Africa and           Shariah-compliant funds
London.
                                               PwC has significant experience in
Retakaful                                      advising on launches of Islamic fund
                                               structures, including private equity,
Globally PwC has more than 700                 mutual funds, Sukuk, Islamic exchange-
actuaries and Takaful/Retakaful                traded funds and funds of funds. Our
specialists serving general, family, health    tax specialists can advise on the most
Takaful and Retakaful markets.                 appropriate tax structure for each fund
                                               type.
PwC has solutions for the major
challenges facing Takaful/Retakaful            For fund promoters PwC can offer
operators, such as tax issues, the potential   guidance on eligible investments under
lack of IT and operating infrastructure.       Islamic principles and the monitoring
PwC offers cutting-edge solutions for          of investment restrictions. PwC works
optimizing capital requirements, design        with companies to monitor Shariah
and development of management                  compliance function effectiveness. Advice
information systems, to managing the           is also available from PwC experts on the
impact of an insurer’s conventional            purification of non-Islamic income, cash
and Takaful/Retakaful portfolio. PwC           management and the custody of Islamic

                                                                                                                               PwC 11
Contacts

Islamic Finance                                      Private Equity
Colm Homan                                           George Holmes
+1 (441) 299 7116                                    +1 (441) 299 7109
colm.homan@bm.pwc.com                                george.holmes@bm.pwc.com

Belaid Jheengoor
+1 (441) 299 7190                                    Banking and Financial Services
belaid.jheengoor@bm.pwc.com                          Andrew Brook
                                                     +1 (441) 299 7126
                                                     andrew.brook@bm.pwc.com
Reinsurance
Caroline Foulger
+1 (441) 299 7103                                    Hedge Funds
caroline.j.foulger@bm.pwc.com                        Scott Watson-Brown
                                                     +1 (441) 299 7156
                                                     scott.watson-brown@bm.pwc.com
Captive Insurance
Richard Patching
+1 (441) 299 7131                                    Tax
richard.patching@bm.pwc.com                          Rick Irvine
                                                     +1 (441) 299 7136
                                                     richard.e.irvine@bm.pwc.com

12 Bermuda: Islamic finance hub in the western hemisphere
www.pwc.com/bermuda/islamicfinance

PwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 161,000 people in 154 countries in firms across the PwC network share their
thinking, experience and solutions to develop fresh perspectives and practical advice. See www.pwc.com for more information.

© 2011 PricewaterhouseCoopers. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers (a Bermuda partnership), which is a member firm of PricewaterhouseCoopers
International Limited, each member firm of which is a separate legal entity.
You can also read
NEXT SLIDES ... Cancel