Unique opportunities offered for investors in Malta

The world is currently struggling with its identity. Overnight, from a place of globalisation where cross-border movement was at its height, humankind found itself in a state of travel limitations, border restrictions and introspection, and all because of a microscopic but highly contagious virus. Media coverage of curfews, quarantines and doctors decked from head to toe in full protective body gowns at hospital beds looked like cuts from post-apocalyptic movies. Citizens of the world put their physical and mental brakes on, to take stock of their personal, professional and social situations, while political contexts baulked under pressure.

Never before had we felt our freedoms so restrained, checked and limited. Never before has liberty of movement been so valuable. And never before has second residency been a more attractive proposition. Traditionally, families look at residency-by-investment as a means to have an alternative home in a safe and secure place, in case things go wrong in their country of domicile – a plan ‘B’ that puts their mind at rest. From geopolitical unrest to lack of educational opportunities for their children or a dearth of investment possibilities, a second residency gives individuals and families a kind of insurance, a guarantee of a sound fall-back position, and a plan for a better future and lifestyle for their families.

Our industry has not been spared the impact of COVID-19. However, ironically, there has also been increased interest in residency-by-investment propositions. It is easy to see why. People want to live in jurisdictions where their health and safety are guaranteed. Families want fast and easy access to good healthcare that can be life-saving. Entrepreneurs want to operate in markets that are sound and that have growth potential even in the face of adverse economic conditions.

An attractive proposition
There is an excess of motives as to why Malta is an alluring destination for investment migration. Malta combines island life with European standards and a multi-cultural ambience. An archipelago in the middle of the Mediterranean just south of Sicily, the country boasts a mild climate and over 300 days of sunshine, pristine beaches, a rich history and heritage and an outdoors lifestyle. This, however, is contrasted with a strong economy, highly regulated industries, and membership of the European Union, the Commonwealth, the Schengen Area and the Eurozone.

Malta combines island life with European standards and a multi-cultural ambience

Malta’s strategic location and its geographical proximity to Europe, North Africa and the Middle East means it is well connected to the main regions and markets of interest with numerous air and sea links. Malta has world-class healthcare services, easily accessible via reasonably priced health insurance. The country registered impressive Covid vaccination stats that dominated the EU tables – the result of a strategy that coupled opting for full allocation when purchasing vaccines, with a general awareness of the importance and benefits of getting vaccinated. At the height of contagion, health authorities gave daily public briefings to keep citizens well informed while introducing general restrictions that helped mitigate the spread.

The country offers excellent educational opportunities with a range of state, church and independent schools, as well as a 400-year-old university and a college of arts and sciences. With English being an official language and the language for doing business, expats will have no issues communicating with locals and settling in will be easy. Indeed, Malta is one of the safest countries in the world, with a negligible crime rate. This should attract families who would like to spend their time in an environment where children are safe and women go out for early-morning jogs, secure in the knowledge that no harm will come to them.

Doing business
Investors and entrepreneurs look for jurisdictions with robust and growing economies, high regulation, government support and industry demand. Malta has all these elements while constantly garnering positive ratings from credit agencies and topping the EU charts for economic growth, even in Covid’s aftermath. The government has in place a number of interesting business support agencies that are geared to help entrepreneurs startup or expand their operations.

And with Malta’s size and composition, it doubles up as a fully-fledged test market for new products and services. Booming industries include hospitality, aviation, pharma, maritime, financial services, gaming, film and the knowledge industry. These industries are supported by a strong broadband infrastructure and e-government services.

Stay, settle and reside
The Malta Permanent Residence Programme (MPRP) is a property-based residency-by-investment programme that gives beneficiaries the right to stay, settle and reside permanently in Malta with visa-free access to the Schengen area for 90 out of 180 days. Investors have the option to purchase or lease property, while making a direct contribution to the Maltese government. They should also make a donation to a local registered non-governmental organisation in the areas of philanthropy, culture, sport, science and animal welfare. The aim of this initiative is to build links between residents and the local community.

Up to four generations may apply, enabling family relocation. Applicants and their dependants must go through a four-tier due diligence exercise that ensures that only fit-and-proper individuals and families are given Maltese residence status. To ensure rigour in the application process, applications are submitted via regulated and licensed agents, who will act on behalf of applicants. The programme is straightforward and competitive and we promise a processing time of four to six months from the submission of a complete and correct application. With such a brand promise, applicants can put their mind at rest that it will not be a long-drawn-out procedure.

Embracing the nomadic lifestyle
The pandemic also gave the final blow to the concept of the traditional workplace. When remote working kicked in for the masses in order to control the spread of the virus, it was a first test of a more flexible working arrangement for many. The future augurs well for sustainable hybrid arrangements that give flexibility and improve work-life balance, but also reap benefits for employers.

So, with teleworking no longer the prerogative of the few, many will be seeing how to best exploit this newfound way of working remotely. For those in the knowledge-based industries, working from one country while giving services to employers and clients based in other parts of the world is now even more doable. Malta was quick to react to this trend with the launch of a new Nomad Residence Permit intended to give non-EU nationals the opportunity to work remotely from Malta for a temporary period. Malta already hosts a significant digital nomad community made up mostly of EU nationals who do not require any permits due to freedom of movement. The new permit is intended to reach new niches beyond Europe, as travel restrictions ease once again enabling global mobility.

Applicants who wish to work remotely from Malta, for a temporary period of up to one year, must prove they can work remotely, independent of location. They should either work for an employer registered outside of Malta, conduct business activity for a company registered outside of Malta, and of which they are partners or shareholders; or offer freelance or consulting services to clients whose permanent establishments are in a foreign country. The process is straight-forward and Residency Malta promises an efficient service that discerning nomads expect. To conclude with a famous quote – “the only constant in life is change”. We must all react with agility to what happens around us and find solutions to personal, social and professional challenges that offer us better futures. We believe these solutions can be found on the Island of Malta.

More information about the MPRP and about Malta’s Nomad Residence Permit may be found online at residencymalta.gov.mt.

Strategic investment clears a path through the crisis

It is a well-known fact that the pandemic has had far-reaching consequences on the global market beyond the outbreak of the disease itself. Nevertheless, amid a year of economic distress, one cannot overlook the resilience that major financial institutions in the Gulf market, such as National Investments Company (NIC), have shown during times of turmoil.

Established in 1987, National Investments Company is a leading Kuwaiti asset management and investment bank. The company takes pride in its dynamic and agile approach in a fast-changing environment. As a result, the company has been able to report a total comprehensive income of $73m in the first half of 2021, after registering a total comprehensive loss of $19.2m in the comparative period of 2020 (see Fig 1). In addition to these achievements, the company received three prominent awards in 2021. Firstly, the ‘Best Wealth Management Award, Kuwait 2021’ by Global Business Outlook for its successful record in serving high-net-worth individuals. Secondly, the ‘Best Investment Management Company in Kuwait for 2021,’ by International Business Magazine, a leading publication in the world of business and financial investment, headquartered in Dubai. And finally the ‘Best Asset Management Company of the Year, GCC 2021’ from financial platform Global Banking & Finance.

Manoeuvring through crises
The positive return in NIC’s H1 2021 occurred as the company was quick to capitalise on opportunities by shifting the tactical allocation of its funds and client portfolios towards sectors poised for recovery. The CEO of NIC, Fahad Al Mukhaizim, explained that Boursa Kuwait witnessed unprecedented circumstances due to the pandemic. By thoroughly analysing the market and understanding the reasons behind the changes, the company’s investment banking team took decisions that resulted in exceptional returns for its clients.

One of the examples was the acquisition of a significant stake of Boursa Kuwait, a strategically important asset with strong, recurring and sustainable cash flows due to its market leadership position and improving prospects. Since acquisition, Boursa Kuwait has undergone an IPO and listing process resulting in a gain of several multiples of NIC’s acquisition cost. The second case study was the acquisition of Kuwait Foundry, a mispriced asset with intrinsic value significantly greater than the prevailing market value. The investment offered an identifiable path to realisation of true value. Towards this, NIC acquired a 21 percent stake in January 2019 and have been taking measures to realise value. So far, the company has recaptured most of its equity in the transaction already and the total return multiple based on market value is 1.41 times.

Market leadership
Al Mukhaizim elaborated that the company has built specialist teams in key potential areas such as equity capital markets, mergers and acquisitions, and venture capital as part of its long-term strategy that provides NIC with an excellent platform to execute flagship transactions.
In 2021, NIC completed the financing mandate for a leading fitness and lifestyle business and has listed Al Safat Investment Company, a fully-fledged investment-licensed company with a capital of $85.2m. In addition, the team started a strong pipeline of other mandates, including a buy-side transaction for a leading logistics company, one of Kuwait’s largest multi-sector businesses. And, it is currently working on two flagship pre-IPO mandates, expected to complete in 2022 and 2023, as well as contracts to provide general advisory services.

Diversification and innovation
Technological innovation and the adoption of digital services have expedited since the emergence of COVID-19 and there are no signs of stopping. The technology sector has been one of the most attractive and high-performing sectors due to its record growth in the past few years. Consumer and business spending in this sector has boosted tech stock price targets and increased share prices, reaching new highs.

Harkening to the developments in this sector, NIC followed a technology investment strategy and invested in several global and regional venture capital funds as well as direct investment opportunities. The investment banking advisory team focused on supporting companies and founders, as well as venture capitalists that are likely to disrupt several industries, including financial services, data security, software, mobility, healthcare, and food. The strategy is to invest in projects and companies that have clear potential to make a huge impact on their respective industries and eventually the regional landscape.

Exemplary transactions include NIC’s recent investment in Pipe Technologies as part of its expanding investment strategy targeting the technology sector. Pipe Technologies is a fast-growing US-based financial technology company recognised as the world’s first trading platform for recurring revenues, with a recent valuation of $2bn. Its valuation increased in just under a year since its launch in 2020, making it one of the fastest financial technology companies to reach this rating in history. In addition to the Pipe investment, NIC has recently invested in several global and regional venture capital funds as well as direct investment opportunities. The direct opportunities include NotCo and Darktrace. NotCo is one of the most exciting food technology firms focusing on plant-based alternatives, utilising patented AI technology.

Darktrace is one of the global cyber-security champions, also using AI technology, in this case to help clients thwart cyber-attacks. Meanwhile, the investment banking team is in the advanced phase of due diligence to invest in a leading regional VC platform specialising in delivery.

Unrivalled partnerships
“At NIC, not only did we assess the market behaviour and investment projects during the heart of the pandemic, we also acknowledged the impact of the pandemic on our clients – as human beings. We care about our clients and this had to be translated into action during times of crises,” stated Al Mukhaizim. Accordingly, NIC’s objective was to provide a seamless customer experience that would recognise their psychological status and physical restraints during the uncertain times of the pandemic. Acknowledging what the clients are going through on the other side of the coin has prompted NIC’s evolvement plans to launch an electronic portal, the ‘Market Maker’ service, and support their clients in times of stress by understanding their individual needs and addressing these by offering highly personalised services.

The NIC electronic portal was launched to grant customers direct access to their account so they can view all their investments and the performance of their portfolios through one window integrated with their personal devices. Adhering to social distancing measures, and recognising the series of lockdowns that have occurred in Kuwait and the region, the electronic portal connects clients with their account managers at any time through one application. The service also enables customers to manage their accounts, follow up on investments, carry out withdrawals and deposits, obtain reports on portfolio performance and allows them to update their profiles.

Though the market was significantly impacted by the pandemic, NIC has demonstrated a successful example of strategically capitalising on challenging situations and turning them into opportunities for growth and evolvement. Applying best practices in investor relations and corporate communication has definitely played an important role in cultivating NIC’s relationship with its clients amid an economic crisis.

Investae is emerging as a true leader in fintech

Investae is a fintech with offices in London and Moscow, which prides itself on serving clients in over 30 countries. The company provides a licensed solution for investment firms, bond issuers, wealth managers, private bankers, and alternative investment fund managers, and is designed to make the capital-raising process easier.

Why is your solution new and competitive?
Our aim is to simplify the distribution of financial instruments, whether bonds, equity, real estate, funds, or any other type of investment product. We have gained a complete understanding of the main hurdles faced by investment distributors. We innovate by striving to simplify each step of the capital raising process as much as possible, so that investment managers can focus on what they do best: managing money. We offer a unique solution in the market, providing our clients with guidance, sales and marketing tools, ongoing support, and a continual improvement of results.

Nowadays, investors require a soft-skilled and educative approach, instead of simply being solicited

What’s more, Investae utilises artificial intelligence in the continual process of improving the solutions that we are providing.
For example, there is no longer a need to prepare materials describing each investment proposal in order to persuade your prospects. There is no need to even compose marketing emails. All you need to do is click ‘send’ while using our system. Our team members not only train our clients how to deliver their sales pitches, but they also prepare these investor presentations in advance. Our clients can benefit from the experience of each member of their sales team by gathering all objections and tricky questions into a single dedicated forum, what we call the ‘objection centre.’ It is designed to inform sales team members about the objections they could face, so that they are better prepared to overcome them.

How is the market evolving?
The financial world is changing fast and undergoing a digital revolution. Undoubtedly, it is becoming increasingly hard for anyone looking to raise capital to stand out in an overcrowded marketplace. Nowadays, investors require a soft-skilled and educative approach, instead of simply being solicited.

Similarly, financial professionals need an effortless, smooth-running, and time-saving sales process. We strongly believe that raising capital from investors requires a more sophisticated marketing approach, which utilises all the benefits that our varied digital tools bring into the picture. This is something the market currently lacks, and it is something we excel at. The sell-side of the investment industry has been left behind by asset managers who would often use approaches that are very similar to each other, yet lack efficiency.

What challenges are usually faced when raising capital among investors?
Potential clients are constantly bombarded with investment proposals. That is why it is hard to grab investors’ attention. However, the most common mistake many advisors make is they do not take their prospects’ wants and fears into account. They contact anyone that they think might be interested, following a blanket approach, which means that they do not know how to appeal to potential investors. That is the very problem we solve. Investae runs comprehensive training sessions for our clients, presenting the best techniques on how to secure meetings with prospects, grow their network, deal with indecisive and less financially educated prospects, and get them to respond.

How can your capital-raising tool be used?
Investae offers a platform that uses white-label licensing. As a result, the capital raising process is considerably simplified, which enables our clients to raise money faster: all marketing efforts are already in place, leading to a huge time saving. Companies are then able to hire new agents and distributors, add them to their existing teams, train them, and instantly manage their work. Thus, this tailor-made licensed platform will assist our clients’ own sales teams in selling their own products.

What are your objectives for the next five years?
Our team’s day-to-day efforts are directed to continually increase the value we provide. The primary goal of Investae is to widen the range of services we currently offer to various industries and sectors and gradually become the leading fintech company in the field of capital raising. We aim to change the entire appreciation of this process and bring it to the next level.

Leading the digital service rollout in the Philippines

The year 2020 blindsided the world with the Black Swan occurrence of the deadly Coronavirus disease that spread so swiftly across the globe and that had devastating consequences. Global activity ground to a halt, hampering economic growth as we paused to deal with this crisis. The healthcare industry was temporarily crippled, and the virus caused people to lose their jobs across all industries.

On the local front, the Philippines was faced not only with this devastating pandemic, but started and ended the year with natural disasters – from the unexpected eruption of the Taal volcano to the influx of typhoons during the latter part of the year. Reeling from all these, but most especially from the pandemic, the Philippine’s GDP suffered its biggest annual contraction on record at negative 9.6 percent, year-on-year, according to the Philippine Statistics Authority. Nonetheless, we must salute our selfless overseas Filipino workers who, in spite of global lockdowns and mass layoffs, found ways to send more money back home to help support their struggling families, with total remittances decreasing by 0.8 percent in 2020, dismissing a rather more grim forecast of a sharper fall due to the pandemic.

Highest growth in 33 years
Despite the challenges during these past two years, the Philippines has seen a gradual improvement quarterly, year-on-year, 2020 to 2021. From its worst dip in the second quarter last year, GDP posted a record high of 11.8 percent growth in the second quarter of 2021, year-on-year, the highest since the fourth quarter of 1988. This robust performance may be a result of the ‘base effect’ as some analysts claim. Some optimists nonetheless reason that this is a result of the gradual improvements in business confidence as the economy learns to live with the virus and the hope of a safer future with the vaccine roll-out in March. Following the performance of the economy, the Philippine non-life insurance industry faced its toughest and most challenging year as COVID-19 redefined the ‘face-to-face’ norm of insurance business transactions, with most insurance companies pivoting their business operating models and systems. Considered a non-essential sector, and thus not operational for several months during restrictive quarantine status, this propelled insurance companies to embark on more aggressive initiatives towards the digitalisation of operations. The non-life insurance sector’s business portfolio contracted by 9.3 percent at PhP83.8bn ($1.7bn) with total net premiums written posting a 16.2 percent negative growth at PhP49.3bn ($984m).

In terms of profitability, however, net income leaped by 65.8 percent to PhP5.7bn ($113.8m) as losses spiralled down 20.9 percent to PhP21.5bn ($429.2m). With lower claims incidences during the lockdown period and operational efficiencies partly brought about by work-from-home arrangements for the whole year, these somehow balanced off the decreasing premiums, hence maintaining the non-life insurance sector’s profitability. The loss ratio in 2020 was therefore at 41.7 percent versus 49.1 percent in 2019. On the whole, despite the challenges of the pandemic, the non-life insurance industry remains strong and stable with aggregate assets and net worth ending a challenging year with increasing growth rates at 7.96 percent and 7.66 percent at PhP280.2bn ($5.6bn) and PhP105.6bn ($2.1bn), respectively.

The route ahead
Moving forward, the non-life insurance industry is optimistic that it can recover lost ground and exceed expectations as the administration is fast-tracking its vaccine programme, imposing more localised and granular lockdowns, thereby reducing the drag on the economy. In addition to this, it is expected that the sale of new motorcars will lead to an annualised growth of 18.2 percent based on motorcar sales as of July 2021, so insurance premiums on these will naturally move up substantially relative to last year.

Nonetheless, to remain relevant, insurance companies need to advance technology as innovation will be an important component of the future. Equally important, artificial intelligence (AI) will be integral to better underwriting capabilities. There is no path back to pre-COVID, only a path forward to the post-COVID market, accelerating digital infrastructure and product offerings to meet the evolving demands of the market with minimal human intervention.

As we leave the most challenging year so far, we send our overwhelming gratitude to our colleagues and associates, our clients, our business partners and to everyone who went the extra mile during the global health crisis. The year leaves with us a reverberating memory of a sense of awe at how people can naturally adapt to a Black Swan situation and be resilient, tolerant, and empathetic in dealing with a diversity of challenges during this global COVID-19 pandemic; but at the same time, move on with a sense of caution, hopeful and optimistic that this too shall pass. We shall continue to face all difficulties with gratitude, strength, perseverance and we, together, shall work hard for a sustainable, dignified and fulfilling future. We should look beyond the short-term ‘new normal’ and towards the long-term ‘new normal,’ towards sustainability.

Continuously upgraded
Through all these difficult times, we turned challenges into a wealth of opportunities as Standard Insurance has been well prepared for catastrophic events. Our systems are all digital, integrated and upgraded continuously. Everything is online, whether for internal or external customers. All of our systems are also in the cloud, having migrated all of our systems onto the public cloud years ago, making us possibly the first domestic insurer to be an Amazon Web Services partner. The company’s ISSIoffice plus is an ‘insurance office in an app’ and is accessible via smartphone or any telecomputing device and is another platform that allows one to do the whole insurance cycle. These allowed us to fluidly adjust to the work-from-home arrangement.

Yes, we took a quick pause immediately after the declaration of the community lockdown in March, to check on our people nationwide, ensuring that all our associates were cared for and kept safe so that they too would care for our customers. When it comes to caring for each other, everything is personal to us at our company. After all, that is the very essence of our massively transformative purpose (MTP), ‘peace of mind for all mankind,’ starting with our associates. It is an MTP that we try to ingrain into our DNA so that we are guided by this in all aspects of our operations.

With everyone settled and secure of their future, we immediately plunged into the business of the day, maximising our digital capabilities while easing into the new ways of doing business and conducting meetings using the different platforms of digital communications. We looked at the ‘new normal’ just as a way of looking at and doing things from a different perspective. As long as we persevered and continued to focus on proper underwriting, intelligent pricing across all lines, fast and accurate claims turn-around, and sustainability in the long run, we knew we would be okay. As our Swiss independent director always likes to say, “If it doesn’t make cents, it doesn’t make sense.” Correct business decisions and sales, profits, cash flows, and balance sheets that we understand and can count on, are critical to the welfare of all of the enterprise’s stakeholders, especially during these times.

Furthermore, we strongly believe in both the power of an individual to make a difference, and in the greater power of individuals moving together as one enterprise. More importantly, we are in a unique position of working with a diversity of generations in our workforce, made up of millennials, generation Xers, late baby boomers, and even early baby boomers, with the latter two categories still very much able to work and learn. Getting the best out of the mix of all four generations is a highly challenging but necessary and worthwhile endeavour. We believe that combining the different but existing concepts and people in novel ways creates the products, companies and industries of the future that will surpass and overcome any adversity.

Utilising technological advances
Another unique position is having the capability to be data scientists, having the fundamental product of an insurance algorithm. As such, we have the capability to optimise a large database and engage in mutually beneficial customer-to-company interactions, and drill down on revenues, recurring losses, expenses and investments. We utilise technology to do this and consider it an imperative, recognising that these tasks require the often severely and chronically under-tapped computing power of today. This predictive and advanced analysis goes a long way in enhancing and updating our underwriting and pricing strategies, among others. These last two years brought out both simple and complex innovations of doing business, of delivering despite the challenges of lockdowns and quarantines, of consistently providing quality service to our customers and business partners. We successfully rose to the evolving demands of the market, in terms of innovative products and services.

To remain relevant, insurance companies need to advance technology as innovation will be an important component of the future

We further enhanced our market footprint across digital platforms as well as in physical sales offices in untapped and business areas with high potential. Moving forward, we continue to strive to be better and make an impact, making meaningful connections through well-established distribution channels, harnessing technology to improve our accessibility. We continue to bridge the gap with our strong presence in key cities, with the aim of bringing our products to where you are. We are building a collaborative network as we diversify boldly and expand globally. We are forging strong connections with leading institutions and broadening the spectrum of our local and international clients. Standard Insurance continuously strives for excellence in both national and international arenas, serving the needs of the insuring public according to global standards.

World Finance awarded us the ‘Best Non-Life Insurance Company, Philippines for 2021,’ for the eighth time, even at the height of the pandemic. Equally important, Global Credit Rating upgraded our financial strength ratings to A+(PH) (single A plus) and an international scale rating of BB (double B). We also maintained our ISO 9001:2015 certification by SGS International.

A sustainable future
Finally, the world is insisting that we do things sustainably. Let us all do things that create sustainable lives for everyone: work towards cleaner water for others; more nutritious food for others; cleaner energy for others; let us work towards a future in which we are able to live, work and study in clean and safe neighbourhoods without having to commute expensively for hours; let us be part of a society that provides more equality in terms of opportunities (even if there will always be some who will strive more than others).

We will always respond rapidly no matter what crisis falls in our way. With our massive team of claims experts, highly advanced digital platforms and total insurance infrastructure, we are attuning ourselves to all important challenges and needs, and with our strengths, we are making a difference, the way only we can

Championing participation insurance in Turkey

Bereket Sigorta was established in 1995 and provides services within the framework of a multi-sales channel business model with the motto ‘just in case.’ By 2017, it was serving in more than 500 locations, in places where other insurance companies do not have any distribution channels, and continues to meet the demands of customers all around Turkey with a wide range of products for all. It has a widespread and efficient supply network of over 3,300; consisting of 10 regional directorates, agencies of Agricultural Credit Cooperatives of Turkey, participation banks, saving financing companies, agencies and brokers.

Agricultural Credit Cooperatives of Turkey, the main shareholder of the company, was founded in 1863 and is the largest farmer organisation in Turkey, with total assets of €4bn and more than 850,000 members. With the all-encompassing support of Agricultural Credit Cooperatives of Turkey, Bereket Sigorta has set out to create a model for participation insurance based on taking the lead in the market to restructure insurance products so that they are in compliance with Takaful principles. Bereket Sigorta has developed an exemplary model for the sector called ‘the performance supported incentive proxy model.’ The model was created with the vision of being the benchmark for participation insurance. The idea is to offer positive balance sharing incentives over the profitability of the entire pool without separating income from investments.

What is participation insurance?
Participation Insurance is a type of insurance based on the idea of solidarity. It is built on a system that is far from the traditional economic and financial practices, with interest and activities that are considered forbidden, or ‘haram’ in Islam. It can also be defined as a type of insurance created to meet the insurance needs of individuals who stay away from traditional insurance for religious reasons. In this type of insurance, insurance activities based on risk sharing and cooperation among the participants is carried out.

Participation insurance refers to the insurance practice in which financial assets are managed within a special framework and under the supervision of an advisory committee consisting of experts in the field of Islamic sciences and insurance. In accordance with the principles of participation, companies can’t guarantee religiously illegitimate issues and risks, or manage financial assets within the framework. They must establish an advisory committee and a compliance unit and prepare a participation internal audit report.

The basic principles of participation insurance are to evaluate premium/donation collected from capital owners and participants within the framework, check which are in line with Islamic principles and submit for the approval of the advisory board, which is specialised in Islamic law, for insurance business and transactions. Participation insurance began in Turkey in 2009 and it has shown serious development due to the growth of the interest-free finance sector as well as the regulations introduced in the last decade or so.

As part of the medium term programme (2022–24) published by the T.R. Presidency, Presidency of Strategy and Budget, actions to ensure compliance with international standards in the field of participation finance and to expand participation insurance are included. In this context, participation insurance, as long as it is presented correctly to the segment it addresses, will continue to be an important potential source of funding.

Navigating a crisis
The company operates across all branches including motor, traffic, fire, housing, engineering, agriculture, health, personal accident, transportation, legal protection, TCIP and liability insurance, and continues to progress rapidly in the sector with its technological infrastructure and digital solutions. With its dynamic and innovative brand vision, Bereket Sigorta continues to swiftly progress at the point of customer experience with more than 100 robotic applications in operational business processes and 24/7 service through digital platforms of individual internet and mobile branches.

Participation insurance, as long as it is presented correctly to the segment it addresses, will continue to be an important potential source of funding

With the effect of quarantine and restrictions during the pandemic that affected the whole world, the company highlighted its online sales channel, took quick action and increased the efficiency of its digital channels. As a part of the digital transformation process started in 2019, Bereket Sigorta became the first company to offer online insurance products through the instant messaging service BIP, which is like the Turkish version of WhatsApp. Through our application, customers can buy insurance products and access information from agencies and authorised services. Bereket Sigorta, which implements the first and unique participation model in Turkey, continues to stand out in the sector with all kinds of corporate social responsibility projects and collaborations that will contribute to the sustainable growth of the participation finance ecosystem as well as the faster and healthier development of participation insurance.

It contributes heavily to the spread of participation insurance through public institutions, non-governmental organisations, universities, associations and sports clubs, with a special focus on corporate social responsibility projects. Within this scope, Bereket Sigorta worked with the Turkish foundation for waste reduction (TI˙SVA) and provided $101m coverage to more than 55,000 women entrepreneurs as they take important steps into economic life.

In order to encourage low-income women entrepreneurs within the agricultural sector, the ‘women farmer loan’ project, which includes basic agriculture and basic financial literacy training, was implemented in cooperation with Tekfen Foundation and TI˙SVA. This programme, implemented as a social management project, allowed the provision of support for low-income women farmers in the Aegean region of Turkey.

To deepen the participation finance ecosystem and spread the participation insurance to the base, a protocol was signed between the independent industrialists and businessmen association (MUSIAD) and Bereket Sigorta, with the idea of becoming a ‘unifying force in the economy.’ With this cooperation, discounted insurance products for MUSIAD women, young members and employees are offered, as well as membership of Bereket loyalty club, which provides advantages in many areas of daily life from shopping to personal development.

Continued excellence and growth
Participation insurance constitutes approximately five percent of the insurance sector premium production in terms of volume and this will likely increase to 10 percent in the coming periods. According to data compiled from the union insurance and reinsurance companies of Turkey (TSB), the total premium production in participation insurance in 2020 increased by 24.2 percent compared to the same period in the previous year and reached 4.3 billion TL ($460m). There are 10 companies operating in the field of participation insurance and they represent a significant proportion of production, having the largest share in premium production.

Bereket Sigorta received two awards at once in the categories of the ‘Most Reliable Participating (Takaful) Insurance Company in Turkey’ and ‘CSR Excellence and Dedication to Community in Turkey’ within the scope of the 2021 Islamic Finance awards presented by World Finance.

This accolade is in recognition of Bereket’s leadership and for demonstrating remarkable vision in identifying tremendous opportunity in the greatly underserved Turkish market, while simultaneously answering community needs for participation insurance. Bereket Sigorta’s successful nomination is not only due to its long-standing records of expertise in risk management, but also for its compelling business plan, mobilising highly qualified professionals with procedural know-how, allocating resources and being able to make outstanding progress in a short period of time.

How one company is planning to revitalise a region

The Irkutsk Region of Eastern Siberia is prosperous in gas resources, but gas supply is in little use for industrial needs or residents — gasification of the region is only about 10 percent. Natural gas in Eastern Siberia has not been in demand for decades due to a lack of transportation infrastructure and sales markets. That’s all set to change with the commissioning of the Irkutsk Polymer Plant in the district of Ust-Kut.

As Yakov Ginzburg, General Director of Irkutsk Oil Company, a parent company of Irkutsk Polymer Plant, says: “Reasonable environmental management and the search for new business development areas in the face of OPEC+ oil production restrictions were the key triggers for transition into the vertical petrochemical enterprise.”

Since 2014, the company has been forming a gas chemical cluster in the north of the Irkutsk Region, which includes gas production, treatment, transportation and processing facilities, two helium plants, and a polymer plant. It is estimated that total investments in gas projects will amount to 500bn Roubles ($7bn); 200bn Roubles ($2.8bn) have already been invested. Gas processing plants and a gas fractionation unit are also scheduled for commission in 2022.

The first helium plant will be put into operation in 2022, with a second plant scheduled to start operations in 2025. The total production output is expected to be 15–17 million litres of liquefied helium per year, turning the Irkutsk Oil Company Group into the second largest helium producer in Russia and among the top 10 in the world.

The Irkutsk Polymer Plant – the construction of which is now 40 percent complete – is the largest component of the gas chemical cluster. It is scheduled for commissioning in 2024, with a production capacity of 650,000 tonnes of commercial grade polyethylene per year.

More than 2,000 people are currently working on the site of the plant, with the Japanese engineering company Toyo Engineering responsible for design, equipment and material supply, and Gemont (Turkey) working as the general contractor on both the polyethylene and ethylene plants. Engineers and labourers come from all over Russia, as well as from Japan, Turkey, France, Holland and the USA. At the end of 2022 the number of employees will increase to between 7,000 and 8,000.

The total cost of the Irkutsk Polymer Plant is estimated at 250bn Roubles ($3.5bn), which includes the construction of a housing estate for the plant’s employees in Ust-Kut. Compared to initial estimates, the amount has increased due to the rise in the cost of materials including steel and concrete, as well as labour costs for construction and installation work.

Irkutsk Oil Company has developed its own energy-saving and green technologies

During 2020 and 2021, earthworks and foundations for large equipment were carried out at the site, the installation of which began in June 2021 and was completed in September. In total, 44 units of large equipment have been installed at the polymer plant. They were delivered to Ust-Kut from the South Korean port of Masan via the Northern Sea Route in the summer of 2020. A 500-tonne purge bin was the last piece to be assembled. Installed in a metal frame at a height of 60 metres, it required two cranes with lifting capacities of 1,600 (the largest in Russia) and 750 tonnes.

One hundred thousand cubic metres of concrete had been poured by the start of November this year, though that figure will have more than doubled by the end of the project. For comparison, 20,000 cubic metres of concrete were used in the construction of the foundations and concrete trunk of Moscow’s Ostankino Tower, the tallest freestanding structure in Europe. The next stage of work at the site is to install 1,100 pieces of small equipment, auxiliary equipment and systems.

Overcoming the challenges of the region
Ust-Kut, like most northern territories, has many problems. In the 1970s, during the construction of Baikal-Amur Mainline railway, it was a pleasure ground for the youth of the Soviet Union. After that, the era of stagnation began. A lack of modern social and community facilities and infrastructure, modern healthcare system and good quality education, as well as deteriorated utilities, have all been a catalyst for migration away from the region. These issues remain unresolved to this day.

Polymerization reactor
Polymerization reactor

One of the challenges facing this ambitious project is a labour shortage – the launch of the polymer plant will create 1,600 new jobs. Tempting workers to relocate to Ust-Kut to fill those roles will be key to the plant’s success. In order to ensure comfortable living conditions for its personnel, the company decided to build a residential zone with capacity for 3,000 people, ample not just for plant employees but their families too. Among the facilities on offer, which will also be available to existing residents of Ust-Kut, are 30 housing developments, a school for 520 pupils with a swimming pool and a stadium, and two kindergartens. Commissioning of the first apartment buildings will coincide with the start-up of the plant; the entire complex will be ready by the end of 2025.

The Irkutsk Oil Company has played a vital role in supporting the region’s health system over the course of the pandemic, donating over 700m Roubles (approx $9.1m) so far. One of the key projects was the construction of a modern hospital with its own oxygen station for COVID-19 patients in the city of Ust-Kut. The 60-bed medical facility has single and double wards with modern equipment. The company has also contributed medicines, personal protective equipment and medical devices to other hospitals and medical institutions in the region.

A greener future
In Russia, as in the rest of the world, the green agenda has become mainstream. The Irkutsk Oil Company has long been ahead of the curve, implementing as far back as 2009 the sorts of projects that other companies only began adopting with the arrival of the ESG agenda in recent years. Irkutsk Oil Company, for example, was the first in Russia to launch recycling as part of its processes – the reinjection of gas into the reservoirs.

The company is actively engaged in reforestation, planning to plant seedlings over an area of 3,000 hectares by 2023. It’s also engaged in bioresource restoration: 500,000 juvenile graylings were released into the Lena River in the summer of 2021. An additional 120,000 fry are still to be released into the region’s water bodies. In addition, Irkutsk Oil Company has developed its own energy-saving and green technologies, and no PET water bottles are allowed on company property.

There is always scope for new ESG opportunities. A feasibility study is being developed in cooperation with Japanese partners for the production of blue ammonia, for example, a product considered to be the fuel of the future as it does not emit greenhouse gases (CO2). The company’s specialists are also studying the technologies of CO2 capture, injection and processing, as well as methane emission reduction. The company plans to create an eco-industrial park for on-site recycling.

Irkutsk Oil Company is laying the foundation for a better future and playing a vital role not just in its own industry, but in its attempt to revitalise a region and play an active part in a global agenda for change.

Building new frameworks for a better financial future

Formerly known as Visor Capital, Tengri Partners Investment Banking (Kazakhstan) JSC (Tengri Partners) was founded in 2004 with the aim of creating the best regional investment bank in Central Asia. Tengri Partners provides a full range of investment services and products in Kazakhstan, including – but not limited to – investment banking, securities trading and brokerage, industrial analysis, and investments. The company’s activities were recognised by World Finance, which awarded Tengri Partners the honour of the ‘Best Investment Bank in Kazakhstan’ in 2019 and 2020.

Paving the way for development
In 2018, Tengri Partners made its debut in bringing AAA-rated development financial institutions (DFIs) to the capital market of Kazakhstan. Thus, the company was first to place bonds of the International Finance Corporation (IFC) denominated in tenge on the Kazakhstan Stock Exchange (KASE) with a total volume of KZT8.6bn ($25m). For the first time, DFI bonds were included in the basket of government securities, which increases the attractiveness of the instruments for investors and, subsequently, bolsters the market activity. The transaction became a landmark event in the history of the development of capital markets in Kazakhstan. Following the IFC, Tengri Partners has successfully placed international bonds in tenge with such DFIs as the European Bank for Reconstruction and Development (EBRD) and the Asian Development Bank (ADB). The total issued volume of the AAA-rated DFI bonds in tenge in Kazakhstan currently amounts to KZT722.5bn ($1.83bn) – all of which were placed by Tengri Partners.

Introducing ESG financing
Although the topic of green financing is gaining widespread popularity in developed markets, it is too early to compare the performance of a given asset class to the conventional instruments as it is at an early stage of development in Kazakhstan. The first green bonds in Kazakhstan were placed by the ‘DAMU’ Entrepreneurship Development Fund JSC on the Astana International Exchange (AIX) in August 2020.

In turn, the debut issue of green bonds on the KASE platform is attributed to the ADB placement in November 2020 with Tengri Partners acting as a sole arranger. ADB tapped the market with two medium-term notes in the total amount of almost KZT14bn ($32m). The proceeds went to projects aimed at lowering or eliminating greenhouse gas emissions, as well as lowering the vulnerability of anthropogenic or natural systems to the consequences of climate change and enhancing resilience and adaptability.

Newly introduced green bonds demonstrated high appreciation by market participants reflecting oversubscription of 283 percent and 179.5 percent and negative spread of 10–12 bps to the government bonds despite a highly competitive environment with the ministry of finance and competition of high-grade SOEs for the spare liquidity at the time of placement.

Along with green bonds, ADB also launched the debut placement of gender bonds in Kazakhstan aimed at the achievement of gender equality and the promotion of women’s empowerment. Tengri Partners participated in this deal as a sole arranger placing about KZT8.4bn ($20m) worth of ADB bonds on KASE. Proceeds were directed to the ‘Promoting Gender Equality in Housing Finance Project,’ which focuses on increasing the lending operations of the Otbasy Bank House Construction Savings Bank JSC and promoting affordable residential mortgage loans for female borrowers in predominantly rural regions. Overall, the ESG bond market in Kazakhstan today amounts to KZT43.4bn ($102.4m), which already exhibits good opportunities for the development and stimulation of sustainable financing in the region.

Making securitisation work
Until recently, there were no precedents in Kazakhstan’s history of a multi-tranche securitisation of a mortgage portfolio based on the principle of ‘true sale’ adhering to the local law. That was due to several legislative and regulatory provisions that not only implied additional risk of loss of value for investors – especially in the event of SPV default – but also impeded fair reflection of the economic viability of the transaction and the quality of bond credit risk in the international credit rating.

Considering the amount of work and energy costs associated with initiatives to change legislation, a specific deal is often needed to clearly determine the ineffectiveness of certain provisions. Such a deal is the debut securitisation of the mortgage portfolio for the largest mortgage organisation in Kazakhstan – the Kazakhstan Housing Company JSC (KHC). It was initiated in 2019 in the amount of up to KZT26bn ($65m), and structured by Tengri Partners.

The preparation of the deal made it possible to identify the main barriers to the development of the market, gave impetus to a broad discussion of the issue at the legislative level, and served as a pretext for introducing key amendments to the legal infrastructure to bring it in line with global best practices.

The main limitation in Kazakhstan today, in comparison to more developed jurisdictions, is the lack of a full-fledged concept of subordination when registering several SPV bond issues within one bond programme. Although it is possible to prioritise the allocation of funds to investors from the proceeds on the underlying assets during the life of the SPV, the observance of such priority in the event of a default of the SPV contradicts the following provision of the law.

The second limitation is the lack of disclosure of how other parties in a securitisation transaction should be treated in case of default: service agent, custody, asset manager, management company, stock exchange, trustee, etc.

If the necessary amendments are adopted, the securitisation market in Kazakhstan has a great future

Initiated amendments by Tengri Partners and KHC account for all of these, allowing the trustee the use of cashflows from the remaining performing portfolio and recoveries for payment of third-party fees.

If the necessary amendments are adopted, the securitisation market in Kazakhstan has a great future. The reason for this is the growing loan market – the mortgage and car loan market, for example – amid a limited range of long-term funding instruments for local commercial banks and quasi-state-owned companies. In addition, given the high share of non-performing loans and, consequently, the high pressure on regulatory capital, securitisation may serve as an effective way to increase the level of banks’ liquidity and to provide capital relief without the need for government as previously observed with additional banks’ capitalisation programmes.

Global infrastructure practice
In 2021, Tengri Partners became a member of the International Swaps and Derivatives Association (ISDA). Membership in the international professional association will allow Tengri Partners to exploit the developed infrastructure of ISDA in the OTC-derivatives transactions, cooperate with industry experts on the issues of current interest, participate in the discussions of best practices and in the preparation of relevant regulatory documents. Thereby, Tengri Partners has proved that it is striving for active development of the company as a professional participant in the international capital markets and derivative instruments. Today, Tengri Partners is one of the few ISDA members in Kazakhstan.

Tracking the performance of TONIA
Overnight repo market is the most liquid segment of the capital market in Kazakhstan due to the large transaction volumes – about KZT400bn ($940m) per day – and many market participants: banks, insurance companies, funds, corporate treasuries. Tenge Overnight Index Average (TONIA) reflects a key short-term risk-free benchmark for the value of money in Kazakhstan’s financial market. In developed markets, government securities, corporate bonds, swaps and loans are linked to the analogous indicators (SOFR, SONIA, etc) to fairly reveal the change in the value of money.

In September 2021, Tengri Partners, in cooperation with EBRD and commercial banks, proposed an introduction of the TONIA compounded rate and TONIA compounded index indicators to the market on KASE. TONIA Index is a big stepping-stone to the development of the financial market in Kazakhstan assisting with liquidity enhancement and a wider range of instruments. TONIA-linked instruments will thus enable a more efficient way of investing in the risk-free money market, in comparison with the traditional rolling of position in the overnight repo market.

Launching the market analysis toolkit
In 2020 Tengri Partners commenced a PMI survey in Kazakhstan in partnership with IHS Markit that provides some of the most closely monitored reports of business activity worldwide. Thorough work has been carried out with IHS Markit in the development of the methodology and approach to calculating the PMI. The launch manifests Tengri Partner’s focus, which is to provide an essential entry point into Kazakhstan’s market for international investors and share vital analysis for investment decision, as well as to gauge market sentiment. Kazakhstan became the 44th country covered by the global PMI series from IHS Markit.

Despite turbulent conditions in capital markets over the course of 2020, and extreme volatility in the exchange rate, Tengri Partners has maintained all of its core business lines and remained focused on serving the needs of major institutional clients to a world-class standard.

Bringing Filipinos a global insurance experience

BPI-Philam, the strategic alliance that allowed AIA Philippines (formerly AIA Philam Life) to offer life insurance through the Bank of the Philippine Islands (BPI), now has a new identity as BPI AIA. The redesigned brand will use its global heritage to fulfil its commitment to provide accessible, affordable, and personalised insurance for Filipinos.

The rebrand is another step in the company’s commitment to forward thinking and continual innovation and evolution. It wants to be a world-leading insurtech that stands out for its advanced technology that allows customers to ‘experience the future.’ The firm was founded in 2009 and is among the top insurance companies in the country recognised by the Insurance Commission. Its bank partner, BPI, is the leading bank in the Philippines and Southeast Asia, with a heritage of financial strength and innovation over the past 170 years.

Meanwhile, AIA Philippines has been a market-leading insurance company for over 70 years under the AIA Group – the largest independent publicly listed pan-Asian life insurance group, with a presence in 18 markets across Asia Pacific.

Strength and commitment
“As BPI AIA, this rebrand further communicates our company’s stability and commitment to our customers,” Surendra Menon, BPI AIA’s CEO, told World Finance. “The challenges we all experienced in the past years brought extraordinary changes to our customers’ lives, and as their life protection partner, we also evolve to deliver the support they need and deserve.”

Menon says the rebranding will entail an overall boost in BPI AIA’s standards of doing business. There will be significant improvements in processes and the technology it uses to service its customers. Specifically, it will be utilising data and digital tools even more efficiently to craft not simply products but solutions that will help improve the lives of Filipinos.

“Meanwhile, our people will also be more involved in every step along the customer journey. We are constantly evolving and innovating to give our customers, partners, and people the best experience whenever they engage with our brand,” he adds.

As expected, there will be an ever-increasing range and standard of services geared to how customers’ lifestyles are changing at the speed that is comfortable for them. “What we bring to our customers are the same high standards in terms of product and service quality that AIA is known for,” he continued to explain.

Menon believes there are a number of advantages to aligning with the bigger umbrella that is the AIA Group. He says: “AIA has always been the North Star for us, we’ve always known we’ll adopt the AIA name one way or another.” AIA is a global brand that has had a positive association with the insurance industry for over a century now, so carrying the AIA name solidifies the company’s identity as a stable insurance company capable of delivering on its promises.

The mission at BPI AIA is to make sure that insurance is easy to get and easy to have for every Filipino, no matter what class they belong to

In addition, the global reinforcement of the AIA Group allows the company to tap into the industry’s best practices gained in the 17 other markets that AIA services in the Asia-Pacific region.

This will bring about continuous improvement in systems and processes, all aimed at the end goal of improving customers’ experience with insurance. BPI AIA already shares values, expertise, and levels of commitment with BPI and AIA Philippines. Customer centricity is at the heart of what they do collectively. “We are all working towards providing our countrymen with the appropriate financial solutions they need as they go through different life stages,” says Menon.

During the pandemic, BPI AIA prioritised ensuring the welfare of its own people so that they would be in a good position to help customers as soon as they needed it. Suddenly working full-time from home, teams rallied and continued business as quickly and as efficiently as they could.

The Philippine Insurance Commission approved digital selling and the company continues this practice today. Menon believes it is up to its customers to know whether they are comfortable with meeting with salespeople face to face; and if they aren’t, it’s absolutely understandable: “There are secure digital tools in place to provide them the services they require, without sacrificing their safety and peace of mind.”

Menon continued; “As the situation improves in the Philippines, we are looking forward to seeing more and more people come back into BPI’s branches and engage with our people again. But nonetheless, we have onboarded some of the latest technology that will allow for a more seamless, faster experience for our customers – and they work for both face-to-face and virtual.”

Service innovations
Aligning with the AIA brand in the time of a pandemic pushed for service and product innovations already scheduled to be developed and launched much earlier than planned. Systems and processes were streamlined and brought to life to improve the client service experience.

Many more innovations are expected from the entire AIA Philippines Group. These will include improving their self-management of policies via My AIA, a comprehensive health and wellness app with BPI AIA’s Total Health Solution and AIA Vitality, more payment options, and more customer touchpoints/communication channels. On top of all the digital developments on BPI AIA’s side, integration with their bank partner’s digital developments are at an all-time high – customers can expect a faster, more seamless interaction with BPI AIA through BPI’s mobile banking app.

Through one click of a button, a customer can use their own data to determine the best life insurance product the company has for them. Payments facilities through BPI are constantly evolving to include the latest and most secure payment channels customers prefer for their own convenience.

All these efforts together provide the fastest, most seamless customer experience. “We want our customers to feel the insurance experience of the future today – by having everything they need from BPI and BPI AIA just a few clicks away, on their mobile banking app or on our own platforms.

They can get insured virtually, manage their policy digitally, and even file their claims online – everything is there at their fingertips,” added Menon.

Protection gap
At present, insurance penetration in the Philippines is still very low. It is this huge protection gap that the combined companies are committing to address together. The geography of the Philippines makes it vulnerable to natural calamities such as earthquakes, volcanic eruptions, and typhoons. When there’s low insurance penetration in an economy, losses resulting from unforeseen events like these significantly limit economic and social development. There is an estimated PHP2.7trn ($54bn) protection gap in the country.

BPI AIA plans to help close it using its life, health, and income protection plans. It is making it its mission to come up with products that cater to various needs and different market segments to make a difference in the lives of its customers, and in the long run, help bridge that huge gap.

Community support
BPI AIA is committed to its ongoing initiatives. Financial literacy has always been central to the entire AIA Group. The mission at BPI AIA is to make sure that insurance is easy to get and easy to have for every Filipino, no matter what class they belong to. “We continuously work towards educating our countrymen on the importance of becoming financially literate and providing them with the skills and tools to do so,” says Menon. “Solutions such as microinsurance, for instance, have consistently been part of our offered products and services, and we continue to work with more partners nationwide to expand the reach of our microinsurance products and related solutions,” he continued.

Peace of mind
This all feeds into the company’s long-held desire to encourage its customers to live healthier (both physically and financially), longer, and better lives. “We share our philosophy that when you live healthily, you live well. And when you have peace of mind because you know your insurance will take care of everything when the unthinkable happens, you have more courage to live your life to the fullest,” said Menon.

Through the looking glass: innovating sustainability

As a company, BA Glass aims to go beyond just making glass containers. We aim to build a greener pathway by engaging different stakeholders to reduce the impact of our actions on the planet’s future. Given its natural properties, glass is the only packaging material that blends in with nature. It preserves the taste and ensures that there is no level of food contamination. Glass represents the safest material not only for humankind but for the world.

The industry faces continuous challenges regarding waste and gas emissions reduction, carbon footprint targets, talent attraction, and other materials’ competition, among many others. But not even a year of crisis with the global pandemic has prevented progress on topics such as sustainability, digitalisation, health protection and human wellbeing.

In fact, despite the unfavourable context, last year we accelerated the development of several projects that publicly express our commitment in the transformation of glass as the most sustainable and healthy packaging material on our planet. Furthermore, our shareholders decided to increase the environmental fund created last year, dedicating more than €7m to the cause. This fund supports research and development for CO2 capture and reuse initiatives.

In an era when the planet’s natural protection is under threat, environmental sustainability is at the heart of the group’s decision-making. Besides the internal goals and the public commitments shared in the Porto Protocol, BA decided to reinforce its public dedication to the environment. For that, another important step was taken at the beginning of 2021, as we joined the Science-Based Targets Initiative, an organisation that drives companies to establish ambitious science-based emissions reduction targets. We are now developing a roadmap that will enable us to reduce our carbon footprint by more than 50 percent by 2035.

Going green
Regarding green technologies, we continuously invest in our production facilities, implementing the most innovative ideas. In 2020, BA built a new furnace and rebuilt two others, and with these projects, a drop of 13 percent in energy consumption was achieved, representing a reduction of 23,000 tons in CO2 emissions. BA has been investing in clean energy and has a medium-term plan to cover the roofs of all the plants and warehouses with solar panels. With this investment, we expect to be reducing the annual CO2 emissions by more than 25,000 tons.

Additionally, BA has been working towards the increase of cullet in its production process, but its availability in the market is still below the needs of the industry. To promote and boost recycling behaviours in Europe, BA is proud to have joined the Close the Glass Loop Programme of FEVE. The goal is to reach a European collection rate of 90 percent by 2030, up from the current 76 percent, by joining forces with municipalities and recyclers.

But we seek more and we treasure the close relationships with suppliers, customers, consumers, and partners, which allows us to have real insights into their needs and concerns. In 2021, to respond to consumers’ demands for more sustainable packaging, BA launched ‘Pure,’ a new brand that aims to make glass more environmentally friendly through conscious design and production. ‘Pure’ has three distinct lines that express the different approaches to reach one same goal – to make the world a greener place. PURE Life, from BA’s conscious thinking and commitment of producing the most sustainable packaging. PURE Premium, from the consumers’ need of having a unique and special experience respecting nature.

And finally, PURE Innovation, that comes from the company’s ambition to challenge and be challenged by the market, its customers, and consumers. The constant drive for excellence, promoting benchmarking with other industries, and the sense of ownership and initiative of our people, allows the generation of new ideas and the implementation of innovative projects. The improvement of our production processes and the execution of several projects on BA digital transformation, are examples of it.

Therefore, we invite you to get to know more about BA’s commitments, on our social platforms, as well as our online sustainability reports. At BA, we believe we can make the difference with our people who dream about engineering transformations and of disrupting paradigms. We stand for our people, our customers, and our partners. And, like the glass we produce, we stand for life!

Outsourcing success in the post-pandemic era

In the wake of the COVID-19 pandemic, many businesses are choosing to go back to basics. The extraordinary circumstances of the past 20 months – coupled with the threat of a global economic recession – have prompted companies to refocus on the essential. Many firms are now looking to streamline their business and achieve their highest potential while cutting unnecessary costs and minimising risks.

It is perhaps no wonder, then, that outsourcing is proving to be a popular option in the post-Covid climate. By outsourcing elements of their business that may have traditionally been performed in-house, companies are able to refocus on their core operations and fully devote themselves to ensuring that their business is the best that it can be. Outsourcing can give companies more freedom and flexibility to focus on what really matters – and in the current economic climate, that’s a valuable thing, indeed.

However, as the demand for outsourcing grows, the sector itself is becoming increasingly competitive. This, in many ways, is having a positive impact on the industry: with new competitors entering the market, existing outsourcers are looking to innovate and to explore new business lines and offerings in order to meet customers’ evolving demands. This healthy level of competition is fuelling some exciting new developments within the fast-paced outsourcing sector, with forward-thinking firms helping to craft a very bright future for the industry.

Going global
The pandemic has prompted a global pivot to digital at a scale that has simply never been seen before. Almost overnight, companies successfully adopted remote work as government-mandated lockdowns came into effect in the spring of 2020. This not only enabled employees to continue to work from the safety of their own homes, but it also had the added benefit of breaking down many geographic barriers for businesses. With meetings now taking place on Microsoft Teams or Zoom, companies found that they could easily communicate with international customers, stakeholders and investors all at the touch of a button. Simply put, business is becoming more global, and if companies want to survive and thrive in the post-Covid era, they will need to set their sights on the international market.

At Intelcia, we have always had a global outlook. In fact, from our earliest days, we had no intention of staying local. Intelcia was founded in Morocco in the year 2000, and even as the business was just beginning, there was already an appetite for growth and expansion. In 2011, Intelcia took its first real step towards achieving this vision, acquiring a French-based company that not only gave the company a presence in mainland France, but also brought onboard over 1,000 new employees. The move was a logical next step for Intelcia, as it was already working within the French-speaking world, thanks to its Moroccan roots. After establishing a base in France, Intelcia then set its sights on sub-Saharan Africa, opening branches in Cameroon, Côte d’Ivoire and Senegal, followed by Madagascar and Mauritius. In just a few short years, this strategic expansion saw Intelcia establish a unique pan-African footprint, with the company soon emerging as a market leader in the French-speaking world.

But Intelcia’s ambition didn’t stop there. In 2018, the company opened a multilingual site in Portugal, strengthening its presence within Europe and enabling the firm to support its customers in a wide range of European languages. The move has proved a success for Intelcia – by the end of 2021, the Portuguese branch is expected to rank as the country’s second largest outsourcing hub.

The most successful companies are those that are always looking to improve and advance, strengthening their core products

Intelcia has been busy founding bases on the other side of the Atlantic, too. Since 2020 – even amid the economic uncertainty caused by the pandemic – the company has successfully launched new operations in the US, Jamaica and the Dominican Republic. And more recently, it has expanded its operations into Spain, the UK, Colombia and Chile, following the acquisition of Spanish outsourcing player Unisono. While Intelcia has certainly established a strong international presence over the course of the past 20 years, its expansion into the Americas marks a significant turning point in the company’s development strategy. The English-speaking world represents a strong focus for the coming years, and offers a wealth of exciting new opportunities. Now operating in 16 different countries, spread across three different continents, Intelcia has firmly set its sights on becoming a truly global player, offering innovative and multilingual solutions to customers.

Evolving with the times
In the fast-moving and competitive outsourcing industry, an international presence is a must. That said, while geographic expansion is undeniably important, diversifying your business lines is just as crucial. The most successful companies are those that are always looking to improve and advance, strengthening their core products and services while introducing new, innovative solutions for customers. Diversification has always been at the very heart of Intelcia’s strategy, and continues to drive the company forward today.

Alongside our core customer service offerings, we are now proud to provide IT services, and currently have 250 employees dedicated to this line of work. Over the next three years, we plan to grow this area of our business to encompass 2,000 employees, who will serve our customers across a range of geographies. Alongside our IT development and supervision solutions, we are now in the process of consolidating our digital transformation consulting and support services, which we believe will prove incredibly useful to our customers as they look to digitise their businesses in response to the pandemic.

In addition to developing exciting new business lines, Intelcia is also committed to ensuring that its core business is as efficient and customer-friendly as possible. Since the beginning of the COVID-19 crisis, customer service centres have become the main – if not the only – point of contact between customers and brands. In these testing times, delivering an exceptional customer service experience is more important than ever. In addition to hiring the very best people, ensuring quality training and nurturing talent among our staff, at Intelcia, we are also committed to adopting the latest cutting-edge technologies to ensure a seamless customer service experience.

Over the past four years, Intelcia has invested in artificial intelligence (AI). Before we started on this journey, we made sure that we understood the value that AI would bring to our business, and how it would complement the customer experience. Indeed, as all outsourcing firms will understand, each and every contact centre’s processing capabilities depend on the available agents – and when there is a surge in incoming calls and queries, this can quickly turn into a bottleneck. In this industry, long wait times are, of course, unacceptable. In these instances where there is increased demand for agents, AI and smart automation technologies offer a simple solution. AI-powered chatbots can provide real-time, round-the-clock support to customers when human customer service agents might be otherwise engaged. What’s more, with the pandemic serving to accelerate digital adoption, most customers now expect instant, digital solutions as standard, meaning that the case for AI has never been so strong. At Intelcia, our highly efficient, talented workforce is now supplemented by a host of advanced ‘virtual agents,’ ensuring a quality customer service experience for all of our customers.

Looking ahead
We are now more than 20 months on from the world’s first lockdowns, and are cautiously looking ahead to a post-pandemic future. The crisis has completely reshaped the customer service industry, ushering in new trends and expectations. In the years to come, businesses in the industry will be defined by how they have reacted and responded to this new environment, and at Intelcia, we will use the lessons learned from the pandemic to propel us towards an exciting future.

There’s no denying that technology will play a crucial role in the future of the outsourcing industry. AI will undoubtedly become an increasingly common feature – but customers will gravitate towards those companies that use AI efficiently, respectfully and sensibly. Intelcia’s adoption of AI has always been driven by a desire to better serve our customers and to create a more harmonious user experience. Indeed, by automating repetitive, time-consuming tasks, AI gives the gift of time to our customer service advisors – allowing them to focus instead on more valuable ‘human’ activities that can’t be carried out by a machine or an algorithm, such as solving complex customer problems. We know that our first-class employees are one of our finest assets, and that’s why we use AI to complement – not replace – our staff. We are deeply committed to investing in our employees’ skills, and offer training and certification courses at all levels of the organisation. After all, our employees’ success is our success, and we want each and every member of staff to feel proud to be a part of the Intelcia family.

As for our global ambitions, we are setting our sights high: our goal is to reach $1.5bn in revenues by 2025, and to rank among the top 10 outsourcing companies worldwide. If our track record is anything to go by, then this target feels well within our grasp. With our unique geographic footprint, our highly motivated and capable staff and our appetite for growth continuing to propel us onward, Intelcia is very much looking forward to seeing just what the future holds.

Pioneering the new era in banking

It has been more than 18 months since the COVID-19 lockdown and the pandemic has dramatically reshaped our lives both personally and professionally. While these have been challenging times to live through, we are also seeing first-hand how the pandemic is fuelling innovation at an extraordinary scale, from the scientific breakthroughs behind the lifesaving COVID-19 vaccinations, to the technological advances that have facilitated a worldwide pivot to working remotely.

Progress has been rapid, effective, and driven by need. Now, as the world looks to move towards recovery, these innovations will continue to revolutionise our post-pandemic lives. For the banking industry, the pandemic has served to accelerate many of the digital changes that were already well underway. For Banorte in particular, the challenge has been to expedite our digital programmes to meet the evolving needs of our customers.

The digital transformation at Banorte
For years, a digital revolution in the banking industry had long been overdue. At Grupo Financiero Banorte, we have been working steadily to expand our digital offerings for many years and have been paving the way into the Mexican banking sector when it comes to both digitisation and personalised services.

It is our goal to seamlessly combine our branch-based services with our digital efforts

As part of that journey, we have launched many innovations, including features for our mobile banking app ‘Banorte Movil’; as well as passed several milestones by becoming the first bank in Mexico to offer a wide variety of digital features to our clients, such as: a mobile token in 2011; a digital debit and credit card that can be generated instantly in 2013; identity verification via selfie in 2016; and credit cards and mutual funds available from the app in a matter of minutes in 2019. For over a decade we have focused on our exploratory and research analysis on how to seize technological opportunities, and how best to meet the consumers’ changing needs.

Undoubtedly, this preparatory work served us well when the crisis struck, and we were forced to accelerate what we had planned for the next five years to occur in less than one. Having laid the groundwork for that digital transformation, we found ourselves well-placed to serve our customers when the pandemic arrived. As social distancing guidelines impeded in-person branch visits, our customers pivoted to digital with remarkable ease. In just one year, we observed an increase of 1.2 million customers using our digital services, with only four percent of transactions taking place in branches. While this growth is certainly something to celebrate, Banorte is not stopping yet; we still have much more to do to achieve our digital vision.

Recently, we signed a strategic agreement with Google Cloud to continue the IT modernisation across all our platforms and services, truly propelling Banorte towards a more technological and innovative future. The agreement will also get Banorte closer to artificial intelligence (AI) when it comes to data analysis, which will allow us to provide hyper-personalised experiences for our customers as we deepen our understanding of their needs. In a similar vein, in 2020 we also signed a joint venture with Rappi, a Latin American tech ‘unicorn,’ to develop a new generation of digital financial services within the superapp, another exciting initiative to add to our growing portfolio.

A strategy with customers at the centre
When it comes to Banorte’s approach to service, the pillar is quite simple: the customer is at the core of everything we do. That is why we are always working to better understand our customers, their needs, and their unique circumstances. We know that each individual – and indeed, each small business – is different, thus we strive to offer a highly personalised banking experience to each of our customers.

At Banorte, we believe that hyper-personalisation is the key to retain a competitive edge in this challenging industry. Increasingly, in all aspects of their lives, customers are demanding more personalised experiences and tailor-made offers, and banking is no different. Fortunately, every customer interaction provides us with valuable real-time data on their individual banking habits and lifestyles. We are then able to use AI to analyse this data, which helps us create a profile of each of our customers and offer them products and services in return, while simultaneously improving our branch efficiency in terms of sales and cost savings. This way, prioritising personalised experiences has proved beneficial to Banorte as well as to our valued customers.

Today, customers require access to a wide range of services while also feeling reassured that they are not compromising their security when banking digitally. If their needs are not met by their current bank, we can fully expect them to switch – after all, digital acceleration has made it easier than ever before for customers to change banks. With all this in mind, it is safe to say that the world of digital banking is becoming incredibly fast-paced and competitive.

While Banorte’s portfolio of digital products has been incredibly popular with its customers, we also understand that some customers continue to value the traditional banking experience. It is our goal to seamlessly combine our branch-based services with our digital efforts, ensuring a flexible experience that works for all whether a customer prefers to bank in-person or on their smartphone.

Solidarity with Mexicans
However, it is not just our digital products that have aided customers during the COVID-19 crisis. Guided by solidarity and our commitment to Mexicans, we were determined to stand by our customers from the very beginning of the pandemic. We are proud to have become the first bank in Mexico to offer its customers a loan deferral programme in response to the pandemic. Since we introduced this scheme, which allows for deferrals on payments from four to six months, more than 630,000 loans were deferred, providing customers with buffer time.

Grupo Financiero Banorte’s CEO, Marcos Ramírez-Miguel (left) and Chairman, Carlos Hank-González
Grupo Financiero Banorte’s
CEO, Marcos Ramírez-Miguel (left)
and Chairman, Carlos Hank-González

During these unprecedented times, we are also committed to keeping our staff and our customers safe. Our remote work policy is still in place, with 60 percent of employees continuing to work from home, which has proven a more efficient way to work – on top of the reduced COVID-19 exposure risks, of course. These actions are not only a result of our commitment to customers and employees, but they have made us aware of the profound reassessment of values all people and organisations are going through.

The financial industry is key
Understanding this new set of needs individuals have takes us one step further in the banking industry. As a part of the financial sector, we must find opportunities in the crisis and embrace our key role on the path of economic recovery, which will also depend on our capability to transform ourselves and upgrade our business as necessary.

To attain long-lasting relationships through value-added proposals, we should consider working with all our stakeholders and understand that the context has changed. For a true recovery to take place, it must be comprehensive and sustainable. We already see clear signs of recovery. The main economic indicators are showing us that people and investors’ trust is back.

In Mexico, there has been an important growth in the economy as well as in consumption, investments, and credit. Although we should not claim victory yet, we must celebrate what we have already advanced together. Perhaps the challenges of the last year and a half did not allow us to go as far or as fast as we expected, but the pandemic has unleashed new opportunities. For Banorte, the mission is very clear: to be the engine of the recovery in Mexico by honouring our commitment to Mexicans to help them get ahead and fulfill their dreams.

Decarbonising our business
During the pandemic, we have kept our environmental, social, and governance (ESG) strategy at the core of our operating model and will continue to build on it in the years to come. This means that the environmental aspects of our commitment are as important as the social and governance ones.

As a founding member of the UN’s Net Zero Banking Alliance, we are fully committed to decarbonising our operations, as well as our loan and investment portfolios by 2050. Moreover, we are also a founding member of the UN’s Principles for Responsible Banking, and for over 10 years, we have pioneered best practices on social and environmental risk management in credit portfolios within the Mexican banking industry.

As we look towards the future, our ESG principles will continue to define our business model. In our digitisation strategy, we are also committed to exceeding and generating best practices by placing our customers first. Marrying the very latest technologies with our deep customer knowledge and understanding, we hope to go above and beyond our customers’ expectations, always striving for excellence as we shape the banking industry of tomorrow.

A buzzword for many, a commitment for onsemi

Since joining onsemi in February of this year, CEO Hassane El-Khoury and I, together with the rest of our leadership team, have been working on the transformation from the former ‘ON Semiconductor’ to the new ‘onsemi.’ On August 5 during our analyst day, we revealed our new trade name ‘onsemi’ and a refreshed brand as the next step in the company’s evolution to establish itself as the leading provider of intelligent power and sensing technologies. With a continued focus on the automotive and industrial end-markets, onsemi has sharpened its strategy to drive disruptive innovation that contributes to a sustainable ecosystem of high-growth megatrends such as vehicle electrification, advanced safety, alternative energy and factory automation.

We consider the changes in strategy a transformation of the company rather than a turnaround. Instead of looking at product lines, we now focus on the markets where our solutions can add value. By moving capacity to markets and solutions we want to sustain, we are shifting our product mix. Our new company name shows that we are not about what we make but what we provide our customers with: intelligent power and sensing technologies that help our customers solve their toughest challenges.

The results over the last few quarters are evidence of this. Adding value to our customers’ solutions has translated into a significantly increased growth margin, earnings per share (EPS), cash flow and record revenues. The new direction of onsemi, focused on our vision to empower a sustainable ecosystem, has already led to our transformation to a company with a more predictable financial performance.

Innovation-led sustainability
Today, the industrial and automotive end-markets are responsible for two-thirds of global greenhouse gas emissions. By applying its intelligent power and sensing technologies to these markets, onsemi has an immense opportunity to do its part in achieving a net zero economy. As we see it, climate change presents not only a risk to the environment, humans and animals globally, but plenty of opportunities for innovative business solutions.

We define disruptive innovation as providing our customers with differentiated solutions that add value to their own products and that contribute to a sustainable ecosystem. We are doing this at onsemi by powering the electrification of the automotive industry with intelligent power technologies that allow for lighter and longer-range electric vehicles and enable efficient fast-charging systems. We are also enhancing the automotive mobility experience with our intelligent sensing technologies with imaging and depth-sensing that make advanced vehicle safety and automated driving systems possible.

Sustainability is what governments are asking for, employees are demanding, shareholders are requiring, and companies are investing in

In the industrial market, we are propelling the sustainable energy evolution with our intelligent power technologies for the highest efficiency solar strings, industrial power and storage systems, while enabling Industry 4.0 with our intelligent sensing technologies for smarter factories, buildings and homes.

This includes high-efficiency power solutions with both insulated-gate bipolar transistors (IGBTs) and silicone carbide (SiC) for increased power throughput for charging stations and energy infrastructure. For factory automation, we offer high-speed sensing for robotics, scanning and inspection and the widest intelligent power portfolio across all voltages and technologies. In addition, we are leveraging some of our high-efficiency, intelligent power solutions to optimise power consumption in adjacent markets such as the cloud and telecom infrastructure.

Net zero emissions by 2040
While our company has a long history of dedicating itself to sustainable products and being a good corporate citizen, this year, onsemi has publicly committed to applying its research and design expertise and pledged to adapt its own operations to achieve net zero emissions by 2040. As our CEO stated on our analyst day, sustainability is what governments are asking for, employees are demanding, shareholders are requiring, and companies are investing in. But first and foremost, we are doing this because it is the right thing to do.

To achieve net zero emissions by 2040, we are implementing an aggressive strategy. But what it takes to get to net zero emissions is often misunderstood and not all climate pledges are created equally. So, what does net zero mean? How does this compare to what our competitors and other companies are doing around climate change? You have likely seen companies commit to being carbon neutral or net zero and there is a world of difference between the two of them.

Carbon neutral commitments do not require companies to eliminate any present or future emission from their operations. Instead, this type of commitment allows a company to continue its business-as-usual practices so long as it purchases enough carbon offsets to negate its emission activities. Carbon neutral pledges are not aligned with the Paris Agreement.

Before purchasing offsets equal to the emissions that cannot be avoided, net zero pledges require an ambitious 1.5 degrees Celsius aligned science-based target for emission reductions across the whole value chain. This means that the company ensures direct emission will not contribute to a global temperature rise exceeding 1.5 degrees Celsius above pre-industrial times. Net zero pledges align with the Paris Agreement.

The three pillar strategy
With this commitment, we have set the most ambitious goal among our competitors and will surpass the Paris Agreement’s goal by a full decade. Our strategy is focused on three pillars:

Firstly, ‘capitalise on efficiency’: Every ton of carbon dioxide (CO2) avoided is a ton we do not need to eliminate or offset. Our employees have already demonstrated their innovative abilities to create such efficiencies. We reduced our emissions by 12,101 metric tons of CO2 in 2020 through 49 projects centred on increased energy efficiencies.

Investments in facilities, processes and equipment to increase energy efficiency can reduce our greenhouse gas footprint by as much as 15 percent by 2040. We will also be focusing on our process gas usage as there is substantial opportunity for efficiency in this area.

Secondly, ‘renewable energy’: To achieve net zero, companies need to invest in renewable energy equal to the emissions associated with their energy consumption. Offsets cannot be used for electricity-related emission in a net zero model. The company will transition to an emissions-free renewable energy portfolio to achieve this goal. We plan to use 50 percent renewable energy by 2030 and 100 percent by 2040. We will engage with energy providers to identify power purchase agreements in locations where it is feasible to recoup investment costs in long-term agreements. To assist in our shift to renewable energy, we joined the Renewable Energy Buyers Alliance to ensure a rapid transition to a cleaner zero-carbon energy future.

And the third pillar, ‘offsets and influence’: For non-electricity emissions that cannot be eliminated, we will purchase certified carbon offsets equal to their amount. Green-E and Gold Standard certified offsets are the most credible and will be prioritised in our strategy. Science-based targets also require goals for reducing emissions in the supply chain. We will leverage our Responsible Business Alliance membership to engage suppliers on emissions reduction.

No goal is worth the paper it is written on without continuous measurement of progress against it. Our CSR report will be a key resource for anyone wanting to see our progress toward net zero emissions. We will report our emissions on a scope one, two and three basis. The scope of the emissions speaks to what kind of emission it is and how it relates to onsemi business operations.

Scope one emissions are direct emissions from company-owned and -controlled resources. The company will focus on removing scope one emissions as part of its net zero goal by capitalising on efficiencies in locations we operate in. Scope two emissions are indirect emissions from the generation of purchased energy, which we will eliminate by converting to 100 percent renewable energy.

Finally, scope three includes indirect emissions that occur in the supply chain of onsemi, including both upstream and downstream. As part of our net zero strategy, we will eliminate these emissions by working with our suppliers to implement their own emission reduction targets and offsetting the excess. In 2020, we started tracking some of them and will build the rest of scope three emissions into our reporting as we continue on this journey.

Lastly, our efforts have not gone unnoticed. Our sustainability programmes have been recognised many times over the years. For a second consecutive year we were declared the winner of the 2021 World Finance Sustainability Award in the category of the ‘Most Sustainable Company in the Semiconductor Industry – 2021.’ Some other examples are our Platinum award from Ecovadis for 2020, only awarded to the top one percent of companies assessed. This year we are ranked number 10 and the top-rated semiconductor company on Barron’s 100 most sustainable companies. For the fourth consecutive time, we are listed on the Dow Jones Sustainability Index for North America. We are also rated PRIME by ISS-ESG.

There is no question that there will be some learning on our way to net zero emissions, but our plan is in place and we are dedicated to its execution from the top down. We will measure our progress, make corrections as needed and pursue our goal with determination. In the end it comes down to what we started with: committing to net zero is the right thing to do.

The nature-finance gap

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