Strictly Private and Confidential

Wealth Management / Bank Assurance

Executive Summary of Opportunity
1 August 2005

Strategic rational
Insurance is a growing requirement in industrialising countries particularly where there are emerging middle
classes. The geographical break up of family units, physical separation and moving away from the land mean
that traditional family support systems are no longer available to handle personal financial crises. At the same
time, rising living standards mean more to lose and more to be protected. Insurance provides this protection.
Governments also increasingly recognise the social benefits of insurance. Motor insurance is already mandatory
in Kenya.
Difficulty in accessing the products and lack of education about insurance are key limitations in this market. A
bancassurance offer goes a long way to solving the access problem. Education can be achieved quickly via
disturbance sales messages. Need can be quickly turned into want.
The Bancassurance is an unexploited value opportunity to the bank . The rationale for considering this are as
follows:
To improve annuity based non-interest income in segments and product areas that are not subject to
political pressure (e.g. basic bank charges and standard / low value segments deemed critical to improve
access to banking), especially given continued margin pressure
To add value to customers and serve as a retention and loyalty tool and also enhance brand image
To better utilize the extensive, but costly branch network/infrastructure, as well as our customer and account
information
To proactively respond to changes in savings patterns that will lead to loss in liability market share to
insurance companies and investment houses
To maximise cross-selling opportunities as certain Bank Assurance products, complement the sale of certain
Bank products especially vehicle finance and mortgages

Overview - Scope
The high-level preliminary business case consist of two parts:
Base case, which is intended for inclusion in MTP contingency revenue opportunities. These numbers have been
contracted with the 4 largest markets, but is deemed conservative as a large degree of uncertainty exist not
only relating to the insurance, investment and wealth management potential, but also with reference to the
mortgage and vehicle finance market size which provides the foundation for the cross selling opportunities.
Uplift case, adopts more aggressive assumptions and incorporate a wider product rage than that included in the
base case. The numbers in the uplift case have not been contracted with the countries, but provides a more
realistic albeit un-validated, reflection of the revenue opportunity.
Both cases are based on a distributor model (thus no in-house Barclays Sub-Saharan Africa products). The
products and segments included in the respective cases" are presented below

Base Case
Revenue Opportunity

Premi
er

Uplift Case

Local
Presti Premie Presti Standar
Busines
ge
r
ge
d
s

Corporate /
Business
banking

Investment (e.g. Unit Trusts / Mutual Funds, Bonds, etc)

X
X
Wealth Management Offering
X
Vehicle Protection Insurance
X
X
X
Home Contents Insurance
X
X
X
Life Cover
X
X
X
Home Structural Insurance
X
X
X
Funeral Cover
X
X
X
Travel Insurance
X
X
X
X
X
Professional Indemnity, Trade, Key-man insurance (loan
X
X
protection)
Work site life, medical and short term insurance
X
X
X
Note No new / additional values have been calculated for the following:
Credit life is an existing bundled offering (except key man insurance) in all markets additional revenue possible if better
terms can be negotiated than that currently secured though Aon and other providers, but full-life cover may erode some of
the volume currently recorded.
BarCap structured notes to facilitate LT on-balance sheet liability growth
Educational Savings / Life Cover Instruments focussed specifically on securing children's education

Overview - Financial

Base Case

The 2008 revenue uplift is estimated between 3,9 million and 11,2 million, depending on the approach to be
adopted by Barclays Africa as illustrated below
2006
2007
2008
Comments
Investment / Wealth Management
Premier & Prestige Mortgage & Vehicle Finance related
Insurance Revenue
Total
Standard Customer Base (including Premier & Prestige
Profile Customers who have not "signed up" for these
propositions) penetrated with insurance & investment
products (same average revenue / customer as per base
case)

1,307,817

248,494

735,552

671,236

2,043,369

Investment products to Prestige and Premier, but wealth

advisory service offering to Premier only
Cross-sell only to customers taking mortgages & vehicle
1,344,473
finance through BA
3,888,257
2,543,784

2008 Penetration levels / country assumed: 30% of Mauritius

& Botswana, 20% Kenya, 10% Ghana, Zambia & Uganda.
2,861,832
Note that 20% of 2008 target achieved by 2006, 50% by
2007 and 100% by 2008

260,072

1,040,917

183,631

429,911

698,208

1,114,939

3,514,196

7,448,297

50,000

125,000

Funeral Insurance

200,000

500,000

Corporate, Business Banking & Local Business Offering

(Trade, Professional Indemnity, key-man / loan protection,
medical, etc)

400,000

1,000,000

Premier & Prestige additional insurance revenue

Uplift
Scenario
1

422,743

Total Revenue from "Base Case Product Set", but with

more aggressive penetration assumptions
Travel Insurance

Workplace marketing channel (insurance and life

products)

Mortgage & Vehicle Finance related Insurance Products

(100% cross-sell / tied product assumed)

30% penetration of FX customers by 2008

250,000 Note that 20% of 2008 target achieved by 2006, 50% by
2007 and 100% by 2008
15% penetration of customer base by 2008
1,000,000 Note that 20% of 2008 target achieved by 2006, 50% by
2007 and 100% by 2008
5% penetration of corporate / business customer base in
2006, 10% by 2007 and 15% by 2008
2,000,000
Assumed annual income of 1,500 per customer @ 15%
commission

100,000

250,000

5% penetration of corporate customer base (not SMEs) in

2006, 10% by 2007 and 15% by 2008
500,000
Assumed annual income of 2000 per customer @ 15%
commission (ignored revenue from other banking products)

Uplift
Scenario
2

Total as per Uplift Scenario 1, plus additional products

and channels

For comparison sake the 2004 unvalidated business case

projected the following revenue

1,864,939

3,775,691

5,389,196

5,307,971

11,198,297

8,055,246

Unvalidated business case developed by James Clark. Note

that Credit life revenue (15%, 14% and 11% of the projected
revenue stream in 2006, 2007 and 2008 respectively) had
been included in this business case, plus an earlier start
date of 2005 was assumed

Next Steps
It is recommended that the Barclays Africa Executive approve:
a Bankassurance and wealth management pilot. The pilot is proposed to:
1. Be based on the scope of Uplift Scenario 1 as described on the previous page although the launch of investment product and wealth
management services will lag the launch of insurance products (more complex, higher risk and longer training period required)
2. Commence with Botswana which already has a Brokerage entity registered in Barclays name to ensure quick win
3. Launch the pilot in parallel in Mauritius which has strong local skills in this area
4. Start simultaneously with the legal and regulatory process in Kenya, which has the greatest potential, but is likely to face a long runup time to establish the regulatory required infrastructure
5. Start with the pilot in Ghana on completion of the pilots in Botswana and Mauritius

The engagement of a Barclays UK Bankassurance and wealth management expert to assist Barclays Sub-Saharan
Africa with the establishment of this offering in all four markets.

The appointment of a central product resource to assume accountability for the pilot as well as eventual BAU
management of Bankassurance and Wealth Management offerings in Barclays Sub-Saharan Africa. The pilot project
team, in addition to the UK Expert and Central Product resource, will require two full-time in-country resource
(project manager and business analyst), as well as active involvement from Head of Retail in country, Central
Proposition Director and Customer Insight / Marketing in country and in the centre.

The estimated cost to Barclays Africa (excluding BA staff cost) which is estimated at 250,000 (approximately 40%
in 2005 and 60% in 2006)

The overall approach to the pilot as detailed in the Bancassurance Next Steps document dated .. (Hugh to
finalise and forward)

The following key design principles:

1. Product distributed should safeguard and enhance the trust based relationship that the customer has with the Bank
2. Keep the product range down, to ensure we minimise cost and maximise revenue (i.e. reduced need for training, manage fewer
supplier relationships and negotiate optimal terms based on revenue, less complex systems, etc.)
3. Sales effectiveness to be secured though design of remuneration schemes linked to the various distribution structures.
4. The distribution structure must take into account the mix of products, price, process and the level of advice depending on the market
segment.
5. Basic systems are needed to ensure that the customers are properly recorded, tracked and the distribution incentives paid correctly.
6. Basic desk-top advisory tool to be provided from the start, and to be incorporated in internet banking solution (EMBP scope)