IFC's Groundbreaking $3.5 Billion Credit Insurance Agreement: Pioneering Development Through Insuran
In a momentous stride towards fostering development in emerging markets, the International Finance Corporation (IFC) has inked a historic $3.5 billion credit insurance policy. This significant achievement marks a new era of economic empowerment and support for those regions where development is most needed.
Under its Managed Co-Lending Portfolio Program (MCPP), IFC has joined forces with 13 leading global insurers. The collaboration, known as MCPP Financial Institutions III, is set to mobilize the risk capacity of these insurers. Its ultimate goal is to facilitate over $7 billion of fresh IFC medium and long-term lending to commercial banks and non-bank financial institutions over the next six years.
One of the program's primary objectives is to enhance access to finance for various segments, including micro, small, and medium enterprises. This includes businesses owned by women and those actively contributing to mitigating climate change.
Notably, MCPP Financial Institutions III stands as IFC's most substantial mobilization effort under a single agreement. It promises to extend the insurance industry's capacity to bear risks, thus encouraging private capital infusion. This, in turn, will unlock billions of dollars in development finance, contributing significantly to economic growth, job creation, and poverty reduction.
John Gandolfo, IFC Vice President and Treasurer, Treasury & Mobilization, emphasized that insurance is not solely about managing risks but also underwriting human potential and development in emerging economies. He stated that this new facility illustrates the potential for leading insurers and development finance institutions to work in synergy to address pressing global development challenges.
The program boasts participation from a distinguished lineup of insurance companies, including Liberty Specialty Markets, Munich Re, the Tokio Marine Group, AXA XL, Everest, and Aspen, to name a few. Many of these insurers are collaborating with IFC for the first time, highlighting the program's attractiveness and potential impact.
Veronica Scotti, Chairperson of Swiss Re Public Sector Solutions, emphasized the importance of mobilizing private capital to scale the impact of development finance. She commended IFC's successful management of the MCPP FIG III program, attributing its record volume to IFC's scaling capability.
Mike Karmilowicz, President and CEO of Everest's primary Insurance Division, recognized the MCPP as a prime example of IFC's ability to mobilize private capital by leveraging the robust balance sheets of global insurance companies. He expressed pride in partnering with IFC to alleviate poverty and promote sustainable development globally.
MCPP Financial Institutions III serves as a bridge, allowing insurers to extend insurance coverage to distinctive developmental transactions. This not only benefits markets and clients but also generates positive social, economic, and environmental impact. The program aligns insurers with IFC's diverse pipeline of financial institution lending, with a commitment to be 100% aligned with the Paris Climate Agreement by 2025.
With the introduction of this groundbreaking program, the total capacity raised under MCPP will surpass $16 billion. This significant resource pool is poised to support over 260 IFC clients across 63 countries, reinforcing IFC's commitment to global development. Thomas Lallinger, Head of Financial Risks at Munich Re, expressed eagerness to strengthen their partnership with IFC. He highlighted the mutual benefits this collaboration brings to both enterprises, ultimately driving capital mobilization for IFC's mission and leveraging IFC's expertise in emerging markets for Munich Re's gain.