Global property and casualty insurer, Chubb has announced its support for the Galápagos Marine Bond – the world’s largest debt conversion for marine conservation.
The marine conservation-linked bond involves a partnership with the Government of Ecuador and the US International Development Finance Corporation (DFC), the Inter-American Development Bank, Credit Suisse, Oceans Finance Company and the Pew Bertarelli Ocean Legacy.
Through its Sovereign Risk Insurance Limited subsidiary and Chubb Global Markets – the company’s London Market wholesale and specialty business, together with other private insurers, provided more than $390 million of reinsurance to DFC in a political risk insurance transaction.
According to the announcement, the transaction is designed to help Ecuador reduce its external government debt, as well as fund marine conservation and provide for annual endowment payments to the Galapagos Life Fund (GLF).
Moreover, DFC is also providing $656 million in political risk insurance for the loan, while the Inter-American Development Bank is providing an $85 million guarantee.
Additionally, Chubb, along with other private insurers, are providing 60% reinsurance to facilitate the project.
Through this debt conversion, Ecuador will realize more than $1.12 billion lifetime savings through reduced debt service costs.
Through the loan, Ecuador was able to repurchase and retire a substantial portion of its external commercial debt, and also create significant annual cash flow for marine conservation, as well as establish an endowment – the Galapagos Life Fund – to fund marine conservation for future generations.
“The private political risk insurance market is delighted that we could support the DFC in such a big way for this critically important Galápagos Marine Bond transaction for Ecuador,” said Julian M. Edwards, Global Head, Political Risk and Credit, Chubb Global Markets.
Natalie Chiaramonte, Division President of Sovereign Risk Insurance, added, “This is an excellent example of public-private partnership that continues to deliver debt reduction and substantive marine conservation commitments. Not only are we helping to make a significant conservation project possible, but we are also supporting sustainable economic development and community resilience through critical debt relief.”