Swiss Re Corporate Solutions, the commercial insurance arm of global reinsurer Swiss Re, has partnered with the International Finance Corporation (IFC) to expand a “pioneering platform” by $500 million, supporting greater investments designed to modernise infrastructure in emerging markets.
Under the agreement, Swiss Re will insure a portion of the credit risk on loans IFC makes through its Managed Co-Lending Portfolio Program (MCPP), providing risk coverage up to $500 million.
According to an announcement the transaction started this week, and the involvement of Swiss Re takes the platform’s total capacity to $7 billion, which enables the IFC to improve power, water, transport and telecommunications in developing markets.
Head of Credit & Special Lines at Swiss Re Corporate Solutions, Andreas Hillebrand, commented: “We are pleased to support this IFC initiative, which will help release much-needed capital into emerging markets to support tomorrow’s resilient societies and economies.
“Furthermore, by strengthening our relationship with the IFC, we will be able to further expand our well-established trade and infrastructure finance platform and increase the diversity of our emerging market portfolio.”
Through the partnership, IFC, which is a member of the World Bank Group, will both originate and manage a portfolio of loans on its own account, with Swiss Re using an unfunded risk-participation solution to insure the risk in the event of a default.
This is designed to provide the IFC with additional capacity to finance important and vital infrastructure projects in developing parts of the world.
IFC Vice President and Treasurer, Jingdong Hua, said: “Modern infrastructure is essential for economic growth and lasting prosperity. Yet a huge investment gap exists in this sector—totaling trillions of dollars a year in emerging markets alone.
“The MCPP platform marks a breakthrough in the search for large-scale financing solutions to the challenges of development. Through this partnership with Swiss Re Corporate Solutions, we have extended MCPP’s reach and created another important building block in the global effort to move from billions to trillions in development finance.”
IFC established the MCPP in 2013, with the People’s Bank of China pledging $3 billion for investment in IFC projects. Since its creation, the platform has more than doubled in size via the inclusion of various institutional investors, including insurers, pension funds, and sovereign funds.
