Through an agreement with five major international insurers, the Asian Development Bank (ADB) would mobilize a cofinancing capacity of up to US$1 billion to assist lending to Financial Institutions (FIs) in Asia and the Pacific.
Through the utilization of credit insurance, the Master Framework Programme for Financial Institutions will enable the ADB to enhance its lending to regional commercial banks and non-bank financial institutions.
According to a news statement issued here today, Tokio Marine Group (Tokio Marine & Nichido Fire Insurance Co. Ltd. and Tokio Marine HCC), AXA XL, Chubb, Liberty Specialty Markets, and Allianz Trade have all signed an initial three-year partnership agreement with ADB.
A portion of the ADB’s loans to the financial institutions will have the risk of nonpayment covered by the program’s highly rated insurers. This will enable ADB to manage its exposures, free up resources, and expand its lending capacity by transferring credit risk from its portfolio to the balance sheets of insurers.
“ADB has been a pioneer among multilateral development banks in partnering with private insurance companies to expand lending operations through the use of credit insurance,” said Head of ADB’s Guarantees and Syndications Unit Bart Raemaekers.
“The relationships we’ve built with insurers have allowed us to mobilize this additional source of private capital as cofinancing to help meet our client’s needs,” he added.
“Tokio Marine Group has always worked closely with multilateral development institutions like ADB with whom we share common goals and values, as Tokio Marine continues to pursue its vision To Be a Good Company,” said Tokio Marine HCC Credit Group President Jerome Swinscoe.
“Our partnership with ADB has grown through the years. This landmark program has come at an opportune time when we can all contribute to the economic recovery that Asia needs. We are honored to be a part of this endeavor,” he added.
The program streamlines the underwriting and approval process for risk transfers and will allow ADB to more efficiently mobilize cofinancing capacity. ADB’s loans to the financial sector have included support for operational priorities such as micro, small, and medium-sized enterprises, gender equality, and efforts to address climate change.