The Asian Development Bank (ADB) and five major international insurers have reached an agreement that would mobilize co-financing capacity of up to US$1 billion to boost lending to financial institutions (FIs) across 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.
The highly rated insurers participating in the program will cover the risk of nonpayment on a portion of ADB’s loans to the financial institutions. This will allow ADB to transfer credit risk from its portfolio to insurers’ balance sheets, freeing up ADB’s capital, managing its exposures and increasing its lending capacity.
“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 enables ADB to more effectively mobilize cofinancing capacity and streamlines the risk transfer underwriting and approval procedure. The banking industry has benefited from ADB loans that have supported operational priorities like gender equality, micro, small, and medium-sized firms, and measures to combat climate change.
