The Asian Development Bank (ADB) has signed an agreement with five leading global insurers which will mobilise up to $1 billion of financing capacity to support lending to financial institutions (FIs) in Asia and the Pacific.
The Master Framework Programme for Financial Institutions will allow ADB to increase its lending to both commercial banks and non-bank financial institutions in the region through the use of credit insurance.
ADB has signed an initial 3-year partnership with Tokio Marine Group (Tokio Marine & Nichido Fire Insurance Co. Ltd, and Tokio Marine HCC), AXA XL, Chubb, Liberty Speciality Markets, and Allianz Trade, according to a statement issued on Thursday.
The highly rated insurers participating in the programme will cover the risk of nonpayment on a portion of ADB’s loans to 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 mobilise this additional source of private capital as cofinancing to help meet our client’s needs,” Raemaekers said.
“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 programme has come at an opportune time when we can all contribute to the economic recovery that Asia needs. We are honoured to be a part of this endeavour,” Swinscoe said.
The programme streamlines the underwriting and approval process for risk transfers and will allow ADB to mobilise co-financing 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.