Washington, D.C., June 13, 2013
—IFC, a member of the World Bank Group, will provide up to a $100 million risk-sharing facility to Munich Re to help foster infrastructure development in Latin America.
The facility, the first of its kind, will initially focus on Brazil and cover part of Munich Re’s reinsurance portfolio of surety bond exposure over the next five years to selected construction, engineering, and procurement contractors. By providing peak exposure relief at the reinsurance level, the facility will increase Munich Re’s capacity to provide reinsurance for surety bond exposure and consequently support further development of infrastructure in Brazil and other countries in Latin America.
The need for infrastructure has increased demand for engineering, procurement, and construction firms in emerging markets. These firms are often required to provide securities to guarantee project completion. Surety bonds are an efficient and cost-effective option in the event contractors cannot fulfill contractual obligations.
“By providing this coverage, this risk-sharing facility will help companies overcome bottlenecks and allow for more efficient infrastructure development,” said Rashad Kaldany, IFC Vice President and Chief Operating Officer. “Infrastructure is central to economic growth and improved living standards, particularly in Brazil.”
Thomas Lallinger, head of Munich Re’s Financial Risks division, said: “We are very happy to enhance our cooperation with IFC and the World Bank. By combining Munich Re’s regional and reinsurance expertise and the financial possibilities of IFC, new risk-transfer solutions can be developed to foster infrastructure projects in emerging countries.”
The facility is in line with IFC’s strategy of expanding the use of insurance and reinsurance products through leading players. The partnership with Munich Re allows IFC to innovate by creating risk-transfer solutions that can be implemented in priority subsectors and across emerging markets.
IFC’s strategy in Brazil is focused on improving the country’s competitiveness, supporting job creation, infrastructure development, and access to financial services for underserved sectors. IFC’s environmental and social standards aim to support sustainable development in various industries in Brazil. IFC’s new investments this fiscal year in Brazil, including syndications, amount to $2 billion.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. IFC helps developing countries achieve sustainable growth by financing investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments. In FY12, IFC’s investments reached an all-time high of more than $20 billion, leveraging the power of the private sector to create jobs, spark innovation, and tackle the world’s most pressing development challenges. For more information, visit
www.ifc.org
.
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