AfDB partners with global insurers to mobilize $1 billion in FI lending capacity

The Asian Development Bank (AfDB) has signed an agreement with five major global insurers that will mobilize up to $1 billion in co-financing capacity to support lending to financial institutions (FIs) in Asia and the Pacific.

The Master Framework Program for Financial Institutions will enable the AfDB to increase its lending to commercial banks and non-bank financial institutions in the region through the use of credit insurance.

ADB has signed an initial three-year partnership with Tokio Marine Group (Tokio Marine and Nichido Fire Insurance Co. Ltd, and Tokio Marine HCC), AXA XL, Chubb, Liberty Specialty Markets and Allianz Trade, a press release said here today. today.

Highly rated insurers participating in the program will cover the risk of non-payment of a portion of AfDB loans to financial institutions. This will allow AfDB to transfer credit risk from its portfolio to insurers’ balance sheets, free up AfDB capital, manage its exposures and increase its lending capacity.

“The AfDB 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 the head of the AfDB Guarantees and Syndications Unit, Bart Raemaekers.

“The relationships we have built with insurers have allowed us to leverage this additional source of private capital in the form of co-financing to help meet the needs of our customers,” he added.

“Tokio Marine Group has always worked closely with multilateral development institutions like the AfDB with whom we share common goals and values, as Tokio Marine continues to pursue its vision of being a good company,” said Tokio Marine HCC Credit Group Chairman Jerome Swinscoe.

“Our partnership with the AfDB has grown over the years. This historic program comes at an opportune time when we can all contribute to the economic recovery that Asia needs. We are honored to be part of this endeavour,” he added.

The program streamlines the risk transfer underwriting and approval process and will enable the AfDB to mobilize co-financing capacity more effectively. AfDB lending to the financial sector has included support for operational priorities such as micro, small and medium enterprises, gender equality and climate change efforts.