Lloyd's in major World Bank Group collaboration

Lloyd’s in major World Bank Group collaboration | Insurance Business Australia

Environmental

Lloyd’s in major World Bank Group collaboration

Reinsurance backing provides support to development projects

Environmental

By
Terry Gangcuangco

Lloyd’s has partnered with the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA), reinsuring the agency to enable it to increase its capacity for investment guarantees.

The official tie-up marks a renewed commitment to enhancing sustainable development outcomes through the expansion of World Bank Group guarantees, building on a collaboration that has spanned more than two and a half decades.

Accordingly, Banco do Brasil S.A. will receive a US$1.2 billion guarantee from MIGA. The guarantee will back loans aimed at supporting micro, small, and medium-sized farmers engaged in no-till and other climate-smart agricultural practices, which contribute to carbon sequestration and bolster climate resilience. The initiative is backed by private capital raised from 15 reinsurance partners.

A key part of MIGA’s plans is its management of the World Bank Group Guarantee Platform, with the goal of scaling annual guarantee issuance to US$20 billion by 2030. The participation of reinsurance partners, such as those in the Lloyd’s market, will be pivotal in achieving this target.

Over the years, the collaboration between Lloyd’s and MIGA has supported global projects designed to stimulate economic development, alleviate poverty, and enhance living standards. Notably, many of the initiatives have also contributed to climate change mitigation and adaptation efforts in developing countries.

In fiscal year 2024 alone, MIGA backed 30 projects across 22 countries, each addressing climate change mitigation or adaptation.

Commenting on the formalisation of the Lloyd’s-MIGA partnership, Lloyd’s chief executive John Neal (pictured) said: “Collaboration is the hallmark of the Lloyd’s market, and through our ongoing partnership with MIGA, the (re)insurance industry has facilitated projects around the world which are having a tangible impact on the local and national communities that need it most.

“By providing financial security for these loans, we can help to ensure that this work can continue for decades to come.”

Echoing Neal’s sentiment, MIGA executive vice president Hiroshi Matano noted: “MIGA’s long-running collaboration with the Lloyd’s marketplace has brought significant benefits to both investors and host countries.

“Investors have gained access to larger levels of coverage for projects in developing countries, and host countries have benefited from higher levels of productive foreign investment. We look forward to many more years of partnership.”

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