Much like impact investing has grown in popularity among asset managers, so too have insurance companies adopted the concept of "impact underwriting." Thanks to this growing interest in generating impact, insurance companies are a new and increasingly critical set of syndications partners for development institutions like IFC.
As the global community seeks ways to attract more private capital to developing economies, insurers offer a source of risk appetite that development banks can use to make larger loans to their borrowers. This expands private mobilization efforts to reach a broader set of borrowers and cover a bigger share of their investment portfolios.
IFC currently works with more than a dozen private insurers that provide us with a comprehensive non-payment insurance product on our medium- and long-term loans to borrowers, as well as trade credit insurance on our short-term loans and guarantees.
Under our Managed Co-Lending Portfolio Program, several insurers have partnered with us on a treaty (portfolio) basis to underwrite eligible loans we make to borrowers in the financial and infrastructure sectors. We may also engage insurers on a facultative (single-borrower) basis as part of our traditional syndications process to take on a portion of the credit risk we are taking for our own account.
Over time, we have deepened our relationships with insurers and expanded their partnership to cover a growing range of assets including Basel III Tier 2 subordinated debt, debt securities issuances, and local currency-denominated loans.
Working together with institutions like IFC, insurers are helping foster greater investment in efforts that provide COVID-19 relief, lift the world's poorest out of poverty, and contribute to achieving the U.N. Sustainable Development Goals.