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Underwriting Process

MIGA’s underwriting process begins when a client submits a Preliminary Application. The application is free, confidential, short, and it can be done online. As soon as we receive the application, we will assign an underwriter to review it to determine whether the project meets our eligibility criteria. MIGA will then contact the client to discuss the project.

At this point the underwriter discusses preliminary pricing with the client, the potential size of the guarantee, and the MIGA covers that are most appropriate for the investment.  We also work with the client to identify environmental and social impact assessments that must be undertaken.

Definitive Application and Client Documentation

The next step is for the client to submit a Definitive Application (the form will be provided by MIGA’s underwriting team).  After receiving the completed Definitive Application, MIGA begins a thorough review of the project.  To ensure a quick underwriting process, the project sponsors must submit supporting documentation, which we review to ensure that the project meets MIGA’s policies and guidelines. The supporting documentation we require to begin the formal underwriting process typically may include: 

  • Feasibility study or a business plan supporting  the economic viability and financial soundness of the project
  • Financial forecast/ model
  • All loan documentation, including  shareholder and non-shareholder loans (drafts acceptable during underwriting) and all loan-related documents
  • All loan guaranties (including back-stop guarantees from parent companies)
  • Financial statements and incorporation documents/by-laws from the investor and the project enterprise in the host country
  • Environmental permits/environmental impact assessment if applicable
  • Land purchase/lease agreements
  • All other applicable project licenses/ permits/ agreements/contracts

Underwriting Fees

Definitive Application Fee: $5,000 for cover of less than $25 million and $10,000 for larger amounts. The application fee is applied toward the initial premium or, if MIGA rejects the project for any reason, the fee is refunded.

Processing Fee: Additional fees may be required for complex projects. For example, fees may be required to cover the cost of site visits for environmental and social due diligence.

Syndication Fee: If applicable, a fee will be applied when MIGA arranges a project’s total insurance requirements through reinsurance.

Review, Disclosure, and Due Diligence by MIGA

Before we undertake extensive underwriting , MIGA’s management conducts a preliminary assessment of the project’s development impact, risk profile, and compliance with our legal and policy requirements. This early review helps give prompt feedback to clients on the project and the requirements for MIGA coverage. Once a project is authorized to proceed, our underwriting team completes its analysis of the project’s risks, its economic and financial viability, its environmental and social impact, and in general, its contribution to development.

During this period we will also seek the host country’s approval to issue the insurance. This should provide some comfort to clients because the country has supported MIGA’s participation in the project. Once our management approves a project, we submit the project to our Board of Directors, comprising government representatives from our member countries. In accordance with our disclosure policy, a brief summary of the project and related environmental and social impact documents must be publicly disclosed prior to presentation to the Board of Directors. With MIGA’s Board approval and host country approval, the guarantee contracts are ready to be signed.

The duration of the underwriting process depends on the complexity of the project. Complex projects requiring extensive environmental and social due diligence will take longer, but most projects can be underwritten in four to six months or less. Projects under the Small Investment Program can be processed in one to two months if all of the required documentation has been provided.

Investors are encouraged to contact MIGA to discuss the type, amount, and duration of coverage that fits their needs. The business inquiries line is available by phone at +1.202.458.2538 or e-mail at migainquiry@worldbank.org.

     
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