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Sectors

Reinsurance

Since 1997, MIGA has successfully used reinsurance to leverage its investment guarantee capacity, manage the risk profile of its portfolio and foster the growth of the private political risk insurance market. Significant benefits have accrued both to MIGA's investors, who have gained access to larger levels of coverage for projects in developing countries, and to the host countries that have benefited from much higher levels of productive foreign investment.

Syndication/ceding risk - Whenever a project exceeds MIGA's own capacity, the agency reinsures itself, through a syndication process, with private and public sector (re)insurance companies in order to meet its clients’ needs. MIGA’s main programs are facultative reinsurance and the cooperative underwriting program (CUP).

Assuming risk - In addition to attracting capacity from private and public insurers in order to support projects in its member countries, MIGA also provides such capacity to primary insurers. Currently MIGA provides this kind of assistance mainly to public insurers, but also welcomes inquiries from private insurers. MIGA's ability to provide reinsurance is conditioned on, among other factors, whether the agency's environmental and social policy clauses can be included in the contract of the primary insurer.

MIGA's reinsurance partners changes over time, as new members are added and some companies withdraw from the market.

Syndication Process

When MIGA sets out to attract additional insurance capacity through facultative reinsurance (FACRE) or the Cooperative Underwriting Program (CUP), it takes the following steps: 

  • Preliminary discussions with a number of potential (re)insurers take place on a no-name basis. MIGA informs the client on indicative available capacity and premium rates. The client authorizes MIGA to seek capacity with the FACRE or CUP program through a mandate letter and pays applicable syndication fees.
  • MIGA sends out formal invitations to potential reinsurers/ CUP-partners.
  • Reinsurers/ CUP-partners indicate to MIGA the capacity they wish to offer and agree to basic terms and conditions.
  • In the case of facultative reinsurance, the selection of partners is made by MIGA. In case of CUP, the selection of CUP-partners is a joint decision by MIGA and the client.
  • Syndicate is formed and participating reinsurers/ CUP-partners are informed.
  • Underwriting package and transaction documentation are sent to syndicate members for their review.
  • Signing of the Contract of Reinsurance and the Contract of Guarantee, or signing of the CUP.

 

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