Frequently Asked Questions
Investment Guarantee Basics
Project and Country Limits
Applying for a MIGA Guarantee
Cooperation between MIGA and Other Public and Private Insurers
MIGA and World Bank Group
Investment Guarantee Basics
Q What products does MIGA provide under its investment guarantee program?
A MIGA provides non-commercial guarantees (insurance) for cross-border investments into developing countries. MIGA's guarantees protect investors against the risks of transfer restriction (including inconvertibility), expropriation, war and civil disturbance, breach of contract, and non-honoring of financial obligations.
Q Who is eligible for a MIGA guarantee?
A In general, investors who are citizens of, or entities that are incorporated in, MIGA member countries—other than the country in which the investment is being made (called host country)—are eligible for MIGA guarantees. However, MIGA can insure an investment made by a national of a host country if the funds to be invested come from outside the country and the application for coverage is made jointly by the investor and the host country.
Q What is the typical term of a MIGA guarantee?
A MIGA issues guarantees for periods of up to 15 years, and occasionally, 20 years. The minimum length of a guarantee is three years. In guarantees that cover loans, MIGA usually issues coverage to match the length of such loans.
Q Can MIGA cancel a guarantee?
A Yes, if the investor breaches its contractual obligations.
Q Can an investor cancel a guarantee?
A Yes, after the first three years of coverage, or as of the date of notice when the project enterprise is liquidated, declared bankrupt, or placed on receivership, or the guarantee holder has no legal interest in the guaranteed project.
Q Does MIGA finance projects?
A No, MIGA is an insurer, not a lender.
Q Does MIGA provide export credit insurance?
A No, MIGA covers only equity interests, loans related to an investment project (shareholder and non-shareholder loans), and certain types of transactions in which the investor's remuneration depends on the revenues or production of the investment project.
Q Does MIGA disclose any information related to guarantees to the public?
A Yes, prior to consideration by MIGA's Board of Directors, MIGA discloses on its website a "Summary of Proposed Guarantee" that includes the name of the investor, the host country, a brief project description, the risks covered, and the amounts to be insured. Proprietary information is not disclosed without the investor's approval. Environmental and social information is also disclosed for all projects with any potentially adverse social or environmental impacts. After MIGA signs a contract of guarantee with an investor, MIGA discloses a "Project Brief" containing final details of the investment. Project briefs are also published in MIGA's annual report.
Q What types of investments are eligible for MIGA guarantees?
A MIGA insures cross-border investments. This includes new investments as well as investments associated with the expansion, modernization, improvement, or enhancement of existing projects, or where the investor demonstrates both the development benefits of, and a long-term commitment to, the project. Acquisitions by new investors, including the privatization of state-owned enterprises, may also be eligible. Projects must support the host country's development goals, comply with MIGA's Policy on Social and Environmental Sustainability and anti-corruption and fraud standards, and also be financially viable.
Forms of eligible investments include equity interests, shareholder and non-shareholder loans, loan guarantees, as well as certain types of transactions in which the remuneration of the investor largely depends on the revenues or production of the investment project (e.g., technical assistance contracts, management contracts, operating leases, profit sharing contracts, and franchising agreements).
Q What sectors are eligible for MIGA guarantees?
A Most sectors are eligible for MIGA guarantees, including (but not limited to) financial, infrastructure, oil and gas, mining, telecommunications, services, agribusiness, and manufacturing. For examples of projects recently covered by MIGA please search our project database.
Q What sectors are not eligible?
A Sectors not eligible for coverage include gambling, tobacco production and processing, highly speculative investments, defense, illegal drugs, and the production of spirits.
Q Can MIGA provide coverage to a third-party lender (i.e., a financial institution)?
A MIGA can cover loans made by a third-party lender as long as the loan relates to a specific investment or project in which some other form of direct investment is present.
Q What factors does MIGA consider when making a risk assessment?
A In addition to country risks, MIGA considers project risks, including location, project viability, the sector and its importance for the host country, financial viability, potential for earning export proceeds in freely usable currency, environmental impact, and participation of local partners as well as domestic and multilateral institutions.
Q Can an investor ask MIGA to cover just one type of risk?
A Yes, MIGA may on occasion offer standalone coverage except in its Small Investment Program which offers a standardized package of risk coverages.
Q Can MIGA issue a guarantee against commercial risks, such as commercial insolvency?
A No, MIGA provides insurance against non-commercial risks only.
Q Is the percentage of coverage fixed for all projects?
A Regardless of the nature of the project, an investor is required to remain at risk for a portion of any loss. For equity investments, MIGA may guarantee up to 90 percent of the investment, plus up to an additional 500 percent of the investment contribution to cover earnings attributable to the investment. For loans and loan guarantees, MIGA may guarantee up to 95 percent of the principal, plus an additional 135 percent of the principal to cover interest that accrues over the term of the loan. For technical assistance contracts and other contractual agreements, MIGA may insure up to 90 percent of the total value or remuneration of payments due under the insured agreement (up to 95 percent in exceptional circumstances).
Q Does MIGA have country limits?
A Yes, MIGA currently has a limit of $820 million per country on a net basis. However, MIGA works closely with public and private insurers, using, for example, treaty and facultative reinsurance as well as coinsurance to augment its capacity limits.
Q Does MIGA have minimum and maximum project size limits?
A There is no minimum size limit for a project. At present, MIGA can cover up to $250 million on a net basis per project. This may be supplemented through MIGA's coinsurance and reinsurance programs, therefore the gross amounts covered can be considerably higher.
Q When should an investor approach MIGA for a guarantee?
A The investor should submit a Preliminary Application as soon as possible, generally before substantial funds are committed and expended for the project.
Q How does an investor apply for a MIGA guarantee?
A Applicants first submit a confidential, two-page Preliminary Application. MIGA staff determine within three business days whether a project is in principle eligible for coverage; they register the project and send the applicant a letter confirming such registration along with a Definitive Application, in which the applicant is requested to provide more detailed information.
Q How long does it take to get a guarantee?
A Depending on the project's complexity, MIGA typically issues guarantees within three to four months of receiving a Definitive Application.
Q Does MIGA charge an application fee?
A While there is no charge for filing a Preliminary Application, MIGA does charge a fee to register Definitive Applications. If a guarantee is offered and accepted, the fee is credited toward the first premium payment. If MIGA declines to offer coverage, the fee is refunded. If the investor decides not to purchase the coverage, MIGA retains the fee. MIGA may charge an additional processing fee for particularly complex projects and a syndication fee for arranging additional amount of coverage under its coinsurance and reinsurance programs.
Q Can MIGA cooperate with other private and public insurers?
A Yes, MIGA works very closely with both public and private insurers. There are several ways in which such cooperation is achieved: treaty and facultative reinsurance, the Cooperative Underwriting Program, and coinsurance.
Q What is the Cooperative Underwriting Program (CUP)?
A The CUP is a coinsurance program designed to encourage private insurers to cover political risk insurance for projects alongside MIGA. Under the CUP, MIGA is the insurer-of-record and issues a contract of guarantee for the amount of insurance requested by an investor (subject to available capacity), but retains only a portion of the amount for its own account.
Q Can MIGA reinsure another insurer?
A Yes. MIGA can provide reinsurance; however, the primary insurer's contract must contain certain provisions required by MIGA, such as those concerning MIGA's Policy on Social and Environmental Sustainability
Q How does MIGA work with other parts of the World Bank?
A We are legally and financially independent, but cooperate closely with the International Bank for Reconstruction and Development, the International Development Association, the International Finance Corporation, and the International Centre for Settlement of Investment Disputes.
Q What is the difference between a MIGA guarantee and a World Bank partial risk guarantee?
A One of the main differences is that the World Bank requires a counter-guarantee of the host government; also, the World Bank only insures debt instruments, while MIGA covers equity as well. For details, see the World Bank Guarantee Instruments website. Although MIGA does not require a counter-guarantee, it does request host country approval before issuing a guarantee.
Q Must the International Finance Corporation or the World Bank be involved in a project for MIGA to provide a guarantee?
A No, MIGA can insure investments in projects with or without the involvement of another member of the World Bank Group.
Q Whom should I contact if I have a question on existing guarantees?
A Send an email to firstname.lastname@example.org.
Q How many claims has MIGA paid?
A MIGA has paid six claims since its inception in 1988. The first claim was paid by MIGA in 2000 for an equity investment in P.T. East Java Power Corporation in Indonesia, which was guaranteed by MIGA. The project was one of several power projects suspended by a presidential decree in 1997 in response to the country's economic crisis in the late 1990s. The second claim was for war and civil disturbance relating to a power project in Nepal. A Maoist guerrilla attack in 2002 damaged a hydroelectric power plant. MIGA paid compensation for the repair of the damages to the gas turbine, and the project continues to be in operation. The third claim was for a project in Argentina at the time of the country's financial crisis. The fourth and fifth claims were paid in fiscal year 2009 and were both related to losses under war and civil disturbance coverage. One was paid for losses incurred in the violence following Kenya's disputed election in 2007 and the other was paid for losses resulting from political violence in Madagascar. In 2011, a small claim for war and civil disturbance was paid from the donor-funded Afghanistan Investment Guarantee Facility.
Q Why has MIGA paid so few claims?
A The small number of claims paid by MIGA since its inception in 1988 attests to the agency's ability to work with investors and host countries to find amicable resolutions to disputes. MIGA focuses on finding solutions to pre-claim situations before they reach the level of full-fledged claim, ultimately keeping the investment and its development benefits on track. MIGA's proactive facilitation efforts have been pivotal in the resolution of more than 90 disputes related to MIGA-guaranteed projects.