Fiscal Year 1998: Guarantee Results
Fiscal Year 1998: Guarantee Results
Washington, D.C., August 14, 1998 — The Multilateral Investment Guarantee Agency (MIGA) today announced the results of its guarantee activities for fiscal 1998, the tenth anniversary year of its establishment. MIGA issued US$830.9 million in new coverage for projects in 26 developing member countries, and broadened its portfolio by writing coverage for investments in 10 new countries -- Angola, Bolivia, Cape Verde, Dominican Republic, Equatorial Guinea, India, Kenya, Mozambique, Ukraine, and Uruguay.
Commenting on the year's results, Mr. Motomichi Ikawa, MIGA's new Executive Vice President, said: "At the end of its first ten years, MIGA is well-positioned for new successes. MIGA leveraged its guarantee capacity to facilitate foreign direct investments at eight times the level of its outstanding portfolio as of the end of fiscal 1998. The Agency's Board of Directors acknowledged MIGA's important role in promoting developmentally-beneficial investments in its member countries by approving a doubling of its capital base to enable the Agency to expand its future activities."
Development Impact
The development impacts of MIGA's fiscal 1998 projects includes about 8,000 jobs created and approximately US$6.1 billion in foreign direct investments facilitated in the developing countries in which they were located. The 348 guarantee contracts issued by MIGA so far have facilitated an estimated US$25 billion in foreign direct investment in 62 developing and transition member countries.
Innovations in Guarantee Activities
MIGA further expanded its efforts to collaborate with other insurers and optimize its guarantee capacity to better serve the needs of its clients. MIGA signed a coinsurance agreement with Brockbank Syndicate Management Ltd., of Lloyd's of London, to provide up to $100 million in additional insurance per project on an ad hoc basis, under the Agency's Cooperative Underwriting Program (CUP). MIGA also signed its first contract with Zurich-American Political Risk, under the CUP, for a power project in Argentina. The CUP is a form of coinsurance designed to encourage private insurers to provide coverage of investments in developing countries where they otherwise might not assume the risk without the backing of the World Bank Group. The program is expected to generate additional investment insurance capacity from private insurers in the future.
Through a reinsurance agreement, MIGA issued its largest guarantee to date to cover a shareholder loan by Banque Nationale de Paris for expansion of its branch in St. Petersburg. The $90 million guarantee was also MIGA's first reinsurance contract with la Compagnie Française d'Assurances pour le Commerce Extérieur (COFACE) of France.
MIGA also set up its first mobile offices overseas, in response to investors' demand for the Agency to extend its field presence. In July and October 1997, MIGA organized two-week work programs in the Caribbean and India, respectively, to enable individual meetings with prospective clients and seminars on the Agency's guarantee program and investment marketing services. In March 1998, MIGA set up a three-week office in London and held a major seminar for insurance brokers. In addition, MIGA hosted a major symposium on International Risk Management Techniques and the Role of Political Risk Insurance, and a seminar on Safeguarding Investments in the West Bank and Gaza, both in Washington, D.C., earlier in October and November, respectively.
Mr. Roger Pruneau, MIGA's Vice President for Guarantees, expressed optimism for the future: "The development of new products and forging of new partnerships, during fiscal 1998, signal the start of a new period of growth in the future. The recapitalization package assures a sound financial base for expansion. Increased budgetary resources will be used to expand our staff, and our new Management team will add fresh ideas and process recent innovations. Finally, a strong pipeline of more than 1,200 investor applications for guarantee coverage sets the stage for a vibrant new phase for MIGA."