Lloyd's and World Bank Unit Target US$20bn in Guarantees
Lloyd's, the London-based insurance and reinsurance marketplace, has announced a formal partnership with the Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group.
The collaboration aims to increase MIGA's guarantee issuance to US$20bn annually by 2030, leveraging Lloyd's reinsurance capacity to support sustainable development projects in emerging markets.
The partnership, revealed at a New York Climate Week event, builds on a 25-year history of cooperation between the two organisations.
It emphasises the partners’ joint commitment to drive sustainable development outcomes through World Bank Group guarantees, which provide risk mitigation for cross-border investments in developing countries.
Reinsurance boost
MIGA's new World Bank Group Guarantee Platform will play a crucial role in achieving the US$20bn target. The platform will rely heavily on collaboration with reinsurance partners to expand its capacity for issuing investment guarantees.
Lloyd's CEO John Neal emphasises the impact of the partnership: “Through our ongoing partnership with MIGA, the (re)insurance industry is facilitating projects around the world which are having a tangible impact on the local and national communities that need it most.”
The reinsurance provided by Lloyd's market allows MIGA to leverage its investment guarantee capacity, enabling larger coverage for projects in developing countries.
This, in turn, benefits host countries by attracting more productive foreign investment.
Climate-focused guarantees
As part of the announcement, MIGA revealed a US$1.2bn guarantee for Banco do Brasil SA, Brazil's largest state-owned bank.
The guarantee will support a loan for local lending operations targeting micro, small and medium farmers engaged in climate-smart agricultural practices, including no-till agriculture.
These practices offer carbon sequestration and climate resilience benefits.
The guarantee is supported by 15 reinsurance partners, demonstrating the importance of private capital mobilisation in such projects.
Brazilian agriculture project
The Banco do Brasil project exemplifies the potential impact of MIGA's guarantees. It is expected to increase access to finance for micro, small and medium farmers in support of sustainable agriculture, addressing global challenges of climate change and deforestation in Brazil.
The project estimates that approximately 1.8 tonnes of greenhouse gas emissions can be avoided per hectare annually through the use of no-till farming activities.
This practice can also reduce social and environmental costs arising from soil erosion, contributing to enhanced resilience and adaptation to climate shocks.
World Bank conservation experts, as well as MIGA's climate and gender teams, have provided advice on the project, ensuring a multi-dimensional approach to development impact.
The project assessment includes considerations for harmful child labour, forced labour, use of pesticides, biodiversity loss and impacts on indigenous peoples associated with agriculture.
Cross-sector collaboration
MIGA's recent focus on climate change is evident in its activities over the past year. In fiscal year 2024, the agency issued guarantees supporting climate change mitigation or adaptation in 30 projects across 22 countries.
The formalisation of the Lloyd's-MIGA partnership underscores the importance of cross-sector collaboration in addressing global issues and future challenges in development finance and risk mitigation.
Hiroshi Matano, MIGA Executive Vice President, adds: “MIGA's long-running collaboration with the Lloyd's marketplace is bringing significant benefits to both investors and host countries.
“Investors are gaining access to larger levels of coverage for projects in developing countries, and host countries are benefiting from higher levels of productive foreign investment.”
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