10 April 2024News

IDF reveals blueprint for investment in resilient infrastructure

The Insurance Development Forum has announced plans to facilitate insurance sector investments in resilient infrastructure that will enhance the resilience of vulnerable communities in emerging and developing economies to risks from climate change and other natural disasters.

The IDF said its Infrastructure Task Force had spent the last 12 months developing a blueprint designed as a catalyst for driving greater mobilisation and more impactful insurance sector investment in a critical, underserved segment of the infrastructure market. 

"This blueprint seeks to create a pipeline of infrastructure projects that match insurance sector investment requirements," the IDF said in a statement. "The blueprint, which has been developed by leading IDF insurance company members, is strongly aligned with the purpose of the IDF and its objective to optimise and extend the use of insurance and its related risk management and financial capabilities to build greater resilience to climate change risks and other natural disasters."

The IDF is made up of virtually all global insurance companies, including many Bermuda-based re/insurers, who are also represented on the IDF board.  

The statement said the blueprint is aimed at mobilising insurance industry investments into the development of smaller to mid-size commercial infrastructure projects in developing and emerging markets. 

This includes investing in a diversified portfolio of greenfield and brownfield commercial infrastructure projects in sectors such as renewable energy, water, waste, transportation, social (e.g., hospitals, education and government-backed housing), digital infrastructure and telecommunication, as well nature-based solutions geared towards enhancing the resilience of vulnerable communities in emerging and developing economies to risks specifically from climate change and other natural disasters. Investments will be made through senior and mezzanine secured debt with a credit profile that is compatible with the requirements of the global insurance industry. 

The blueprint reflects the need to partner with DFIs and other credit enhancement providers to create new innovative investment structures that meet the credit quality requirements for insurer investments.

"The IDF is working with BlackRock to put its blueprint into action, leveraging the global asset manager’s significant infrastructure investment and blended finance expertise and familiarity with insurance industry investment requirements," the statement said. 

Michel Liès, chair of the IDF Steering Committee, said: “The Insurance Development Forum is today issuing an unprecedented call to action to the global re/insurance sector to support the investment in resilient and sustainable infrastructure in vulnerable communities. 

"COP28 highlighted the urgent need to scale up the financing for resilient infrastructure. The blueprint was designed by insurers with our specific investment needs in mind. We see this as essential for companies’ and countries’ long-term sustainability, and the effective mobilisation of insurance industry capital towards a much-underserved segment of the infrastructure market in emerging and developing countries." 

Charles Hatami, Global Head of the Financial and Strategic Investor Group at BlackRock, said: “With developing nations facing a significant shortfall in the capital they need to build resiliency and to support a low-carbon transition in their economies, we see innovative solutions, such as public-private partnerships and blended finance structures, as important tools for mobilising greater private capital into these markets. We look forward to jointly exploring with the IDF ways to evolve the investment universe for blended finance beyond equities and into debt, in a way that meets the specific needs of insurers and delivers attractive risk-adjusted returns along with positive measurable outcomes.”

Bermuda-related companies who are members of the IDF include AXIS Capital, Convex, RenaissanceRe, Hamilton Re, AXA XL, Chubb, Fairfax, Hiscox, Liberty Mutual and MS Amlin. 

Convex chairman Stephen Catlin, former AXIS Capital CEO Albert Benchimol and Association of Bermuda Insurers and Reinsurers CEO John Huff are members of the IDF steeering committee while RenaissanceRe's Jeff Manson and Rachel Delhaise of Convex are on the operating committee.      

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