Tokio Marine and Others Take on $1 Billion in Credit Risk on ADB Lending

Posted on 08/22/2022

Insurance companies are trying to find ways to earn fees through working with development banks. The Asian Development Bank (ADB) signed an agreement with five global insurers which will mobilize up to US$ 1 billion of cofinancing capacity to support lending to financial institutions in Asia and the Pacific. The Master Framework Program for Financial Institutions will allow ADB to increase its lending to both commercial banks and non-bank financial institutions in the region through the use of credit insurance. ADB has signed an initial 3-year partnership with Tokio Marine Group (Tokio Marine & Nichido Fire Insurance Co. Ltd, and Tokio Marine HCC), AXA XL, Chubb, Liberty Specialty Markets (Liberty Mutual), and Allianz Trade.

The insurers participating in the program will cover the risk of nonpayment on a portion of ADB’s loans to financial institutions. This will allow ADB to transfer credit risk from its portfolio to insurers’ balance sheets, freeing up ADB’s capital, managing its exposures, and increasing its lending capacity.

Keywords: AXA SA, Allianz SE.

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