9 15am levan shalamberidze - 2nd

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  • 1. IFC, a Global Partner for Insurance Companies Creating Strategic Opportunities Levan Shalamberidze, Global Portfolio Lead - Insurance December 2013
  • 2. IFC: Part of the World Bank Group IBRD IDA IFC MIGA ICSID International Bank for Reconstructio n and Development International Development Association International Finance Corporation Multilateral Investment and Guarantee Agency International Center for Settlement of Investment Disputes Loans to middle-income and creditworthy lowincome country governments Interest-free loans and grants to governments of poorest countries Solutions in private sector development 2 Guarantees of private sector investment’s noncommercial risks Conciliation and arbitration of investment disputes 2
  • 3. IFC at a Glance 3
  • 4. Committed Portfolio by Industry, FY13 Total Portfolio: $49.6 Billion Oil, Gas, & Mining Trade Finance 5% 6% Telecom & IT 3% Financial Markets 29% Funds 8% Consumer & Social Services 8% Agribusiness & Forestry 9% Infrastructure 19% Manufacturing 13% IFC’s Own Account, as of June 30, 2013 4 4
  • 5. Advantages of Having IFC as a Shareholder IFC has significant experience in equity investments throughout the world • Flexibility: Contrary to more “defined” private equity investors, IFC’s array of equity-like products include common equity, preferred equity, subordinated debt, income-participation debt and others, all of which can be tailor-made to specific needs. • Institutional Building: IFC can play an “honest broker” role among existing shareholders, enabling the client to pursue its business plans and growth prospects. Strategic players are not likely to support expansion plans without requesting a larger/control equity stake. IFC helps its clients grow into local and regional champions. • Regional Knowledge and Experience: IFC can share its knowledge and experience as a longstanding financier. • Longer-term Investor: Unlike investment funds, IFC will invest its own resources. These resources are not subject to capital calls and do not need to be returned to investors after a period of time. • Stamp of Approval: Institutional investors with a lesser knowledge of the region often rely on IFC’s stamp of approval and detailed due diligence. In addition, IFC’s presence as a shareholder reduces the insurance company’s exposure to political risk and contributes to foster a positive dialogue with domestic regulatory and governmental authorities. 5
  • 6. Insurance: Significant Ramp up since 2011 Rapid growth starting in FY12 Recent rapid growth starting in FY12 as a result of dedicated resources and focus on business development. US$_mm Cumulative Exposure* from FYE07 ‐FY13  Cumulative Exposure from FYE07 ‐FY14 (Projected)  $1,200 1,102.6  $1,000 714.4  $800 $600 $400 $200 50.2  129.2  131.6  FYE08 FYE09 206.3  217.9  FYE10 FYE11 $0 FYE07 FYE12 FYE13 *For IFC’s own account 6
  • 7. IFC’s Insurance Investments 30 clients, US$1.3 million total committed portfolio * Europe, Central Asia & Middle East Committed Balance 284 m 4 # Clients % Insurance Portfolio 22% Latin America and the Caribbean Committed Balance 775 m 15 # Clients % Insurance Portfolio 59% Asia and the Pacific Committed Balance # Clients % Insurance Portfolio Sub-Saharan Africa Committed Balance 75 m # Clients % Insurance Portfolio *Including IFC AMC commitments, as of June 2013. 7 7 6% 182m 4 14%
  • 8. Examples of Insurance & Pensions Relationships announced and committed investments China Ancheng Middle East Brazil South Africa •US$81 million •Common Shares Inst. Endorsement •US$125 million •Common Shares Regional Expansion •US$200 million • Common Equity Inst. Endorsement •US$28 million •Common Shares Transformation & Growth India Nigeria Morocco Latin America •US$90 million •Common Shares Regional Expansion Latin America •US$125 million •Common Shares Regional Expansion •US$13.3 million •Common Shares Inst. Endorsement China Colombia •US$100 million •Risk sharing facility Surety Africa Peak RE •US$200 million •Common Shares Regional Expansion •US$82.5 million •Common Shares Asian Reinsurance •US$75 million •Common Shares Regional Expansion 8 •US$24 million •Common Shares Regional Reinsurance
  • 9. Insurance Portfolio Continued Growth, Better Product Diversification & Reduced Concentration  As of June 30, 2013, IFC’s Insurance portfolio consists of 30 clients in 23 countries with approximately US$1.3 billion disbursed o/s exposure.  83% in straight equity, 11% in convertible instruments and 6% in RSF.  Health insurance is the largest sub-sector in the portfolio, representing 28% of the total portfolio.  First risk sharing facility with Munich Re on its reinsurance portfolio of surety (performance guarantee) bonds to support the development of infrastructure in Brazil committed in FY13.    Additional equity mobilization from Asset Management Company of $150 million. Strong regional concentration in LAC (61%), but well diversified by sub-sector. Currently, the 6 largest investments represent 61% of the portfolio (down from 74% in FY12). Insurance portfolio accounts for approximately 10% of FM’s total economic capital.  9
  • 10. How Our Insurance Strategy Helps Meet IFC’s Objectives Growth • Insurance Industry growth is very high in emerging markets  Average Insurance growth in EMs is more than 10% per year  In addition, Insurance penetration as a % of Bank assets is low in EMs • For this reason, insurance investments in emerging markets generally provide superior returns on equity, if selected for consistent profitability Diversification • Insurance provides diversification to IFC’s FM portfolio   Non-life insurers (most of the EM market), have low correlation with the credit cycle on the liability side, and moderate correlation of the asset side During the recent banking crisis, limited failures were driven by bank-like activities of affiliated companies, niche sectors (e.g., mortgage insurance) and complex life guarantees /optionality offered mostly in developed markets Development Goals • Policy count, lives covered, pension participants, losses/benefits paid 10
  • 11. Potential Investment Instruments  IFC has a whole array of equity investment products that can be tailor-made to fit specific needs.  For equity investment IFC typically negotiates the right to nominate a Board member. Timeline Common Equity Preferred, Variable Div. Voting Equity Preferred, Fixed Div. Voting Equity Preferred, Variable/Fixed Div. Non-Voting Equity Conversion to Common Equity IFC Exit 5+ years. Convertible Debt Risk Sharing Facility Potential IFC investment structure. 11