The Asian Development Bank (ADB) has signed an agreement with five insurance companies to mobilize up to US$1 billion of co-financing capacity to support lending for financial institutions in the Asia-Pacific region.

The Master Framework Programme 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 three-year partnership with Tokio Marine Group (Tokio Marine & Nichido Fire Insurance Co Ltd and Tokio Marine HCC), AXA XL, Chubb, Liberty Specialty Markets, and Allianz Trade.

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

“ADB has been a pioneer among multilateral development banks in partnering with private insurance companies to expand lending operations through the use of credit insurance,” says Bart Raemaekers, head of ADB’s guarantees and syndications unit.

“The relationships we’ve built with insurers have allowed us to mobilize this additional source of private capital as co-financing to help meet our client’s needs.” 

The programme streamlines the underwriting and approval process for risk transfers, and will allow ADB to more efficiently mobilize co-financing capacity.

ADB’s loans to the financial sector have included support for operational priorities such as micro, small, and medium-sized enterprises, gender equality, and efforts to address climate change.