MIGA Signs First CUP with Chubb & Son: Banco Santander in Brazil

MIGA Signs First CUP with Chubb & Son: Banco Santander in Brazil

Washington, D.C., May 24, 1999 — Increasing collaboration between the private insurance market and MIGA, the Agency issued its first contract involving Chubb & Son of the United States for a project in Brazil. Also participating are four Lloyd's of London syndicates. The project will fund the expansion of the general lending activities of Banco Santander Brazil, S.A. (BSB), a wholly-owned subsidiary of Banco Santander, S.A. of Spain. MIGA's contract has been issued under its Cooperative Underwriting Program (CUP)* .

MIGA insured US$100 million of negotiable notes, with a three-year tenor, issued by BSB to Santander Brazil Risk Insured Trust (SBR), a trust created by Banco Santander Central Hispano and other investors. The transaction is noteworthy because it reaffirms Brazil's return to the international capital markets, in medium tenor issues. BSB is expected use the funds to lend to its target clients in the agriculture, infrastructure and manufacturing industries through its branches. It will respond to the growing demand for medium-term financing in Brazil.

This project reflects MIGA's recent efforts to increase the availability of insurance capacity for foreign investments by working closely with private insurers. MIGA's guarantee contract, totaling US$107 million in coverage, was co-insured under the Agency's CUP by the Great Northern Insurance Company, a member of Chubb & Son; Lloyd's of London syndicates ACE Global Markets' Syndicate 488/2488, M.D. Reith, Esq., And Others, Syndicate 861; M.E. Brockbank, Esq., And Others, Syndicate 1209; and N.J. Metcalfe, Esq., And Others, Syndicate 588.

Mr. Roger Pruneau, Vice President of MIGA Guarantees, reaffirmed MIGA's commitment to increasing insurance capacity in the marketplace for foreign investments in its developing member countries: " MIGA seeks to collaborate closely with private insurers to meet growing client demand for increasing amounts and tenors of insurance coverage for foreign investments in developing countries. With this transaction, we are very happy to establish a relationship with Chubb, and to extend our close ties with Lloyd's of London."

Ms. Pat Skold of Chubb & Son welcomed the contract with MIGA: "We are very glad to be involved in co-insuring a project with MIGA and look forward to facilitating many similar investments through such collaborative agreements with the Agency."

*​The CUP, a form of coinsurance in which MIGA acts as the insurer-of-record among other participating underwriters, is designed to increase available investment insurance capacity for investors by encouraging private insurers to offer coverage in developing countries where they might not have guaranteed investments without the involvement of a multilateral institution such as MIGA.