MIGA Signs First Reinsurance Agreement with ACE Global Markets: Mortgage Lending Project in Argentina

MIGA Signs First Reinsurance Agreement with ACE Global Markets: Mortgage Lending Project in Argentina

April 1, 1999 — MIGA signed its first reinsurance agreement with ACE Global Markets' Syndicate 488/2488 of Lloyd's of London, extending its close cooperation with private insurers so as to increase availability of political risk insurance for foreign investments in developing countries. The $31 million long-term (15 years) agreement with a multilateral insurer is groundbreaking for ACE Global Markets. It covers a $50 million loan by Lloyds Bank of the United Kingdom to its wholly-owned subsidiary in Argentina, to expand its residential mortgage lending operations. Reinsurance allowed MIGA to provide adequate coverage for this project which will support the construction industry, the fastest-growing sector in the Argentine economy and an important generator of employment.

The funds will be on-lent through Lloyds Bank's network of 51 offices in Argentina for residential mortgages. The project will help to create a large number of jobs in the construction industry and will have significant downstream effects, such as increasing business for manufacturers of building products, furniture, household appliances and related consumer goods.

Mr. Iain Cheyne, Managing Director, International Banking, Lloyds Bank Plc, said: "We are pleased with MIGA's continued support in providing sufficient amounts of high-quality guarantee coverage for our loan investments in developing countries. We look forward to continuing our long-standing relationship with MIGA."

Mr. Jack Gressier, Deputy Underwriter, Syndicate 488/2488 London, said: "We are honored to be associated with MIGA in reinsuring this project. This first step will be one of many for ACE Global Markets in building a successful long-term relationship with MIGA."

Mr. Roger Pruneau, Vice President of MIGA Guarantees, commented on MIGA's ability to insure loans by commercial banks: "We are especially glad to participate with another Lloyd's of London syndicate in increasing insurance capacity to cover developmentally beneficial projects."

MIGA's collaboration with ACE Global Markets follows a coinsurance arrangement with Lloyd's of London's Brockbank Syndicate Management Ltd. under MIGA's Cooperative Underwriting Program (CUP). These initiatives are part of MIGA's efforts to expand its role in increasing insurance coverage capacity for investors, through collaborative reinsurance and coinsurance mechanisms with other insurers. This includes treaty reinsurance agreements with ACE Bermuda Insurance Ltd and XL Insurance Company Ltd. of Bermuda, and facultative reinsurance agreements with the EDC of Canada, OPIC of the United States and EID/MITI of Japan.