Allianz Trade and the International Finance Corporation – a virtuous partnership to boost sustainable development

At Allianz Trade, we believe that the financial services sector has an important role to play in fostering economic development and sustainable growth.

As such, since 2018 we have adopted an “Impact Underwriting” strategy in our  Specialty Credit business, inspired by Allianz’s “Impact Investment” strategy. What this means in practice is that we work, amongst others, with multilateral entities that have a mandate to foster sustainable development, and underwrite policies that enable them to build on their programs.

These policies represent up to 20% of our Specialty Credit book and are part of a growing trend.  

Together with other leading insurers, we signed a 3.5bn USD policy with the International Finance Corporation, or IFC. The IFC, member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Their mandate is to finance local or regional banks and private sector companies in emerging markets, with the aim of fostering sustainable growth and development.

This policy covers the nonpayment risk in their Managed Co-Lending Portfolio Program for Financial Institutions. Now in its third cycle, the program aims to expand access to finance to small and medium enterprises, women-owned businesses, and those that work to address climate change. The IFC lends to local or regional banks, which then lend to these companies (through standard loans or micro-loans), creating additional financing to meet investment needs. In the past, IFC financing, supported by the Managed Co-Lending Portfolio Program, has enabled the Vietnam Commercial Joint Stock Bank (VIB) to finance small-to-medium enterprises (SMEs), micro-SMES and affordable housing projects in Vietnam, promoting financial inclusion and a deepening of the financial market.

It’s typical for a policy of this size to be syndicated, meaning multiple insurers share the risk - our share in this case is 200M USD. We’ve worked with the IFC since 2015, and this is our largest transaction to date. Given the track record we have built up together and the backing of the World Bank, the policy is designed to give the IFC a great deal of freedom in its transactions with its partner banks and institutions within the framework of the social impact mandate.

Around the world there are around 60 companies that offer specialty credit products. In this competitive landscape, Allianz Trade is one of the largest specialty credit providers, and one of only a handful with an AA rating. All of our work in Specialty Credit is tailor-made for our customers’ specific needs – whether it’s a global company, a bank, or a multilateral institution like the IFC – and our team’s wide range of expertise and professional experiences set us apart.