Release date: 8 June 2023
Promoter – Financial Intermediary
BLUEORCHARD ASSET MANAGEMENT (LUXEMBOURG) SALocation
Description
The operation consists in a junior participation in the BlueOrchard InsuResilience Fund II on behalf of the Luxembourg-EIB Climate Finance Platform (LCFP). The Fund targets climate change adaptation and resilience through innovative and high-growth companies operating in the insurance industry.
Additionality and Impact
The Fund addresses a market failure related to the availability and affordability of climate insurance products for vulnerable and low-income populations, particularly in developing countries. Many individuals and small businesses in developing regions do not have access to traditional financial services, including insurance. This financial exclusion leaves them highly vulnerable to the economic impacts of climate-related events, as they lack the means to protect their assets and livelihoods. Furthermore, climate-related risks, such as extreme weather events, can be difficult for private insurers to assess and underwrite, especially in regions with limited historical data. As a result, they may be reluctant to offer affordable insurance options to these populations, leaving them without coverage.
The EIB's additionality is expected to be high given EIB's involvement in the fund structuring and fundraising process as well as the provision of first-loss capital to the Fund. The EIB had already provided a similar assistance to the predecessor fund, whose fundraising was conducted at a challenging time and only gained momentum with EIB's involvement that crowded in additional investors and brought the fund closer to its target size. The EIB's stamp of approval and capital is expected to be equally catalytic for the Fund and attract important private and public sector investors. Moreover, the EIB's involvement will ensure the adoption of best practices in Fund's legal documentation and governance structure.
The Fund is expected to contribute to several SDGs, including SDG 1 (No Poverty), SDG 2 (Zero Hunger), SDG 8 (Decent Work and Economic Growth), SDG 10 (Reduced Inequalities), SDG 11 (Sustainable Cities and Communities) and SDG 13 (Climate Action).
Objectives
The aim is to improve the resilience of poor and vulnerable households, as well as micro, small and medium enterprises to weather events and natural catastrophes. To that end, the Fund will provide financing to portfolio companies that are active or seeking to become active in the value chain for insurance, enhancing the final beneficiaries' resilience to the aforementioned disasters. The portfolio companies need to be based or operating in countries which are eligible to receive Official development assistance (ODA) and which are listed at the time of the respective investment in the OECD Development Assistance Committee list of ODA recipients.
Sector(s)
- Services - Financial and insurance activities
Proposed EIB finance (Approximate amount)
USD 5 million (EUR 5 million)
Total cost (Approximate amount)
USD 100 million (EUR 94 million)
Environmental aspects
The beneficiaries of the Fund must comply with environmental and social requirements and the standards of responsible finance.
Procurement
Not applicable.
Status
Signed - 21/12/2023
Disclaimer
Before financing approval by the Board of Directors, and before loan signature, projects are under appraisal and negotiation. The information and data provided on this page are therefore indicative.
They are provided for transparency purposes only and cannot be considered to represent official EIB policy (see also the Explanatory notes).