“Thanks to the support of the international financial markets and all parties involved, insurance coverage can be confirmed to participating countries on June 1,” announced Caroline Anstey, World Bank Country Director for the Caribbean. “This new Facility is being launched just in time for the beginning of the 2007 hurricane season, which according to the experts, may be particularly severe.”

The CCRIF is operated by Caribbean Risk Managers Ltd., with captive management support from Sagicor Insurance Managers Ltd. The brokerage firm Benfield Ltd. secured CCRIF’s reinsurance capacity from international reinsurers Munich Re as the lead reinsurer, with Paris Re as the main following market, and Hiscox (Lloyd’s Syndicate 33) also participating. The World Bank Treasury has arranged for CCRIF to transfer a portion of the catastrophe risk to the capital markets through a swap transaction.

The CCRIF’s capacity to service claims is based on its own reserves combined with the financial capacity of the international financial markets. This will allow CCRIF to respond to events that may occur only once every 1,000 years or more, achieving a higher level of resiliency than international standards.

CCRIF was able to secure US$110 million of claims paying capacity on the international reinsurance and capital markets. The reinsurance structure consists of four layers: CCRIF retains the first layer of US$10 million; reinsurers underwrite the second (US$15 million) and third layers (US$25 million); the top layer (US$70 million) is financed with reinsurance (US$50 million) plus US$20 million coverage through a catastrophe swap between the World Bank (IBRD) and CCRIF. IBRD hedged its risk through a companion cat swap with Munich Re Capital Markets. The US$20 million swap between IBRD and CCRIF is the first transaction to enable emerging countries to use a derivative transaction to access the capital market to insure against natural disasters. It is also the first time a diversified pool of emerging market countries’ catastrophe risk is placed in the capital markets.

Caribbean States are highly vulnerable to natural disasters--on average, one major hurricane affects a country in the region every 2 years - and they have only limited options available to respond. Work is also being considered to expand the scope of the coverage provided by CCRIF to other natural hazards such as floods and tsunamis, and to other Caribbean territories.

CCRIF participating governments are: Anguilla, Antigua & Barbuda, Bahamas, Barbados, Belize, Bermuda, Cayman Islands, Dominica, Grenada, Haiti, Jamaica, St Kitts & Nevis, St Lucia, St Vincent & the Grenadines, Trinidad & Tobago, Turks and Caicos Islands.