IFC To Boost Caribbean Insurance Industry

by Mike Godfrey, Tax-News.com, Washington

13 April 2011

International Finance Corporation (IFC), a member of the World Bank Group, recently agreed to invest heavily in a Barbados-based insurance company, in order to bolster market confidence and aid the expansion of Caribbean insurance services.

IFC is to pour up to USD100m into the Sagicor Financial Corporation, and the transaction will consist of up to USD20m in common shares, which will represent approximately a 4% stake in the company, and up to an additional USD80m in convertible and redeemable preference shares. The decision marks the IFC's largest transaction in the insurance sector to date.

The investment, announced on March 21, is intended to allow consumers to plan and invest in the future by helping to expand Sagicor’s presence in the Caribbean and eventually in Latin America. According to the IFC, it also demonstrates confidence in the long-term future of the Caribbean insurance industry following several market failures and a tightening of credit arising from the 2008 global economic crisis.

The IFC is currently seeking to develop its investment activities in the insurance sector, an effort which involves partnering with global and regional insurance companies that are focused on expanding in emerging markets. Commenting on the deal, the IFC's executive vice president Lars Thunell said: "This partnership between IFC and Sagicor will promote greater access to more types of insurance products in the region".

Sagicor Chairman Stephen McNamara said: "We view this investment, and indeed the level of investment by IFC, as a message of confidence in Sagicor". He added: "The benefits of this partnership and investment to the wider communities will become evident as Sagicor deploys the funds raised for growth within the region".

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