34052 - QBE Equity 2

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Summary of Investment Information

Project Number

34052

Company Name

ISTMO COMPANIA DE REASEGUROS INC

Date SPI Disclosed

Aug 28, 2013

Country

Panama

Region

Latin America and the Caribbean

Projected Board Date

Sep 30, 2013

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : Sep 26, 2013
Signed : Nov 6, 2013
Invested : Dec 18, 2013

Sector

Reinsurance

Project Description

The proposed investment in QBE del Istmo Re (the “Company” or “QBEDIR”) fits well with IFC’s industry strategy to support locally-based reinsurance companies that have a regional focus. By providing insurance for insurance companies, reinsurance companies support the industry in managing its business more effectively in the context of risk, uncertainty and volatility of insurers’ underlying underwriting and business activity. In addition, reinsurers also provide expertise and services to primary insurers, especially in the fields of product development, pricing, underwriting and claims management. This is particularly useful in developing markets where access to insurance skills may be limited and costly.

IFC originally committed US$10.0 million in preferred shares and US$8.5 million in common shares (resulting 7.4% common equity stake) of QBEDIR in March 2010. Since then, the Company has continued to expand its product base and geographic reach with the support of a strong management team. The proposed project consists of an additional equity investment and sends a positive signal to the market as QBEDIR’s second largest shareholder, QBE Insurance Group, divests its participation. The investment will also allow the Company to focus on its regional expansion strategy.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	4.50

Development Impact

(i) Ability to support a regional reinsurance company and current IFC client dedicated to increasing access to insurance products to SMEs in 18 LAC countries, including IDA countries.
(ii) In face of the second largest shareholder exiting, IFC''s participation will allow the Company to focus on breaking into new markets and expanding in several smaller ones.
(iii) Over the short to medium term, IFC is expected to support the Company''s listing on an international public market and increase the likelihood of a successful IPO.

(i) Stamp of Approval: IFC''s participation will send a positive signal to the market, which includes rating agencies, and potential multilateral and private investors - a crucial step as the Company seeks credible investors to replace QBE Insurance Group.
(ii) Long-term partnership: IFC will provide patient capital to a leading regional insurer and allow QBEDIR to focus on its regional growth (South-South projects), and improvement in risk management practices.
(iii) Corporate governance expertise: IFC''s participation and the crowding in of additional investors will help QBEDIR move away from a family and management-owned business, leading to more transparent corporate governance. IFC and the Company have agreed upon a corporate governance action plan to be implemented in coming months. IFC will propel the Company towards utilizing international corporate governance standards.

E&S Category Rationale / Risks and Mitigation

This is an additional equity investment in QBEDIR, a Company focused on reinsurance and insurance business. While the Company is not directly involved in financing projects, it has some exposure to infrastructure projects, some of which with potentially high E&S risks, through its surety business. As such, the project was categorized as FI-2 according to IFC''s Sustainability Framework.

The key E&S risks of the project are related to the Company’s surety business, which may involve policies to projects with E&S risks, specifically in the infrastructure sector. In order to manage these risks, the Company will be required to follow international best practices on E&S risk management for the insurance industry and to develop an E&S risk screen, aligned with the IFC''s Performance Standards, to identify potentially problematic projects with unresolved E&S risks. QBE has some E&S management capacity, applying the IFC exclusion list consistently over the life of the existing project with the IFC.

Contacts

For Inquiries About the Project, Contact

Ramón Fernández Morales
Vicepresidente Mercadeo y Productos
QBE del Istmo Compañia de Reaseguros, Inc.
Costa del Este, Avenida Paseo del Mar
Calle Vista del Pacifico No. PH-1
Apartado Postal 0816-03239
Republica de Panama
E-mail: mailto:ramon.fernandezm@istmore.com

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This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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Task Title & Description	Anticipated Completion Date
Nominate officers	10/30/2013
Establish SEMS
Staff Training

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