BAKU, Azerbaijan, June 17. The participation of the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) as a guarantor significantly increases the confidence of private insurers and investors, opening access to billions in financing for infrastructure projects in developing countries, Global Head of Credit & Political Risk at Specialist Risk Group (SRG), John Lentaigne, said during a panel session at the 14th Islamic Development Bank (IsDB) Group Private Sector Forum, Trend's correspondent reports from the event.
"When ICIEC works together with private insurers, it really works. ICIEC is excellent at mobilizing private reinsurers, who are not driven by development objectives on their own," he said.
According to Lentaigne, the team he leads covers approximately $25 billion in insured assets, the majority of which are in the emerging markets of Africa, the Middle East, Asia, and Central Asia.
"The combination of ICIEC guarantees, private reinsurance, and bank financing often provides a cost of capital significantly lower than alternative sources, including capital markets," he noted.
At the same time, the expert emphasized that geopolitical risks remain the main constraint on the insurance market.
"The war in the Middle East has hit insurers hard. Companies insuring war risks are facing a loss ratio of around 400% this year. This is why companies in the Persian Gulf are complaining about the cost of insurance," Lentaigne stated.
According to him, in addition to military conflicts, climate risks and sovereign default risks have a significant impact.
"ICIEC can mitigate some of these risks, but there comes a point when private insurers simply lose interest in the market. This currently applies to several countries in the Sahel, as well as Syria, Sudan, and Libya," he said.
The expert also highlighted the growing role of blended finance mechanisms.
"ICIEC acts as the transaction's anchor institution, providing credibility through its credit rating, preferred lender status, and high underwriting standards. This is what gives private reinsurers confidence," he noted.
According to him, the combination of ICIEC guarantees, resources from multilateral development banks, and private reinsurance has the potential to "unlock billions of dollars of capital," while simultaneously extending the maturity of financing and reducing its cost.
"Another important innovation that ICIEC is actively developing is the ability to repackage such transactions and sell them to institutional investors. Thanks to this, for example, Japanese pension funds have the opportunity to invest in projects in Central Asia and Africa, which would not be possible without ICIEC's participation," Lentaigne said.
Summing up, he emphasized that the corporation has significantly strengthened its position in recent years.
"When ICIEC operates at its peak, it is a truly outstanding institution, capable of attracting vast amounts of private capital," Lentaigne concluded.
