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International Finance Corporation (IFC), an arm of the World Bank Group, has signed a $3.5 billion credit insurance policy with 13 global insurance companies under its Managed Co-Lending Portfolio Programme (MCPP). IFC said the agreement constitutes a milestone that will support economic activity and foster development in emerging markets.

The programme, MCPP Financial Institutions III, mobilises the risk capacity of leading insurers to support more than $7 billion of new IFC medium- and long-term lending to commercial banks and non-bank financial institutions over the next six years. The programme will increase access to finance for micro, small, and medium enterprises, including women-owned businesses, as well as firms addressing climate change.

MCPP Financial Institutions III is IFC's largest ever mobilisation in a single agreement. It will unlock the insurance industry's risk-bearing capacity to increase private capital deployment and enable billions of dollars of additional development finance to support economic growth, job creation, and poverty reduction, IFC said in a statement.

"Insurance is not just about managing risks. It is also about underwriting human potential and development in emerging economies," said John Gandolfo, IFC Vice President and Treasurer, Treasury & Mobilization. "This new facility demonstrates the opportunity for leading insurers and development finance institutions to work together to solve the world's most urgent development challenges."

MCPP Financial Institutions III has garnered the participation of a consortium of prominent insurers, including continuing participants Liberty Specialty Markets, Munich RE, the Tokio Marine Group, AXA XL, Everest, and Aspen. The Hartford, Swiss Re, AXIS Capital, HDI Global Specialty, Allianz Trade, Sompo International, and SCOR are joining the programme for the first time.

IFC said MCPP Financial Institutions III enables insurers to expand insurance coverage to unique developmental transactions in markets – and with clients – that deliver positive social, economic, and environmental impact. It connects insurers to IFC's diversified pipeline of financial institution lending, which will be 100 percent aligned with the Paris Climate Agreement by 2025.

The new programme will increase the total capacity raised under the MCPP, IFC's portfolio syndications platform, to over $16 billion. To date, MCPP has supported more than 260 IFC clients across 63 countries.