The Natural Disaster Fund (NDF), a largely parametric risk transfer focused public-private partnership funded by UK and German governmental entities and managed by Global Parametrics (part of CelsiusPro Group) has signed up a major new capacity provider in global re/insurer MS Amlin.
The original vision was to create a natural disaster insurance and risk transfer focused fund with a development leaning, in terms of the low and middle-income focused counterparties it would trade and provide risk protection to.
The original plan also envisaged the Natural Disaster Fund (NDF) being open to third-party investors, but it has since focused on risk sharing agreements with major traditional market players.
First, Hannover Re signed up to support the NDF, providing its reinsurance capacity to augment the work of the fund.
Now, global player MS Amlin has joined as well, committing up to $50 million to share risks with the NDF and becoming its second commercial risk capacity partner.
The announcement calls the NDF a, “a blended risk transfer vehicle designed to mitigate climate-related challenges and build resilience for low-and-middle-income countries and currently has a portfolio of more than $100m of risks.”
MS Amlin will now support the NDF’s future growth, enabling it to support more risk transfer for communities in need.
“Our participation with the NDF reflects our commitment to deploying capacity where it can support adaptation, resilience and long-term insurability,” explained Amir Sethu, MS Amlin’s Head of Sustainability. “We are excited to be joining such an innovative structure, to support its mission and the vital work it undertakes worldwide. Through close collaboration with the NDF and its partners, we will help to mitigate losses caused by natural disasters and build a more resilient future for vulnerable communities around the world.”
“MS Amlin joining the NDF as a risk-sharing partner is an important new chapter in the NDF’s journey,” Mark Rueegg, Chief Executive Officer at CelsiusPro Group added. “It is part of the NDF’s mission to grow and to onboard global risk institutions. Therefore, building on the work with our highly-valued long-standing partner Hannover Re, we are bringing together cornerstone organisations in the risk transfer sector to grow the NDF and its portfolio, and therefore to increase the delivery of meaningful and sustainable impact where it is most needed.”
As the NDF scales, which this injection of capacity from MS Amlin will assist, there may still be future opportunities to bring third-party capital into the Fund, to expand its ability to write more parametric business.
Also today, it was announced that the UK Foreign, Commonwealth & Development Office (FCDO) made a new £3 million commitment to the Technical Assistance Facility (NDF TA Facility), operated by the Natural Disaster Fund (NDF).
It’s expected to support the development of of between 10-15 high-impact risk transfer projects targeted to assist climate-vulnerable communities and businesses until 2030.
“The $662 million payout to Jamaica following Hurricane Melissa showed that pre-arranged finance can work and it can get there at speed… but it wasn’t enough,” commented Baroness Chapman, the UK’s Minister for Development. “We can do much, much more. That’s why the UK is working with the multilateral development banks and the insurance industry to really scale these approaches. Today I am pleased to announce a new £3 million contribution from the UK to the Natural Disaster Fund Technical Assistance Facility. Doing this will help develop insurance solutions in climate-vulnerable countries – which will drive investment and resilient growth where it’s really needed the most.”
“This additional funding from the FCDO is a tribute to the continued successes of the NDF,” added Angus Kirk, Chief Executive Officer at Global Parametrics. “Climate and natural catastrophe risks have a disproportionate impact on low-and-middle-income countries. A significant lack of insurance coverage in these countries hinders their ability to recover and build resilience against catastrophic climate events and is a significant constraint to their economic growth and prosperity.
“Public-private partnerships, such as between the NDF, the FCDO and the KfW, play a crucial role in combining expertise and resources to help foster global knowledge sharing, innovation and long-term resilience-building efforts.”
