Swiss Re collaborates with World Bank on infrastructure investment strategies

According to the OECD, of the USD 80 trillion or so managed by institutional investors such as insurance companies and sovereign wealth funds, less than one percent is earmarked for infrastructure investment. The recently signed collaboration between Swiss Re and the World Bank's Global Infrastructure Facility could help to unlock more infrastructure investments – and thus contribute to growth and job creation.

On 9 October 2014, at the annual IMF/World Bank meetings in Washington DC, the World Bank unveiled its Global Infrastructure Facility (GIF), a partnership of public and private sector entities.

Swiss Re will collaborate with the GIF as an advisor in order to help establish infrastructure investment as an asset class, as well as to provide innovative insurance risk solutions for the sector.

Infrastructure investing high on G20's agenda

Swiss Re's Asset Management has been a strong voice over the past years in the public policy discussion about how to unlock the potential of institutional investors for long-term investments.

Guido Fürer, Swiss Re's Group
Chief Investment Officer

Guido Fürer, Swiss Re's Group Chief Investment Officer, represented the private sector and spoke during the launch, sharing the stage with the  Finance Minister of Australia, which currently holds the G20 presidency, and the World Bank and European Investment Bank Presidents. Infrastructure investments are very high on the Australian and G20 agendas as recognized by the numerous official statements.

Need for a new asset class

"Lowering infrastructure impediments is important to attract long-term investors and to this end we need to have a tradable asset class," Fürer said at the World Bank signing ceremony.

"Today, infrastructure debt investments are not standardised and there is a lack of bankable projects. Also, new risk solutions can help developing economies avoid exposing the public coffers to natural catastrophes as they step up their infrastructure investments. Such risk transfer solutions can also make investments into infrastructure projects more attractive."

He added that Swiss Re looks forward to partnering with the World Bank as an advisor to work towards this common goal.

Among other activities, the GIF collaboration also includes engagement with policymakers on an international level, such as the G20.

Crucial twin role of the re/insurance industry

The re/insurance industry is not only a very important risk transformer but also one of the world's largest institutional and long-term investors. So it stands to reason, from Swiss Re's point-of-view, that expanding infrastructure investment is not unduly exposed to fiscal risk. And one of the major sources of such risk is natural disasters - especially in developing countries. It is here - to accompany sustainable investments and strengthen resilience to natural disaster - that the re/insurance industry with its special knowledge about risk has a range of innovative solutions to offer.

The GIF aims to expand the sources of long-term finance for infrastructure in emerging markets and developing economies by helping infrastructure investment evolve into a recognized asset class for private investors. This will be achieved through strengthening project preparation and the structuring of complex infrastructure projects, which the GIF itself will help finance. The grouping constitutes an important building block towards unlocking the potential of long term investors for infrastructure building and renewal.

Published 14 October 2014

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