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Global Parametrics and Enabling Qapital launch the Climate Resilience Enhanced Debt product with Chamroeun Microfinance Plc. in Cambodia

September 10, 2021 – Global Parametrics (GP), provider of parametric protection solutions against natural hazard and extreme weather risks in emerging markets, and Enabling Qapital, an impact investor and advisor of the Enabling Microfinance Fund (EMF), today announce the joint development of the Climate Resilience Enhanced Debt (CRED) product.  The innovative offering enables microfinance institutions to access critical emergency financing after a climate event to help promote business continuity and increase resilience within the communities they serve.

The first CRED transaction was recently signed with Chamroeun, a leading microfinance institution in Cambodia.  The instrument targets Chamroeun’s agricultural lending portfolio of approximately 5,000 smallholders with protection against severe drought and flooding.  The financing solution has a three-year term.

When disasters hit, lenders typically pull back liquidity, which makes recovery more challenging for the communities they serve.  In contrast, the CRED product offers quick, countercyclical financing to businesses to speed up recovery.

The CRED product utilizes GP’s parametric index platform to tailor efficient structures to the climate risks of Enabling Qapital’s clients.  The Enabling Microfinance Fund then provides contingent financing on pre-agreed terms that is triggered based on GP’s climate indexes.  The contingent financing offers Chamrouen fresh cash post-disaster to help their borrowers continue operating in the face of such adverse conditions, which ultimately leads to more resilient communities in Cambodia.

To manage any downside risk of its CRED loans, the Enabling Microfinance Fund also purchases matching risk transfer protection from the Natural Disaster Fund (NDF) which is managed by the GP team.  Thus, when a contingent loan is triggered for the more extreme events, EMF receives a payment from the NDF and transfers the majority to Chamroeun in the form of interest rate reduction or principal forgiveness.  By efficiently packaging this parametric solution as an add-on to a standard loan product, GP and Enabling Qapital have been able to significantly reduce the cost of protecting vulnerable communities against climate risks.

The Enabling Microfinance Fund is currently USD 276 million in assets, with investments in loans to microfinance institutions across Asia, Africa and Latin America, and thus offers an ideal platform to replicate this offering in other markets.  As many communities in low- and middle-income countries grow increasingly vulnerable to climate risk, the CRED product can offer a much-needed solution for efficient and affordable risk management for lenders to the working poor.

Vice President of Global Parametrics, Dan Bierenbaum remarked: “We’re thrilled to partner with Enabling Qapital on this innovative solution.  With growing vulnerability to climate risks in emerging economies, we see the CRED product as an ideal way to get targeted financing into these communities post-disaster.  Leveraging credit instruments provides a particular cost efficient means to deliver the emergency funding, which helps to make this protection more affordable for the communities that need it most.”

Chuck Olson, Managing Partner at Enabling Qapital commented: “We have closely followed the pioneering work at Global Parametrics in mitigating climate risk, and are extremely proud to be working with them on the launch of our climate initiative.  We believe we have found the ideal partner in Chamroeun, as their experienced team is already pushing boundaries in access to finance in Cambodia.”

Yannick Milev, CEO of Chamroeun noted “Having a strategic partner to help us respond proactively with adapted services to our agri-business clients’ challenges, while at the same time protecting our assets, is an important development for Chamroeun.  Chamroeun’s ambition is to further expand its services to vulnerable families in rural areas, and this has been made all the more necessary by the current global Covid-19 pandemic.  Indeed, building resilient and competitive economies in the agricultural sector is an important strategy for all stakeholders in Cambodia, but brings with it important risks associated to increasingly uncertain weather patterns.  Chamroeun’s partners (clients) are the ones most vulnerable to these, and it is important we come together as a global community in initiatives such as this one, for us to all share the burden of that risk more equally.”

About Global Parametrics 

 Rethinking Risk to build more Inclusive Resilience: Extreme weather events and natural hazards are being intensified by climate change, increasing the frequency and intensity of economic shocks which disrupt business and threaten livelihoods.

Established in 2016, Global Parametrics is a specialty provider of parametric solutions for natural hazard and extreme weather risk in emerging economies. Working with the private, public and third sector, GP uses its innovative climatic, seismic and financial risk modelling to rethink resilience for a new era of risk.   

Learn more at: https://globalparametrics.com/    

About Enabling Qapital – Moving Money to Meaning

Enabling Qapital Ltd. is an Impact Investment Advisory Company with strong ties in the impact investment sector, deep expertise in finance, and a proven investment management track record.  Enabling Qapital has built an innovative state-of-the-art approach to investing with impact.  The Founding partners have combined a unique set of skills and a 100+ year successful track record to become the exclusive advisor to the Enabling Microfinance Fund.

Enabling Qapital has a global footprint with teams based in Switzerland, Liechtenstein, Africa, Central Asia, East/South Asia and Latin America.  The key strength of EQ’s business model is its people – combining a local presence in the regions where they work with experienced Investment Officers who originate, execute and monitor impact investments.

Learn more at:  https://www.enabling.ch/

About Chamroeun Microfinance Plc.

Chamroeun Microfinance Plc. is a licensed microfinance institution based in Cambodia, currently supporting 45,000+ partners (clients) in 16 of Cambodia’s 25 provinces. Chamroeun is a client-certified institution and aims to be the leading social microfinance institution in Cambodia. With 21 branches and a portfolio exceeding 30 million USD, Chamroeun has developed a range of innovative solutions to promote inclusive and responsible lending. Chamroeun’s portfolio is currently in rural areas at 60%, and in support to agricultural businesses at 30%. It provides both end-user and corporate financing in the agricultural sector, with exposure to a range of commodities and value-chain actors, including rice, aquaculture, poultry, cassava, and others. Chamroeun’s offer of loan services is mostly uncollateralized, and it supports its partners with financial literacy and business development services.

Learn more at:  https://www.chamroeun.com/

Global Parametrics and The Demex Group announce partnership to provide coverage for the most remote locations in a global offering.

Washington, DC and London, United Kingdom – The Demex Group, creators of a first-of-its-kind platform for analyzing, pricing, and transferring climate-linked risks at scale and Global Parametrics, provider of parametric solutions for natural hazard and extreme weather risk in emerging economies, today announced 2 new programmes enabling financial protection for those traditionally underserved by formal risk transfer. The collaboration harnesses Demex’ core technology to develop protection for smallholders in both the Philippines and Vietnam, in order to combat climate risks and enhance community resilience.

In the Philippines, within a consortium led by Global Parametrics and including CLIMBS, IBISA Network and the International Centre for Tropical Agriculture (CIAT), the initiative is developing a novel new protection for agricultural cooperatives.

The overall objective of the product offering is to help cooperatives finance agricultural entrepreneurs against hydrometeorological risks, in order to build resilient and sustainable communities. The consortium provides a meso-level solution; for the initial transaction, the product will be offered to four savings and credit cooperatives and one agricultural cooperative affiliate, with the aim to rapidly scale for coming seasons.

Coffee production provides a livelihood for 2.6 million people in Vietnam, including over 600,000 smallholder farmers. Climate change threatens to become an environmental disaster for farmers due to decreased water availability, pest and disease attacks and more frequent extreme weather events. Global Parametrics deployed the Demex Solutions Center to structure a parametric extreme rainfall protection for ECOM coffee group in the Central Highlands of Vietnam. This programme is the first of its kind whereby a global trading entity is supporting its smallholder producers with a non-subsidised climate resilience product, acting as a benchmark for future programs.

Global Parametrics and Demex are improving coverage for the most remote locations with unparalleled quick, efficient, and comprehensive coverage across a range of perils including excess wind, drought, flood, and tropical cyclone.

Alin Radu, Head of Product and Structuring for Global Parametrics said, “Demex enables us to rapidly price and settle high volumes of transactions. This gives us the capability to easily replicate, scale and enhances our ability to operate anywhere in the world.”

Steve Bennett, Head of Product for Demex said, “We’re excited to work with Global Parametrics to create secure and scalable solutions that are specifically designed for hyper-local climate safeguards.”

Hector Ibarra, Chief Executive Officer for Global Parametrics said, “We are delighted to partner with Demex who have not only furthered our offering but also boosted our ability to provide innovative climate protection and resilience solutions to the underserved. We look forward to continue to work together in supporting this commitment.”

Ed Byrns, Chief Executive Officer for Demex said, “Global Parametrics’ focus on traditionally underserved communities is an important part of the ecosystem for climate resilience. This initiative is an important step toward our Demex mission to make it simple for businesses to financially protect themselves from climate-linked operational risk at a global scale.”

In partnership with

About The Demex Group

Demex technology is a first-of-its-kind platform for analyzing, pricing, and transferring climate-linked risks at scale. With increasingly variable weather conditions, Demex offers businesses the ability to manage risk and create opportunity.

Demex enables businesses to identify and implement climate risk transfer solutions by seamlessly integrating the weather data, cashflow modeling and channel partners required to provide coverage that’s tailored for each customer. 

Demex shields customers from the financial surprises of volatile weather so that they can grow their businesses. Learn more at www.thedemexgroup.com   

About Global Parametrics

Rethinking risk to build more inclusive resilience:  Extreme weather events and natural hazards are being intensified by climate change, increasing the frequency and intensity of economic shocks which disrupt business and threaten livelihoods.   

Established in 2016, Global Parametrics is a specialty provider of parametric solutions for natural hazard and extreme weather risk in emerging economies. Working with the private, public and third sector, GP uses its innovative climatic, seismic and financial risk modelling to rethink resilience for a new era of risk.   Learn more at: https://globalparametrics.com/    

Our Partnerships and Business Development Lead, Juan Marcano, writes for Global Parametrics as part of the UK Department for International Trade‘s Business of Resilience thought leadership series. The Business of Resilience Campaign is promoting the UK’s capabilities in resilience insurance and associated services covering climate and natural disasters, pandemics, cyber and other related supply chain risks. 

Climate change is increasing natural hazards and extreme weather risks globally. But as these risks grow, so have the number of innovations to mitigate them. Insurance – often seen as the dull side of finance – now has a key role in providing solutions to the climate crisis.

Currently, many businesses and individuals lack formal risk transfer in areas which suffer from natural hazard and extreme weather risk. This protection gap poses a challenge, but also an opportunity for re/-insurance players to strengthen global economic resilience and to grow into these emerging markets. Harnessing innovations in technology and risk management has only increased the ability to develop such solutions and cover previously uninsurable risk.

The experience in Mexico

The Mexico Reef Protection Programme (MRPP), launched in 2018, was seen as a first step in changing how we value our natural assets, and the place of the insurance sector in protecting and restoring natural landscapes.

The programme protects a large section of the Mesoamerican reef, releasing payouts in the event of a tropical storm to be used for restoration of the reef itself.

Providing cover for the reef not only protects the reef, but has knock-on positive effects to the communities on its shore. Coral reefs act like natural sea walls; shielding nearby buildings from the devastating impacts of tropical storm surge. Preserving the reef also retains the ecosystem (beaches, dunes, marine environment) which are essential for tourism income in the area. The programme is a prominent example of a nature-based solution; conserving and protecting nature to the benefit of society and human well-being.

The Reef Programme is a parametric solution; providing a pre-agreed payment based on the probability of the pre-identified event. These methods of coverage take away the need for valuing the asset itself, meaning the policy is triggered not by financial losses, but when a pre-identified event occurs, which in this case is when wind speeds exceed 100 knots in a pre-defined area.

Parametric solutions provide an ordered and managed method to inject funds from global reinsurance and capital markets into areas impacted by natural catastrophe risk. This market solution relies on private capital to finance a gap which would otherwise be shouldered by local government and communities.

How it all works

For the MRPP, funds are paid out following a parametric trigger for a tropical storm in an area of the Mesoamerican reef. Leveraging parametrics for the programme ensures a rapid and objective payout, and transparency on payment conditions. Through the latest technology in scientific risk hazard modelling, the risk of tropical storm in the area can be more easily understood, allowing local government and affected communities to consider further pre-disaster risk assessment management and response planning.

Integrating the understanding of risk on the ground as perceived by the end user creates a better placed product. By engaging with the local government of Quintana Roo, the MRPP helps to achieve the sustainability of the programme in future, promoting knowledge sharing of the technology and infrastructure behind the programme and the creation of an inclusive and transparent system for premium collection.

Innovative programs such as the MRPP, are often initiated and subsidized via donor agencies or corporate social responsibility initiatives, which, although useful for establishing a programme’s infrastructure and mechanisms, are not focused on sustainable methods to continue and expand once the duration of the programme is complete.

By engaging the local financial sector, the state of Quintana Roo was able to renew this programme without subsidies, even during the Covid-19 Crisis. The renewal was conducted through Mexican insurer Banorte, supported by Global Parametrics and the Natural Disaster Fund – a public private partnership designated to mitigate the challenges in natural disaster resilience for low-and middle-income countries with participation from the UK and German governments and global reinsurer Hannover Re.   The local commitment and brings understanding of such a programme and its associated products to the local market, thereby increasing capacity at the local level for future renewals and scale.

The local benefits

Following Hurricane Delta on 7^th October 2020, the reinsurance policy paid out 40% of the total limit within 14 days. The final payment was used to fund work dedicated to the restoration of the reef. Given these successes, the local government of Quintana Roo is looking to expand the scope of the programme to include beaches and dunes, and to scale up the geographic coverage.

As the risk of extreme weather and natural hazards grow, so does the opportunity for firms to take part in risk management solutions. Nature based solutions are an important tool to manage the effects of climate change. Risk transfer can both protect the natural and human element of these programmes and mitigate the financial impact of natural events. Linking the two creates sustainable interventions that build local resilience and capacity to help mitigate the impact of extreme weather events.

In partnership with

To learn more about the insurance industry and the positive impact it has in climate resilience join the Business of Resilience Conference 2021

See below for the full report

GP NDF Impact Report 2020

“It is becoming clear that, in this uncertain world, protecting the economic activity of customers is as important as protecting their assets and speed of payment is essential.”

Our Partnerships and Innovation Lead, Toby Behrmann, featured in Insurance Day this week. 

Toby gives an insight into the power of parametrics; outlining why 2020 created the perfect storm for extensive growth in these solutions. 

In December 2019, Hannover Re, KfW and our Natural Disaster Fund announced joint collaboration, with the aim to bring sustainable risk transfer solutions to low and middle income countries. 

One year on, our partnership has reached over 10 million beneficiaries, across 21 countries in Latin America, Africa and Asia.

At the Insuresilience Global Partnership Forum on Monday 7th December, we took a look back on our first year, exploring the importance of public private partnerships for implementing actionable programmes to combat the protection gap. 

Speakers included our founder Dan Bierenbaum, Principal Portfolio Manager Stefan Hirche of KfW and Hannover Re’s Managing Director Henning Ludolphs. 

Watch the event here: 

Global Parametrics (GP) has structured two risk transfer solutions using its new Water Balance Index (WBI), enabling partners IBISA and One Acre Fund to provide drought and excess rainfall protection in India and Tanzania. The WBI estimates changes to the proportion of water in soil, using monthly rainfall, evapotranspiration and other weather variables such as temperature and wind speed. WBI has uses worldwide: to hedge drought risks and reduce the negative impacts of water imbalance on crops, closely tied to water shortages, food insecurity and economic losses.

Global Parametrics was honoured to be featured in the IDF’s report “The Development Impact of Risk Analytics“. The IDF is a partnership led by the insurance industry and supported by the UN, World Bank, NGOs and other international organisations, calling for international collaboration to develop and share capabilities in disaster risk understanding where it is needed most. The report encompasses the contributions of over 30 industry professionals, across private sector, development agencies and specialists, academia and international NGOs.  

GP’s work delivering anticipatory cash transfers with Oxfam and Plan International for the B-READY programme in the Philippines was featured. B-READY harnesses digital cash transfer and forecast parametric index to trigger payments to vulnerable households prior to tropical cyclones making impact, strengthening the resilience of local communities.

Read the IDF report here: https://www.insdevforum.org/report-development-impact-risk-analytics

GP has structured a solution to provide windstorm protection on the world’s most remote habitable island. Our unique wind index will help safeguard Tristan da Cunha’s lobster factory which is responsible for 70% of the island’s income. This is indicative of our continued commitment to providing protection to businesses and communities in emerging markets.