Document of
The World Bank
Report No: 64562-LAC
RESTRUCTURING PAPER
ON A
PROPOSED PROJECT RESTRUCTURING
OF
THE CARIBBEAN CATASTROPHE RISK INSURANCE FACILITY PROJECT
P108058/TF058302
MAY 4, 2007
TO THE
CARIBBEAN CATASTROPHE RISK INSURANCE FACILITY
OCTOBER 3, 2011
ABBREVIATIONS AND ACRONYMS
CCRIF
MDTF
Caribbean Catastrophe Risk Insurance Facility
Multi-donor Trust Fund TF070721
Regional Vice President:
Country Director:
Sector Manager:
Task Team Leader:
Pamela Cox
Françoise Clottes
Guang Z. Chen
Niels Holm-Nielsen
CARIBBEAN
CARIBBEAN CATASTROPHE RISK INSURANCE FACILITY
CONTENTS
Page
SUMMARY .................................................................................................................................... 1
PROJECT STATUS ...................................................................................................................... 1
Restructuring
Status: Final
Restructuring Type: Level 2
Last modified on date : October 20, 2010
1. Basic Information
Trust Fund ID & Name
Recipient/Executor
Task Team Leader
Sector Manager/Director
Country Director
Original Board Approval Date
Current Closing Date
Proposed Closing Date [if applicable]
EA Category
Revised EA Category
EA Completion Date
Revised EA Completion Date
TF058302, Caribbean Catastrophe Risk Insurance Facility
Caribbean Catastrophe Risk Insurance Facility
Niels Holm-Nielsen, LCSUW
Guang Zhe Chen, LCSUW
Françoise Clottes, LCC3C
Not applicable
January 16, 2012
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
2. Revised Financing Plan (US$)
Source
TF070721
Total
Original
24,000,000.00
24,000,000.00
Revised
70,997,902.39
70,997,902.39
3. Borrower
Organization
Not applicable
Department
Location
4. Implementing Agency
Organization
Sagicor Insurance Managers
Department
Location
Cayman Islands
5. Disbursement Estimates (US$m)
Actual amount disbursed as of
Fiscal Year
FY 2012
Annual
Not Applicable
i
Cumulative
65.9
6. Policy Exceptions and Safeguard Policies
Does the restructured project require any exceptions to Bank policies?
No
Have these been approved by Bank management
Is approval for any policy exception sought from the Board?
Does the scale-up of restructured projects trigger any new safeguard policies? If yes,
please select from the checklist below.
Safeguard Policy
Environmental Assessment (OD 4.01)
Natural Habitats (OP 4.04)
Forestry (OP 4.36)
Pest Management (OP 4.09)
Cultural Property (OPN 11.03)
Indigenous Peoples (OD 4.20)
Involuntary Resettlement (OP 4.12)
Safety of Dams (OP 4.37)
Projects in International Waters (OP 7.50)
Projects in Disputed Areas (OP 7.60)
Last Rating
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
No
Proposed
7a. Project Development Objectives/Outcomes
Original/Current Project Development Objectives/Outcomes
From the Grant Agreement: “The objective of the Project is to help provide a better mechanism for dealing
with catastrophic risks initially in the Caribbean region by supporting an (sic) establishment and operations
of the Caribbean Catastrophe Risk Insurance Facility (the Facility).” The outcome is that Caribbean
Community (CARICOM) member or associate member countries that participate in the Facility receive a
cash pay-out in the event of a hurricane or earthquake of an intensity and proximity that meet the
parameters of their respective policy.
7b. Revised Project Development Objectives/Outcomes [if applicable]
Not applicable
ii
CARIBBEAN CATASTROPHE RISK INSURANCE FACILITY
RESTRUCTURING PAPER
SUMMARY
1. The purpose of this Level 2 Restructuring is to increase the amount of the Trust Fund
CCRIF Grant Agreement (TF058302) from US$70,000,000 to US$70,997,902.39
million by transferring to it US$997,902.39 from the Multi-donor Trust Fund (MDTF
– TF070721), as requested by the Grantee. The MDTF, which is administered by the
World Bank, was set up in 2007 with World Bank and other donor contributions1, for
the express purpose of supporting CCRIF’s establishment, initial operations, and
growth of financial capacity to provide hurricane and earthquake insurance to
participating Caribbean countries and territories.
2. The MDTF received donor contributions equivalent to US$67.4 million. Interest
income to the MDTF since then, net of administrative charges, has raised the amount
to slightly less than US$71 million. CCRIF received an initial US$24 million grant
from the MDTF on April 26, 2007. The CCRIF Grant Agreement was amended on
November 11, 2008, to add a further US$26 million, and again on October 25, 2010,
to provide an additional US$20 million. This final transfer of US$997,902.39 from
the MDTF to the CCRIF Grant Agreement is the balance in the MDTF as of August
31, 2011.
3. The Restructuring is consistent with the purposes of the MDTF, the terms of the
Administration Agreements between the World Bank and the donors, and the
purposes for which CCRIF was established. It does not entail any change in the
CCRIF project development objective or outcome indicators. It is needed to ensure
that sufficient funds are available to reimburse CCRIF, to the extent of available
funds, for anticipated eligible expenditures – including certain administrative and
R&D costs and its reinsurance premium – as well as potential policy pay-outs that fall
within the level of CCRIF’s risk retention.
PROJECT STATUS
4. CCRIF was established to provide parametric hurricane and earthquake coverage to
Caribbean countries and territories. The objective of the insurance is to enable the
governments of the participating countries and territories to receive a rapid injection
of liquidity in the wake of a hurricane or earthquake that meets the parameters of their
policies. The pay-out to the government is intended to help it satisfy urgent
expenditure needs while mobilizing donor and other resources necessary for the relief
and longer-term recovery effort.
1
In addition to the World Bank, the contributing donors were Bermuda, Canada, the Caribbean
Development Bank, European Union, France, Ireland, and the United Kingdom.
1
5. CCRIF is performing satisfactorily and there are no outstanding financial
management, audit, or procurement issues in this recipient-executed trust fund. Key
progress indicators include:
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

16 Caribbean countries and territories joined in 2007, double the number estimated to
ensure a well diversified risk pool. All 16 have renewed coverage each year since
then.2
CCRIF has steadily built its risk bearing capacity. Its audited assets totaled US$114.1
million as of end-May 2011 (the end of its 2010-2011 fiscal year). This exceeds the
US$100 million target that was established at CCRIF’s inception.
In addition, CCRIF has gained the confidence of major reinsurers and has each year
been able to lay off a significant part of its risk to them at acceptable prices. For its
current insurance year (June 1, 2011, to May 31, 2012), it obtained US$125 million in
reinsurance, including a US$30 million capital market swap intermediated by the
World Bank Treasury. With this, it has the capacity to withstand a 1 in 1,400 year
event, without drawing on more than US$25 million of its own assets. Its assets in
excess of $25 million are estimated to give CCRIF the capacity to withstand a 1 in
10,000 year event, although it would require recapitalization thereafter.
CCRIF is fulfilling its role of providing a rapid injection of liquidity to the
governments of those members whose policies have been triggered. Coming within
two weeks of the event, payouts as of September 26, 2011, have totaled $32.2
million, as shown in the table below.
Caribbean Catastrophe Risk Insurance Facility
Payouts as of September 15, 2011
Event
Earthquake
Earthquake
Tropical Cyclone Ike
Earthquake
Tropical Storm Earl
Tropical Cyclone Tomas
Tropical Cyclone Tomas
Tropical Cyclone Tomas
Date
29-Nov-07
29-Nov-07
7-Sep-08
12-Jan-10
31-Aug-10
31-Oct-10
31-Oct-10
31-Oct-10
Affected Country
Dominica
St. Lucia
Turks and Caicos Islands
Haiti
Anguilla
Barbados
St. Lucia
St. Vincent and the Grenadines
Total Payouts
2
US$ Amount
528,021
418,976
6,303,913
7,753,579
4,282,733
8,560,247
3,241,613
1,090,388
32,179,470
CCRIF members are: Anguilla, Antigua and Barbuda, Bahamas, Barbados, Bermuda, Belize, Cayman
Islands, Dominica, Grenada, Haiti, Jamaica, St. Kitts & Nevis, St. Lucia, St. Vincent & the Grenadines,
Trinidad & Tobago, and Turks and Caicos Islands.
2
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



In response to its members’ demands, CCRIF is developing an excess rainfall
product to supplement its earthquake and hurricane policies.
CCRIF has initiated a technical assistance program in order to increase its value
to its members. The program encompasses: (i) sponsorship for Caribbean
participants in a range of training and professional development workshops and
seminars on disaster risk management issues; (ii) data collection and analysis to
strengthen members’ understanding of their vulnerability to climate change
hazards and of cost effective adaptation measures; and (iii) some scholarships for
undergraduate and post-graduate studies in areas related to disaster risk
management and catastrophe insurance.
CCRIF has also established collaborative relationships with regional partners such
as the Caribbean Community Secretariat, Caribbean Community Climate Change
Centre, Caribbean Institute for Meteorology and Hydrology, United NationsEconomic Commission for Latin America and the Caribbean, Caribbean Disaster
Emergency Management Agency, and the Disaster Risk Reduction Center at the
University of the West Indies.
A beneficiary survey financed by the Bank in June 2011 revealed overall positive
views of CCRIF. Appreciation was expressed for CCRIF’s attractively priced
products, its technical assistance program, its flexibility and clientresponsiveness, and its collaboration with other Caribbean institutions.
CCRIF has gained international prominence. It is invited to speak at conferences
and symposia in Europe, Asia, and the Pacific on themes related to disaster risk
management and catastrophe risk insurance. Its technical advice is sought
regarding parametric products for agriculture, tourism, and utilities.
Risks to CCRIF’s on-going operations are low given its financial strength, its
members’ continued interest in its products and services, and the broad
appreciation within the region, including among partner institutions, for its
contributions to disaster risk management and reduction.
3