Document of
The World Bank
Report No: 58237-DM
RESTRUCTURING PAPER
ON A
PROPOSED PROJECT RESTRUCTURING
OF
OECS-CATASTROPHE INSURANCE PROJECT
IDA 4269-DOM
March 8, 2007
TO
THE COMMONWEALTH OF DOMINICA
December 16, 2010
ABBREVIATIONS AND ACRONYMS
CCRIF
GoD
IDA
OECS
Caribbean Catastrophe Risk Insurance Facility
Government of Dominica
International Development Association
Organization of Eastern Caribbean States
Regional Vice President:
Country Director:
Sector Manager / Director:
Task Team Leader:
Pamela Cox
Yvonne M. Tsikata
Guang Zhe Chen
Francis Ghesquiere
OECS COUNTRIES
OECS-CATASTROPHE INSURANCE
P094539
CONTENTS
A.
B
C.
D.
Page
DATA SHEET……………………………………………………………………………………………..1
SUMMARY ........................................................................................................................... 3
PROJECT STATUS .............................................................................................................. 3
PROPOSED CHANGES ...................................................................................................... 5
A. DATA SHEET
Restructuring
Status: Draft
Restructuring Type: Level two
Last modified on date : 12/08/2010
1. Basic Information
Project ID & Name
Country
Task Team Leader
Sector Manager/Director
Country Director
Original Board Approval Date
Original Closing Date:
Current Closing Date
Proposed Closing Date [if applicable]
EA Category
Revised EA Category
EA Completion Date
Revised EA Completion Date
P094539: OECS-Catastrophe Insurance
The Commonwealth of Dominica
Francis Ghesquiere
Guang Zhe Chen
Yvonne M. Tsikata
03/08/2007
12/31/2010
12/31/2010
C-Not Required
C-Not Required-Not Required
04/07/2006
2. Revised Financing Plan (US$m)
Source
BORR
IDA
Total
Original
0.00
4.5
4.5
Revised
0.00
4.5
4.5
3. Borrower
Organization
The Commonwealth of
Dominica
Department
Ministry of Finance
Location
Dominica
4. Implementing Agency
Organization
Department
Sagicor
1
Location
Cayman Islands
5. Disbursement Estimates (US$m)
Actual amount disbursed as of 12/14/2010
Fiscal Year
2010
2011
3.9
Annual
Cumulative
0.00
0.00
Total
0.3
4.2
6. Policy Exceptions and Safeguard Policies
Does the restructured project require any exceptions to Bank policies?
N
Does the restructured projects trigger any new safeguard policies? If yes, please select
from the checklist below and update ISDS accordingly before submitting the package.
N
7a. Project Development Objectives/Outcomes
Original/Current Project Development Objectives/Outcomes
The development objective of the project is to reduce the participating country's financial vulnerability to
natural disasters (earthquakes and hurricanes). This is being achieved through the provision of financing to
allow these countries to join the Caribbean Catastrophe Risk Insurance Facility and the purchase of
financial protection against catastrophic hurricane and/or earthquake losses.
7b. Revised Project Development Objectives/Outcomes [if applicable]
NA
2
OECS-CATASTROPHE INSURANCE PROJECT
RESTRUCTURING PAPER
B. SUMMARY
1.
The Government of Dominica (GoD) would like to use project savings (SDR
476,413.74) representing about US$748,746.13 to reimburse 50 percent ($374,373.07) of
its 2010/2011 annual insurance premium for hurricane and earthquake insurance obtained
from the Caribbean Catastrophe Risk Insurance Facility (CCRIF).
2.
On March 8, 2007, the Government of Dominica (GoD), signed a Financing
Agreement for SDR 3.0 Million (US$4.5 Million equivalent) with the International
Development Association (IDA), for the financing of the OECS Catastrophe Insurance
Project. The effective date for the Project was May 24, 2007, while the closing date for
the Credit is December 31, 2010.
3.
The Project aims to provide Dominica with insurance coverage against natural
disasters (earthquakes and hurricanes). As originally designed, it consists of the
following parts:
A. Provision of financing for the payment of the Recipient's entrance fee to
participate in the CCRIF; and
B. Provision of financing for the payment of 100 percent of the Recipient’s
Annual catastrophe risk insurance premiums for the first two years of its
participation in the CCRIF, and 50 percent of the Recipient's said
premium for the third year of its participation in the CCRIF.
C. PROJECT STATUS
4.
As stipulated under the current Financing Agreement, IDA made a payment for
the recipient’s entrance fee to participate in the CCRIF as well as payments for its annual
catastrophe risk insurance premiums (100 percent for the first two years of its
participation in the CCRIF, and 50 percent of its premium for the third year). A total of
four (4) payments under the current Financing Agreement have already been made.
Table 1 below provides the Estimated Entrance Fee and Premium payments for
Dominica; while Table 2 presents the actual Entrance Fee and Premium payments.
3
Table 1. Dominica Estimated Project Cost in US$ Million
Project Cost by Component
1. Entrance Fee
1.286
Sub-total
Total (1+2)
2. Premium Payment
1.286 (year 1 )
1.286 (year 2)
0.642 (year 3)
3.214
1.286
4.5
Table 2. Dominica Actual Project Cost in US$ Million
Project Cost by Component
1. Entrance Fee
1.125
Sub-total
Total (1+2)
2. Premium Payment
1.125(year 1 )
1.125 (year 2)
0.562 (year 3)
2.812
1.125
3.937.500
5.
The project has savings of approximately US$748.000. These savings are mainly
due to the fact that the estimated entrance fee and premium payments for Dominica were
lower than projected by the insurance broker. As a result, there is a difference of
US$562,500 between the project cost estimates and the actual project cost (Table 2 vs.
Table 1). Moreover, the weakening of the US dollar against the SDR between 2007 and
2009 generated additional savings of about US$185,500.
6.
The GoD would like to use a portion of these savings to reimburse 50 percent of
its 2010/2011 annual insurance premium payment of US$733,704. Dominica needs
US$374,373.07 from IDA for this purpose. These funds will be IDA’s fourth payment of
annual insurance premiums, and it will represent its fifth contribution to the project for
Dominica.
7.
The Project is performing satisfactorily. Desired outcomes have been achieved.
Dominica has remained eligible for CCRIF insurance since its inception and, indeed,
received a payout following an earthquake that affected it in November 2007. CCRIF’s
financial strength has steadily increased and, with reinsurance and its own risk retention,
is estimated to have the capacity to pay claims corresponding to a series of events with a
probability of occurring once in every 1,000 years. All 16 countries and territories that
joined CCRIF in 2007 have renewed policies for each successive year, including 2010-
4
2011. There are no outstanding audit, financial management, procurement, or safeguards
issues. The Project closes on December 31, 2010.
D. PROPOSED CHANGES
8.
In order to provide for reimbursement of 50 percent of the fourth premium for
2010/2011 out of the proceeds of the Credit, the following changes are proposed to the
Financing Agreement: (a) amendment of the Project Description to include the fourth
installment in the second component (Part B) of the Project; (b) modification of the
Institutional Arrangements to require a counterpart financing of 50 percent for the fourth
installment; and (c) modification of the table of disbursement (Withdrawal of Proceeds of
the Financing), to include an additional category for the fourth installment, and
reallocation of the amount of the Credit among Categories to provide for the amount of
the fourth installment.
9.
The Table for Reallocation of Proceeds to reflect the changes in SDRs is as
follows:
Category
Original Amount
of the Credit
Allocated
(expressed in SDR)
Revised Amount of
the Credit Allocated
(expressed in SDR)
Percentage of
Expenditures to be
Financed
(inclusive of Taxes)
(1) Recipient’s
entrance fee as
described in Part A
of the Project
856,000.00
743, 157.99
100%
(2) Recipient’s first
and second annual
insurance premiums
as described in Part
B of the Project
1,714,000.00
1,429,212.60
100%
(3) Recipient’s third
annual insurance
premium as
described in Part B
of the Project
430,000.00
351,215.67
50%
476,413.74
50%
(4) Recipient’s
fourth annual
insurance premium
as described in Part
B of the Project
-0
TOTAL AMOUNT
3,000,000
3,000,000
5