Washington: The World Bank, a George Soros foundation and other investors pledged $65 million (Rs293 crore) to LeapFrog Investments, which backs firms that sell insurance and other financial products to some of the world’s poorest people.
The International Finance Corp., the World Bank’s private investment unit, committed $20 million; Bermuda-based Flagstone Reinsurance Holdings Ltd agreed to invest $12 million; and New York-based Soros Economic Development Fund approved a $7 million contribution, the investors said in a statement on Monday. Germany and the Frankfurt-based development bank KfW Entwicklungsbank put up $26 million.
“No one has to make a tradeoff in micro-insurance between social impact and returns—you can have profit and you can have purpose,” LeapFrog president Andrew Kuper had said in a 26 March interview. “I hope we’re going to see 100 LeapFrogs in due course, that people will follow us in and that it will be an entire industry just like the microcredit financing industry.”
The latest pledges brought to $112 million the amount LeapFrog can invest. The fund is legally domiciled in Mauritius and has offices in Sydney, Johannesburg, Edinburgh and Washington, according to its website.
The micro-insurance industry, geared to low-income people, has an estimated market of 1.5 billion people, the fund said, citing an estimate by the MicroInsurance Centre Llc.
So far, the fund has made an investment of about $6 million in South Africa-based AllLife (Pty) Ltd, which offers insurance to people living with HIV/AIDS.
Kuper said it’s looking at ventures in Kenya, India and the Philippines.
Micro-insurance supporters see the profitable sale of policies with premiums of as little as five cents a month as an extension of the microcredit movement that makes small loans to the poor to allow them to start businesses.
Microcredit gained prominence when one advocate, Muhammad Yunus, won the Nobel Peace Prize in 2006 for his role in founding the Grameen Bank.
Erik Holm in New York contributed to this story.