MICROCAPITAL STORY: International Finance Corporation (IFC) Acquires 16.5% Stake in Peruvian MicroInsurer Protecta

International Finance Corporation (IFC) acquired a 16.5% stake in Peruvian life insurer Protecta, a microinsurance company. In February 2009, Protecta sold 3.17 million new shares to IFC at one sol each for a total of PEN 3.17 million (USD $1million). IFC stated in its official press release that the deal was made in order to help expand Protecta’s capital base and extend its insurance services to lower-income households and smaller businesses.

IFC, a member of the World Bank Group, is now the second biggest shareholder in Protecta. IFC aims to foster sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. According to the organization’s 2008 Annual Report, IFC made investments of USD 16.2 billion in the 2008 fiscal year. The new shareholder structure of Protecta now includes: Grupo ACP Inversiones y Desarrollo with 82.9%; IFC with 16.5%; and Alfredo Llosa with 0.62%.

Protecta, which launched operations in February 2008, is a specialized micro-insurance company in Peru. It offers insurance coverage starting from PEN 2.5 (US$0.8) a month to low income clients. The insurer recorded PEN 11.4 million (USD 3.59 million) in written premiums in 2008. Protecta’s two main products include life insurance associated to loan portfolios of financial institutions and life insurance for micro-entrepreneurs’ spouses, according to financial sector regulator Bank Superintendent (SBS) statistics.

In its first year 2008, Protecta was recorded as Peru’s smallest life insurer in terms of written premiums with a 0.6% market share. Protecta president Alfredo Jochamowitz responded that Protecta’s business plan contemplates further capital increases, so the company may extend its reach to more people. For more on microinsurers, read this MicroCapital article.

By: Andrea Chu

ADDITIONAL SOURCES

Business News Americas, February 20, 2009: “IFC Acquires Stake in Peruvian MicroInsurer“

International Finance Corporation: “press release”

MicroCapital, March 19, 2009: “Microinsurance Client Base of Allianz Life Indonesia Grows Four-fold in 2008“