Swiss Re announced that it has entered into a weather derivative contract with the International Development Association (IDA), the arm of the World Bank that helps the world’s poorest countries. Under the terms of the contract, Swiss Re will pay out up to USD 5 million in the event that Malawi’s farmers suffer from a drought-related shortfall in maize production. With this transaction, the IDA backs its first-ever weather derivative contract with the Government of Malawi.

”The weather derivative contract with the World Bank is a prime example of an ex-ante 
disaster risk management strategy designed to mitigate the financial impact of drought 
for a country such as Malawi that is heavily dependant upon the income from its 
agricultural production,” said Juerg Trueb, Swiss Re’s Head of Environmental and 
Commodity Markets.  

The World Bank, working together with the Government of Malawi, structured the contract 
as an option on a rainfall index. The index links rainfall and maize production, so that 
if precipitation falls below a certain level the index will reflect the value of the 
projected loss in maize production. The maximum payout is reached if maize production 
drops to 10% below the historical average. 

“This weather derivative contract is just one instrument as part of a World Bank effort 
to deliver customized financial solutions and help members plan efficient responses to 
catastrophic events. The use of weather derivatives are most effective as part of a 
broader risk management strategy,” said Gloria Grandolini, Director of the World Bank 
Treasury’s Banking and Debt Management Department.  

Juerg Trueb concluded: “The execution of the contract between the World Bank and Swiss 
Re demonstrates the ability and the interest of the international risk transfer markets 
to absorb such risks.” 

Swiss Re has pioneered weather risk transfer instruments in developing countries, 
starting in India in 2004 with a programme reaching over 350 000 smallholder farmers. In 
the meantime, the company has become a leading solution provider in weather and weather 
contingent commodity price structures with a share of more than 30% in the worldwide 
weather risk markets. Under its Climate Adaptation and Public Sector Business 
Development Programmes, the company fosters the use of modern risk management 
instruments, such as weather derivatives and insurance-linked securities, to the benefit 
of non-OECD countries.

Swiss Re is one of the leading global reinsurers. We offer a wide range of 
traditional reinsurance products and related services, which are 
complemented by insurance-based corporate finance solutions and 
supplementary services.

Our core business segments are: risk transfer, risk finance and asset 
management.

Our financial strength receives excellent ratings from leading agencies. 
Next to our financial resources, our employees' knowledge is one of our 
primary competitive advantages.

Swiss Re is a recognised expert in the field of risk and capital 
management. While our stated goal is not necessarily to be number one in 
terms of volume, we aspire to global leadership in terms of value for 
clients and shareholders, and professional development and opportunities 
for all our employees.

Publisher:
swiss-press.com

Branche:
Versicherungen
Versicherungen
Kontakt:
Swiss Re / Versicherung24.ch

Link zum Firmen-Portrait von Swiss Re


Link zur Pressemappe