1. MIGA: Who We Are and What We Do
MULTILATERAL INVESTMENT GUARANTEE AGENCY
WORLD BANK GROUP

2. I N S U R I N G I N V E S T M E N T S  E N S U R I N G O P P O R T U N I T I E S

3. The World Bank Group
1944 IBRD International Bank for Reconstruction and Development
1960 IDA International Development Agency
1956 IFC International Finance Corporation
1966 ICSID International Center for the Settlement of Investment Disputes
1988 MIGA Multilateral Investment Guarantee Agency
Promote FDI with the use of guarantees and technical assistance

4. World Bank Group Instruments
IFC A-Loan
IFC B-Loan
IFC C-Loan
IFC Guarantees (partial credit structures usually for local financing)
Interest Rate and Currency Swaps
Political Risk Insurance
expropriation
transfer restriction
breach of contract
war & civil disturbances
NHSFO
Guarantees
partial risk
partial credit
IBRD Loan
IDA credits and grants
Tech. Assistance

5. About MIGA MIGA was created in 1988 as a member
of the World Bank Group to promote private foreign direct investment into developing countries
to support economic growth, reduce poverty, and improve people’s lives

6. What We Do
Noncommercial risk insurance (guarantees) for investors and lenders
Investment dispute mediation
Technical assistance to help countries attract and retain FDI
Online information on investment opportunities and operating conditions in developing countries (pri-center.com)
Concerns about uncertain political environments and perceptions of political risk often inhibit investment, with foreign direct investment (FDI) often going to a handful of countries and leaving the majority of developing countries largely ignored.
MIGA’s guarantee program acts as a catalyst to open up markets to FDI and support projects with the strongest development impact.
The agency uses its legal services to mediate potential investment disputes between investors and host governments.
MIGA’s technical assistance services play an integral role in catalyzing foreign direct investment by helping developing countries around the world define and implement strategies to promote investment.
MIGA also develops and deploys tools and technologies to support the spread of information on investment opportunities.

7. Our Strategic Priorities
Focusing on sustainable development
Opening up difficult or frontier markets, especially in conflict-affected countries
Supporting investments in Africa and the world’s poorest countries
Supporting complex projects
Promoting cross-border investments between developing countries
As a development agency first and foremost, our primary objective is to increase foreign direct investment into developing countries to reduce poverty and improve people’s lives. Projects supported by MIGA are above all, developmentally responsible. They have widespread benefits--generating jobs and taxes, and transferring skills and know-how. Local communities often receive significant secondary benefits through improved infrastructure. Projects encourage similar local investments and spur the growth of local businesses. In addition, MIGA’s involvement requires investors to adhere to World Bank Group social and environmental standards.
MIGA also focuses on opening up difficult or frontier markets, especially in conflict-affected countries, an area where other insurers and many investors are not willing to go. Another focus is on supporting infrastructure investments, which often involve untested municipal governments and require complex coverage arrangements. Investments between developing countries is another priority for MIGA, and one where we have extensive experience.

8. Types of Investments Covered
Equity
Shareholder loans
Loan guarantees
Loans from financial institutions
Non-shareholder loans
Non-equity direct investment
…other forms of investment such as technical assistance and management contracts, asset securitizations, capital market bond issues, leasing, services, franchising and licensing agreements, may also be eligible for coverage.

9. Eligibility Requirements
Eligible investments
Cross-border from one member country (developed or developing) into another developing member country
Primarily “greenfield” investments
If an existing investment, must have high developmental impact

10. Terms of Coverage Amount of coverage Tenor Pricing
MIGA can typically arrange cover for all amounts, either on its own books or through co/reinsurance
No minimum amount for guarantee or size of investment
Amounts can include interest principal for debt and future retained earnings for equity
Equity covered up to 90% and debt up to 99%
Tenor
Minimum 1 year, up to 20 years; investor decides on the duration of a guarantee
Investor can cancel the contract after the 3rd anniversary
Pricing
Premium rates are decided on a per project basis and vary by country, sector, transaction and the type of risk insured
Premiums are paid annually or semi-annually and are calculated as a percentage rate applied to the amount of coverage

11. Overview: MIGA’s Coverages
Inconvertibility and Transfer Restriction
Expropriation
War and Civil Disturbance
Breach of Contract
Non-Honoring of Sovereign Financial Obligations

12. Political Risks Covered by MIGA (I) Inconvertibility and Transfer Restriction
Protects against losses arising from inability to
convert local currency into foreign exchange within the host country
transfer funds out of the host country
In case of convertibility restrictions, MIGA’s compensation is based on official rate of exchange at the Date of Loss
Currency depreciation and devaluation not covered
Conversion and transfer have to be lawful in the Host Country at the time when MIGA’s coverage is issued

13. Political Risks Covered by MIGA (II) Expropriation
Protects against losses arising from:
Nationalization and confiscation
Creeping expropriation (a series of acts that are expropriatory taken in sum, e.g. gradual changes in tax regime)
Expropriation of funds (e.g., “account freeze”)
Expropriation also if the Project Enterprise
is deprived of a substantial benefit
constituting a fundamental right (e.g., under a Project Agreement)
essential to its overall financial viability (normally this implies insolvency or impending insolvency of the Project Enterprise)
Non-discriminatory regulatory measures not covered, unless such measures have a confiscatory effect

14. Political Risks Covered by MIGA (III) War and Civil Disturbance
Three forms of coverage
Loss of Assets
Temporary Loss of Income (for equity)
Permanent Loss of Use
Loss has to be a direct and immediate result of acts of war, revolution, rebellion, insurrection, coup d’état, civil war, civil commotion, riots
Act of sabotage or terrorism can also be covered
Acts must pursue a broad political or ideological objective
Breach of contract :
Applied to breach of supply/offtake contracts, PPA , a license agreement, sovereign guarantees etc., typically relating, but not limited to, to infrastructure or natural resource projects.

15. War and Civil Disturbance (cont
War and Civil Disturbance (cont.) Temporary Loss of Income (Equity Investments)
Short-term business interruption coverage not offered on a stand-alone basis, but added to the WCD coverage upon request
Compensation based on
lost business income,
unavoidable continuing expenses and
extraordinary expenses to resume operations

16. Political Risks Covered by MIGA (IV) Breach of Contract
Protects against loss arising from breach or repudiation of a project agreement (e.g., in infrastructure and power projects)
Project agreement must be entered between the Host Government on the one hand and Guarantee Holder and/or Project Enterprise (for Equity investments only) on the other hand
MIGA covers “denial of justice” risks:
Failure to pay on a valid arbitral award or judgment by a state court rendered against host government or
No recourse to judicial or arbitral forum by the investor or Project Enterprise
May cover obligations of sub-sovereigns and SOEs, subject to certain restrictions
Breach of contract :
Applied to breach of supply/offtake contracts, PPA , a license agreement, sovereign guarantees etc., typically relating, but not limited to, to infrastructure or natural resource projects.

17. Breach of Contract (cont.) Coverage of SOEs
New guidelines permit coverage of contracts with an SOE where:
It is controlled by the Host Government or its political subdivision
It performs a public service or fulfills a governmental function (like a utility) and
Either:
The Host Government, as a matter of law, is responsible for its financial liabilities or
It is creditworthy on a stand-alone basis
In some cases where the contract is with an SOE that does not meet these criteria (e.g. Dakar Ports), MIGA has the option of covering a Host Government guarantee in BoC
Breach of contract :
Applied to breach of supply/offtake contracts, PPA , a license agreement, sovereign guarantees etc., typically relating, but not limited to, to infrastructure or natural resource projects.

18. Political Risks Covered by MIGA (V) Non-Honoring of Sovereign Financial Obligations
For unconditional financial payment obligations or guarantees of the Host Government
Examples:
Host Government unconditionally guarantees repayment of loan by Project Enterprise
Host Government assumes unconditional obligation to inject equity or other funding on demand or at date certain
Not Eligible: Host Government issues performance guarantee relating to power purchase agreement (guarantee not unconditional)
No arbitral award is required
Breach of contract :
Applied to breach of supply/offtake contracts, PPA , a license agreement, sovereign guarantees etc., typically relating, but not limited to, to infrastructure or natural resource projects.

19. Non-Honoring of Sovereign Financial Obligations Eligibility Requirements
Sovereign Financial Obligation must be associated with:
an eligible investment project with measurable developmental impacts
Whose obligations are eligible?
Central governments (e.g., guarantee issued by MoF)
Sub-sovereign obligations (i.e., provincial or municipal governments) eligible on a case-by-case basis
Guarantees issued by an SOE not eligible

20. MIGA’s Underwriting Process
Investor
Marketing and origination
Preliminary Application
MIGA (1–3 months)
Definitive Application
Early Screening Project Review Meeting (“ESM”)-chaired by the Director of Operations Group
Underwriting and host country approval
Developmental impact
Environmental, Social review
Pricing and reinsurance
Economic financial viability, country risk
World Bank Group policy
Project Review Committee (“PRC”)-Track “A” projects (complex/high risk)
Final Approval Meeting (“FAM”)-Track “B” projects (simpler/low risk)
Investor and MIGA
Sign contract of guarantee
Monitoring, evaluation, contract maintenance 1
Available online
Free, confidential
2 pages
Determines eligibility
More detailed analysis of a project
Fees due ($5k up, depending on the type of project)
Starts underwriting process 2
MIGA does more than offer political risk insurance for investments in developing countries. We offer additional value to our clients that we believe sets us apart from other insurers. For example:
MIGA deters harmful actions. Our relationship with shareholder governments provides additional leverage in protecting investments.
We also mediate disputes. As an honest broker, MIGA intervenes at the first sign of trouble to resolve potential investment disputes before they reach claim status, helping to maintain investments and keep revenues flowing.
Our guarantees help investors obtain project finance from banks.
In addition, loans guaranteed by MIGA may help reduce risk-capital ratings of projects.
We also provide insurance coverage for up to 15 years (in some cases 20), thereby increasing the tenor of loans available to investors.
To each transaction, we apply decades of experience, global reach, and knowledge of developing countries.
Last, we help investors and lenders ensure that projects comply with what are considered to be the world’s best social and environmental safeguards. 3

21. MIGA’s Claims Track Record
Over 600 projects with MIGA support, more than 90 cases treated as possible claims, but in which no claim has been paid.
MIGA has successfully facilitated the settlement of disputes in all currency transfer/inconvertibility issues and since inception has paid claims in 6 cases:
Afghanistan ($575 for war and civil disturbance in FY11) – (paid by MIGA Administered Trust Fund)
Indonesia ($15 million for expropriation in FY00)
Nepal ($144,600 for war and civil disturbance in FY05)
Argentina ($558,311 for expropriation in FY05)
Kenya ($491,100 for war and civil disturbance in FY09)
Madagascar ($12,824 for war and civil disturbance in FY09)
All other cases have been resolved (before or after the claim was filed) or the claim was withdrawn
Deterrence effect ensures that only a small number of projects that MIGA supports encounter problems

22. Why Investors Choose MIGA
Expertise in complex projects and in challenging environments
Credit enhancement
Longer tenors (up to years)
World Bank Group “umbrella” of deterrence
Track record in dispute resolutions
Mobilization of reinsurance capacity
Best practices in environmental and social management
Prompt claims payment
Access to World Bank Group expertise and resources

23. ANNEX: Key Statistics about MIGA

24. MIGA’s 2011 Highlights Gross exposure 1990 -2011 ($ billion)
9.1
Key Figures
Issued 1,030 guarantees for 651 projects for a total of $24.5 billion during
Gross exposure: $9.1 billion in FY11
Issued $2.1 billion in FY11 in support of 38 projects
$415.3 million for investments in IDA-eligible countries (of which $228 million was in sub-Saharan Africa)
Four new host countries: Iraq, Kosovo, Liberia, Republic of Congo
7.7
7.3
6.5
5.3
5.3
5.4
5.2
5.2
5.1
5.1 02 03 04 05 06 07 08 09 10 11

25. Gross Exposure in 2011 Guarantees Issued in FY11, by Region
(by number of projects)
Guarantees Issued in FY11, by Sector
(by $ volume)

26. Contact Information
Washington, D.C.:
Izumi Kobayashi
 Ana-Mita Betancourt
Ravi Vish
Executive Vice President
Director and General Counsel, Legal Affairs and Claims
Director and Chief Economist, Economics and Policy
Michel Wormser
Vice President and Chief Operating Officer
Lakshmi Shyam-Sunder
Marcus S.D. Williams
Director and Chief Financial Officer, Finance and Risk Management
Adviser, Strategy and Operations
Edith P. Quintrell
Director, Operations
Singapore:
Paris:
Kevin W. Lu
Olivier Lambert
Regional Director, Asia-Pacific
Manager, Europe

27. www.miga.org For more information, visit www.miga.org
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