Aims to make a number of individual investments and build partnerships in the microinsurance space
LeapFrog Investments, the world’s first microinsurance fund, announced today that it has raised over Rs. 506 Crore (US$110 million) to invest in businesses that deliver affordable insurance in Asia and Africa. India is one of the priority countries for the fund, wherein LeapFrog would seek to invest up to Rs. 138 Crore (US$30 million) in innovative insurance and financial services companies or Indian businesses that own strong distribution platforms and are eager to seize the growth opportunity in the microinsurance space.
Over the next four years, the fund aims to make a number of individual investments of between Rs. 23 Crore to Rs. 69 Crore each (US$5 million to US$15 million) and partner with local insurance companies, microinsurers, or businesses with significant distribution platforms that reach the mass market. These distribution partners could include banks, retail stores, mobile phone networks, microfinance institutions, religious institutions, or any company with a broad network.
Microinsurance (the provision of insurance to the financially excluded) is a big business in India today. In 2009, the non-life microinsurance business alone pulled in over Rs. 1300 Crore (US$850 million) in premiums. There are currently 24 microinsurance plans registered with the Insurance Regulatory and Development Authority (IRDA) by 15 commercial life insurers in India. Yet there is a huge growth opportunity as only 5 million people - or only 2% of the poor, have microinsurance.
“We are tremendously excited by the potential of microinsurance in India,” said Jim Roth, the LeapFrog Principal who leads the fund’s investments in South Asia. “India is, in absolute terms, the largest and fastest growing microinsurance market in the world. It is also the centre of most microinsurance innovation today. Yet, the potential market for insurance here is still underserved, with most people unable to access insurance via conventional channels. There is a massive opportunity for smart business leaders and policymakers to increase the reach and scale of microinsurance in India – generating both high social impact and strong profits.”
As a long-term and strategic investor, LeapFrog will commit substantial time and capital to support high-growth and high-impact companies in the country. “We are here for the long-term and bring unique expertise,” said Roth. “We will partner with local players and bring equity capital and our knowledge of global best practices, to ensure commercial success and impact – supporting the provision of affordable and relevant microinsurance products.”
LeapFrog is the first investment fund globally focused on meeting the insurance and inclusive financial services needs of low-income people in developing countries. The LeapFrog team consists of global pioneers in microinsurance market, with track records of both investing in and scaling microinsurance businesses.
Describing the fund’s investment approach, President and Founder Dr. Andrew Kuper said: “Our success will be driven by the fact that we are meeting the escalating demand for microinsurance at the right time, with the right people. Our team can add value to portfolio companies in business planning, product design, regulatory and risk management, and development of efficient and high-volume distribution channels.” Stating the reasons for focusing on India, Kuper, said “A vast majority of the Indian population, that falls under the low-income group, has enough income to afford insurance that protects their families and enterprises. Insurance can have a transformative impact on their lives and livelihoods, enabling them to build their future without fear.”
In addition to India, LeapFrog’s priority countries for investment include Philippines, South Africa, Kenya and Ghana. The fund has already made its first investment of over Rs. 28 Crore (US$6 m) in AllLife, an innovative South African insurer serving people living with HIV and diabetes.
Leading investors are behind LeapFrog’s profit-with-purpose investment proposition, with four global institutions announcing investments today at a signing ceremony in Frankfurt. The International Finance Corporation, part of the World Bank Group, committed Rs. 92 Crore (US$20 million). The board of the Soros Economic Development Fund approved an investment of Rs. 32 Crore (US$7 million). Flagstone Reinsurance, a global reinsurer, committed Rs. 55 Crore (US$12 million). The largest amount of Rs. 115 Crore (US$25 million) was announced by KfW Entwicklungsbank and BMZ, the German Federal Ministry for Economic Cooperation and Development.
LeapFrog is now by far the largest dedicated investor in the microinsurance sector worldwide. LeapFrog’s dual aims are to deliver strong returns for its investors and to reach 25 million vulnerable people worldwide with quality insurance – protecting their lives, families, property, and businesses.
For more information on the company please log on to: www.leapfroginvest.com
