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World's First Microinsurance Fund Announces Major New Investors J.P. Morgan, TIAA-CREF, Proparco, Waterloo, ACE - LeapFrog Fund Achieves Record Close of $137 million
Today the world's first microinsurance fund, LeapFrog Investments, announced its final close on $137 million for investments in Africa and Asia - a record amount that makes LeapFrog the largest investor in microinsurance worldwide. The fund announced major new investors including J.P. Morgan, TIAA-CREF, and Proparco as well as the Waterloo Foundation and the ACE Group. "As leaders from around the world and across sectors gather here at IFC headquarters," said Andrew Kuper, President and Founder of LeapFrog, "we mark a historic moment: the birth of a new social-purpose asset class that will generate profits for investors while lifting tens of millions out of poverty."
President Bill Clinton has hailed LeapFrog as "the Insurer to the Poor," and is among the many leaders who have recognized LeapFrog's profit-with-purpose approach as opening up new frontiers for microfinance and alternative investment. The fund's portfolio companies are anticipated to reach 25 million low-income and vulnerable people in Africa and Asia with life-changing financial services. The companies may offer a range of affordable products including health and life insurance as well as low-income housing and weather index insurance. Safety nets of this kind can be critical to better coping with natural disasters that have afflicted countries such as Chile and Haiti (see also LeapFrog Investments).
"J.P. Morgan is proud to support the LeapFrog fund in its efforts to provide low-income communities with the safety and security necessary to increase income, build assets, and escape poverty," said John Buley, Jr., Managing Director of Social Finance at J.P. Morgan. "We believe that microinsurance is a key innovation that will further the development of business in the social sector, and represents a massive opportunity to meet the inclusive financial services needs of low-income people in developing countries," he added. Scott Budde, Managing Director of Global Social and Community Investments at TIAA-CREF concurred: "From an impact perspective, we see microinsurance as a valuable complement to other socially responsible financial services for low income clients, while also providing competitive returns to investors." J.P. Morgan committed $10 million and TIAA-CREF $7 million to the fund.
LeapFrog also provided new details on its innovative investment strategy. Based on avid interest from local insurers, LeapFrog is identifying and screening a variety of larger opportunities in its priority countries including India, Kenya, Ghana, South Africa and the Philippines. The fund plans to invest in and alongside insurers as well as large distributors, such as microfinance institutions, retail chains, religious groups, and mobile phone networks. LeapFrog expects to deploy around $5 million to $15 million in each portfolio company, to join the board, and to bring deep operational expertise to bear to drive growth and success on the double bottom line.
The fund has already invested in AllLife, a profitable South African life insurer that exclusively serves people living with HIV and diabetes. AllLife's innovative adherence program helps clients to lead relatively long and healthy lives, and makes people with pre-existing conditions insurable. Ross Beerman, CEO of AllLife, in his address to the assembled global leaders, will draw out lessons from this social business for both developing and developed countries, including the United States.
Other investors in LeapFrog include the Soros Economic Development Fund and the Omidyar Network (created by eBay founder Pierre Omidyar), the largest development banks including IFC (part of the World Bank Group), KfW, and EIB, as well as major reinsurers Flagstone Re and SCOR. Microinsurance is being sold profitably in many countries and shows enormous potential for growth, with a recent Lloyds study estimating the market to be 1.5 billion people.
LeapFrog's team now has the unparalleled capital and distinctive expertise to lead the development of this pro-poor industry. Kuper concluded, "Our team reached this mountaintop against the headwinds of the global financial crisis, driven by a clear vision and value proposition. We don't believe you have to choose between money and meaning."