The World Bank Implementation Status & Results Report SEE Catastrophe Risk Insurance Facility TA SECO (P156455) SEE Catastrophe Risk Insurance Facility TA SECO (P156455) EUROPE AND CENTRAL ASIA | Western Balkans | Finance, Competitiveness and Innovation Global Practice | Recipient Executed Activities | Investment Project Financing | FY 2016 | Seq No: 4 | ARCHIVED on 05-Mar-2020 | ISR40675 | Implementing Agencies: Europa Reinsurance Facility, Ltd. (Europa Re), Europa Reinsurance Facility Key Dates Key Project Dates Bank Approval Date: 14-Sep-2015 Effectiveness Date: 01-Mar-2010 Planned Mid Term Review Date: 24-Feb-2020 Actual Mid-Term Review Date: 24-Feb-2020 Original Closing Date: 30-Jun-2020 Revised Closing Date: 30-Jun-2020 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The Project Development Objective (PDO) is two-fold: (i) to scale up access of homeowners, farmers, the enterprise sector and government agencies to affordable insurance covering losses to property and crops caused by climate change and geological hazards in Albania, FYR of Macedonia and Serbia, and (ii) expand the offering of innovative catastrophe insurance products developed under the SEE CRIF project to Bosnia and Herzegovina. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Financing of Europa Re capital reserve:(Cost $3.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Overall Risk Rating Moderate Moderate Implementation Status and Key Decisions Since the last ISR in August 2019, Europa Re has continued to support sales of numerous catastrophe insurance products developed under the project in its member countries thus fully meeting its PDO objective. Innovative catastrophe insurance products developed under the SEE CRIF program are now offered to homeowners, SMEs, farmers and municipalities in all three countries of the program through 10 partner insurance companies. These products are also among the most affordable offered in the market. In North Macedonia, for instance, earthquake property insurance insurance offering EUR 15,000 - 20,000 of coverage retails for only EUR 7-10. Unfortunately, due to the lack of concerted government policy efforts to make such coverage compulsory demand for catastrophe insurance products remains very low. However, following the recent devastating EQs in Albania, the government seems to be prepared to introduce the compulsory catastrophe insurance law, prepared with technical inputs (risk modeling and actuarial) under the SEE CRIF project. 3/5/2020 Page 1 of 4 The World Bank Implementation Status & Results Report SEE Catastrophe Risk Insurance Facility TA SECO (P156455) The second objective of the PDO (expansion of catrisk products in BiH) has been also achieved. Europa Re now provides reinsurance coverage for EQ insurance policies sold by the BiH insurers, which enables them to offer affordable EQ coverage to homeowners and SMEs. In 2019, for the second year in a row, Europa RE reached its financial sustainability target by turning a small profit at the year end. In December 2019, the level of company's equity capital reached CHF 12.5 million, which represents an increase of CHF 1 million compared to the same reporting period of 2019. As demand for retail catastrophe insurance products developed under the project remains low due to ad hoc post-disaster compensation policies common in all three project member countries, Europa Re has developed several highly innovative municipal and sovereign level parametric insurance covers which offer significant budget relief to governments in case of either catastrophic earthquake, floods or droughts. The company is now in discussions with its member countries to explore their interest in obtaining such a budget protection cover. The company also significantly contributed to the development of the draft Disaster Insurance Law in Albania (by providing actuarial and risk modeling inputs for the development of the risk-based tariff) and prepared a draft of compulsory micro EQ insurance law for North Macedonia, which will be discussed with the government during the upcoming project supervision mission. In North Macedonia, in August 2019, in partnership with the local bank and the insurance company, Europa RE launched a new earthquake micro- coverage for mortgage borrowers at a highly affordable premium rate. In North Macedonia, the project succeeded in building a sustainable insurance portfolio consisting of a combination of AYII policies sold to local farmers and earthquake insurance coverage sold to homeowners. In Serbia, the project has been successful in providing municipal area yield index insurance (AYII) to municipalities. In addition, under SEE CRIF project, retail flood, earthquake and AYII insurance products are now available for purchase through 10 local insurance partners in all three countries. The project team has been maintaining intense supervision over the project during the ISR period through regular interactions with Europa Re project implementation team and its senior management. A formal project supervision mission will take place in March 2020. Disbursement of the TF currently stands at 95% and is expected to reach 100% by the project completion date. No FM or procurement irregularities have been observed since the submission of the last ISR. All the financial statements were filed in compliance with the Bank requirements and on time. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance -- Moderate Moderate Macroeconomic -- Moderate Moderate Sector Strategies and Policies -- Moderate Moderate Technical Design of Project or Program -- Moderate Moderate Institutional Capacity for Implementation and -- Low Low Sustainability Fiduciary -- Low Low Environment and Social -- Low Low Stakeholders -- Low Low Other -- -- -- Overall -- Moderate Moderate Results PDO Indicators by Objectives / Outcomes 3/5/2020 Page 2 of 4 The World Bank Implementation Status & Results Report SEE Catastrophe Risk Insurance Facility TA SECO (P156455) Insurance products designed under SEE CRIF are widely available to the public IN00808382 ►Number of insurance companies offering catastrophe insurance products developed under the project to public (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 10.00 10.00 10.00 Date 31-Oct-2017 17-Jul-2019 17-Jul-2019 30-Jun-2020 Europa Re achieves financial sustainability IN00808381 ►Financial sustainability of Europa Re (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 4.00 3.00 3.00 Date 31-Oct-2017 17-Jul-2019 31-Dec-2019 30-Jun-2020 Europa Re achieves annual return on equity of at least 3 percent. Comments: Intermediate Results Indicators by Components Complete the financing of Europa Re capital reserve IN00808383 ►Amount of reserve financed (Amount(USD), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 2.80 2.80 2.80 Date 03-Dec-2018 28-Jun-2019 28-Jun-2019 31-Dec-2018 Disburse USD 2.8 mm into Europa Re's capital reserve by the end of December 2018. Comments: Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P156455 TF-95647 Effective USD 8.21 8.21 0.00 7.69 0.52 94% 3/5/2020 Page 3 of 4 The World Bank Implementation Status & Results Report SEE Catastrophe Risk Insurance Facility TA SECO (P156455) P156455 TF-A6354 Effective USD 2.85 2.85 0.00 2.85 0.00 100% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P156455 TF-95647 Effective 25-Nov-2009 08-Dec-2009 01-Mar-2010 31-Mar-2013 30-Jun-2020 P156455 TF-A6354 Effective 13-Dec-2017 15-Dec-2017 17-Dec-2017 30-Jun-2020 30-Jun-2020 Cumulative Disbursements Restructuring History Level 2 Approved on 25-Oct-2017 Related Project(s) There are no related projects. 3/5/2020 Page 4 of 4