The RE.bound Program Leverages Innovative Risk Transfer Solutions As a Mechanism for Resilient Infrastructure Project Finance
A team of private sector leaders is designing and structuring new insurance-based products to generate capital for risk-reduction projects
NEWARK, Calif. -
April 02, 2015 -
Today re:focus partners is proud to announce the first step toward creating a new financial product designed to support resilient infrastructure investment. Together with The Rockefeller Foundation, Swiss Re, Goldman Sachs and RMS, re:focus partners is launching a new program called RE.bound.
Through RE.bound, a team of private sector leaders is taking steps to design a new catastrophe bond-like product that can promote project-based risk reduction solutions. These new types of instruments would realize the potential insurance benefits from infrastructure improvements and monetize the physical and financial risk reductions associated with investments in resilient systems, such as seawalls and green stormwater infrastructure.
Planning for resilience projects is a public investment challenge because the benefits are diffuse and realized far into the future. Infrastructure spending stays stuck in traditional projects when the financial benefits of resilience investments are not identified ahead of time. For example, the savings from risk mitigation efforts are rarely measured in coastal communities that don’t flood regularly. RE.bound intends to fix this problem by modeling the financial benefits of specific resilient infrastructure projects upfront and integrating insurance coverage with investment in long-term risk reduction.
If this structure is viable, it will be announced at the UN Climate Change and Sustainable Development Goals conferences in Paris in December 2015.
“At The Rockefeller Foundation we recognize that in order to solve today’s challenges, communities need innovative tools, such as these new bonds, that have the potential to transform how they think and operate through a resilience lens,” said Judith Rodin, president of The Rockefeller Foundation. “RE.bound will use the expertise of leaders in investment banking, reinsurance, infrastructure, and climate risk analysis. We are confident that well-structured risk transfer mechanisms can both help communities recover more quickly from severe shocks and make them more resilient ahead of potential disasters.”
“RE.bound is an exciting next step to our work on the RE.invest Initiative," said Shalini Vajjhala, Founder and CEO of re:focus partners. “This new program builds on the local resilient infrastructure solutions developed through RE.invest to create a global financing opportunity for cities around the world."
“Goldman Sachs has been involved in structuring catastrophe bond transactions for a variety of clients to provide efficient risk reduction," said Ali Al-Ali, Managing Director and Co-Head of Insurance Structured Finance at Goldman Sachs. “This program would use catastrophe bond technology to ultimately reduce site-specific insurance costs and promote investments in resiliency measures. We are proud to be collaborating on the program to explore this innovative direction."
"Partnering on risk transfer solutions that not only make cities safer, but carry forward resilience more promptly as well, is an important priority for Swiss Re," said Alex Kaplan, Swiss Re. "The value of building a more sustainable economic future is core to Swiss Re's business. Developing solutions which generate funds for resilient infrastructure projects and produce rapid recovery funds will help society translate resilience from talk into action."
"Catastrophe models are crucial to understanding risk and structuring robust catastrophe bonds," said Ben Brookes, Vice President, Capital Markets at RMS. "Cat bonds can be powerful tools to encourage risk mitigation efforts, facilitate rebuilding after a disaster and create a more resilient society. We are excited to work with RE.bound to extend their use into new areas.”
About re:focus partners
re:focus partners is a design firm dedicated to developing integrated resilience solutions and innovative public-private partnerships for vulnerable communities around the world. Through large-scale programs like the RE.invest Initiative (www.reinvestinitiative.org), re:focus identifies systemic opportunities for innovation to create both public value and new private investment potential through projects with sound financial returns and economic, social, and environmental integrity for the communities they serve. For more information, please visit: www.refocuspartners.com or follow us @refocuspartners.
About The Rockefeller Foundation
For more than 100 years, The Rockefeller Foundation's mission has been to promote the well-being of humanity throughout the world. Today, The Rockefeller Foundation pursues this mission through dual goals: advancing inclusive economies that expand opportunities for more broadly shared prosperity, and building resilience by helping people, communities and institutions prepare for, withstand, and emerge stronger from acute shocks and chronic stresses. To achieve these goals, The Rockefeller Foundation works at the intersection of four focus areas – advance health, revalue ecosystems, secure livelihoods, and transform cities – to address the root causes of emerging challenges and create systemic change. Together with partners and grantees, The Rockefeller Foundation strives to catalyze and scale transformative innovations, create unlikely partnerships that span sectors, and take risks others cannot – or will not. For more information, please visit www.rockefellerfoundation.org.
About The Goldman Sachs Group
The Goldman Sachs Group, Inc. is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in all major financial centers around the world.
About Swiss Re
The Swiss Re Group is a leading wholesale provider of reinsurance, insurance and other insurance-based forms of risk transfer. Dealing direct and working through brokers, its global client base consists of insurance companies, mid-to-large-sized corporations and public sector clients. From standard products to tailor-made coverage across all lines of business, Swiss Re deploys its capital strength, expertise and innovation power to enable the risk-taking upon which enterprise and progress in society depend. Founded in Zurich, Switzerland, in 1863, Swiss Re serves clients through a network of about 70 offices globally and is rated "AA-" by Standard & Poor's, "Aa3" by Moody's and "A+" by A.M. Best. Registered shares in the Swiss Re Group holding company, Swiss Re Ltd, are listed in accordance with the Main Standard on the SIX Swiss Exchange and trade under the symbol SREN. For more information about Swiss Re Group, please visit: www.swissre.com or follow us on Twitter @SwissRe.
RMS models and software help financial institutions and public agencies evaluate and manage catastrophe risks throughout the world, promoting resilient societies and a sustainable global economy.