HorizonRe’s aim is to assess and develop facultative reinsurance underwriting solutions for third parties within the niche market of financial guarantees and political risk insurance /reinsurance.

HorizonRe acts as an intermediary, placing a captive insurance company’s insurance risks within the global reinsurance market. Financial reinsurance is a specialised activity which assists in the distribution of risks and stabilises the underwriting results of an insurance company.

The key underwriting objectives of financial reinsurance are to provide solutions to improve:

• The stated profit of the reinsured;
• The stated policyholder’s surplus of the reinsured and/or, to improve both, simultaneously.

HorizonRE aims to participate firstly as an intermediary and, once the reinsurance license has been obtained, as an underwriter of risk in the Financial Guarantee Co-operative Underwriting Program (“CUP”), which forms part of the Multilateral Investment Guarantee Agency (“MIGA”). Both organisations are members of the World Bank.

CUP is a fronting arrangement, whereby the World Bank, as the insurer of record, issues a contract of guarantee for the entire amount of insurance requested by an investor, retaining only a portion of exposure for its own account.

The remaining risk is globally ceded to various participating commercial insurance and reinsurance companies.

The investment guarantee insurance program to non-government investors is against the following political risks:

• Breach of Contract;
• Expropriation;
• Transfer Restriction and,
• War and Civil Disturbance in the host country

The premium rate is based on risk assessment which focuses primarily on the risks associated with the individual project and coverage, taking into account general economic and political conditions of the host country.