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The world’s first microinsurance fund, LeapFrog Investments, has 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 JP Morgan, TIAA-CREF, and Proparco as well as the Waterloo Foundation and the ACE Group.
Andrew Kuper, President and Founder of LeapFrog said, “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”.
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.
John Buley, Jr., the Managing Director of Social Finance at JP 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.” JP Morgan committed $10 million and TIAA-CREF $7 million to the fund.
LeapFrog also provided new details on its innovative investment strategy. Based on 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 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 adherence program helps clients to lead relatively long and healthy lives, and makes people with pre-existing conditions insurable.
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.
Kuper said, “We don’t believe you have to choose between money and meaning.”