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LeapFrog leads $7m investment in emerging markets insurer Bima

21 Feb 2013

LeapFrog Investments, which focuses on financial services in emerging markets, has led a $7m investment in Africa and Asia-focused insurance group Bima.

Of the total investment, $4.25m comes from LeapFrog, and the remainder from existing shareholders.

Launched in 2010 by Swedish emerging markets investor Kinnevik, Bima provides affordable insurance to people in emerging markets via their mobile phones.

The company operates in Ghana, Tanzania, Senegal, Mauritius, Bangladesh and Sri Lanka.

“Just as banks ultimately embraced mobile money, insurers will become rapid adopters of mobile technology,” explains Gustaf Agartsson, CEO of Bima.

“LeapFrog provides us with world-leading expertise in product design and distribution, plus access to its portfolio of insurance companies. This distinctive support will enable us to innovate and scale in current markets and roll out in many new markets in the coming two years.”

This is LeapFrog’s seventh insurance investment, with the fund’s portfolio companies now spanning ten markets in East, West and South Africa as well as South Asia.

“Bima has harnessed the mobile revolution to dramatically reduce the price of premiums. Products such as life, accident and health insurance are provided on a commercial basis for as little as $0.20 to $6.00 a month,” said LeapFrog partner Stewart Langdon. “This radical affordability puts the safety net of insurance within reach of millions of low-income customers in emerging markets for the first time.”

Bima does not replace traditional insurance companies or mobile network operators. Instead, the business uses technology to bridge the two, and provides further support on distribution, product development and daily management.

The resulting partnership, connecting two very different industries, means the insurer is able to access a vast new customer base while the mobile operator bolsters its revenue and performance.

Three billion mobile phone users live in emerging markets, yet according to McKinsey & Co, over one billion of them have no access to financial services such as bank accounts.

The number of untapped potential insurance customers is even higher –analysis by Lloyds & Swiss Re estimates that as many as three billion emerging consumers would acquire affordable insurance if offered it.

A recent study by the ILO found that farmers in Ghana who were randomly assigned to receive insurance cover increased their agricultural investment significantly, in some cases up to 65 per cent. By contrast, those assigned to receive credit demonstrated little change in their investment behavior.

The study indicates that often the problem is not the absence of capital, but the omnipresence of risks, preventing people from making worthwhile investments in the future.

With severe and often catastrophic risks removed, low-income people can take leaps such as planting higher-yield crops or starting businesses, LeapFrog said. They can raise their incomes and permanently change their families’ prospects.

LeapFrog invests in financial services companies in Africa and Asia. Launched in 2008 with President Bill Clinton, investors in LeapFrog’s fund include global banks such as JP Morgan, the European Investment Bank and Triodos; investment funds such as Soros EDF, Omidyar Network, and Calvert; global reinsurers and pension funds such as SCOR, Haverford, and TIAA-CREF; and leading development financiers including FMO, IFC, KfW, Proparco and Accion Frontier Investments Group.

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