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Kita Partners with MS Amlin to Insure Carbon Credit Projects
Kita, an insurance provider specializing in emerging sustainability and climate-related risks, has announced a new partnership with MS Amlin, a leading insurance and reinsurance company operating within the Lloyd’s market. This collaboration aims to support the launch of an insurance product protecting against non-payment risks associated with carbon and natural capital projects.
What is Kita?
Founded in 2021 and operating as a coverholder at Lloyd’s of London, Kita develops innovative insurance solutions for risks frequently enough inadequately addressed by conventional financial instruments. The company focuses notably on the rapidly evolving sectors of sustainability and climate finance.
In 2023, Kita launched its Non-Payment Insurance (NPI) product. This policy is designed to safeguard financiers of carbon credit projects against the risk of non-payment by the contractual counterparty. NPI addresses a key barrier to growth in climate and natural capital markets: credit risk related to loans,prepayments,and other financial commitments. Kita states that this insurance helps unlock capital for projects that are vital to achieving global sustainability goals.
MS Amlin’s Role and Market support
MS Amlin will provide lead capacity for kita’s NPI offering as a Lloyd’s coverholder.additional support comes from Chaucer Group and Tokio marine Kiln, contributing underwriting capacity and financial strength to the solution. This multi-party backing demonstrates confidence in the product and its potential impact.
How Non-Payment Insurance Works
The NPI policy covers a range of credit exposures linked to carbon projects, including project finance, prepayment structures, offtake agreements (payment receipts), and other exposure types. It transfers the counterparty credit risk to a high-quality insurance balance sheet.This mechanism not only reduces potential losses from default but can also potentially lower capital requirements for banks