41600 To promote foreign direct investment into developing countries to support economic growth, reduce poverty, and r improve people’s lives. r r r r r FDI Flows and MIGA Guarantees to Developing Countries Net FDI Flows to Percent of Net FDI Flows and MIGA Guarantees Developing Countries, to Developing Countries Outside the Top Ten, 300 100 250 80 200 60 150 40 100 20 50 0 0 1990 1995 2000 2005 1990 1995 2000 2005 Top ten net FDI recipients % of MIGA’s gross issuance All other countries 3-year moving average % of net FDI flows to developing countries outside the top ten 2 HIGHLIGHTS HIGHLIGHTS 1 In fiscal year 2007, the total amount of guarantees issued for projects in MIGA’s developing member countries reached $1.4 billion, representing the third consecutive year of steady growth in guarantees issued. Commitments approved by the Board of Directors totalled $1.9 billion. TABLE 1 Guarantees Issued 2002 2003 2004 2005 2006 2007 FY90-07 FIGURE 1 Earned Premium, Fees, and Investment Income,* 07 36.3 42.7 06 37.2 11.4 05 39.6 16.8 Premium and fee income 04 40.9 14.2 Investment income 03 39.5 25.3 02 40.4 28.7 * Excludes other income. 01 36.5 30.4 00 29.5 23.5 98 24.1 13.7 96 21.9 9.4 94 9.9 4.7 92 3.1 5.4 90 0.5 7.2 Membership 2 HIGHLIGHTS Operational Highlights Amount of Share of No. of projects Share of projects guarantees guarantees issued supported supported (%) issued $ (M) (%) Priority area Region Sector Other highlights include: HIGHLIGHTS 3 Partnerships World Bank Group Cooperation 4 HIGHLIGHTS Throughout this Annual Report, you will see evidence of the positive strides the Multilateral Investment Guarantee Agency (MIGA) has taken toward overcoming poverty in all regions—especially in Africa and in the markets perceived to be the riskiest—advancing social and economic development, investing in growth, and encouraging hope, and opportunity. HIGHLIGHTS 5 6 HIGHLIGHTS This past fiscal year in MIGA was one marked by progress on many fronts, beginning with the continued, steady growth in the amount of guarantees issued in support of foreign direct investment (FDI) in our developing member countries. This year, guarantee commitments reached $1.9 billion, of which $1.4 billion in coverage was signed. This represents the third consecutive year of growth in the amount of guarantees issued. The agency’s overall outstanding guarantees portfolio remained strong at $5.3 billion. HIGHLIGHTS 7 8 HIGHLIGHTS Peter D. Cleary Yukiko Omura Philippe Valahu Moina Varkie Frank J. Lysy Kevin Lu Marcus Williams Hasan Tuluy W. Paatii Ofosu-Amaah HIGHLIGHTS 9 MIGA in Africa 10 DEVELOPMENT IMPACT Sub-Saharan Africa hosts just 10 percent of the global population, yet it is home to 30 percent of the world’s poor. The reduction of extreme poverty, which spiked to roughly 50 percent of the popu- lation (300 million people) in 2000, has been hampered by poor growth performance. But following several “lost” decades of slow growth, Africa today is on the cusp of major change, as the region breaks out of the long economic stagnation of the 1970s and 1980s. DEVELOPMENT IMPACT 11 Infrastructure Burundi Telecommunications. 12 DEVELOPMENT IMPACT Sierra Leone Other infrastructure. Uganda Mali e e FIGURE 2 Guarantees (Volume) Issued in Africa from FY90-07, 42% Infrastructure 15% Mining 15% Oil & Gas 12% Manufacturing 8% Services 7% Agribusiness 2% Financial 1% Tourism DEVELOPMENT IMPACT 13 Kenya Agribusiness Services 14 DEVELOPMENT IMPACT Sierra Leone Ghana Financial Oil, gas, and mining Mozambique DEVELOPMENT IMPACT 15 16 DEVELOPMENT IMPACT MIGA Operations in Mozambique, 1998-2007 Operation Approval Date Guarantee ($ M) Sector Status TOTAL 495.0 DEVELOPMENT IMPACT 17 Demand for FDI Information on Sub-Saharan Africa, Latin America and the Caribbean Sub-Saharan Africa Middle East and North Africa Europe and Central Asia South Asia East Asia and JUN02 DEC02 JUN03 DEC03 JUN04 DEC04 JUN05 DEC05 the Pacific 18 DEVELOPMENT IMPACT Manufacturing Tourism DEVELOPMENT IMPACT 19 20 OPERATIONAL OVERVIEW Guarantees MIGA saw a slight upswing in the level of guarantees issued in fiscal year 2007, with coverage reaching $1.4 billion and the overall out- standing portfolio remaining strong at $5.3 billion. The increase in coverage represents the third consecutive year of growth in the amount of guarantees issued by the agency. The coverage reflected MIGA’s focus on supporting projects in countries that carry a higher perception of risk—including in Africa, frontier markets, and IDA- eligible countries—facilitating complex infrastructure transactions, and working with investors and client countries to help them resolve disputes and keep investments on track. OPERATIONAL OVERVIEW 21 MIGA’s Guarantees Exposure in IDA-Eligible Countries, 80 60 40 20 0 01 02 03 04 05 06 07 22 OPERATIONAL OVERVIEW FIGURE 3 FDI Flows and MIGA Guarantees to Countries Seen as “High Risk” Net FDI Flows to % of Net FDI Flows and MIGA’s Developing Countries, Guarantees to “High Risk” Developing Countries, 300 100 250 80 200 60 150 40 100 50 20 0 0 1990 1995 2000 2005 1990 1995 2000 2005 All other countries % of MIGA’s gross issuance "High Risk" 3-year moving average Net FDI flows to high risk countries (as % of overall developing country flows) FIGURE 4 Guarantees Portfolio, Gross Outstanding Exposure, 07 5,301 06 5,352 05 5,094 04 5,186 03 5,083 02 5,257 01 5,179 00 4,365 98 2,862 96 2,277 94 1,048 92 421 90 132 OPERATIONAL OVERVIEW 23 TABLE 2 Projects Supported in Fiscal 2007 Host Country Guarantee Holder Investor Sector Amount $ M Priority/Area Country of Interest Asia Europe and Central Asia Latin America and the Caribbean 24 OPERATIONAL OVERVIEW TABLE 2 Projects Supported in Fiscal 2007 Sub-Saharan Africa OPERATIONAL OVERVIEW 25 TABLE 3 MIGA’s Outstanding Guarantee Portfolio in IDA-Eligible Countries IDA-eligible Countries Gross Exposure ($ M) % of Gross Net Exposure ($ M) % of Net Total 2,194 41 1,411 44.0 26 OPERATIONAL OVERVIEW FIGURE 5 Outstanding Portfolio Distribution by Host Region, 36.6% Europe and Central Asia 28.0% Latin America and the Caribbean 18.2% Sub-Saharan Africa 14.3% Asia Regional Diversification 5.4% Middle East and North Africa OPERATIONAL OVERVIEW 27 r r r r r SIP Projects Supported in FY07 Host country Guarantee Holder Investor Country Sector Amount ($ M) 28 OPERATIONAL OVERVIEW FIGURE 6 Guarantees Issued by Sector in FY07 36% Infrastructure 35% Financial 23% Manufacturing 4% Oil, gas, and mining 2% Agribusiness, tourism, and services TABLE 4 Outstanding Portfolio Distribution by Sector, FY01 FY02 FY03 FY04 FY05 FY06 FY07 Total 100 100 100 100 100 100 100 OPERATIONAL OVERVIEW 29 TABLE 5 Ten Largest Outstanding Country Exposures in MIGA Portfolio, Host Country Gross Exposure ($ M) % of Gross Net Exposure ($ M) % of Net Total 2,863.0 54.0% 1,520.4 47.3 30 OPERATIONAL OVERVIEW FIGURE 7 Outstanding Portfolio Distribution by Investor Country, France 17.3 Austria 12.9 United States 6.8 South Africa 6.3 Finland 5.7 Spain 5.3 Cayman Islands 4.8 Czech Republic 4.2 Luxembourg 4.1 United Kingdom 4.1 Japan 3.7 Egypt, Arab Rep. of 3.0 Canada 2.5 Switzerland 2.4 Netherlands 2.3 Belgium 2.2 Bermuda 2.2 Germany 1.8 Singapore 1.7 Senegal 1.4 Mauritius 1.2 Others* 4.0 OPERATIONAL OVERVIEW 31 South-South Investments Supported in FY07 Investor country Host Country Sector Gross Exposure ($ M) 32 OPERATIONAL OVERVIEW Partners OPERATIONAL OVERVIEW 33 Technical Assistance MIGA provides technical assistance to help governments and other intermediaries involved in promoting investment improve their ability to respond effectively to investor needs. In fiscal 2007, the agency’s active technical assistance (TA) portfolio contained 44 projects covering 29 countries, along with several regional and global initiatives. 34 OPERATIONAL OVERVIEW FIGURE 8 Technical Assistance Portfolio Distribution by Region 23% Africa 18% East Asia and the Pacific 18% Europe and Central Asia 11% Latin America and the Caribbean 7% Middle East and North Africa 5% South Asia 18% Global OPERATIONAL OVERVIEW 35 Sector-focused FDI intelligence reports and E-Learning Ex-Post Evaluation 36 OPERATIONAL OVERVIEW Online Investment Information and Knowledge Services During the fiscal year, MIGA launched a new service on political risk management and insurance, the PRI-Center (www.pri-center. com). The move further aligned MIGA’s online investment services with the agency’s core business and strategic priorities. MIGA also consolidated existing investor-oriented websites into a single portal site, FDI.net (www.fdi.net). Through these ini- tiatives, MIGA continues to contribute to its mandate of con- ducting research and extending knowledge about investment- related issues. These sites further position MIGA as a thought leader on PRI- and FDI-related issues. OPERATIONAL OVERVIEW 37 TABLE 6 MIGA’s Online Services Host country Description Audience Services r r r r r r r r r r r r r r r r r 38 OPERATIONAL OVERVIEW AFGHANISTAN BANGLADESH CAMBODIA CHINA EAST TIMOR FIJI INDIA INDONESIA KOREA (REPUBLIC OF) LAO PEOPLE’S DEMOCRATIC REP. MALAYSIA MALDIVES MICRONESIA MONGOLIA NEPAL PAKISTAN PALAU PAPUA NEW GUINEA PHILIPPINES SAMOA SINGAPORE SOLOMON ISLANDS SRI LANKA THAILAND VANUATU VIETNAM Regional Distribution of Regional Development Indicators, Asia Outstanding Guarantees Portfolio East Asia and South Asia Pacific $757 M Asia $1,941 M Europe and Central Asia $1,483 M Latin America and the Caribbean $285 M Middle East and North Africa $964 M Sub-Saharan Africa REGIONAL ACTIVITIES 39 Guarantees Country Activities Afghanistan Project Name: Areeba Afghanistan LLC Afghanistan Project Name: Baz International Pharmaceutical Company (BIPC) 40 REGIONAL ACTIVITIES Guarantees Country Activities Afghanistan Afghanistan Project Name: BRAC Afghanistan Bank China Project Name: Beijing Rohrueck Mobile Garbage Bins Co. Ltd. REGIONAL ACTIVITIES 41 Guarantees Country Activities China China Project Name: Beijing Gaoantun Waste to Energy Co. Ltd. China Project Name: Mahindra (China) Tractors Company Ltd. 42 REGIONAL ACTIVITIES Guarantees Country Activities China China Project Name: Deqing Darco Producing Water Company China Project Name: Zhenjiang Golden State Water Co. Ltd. REGIONAL ACTIVITIES 43 Guarantees Country Activities China Technical Assistance Country Activities Bangladesh Cambodia China Indonesia Nepal Philippines 44 REGIONAL ACTIVITIES Technical Assistance Country Activities Philippines REGIONAL ACTIVITIES 45 ALBANIA ARMENIA AZERBAIJAN BELARUS BULGARIA BOSNIA-HERZEGOVINA CROATIA (REPUBLIC OF) CYPRUS ESTONIA GEORGIA HUNGARY KAZAKHSTAN KYRGYZ REPUBLIC LATVIA LITHUANIA MACEDONIA MALTA MOLDOVA MONTENEGRO POLAND ROMANIA RUSSIAN FEDERATION SERBIA SLOVAK REPUBLIC TAJIKISTAN TURKEY TURKMENISTAN UKRAINE UZBEKISTAN Regional Distribution of Regional Development Indicators, Europe and Central Asia Outstanding Guarantees Portfolio $757 M Asia $1,941 M Europe and Central Asia $1,483 M Latin America and the Caribbean $285 M Middle East and North Africa $964 M Sub-Saharan Africa 46 REGIONAL ACTIVITIES Guarantees Country Activities Kazakhstan Project Name: BTA Ipoteka Mortgage Securitization Russian Project Name: Commercial Bank DeltaCredit Closed Joint Stock Company Federation Russian Project: Joint Stock Company Import-Export Bank (Impexbank) Federation REGIONAL ACTIVITIES 47 Guarantees Country Activities Russian Federation Russian Project Name: ZAO Raiffeisenbank Austria Federation Technical Assistance Country Activities Croatia e Macedonia Montenegro Russia Serbia 48 REGIONAL ACTIVITIES Technical Assistance Country Activities Tajikistan Regional e Ukraine REGIONAL ACTIVITIES 49 ANTIGUA AND BARBUDA ARGENTINA BAHAMAS BARBADOS BELIZE BOLIVIA BRAZIL CHILE COLOMBIA COSTA RICA DOMINICA DOMINICAN REPUBLIC ECUADOR EL SALVADOR GRENADA GUATEMALA GUYANA HAITI HONDURAS JAMAICA NICARAGUA PARAGUAY PANAMA PERU ST. KITTS & NEVIS ST. LUCIA ST. VINCENT SURINAME TRINIDAD & TOBAGO URUGUAY VENEZUELA Regional Distribution of Regional Development Indicators, Latin America and the Caribbean Outstanding Guarantees Portfolio $757 M Asia $1,941 M Europe and Central Asia $1,483 M Latin America and the Caribbean $285 M Middle East and North Africa $964 M Sub-Saharan Africa 50 REGIONAL ACTIVITIES Guarantees Country Activities Brazil Project Names: Itumbiara Transmissora de Energia Ltda., Porto Primavera Transmissora de Energia Ltda., Vila do Conde Transmissora de Energia REGIONAL ACTIVITIES 51 Guarantees Country Activities Ecuador Project Name: Termoguayas Generation S.A. Jamaica Project Name: The Bank of Nova Scotia Jamaica Limited Uruguay Project Name: Botnia South America S.A. 52 REGIONAL ACTIVITIES Guarantees Country Activities Uruguay Technical Assistance Country Activities Colombia Guatemala REGIONAL ACTIVITIES 53 Technical Assistance Country Activities Honduras Nicaragua Regional 54 REGIONAL ACTIVITIES ALGERIA BAHRAIN EGYPT IRAN (ISLAMIC REPUBLIC OF) ISRAEL JORDAN KUWAIT LEBANON LIBYA MOROCCO OMAN QATAR SAUDI ARABIA SYRIAN ARAB REPUBLIC TUNISIA UNITED ARAB EMIRATES YEMEN Regional Distribution of Regional Development Indicators, Middle East and North Africa Outstanding Guarantees Portfolio $757 M Asia $1,941 M Europe and Central Asia $1,483 M Latin America and the Caribbean $285 M Middle East and North Africa $964 M Sub-Saharan Africa REGIONAL ACTIVITIES 55 Technical Assistance Country Activities Egypt Oman Yemen 56 REGIONAL ACTIVITIES ANGOLA BENIN BOTSWANA BURKINA FASO BURUNDI CAMEROON CAPE VERDE CENTRAL AFRICAN REPUBLIC CHAD CONGO (DEMOCRATIC REPUBLIC OF) CONGO (REPUBLIC OF) CÔTE D’IVOIRE DJIBOUTI EQUATORIAL GUINEA ETHIOPIA ERITREA GABON GAMBIA GHANA GUINEA GUINEA-BISSAU KENYA LESOTHO LIBERIA MADAGASCAR MALAWI MALI MAURITANIA MAURITIUS MOZAMBIQUE NAMIBIA NIGERIA RWANDA SENEGAL SIERRA LEONE SEYCHELLES SOUTH AFRICA SUDAN SWAZILAND TANZANIA TOGO UGANDA ZAMBIA ZIMBABWE Regional Distribution of Regional Development Indicators, Sub-Saharan Africa Outstanding Guarantees Portfolio $757 M Asia $1,941 M Europe and Central Asia $1,483 M Latin America and the Caribbean $285 M Middle East and North Africa $964 M Sub-Saharan Africa REGIONAL ACTIVITIES 57 Guarantees Country Activities Burkina Faso Project Name: Société Burkinabé de Promotion Hôtelière Cameroon Project Name: National Financial Credit Bank S.A. 58 REGIONAL ACTIVITIES Guarantees Country Activities Ghana Project Name: Barclays Bank of Ghana Ltd. Guinea Project Name: Orange Guinée S.A. Guinea-Bissau Project Name: Société Guinéenne de Promotion Hôtelière REGIONAL ACTIVITIES 59 Guarantees Country Activities Guinea-Bissau Kenya Project Name: Kibos Sugar and Allied Industries Limited Mozambique Project Name: Companhia de Sena S.a.r.l. Mozambique Project Name: Sasol Pipeline Project 60 REGIONAL ACTIVITIES Guarantees Country Activities Mozambique Nigeria Project Name: Aarti Steel Nigeria Ltd. Uganda Project Name: Umeme Limited REGIONAL ACTIVITIES 61 Guarantees Country Activities Uganda Uganda Project Name: Bujagali Energy Ltd. Technical Assistance Country Activities Ghana Lesotho Liberia 62 REGIONAL ACTIVITIES Technical Assistance Country Activities Mali Namibia Mozambique Sierra Leone South Africa Uganda REGIONAL ACTIVITIES 63 64 IEG / COMPLIANCE Independent Evaluation Group MIGA’s Independent Evaluation Group (IEG) assesses the development effectiveness of MIGA programs, guarantee projects, and complementary services. The group reports to MIGA’s Board of Directors and the Committee on Development Effectiveness, and is independent from MIGA management and operations. Compliance Advisor/Ombudsman The IFC/MIGA Compliance Advisor/Ombudsman (CAO) is an independent recourse mechanism that reports directly to the President of the World Bank Group. The post was established in 1999. Its mandate is to help MIGA and the International Finance Corporation address complaints by people affected by projects in a manner that is fair, objective and constructive, and to enhance the social and environmental outcomes of projects in which these organizations play a role. IEG / COMPLIANCE 65 66 MANAGEMENT’S DISCUSSION AND ANALYSIS MANAGEMENT’S DISCUSSION AND ANALYSIS 67 OVERVIEW DEVELOPMENT ACTIVITIES Summary of Business Segments Political Risk Insurance (PRI) r Transfer restriction and inconvertibility r Expropriation r War and civil disturbance r Breach of contract 68 MANAGEMENT’S DISCUSSION AND ANALYSIS TABLE 1 Cumulative Guarantees Issued in Member Countries FY07 FY06 FY05 FY04 TABLE 2 Regional Distribution of Gross and Net Exposure Gross ($ M) Net ($ M) Total Net Exposure (%) FY07 FY06 FY05 FY07 FY06 FY05 FY07 FY06 FY05 757 523 16.3 1,941 902 28.1 1,484 876 27.3 285 262 8.2 964 711 22.2 -130 -65 -2.0 Total 5,301 5,362 5,094 3,209 3,310 3,138 100.0 100.0 100.0 Technical Assistance (TA) Online Dissemination of Information MANAGEMENT’S DISCUSSION AND ANALYSIS 69 Investment Dispute Mediation Outlook and Challenges Market Trends Operational Priorities r Supporting investments between MIGA Category Two countries (South-South investments). r upporting investments in infrastructure expansion and rehabilitation. r Supporting growth in other frontier markets. FUNDING SOURCES Subscribed Capital 70 MANAGEMENT’S DISCUSSION AND ANALYSIS TABLE 3 Summary of General Capital Increase, as of June 30, 2007 Category One Category Two All Countries Number $M Number $M Number $M Total Subscribed 23 459.4 86 286.4 109 745.8 Total Subscribed and Reserved 23 498.3 111 326.8 134 825.1 Equity CAPITAL MANAGEMENT Underwriting Capacity TABLE 4 Current Underwriting Capacity, $ M Total 2,476 Statutory Underwriting Capacity - June 30, 2007 10,570 MANAGEMENT’S DISCUSSION AND ANALYSIS 71 Capital Adequacy TABLE 5 Risk Bearing Capacity, FY05-07, $ M FY07 FY06 FY05 Net exposure 3,209 3,310 3,138 Paid-in Capital 360 359 349 Operating Capital 950 863 830 Operating Capital/Net Exposure 29.6% 26.1% 26.4% INVESTMENT MANAGEMENT 72 MANAGEMENT’S DISCUSSION AND ANALYSIS FIGURE 1 Portfolio Composition of MIGA’s US $ Holdings, in percent 56.7 Money Market/Deposits/Cash 2.1 Agency 1.0 Domestic Government 22.7 Asset-backed Securities 17.5 Mortgage-backed Securities Risk Management Risk Landscape Insurance Risk Credit Risk Interest Rate Risk Foreign Exchange Rate Risk Operational Risk MANAGEMENT’S DISCUSSION AND ANALYSIS 73 Legal Risk Economic Capital and Portfolio Risk Modeling CRITICAL ACCOUNTING POLICY Reserve for Claims Pension and Other Postretirement Benefits 74 MANAGEMENT’S DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Operating Income and Net Income TABLE 6 Analysis of Operating Income and Net Income, $ M FY07 FY06 FY05 Net Premium Income Operating Income Net Income Operating Capital 950 863 830 ROOC (before provisions) ROOC (after provisions) FY07 versus FY06 FY06 versus FY05 MANAGEMENT’S DISCUSSION AND ANALYSIS 75 CORPORATE GOVERNANCE General Governance Board Membership r r r r r r Audit Committee Membership Key Responsibilities Communications r r r r Executive Sessions 76 MANAGEMENT’S DISCUSSION AND ANALYSIS Access to Resources and to Management Code of Ethics r r Auditor Independence r r r r r r r r r r r MANAGEMENT’S DISCUSSION AND ANALYSIS 77 MANAGEMENT’S ASSERTION REGARDING COSO 78 MANAGEMENT’S DISCUSSION AND ANALYSIS MANAGEMENT’S ASSERTION REGARDING COSO (CONT’D) MANAGEMENT’S DISCUSSION AND ANALYSIS 79 FINANCIAL STATEMENTS Report of Independent Accountants 80 FINANCIAL STATEMENTS BALANCE SHEET FY07 FY06 Assets Liabilities and Shareholders’ Equity FINANCIAL STATEMENTS 81 STATEMENT OF INCOME FY07 FY06 STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY FY07 FY06 82 FINANCIAL STATEMENTS STATEMENT OF CASH FLOWS FY07 FY06 FINANCIAL STATEMENTS 83 STATEMENT OF SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER Subscriptions—Note C Voting power Total Amount Amount Number % of Members Shares Subscribed Paid-in Subject to Call of Votes Total 84 FINANCIAL STATEMENTS STATEMENT OF SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER Subscriptions—Note C Voting power Total Amount Amount Number % of Members Shares Subscribed Paid-in Subject to Call of Votes Total FINANCIAL STATEMENTS 85 STATEMENT OF SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER Subscriptions—Note C Voting power Total Amount Amount Number % of Members Shares Subscribed Paid-in Subject to Call of Votes Total 86 FINANCIAL STATEMENTS STATEMENT OF SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER Subscriptions—Note C Voting power Total Amount Amount Number % of Members Shares Subscribed Paid-in Subject to Call of Votes Total Total—June 30, 2007 2 174,266 $ 1,885,558 $ 359,584 $ 1,525,974 218,384 100.00 Total—June 30, 2006 173,965 $ 1,882,301 $ 358,947 $ 1,523,354 218,888 100.00 FINANCIAL STATEMENTS 87 STATEMENT OF GUARANTEES OUTSTANDING Gross Exposure—Note D US Japanese Reinsurance— Net Host Country Euro Total Dollars Yen Note D Exposure 88 FINANCIAL STATEMENTS STATEMENT OF GUARANTEES OUTSTANDING Gross Exposure—Note D US Japanese Reinsurance— Net Host Country Euro Total Dollars Yen Note D Exposure FINANCIAL STATEMENTS 89 NOTES TO FINANCIAL STATEMENTS PURPOSE NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING AND RELATED POLICIES Basis of Preparation Accounting & Reporting Developments Use of Estimates 90 FINANCIAL STATEMENTS Investments Nonnegotiable, Noninterest-bearing Demand Obligations on Account of Subscribed Capital Impairment of reinsurance assets Reserve for Claims Currency Translation Valuation of Capital Stock Revenue Recognition FINANCIAL STATEMENTS 91 NOTE B—INVESTMENTS Fair Value 2007 2006 Fair Value 2007 2006 NOTE C—CAPITAL STOCK 92 FINANCIAL STATEMENTS Initial Capital Capital Increase Total Shares (US$000) Shares (US$000) Shares (US$000) As of June 30, 2007 At June 30, 2006 NOTE D—GUARANTEES Guarantee Program Contingent Liability Reinsurance FINANCIAL STATEMENTS 93 2007 2006 Portfolio Risk Management Portfolio Diversification June 30, 2007 June 30, 2006 Exposure in Exposure in Exposure in Exposure in Top Five Countries Top Ten Countries Top Five Countries Top Ten Countries Gross Exposure Net Exposure June 30, 2007 June 30, 2006 Gross Net % of Total Net Gross Net % of Total Net Exposure Exposure Exposure Exposure Exposure Exposure 94 FINANCIAL STATEMENTS June 30, 2007 June 30, 2006 Gross Net % of Total Net Gross Net % of Total Net Exposure Exposure Exposure Exposure Exposure Exposure NOTE E—CLAIMS Reserve for Claims June 30, 2007 June 30, 2006 Specific Reserve for Claims FINANCIAL STATEMENTS 95 Reporting Period FY02 FY03 FY04 FY05 FY06 FY07 Total Pending Claims Claims Payable NOTE F—PENSION AND OTHER POST RETIREMENT BENEFITS Benefit Cost 96 FINANCIAL STATEMENTS SRP RSBP PEBP 2007 2006 2007 2006 2007 2006 Projected Benefit Obligation Fair value of plan assets Funded status Amounts recognized in Accumulated Other Comprehensive Income on adoption of FAS 158 SRP RSBP PEBP TOTAL Incremental effect of applying FAS 158 on individual line items on the Balance Sheet Before Application of FAS 158 FAS 158 Adoption Adjustments After Application of FAS 158 Line Item FINANCIAL STATEMENTS 97 SRP RSBP PEBP Total Assumptions SRP RSBP PEBP 2007 2006 2007 2006 2007 2006 SRP RSBP PEBP 2007 2006 2007 2006 2007 2006 One percentage point One percentage point increase decrease Investment Strategy 98 FINANCIAL STATEMENTS SRP RSBP Target Allocation Plan Assets Target Allocation Plan Assets 2007 2007 2006 2007 2007 2006 Asset Class Total 100 100 100% 100 100 100% Estimated Future Benefits Payments SRP RSBP PEBP Before Medicare Medicare Part Part D Subsidy Part D Subsidy Expected Contributions NOTE G—SERVICE AND SUPPORT FEE NOTE H—ESTIMATED FAIR VALUES FINANCIAL STATEMENTS 99 100 APPENDICES APPENDICES 101 Governors and Alternates, as of June 30, 2007 Member Governor Alternate 102 APPENDICES Governors and Alternates, as of June 30, 2007 Member Governor Alternate APPENDICES 103 Governors and Alternates, as of June 30, 2007 Member Governor Alternate 104 APPENDICES Governors and Alternates, as of June 30, 2007 Member Governor Alternate APPENDICES 105 Directors and Alternates: Voting Power, as of June 30, 2007 Director Alternate Casting votes of Total votes % of total Elected by the votes of the six largest shareholders Elected by the votes of other shareholders 106 APPENDICES Directors and Alternates: Voting Power, as of June 30, 2007 Director Alternate Casting votes of Total votes % of total Elected by the votes of other shareholders (cont’d) In addition to the directors and alternates shown in the foregoing list, the following also served after November 1, 2006 Director End of period of service Alternate director End of period of service APPENDICES 107 Signatories to MIGA’s Convention, as of June 30, 2007 108 APPENDICES Subscriptions to the General Capital Increase, as of June 30, 2007 Shares CATEGORY 2 Shares CATEGORY 2 Shares CATEGORY 1 Amount $ Amount $ Amount $ Subscribed Subscribed Subscribed SUBTOTAL 42,461 459,428,020 Shares CATEGORY 2 Amount $ Subscribed SUBTOTAL 26,473 286,437,860 TOTAL CAT. 1&2 68,934 745,865,880 Shares Summary Subscribed Amount $ Total Cat. 1 42,461 459,428,020 Total Cat. 2 26,473 286,437,860 TOTAL 68,934 745,865,880 APPENDICES 109 MIGA Member Countries (171) Industrialized Countries (24) Developing Countries (147) ASIA EUROPE AND CENTRAL ASIA LATIN AMERICA AND CARIBBEAN MIDDLE EAST AND NORTH AFRICA SUB-SAHARAN AFRICA Countries in the Process of Fulfilling Membership Requirements (2) INDUSTRIALIZED COUNTRIES DEVELOPING COUNTRIES 110 APPENDICES Facultative Reinsurance Obtained by MIGA Facultative Reinsurance Provided by MIGA Investment Insurer Country Investment Insurer Country APPENDICES 111 Cooperative Underwriting Program Participants Guarantee Clients Investment Insurer Country 112 APPENDICES Guarantee Clients Guarantee Clients Guarantee Clients APPENDICES 113 Contacts GUARANTEES BUSINESS INQUIRIES TECHNICAL ASSISTANCE 114 APPENDICES Abbreviations APPENDICES 115 Photo Credits 116 APPENDICES World Bank Group