Bermuda-based re/insurer Flagstone Reinsurance Holdings has invested $12 million into the LeapFrog "micro-insurance" fund which aims to provide insurance to some of the world's poorest people.

LeapFrog, whose aim is to provide quality insurance to 25 million vulnerable people in Africa and Asia, announced yesterday that Flagstone was one of a group of investors who had ploughed $65 million into ther fund.

The International Finance Corp., the World Bank's private investment unit, committed $20 million, while New York-based Soros Economic Development Fund approved a $7 million contribution and Frankfurt-based development bank KfW Entwicklungsbank put up $26 million.

Flagstone chairman Mark Byrne yesterday made it clear that his company's investment was a business decision.

"Investing in ways that will couple a reasonable commercial return with flexible entrepreneurs has been shown to outperform direct charity as a way of improving outcomes for poor populations," Mr. Byrne said.

"Flagstone views our investment in LeapFrog as supporting our corporate social responsibility goals, but also as a foundation for an emerging high growth business opportunity."

Flagstone was one of the reinsurers founded after Hurricane Katrina, known as the Class of 2005.

It has blossomed into a truly global re/insurer and its office locations include South Africa and India.

The new investments mean LeapFrog now has $112 million in capital.

Micro-insurance supporters see the profitable sale of policies with premiums of as little as five cents a month as an extension of the micro-credit movement that makes small loans to the poor to allow them to start businesses.

Microcredit gained prominence when one advocate, Muhammad Yunus, won the Nobel Peace Prize in 2006 for his role in founding the Grameen Bank.

The micro-insurance industry, geared to low-income people, has an estimated market of 1.5 billion people, the fund said, citing an estimate by Lloyd's and the MicroInsurance Centre.

The fund was launched 18 months ago at the Clinton Global Initiative and LeapFrog is described by former US President Bill Clinton as the "insurer to the poor".

The fund says it seeks to invest amounts between $5 million and $15 million in high-growth potential businesses that "will bring insurance to financially excluded people including life, property, catastrophe, and health insurance".

The fund has already made an investment of about $6 million in South Africa-based AllLife, which offers insurance to people living with HIV/AIDS. Dr. Kuper said it's looking at ventures in Kenya, India and the Philippines.

LeapFrog said that for the world's poor, quality insurance is critical to permanently escaping the cycle of poverty and to catalysing entrepreneurship.

The fund added that the microinsurance industry has an annual growth rate in excess of 18 percent - yet more than 90 percent of low-income people were still without any access to insurance.

Last week, Flagstone announced its intention to move its holding company from Bermuda to Luxembourg, while maintaining its operating platform on the Island.

For more information, go to the fund's website at www.leapfroginvest.com