OFFICIAL DOCUMENTS. THE WORLD BANK IBRD -IDA I womawgwmiou. Public Disclosure Authorized. Public Disclosure Authorized. Public Disclosure Authorized

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1 Public Disclosure Authorized OFFICIAL DOCUMENTS THE WORLD BANK IBRD -IDA I womawgwmiou crwa,i 10,2017 Public Disclosure Authorized Pacific Catastrophe Risk Insurance Foundation do Ms. Maybelline Bing Ministry Finance Majuro Marshall Islands Dear Ms. Bing. PCRAF!: Furring Disaster Risk Finance in Pacific Project PCRA FI Grant No. TF A4136 Letter Agreement Public Disclosure Authorized In response to request for financial assistance made on behalf Pacific Catastrophe Risk Insurance Foundation ("Recipient- or "Foundation"). I am pleased to inform you that International Bank for Reconstruction and Development and International Development Association ("World Bank"), acting as Administrator Pacific Catastrophe Risk Assessment and Financing Initiative Multi-Donor Trust Fund ("Trust Fund") provided by various donors ("Donors"). proposes to extend to Recipient for benefit Cook Islands, Republic Marshall Islands, Independent State Samoa. Kingdom Tonga, Republic Vanuatu and any or countries that may become members Foundation Council (as defined in Annex to this Agreement) and as agreed in writing with World Bank. in whose respective territories Project is carried out ("Pacific Island Countries"; each a "Pacific Island Country"), a grant in an amount not to exceed one hundred thousand United States Dollars (U.S.S 100,000) ("Grant") on terms and conditions set forth or referred to in this letter agreement ("Agreement"), which includes attached Annex, to assist in financing Part 2 project described in Annex ("Project"). Public Disclosure Authorized This Grant is provided as part financial assistance from World Bank. acting as administrator Trust Fund, to support Project. The World Bank, acting as administrator Trust Fund, has also agreed to make available grants from Trust Fund to PCRIC (as defined in Annex to this Agreement), Secretariat Pacific Community and Pacific Islands Forum Secretariat to assist in financing Project, all pursuant to terms and conditions set forth in grant agreements to be entered into between World Bank and respective entities. This Grant is funded out Trust Fund for which World Bank receives periodic contributions from Donors. In accordance with Section 3.02 Standard Conditions (as defined in Annex to this Agreement). World Bank's payment obligations in connection with this Agreement are limited to amount funds made available to it by Donors under 1818 [1 Strce NW - %&hington. D( LSA

2 Pacific Catastrophe Risk Insurance Foundation -2- PCRAFI Grant No. TF A4136 Frust Fund, and Recipient's right to withdraw Grant proceeds is subject to availability such funds. The Recipient represents, by confirming its agreement below, that it is authorized to enter into this Agreement and to carry out Project in accordance with terms and conditions set fbrth or referred to in this Agreement. Please confirm Recipient's agreement to foregoing Recipient by having sign and an date authorized enclosed ficial copy Bank. this Agreement, and returning it to World Very truly yours, INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION By Mona Sur Acting Country Director Timor-Leste, Papua New Guinea & Pacific Islands East Asia and Pacific Region AGREED: PACIFIC CATASTROPHE RISK INSYRANCE FOUNDATION By: Authonzed resentative Name: Title: Ev ia % d Date:-

3 Pacific Catastrophe Risk Insurance Foundation -3- PCRAFI Grant No. TF A4136 Enclosures: (1) Standard Conditions for Grants Made by Vorld Bank Out Various Funds, dated February 15, 2012; and (2) Disbursement Letter same date as this Agreement, toger with World Bank Disbursement Guidelines tbr Projects, dated May 1, 2006.

4 Pacific Catastrophe Risk Insurance Foundation -4- PCRAFI Grant No. TV A4136 ANNEX Article I Standard Conditions; Definitions 1.01.Standard Conditions. The Standard Conditions, with modifications Appendix set forth to in this Agreement, constitute an integral part this Agreement Definitions. Unless context requires orwise, capitalized terms used in this Agreement have meanings ascribed to m in Standard Conditions or in this Agreement (including cover letter to this Agreement and this Section) as follows: "Anti-Corruption Guidelines" means "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants". dated October 15, 2006 and revised in January 2011 and as July "Captive Insurance License" means License No. C102/2016 in effect from September and issued to PCRIC to carry out captive insurance business pursuant to Captive Insurance Act 2013 Cook Islands. (c) (d) (e) (f) (g) (h) "Constitution PCRIC- means Constitution Pacific Catastrophe Risk Insurance Company, prepared in accordance with Pacific Catastrophe Risk Insurance Facility Act 2016 Cook Islands and approved by Foundation Council on October 5, as may be amended from time to time in accordance with its terms. "Establishment Documents Foundation" means regulations, rules, instruments. contracts, agreements, licenses and certificates reto, which shall establish, operationalize and govern Foundation, which shall include, but not limited to, Foundation Rules. "Establishment Documents PCRIC" means regulations. rules. instruments, contracts, agreements, licenses and certificates reto, which shall establish. operationalize and govern PCRIC. which shall include, but not limited to, Constitution PCRIC and Captive Insurance License. "Foundation Council" means council Foundation established to conduct Foundation's affairs, with functions and compositions as set forth in Pacific Catastrophe Risk Insurance Facility Act 2016 Cook Islands and Foundation Rules. "Foundation Rules" means Foundation Rules Pacific Catastrophe Risk Insurance Foundation, prepared in accordance with Pacific Catastrophe Risk Insurance Facility Act 2016 Cook Islands and adopted by Foundation Council-on October 5, as may be amended from time to time in accordance with its terms. "Legislation" means Pacific Catastrophe Risk Insurance Facility Act 2016 Cook Islands, Captive Insurance Act 2013 Cook Islands and International Companies Act Cook Islands, including any regulations made reunder.

5 Pacific Catastrophe Risk Insurance Foundation -5- PCRAFI Grant No TF A4136 i) "PCRIC" means Pacific Catastrophe Risk Insurance Company. a company established pursuant to Pacific Catastrophe Risk Insurance Facility Act 2016 Cook Islands. tj) (k) "PCRIC Grant Agreement" means grant agreement for Project between PCRIC and World Bank, as such grant agreement may be amended from time to time. "Respective Part Project" means Part 2 Project. to be carried out by Recipient. (1) "Share Capital Funds" means funds to be provided to Recipient to support capitalization PCRIC in accordance with Part 2 Project. (m) "Standard Conditions" means Standard Conditions for Grants Made by World Bank out Various Funds dated February 15, Article II Project Execution Project Objectives and Description. The objective Project is to improve access to post-disaster rapid response finance for Pacific Island Countries. The Project consists parts described in Schedule I (Project Description) PCRIC Grant Agreement Project Execution Generally. The Recipient declares Project. its commitment To this end, to Recipient objectives shall carry accordance out Respective with provisions Part : Project Article in II Standard Guidelines: Conditions; and (c) this Article Anti-Corruption Institutional and Or Arrangements. The Recipient shall, and shall ensure that PCRIC shall, implementation at all times during Project, maintain qualified and experienced staff in adequate management numbers, and with terms reference, staffing satisfactory and to resources World Bank for purpose carrying out Project. Without limitation upon forgoing provisions in paragraph above, Recipient shall: (i) (ii) until end November 1, 2017 or such later date as may World be agreed Bank with in writing ("Interim Period"). maintain an interim directors board PCRIC, comprising two (2) interim directors, reference, with staffing terms and resources satisfactory to World purpose Bank for carrying out Project: by no later than end Interim Period, complete board appointment directors PCRIC. comprising five (S) board members, all

6 Pacific Catastrophe Risk Insurance Foundation -6- PCRAFI Grant No. TF A4136 (iii) with terms reference, staffing and resources satisfactory to Bank World for purpose carrying out Project. and ensure appointments that such shall take effect under Cook Islands law Constitution and PCRIC: and reafter maintain such board directors PCRIC at all times during implementation Project. (c) (d) (e) The Recipient shall not change objectives, organizational structure, governance or ownership Recipient and/or PCRIC, including changing share capital PCRIC and amending or restating Establishment Documents Foundation and/or Establishment Documents PCRIC, without prior written consent World Bank. if such action, change, amendment or restatement has or is reasonably likely to have a material adverse effect on ability Recipient and/or PCRIC to carry out its obligations under Project. or any interests World Bank or Pacific Island Countries. The Recipient shall not invite a country that is not a Pacific Island Country to become a member Foundation without prior written consent World Bank. The Recipient shall comply with any applicable law, rule or regulation jurisdiction where it is incorporated, which is binding upon Recipient Donor and Visit. The Recipient shall take or cause to be taken all such measures as World Bank may reasonably request to identify publicly Donors' support for Project. For purposes Section 2.09 Standard Conditions, Recipient shall, upon World Bank's request, take all measures required on its part to enable representatives Donor(s) to visit any part Member Country's territory for purposes related to Project Project Monitoring. Reporting and Evaluation. The Recipient shall monitor and evaluate progress Respective Project Part and prepare Project Reports for Respective Part accordance Project in with provisions Section 2.06 Standard Conditions and basis on indicators acceptable to World Bank. Each Project cover Report period shall one (1) calendar semester, and shall be furnished to Bank World not later than one (1) month after end period covered by The such report. Recipient shall prepare Completion Report in accordance provisions with Section 2.06 Standard Conditions. The Completion be Report furnished shall to World Bank not later than six (6) months after Closing Date.

7 Pacific Catastrophe Risk Insurance Foundation -9- PCRAFI Grant No. TF A4136 Article VI Recipient's Representative; Addresses Recipient's Representative. The Recipient's Representative reterred to in Section 7.02 Standard Conditions is Chair Foundation Council Recipient's Address. The Recipient's Address referred to in Section 7.01 Standard Conditions is: Ministry Finance P.O. Box D Majuro Republic Marshall Islands Facsimile: World Bank's Address. The World Bank's Address reterred to in Section 7.01 Standard Conditions is: International Bank for Reconstruction and Development International Development Association 1818 H Street, N.W. Washington, D.C United States America Facsimile:

8 Pacific Catastrophe Risk Insurance Foundation -10- PCRAFI Grant No. TF A4136 APPENDIX Modifications to Standard Conditions The Standard Conditions are modified as follows: 1. The provisions Section 2.07 Standard Conditions are hereby modified to read as follows: " a financial management system is maintained and financial statements ("Financial Statements") are prepared in accordance with consistently applied accounting standards acceptable to World Bank, both in a manner adequate to reflect operations and financial condition Recipient. including operations. resources and expenditures related to Project." 2. The provisions Sections 4.02(d) and (h) Standard Conditions are deleted in ir entirety. 3. For purposes this Agreement. term "Member Country" defined in paragraph 17 Appendix to Standard Conditions is modified to read as follows: -17. "Member Country" means each following: Republic Fiji, Republic Marshall Islands, Independent State Samoa, Kingdom Tonga, Republic Vanuatu and any or countries as agreed in writing with World Bank, in whose respective territories Project is carried out: "Member Countries" refers to all aforementioned countries; and solely for purposes Standard Conditions, whenever term "Member Country" or "Member Countries" is used in Standard Conditions, it shall be read to include Cook Islands, and if agreed in writing by World Bank, Niue, self-governing territories in free association with New Zealand." 4. For purposes this Agreement and unless context requires orwise, term "Project' defined in paragraph 18 Appendix to Standard Conditions is modified to read as follows: "18. "Project" means part(s) Project specified in Grant Agreement to be carried out by Recipient, for which Grant is made, as description such project may be amended from time to time by agreement between Recipient and World Bank."

9 Pacific Catastrophe Risk Insurance Foundation -7- PCRAFI Grant No. TF A Financial Management. (c) The Recipient shall ensure that a financial management system is maintained in accordance with provisions Section 2.07 Standard Conditions. The Recipient shall ensure that intenm unaudited financial reports for Respective Part Project are prepared and furnished to World Bank not later than forty-five (45) days after end each calendar semester. covering semester, in form and substance satisfactory to World Bank. The Recipient shall, upon World Bank's request. have its Financial audited Statements in accordance with provisions Section 2.07 Conditions. Standard Each such audit Financial Statements shall cover period indicated in World Bank's request. The audited Financial Statements for each such period shall be furnished to World Bank not later than six (6) months after end such period indicated in World Bank's request. Article III Withdrawal Grant Proceeds Eligible Expenditures. The Recipient may withdraw proceeds Grant in accordance with provisions : Article III Standard Conditions; this Section; and (c) such additional instructions as World Bank may specify by notice to Recipient (including 'World Bank Disbursement Guidelines for Projects" dated May as revised from time to time by World Bank and as made applicable to this Agreement pursuant to such instructions), to finance 100% Eligible Expenditures consisting Share Capital Funds Withdrawal Conditions. Notwithstanding provisions Section 3.01 this Agreement, no withdrawal shall be made for payments made prior to date this Agreement. except that withdrawals up to an aggregate amount not to exceed one hundred thousand United States Dollars (U.S.$ 100,000) may be made for payments made pnor to this date but on or after October , for Eligible Expenditures Withdrawal Period. The Closing Date referred to in Section 3.06 (c) Standard Conditions is June Article IV Additional Remedies Additional Events Suspension. The Additional Events Suspension referred to in Section 4.02 (k) Standard Conditions consists following: Any Legislation has been amended, suspended. terminated, supplemented, replaced, abrogated, repealed or waived so as to affect materially and adversely, in opinion

10 Pacific Catastrophe Risk Insurance Foundation -8- PC'RAFI Grant No. TF A4 136 World Bank, ability Recipient to perform any its obligations under this Agreement. The Establishment Documents Foundation and'or Establishment Documents PCRIC have been amended, suspended, terminated, supplemented, replaced. abrogated, repealed or waived so as to affect materially and adversely, in opinion World Bank, ability Recipient to pertrm any its obligations under this Agreement. Article V Effectiveness; Termination This Agreement shall not become effective until evidence satisfactory to World Bank has been furnished to World Bank that condition specified below have been satisfied. The execution and delivery this Agreement on behalf Recipient have been duly authorized or ratified by all necessary corporate action. The Recipient has furnished to World Bank a copy share certificate which demonstrates that it holds one (1) ordinary share PCRIC in amount one hundred thousand United States Dollars (U.S.S ) As part evidence to be furnished pursuant to Section 5.01, re shall be furnished to World Bank an opinion or opinions satisfactory to World Bank counsel acceptable to World Bank showing that, on behalf Recipient, that this Agreement has been duly authorized or ratified by, and executed and delivered on its behalf and is legally binding upon it in accordance with its terms Except as Recipient and World Bank shall orwise agree, this Agreement shall enter into effect on date upon which World Bank dispatches to Recipient notice its acceptance evidence required pursuant to Section 5.01 ("Effective Date"). If, before Effective Date, any event has occurred which would have entitled World Bank to suspend right Recipient to make withdrawals from Grant Account if this Agreement had been effective, World Bank may postpone dispatch notice referred to in this Section until such event (or events) has (or have) ceased to exist Termination for Failure to Become Effective. This Agreement and all obligations parties under it shall terminate if it has not entered into effect by date one hundred and twenty (120) days after date this Agreement, unless World Bank. after consideration reasons for delay, establishes a later date for purpose this Section. The World Bank shall promptly notify Recipient such later date.