Insurance broker Aon, in collaboration with the U.S. International Development Finance Corporation, has announced a first-of-its-kind $350 million insurance program aimed at building insurance capacity in Ukraine and accelerating new capital investment and economic recovery.
As one of the world’s largest brokers operating in Ukraine, Aon has worked closely with DFC and the Ministry of Economic and Trade Development of Ukraine to coordinate a comprehensive $50 million reinsurance facility to support the proactive and ongoing issuance of local war risk insurance to companies operating in Ukraine.
Aon and DFC collaborated on an additional $300 million in war risk insurance designed specifically for Ukraine’s healthcare and agriculture industries.
“Capital will not flow where it is not protected, and this unprecedented program with the U.S. International Development Finance Corporation is designed to unlock and accelerate investment in Ukraine at a time when it is needed most,” Aon President Eric Andersen said in a statement at the Ukraine Recovery Conference in Berlin.
“This groundbreaking facility will enable the local insurance industry to properly assess risks and attract much-needed new capital to Ukraine, while creating the capacity and potential for the country to support its recovery,” Andersen added.
DFC will act as a reinsurer for insurance companies eligible to issue insurance policies in Ukraine and will use its balance sheet to assume $50 million of war-related reinsurance risk in Ukraine.
The facility is built on two established DFC models.
- On-lending will guarantee loans made by local Ukrainian banks and facilitate lending to priority regions and sectors.
- Underwriting insurance, especially for war and political risks.
The additional $300 million in capacity for war risks in Ukraine’s health and agriculture sectors highlights the strong demand for accessible, affordable war risk insurance by private businesses operating in Ukraine, which will grow even more during the recovery period.
“The U.S. government is taking steps to support the flow of capital to Ukraine’s private sector,” DFC CEO Scott Nathan said at the Ukraine Recovery Conference. “The private sector is vital to Ukraine’s recovery, and we are leveraging our unique tools, particularly our political risk insurance, to build investor confidence in Ukraine at this critical time.”
The first company to be recognized as a Ukrainian eligible insurer with access to the reinsurance scheme is ARX, the Ukrainian subsidiary of Fairfax Financial.
Aon explained that it, DFC and ARX will work together to build a war risk insurance portfolio for companies operating in Ukraine and to help ARX expand its war risk insurance offerings in the country.
With this system in place, eligible insurers can choose to quickly provide local war risk insurance to companies operating in Ukraine. In the longer term, this system could encourage other reinsurers to participate in Ukraine’s civilian market, stimulating the base of private investment that is essential for the recovery.
Aon said the announcement follows the September 2023 appointment of former Commerce Secretary Penny Pritzker to lead the U.S. government’s response to the war in Ukraine as U.S. Special Representative for Ukraine’s Economic Recovery.
In this role, Special Representative Pritzker has been instrumental in convening the private sector, multinational banks, and corporations operating in Ukraine to mobilize support for the Ukrainian economy, and in advancing Aon and DFC’s efforts to mobilize the insurance industry to bring in $350 million in private capital to support Ukraine’s economy and recovery.
“As we explore opportunities to support Ukraine’s economy, we recognize that a robust insurance market is essential to attracting investment to the country,” Pritzker said in a statement. “This loan facility and the injection of new private capital into Ukraine will support local businesses currently operating in the country while preparing Ukraine for recovery and further economic growth.”
Source: Aon
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Aon Ukraine
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