- U.S. International Development Finance Corporation will be able to reinsure war-related hazards and increase insurance capacity in Ukraine thanks to comprehensive $50M reinsurance arrangement.
- Aon and U.S. DFC worked on further $300 million in conflict risk insurance for Ukraine’s agriculture and healthcare sectors.
- U.S. Special Representative for Economic Recovery of Ukraine Penny Pritzker was key in inspiring public and commercial sector backing.
Leading worldwide professional services company Aon plc (NYSE: AON) launched a $350 million, first-of-its-kind insurance initiative with the U.S. International Development Finance Corporation to increase insurance capacity and hasten new capital investment and economic recovery in Ukraine.
Working closely with DFC and the Ukraine Ministry for Development of Economy and Trade to support the active and continuous issuing of on-the-ground war risk policies to businesses operating in Ukraine, Aon coordinated a comprehensive $50M reinsurance facility as one of the largest worldwide brokers operating in Ukraine. Together, Aon and DFC worked on an extra $300 million in conflict risk insurance particularly tailored for Ukraine’s agriculture and healthcare sectors.
“Capital will not go where it is not protected and this unprecedented program with the U.S. International Development Finance Corporation is intended to unlock and accelerate investment in Ukraine at a time when the need is most acute,” said Eric Andersen, president of Aon, at the Ukraine Recovery Conference in Berlin. “This innovative facility will help the local insurance sector to properly price risk and attract much needed new capital into Ukraine, so building capacity and capability in the nation to support reconstruction.”
Using its balance sheet to accept $50M of war-related reinsurance risk in Ukraine, DFC will function as the reinsurer for approved insurance companies providing policies in Ukraine. Building on two well-known DFC models—on-lending, which guarantees loans made by local banks in Ukraine to enable lending to priority regions and sectors; and insurance underwriting, particularly for war and political risk—the facility The extra $300 million of capacity in the fields of agriculture and health for Ukraine emphasizes the strong need for easily available, reasonably priced war risk insurance by private businesses functioning in Ukraine that will only grow during rebuilding.
DFC CEO Scott Nathan remarked at the Ukraine Recovery Conference, “The U.S. Government is taking steps to help drive capital to the private sector in Ukraine, The private sector is critical to Ukraine’s recovery, and we are leveraging our unique tools, especially political risk insurance, to build investor confidence in Ukraine at this critical moment.”
ARX, a Ukrainian affiliate of Fairfax Financial, is the first company accredited as a qualified Ukrainian insurance company eligible to use the reinsurance facility. Working jointly, Aon, DFC and ARX will create a portfolio of war risk insurance policies for businesses doing business in Ukraine and assist ARX in broadening its war risk insurance offering there. Once the facility is set up, approved insurance providers can choose to offer enterprises running in Ukraine quick, on-site war risk coverage. Long term, this facility can inspire private sector involvement in Ukraine under alternative reinsurance, hence fostering a basis of private investment vital to a recovery.
The news corresponds with the September 2023 nomination of former Commerce Secretary Penny Pritzker to oversee the U.S. government’s reaction to the war in Ukraine as the Special Representative for Ukraine’s Economic Recovery. In this capacity, Special Representative Pritzker organized the private sector, multilateral banks and companies doing business in Ukraine to generate support for the Ukrainian economy and has been instrumental in advancing the work of Aon and the DFC to mobilize the insurance industry to bring $350M in private capital to support Ukraine’s economy and recovery.
“As we looked for opportunities to support the Ukrainian economy, we recognized that a robust insurance market was essential to attracting investment in the country,” said Pritzker. “This facility and the infusion of new private capital into Ukraine will help local businesses operate in the country today, while preparing Ukraine for reconstruction and further economic growth.”
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