The U.S. International Development Finance Corporation (DFC) will provide $50 million, in coordination with Aon, in political risk insurance (PRI) for a new reinsurance facility to ARX, an Ukrainian subsidiary of Fairfax Financial Holdings Limited, to support companies in Ukraine.
This initiative aims to establish a range of war risk insurance policies specifically designed for companies operating in Ukraine. It will support ARX in expanding its war risk coverage within the country.
The deal, brokered by the American insurer AON and facilitated by the Special Rep’s office, will offer coverage for agriculture, retail, and other key business assets.
This effort is expected to generate over $200 million in new coverage for physical assets located in Ukraine, helping to increase economic activity in the region.
DFC’s PRI is facilitating the reinsurance that will allow ARX to offer broader coverage to businesses in Ukraine and help bolster investor confidence by reducing investment risks amidst the ongoing conflict.
Agnes Dasewicz, DFC Head of Investment, stated: “In collaboration with the private sector, DFC is building investor confidence where it’s needed most and mobilising the capital required to strengthen Ukraine’s economy today and into the future.
“DFC’s political risk insurance is providing vital support to the Ukrainian people and their economy as we work towards a brighter and more prosperous future for the country.”
First Deputy Chairman of the Board of ARX Maksym Mezhebytskyie said: “We are also confident that the historic decision of DFC will be a signal for the international reinsurance market and will lead to the involvement of international commercial reinsurers in reinsurance of war risks from Ukraine.”
“Aon’s work with the U.S. International Development Finance Corporation is unlocking and accelerating investment in Ukraine at a time when the need is most acute,” Aon CEO Greg Case, added.
He continued: “This groundbreaking facility will enable the local insurance industry to appropriately price risk and draw much-needed new capital into Ukraine, while creating capacity and capability in the country to support reconstruction.”
DFC recognizes that the private sector is critical to Ukraine’s recovery and that Russia’s invasion has created uncertainty in the country’s investment environment.
DFC has taken steps to help drive capital to the private sector in Ukraine, with PRI being one of several financial tools that the agency is employing in the country.
Its total portfolio of $1.7 billion will help sustain Ukraine’s economic recovery and position the country for reconstruction.
This announcement builds on DFC’s portfolio of investments in Ukraine, including a $250 million loan to strengthen food security, $25 million in PRI to help those injured in the conflict, and more than $200 million to support expanded financing for Ukrainian small businesses.
Back in June, the US DFC announced the launch of the $350 million insurance program, described as this first-of-its kind, that will enable the local insurance industry to price risk appropriately and attract much needed new capital into Ukraine.
This program includes the $50 million comprehensive reinsurance facility. The announcement also confirmed ARX as the first company to be certified as a qualified Ukrainian insurer to access the reinsurance facility.
