The President of Russia, Vladimir Putin, has signed a Federal Law that ratifies the agreement establishing the Eurasian Reinsurance Company (ERC), which was signed on October 20, 2022, in Yerevan, Armenia’s capital.
The agreement foresees creation of the ERC, approval of its charter, defining objectives, functions, legal status, financial support of the company as an international organisation.
The Eurasian Reinsurance Company was created by member-states of the Eurasian Economic Union (EAEU), consisting of Russia, Belarus, Kazakhstan, Kyrgyzstan, and Armenia.
According to the announcement, it will facilitate increasing mutual trade, investment, the development of economic integration between the parties, improving investment appeal and expanding the parties’ trade and economic relations with third countries through reinsurance of export loans (including all financial tools for export support), export-oriented funding and investments from business and/or political risks in the countries of the parties and in third countries.
The EAEU governments had adopted an agreement to set up the Eurasian Reinsurance Company with charter capital formed by contributions from EAEU countries expected to total 15 bln rubles (US $213 m).
The charter capital of the Eurasian Reinsurance Company may reach US $200 m, and its potential capacity – up to US $2 bln, according to Xprimm.
Experts have said that the emergence of additional insurance capacity in the amount of US $2 bln could potentially lead to an increase in the volume of mutual trade within the EAEU in the amount of over US $6 bln.
On the launch of the new Eurasia regional reinsurance firm rating agency AM Best had previously said: “Heightened geopolitical risk could also delay the progress of some region-wide initiatives announced in 2021, such as the incorporation of the Eurasian Reinsurance Company, which was expected to be capitalised by member states of the Eurasian Intergovernmental Council and international financial institutions.”
