Aon and The European Bank for Reconstruction and Development (EBRD) have launched a €110m (£90.7m) guarantee scheme to provide reinsurance capacity to cover war-related risks in Ukraine.
The structure used for the facility is based in Guernsey and sits within Aon’s White Rock business. Recently Aon and White Rock in Guernsey have enabled finance disaster relief for The International Federation of Red Cross and Red Crescent Societies and a catastrophe bond providing protection against wildfire related losses in the State of California.
The collaboration will help to revitalise the war risk insurance market in Ukraine and boost the provision of reinsurance capacity to private-sector insurers to address the ongoing challenges posed by the war.
EBRD President Odile Renaud-Basso hailed the scheme as a ‘significant milestone for Ukraine and a testament to the EBRD’s unwavering commitment to supporting the country’s real economy.’
She continued: “The EBRD’s guarantee will enable private-sector reinsurers to re-engage on Ukrainian war risk and build a resilient insurance market in Ukraine. This is crucial to giving businesses confidence that their assets are protected, which, in turn, will unlock and accelerate investment in Ukraine.”
Under the Ukraine Recovery and Reconstruction Guarantee Facility, the EBRD will support global reinsurance companies with a guarantee covering losses on certain war-related risks underwritten by local Ukrainian insurers.
Yuliia Svyrydenko, first Deputy Prime Minister and Minister of Economy of Ukraine, said: “We are sincerely grateful to the EBRD and all parties involved in launching this insurance mechanism. The market has been eagerly anticipating it.
She continued: “I am confident that this mechanism will provide much-needed support for small and medium-sized businesses, which have been severely affected by the war. It will help attract investment to the Ukrainian economy and serve as a signal to other market players that new insurance mechanisms can and should be implemented, as there is clear demand from the private sector.”
Global specialist reinsurer MS Amlin and Ukrainian insurance companies INGO, Colonnade and UNIQA are among the first participants to join the scheme.
Initially, the scheme will cover inland cargo, motor vehicle damage and railway rolling stock. It has the flexibility to expand to a broader range of assets as market demand evolves. It is estimated that the bank’s guarantee could facilitate insurance cover for up to €1 billion worth of goods and vehicles in transit each year.
The facility is initially backed by France, the United Kingdom, Norway and the TaiwanBusiness-EBRD Technical Cooperation Fund. Additional donor support has been pledged by the European Union and Switzerland.
Aon CEO Greg Case said: "Aon’s steadfast commitment to Ukraine compels our firm to continue to identify new opportunities for businesses to invest in the country during the ongoing war. This innovative new facility in collaboration with the EBRD further enhances the stability of the insurance market in Ukraine and strengthens the foundation for economic resilience and growth."
Guernsey Finance Chief Executive Rupert Pleasant added: “Guernsey has become the go-to jurisdiction for providing innovative insurance solutions to the world’s developing issues. This is thanks to our flexible and pragmatic regulatory approach and speed to market for essential products through the use of cellular structures.”
