Aon Announces $350M Insurance Program for Economic Recovery in Ukraine

The program includes a comprehensive $50M reinsurance facility and an additional $300M in war risk insurance for Ukraine’s health care and agriculture industries.

(Image credit: Olga Subach/Unsplash.)

Aon plc (Dublin), a global professional services firm, has announced a $350M insurance program with the U.S. International Development Finance Corporation (DFC) to build insurance capacity and accelerate new capital investment and economic recovery in Ukraine.

Aon reports that, as one of the largest global brokers operating in Ukraine, it has coordinated a comprehensive $50M reinsurance facility, working closely with DFC and the Ukraine Ministry for Development of Economy and Trade to support the active and ongoing issuance of on-the-ground war risk policies to businesses operating in Ukraine. Aon and DFC collaborated on an additional $300M in war risk insurance specifically designed for Ukraine’s health care and agriculture industries.

Eric Andersen, president, Aon.

“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,” commented Eric Andersen, president, Aon, at the Ukraine Recovery Conference in Berlin.“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.”

Aon reports that DFC will act as the reinsurer for qualified insurance companies issuing policies in Ukraine and use its balance sheet to assume $50M of war-related reinsurance risk in Ukraine. Aon notes that the facility builds upon two well-established DFC models: on-lending, which guarantees loans made by local banks in Ukraine to facilitate lending to priority geographies and sectors; and insurance underwriting, especially for war and political risk. According to Aon’s statement, the additional $300M of capacity in war risk for Ukraine’s health care and agriculture sectors highlights the robust demand for accessible, affordable war risk insurance by private companies operating in Ukraine that will only increase during reconstruction.

Scott Nathan CEO, DFC.

“The U.S. Government is taking steps to help drive capital to the private sector in Ukraine,” said Scott Nathan CEO, DFC, at the Ukraine Recovery Conference. “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.”

The first firm to be certified as a qualified Ukrainian insurance company to access the reinsurance facility is ARX, a Ukrainian subsidiary of Fairfax Financial. Aon, DFC and ARX say they will work together to build a portfolio of war risk insurance policies for companies operating in Ukraine and support ARX in expanding its war risk insurance offering in the country. With the facility in place, Aon says qualified insurance companies can select to provide rapid, on-the-ground war risk policies to businesses operating in Ukraine. In the long-term, Aon asserts, this facility can encourage private market participation in Ukraine by other reinsurers, promoting a foundation of private investment that will be essential to a recovery, according to the statement.

Mobilizing Support for the Ukrainian Economy

Penny Pritzker, former U.S. Secretary of Commerce.

Aon’s 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 the U.S. Special Representative for Ukraine’s Economic Recovery. In this role, Special Representative Pritzker convened the private sector, multilateral banks and businesses operating in Ukraine to mobilize support for the Ukrainian economy and has supported 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,” comments 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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Miles O’Donnell // Miles O’Donnell is a Vancouver, Washington-based student with an interest in journalism and business administration currently working as a junior reporter for Insurance Innovation Reporter. His interests include politics, philosophy and music.

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