DFC announces $357 mn in New Political Risk Insurance in Ukraine

U.S. International Development Finance Corporation (DFC) announces $357 mn in new political risk insurance in ukraine as russia’s invasion threatens critical private investment.

Scott Nathan, CEO of the DFC, announced a new financing package for Ukraine. This package includes political risk insurance transactions to address urgent economic needs and support the country’s long-term recovery (see How to Russia’s War in Ukraine is Changing the World and Insurance?).

Scott Nathan, CEO of the U.S. International Development Finance Corporation

The private sector is critical to Ukraine’s recovery, but the brutality of Russia’s invasion of Ukraine created uncertainty around the investment environment and whether companies will feel confident in rebuilding their operations

Scott Nathan, CEO of the U.S. International Development Finance Corporation

“The U.S. Government recognizes these security concerns and is taking steps to help drive capital to the private sector in Ukraine. We are leveraging our unique tools, especially political risk insurance, along with loans, loan guaranties, and equity investments, to build investor confidence in Ukraine at this critical moment”, Scott Nathan said.

The four new transactions total $357 mn, raising DFC’s total transactions in Ukraine to $848 mn since Russia’s War in Ukraine and its overall portfolio in the country to $1.6 bn.

These transactions form part of a larger package announced at a conference where Nathan met with global leaders and development finance officials.

DFC announces $357 mn in New Political Risk Insurance in Ukraine

DFC announced the following political risk insurance transactions:

  • A $50 mn reinsurance facility brokered by Aon and distributed by ARX, a Ukrainian subsidiary of Fairfax Financial Holdings, to build a portfolio of war risk insurance policies for companies operating in Ukraine and to support ARX in expanding its war risk insurance offering in Ukraine.
  • $150 mn in political risk insurance to maintain existing operations in Ukraine’s agricultural export sector. These operations support Ukrainian livelihoods and generate significant exports to alleviate food insecurity.
  • A political risk insurance contract for $152 mn to a Ukrainian company involved in the manufacturing sector.
  • $5 mn in political risk insurance to support Ukrainian students’ access to higher education amid the war.

Due to security concerns, DFC has not disclosed several organizations involved in these transactions to protect them from potential military retaliation by Russia.

DFC also announced a $28 mn loan portfolio guarantee for ProCredit Bank Ukraine. Co-sponsored by USAID, this transaction aims to support lending to small Ukrainian businesses, particularly in the agricultural sector, to enhance food security.

DFC collaborates with the private sector to finance solutions to critical challenges in developing countries. Investments span various sectors, including energy, healthcare, infrastructure, agriculture, and small business services, adhering to high standards and respecting environmental, human, and worker rights.

Ukraine’s Reconstruction and Economy SURE Trust Fund is crucial for rebuilding Ukraine in the wake of damages caused by Russia’s War, estimated at $411 bn by the World Bank.

The SURE Trust Fund focuses on facilitating private investments and solutions for economic recovery, including mitigating war risks.

MIGA blends donor financing from the SURE TF with risk exposure on its own books, and crowds in public and private reinsurance where available, to deploy guarantees in support of Ukraine.

The mix of public and private capacity will vary and evolve depending on the intensity of conflict in Ukraine and the stage of reconstruction.

Nataly Kramer   by Nataly Kramer