The European Bank for Reconstruction and Development (EBRD), in partnership with the European Commission and other collaborators, has committed to assisting Ukraine in revitalising its private investment insurance market, the development bank said in a press release on June 23.

Together they will establish the Ukraine Reconstruction Guarantee Program, aimed at providing private sector insurance coverage against war-related risks. Initially, the programme will focus on insuring trade operations, with plans to later expand its scope to encompass investments.

Separately, the World Bank has launched the Multilateral Investment Guarantee Agency (MIGA) to provide war insurance to companies working in Ukraine.

The introduction of the EBRD guarantee mechanisms is expected to revive the private insurance market in Ukraine, attracting investors for immediate recovery efforts while ensuring sustainable long-term reconstruction, according to Economy Minister Yulia Svyridenko. To achieve this goal, the parties involved aim to secure donor support, including grants and other risk-sharing instruments, and make effective use of the existing insurance industry infrastructure.

Prime Minister Denys Shmyhal expressed confidence that donor support would entice Ukrainian and international insurance and reinsurance companies to participate. This collaboration will expedite the return of foreign investments to Ukraine, contributing to economic recovery, job creation and increased tax revenues to support the Ukrainian military.

Norway's Minister of Foreign Affairs, Anniken Huitfeldt, announced that her country will allocate €25mn towards insurance initiatives, aimed at fostering the development of private businesses and stimulating investment in Ukraine. This commitment highlights the international community's recognition of the importance of supporting Ukraine's economic growth and stability.

By restoring and strengthening the private investment insurance market, Ukraine can provide assurance to investors and attract much-needed capital for reconstruction and development projects. This initiative is crucial for rebuilding the country's infrastructure, revitalising its economy, and ultimately improving the lives of its citizens. With the combined efforts of the EBRD, the European Commission, and donor nations like Norway, Ukraine is well-positioned to navigate the path towards a prosperous future.

The EBRD and the World Bank are attempting to improve Ukraine’s investment climate by providing more insurance services as part of the Western effort to attract large-scale private investment capital to pay for Ukraine’s reconstruction, as was made clear at the recent Ukraine Recovery conference in London on June 21-22.

The World Bank’s Multilateral Investment Guarantee Agency (MIGA), in collaboration with the Trust Fund for the Support of Ukraine Reconstruction and Economy (SURE), has commenced providing war risk insurance coverage in Ukraine. Specifically, MIGA has increased its insurance guarantees from €17.1mn to €40.85mn for the German banking group ProCredit. These guarantees are applicable to ProCredit's investments in its Ukrainian subsidiary, ProCredit Bank, which aims to provide capital support to small and medium-sized businesses in Ukraine.

The Ministry of Economy has confirmed that the MIGA guarantees will remain in effect until December 2025. The substantial increase of €23.75mn in MIGA's guarantee will enable ProCredit Bank to optimise its capital structure, continue offering essential banking services, and extend new loans to its clients. It is worth noting that this project marks the first instance of war risk insurance being implemented with the involvement of SURE.

By partnering with MIGA and SURE, ProCredit Bank is able to mitigate the risks associated with operating in a region affected by conflict. The increased guarantee from MIGA demonstrates their commitment to supporting investments in Ukraine and fostering the growth of small and medium-sized enterprises (SMEs). This collaboration is expected to contribute to the development and stability of the Ukrainian economy, providing much-needed financial resources to businesses in the country.

The involvement of MIGA and SURE in providing war risk insurance highlights the importance of international institutions and initiatives in promoting investment and economic recovery in Ukraine. By mitigating the risks associated with war and conflict, these organisations facilitate a conducive environment for businesses to thrive and contribute to the country's economic growth.

The increased insurance coverage offered by MIGA will not only benefit ProCredit Bank but also the Ukrainian economy as a whole. Access to capital and banking services is crucial for SMEs, as they play a vital role in job creation and economic development. This initiative will support the ongoing efforts to rebuild and strengthen the Ukrainian business sector, promoting resilience and sustainable growth.