A Kyiv-based start-up has emerged as Ukraine’s leading provider of war risk insurance for commercial property and investment, launching a facility backed by Lloyd’s of London and now preparing to expand to become an international player.

FortuneGuard, founded two years ago by entrepreneur Oleksii Omelianchuk, offers what it describes as the largest war risk and political violence insurance facility in Ukraine. Since launching the product in January in partnership with local insurer ARX and Lloyd’s broker McGill, it has quoted over $2.5bn in assets and maintains a pipeline of $4bn.

“We now operate the largest facility in Ukraine for commercial property and investments for war risks and political violence,” Omelianchuk says. “We have developed that with Lloyd’s of London and some non-Lloyd’s participants as well.”

According to the latest World Bank estimate, Russia has caused a total of $524bn worth of damage of which $178bn is physical damage. Currently there are no plans for funding the reconstruction of Ukraine other than the circa $75bn of international financial institutions (IFIs) commitments over the next ten years. Ukraine needs over $17bn for reconstruction this year alone, according to the government estimates, and at least $300bn for post-war recovery, according to a report by Kyiv School of Economics (KSE).

The hope is that the private sector will step in to provide the capital, highlighted at the London Recovery conference in June 2023. But private investors interviewed by bne IntelliNews say they won’t invest without some protection from war-risks, and specifically against the possibility of a second invasion by Russia sometime in the not-too-distant future. War insurance is a means to promote this investment, but the business is still getting off square one.

The European Bank for Reconstruction and Development (EBRD) has already set up the first scheme that covers the transport of export goods from Ukraine to the border to help promote trade, but it is still small-scale and limited. The EBRD is working hard to expand the business, the president of the EBRD Odile Renaud-Basso told bne IntelliNews at the meeting.

At the recent EBRD annual meeting, Britain’s Chancellor of the Exchequer, Rachel Reeves, promised to help and said the government was talking to bankers in the City of London to create new innovative products to increase the breadth and scope of insurance products available to investors going into Ukraine.

Pioneering services

FortuneGuard is pioneering the creation of a domestic war insurance business in Ukraine. Its main product was built during a three-month period in the Lloyd’s Lab innovation programme in London. “It took us about three months to launch it – 60 meetings later in Lloyd’s,” Omelianchuk told bne IntelliNews in an exclusive interview. “Lloyd’s has been very supportive.”

What makes FortuneGuard’s success all the more striking is that Omelianchuk is a newcomer to the insurance industry – although he has had firsthand experience of war risks.

“The reason I started this company is because my previous company was destroyed by the war,” he says. That company, Love&Live, was a direct to consumer fashion group founded in 2016.

Omelianchuk says the company was worth $20mn and about to hold a funding round when the war started. “We had the terms sheet ready and everything. But you know, things didn’t turn out that way.”

Omelianchuk seems to have finished mourning his former company, helped along by the success of FortuneGuard.

“It’s been a tremendous success. We have about 70% of the market now, in terms of quotes,” he says.

Because Lloyd’s is not licensed to underwrite policies directly in Ukraine, FortuneGuard partnered with ARX, a local insurance company, to administer the policies domestically. The firm also works with McGill, a registered Lloyd’s broker. “FortuneGuard basically led the whole thing, engaging the broker, the local company, the markets and Lloyd’s Corporation,” says Omelianchuk.

The facility evaluates risk for each submitted asset using government and open-source data, along with artificial intelligence. “We analyse it using a lot of data from the government, open source data... we use AI as well for that,” Omelianchuk explained. “Then we help with pricing of the assets.”

For most of the war, providing Ukrainian companies with access to international insurance markets was seen as a critical yet insurmountable challenge.

“For nearly three years, at every conference everyone was talking about insurance for investments in commercial property,” says Omelianchuk. “The government, the DFIs, the big insurers, local companies, they were talking and trying to make something, but nothing concrete had materialised.”

Omelianchuk says his idea was initially met with scepticism from the insurance industry – even within Lloyds, few expected the facility to materialise: “People were telling me, it’s nice you’re trying this, but it’s not going to work.”

Undeterred, Omelianchuk set about trying to solve the problem. FortuneGuard was admitted to Lloyd’s Lab in October 2024, and after three hectic months the product was launched in January this year.

Asked what made the difference, he says, “Maybe the entrepreneurial vision was missing because everything was there – the capital was there, the structures were. But somebody needed to tie it all together.”

Clients so far have included shopping centres, telecom companies, logistics facilities, factories and renewable energy projects. “We have big telecoms. We have shopping centres, we have factories – international multinational companies owning factories here in Ukraine,” says Omelianchuk.

Most policies to date have covered existing assets, although some new investments are beginning to come forward. “We’ve just quoted last week a new project” he says. “But unfortunately, investment hasn’t started yet on a massive scale.”

Early days

The lack of adequate insurance has long been cited as one of the factors holding international investors back from investing in Ukraine. But Omelianchuk says that the appearance of FortuneGuard’s facility alone has not triggered large-scale investor movement.

“Investors are waiting for the end of the war. Yes, the war risk insurance is there now. We are providing it so anybody can get it. But that’s not what gives the green light to investors.”

Before FortuneGuard’s facility launched, war risk coverage in Ukraine was severely limited. “When we were launching, the highest policy limit was half a million dollars,” he says, referring to local insurers. “We can do up to $75mn.”

Omelianchuk also notes that even government-backed facilities had lower limits. Major Ukrainian insurer ARX offers a war risks insurance facility of up to $2.5mn backed by the US Development Finance Corporation (DFC). “That puts us at a significantly higher capacity than the government-backed facility – currently around 30 times more,” notes Omelianchuk.

Other offerings in the Ukrainian market include the logistics-focused cargo insurance from the EBRD, which launched a €116mn guarantee programme in partnership with AON and local providers earlier this year.

The World Bank’s Multilateral Investment Guarantee Agency is also present in the market, providing a $10mn guarantee for Dragon Capital’s M10 Industrial Park project in Lviv in September 2023.

National export guarantee agencies such as Poland’s Korporacja Ubezpieczeń Kredytów Eksportowych (KUKE) also run programs to support trade between Ukraine and its international partners.

But FortuneGuard’s facility stands out from all of these state-backed programmes by the speed with which it can move: “There’s so much regulation that in order to get a policy from them, you have to almost give your blood test. Whereas we quote within a week and we can sign the policy within a week,” says Omelianchuk.

With the Ukraine facility now operational, FortuneGuard is working to export the model. “We’re now preparing to extend this to other markets,” says Omelianchuk. The experience of building a war-ready insurance product in Ukraine has positioned the company uniquely for expansion. “We are the only product which operates in an active war.”

The company’s success is another example of how the war in Ukraine has stimulated innovation amongst the country’s entrepreneurs. Just as Ukraine is now looking to become a major international exporter of military tech, most notably in drone warfare, FortuneGuard is positioning itself to become a major player in a world increasingly overshadowed by the threat of war.

The company is preparing to raise funding in June and plans to become a managing general agent, which would allow it to underwrite policies directly. “We will be expanding, hiring people. We are building a big, big international company.'