Full transcript at bottom of this page
Conference Organizers:
US-Ukraine Business Council (USUBC) and US Department of Commerce.
Topics Covered:
The need for expanded Political risk insurance (PRI) to support Ukraine's reconstruction.
Speakers:
David De Falco, Deputy Assistant Secretary for Europe and Eurasia, U.S. Department of Commerce.
Sarah Nickel, Commercial Officer, U.S. Department of Commerce.
Matthew Edwards, Moderator, Director, Office of Russia, Ukraine; Eurasia, International Trade Administration, U.S. Department of Commerce
Crispin Ellison, Partner, Oliver Wyman
Bridget Gainer, Global Head of Public Affairs & Policy, Aon Corporation
Oksana Ocheretyana, Deputy Head of the Export Credit Agency of Ukraine
Vyacheslav Ovechkin, Director of the Investments, Innovations and IP Department, Ministry of Economy of Ukraine
John Moran, Senior Advisor to the Chief Operating Officer, U.S. Development Finance Corporation
Slide Decks:
Main Points:
- Sarah Nickel's Presentation on Political Risk Insurance [0:16:22 - 0:20:04] - Sarah Nickel, Commercial Officer at the US Embassy in Kyiv, discusses the importance of political risk insurance in mitigating non-commercial risks and attracting investment to Ukraine.
- Vyacheslav Ovechkin's Presentation on Ukraine's Economic Situation [0:20:04 - 0:32:34] - Vyacheslav Ovechkin, head of the investment department at the Ministry of Economy, provides an update on Ukraine's economic situation, including GDP growth, inflation, and exchange rates.
- Crispin Ellison's Presentation on Black Sea Shipping Insurance [0:32:34 - 0:43:14] - Crispin Ellison from Oliver Wyman discusses the challenges of obtaining war risk insurance for shipping in the Black Sea and the importance of data in building confidence in the market.
- Oksana Ocheretyana's Presentation on Ukraine's Export Credit Agency [0:43:14 - 0:54:07] - Oksana Ocheretyana, vice chair of the Supervisory Board of Ukraine's export credit agency, discusses the history and current activities of the agency.
- John Moran's Presentation on DFC's Role in Ukraine [0:54:07 - 1:00:23] - John Moran from the Development Finance Corporation discusses DFC's long-term presence and exposure in Ukraine and its efforts to support political risk insurance.
- Q&A Session [1:00:23 - 1:34:41]
- The panelists discuss the challenges of obtaining political risk insurance for different sectors, including agriculture and overland transport, and the importance of geographic considerations.
- They emphasize the need for a coordinated effort to build the local insurance market and the importance of public-private partnerships in addressing market imperfections.
Video:
Transcript:
Matthew Edwards 0:00
Matt: Well, good morning, everyone. I hope folks can hear me okay. My name is Matt Edwards, and I'm the director of the Eurasia office of the Department of Commerce in Washington, and we are very pleased to be able to partner today with the US-Ukraine Business Council in bringing to you this discussion of developments in the area of political risk insurance as it applies to Ukraine today.
Before I go further, I want to especially thank Morgan Williams, the US-Ukraine Business Council President, and Nadiia Komazhiuk of his team, who have both done such an incredible job of helping to inform, hold together, and even grow the US business community that's active with Ukraine, really, for the past decade, since the start of Russia's war, and especially during the past two years. I'll salute them with my US UBC coffee mug. Thank you so much for helping us host this event.
I understand we've got more than 300 people signed up and tuning in, so I look forward to some great discussion. We have a lot of ground to cover and some very knowledgeable speakers, so I will move to them very quickly. First of all, just as a quick preview and housekeeping, we will have a few changes to our lineup.
First of all, Nathan Seaford, our Commercial Officer at Embassy Kyiv, has had to step away for several days, and so we're very pleased to have his deputy, Sarah Nickel, with us to offer thoughts from the perspective of our department's office in Embassy Kyiv. Secondly, we understand that Deputy Economy Minister Kuzyo is traveling with a high-level delegation and may not be able to get a connection. If not, we understand that Mr. Vyacheslav Avijkin, head of the ministry's investment department, is on the line and ready to take Vice Minister Kuzyo's place on the agenda.
We will have some time for Q&A after the presenters speak. We have a lot of attendees, as I mentioned, so we may not get to all of your questions, but if not, please do enter them in the chat or in the Q&A. We'll be glad to work with the Business Council to try and get out additional answers.
I will give the floor to Morgan Williams before we close, because the US-Ukraine Business Council and its members do such a great job keeping us moving forward. I look forward to Morgan's thoughts and further ideas as we close.
With that, I will move right into introducing our speakers, and I'll start with our first speaker, who is my boss, Deputy Assistant Secretary David De Falco. David covers a broad swath of territory from Lisbon to the Pacific and from Norway to the Mediterranean and Black Seas as part of his portfolio. He's based here in Washington but oversees more than 250 people in 32 offices at embassies and consulates throughout Europe and Eurasia. David also has about 30 people with him here in Washington, DC.
As David's Eurasia office director, I'll argue that no part of his portfolio over the past two years has been more important than Eurasia, and especially Ukraine. So with that, David, I'll give you the con.
David De Falco 3:59
Thanks, Matt, and I don't count myself among the experts, so I'll try to make this quick and painless. Thanks for the introduction. I like to tell people I have everything Napoleon wanted, but he couldn’t get. That’s probably the easiest way to describe my area of responsibility.
I think what Matt said really underscores the flexibility of this group. We’ve all learned to be flexible, especially in the Ukraine environment. Certainly, I appreciate everyone who's been asked to fill in. This program would not be successful without their participation.
With that, good morning, good afternoon, everyone, wherever you may be seated. I'm pleased to welcome all of you to this webinar on political risk insurance in Ukraine. I also want to echo Matt's thanks and extend our gratitude to our friends at the US-Ukraine Business Council, with whom we've worked to organize this event. They’ve been great partners and collaborators on a number of Ukraine-related activities. So, thank you to the US-Ukraine Business Council.
I also want to thank our colleagues from the Government of Ukraine, Deputy Minister of Economy Kuzyo—who I hope will be able to join us—but also colleagues from the export credit agency of Ukraine for their participation. We know you're all busy with your wartime responsibilities, and we appreciate you taking the time to share information on developments regarding political risk and other insurance products with the business community today.
Among the Commerce Department's contributions to Ukraine's defense and rebuilding efforts, the Commercial Service places its past, current, and future efforts to connect the US private sector with Ukrainian needs front and center. I'm sure that doesn't surprise anybody on the line, but it's certainly worth underscoring, especially as we consider a Ukrainian reconstruction bill whose cost will far exceed the $486 billion estimate provided by the World Bank earlier this month.
We know that private sector participation will be necessary to allow Ukraine to come back stronger and better, and international governmental aid, while essential, will not be enough to get the job done. Our companies have already told us that one element of many that will help unlock greater private sector engagement in Ukraine is expanded political risk insurance at reasonable, economically feasible rates.
For most of you on this webinar, this is common knowledge. However, I'm glad to mention that today’s session focuses not only on further discussion of the problem but also on possible solutions—on what is starting to be done by a range of different actors to address these challenges. And I do want to underscore what Matt said: we certainly look forward to concrete, actionable items that we, as governments, working in collaboration with the private sector, can pursue post-webinar.
While we label the topic as political risk insurance, that’s really a gateway for the variety of insurance products that will be needed by private companies as Ukraine rebuilds. We hope efforts to address PRI will open the doors to addressing other insurance-related needs, thereby enabling our private sector to fully participate in Ukraine's reconstruction. This is where Commerce’s unique strengths in connecting US companies with Ukrainian partners come into play.
For your awareness, last July, Secretary of Commerce Gina Raimondo hosted US Development Finance Corporation (DFC) CEO Scott Nathan, Ukraine’s First Deputy Prime Minister Yuliia Svyrydenko, and executives from major insurance and risk management companies for a roundtable to discuss the specific issue of political risk insurance. With that, we can assure you that the Secretary is closely following this topic and very keen to hear from all of us on what we recommend the next best steps might be.
Within Commerce, our Bureau, the International Trade Administration, supports US companies through its Commercial Service office in Kyiv and its trade policy desk in Washington. Senior Commercial Officer Nathan Seifert, together with Commercial Officer Sarah Nickel, who will be joining us today, are based in Kyiv. They work closely with the country desk team at Commerce headquarters in Washington, DC, headed by Matt, who just introduced me, to help companies in Ukraine and those interested in doing business in Ukraine.
After me, you'll be hearing from Sarah, who will offer some thoughts on the current state of play on the ground and how our operation at Commercial Service Kyiv can help you in the market now. The Commercial Service and the Department of Commerce have leaned in to help Ukraine in its time of need. Our colleagues at the Bureau of Industry and Security have imposed stringent export controls on products intended for Russia, while our Secretary announced relief from Section 232 tariffs for Ukrainian steel.
We also hosted a major defense industrial-based conference at Commerce headquarters here in Washington this past December, working with the Department of Defense to promote partnerships in the defense and aerospace sectors that will contribute directly to Ukraine’s defense—present and future. We’ve also responded to Ukrainian requests for immediate assistance in finding US energy and infrastructure companies to help replace electrical grid and gas transmission equipment after Russian missile and drone attacks.
In short, although we're not an assistance-providing agency, we've been very active in our support for Ukraine, and always in ways that help American companies that want to engage with Ukraine. This webinar today is the first in a series of online outreach sessions that we are planning. Among those, we'll be convening a discussion on March 14, so mark your calendars. This session will help companies get involved in multilateral development bank procurements. We’ll have some engagements designed to help Ukrainian businesswomen forge links with American companies, and we’ll have some outreach in different regions of the United States.
Matt Edwards and our team in Washington will be glad to share information with you as it’s available on these upcoming engagements, so please feel free to reach out to them. I want to thank all of you for joining us today, and with that, Matt, I’ll turn the floor back to you so we can begin the program. Thank you, Matt.
Matthew Edwards 11:11
Thanks very much, David. I'm going to move right over to introduce Sarah Nickel, our next speaker. The agenda we circulated for the webinar had Sarah speaking about the topic of recent geopolitical developments. I'm going to take some of the pressure off. We’re going to ask Sarah to focus on what she and Nathan Seaford and their Embassy Kyiv colleagues are seeing from ground level.
I'm not going to put her so much in the position of opining on political developments here in the United States or predictions of what Congress might do, for example. That’s not an appropriate role for us as civil servants or foreign service officers, although certainly what the United States decides to do vis-à-vis Ukraine will matter a great deal.
Sarah is in contact with companies day-to-day and with Ukrainians day-to-day. She’s in her third year covering Ukraine, first from Washington and now from Kyiv. She also brings a solid business perspective, having served for six years as the executive director of the US-Kazakhstan Business Association based here in Washington prior to joining the Foreign Commercial Service.
We’re very glad to have Sarah as part of our Commerce team and very glad to have you with us for your comments today, Sarah.
Sarah Nickel 12:40
Thank you, Matt, and thanks for taking some of the pressure off. That is always much appreciated. Thank you, Deputy Falco. I want to say a huge thanks to USUBC and to our colleagues on the desk for putting this together, and to the business community and our Ukrainian government counterparts. Your participation in this event really underscores the importance of the conversation.
I know Nathan, our senior officer, was really looking forward to being here with you today, but it’s a pleasure to be here instead, and I will be happy to work on any follow-ups with him and our team. As Commercial Officer here at the US Embassy in Kyiv, I’ve had the privilege to witness firsthand the enthusiasm on the part of the government of Ukraine to modernize its economy and strengthen political and economic ties with Western partners like the United States.
Of course, Russia’s ongoing invasion of Ukraine continues to generate political uncertainty, and that understandably gives investors pause. This is where political risk insurance can play a vital role by mitigating those non-commercial risks and giving investors added confidence to bring in the much-needed capital into key sectors of Ukraine’s economy.
Political risk insurance means investors will be more willing to finance critical infrastructure projects, support agricultural exports, develop domestic manufacturing, catalyze Ukraine’s green transition, and much more. The increased investment will not only help Ukraine achieve its economic potential, but it will also reinforce the country’s Western orientation.
Strong trade and business ties with allies like the United States demonstrate Ukraine’s commitment to democratic rules-based principles of open markets and private enterprise. By de-risking investments that create jobs and economic growth, political risk coverage helps Ukraine advance reforms while also giving investors assurance that their projects will not be derailed by unforeseen political events outside of their control.
As we are speaking with companies, like Matt said, where the interest from American companies is demonstrated here today by your participation in listening to this webinar, inevitably the next question is: How do we predict what’s going to happen? How do we protect our investment? And how do we make sure to be making a positive business decision and support Ukraine moving forward?
I want to stress how essential political risk insurance, and insurance more generally, is in terms of supporting both Ukraine’s economic modernization as well as its strategic relationship with the United States and other Western allies. Encouraging greater investment through these types of risk mitigation tools is vital to Ukraine’s continued integration with Europe and sends a clear signal that Ukraine is truly open for business.
Even more, it protects American opportunities in Ukraine by implementing the best of American technologies, American business practices, and creating those opportunities down the line with restoration and recovery. As David De Falco mentioned, today’s event is important because we want to inject some confidence into Ukraine’s economy. We want to help translate Ukraine’s impressive reforms into much-needed capital for infrastructure, agriculture, manufacturing, and more.
I’m personally looking forward to hearing from our esteemed group of insurance providers today. As David De Falco and Matt mentioned, our team at the Embassy, including Senior Officer Nathan Seifert and our team of expert local commercial specialists, look forward to any follow-ups from the discussion and working with you.
We have a variety of tools to support you, virtually and if you have the opportunity to travel to Kyiv. So, we look forward to being in touch. Thank you. Back to you, Matt.
Matthew Edwards 16:22
Thank you, Sarah. Now, we’re going to get into the heart of our conversation today. We’ve got an amazing lineup of speakers. I want to thank Tanner Johnson and my team and the US-Ukraine Business Council for helping to marshal these folks together at one time in one place.
We’ve got private companies working in the risk mitigation field. We’ve got experts from the Ukrainian government and experts from the United States government. These are people who are not just following the Ukraine situation academically, but they are actually involved. Their companies are directly involved. Their government organizations are directly involved in shaping and moving the needle in the risk environment in Ukraine.
I’m going to invite each of them to talk in sequence, covering topics such as what are the current and upcoming products that might be made available for Ukraine, in particular in support of US investors and exporters? What are the significant developments since the start of the war and very recently? And how does Ukraine fit into the risk profiles of the private insurance industry, and how are the offerings likely to change moving forward?
These are some of the topics I’ll invite our speakers to opine on. Lastly, I’ll offer a thought, which is that insurance is only one subset of a broader risk mitigation or de-risking strategy. It’s certainly necessary, but it perhaps is not always sufficient. So I just want to put a pin in that thought, and maybe we’ll come around to talking more about that.
Let me quickly introduce our speakers. Leading off, we’ll have Bridget Gainer, who’s the Global Head of Public Affairs and Policy for Aon Corporation. Aon has been following Ukraine from the very early days, so thank you so much for joining us.
As I mentioned, Vice Minister Kuzyo can’t join us, but we do have Vyacheslav Ovechkin, the head of the investment department at the Ministry of Economy. We’ve got Crispin Ellison from Oliver Wyman, who’s been very closely involved in efforts to promote the resumption of shipping in the Black Sea, and I’m very much looking forward to his thoughts.
We have the Deputy Chair of the Supervisory Board of Ukraine’s export credit agency, Oksana Ocheretyana, so we’re very glad to hear from her, also representing the Ukrainian government. And finally, from the US government, we are very pleased to have our longtime colleague, John Moran, who is a senior advisor to the COO at the Development Finance Corporation.
We’ve got about 40 minutes to hear your presentations. So that comes out to about an eight-minute average if we’re really efficient, and I’ll invite people to take less time if they wish, or more if they must, but we look forward to hearing your presentations and moving on to the Q&A.
Without further ado, let me give the floor to Bridget Gainer from Aon.
Bridget Gainer 20:04
Thanks very much, and I want to thank everyone here. I do want to call out the leadership of the Commerce Department. I think that the Secretary first started reaching out on this issue in the fall of 2022 and the role of insurance. I won’t speak for Crispin, but I think it’s often very easy to focus on whether it’s debt or investment, but insurance can be such an enabler to both of those things. We really appreciate both the Department of Commerce, the State Department, and the US government leaning in for this.
One of the things I thought I’d kick off with, because I’m first, is the role of insurance when economies have hit real brick walls or crises in the past. I think it’s important to illustrate how possible it is and the type of economic growth that can emanate from it.
Two of the examples I think are most relevant, and I’ll speak briefly and then get into Ukraine, are the United States post-9/11 and even the global financial crisis 10 years ago. Both situations are really similar to the one we’re in now. In the case of 9/11, you ended up in a scenario where one part of insurance, terrorism insurance, became unavailable. The unavailability of one type of insurance, just like the political risk and war risk that we’re talking about today, meant that we were unable to access things like property casualty, DNO, marine, and other coverages we needed at the time. This severely limited the ability of economic growth and activity.
What happened was a combination of the private sector and the US government coming together to determine that there needs to be a role for both. The government came in, took a first loss, and was able to create calm in that marketplace, create a backstop, and then, from that, you saw massive amounts of investment follow.
We really believe that the same thing is possible here in Ukraine. At the moment, war risk is becoming the gating factor for other investments. When we look at the type of investment happening now in Ukraine, what’s amazing is, and I think my colleagues can speak to this as well, the number of companies that continue to invest, to build, and to grow, even without the benefits of the type of insurance they would demand in other places. It has been incredible and shows their commitment to Ukraine. The inspiration we take from that as we build forward is palpable.
The important thing for us to think about is how we can partner with government and also bring private sector capital to bear. Is there a role for a larger facility, something that goes across the Ukrainian economy and opens up investments to companies across the country? At this stage, the most important thing is for governments, whether it's the DFC, Treasury, or the European Union, to look at developing a public-private partnership, create an opportunity for a first loss on war risk, and then open up investment to companies across the economy.
I’ll leave it there.
Matthew Edwards 23:49
Thank you so much, Bridget. I know you’ve just scratched the surface of Aon’s perspectives on Ukraine, so we look forward to hearing your further thoughts in the Q&A.
Let me reintroduce now our first representative from the Ukrainian government, from the Ministry of Economy. We have with us the head of the investment department, Mr. Vyacheslav Ovechkin.
Vyacheslav Ovechkin 24:19
Thank you, Matthew. I'm just going to show you a few slides, if you don’t mind. I’ll share my screen, and I would appreciate it if you let me know if you can see my presentation.
Vyacheslav Ovechkin 24:42
So just a moment. Right? I just want to make it full screen. Is it all right like this?
Matthew Edwards: Yes, we do.
Vyacheslav Ovechkin: Cool, yes.
Well, thanks again for the introduction. My name is Vyacheslav. I'm the director of the investments department with the Ministry of Economy, and I'd like to thank the US Department of Commerce and the USUBC for the invitation and for bringing the important topic of the PRI into the spotlight of today's discussion.
Let me first give you a very quick update on the current economic situation in Ukraine. The good news is that we are recovering faster than it was expected. Last year, the GDP of Ukraine rose by almost 6%, and our focus is 5% for this year, which is actually the fastest pace in Europe. The inflation rate dropped down from almost 27% in 2022 to around 5% last year, and our focus is about the same digits for 2024. Also, the exchange rate is stable, and generally, the situation is okay. However, still, most businesses are concerned about the ongoing hostilities and the duration of the war and the uncertainties caused by it. Still, 77% of the businesses declare now that they can operate without any restrictions.
Now I'll give you three reasons why it is important to invest in Ukraine right now. First of all, Ukraine is a huge reconstruction opportunity, with almost $500 billion of needs and great support from the international community. Secondly, our EU prospects and the official start of the EU accession negotiations are good evidence of that, alongside a €50 billion financing package from the European Commission, including €8 billion for de-risking by international financial institutions. The third reason is active governmental support, and I will talk more on that.
Within the governmental support, naturally, de-risking plays a crucial role, and this is the topic of our webinar right now. Here you can see the full infrastructure or what I want to call the ecosystem of the current war risk insurance landscape in Ukraine or available for investors in Ukraine.
During 2023, we managed to build a war risk insurance infrastructure, and I'd like to briefly stop on a few aspects. The creation of the MIGA Sure Trust Fund and the contributions to it by Japan, the UK, Norway, and Belgium is a very good sign. We are also aware that the United States has committed to injecting another $25 million into this trust fund, and we naturally encourage other countries to join this initiative. Since the full-scale war aggression, MIGA has provided more than $200 million for war risk insurance, including some projects in the real sector of the economy, such as the $9 million insurance for the industrial park project in Ukraine's Lviv region.
The DFC is actively involved in providing political risk insurance for Ukraine, with numerous applications totaling hundreds of millions of dollars. As you may know, DFC recently provided political risk insurance for the Superhuman Center, which will support the hospital's efforts to provide critical healthcare for war trauma survivors in Ukraine. I’m sure you’ll hear more about DFC activities from John Moran, a very good friend of ours.
In addition, the European Bank for Reconstruction and Development is in the process of establishing a new program that will boost the international reinsurance and insurance markets for property and trade risks, and we expect this mechanism to be deployed in mid-year. Some foreign export credit agencies and governments are ensuring investments of their national companies in Ukraine. Last week, Japan’s Nexi ECA announced the Ukraine Lines program for investments and exports to Ukraine, totaling €1.25 billion.
More than 14 national ECAs have increased their limits for medium-term insurance operations and investments in Ukraine and have begun to insure the risks of private investments of their companies. The total limit now exceeds €2 billion, a good step toward attracting foreign private investors from partner countries.
What’s also very important is Ukraine's own efforts to mitigate war risks. At the end of 2023, the Government of Ukraine provided a $20 million backstop, and together with Marsh McLennan and 14 underwriters of Lloyd’s, we launched a new mechanism for war risk insurance for vessels in the Black Sea. This initiative has already resulted in increased export capabilities, and now we are looking forward to expanding this mechanism to inland transportation and possibly aviation.
Secondly, the Ukrainian parliament has adopted a law that allows Ukraine’s Export Credit Agency (ECA) to insure investments by both Ukrainian and foreign entities. My colleague Oksana will talk about this more later. Lastly, the Ministry of Economy, the National Bank, and the Ministry of Finance are developing a national war risk insurance scheme.
These efforts, although important, are not enough to match the scale of investments and trade flows required to ensure Ukraine's economic recovery. We should continue discussions on a tiered structure involving key donor governments, IFIs, global reinsurers, mid-market insurers, Ukraine’s Export Credit Agency, and Ukrainian private sectors to build a robust mechanism.
That’s all from me for now. I look forward to the Q&A session. Thank you so much.
Matthew Edwards 32:34
Thank you very much, Mr. Ovechkin. You mentioned Crispin Ellison, and we’re very glad to have Crispin on board as our next speaker. As you mentioned, he’s been intimately involved in some of the conversations surrounding the expansion of options for Black Sea shipping. I had my first opportunity to sit down with Crispin last summer, and I was very excited to hear about Oliver Wyman’s work.
So Crispin, let me give you the floor. Please feel free to share what you’d like at this point. I’m sure members of our audience will also be interested in your take on specific questions at the end. Thanks very much for staying late in your evening in the UK and joining us.
Crispin Ellison 33:28
Thanks very much, Matt. It's not that late. I mean, even for me, half-past two, I’m quite often in the office, but thanks, everyone, for inviting me. Before I dive into detail, I want to say that insurance is hard in Ukraine. Most of the world's insurance capital is really reluctant to engage in Ukraine, even for normal insurance. You then look at political and particularly war risk insurance, which has traditionally been managed by governments. Governments cover war risks at scale, as you see in Israel. The challenge in Ukraine is that the government doesn't have the funds to do this.
Getting war risk insurance for a country at war, at the level of intensity Ukraine is facing, is really hard. Two big enablers are important for confidence-building in the market: data and public-private partnerships. Data helps us understand the reality of the situation, not just the media image. And the public sector must have a role, as governments covering war risks give the industry confidence.
Let’s talk about shipping in the Black Sea. We worked closely with the Ukrainian government to create a public-private partnership where the Ukrainian government put in a significant amount of money as a first-loss fund to bring premiums down. When the Russians withdrew from the Black Sea grain initiative last July, insurance rates for war risks alone shot up to 5%—unaffordable. By bringing government and industry together, we’ve created a facility where the rates are less than half the commercial rates, and this month, we expanded it to cover all cargo, not just grain, effectively tripling the facility. This will be formally launched on Friday, but it’s available now.
Reopening the Black Sea export corridor is worth 6-8% of Ukraine’s GDP. Last year, when insurance was unaffordable, nothing was sailing.
Another key is providing information. Most people think that all of Ukraine is like Bakhmut, but while parts of Ukraine see violence at an intensity unmatched elsewhere, the majority of the country is not like that. The Ukrainian government has recorded every strike, missile, UAV, and artillery barrage, and we’ve worked with them to create a platform to share that data. It shows that while 15,000 artillery rounds are fired daily at the front line, 66% of the country has been untouched by any explosive events in the past two years. Areas in western Ukraine are open for investment.
We need to help insurers and investors know what the risks are, based on hard facts, and build their confidence. You can apply to access this data platform, and I’ll make sure the Commerce Department circulates the link.
As for what’s next, we are working to expand the Black Sea shipping insurance to cover cargo, and we're looking at how to insure aviation. President Zelensky announced before Christmas that he wants to open Ukrainian airspace, but getting insurance for aviation is a challenge. It requires $750 million of capacity, and Ukraine doesn't have the funds to cover it, but we’re working on getting specialist war risk insurers involved. It’s a tough task, but it’s essential to enable commercial aviation.
Another challenge is travel insurance. Western governments advise against traveling to Ukraine, so most standard insurance is invalid. Current rates for coverage are around $1,200 per million dollars a day—completely unaffordable. We’re trying to bring that down to around 20% of the current price, to encourage investment.
And finally, scaling up insurance for the whole economy is a real challenge. The Ukraine government can’t back it at scale, so we need to develop something that can cover the entire economy. This is something I hope will be discussed at the Ukraine Recovery Conference in Berlin this June.
Building confidence in the insurance market is crucial. At the moment, high-risk insurers are ensuring relatively low-risk things. As confidence grows, we’ll start seeing more insurers entering the market. That’s all from me for now. Thank you.
Matthew Edwards 45:10
Crispin, thank you so much. Very fascinating perspective, both in terms of what’s been achieved and what challenges remain. I’m sure there’ll be great interest during our Q&A.
Our next speaker is Oksana Ocheretyana, Vice Chair of the Supervisory Board of Ukraine’s Export Credit Agency (ECA). She’s been on the board since 2021 and brings over 15 years of experience in banking and finance. Oksana, we’re glad to have you with us.
Oksana Ocheretyana 46:14
Thank you so much. Hello, everyone. My experience comes from the insurance market, so I know these issues well. Our legal entity was established five years ago, but ACA Ukraine started operating actively in 2022, after the war started. After the war, we finally had major changes in legislation that helped us restart operations. One change was that the National Bank of Ukraine said our insurance policy could be used as collateral, which was in huge demand. Over 90% of our portfolio is the insurance of domestic working capital, but we also provide insurance of receivables for Ukrainian exporters, though that’s not currently in high demand.
Last year, unusual times led to unusual solutions. Normally, an ECA doesn’t insure political risks in its own country, but the Ukrainian government wanted to help make investors braver. The government decided to enlarge our scope to include political risk insurance for two areas: loans given by Ukrainian banks to exporters without an immediate export contract and insurance of direct investments in Ukraine. The law allows us to provide insurance for foreign and domestic investors within Ukraine. As part of the Berne Union, I’ve spoken with other ECAs about reinsurance.
I believe ACA Ukraine will be a reinsurer for foreign investors, with support from other ECAs. Our product won’t cover all types of investments, though. We’ll support export-oriented investments. Our law says we cannot support the export of raw materials or commodities. We support goods with added value, services, and other types of export, but the goods we cover must align with our law.
Finally, we’re working closely with the Ministry of Economy to enlarge our capacity. We have technical support from other ECAs, but our capacity is limited—around $55 million. The National Bank requires our insurance liability to match our capital, so we're looking for ways to increase our capacity. Thank you.
Matthew Edwards 54:33
Thank you, Oksana. I’m sure we’ll have more questions for you in the Q&A. Now, our final panelist is John Moran from the Development Finance Corporation (DFC). John is currently the Senior Advisor to the COO, and DFC’s CEO, Scott Nathan, has been very active in trying to figure out how DFC can support Ukraine. John, we look forward to hearing your thoughts.
John Moran 55:49
Thanks, Matt. I’ll try to be succinct. First, I’d like to thank Morgan Williams and the USUBC, as well as my colleagues at Commerce. We were in Kyiv in January, and despite air alerts, we had a productive evening meeting with Ukrainian and foreign business communities.
We have a long-term presence and exposure in Ukraine, and we are very active now. We’ve had someone on the ground in Kyiv since January, and we plan to continue that presence. We’re working on projects right now—our total exposure is around $1.2 billion, a 50% increase since the Russian invasion.
On political risk insurance (PRI), we have a growing pipeline of deals, though, as Crispin said, it is hard to do deals in a war zone. We’re trying to be catalytic, figuring out where we can address market imperfections. We need to expand what public and private actors can do, working alongside ECAs and bilateral agencies.
PRI coverage includes political violence, risk of expropriation, and breach of contract when a government is involved, whether sovereign, sub-sovereign, or a state-owned enterprise. We cover things like damage or destruction due to political violence and business income loss, helping investors manage risks.
At the same time, we are looking for more ways to engage, particularly in the agricultural sector, infrastructure, and renewable energy. In all of these areas, we hope to facilitate greater private sector engagement through our insurance products. We also see the importance of collaborating with multilateral organizations like MIGA to address reinsurance capacity challenges.
I know we’re running out of time, Matt. I’m happy to provide more information later and will attach a slideshow, but I’ll stop here. Thanks for the opportunity.
Matthew Edwards 1:00:23
Thank you, John. I know that there’s a lot more we could cover, but I appreciate your insights. Let’s now move to the Q&A. We have a lot of questions coming in, and I’ll try to prioritize ones that are more relevant to today’s discussion.
Q&A Section
Matthew Edwards 1:00:23
Thank you, John. I know that there’s a lot more we could cover, but I appreciate your insights. Let’s now move to the Q&A. We have a lot of questions coming in, and I’ll try to prioritize ones that are more relevant to today’s discussion.
The first question is from Elena Yes, who we know from Velta Corporation. They’re interested in doing transactions and sending critical materials, specifically titanium, to the United States. The question relates to the financing of exports from Black Sea ports and the need for political risk insurance or ECA insurance. Currently, much of the focus seems to be on agriculture. Is there a way for a company like Velta to get ECA insurance to export titanium feedstock to the US?
Oksana Ocheretyana 1:02:22
Yes, absolutely. First of all, I checked the codes for titanium, and one of the relevant codes is 8108, which we can support. So, we can provide insurance for your exports.
In the future, when we have our investment product, we could cover the investment itself. Additionally, we could help you with financing from a bank, as our insurance can serve as collateral. We have over 10 partner banks and can help you find the proper financing solution, or you can come with your bank, and we’ll work with them. Lastly, we can also insure against the risk of non-payment from your US buyer, covering receivables.
Please reach out to us, and we’ll connect you with our sales team to explore these options further. Thank you.
Crispin Ellison 1:03:07
Just to add to what Oksana said, in terms of shipping, we’ve expanded our insurance coverage beyond grain to include all non-war-like products. So, titanium and other exports are now covered under the Unity facility. The expanded facility is available right now.
Matthew Edwards 1:03:40
Thank you, Oksana and Crispin. I’m going to take the next question from George Carlisle. It’s about overland transport and trucking, particularly from Ukraine into the European Union. There have been some challenges related to border delays and local disputes with countries in Eastern Europe, especially related to the agricultural sector. Does anyone have insight into these challenges, and is there political risk insurance or ECA insurance available for overland transport?
Crispin Ellison 1:04:26
EBRD (European Bank for Reconstruction and Development) is currently working on a program to provide insurance coverage for road transport, but it likely won’t be available until the second half of the year. They’re still developing the scheme to cover the transportation risks.
Sarah Nickel 1:04:48
Yes, I agree with Crispin. We’ve also heard a lot about logistical difficulties and bottlenecks at the borders. Various projects, including from the IMF and EBRD, are in the works to improve customs capabilities. We’ve also had American companies offering technologies to help facilitate smoother customs processing. It’s a known issue, and we’re hoping to see some improvements soon.
Matthew Edwards 1:05:15
Thank you both. Our next question is from Matt Simpson, and it’s directed at Mr. Ovechkin. The question concerns Ukraine’s special investment agreement legislation, which provides guarantees to foreign investors. Matt wants to know when the pending updates to this legislation will be passed in the Rada, as it’s a critical policy for obtaining host-country guarantees required by MIGA (Multilateral Investment Guarantee Agency). Mr. Ovechkin, can you comment on this?
Vyacheslav Ovechkin 1:05:50
Thank you for the question. To be frank, I’m not sure what specific guarantees you are referring to. We don’t have any specific updates on new guarantees for MIGA, and Ukraine does not issue sovereign guarantees for private investments. The sovereign guarantees are only for state debt. However, if you’re referring to the broader legal framework, we can provide more detailed information offline.
Matthew Edwards 1:06:35
Thank you, Vyacheslav. We’ll follow up with Matt Simpson on that question to provide more clarity. Let’s move to a question from David Godfrey Thomas, which is about agricultural infrastructure. There’s been a lot of focus on shipping and exports, but what about building agricultural infrastructure, such as storage facilities or processing plants? Is there political risk insurance available for such investments on the ground in Ukraine?
Bridget Gainer 1:07:15
That’s a great question. The challenge with infrastructure investment is that it depends on the geography and the specific risk involved. If it’s in the western oblasts or other safer areas, you’re more likely to find coverage. But if it’s in high-risk areas closer to the front lines, it becomes much more difficult.
A lot of local insurers in Ukraine are providing limited war risk coverage, but the lack of global reinsurance is the real bottleneck. Global reinsurers are not stepping in, so there’s a limit to how much risk can be covered locally.
Crispin Ellison 1:08:00
I agree with Bridget. There is demand for war risk insurance on agricultural infrastructure, but there’s very little capacity for it right now. The war risk exclusion clause is the main issue, and until we can build confidence in the insurance market, there won’t be enough capital available to cover these risks. However, it is something we are working on, particularly for new investments rather than existing infrastructure.
Oksana Ocheretyana 1:08:45
Yes, and to add to that, we’ve had discussions with the National Bank of Ukraine, which is working on creating a platform or fund to replace the reinsurance facilities for Ukrainian insurers. The fund would help local insurers increase their limits for property insurance. It’s still under development, but it’s another potential solution for covering agricultural infrastructure.
Bridget Gainer 1:09:20
One more point: It’s important to remember that you don’t need to insure the entire country. You can focus on lower-risk areas first, building confidence gradually. The idea is to start somewhere and expand from there, and we’ve seen that approach work in other high-risk environments.
John Moran 1:09:50
Yes, I agree. From DFC’s perspective, we can provide political violence coverage for agricultural infrastructure, including damage, destruction, or business interruption due to violence. We’re looking at several deals in this sector, and while it’s challenging, we do have some capacity to support it. It’s about finding the right partners and de-risking the investment where we can.
Matthew Edwards 1:10:35
Thank you all. I’m going to take a couple more questions before I give the floor to Morgan Williams. The next one is from Christopher Watts, and it’s about land mines in Ukraine. Christopher notes that 40% of Ukraine might be mined, which poses a serious risk for infrastructure projects and agricultural development. How do we factor in these risks, and is there insurance coverage available for de-mining operations or projects in potentially mined areas?
Crispin Ellison 1:11:20
Thank you for that question. While land mines are a significant issue in some areas, the statistic that 40% of Ukraine is mined is likely an overestimation. The Ukrainian government has detailed data on where mines have been laid, especially in areas that were previously under Russian occupation. Most of these areas are in the east and south.
There are regions of Ukraine, particularly in the west, where there’s been no significant fighting, and these areas are much safer for investment. The challenge is de-mining specific areas where agriculture or infrastructure projects are planned. There is insurance available for these risks, but it depends on the location and scope of the project.
Bridget Gainer 1:12:00
And just to add to Crispin’s point, the availability of insurance for de-mining operations or agricultural investments in mined areas will depend on the availability of reinsurance. In the absence of global reinsurers, it’s tough to get sufficient coverage for large-scale de-mining projects, though there are some local solutions in place.
Crispin Ellison 1:12:25
Yes, and the Ukrainian government is working closely with partners to track and mitigate these risks. There’s no denying that de-mining is a massive issue, but we have the data and knowledge to target de-mining efforts in key areas where agricultural or infrastructure projects are planned.
Matthew Edwards 1:12:45
Thank you both. The next question is for John Moran, from Yelena Levada, about working with Ukrainian banks. DFC has partnered with Bank Lviv on loan portfolio guarantees. Are there plans to expand these partnerships with other Ukrainian banks, and can you speak more about DFC’s strategy for leveraging risk guarantees through local banks?
John Moran 1:13:15
Yes, we have ongoing discussions with several Ukrainian banks. We’re looking to expand our loan portfolio guarantees (LPG) to support more local lending. This allows Ukrainian banks to lend to businesses that might not have access to capital otherwise. We currently have a partnership with Bank Lviv, but we’re looking at other banks as well.
One of the key areas we’re focused on is providing collateral substitutes for banks, which helps them take on more risk and make loans to businesses that need it. So yes, there’s more to come in this area, and we’re actively working on it.
Matthew Edwards 1:14:00
Thank you, John. I think that’s a good segue into our closing remarks. We’ve covered a lot today, but there’s still much more to discuss. I want to turn the floor over to Morgan Williams of the US-Ukraine Business Council. Morgan, thank you for all your efforts in organizing this event, and I’d love to hear your thoughts.
Morgan Williams 1:14:35
Thank you, Matt, and thank you to all our speakers today. This has been an important discussion, and we greatly appreciate everyone’s time and insights. I want to give a big thanks to Tanner Johnson and Eli Lovely from the Department of Commerce for working with us on this event for several weeks now.
As many of you know, the private business community is the future of Ukraine, and we’re fortunate that many businesses have stayed in Ukraine throughout the crises. Whether it was after the Orange Revolution, the Revolution of Dignity, or Russia’s invasion, most of the major US companies we work with have stayed. They’ve protected their employees, continued their operations, and contributed hundreds of millions in humanitarian aid.
Ukraine is fortunate to have a strong private sector that’s committed to the country’s future. What’s amazing is that they believe in Ukraine. They’ve stayed, invested, and contributed to its recovery, and that’s exactly what Ukraine needs right now: jobs, investment, and income.
At USUBC, we’ve been around since 1995, and our mission has always been to promote investment in Ukraine and help make it a better business environment. Of course, Putin’s actions have changed that landscape dramatically. But we must continue to support Ukraine. This is not just about Ukraine; it’s about democracy, private enterprise, and standing up against aggression.
In conclusion, I want to urge everyone here to step up their support for Ukraine. Support it in the US, at the White House, in Congress, and at the EU. We cannot afford Ukraine fatigue. We’re fighting for democracy and the principles we all believe in. Together, we can build Ukraine’s private sector, defeat Putin, and create a prosperous future.
Thank you very much, Matt, and thank you to all our speakers and participants today. We’re looking forward to staying engaged and moving forward together.
Matthew Edwards 1:17:35
Thank you, Morgan, and thank you again to all of our speakers: Bridget Gainer, Vyacheslav Ovechkin, Oksana Ocheretyana, John Moran, and Crispin Ellison. Thank you also to Sarah Nickel and my colleagues at Commerce. We look forward to staying engaged with everyone here and continuing these important discussions.
For those who want to learn more about upcoming events, we’ll be hosting a session on March 14 focused on multilateral development bank procurements in Ukraine. Please stay tuned for more information on that.
With that, we’ll close the session for today. Thank you all for attending, and we’ll be in touch with follow-up materials. Have a great day!
