The Export Credit Agency of Ukraine is starting to accept applications for insurance of investments against military and political risks, as envisaged by the Law of Ukraine No. 3497-IX "On Amendments to the Law of Ukraine "On Financial Mechanisms to Stimulate Export Activity" regarding investment insurance in Ukraine against military risks", which came into force on January 1, 2024.
"The start of insurance against military and political risks is an extremely important event for the market and no less important for the "Made in Ukraine" policy. A developed infrastructure for insurance against military risks can be an additional incentive for investors to enter the Ukrainian market, develop their factories and plants here, which are oriented towards export. Previously, insurance against military risks was only available from international organizations - MIGA insured foreign companies willing to invest in Ukraine, the American DFC and the Polish agency KUKE provided guarantees to foreign and Ukrainian companies. And now the ECA is joining the organizations ready to insure investments in Ukraine and in Ukraine. Thanks to this, Ukrainian companies receive additional guarantees of financial security, and the economy - strengthening business activity. Insurance will contribute to the creation of facilities and infrastructure necessary for the development of processing industries and the export of goods made in Ukraine," - noted the First Deputy Prime Minister of Ukraine - Minister of Economy Yulia Svyrydenko in a column for Forbes.
The Export Credit Agency will offer two insurance products: direct investment insurance for investors and investment credit insurance for banks.
Among the military risks that the ECA can insure against are:
- armed conflict, including war or armed conflict, armed aggression, hostilities, mass disturbances;
- forcible change or overthrow of the constitutional order or seizure of state power;
- terrorist acts and/or sabotage, including those caused by armed conflicts, war, armed conflicts, hostilities, mass disturbances, or forcible change or overthrow of the constitutional order, seizure of state power;
- occupation, annexation.
Until today, the Export Credit Agency (ECA) provided only services for insuring the export of goods, works, and services. Now it has acquired another tool - the ability to also insure direct investments and dividends from them if they are related to exports.
A Ukrainian (or foreign) investor who wants to invest within Ukraine, for example, to build a factory or modernize production, will be able to apply directly to the ECA and arrange insurance. The insurance policy of the ECA will also serve as collateral for the loan to cover the investment.
An investor may apply to the ECA for insurance of their contribution if:
- Their share of corporate rights in the project exceeds 10%;
- The investment is aimed at creating objects and infrastructure necessary for the development of processing industries and the export of goods made in Ukraine;
- The investment objects are located in a controlled territory;
- The goods to be exported will meet the requirements of Article 8 of Law No. 1792-VIII of December 20, 2016, "On financial mechanisms to stimulate export activity";
- Dividends can be insured if they are paid from an investment that meets all these requirements.
- 200 million UAH is the maximum insurance amount per investment object.
A bank-lender providing financing to the exporter for the implementation of an investment project may also apply to the ECA for insurance against war and political risks. This will reduce the risks of non-payment for the loan for the bank and, therefore, increase the likelihood of its issuance.
The maximum insurance amount for one investment loan is 200 million UAH, and the insurance rate is determined individually.
The overall volume of insurance is limited only by the statutory capital of the ECA - 2 billion UAH.
