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December 4, 2023

Mitigating risks for foreign investors in Ukraine

1. Risks
2. Insurance for investors


1. Risks

When foreign investors explore opportunities in Ukraine, it is important to understand how to address potential political risks affecting their investments.

Typically, political risk denotes government actions that restrict investors’ right to use or benefit from their assets, or that reduce the value of their business. Such risks might surface due to war, expropriation, restrictions on capital flow within the country, among others.

In relation to the russian aggression against Ukraine, the risks arise primarily from the aggressor’s actions (occupation, hostilities, shelling of infrastructure, blockade of ports). Although unavoidable measures taken by Ukraine’s government to defend the country (mobilisation, restrictions on bank transactions, foreign exchange restrictions, etc.) also constitute a risk for companies, they are foreseeable from the legal point of view.

Related article: Reconstruction of Ukraine: the logistics sector

At present, international organisations such as the Multilateral Investment Guarantee Agency, export credit agencies and state insurance agencies have a key role to play in reducing political risks and increasing investor confidence.

Currently, insurance products cover a standard set of political risks, which include the following:

  • currency inconvertibility and limitations on funds transfers;
  • confiscation, expropriation, nationalisation;
  • political violence/war;
  • failure to fulfil obligations, particularly under contracts.

2. Insurance for investors

Following russia’s full-scale invasion on 24 February 2022, most insurance service providers suspended their operations in Ukraine.

The main reason for this is the lack of insurance products and instruments suitable for a full-fledged war.

Nonetheless, a few reputable organisations are still offering investors options for insuring political risks in Ukraine, including the ones mentioned below.

MIGA (World Bank Group)

The Multilateral Investment Guarantee Agency (MIGA) provides guarantees to investors and lenders, including political risk insurance and credit enhancement.

MIGA has already allocated USD 30 million for a pilot investment insurance project in Ukraine. Furthermore, MIGA has established the Support for Ukraine’s Recovery and Economy (SURE) Trust Fund. The aim of the fund is to address humanitarian needs, support economic activity and assist in the post-war recovery of Ukraine. The fund is expected to reach USD 300 million, enabling MIGA to provide trade finance guarantees and bank reserves during the war.

MIGA insurance coverage typically includes:

  • war and civil disturbances, including protection against loss of tangible assets or business interruption caused by politically motivated hostilities or civil disturbances, such as revolutions, insurrections, coups d’état, sabotage, and terrorism;
  • breach of contractual obligations, including coverage of losses arising from the authorities’ violation of or refusal to fulfil a contract with an investor;
  • currency inconvertibility and restrictions on funds transfers, including protection against losses caused by the inability to legally convert local currency into hard currency;
  • expropriation, including protection against losses resulting from certain actions of the authorities that may restrict ownership of the insured investment.


The US International Development Finance Corporation (DFC) is a US federal government agency that invests in development projects in low- and middle-income countries.

DFC’s political risk insurance covers up to USD 1 billion in losses due to:

  • currency inconvertibility (protects against actions of the authorities that prevent the conversion and transfer of income);
  • government intervention (protects against nationalisation, expropriation, and confiscation);
  • unlawful demand for guarantees in contracts;
  • breach of contracts in the capital markets;
  • political violence, including terrorism (covers loss of assets and income as a result of war, terrorism, and civil unrest).

Investment guarantees of the Federal Republic of Germany

These investment guarantees, managed by PricewaterhouseCoopers GmbH, protect German companies’ direct investments in new markets and developing countries against political risks.

The risks covered include:

  • expropriation;
  • wars;
  • currency inconvertibility and restrictions on money transfers;
  • breach of contracts.


The UK Export Finance (UKEF) supports British exports through insurance and guarantees.

Overseas investment insurance protects British investors from potential losses from overseas investments due to political events in countries that are not members of the Organisation for Economic Co-operation and Development (Ukraine is not a member of this organisation, although it participates in certain processes).

KUKE (Poland)

The Export Credit Insurance Corporation (KUKE) is an official export credit agency of Poland, providing credit insurance, guarantees, and investment insurance.

The investment insurance covers losses due to political risks and force majeure related to investing abroad, including:

  • government intervention;
  • moratoriums on payments;
  • trade restrictions;
  • expropriation.

The insurance can be obtained by any Polish company making long-term investments abroad or by credit institutions providing bank loans to foreign subsidiaries.

SACE (Italy)

The Italian State Export Credit Agency (SACE – Servizi Assicurativi del Commercio Estero) supports Italian businesses with financial instruments and solutions, including investment protection.

SACE investment protection covers the risks of:

  • expropriation;
  • nationalisation;
  • war;
  • currency restrictions;
  • breach of contract;
  • loss of profits due to war or civil unrest.


BPIFRANCE Assurance Export manages state export guarantees on behalf of the French government.

Investment insurance protects investors from losses due to political events related to investments or investment loans abroad and covers the following:

  • nationalisation;
  • expropriation;
  • termination of contracts;
  • war;
  • natural disasters;
  • currency barriers;
  • economic changes.

EKN (Sweden)

The Swedish Export Credit Agency (EKN – Exportkreditnämnden) promotes Swedish exports by insuring the risks of export operations.

The guarantees for investments abroad cover losses due to political events and cover political risks and force majeure, such as:

  • nationalisation;
  • expropriation;
  • war;
  • natural disasters;
  • currency barriers.

EIFO (Denmark)

The Export Investment Fund of Denmark (EIFO) has a loan and guarantee programme for Ukraine, which includes private and public financing options for Ukrainian companies and Danish investments.

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