The Eurasian Reinsurance Company (ERC), which aims to stimulate mutual and foreign trade and implement joint cooperation projects of the Eurasian Economic Union (EAEU), will start operating in 2023. However, the international financial institution needs to increase its charter capital. Such conclusions were reached by representatives of the Union member states, business community and experts at the session ‘The Establishment of the Eurasian Reinsurance Company: Opportunities and Prospects’ held as part of the second Eurasian Economic Forum.
The importance of establishing the Eurasian Reinsurance Company has increased significantly due to sanctions
“This project is now several years old. <...> Much has changed in the world since then, and now, looking back, we realise that the idea was super right. In the current geopolitical situation, the ERC is not just an important, but a critical and necessary element in the completion of the financial and economic infrastructure that is needed in the EAEU space. <...> The tasks facing the Eurasian Reinsurance Company include the development of the reinsurance mechanism. Again, when we started this process, the reinsurance market was functioning quite well, and we all had experience of working on reinsurance both with each other and with export agencies in other countries. We had experience in reinsurance with the commercial market. Unfortunately, due to sanctions, the reinsurance market has effectively closed for Russia and, to a large extent, Belarus. Our colleagues from Kazakhstan and Armenia have reinsurance opportunities, but they are also geographically limited,” Nikita Gusakov, Chief Executive Officer, EXIAR; Senior Vice President, Russian Export Center.
“The recent difficult years for all of us, especially for Russia and Belarus, have prompted a search for other instruments – financial and non-financial – to support national exporters. These are the issues of import substitution, cooperation and, naturally, the need to involve all financial institutions to support exports. These include development banks, export credit agencies, our chambers of commerce and industry, and other participants who are obliged, in fact, to help promote exports of national manufacturers. <...> Unfortunately, the capacity of export insurance companies in Belarus today is insufficient, even with national reinsurance companies of the Republic of Belarus. This is one of the obstacles to financial support for exporting companies. <...> This year, we hope, this process [the establishment of the ERC, – Ed.] will be completed, thus increasing the capacity for exporters,” Gennady Mitskevich, General Director of the Eximgarant of Belarus, Belarusian Republican Export–Import Unitary Insurance Enterprise.
“We discussed the project [the creation of the ERC, – Ed.] even before February 2022, and of course, much of what we discussed there is relevant, without any doubt. Not much has changed. But nevertheless, it cannot be overlooked that in the current circumstances, at least from the perspective of Russian business, this project is extremely relevant. We have actually left the reinsurance ranks of western markets and this is very depressing for Russian business,” Alexander Murychev, Vice President for Financial Policy and Economic Sector Development, Russian Union of Industrialists and Entrepreneurs (RSPP).
Share capital of the Eurasian Reinsurance Company is insufficient for its full operation
“Our trade volumes with the EAEU countries are growing, which is good. But this is without reinsurance instruments working. If they start functioning, I hope that our trade volumes will grow. Not immediately, not quickly, but they will. <...> We have already made a proposal to the Eurasian Commission that the capital is clearly insufficient for full reinsurance work in the Eurasian space. I am not even talking about third countries,” Alexander Murychev, Vice President for Financial Policy and Economic Sector Development, Russian Union of Industrialists and Entrepreneurs (RSPP).
“There is an issue related to things other than additional capitalization. <...> It is an issue related to the payment of share capital in instalments. The capital will be quite small at the start, so this issue needs to be resolved quickly enough for the participant to provide adequate coverage,” Svetlana Gusar, Independent Expert; Vice President, All-Russian Union of Insurers (2017–2023).
Raising additional funds to increase the share capital of the Eurasian Reinsurance Company
“It has already been noted that the capacity is very small given the current situation. That is why it makes sense to continue our work in terms of possible expansion of products, expansion of the share capital. Everyone is already talking about it – business is talking about it. That is why we have to look even further, develop and expand once we are established,” Kanybek Kasymali uulu, Deputy Director of the Department of Trade Policy, Eurasian Economic Commission.
