Lloyd’s of London says solvency won’t suffer despite claims due to invasion of Ukraine

London — Lloyd’s of London faces major claims in 2022 related to Russia’s invasion of Ukraine, but this will not lead to solvency issues, the commercial insurance market said on Thursday.

Lloyd’s is asking its member syndicates to give details of their exposure to the conflict, chair Bruce Carnegie-Brown told Reuters, adding it was too soon to estimate the size of the loss.

Lloyd’s has about 100 members that underwrite complex risks such as planes, ships and oil rigs.

The aviation insurance market is seen as particularly exposed to the effect of what Russia has described as a “special military operation" and of the West’s subsequent sanctions.

Global leasing companies face an imminent sanctions deadline for the repossession of more than 400 jets worth almost $10bn from Russian airlines. Analysts say legal wrangling between airlines, lessors and insurers could last a decade.

Lloyd’s said business underwritten in Ukraine, Russia and Belarus accounted for less than 1% of the market’s total business.

“In terms of our direct exposures, they’re quite low. So this is much more about second order impacts, of which aviation will clearly be one and will end up being significant," Carnegie-Brown said.

Some insurance policies kick in as a result of a war, while others do not cover war, making exposures hard to calculate, he said. Policyholders have notified insurers of likely claims, but have yet to file them, he added.

The Covid-19 pandemic hit Lloyd’s hard in 2020, but the market recovered in 2021 after it raised premium rates and excluded the virus from policies.

It posted a 2021 pretax profit of £2.3bn, following a £900m loss in 2020.

“The market’s underwriting discipline will enable sustainable profitability in the years to come, coupled with a balance sheet that can support our ambition to grow profitably," CEO John Neal said in a statement. 

Reuters