Aircraft lessors which have taken legal cases against insurers over losses from planes seized in Russia amid Ukraine war will likely have to wait two more years before settlements are finalised, the chairman of Lloyd’s of London warned on Wednesday.
AerCap, the world’s largest owner of commercial aircraft and based in Dublin, has taken legal action in London against Lloyd’s, the world’s leading insurance market for specialist coverage, AIG and Fidelis. It comes as 116 of its jets were left stranded in Russia when western allies slapped sanctions on Moscow after it invaded Ukraine in February last year.
Avolon, also based in Dublin, the main global hub for aircraft leasing activities, has taken action against Lloyds in the Irish High Court after Russian carriers kept 10 of its aircraft in the country after the war broke out.
Lloyd’s annual report said that its insurance market, comprised of scores of syndicates that pool capital and accept insurance risks, had set aside £1.4 billion (€1.58 billion) of provisions at the end of 2022 to cover potential claims costs arising from the issue.
Much of the claims are being taken against Lloyd’s Europe, the unit that was established to service EU customers post-Brexit. At the end of last year, there were nine such legal cases in the works.
“I think we’ll get some principles sorted out in court by the end of this year,” the group’s chairman, Bruce Carnegie-Brown, told The Irish Times in Dublin on Wednesday. “But, in terms of turning it into hard dollars and cents, we’re probably two years away.”
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“I think, there will likely be a higher settlement of claims than implied by the provisions that we’ve incurred at Lloyd’s,” he added.
Mr Carnegie-Brown noted that it remains to be determined whether insurers can claim under so-called all-risk covers or war-risk policies. Aircraft lessors typically have smaller amounts covered under war-risk policies.
It also remains to be seen whether the underlying Russian insurers of carriers that hold the aircraft will pay out before contingent policies written by Lloyd’s kick in, he said. Still, the chairman conceded that even if Russian insurers were willing to pay out, there continues to be the issue surrounding sanctions and money transfers.
