Yahoo Finance Lloyd’s of London swings to loss after £21bn Ukraine and Hurricane Ian claims
Lloyd’s of London has swung to an annual loss as it paid out more than £21bn to customers for claims relating to the war in Ukraine and Hurricane Ian in the US.
The world’s biggest insurance market reported a pretax loss of £769m for 2022, compared with a profit of £2.3bn in 2021.
Hurricane Ian and other natural catastrophes caused $275bn (£223bn) worth of damage last year, costing insurance companies $125bn, according to the reinsurance firm Swiss Re.
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Russia’s war in Ukraine has resulted in substantial insurance losses, mostly for stranded aircraft, ships trapped in the Black Sea and disrupted exports of cereals and agricultural products from Ukraine and Russia.
Lloyd’s faces a “mega trial” in London from a number of claimants, including AerCap, the world’s biggest aircraft leasing firm. More than 400 aircraft, worth almost $10bn, have been stuck in Russia after western countries imposed sanctions on the country after Moscow’s invasion of Ukraine in February 2022.
AerCap said last week it was “inconceivable” that it would not recover some losses from insurers over jets stranded in Russia. AerCap is the largest claimant and is suing insurers including Lloyd’s and AIG in London’s high court for up to $3.5bn over the loss of 116 aircraft and 23 engines under its all-risks insurance policy, or $1.2bn under its war risks policy.
Insurers have refused to pay, arguing that the aircraft are not lost yet, that they are no longer subject to a lease agreement and that western sanctions mean they cannot provide cover.
The judge ruled the lawsuits should be dealt with in one large trial – the biggest in the insurance industry in years – to save time.
Thursday’s results showed Lloyd’s made an underwriting profit of £2.6bn last year, up from £1.7bn in 2021, as written premiums climbed by 19% to £46.7bn. Prices rose 8%. Lloyd’s expects the pretax loss to reverse in the coming years as it benefits from rising interest rates.
The group said it made a one-off payment to many Lloyd’s employees in September to help with the soaring cost of living.
“The operating environment has been difficult for everyone,” said the chair of Lloyd’s, Bruce Carnegie-Brown. “The overlapping crises we’ve faced have created a complex set of challenges for us to tackle: from the risk of recession to the impacts of inflation on the cost of living and on claims. It has now been a year since Russia’s invasion of Ukraine: an event that has caused shock waves around the globe.”
