This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.theguardian.com/business/2023/mar/23/lloyds-of-london-loss-ukraine-war-hurricane-ian

The article has changed 5 times. There is an RSS feed of changes available.

Version 0 Version 1
Lloyd’s of London swings to loss after £21bn Ukraine and Hurricane Ian claims Lloyd’s of London swings to loss after £21bn Ukraine and Hurricane Ian claims
(about 8 hours later)
World’s biggest insurance market reports pretax deficit of £769m for 2022 after profit of £2.3bn in 2021 World’s biggest insurance market reports pre-tax deficit of £769m for 2022 after profit of £2.3bn in 2021
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. 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, Hurricane Ian and other events.
The world’s biggest insurance market reported a pretax loss of £769m for 2022, compared with a profit of £2.3bn in 2021. The world’s biggest insurance market reported a pre-tax loss of £769m for 2022, compared with a profit of £2.3bn in 2021. Its payouts included “substantial claims” related to Ukraine and £2bn for property damage from Hurricane Ian in Florida.
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. That hurricane and other natural catastrophes caused $275bn (£223bn) worth of damage last year and cost insurance companies $125bn, according to the reinsurance firm Swiss Re.
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 has set aside £1.4bn to cover Ukraine claims, largely for aircraft stranded in Russia, as well as ships trapped in the Black Sea. A ship is deemed lost and becomes a claim after 12 months, said Bruce Carnegie-Brown, the Lloyd’s chair. He said the £1.4bn reserve was an early-stage number and could go up.
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. More than 400 aircraft, worth almost $10bn, have been stuck in Russia since 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. The planes are covered by Russian insurers, and Lloyd’s is one of the western firms that has provided contingent insurance to the Ireland-based lessors that own the aircraft. If the Russian insurers do not pay out, the lessors’ insurance policies would be triggered. Carnegie-Brown said the Russian insurers are “interested to pay but are prohibited by sanctions from moving money”.
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. Lloyd’s now faces a “mega trial” in London from a number of claimants, including AerCap, the world’s biggest aircraft leasing firm.
The judge ruled the lawsuits should be dealt with in one large trial – the biggest in the insurance industry in years – to save time. The Dublin-based company 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.
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. Carnegie-Brown said there was still a dispute over whether the conflict was a war. Some insurers have refused to pay because they argue that the planes are not lost yet. Some jets are being used by the Russian flag carrier Aeroflot while others are being used for spare parts.
The judge ruled the lawsuits should be dealt with in one large trial – the biggest in the insurance industry in years – to save time. Carnegie-Brown welcomed this but added that the trial could easily last until the end of 2024. A start date for the trial has not been set yet.
Sign up to Business TodaySign up to Business Today
Get set for the working day – we'll point you to all the business news and analysis you need every morningGet set for the working day – we'll point you to all the business news and analysis you need every morning
after newsletter promotionafter newsletter promotion
The group said it made a one-off payment to many Lloyd’s employees in September to help with the soaring cost of living. 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%. It was in the red overall because of an investment loss but expects this to reverse in the coming years.
“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.” The group said it made a one-off £2,500 payment to the half of Lloyd’s staff who earn less than £75,000 a year in September to help with the soaring cost of living, and will make a further £1,500 payment in April.
“The operating environment has been difficult for everyone,” Carnegie-Brown said. “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.”