Insured losses on Russian aircraft seizure grossly overstated: Lloyd’s

Insured losses on aircraft expropriated by Russia might be as low as 15 to 20% of the much-ballyhooed asset values,  Lloyd’s CEO John Neal said Thursday (March 24).

“Asset value is not insured value,” Neal said in a retort to what he considered “astronomical” sums being bantered around in media headlines.

“We think the insured values are some 15 to 20% of the asset value,” he said.

Beyond the gap from insured value to asset value, the final impact will be further subject to a variety of terms, timing considerations and other legal questions, he noted.

Comments follow headline reports by such names as Moody’s and Fitch discussing losses for insurers as a major portion of the oft-repeated $13 billion price tag on the over 500 aircraft expropriated by Russia.

Moody’s gave a loss estimate of $9 to 11 billion on reinsurance cession of 20-30%. Fitch said likely $5-6 billion given aggregate limits and reinsurance at 30-40%, but with a worst-case scenario as high as $10 billion.

A healthy share of the policies in question, chiefly aviation hull policies and political risk covers, are written up via Lloyds of London.

Losses could be spread quite unevenly. While some major global players may be big in aviation covers, that business will still be small relative to their total book. Select specialty insurers, in turn, might yet reveal more shocking numbers, Moody’s warned.

Did you get value from this story?  Sign up to our free daily newsletters and get stories like this sent straight to your inbox.