Key air lessor now targeting insurers of Russian clients in court
A late February deluge of aviation court claims could show the aircraft lessor with the single largest loss from the Russian invasion of Ukraine taking its case beyond its own stable of insurers to hit the full swathe of insurers that had stood behind its estranged Russian partners.
AerCap figures notably on the list of some 97 total plaintiffs that filed a mass of litigation February 23, with subsidiaries and financing vehicles from the group appearing on the plaintiff roster of 19 of the 20 cases filed simultaneously and registered the following week.
Some 30 insurance groups are present across 195 defendant slots across the cases with Lancashire, Liberty Mutual, Allianz and Fidelis all too well represented on the court dockets.
“We are pursuing insurance claims against our own insurers and against the Russian airlines, insurers, and reinsurers,” AerCap CEO Aengus Kelly noted for his company’s Q4 earnings call.
Those pursuits had turned to court action already in June 2022 on the firm’s own contingent and possessed insurance (C&P) policy and concerned the full array of aircraft and engines remaining in Russia. Insurers, led by AIG, had shot down that aviation claim shortly after its submission in March 2022, then got hit by the massive $3.5 billion court action which is still ongoing.
But AerCap also submitted claims as an “additional insured” under the insurance policies of the Russian airlines to whom it had leased the assets. "Our efforts to recover from the airlines’ Russian insurers and their reinsurers continue," AerCap said in its just-released annual report, without dating the timing of its claims.
Those pursuits have triggered some response from insurers.
“We have been approached by some Russian airlines and their insurers about potential insurance settlements involving some of our aircraft lost in Russia,” Kelly told analysts during the Q4 earnings call. It remains “too early to know whether anything will come out of it,” he said, declining further comment, including on whether payments would even be possible under a sanctions regime.
AerCap has additionally submitted insurance claims, both to its own C&P cover provider and to insurers of its Ukrainian partners, for two aircraft stranded in Ukraine. The value of the two claims under the C&P policy for the two aircraft which remain in Ukraine is approximately $100 million. Those actions were dated between November 2022 and January 2023.
At the advent of war in eastern Europe, AerCap had 135 aircraft and 14 engines on lease to Russian airlines. Some 22 aircraft and three engines have been recovered. For the FY2022 report, that spelled a write-off to the tune of $3.16 billion, narrowed to a $2.67 billion net charge after balance sheet derecognition and receipt of bank letters of credit.
For the mass of litigation filed February 23, AerCap is not alone. Air Lease Corporation, with its own major litigation underway on its own home turf, joins on one major case of the 20. And Lithuanian-based AviaAM Leasing makes an appearance. The AviaAM unit owning the array of SPV plaintiffs has admitted to losing 13 aircraft with a carrying value of $570 million and had promised legal action.
Units from a full 30 insurance groups figure amongst the 195 defendant slots across the full swathe of cases.
Lancashire (plus syndicates), Liberty Mutual (including Liberty Specialty Markets and their syndicates), Allianz and Fidelis are nearly omnipresent, each with units on 15 to 18 cases.
Munich Re, GIC and Oman insurance also found themselves on a double-digit case list in the latest onslaught. Then mark Convex, Axis, Global Aerospace, Beazley, Starr International and HDI Global on the long-list of defendants.
Court dockets had already been filled with aircraft leasing claims. Leasers Avolon, SMBC Aviation Capital, BOC Aviation, CDB Aviation, Dubai Aerospace Enterprise (DAE), Air Lease Corporation and a DAE-sponsored SPV have all followed the $3.5 billion June move from AerCap.
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