Lloyd’s of London warns Ukraine war will be ‘major claim’

Insurance market Lloyd’s of London has warned the Ukraine war will be a “major claim” this year.

The group did not give a figure, but said it is in “close dialogue” with market partners to gauge the scale of their exposure to Ukraine and the impact of Russia’s invasion.

It said: “Lloyd’s believes that the ongoing conflict in Ukraine will be a major claim to the market in 2022.”

But it stressed that direct and indirect claims are “expected to fall within manageable tolerances and will not create solvency challenges”.

It added: “Lloyd’s continues to work in lockstep with governments and regulators around the world to support and implement a complex series of sanctions on the Russian state.”

The comments came as Lloyd’s revealed it swung out of the red last year, with pre-tax profits of £2.3 billion against losses of £900 million in 2020.

It bounced back after the pandemic in 2020 marked its most costly single event on record and sent it tumbling to its worst underwriting result for three years.

The group said its combined operating ratio, which is a measure of underwriting profitability, improved from 110.3% in 2020 to 93.5% last year – the best result for seven years.

John Neal, chief executive of Lloyd’s, said: “In a world buffeted by increasingly complex and connected risks – from the pandemic to a geopolitical conflict – the Lloyd’s market is standing by its customers and supporting their recovery when things go wrong.

“Against this backdrop, I’m pleased to see the market return to profitability following the decisive action taken in recent years to improve performance.”

There are fears 2022 will be a tougher year as the Ukraine conflict shows little sign of ending and worries that some sectors, such as aviation insurance and trade credit, may be facing hefty claims.

It is thought there may be a hit from bad debts as a result of the conflict and unrecoverable planes.