(Reuters) — Lloyd’s of London has set aside 1.1 billion pounds ($1.26 billion) to pay claims related to the war in Ukraine, the commercial insurance market said on Thursday, as it posted a pre-tax loss of 1.8 billion pounds in the first half of the year.
Reserves for Ukraine receivables were net after reinsurance, Lloyd’s said in a statement. Insurance companies buy reinsurance to remove some of the risk of large losses.
“We’ve taken a very early view of what we think the financial impact will be,” Lloyds chief executive John Neal told Reuters by telephone, adding that the losses were likely to be about the size of “a small to medium natural disaster”;. .”
About a quarter of Lloyd’s Ukraine’s losses could come from the aviation market, Neal said.
Aircraft leasing companies and insurance companies are squabbling over planes stuck in Russia because of the invasion of Ukraine – which Russia calls a “special military operation” – and subsequent Western sanctions.
Insurers globally could face claims of between $10 billion and $15 billion from the conflict, Mr. Neil.
Around 100 syndicates trade at Lloyd’s, which focuses on specialist risks from oil rigs to footballers’ legs.
Lloyd’s has asked its members to stop insuring new thermal coal mines as it strives to reach net zero climate targets.
But Mr. Neal said the current energy crisis meant there could be flexibility in how to meet those goals.
Lloyd’s said it made a trading loss due to rising interest rates hitting its investments, after a profit of £1.4bn in the same period last year.
However, its insurance profit rose 25% to £1.2bn. Higher premium rates have helped insurance companies’ insurance profits in recent years.