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(Reuters) — Lloyd’s of London has set aside £1.1 billion ($1.26 billion) to pay claims related to the war in Ukraine, the commercial insurance market said Thursday, as it recorded a first-half pre-tax loss of £1.8 billion.
The reserves for the Ukraine claims were net of reinsurance, Lloyd's said in a statement. Insurers buy reinsurance to offload some of the risk of large losses.
“We've taken a very early view of what we think the financial implications will be,” Lloyd's CEO John Neal told Reuters by phone, adding the losses were likely to be about the same size as “a small to medium-sized natural catastrophe.”
Around a quarter of Lloyd's' Ukraine losses may come from the aviation market, Neal said.
Aviation lessors and insurers are wrangling over planes trapped in Russia due to the invasion of Ukraine — which Russia calls a “special military operation” — and subsequent Western sanctions.
Insurers globally may face claims of around $10 billion to $15 billion from the conflict, Mr. Neal added.
Around 100 syndicates trade at Lloyd's, which focuses on specialist risk from oil rigs to footballers' legs.
Lloyd's has asked its members to stop insuring new thermal coal mines as it seeks to reach net zero climate goals.
But Mr. Neal said the current energy crisis meant there could be flexibility in how to reach those targets.
Lloyd's said it made a trading loss due to rising interest rates which hit its investments, following a profit of £1.4 billion in the year-earlier period.
However, its underwriting profit jumped 25% to £1.2 billion. Higher premium rates have helped insurers' underwriting profits in recent years.