Global specialist insurer Lloyds of London said on 24 March that it "believes that the ongoing conflict in Ukraine will be a major claim to the market in 2022 and is in close dialogue with market partners to understand exposures".
The warning came in a statement announcing a strong return to profitability in its 2021 full year financial results - "the best quality result reported for six years" - with an overall profit of £2.3bn (2020: £0.9bn loss) and a combined ratio of 93.5% (2020: 110.3%).
Business underwritten by the Lloyd's market in Ukraine, Russia and Belarus currently represents less than 1% of Lloyd's global footprint, it said.
Direct and indirect claims are expected to fall within manageable tolerances and will not create solvency challenges.
Lloyd's further said it 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.
John Neal, CEO of Lloyd's, said: "As we announce these results today, our thoughts are first and foremost with the people of Ukraine.
"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. The market's underwriting discipline will enable sustainable profitability in the years to come, coupled with a balance sheet that can support our ambition to grow profitably."
Drilling down further into the current results, it said the material turnaround in performance has been driven by the Lloyd's market's keen focus on underwriting profitability, as well as leveraging favourable trading conditions to achieve premium growth. Premium rates increased by 10.9%, continuing the trend of 16 consecutive quarters of positive rate movement.
Lloyd's continued to provide significant support to its customers around the world, it said, paying £19.9bn of gross claims in 2021. Lloyd's has also paid £2.9bn to customers impacted by COVID-19 (86% of claims notified to date).
Against a year of heightened natural catastrophe activity, the combined ratio fell to 93.5% (2020: 110.3%, 97.0% excluding COVID-19) - a 16.8% improvement, and testament it said to Lloyd's continued focus on achieving sustainable, profitable performance.
The drive to improve performance has resulted in a further 3.0% reduction in attritional loss ratio to 48.9% (2020: 51.9%), with the expense ratio of 35.5% (2020: 37.2%) showing a 1.7 percentage point improvement. Lloyd's focus on sustainable performance and investment in digitalisation through its Blueprint Two programme is designed to continue to drive down expenses.
The capital and solvency position at Lloyd's is very strong and continues to build. Net resources increased by £2.6bn to £36.6bn, underlining the exceptional strength and resilience of Lloyd's balance sheet with central solvency and market solvency ratios of 388% and 177% respectively (2020: 209% and 147%).
The quality of Lloyd's balance sheet, protection offered to customers and opportunities for market growth were further reinforced by the announcement in 2021 of a landmark £650m five-year protection for its Central Fund.
