Munich Re faces a “non-trivial” exposure to the ongoing aviation crisis concerning jets stranded in Russia, possibly via its “war risk” policies.
Analysts at Jefferies have contended that Munich Re has a 49.96% share of Global Aerospace, which is on the all-risks cover for aircraft lessing giant Aercap, which recently levelled a lawsuit against AIG and other insurers for refusing to pay out on a $3.5 billion claim related to its lost planes.
Reinsurer support the view that the all-risk policies have clear exclusions for war, which was indisputably a factor in their seizure.
As most buyers of all-risk policies (including Aercap) also have a “war risk” policy, that this would seem to be the natural policy to claim against in the case of the stranded jets.
For its part, leasing firm Aercap argues that its insurers were in breach of policy by refusing to honour its claim, and is now seeking to recoup its losses in court.
The lessor posted a $2.7 billion net loss in the first three months of 2022 after 113 of its jets and 11 engines remained stuck in Russia, City A.M. reports.
Its expected that the outcome of the lawsuit brought forward by Aercap will ultimately come down to whether the court decides that losses fall under the company’s all-risk policy, its war policy, or are not covered be either, as its insurers currently seem to be arguing.