According to analysts at JMP Securities, the Russia-Ukraine conflict fears are likely overdone, but loss estimates remain highly complex and fluid.
Figures that are being discussed in the media are reaching a potential $13 billion in losses in the $200 million premium aviation war market were strongly downplayed by those JMP met with in Bermuda.
While most believe there will be a loss, it will take a long time to gain clarity as the situation is still ongoing.
The set of circumstances required to get to the extreme scenarios being discussed in the press would require actions taken by Russia that would nearly certainly guarantee it never again has access to the parts needed to keep the aircraft airworthy for domestic routes.
It would also mean that Russia couldn’t have access to international territories or purchase new aircraft in the future.
Analysts noted that there are more exposures other than aviation war, as marine war loss related to ships stuck in port and PV losses related to a sunflower oil producer and multiple wind farms.
However, the analysts believe that it’s unlikely to reach some of the amounts suggested by the media, although the market will take losses and they could be substantial for some of the specialists in the classes.
JMP also spoke with some specialist underwriters that have avoided the class, but are keenly watching to see what happens, hoping for a correction of both pricing and terms/conditions that makes the risk more palatable going forward.