Seized but Not Lost: Insurance Proceeds and Aviation ABS

After Russia’s 2022 invasion of Ukraine, the U.S., European Union (EU), UK, and other governments imposed sanctions on Russian individuals and entities, compelling aircraft lessors to terminate leases with Russian airlines. In response, Russian authorities reregistered foreign aircraft in the national registry and blocked their return, effectively retaining assets valued at approximately $10 billion. Because these aircraft were insured under war risk policies, disputes soon emerged between international insurers, Russian airlines and insurers, and aviation lessors over liability for the losses. Initial litigation against NSK, a Russian insurer, led to partial settlements beginning in 2023. More recently, global lessors such as AerCap, Air Lease, and SMBC have reached settlements with insurers including AIG, Lloyd’s, Chubb, and Swiss Re, following favorable court rulings affirming coverage under war risk policies. These insurance recoveries—when allocated to aviation asset-backed…