Lloyd’s has warned of a potential business fallout from Russia’s attack on Ukraine, warning the war will likely lead to a “major claim” this year.

The business raised the alarm last week as it reported a profit before tax of £2.3 billion ($4.04 billion) for last year, following a £900 million ($1.58 billion) loss in 2020.

“Lloyd’s 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 business said.

It says business underwritten by the Lloyd’s market in Ukraine, Russia and Belarus currently represents less than 1% of Lloyd’s global footprint.

“Direct and indirect claims are expected to fall within manageable tolerances and will not create solvency challenges,” Lloyd’s said.

“Lloyd’s 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.”

Lloyd’s General Representative in Australia Chris Mackinnon says the business here performed strongly last year, registering a near 13% rise in gross written premium (GWP) to $3.4 billion.

In 2019 and 2020, Lloyd’s achieved about $3 billion in GWP in the Australian market.

“We’ve bounced back and we’ve got stronger again in 2021,” Mr Mackinnon told insuranceNEWS.com.au.

He says the group-wide 2021 results, announced in London by Lloyd’s, represent the culmination of many years of hard work by the market and the corporation.

Lloyd’s says it paid about £19.9 billion ($34.9 billion) in gross claims last year and £2.9 billion ($5 billion) to customers impacted by covid from 86% of claims notified to date.

GWP increased to £39.2 billion ($68.9 billion), up from £35.5 billion ($62.4 billion) in 2020 and the combined ratio improved to 93.5% from 110.3%.

Lloyd’s says the underwriting profit of £1.7 billion ($2.98 billion) includes the impact of major claims and benefit from prior year releases. In 2020 the business suffered an underwriting loss of £2.7 billion ($4.74 billion).

Major claims contributed 11.2% to the combined ratio, significantly less than the 23% in 2020, as both the severity and frequency of events were reduced last year.