KBRA releases research evaluating the impact of insurance settlements between international insurers and aviation lessors on the aviation asset-backed securities (ABS) sector.
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 securities (ABS) trusts—have supported deleveraging, improved debt service coverage ratios (DSCR), and enabled principal catch-up payments, driving positive rating actions in certain transactions.
Click here to view the report.
Recent Publications
- Ukraine-Russia: Russia-Ukraine Conflict: Potential Aircraft ABS Implications
- KBRA Places Nine Global Aviation ABS Transactions on Watch Developing Due to Russia and Ukraine Concerns
- 30 Global Aviation ABS Transactions on Watch Downgrade Due to Russia and Ukraine Concerns
- KBRA Downgrades 17 and Affirms 18 Securities from 12 Aviation ABS Transactions Due to Russia and Ukraine Concerns
- KBRA Downgrades 16 and Affirms 30 Securities from 18 Aviation ABS Transactions Due to Russia and Ukraine Concerns
About KBRA
KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.
Doc ID: 1011036
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