Economy
Reinsurers face Russia aircraft leasing loss of up to $11bn–Moody
Moody Rating Agency has said that global insurers and reinsurers face potential claims of $9-11 billion as a result of new Russian legislation which will lead Russian airlines to effectively impound aircraft leased from foreign lessors. The exact size of the ultimate insured loss remains unclear, and will likely become known only after lengthy legal proceedings. We do not expect the Russian aircraft law to affect the capital of global diversified players. However, the impact may vary widely by company, and could be more severe for specialised players. Reinsurers will share some of this loss as we estimate that primary insurers typically cede 20%-30% of their marine, aviation and transport premiums to the reinsurance sector
According to Moody “New Russian law will inflict losses on aircraft lessors and insurers. As part of the sanctions triggered by Russia’s invasion of Ukraine, several countries have banned aircraft lessors from leasing to Russian airlines. Furthermore regulators in Bermuda, a global centre for the registration of corporate and private aircraft, have suspended certification of all Russian-operated planes. As a response to these sanctions, the Russian government adopted a law allowing Russian airlines to register the planes already leased from foreign lessors in Russia. By registering these planes in Russia, local airlines will be able to continue using them for domestic flights but not for international travel. This law will effectively prevent foreign lessors from repossessing their aircraft, potentially forcing them to impair some of the value of the planes. Lessors are usually insured for this risk, and are now turning to insurers to recover these losses. We estimate the global (re)insurance industry’s total exposure at $9-11 billion.
“It is unclear at this stage whether insurers will have to pay all these claims. Firstly, the amount and timing of impairment charges to be taken by lessors is subject to a number of variables as well as negotiations with airlines, and this will affect assumptions regarding future recoverable value. Secondly, we understand that many insurers withdrew their coverage before the new Russian law took effect. However, they may not have provided sufficient notice to exonerate themselves from their liabilities. The definition of the event triggering the claim, which will affect the outcome for insurers, will also be subject to legal proceedings.2 Ambiguous language in insurance policies frequently leads to courts deciding in favour of policyholders. We believe lessors are ready to start legal proceedings against insurers if necessary. Insurers and reinsurers will share losses, but individual exposures unknown at this stage
The aviation insurance market is global, and is dominated by large very well diversified insurers, including for example AXA (A2 senior debt, under review for upgrade), Allianz SE (Aa3 senior debt, stable outlook) and American International Group, Inc. (Baa2 senior debt, stable outlook), whose proportional exposure to aviation is small. Specialised players, including for example some Lloyd’s syndicates and Lancashire Holdings Ltd. (Baa2 issuer rating, stable outlook), are also active in the market. However, many insurers have not disclosed exposures to this specific risk, and are still in the process of measuring their potential liability. “In addition, this event only affects a sub-segment of the aviation insurance market. If claims materialise, they will therefore not be distributed among aviation insurers according to their market share.
Aviation insurance is also heavily reinsured, through proportional and non proportional reinsurance. Solvency and Financial Condition Reports published by global insurance groups suggest that insurers cede 20%-30% of their marine, aviation and transport premiums to reinsurers, and that reinsurers pay an even higher proportion of claims. Hence reinsurers are likely to bear a large proportion of the potential loss. However, given the complexity of this event, disputes between insurers and reinsurers are also likely, further delaying the settlement of claims. The claims bill from the Russian aircraft leasing legislation is generally considered moderate for the insurance industry and could be on par with natural catastrophes such as winter storm Udi ($15 billion3) which struck the US last year, or the floods that hit western Europe in July 2021 ($13 billion4). The industry is able to easily absorb events of this size from earnings, with its capital remaining intact. We therefore do not expect the Russian aircraft law to affect the capital of global diversified players. However, the impact may vary widely by company, and could be more severe for specialised players. Losses may creep higher in other insurance lines
“If it materialised, the expected aviation loss would be the largest direct claims event stemming from Russia’s invasion of Ukraine to date. However, the military conflict could lead to an increase in claims in other lines of insurance business, including political risk, trade credit, cyber risk or even property (through “silent cyber” business interruption guarantees). We estimate that trade credit insurers’ exposure to Russia is relatively limited, amounting to no more than 1% to 2% of their total exposures and insurers can cancel some of these exposures. We understand that Russian cross-border exposures (those related to trades between non-Russian sellers and Russian buyers) are going down as export transactions with Russia slow down, while domestic exposures (related to trades between Russian buyers and Russian sellers) have also declined because of currency depreciation. Credit insurers can also cover political risk, and typically share risks with reinsurers through proportional and non-proportional treaties”
The Arab Africa Trade Bridges (AATB) Program and the Federal Republic of Nigeria formalized a partnership with the signing of the AATB Membership Agreement, officially welcoming Nigeria as the Program’s newest member country. The signing ceremony took place in Abuja on the sidelines of the 5th AATB Board of Governors Meeting, hosted by the Federal Government of Nigeria.
The Membership Agreement was signed by Eng. Adeeb Y. Al Aama, the CEO of the International Islamic Trade Finance Corporation (ITFC) and AATB Program Secretary General, and H.E. Mr. Wale Edun, Minister of Finance and Coordinating Minister of the Economy, Federal Republic of Nigeria. The Agreement will provide a strategic and operational framework to support Nigeria’s efforts in trade competitiveness, promote export diversification, strengthen priority value chains, and advance capacity-building efforts in line with national development priorities. Areas of collaboration will include trade promotion, agribusiness modernization, SME development, businessmen missions, trade facilitation, logistics efficiency, and digital trade readiness.
The Honourable Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, called for deeper trade collaboration between African and Arab nations, stressing the importance of value-added Agribusiness and industrial partnerships for regional growth. Speaking in Abuja at the Agribusiness Matchmaking Forum ahead of the AATB Board of Governors Meeting, the Minister said the shifting global economy makes it essential for African and Arab nations to rely more on regional cooperation, investment and shared markets.
He highlighted projections showing Arab-Africa trade could grow by more than US$37 billion in the next three years and urged partners to prioritize value addition rather than raw commodity exports. He noted that Nigeria’s growing industrial base and upcoming National Single Window reforms will support efficiency, investment and private-sector expansion.
“This is a moment to turn opportunity into action”, he said. “By working together, we can build stronger value chains, create jobs and support prosperity across our regions”, Edun emphasized. “As African and Arab nations embark on this journey of deeper trade collaboration, the potential for growth and development is vast. With a shared vision and commitment to value-added partnerships, we can unlock new opportunities, drive economic growth, and create a brighter future for our people.”
Speaking during the event, Eng. Adeeb Y. Al Aama, Chief Executive Officer of ITFC and Secretary General of the AATB Program, stated: “We are pleased to welcome Nigeria to be part of the AATB Program. Nigeria stands as one of Africa’s most dynamic and resilient economies in Africa, with a rapidly expanding private sector and strong potential across agribusiness, energy, manufacturing, and digital industries. Through this Membership Agreement, we look forward to collaborating closely with Nigerian institutions to strengthen value chains, expand regional market access, enhance trade finance and investment opportunities, and support the country’s development priorities.”
The signing of this Agreement underscores AATB’s continued engagement with African countries and its evolving portfolio of programs supporting trade and investment. In recent years, AATB has worked on initiatives across agribusiness, textiles, logistics, digital trade, export readiness under the AfCFTA framework, and other regional initiatives such as the Common African Agro-Parks (CAAPs) Programme.
With Nigeria’s accession, the AATB Program extends it’s presence in the region and adds a key partner working toward advancing trade-led development and fostering inclusive economic growth.
Federal Executive Council (FEC) has approved the 2026–2028 Medium-Term Expenditure Framework (MTEF), a key fiscal document that outlines Nigeria’s revenue expectations, macroeconomic assumptions, and spending priorities for the next three years. The approval followed Wednesday’s FEC meeting presided over by President Bola Tinubu at the State House, Abuja. The Minister of Budget and Economic Planning, Senator Atiku Bagudu made this known after the meeting.
The Minister said the Federal Government is projecting a total revenue inflow of N34.33 trillion in 2026, including N4.98 trillion expected from government-owned enterprises. Bagudu said that the projected revenue is N6.55 trillion lower than earlier estimates, adding that federal allocations are expected to drop by about N9.4 trillion, representing a 16% decline compared to the 2025 budget.
He said that statutory transfers are expected to amount to about N3 trillion within the same fiscal year. On macroeconomic assumptions, FEC adopted an oil production benchmark of 2.6 million barrels per day (mbpd) for 2026, although a more conservative 1.8 mbpd will be used for budgeting purposes. An oil price benchmark of $64 per barrel and an exchange rate of N1,512 per dollar were also approved.
Bagudu said the exchange rate assumption reflects projections tied to economic and political developments ahead of the 2027 general elections. He said the exchange rate assumption took into account the fiscal outlook ahead of the 2027 general elections.
The minister said that all the parameters were based on macroeconomic analysis by the Budget Office and other relevant agencies. Bagudu said FEC also reviewed comments from cabinet members before approving the Medium-Term Fiscal Expenditure Ceiling (MFTEC), which sets expenditure limits. Earlier, the Senate approved the external borrowing plan of $21.5 billion presented by President Tinubu for consideration The loans, according to the Senate, were part of the MTEF and Fiscal Strategy Paper (FSP) for the 2025 budget.
The spot rate on Nigerian Treasury bills has been increased by 146 basis points by the Central Bank of Nigeria (CBN) following tight subscription levels at the main auction on Wednesday. The spot rate on Treasury bills with one-year maturity has now surpassed Nigeria’s 16.05% inflation by 145 basis points following a recent decision to keep the policy rate at 27%.
The Apex Bank came to the primary market with N700 billion Treasury bills offer size across standard tenors, including 91-day, 182-day and 364 day maturities. Details from the auction results showed that demand settled slightly above the total offers as investors began to seek higher returns on naira assets despite disinflation.
Total subscription came in at about N775 billion versus N700 billion offers floated at the main auction. The results showed rising appetite for duration as investors parked about 90% of their bids on Nigerian Treasury bills with 364 days maturity. The CBN opened N100 billion worth of 91 days bills for subscription, but the offer received underwhelming bids totalling N44.17 billion.
The CBN allotted N42.80 billion for the short-term instrument at the spot rate of 15.30%, the same as the previous auction. Total demand for 182 days Nigerian Treasury bills settled at N33.38 billion as against N150 billion that the authority pushed out for subscription. The CBN raised N30.36 billion from 182 days bills allotted to investors at the spot rate of 15.50%, the same as the previous auction.
Investors staked N697.29 billion on N450 billion in 364-day Treasury bills that was offered for subscription. The CBN raised N636.46 billion from the longest tenor at the spot rate of 17.50%, up from 16.04% at the previous auction.
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