The city’s specialist market for insurance swung back to profit last year after a £900 million loss in 2020 when it was badly hit by the Covid-19 pandemic and the resulting claims caused by business interruption and cancelled events.
The outlook includes incoming claims as a result of the conflict. Lloyd's has about 100 member syndicates, which underwrite complex risks such as planes, ships and oil rigs.
The aviation insurance market is seen as particularly exposed to the effects of Russia's invasion of Ukraine and subsequent sanctions by Western governments.
Global leasing companies are staring at an imminent sanctions deadline to repossess more than 400 jets worth almost $10bn from Russian airlines, as experts gave a warning that legal wrangling between airlines, lessors and insurers could last a decade.
While it expects the conflict in Ukraine to be a challenge, the commercial insurance market said this would not create solvency difficulties.
“In a world buffeted by increasingly complex and connected risks – from the pandemic to a geopolitical conflict – the Lloyd’s market is standing by its customers and supporting their recovery when things go wrong,” said John Neal, chief executive of Lloyd’s.
“Against this backdrop, I’m pleased to see the market return to profitability following the decisive action taken in recent years to improve performance.”
Lloyd's said it was "in close dialogue" with its market partners to understand their exposure related to the conflict, without putting a figure on the overall scale of the challenge.
But it said direct and indirect claims relating to the war were “expected to fall within manageable tolerances and will not create solvency challenges”.
”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,” it said.
Lloyd's said business underwritten in Ukraine, Russia and Belarus currently accounted for less than 1 per cent of the market's total business.
Lloyd's made up ground last year after raising premium rates and excluding the virus from insurance policies.
“Lloyd’s continued to provide significant support to its customers around the world, paying £19.9bn of gross claims in 2021. Lloyd’s has also paid £2.9bn to customers impacted by Covid-19,” it said.
Looking ahead, Mr Neal said the market’s underwriting discipline will enable sustainable profitability in the years to come, “coupled with a balance sheet that can support our ambition to grow profitably”.