Insurance as a Strategic Tool in Aviation Leasing: Lessons from AerCap's EUR91m Recovery and the Russia-Ukraine Conflict

The aviation leasing industry, inherently exposed to geopolitical, operational, and financial risks, has long relied on insurance as a cornerstone of risk mitigation. Recent events involving AerCap, one of the world's largest aircraft lessors, underscore the critical role of insurance in safeguarding asset value and ensuring returns stability, even amid unprecedented crises. The EUR91 million payout AerCap received in September 2025 for aircraft leased to Nordwind Airlines, coupled with a landmark $1 billion insurance award for assets stranded in Russia, offers a compelling case study in how strategic insurance frameworks can transform risk into resilienceAerCap Advances $1 Billion Russia Aircraft Recovery, Total Recoveries Hit $2.9 Billion^[1].

The AerCap Case: A Blueprint for Insurance-Driven Risk Mitigation

AerCap's experience with the Russia-Ukraine conflict highlights the interplay between insurance policy design, legal clarity, and geopolitical risk. Following the 2022 invasion, hundreds of aircraft leased to Russian airlines were effectively immobilized due to sanctions and export restrictions. AerCap, however, had secured “War and Allied Perils” coverage, which proved pivotal in its recovery efforts. In June 2025, the UK High Court ruled that the loss of aircraft in Russia constituted a “Government Peril” under war risk (WR) insurance, not all-risk (AR) coverageLessons from the US$4.5 billion aviation insurance ruling^[2]. This distinction shifted liability to WR insurers, enabling AerCap to recover $1 billion in indemnityAerCap Awarded Insurance Payment by English Commercial Court for Aircraft and Engines Lost in Russia^[3].

The EUR91 million payout for five aircraft leased to Nordwind further illustrates the importance of layered insurance strategies. This settlement, approved by U.S. regulators to ensure sanctions compliance, marked a full resolution of claims under Nordwind's policiesAerCap Gets €91M Insurance Payout For Aircraft Leased To Nordwind Airlines Amid Claims Settlement^[4]. Together, these recoveries have pushed AerCap's total pre-tax recoveries from the conflict to $2.9 billion since 2023AerCap Advances $1 Billion Russia Aircraft Recovery, Total Recoveries Hit $2.9 Billion^[5]. Such outcomes demonstrate how comprehensive insurance portfolios—combining hull, liability, and contingent cover—can shield lessors from catastrophic losses.

Legal Clarity and Market Implications

The UK High Court's rulings have had far-reaching implications beyond AerCap. By affirming that sanctions do not bar insurers from covering non-Russian entities, the court provided much-needed legal certainty for the aviation insurance marketLessons from the US$4.5 billion aviation insurance ruling^[6]. This clarity has been critical in resolving disputes over “Contingent Cover” versus “Possessed Cover,” where primary operator policies often failed to respond to lossesHigh Court clarifies war risk liability in Russian aircraft insurance mega-trial^[7]. For instance, the court's definition of “permanent loss” as a result of government-imposed restrictions (e.g., Russia's Resolution No. 311) has set a precedent for future claimsHigh Court finds in favour of Lessors in Russian Aircraft Lessor Policy Claims^[8].

However, these legal victories come at a cost. The $4.5 billion in insured losses from the Russia-Ukraine crisis—later reduced to $3 billion through settlements—has strained war risk insurers, many of whom face elevated premium rates and tighter capacityU.K. High Court Russia Ruling: Aviation insurance impact - WTW^[9]. This underscores the need for lessors to continuously reassess policy language, coverage limits, and aggregate risk exposure. For investors, the AerCap case signals that robust insurance frameworks are not merely reactive but proactive tools for stabilizing returns in volatile environments.

Broader Industry Lessons and Investor Takeaways

The aviation insurance market is now grappling with the aftermath of these rulings. Inflationary pressures on attritional claims and recent aircraft accidents have compounded challenges, while the Russia-Ukraine dispute remains a key risk factorAviation Insurance Market Faces Uncertainties in 2025^[10]. For lessors, the AerCap example reinforces the importance of:
1. Tailored Policy Structures: Ensuring coverage aligns with specific risks, such as confiscation or government-imposed immobilization.
2. Regulatory Compliance: Navigating sanctions regimes without compromising insurance viability.
3. Legal Preparedness: Engaging in litigation or arbitration to enforce policy terms when insurers contest claims.

For investors, the lesson is clear: aviation leasing firms with diversified insurance portfolios and strong legal advocacy capabilities are better positioned to withstand geopolitical shocks. AerCap's recoveries, for instance, have not only offset losses but also demonstrated the potential for insurance to generate returns in crisis scenarios.

Conclusion

Insurance is more than a risk management tool—it is a strategic asset in aviation leasing. AerCap's EUR91 million payout and $1 billion award exemplify how well-structured policies, legal clarity, and proactive risk management can turn potential disasters into financial recoveries. As geopolitical uncertainties persist, investors must prioritize lessors that treat insurance not as an afterthought but as a core component of their capital preservation and return-generation strategies.