Carlyle seeks $700mn over insurers’ failure to pay for Russian jet seizures

Carlyle Aviation Partners, one of the world’s biggest aircraft leasing operators, is seeking $700mn from more than 30 insurers and reinsurers after they failed to pay out over jet seizures by Russian airlines.

The action, filed in Florida late on Monday, includes a claim that the insurers, which include the US’s AIG, Axis and Chubb, have acted in bad faith on policies covering 23 aircraft following the war in Ukraine.

That claim could allow a jury to award punitive damages to Carlyle beyond the $700mn that a person familiar with the case said the company was seeking.

Carlyle Aviation Partners, part of the Carlyle Group, the investment company, is one of many lessors struggling to recover aircraft leased to Russian airlines before Russia’s attack on Ukraine on February 24.

Russian carriers, acting on official instructions, have taken control of about 500 aircraft worth about $10bn leased from overseas companies. They have ignored lessors’ demands to return the aircrafts.

The case was brought by Carlyle Aviation’s UK and US arms, which the legal claim described as “the Carlyle plaintiffs”. It alleged the insurers had committed nine separate breaches of contract.

“In blatant breach of their contractual obligations, and months after the Carlyle plaintiffs first notified defendants of their covered losses, defendants have failed to provide coverage for these losses,” the legal action said.

Although the action said the insurers had given no reason for their failure to pay out, insurers in other cases have insisted the aircraft, which are typically still being used in Russia, have not been lost.

There have also been questions in other cases about whether the claims should be made under the insured companies’ war-risk cover or other policies.

Carlyle’s filing said the insurers had “violated their good faith duties” by failing to evaluate the company’s claims in a timely or serious manner.

“Defendants have not timely provided an assessment or determination as to these claims despite the claims having been presented in March 2022, and despite full particulars of the claims having been provided months before the filing of this complaint,” the papers said.

The claim alleged the insurers had also systematically denied or delayed assessment of insurance claims brought by other claimants in a similar situation to Carlyle.

The Carlyle case involves 16 Boeing and seven Airbus aircraft leased to 12 different airlines, according to the court filing. The single biggest group of aircraft is five Boeing aircraft leased to Utair, a regional airline based in western Siberia.

Most of the aircraft are in Russia, although one Boeing aircraft operated by Azur Airlines has been detained in Egypt.

The Egyptian authorities have been uncooperative, according to the legal papers, although they said the Egyptians had recently indicated they might release the aircraft if Carlyle paid airport storage fees.

The case names 35 insurers and reinsurers as defendants, including one consortium of war-risk insurers operating in the Lloyd’s of London insurance market and 19 syndicates of Lloyd’s underwriters.

None of the insurers involved was willing to comment.

Carlyle Aviation Partners said it was bringing the lawsuit because it had “exhausted all avenues” for recovering the aircraft and had not been compensated as required by its insurance policy.

“We have complied with all obligations under the insurance policy, designed precisely for this type of risk in this situation,” the company said.