Aviation litigation stemming from the Russia-Ukraine conflict is having an impact on the profits of Bermudian-based global speciality insurer Fidelis Insurance Holdings Limited, according to the firm’s latest financial statements, released on Wednesday.

During the fourth quarter, the company incurred net adverse prior-year development attributable to its aviation and aerospace line of business of $287.2 million, relating to business underwritten in 2021 and 2022.

For the year ended December 31, 2024, the company anticipates reporting net income in the range of $100 to $120 million and operating net income in the range of $120 to $140 million.

The firm announced an update to loss reserves, saying it has been judiciously settling claims to derisk its overall exposure.

Dan Burrows, group chief executive officer, said: “We have meaningfully reduced our overall exposure to the complex and evolving Russia-Ukraine aviation litigation, lowered the potential downside risk associated with this event and provided increased certainty to our shareholders.”

In addition, the company has strengthened reserves, in large part to make allowance for continuin settlement discussions and also to reflect recent developments and new information received.

The 2022 Russian invasion of the Ukraine triggered wide-ranging sanctions from Western powers, some focused on the Russian aviation sector. Russia reacted with counter sanctions, stopping the export of foreign-owned aircraft from Russia, leaving Western aircraft lessors with approximately 400 aircraft stranded in Russia and no obvious route to recovery.

With losses estimated at more than $10 billion, the result was a flood of litigation in British courts against insurers and reinsurers.

So far, Fidelis has successfully settled or is in the process of settling, two thirds of the total exposure related to lessor policy claims currently in litigation.

Of the remaining lessor policy claims in litigation, a significant portion of these relate to the English trial concluded on February 14. A court judgment will be rendered in the coming months.

Mr Burrows said without the aviation and aerospace litigation, their full-year results would have exceeded their long-term operating return on average equity target.

“Our balance sheet remains strong, and our business is well positioned to support future growth and deliver long-term value for shareholders,” Mr Burrows said.

Separately, Fidelis Insurance Group also announced its preliminary estimate of catastrophe losses related to the California wildfires in January.

Based on an insured industry loss estimate of $40 billion to $50 billion, the firm expects its catastrophe loss estimates to be in the range of $160 million to $190 million, net of expected recoveries, reinstatement of premiums and tax.

The losses from these wildfires will be reflected in its first-quarter 2025 earnings.