Law360, London (March 3, 2022, 10:03 AM GMT) -- The U.K. government said Thursday it will ban Russian aviation and aerospace industries from taking out insurance or reinsurance in Britain, including with the Lloyd's specialist insurance market, in a new round of sanctions after the country invaded Ukraine. 

HM Treasury said it will introduce legislation to stop insurance and reinsurance providers based in Britain entering into transactions with Russian entities, in another move to freeze Russia out of the global financial system.

The European Union has taken similar steps, and the latest actions will probably have a major effect on the Lloyd's of London market, which provides specialist insurance for aviation and aerospace risk to clients in Eastern Europe.

"In taking such action, the UK is demonstrating its commitment to apply severe economic sanctions in response to Russia's invasion of Ukraine," HM Treasury said.  "Coupled with similar actions by the EU, this move further isolates Russia's economy from the international financial system." 

The EU banned insurers in the bloc on Feb. 25 from providing insurance directly or indirectly for aviation and aerospace parts or equipment.

The European measures were introduced in a wider ban on the export to Russia of a wide range of goods from the aerospace and energy markets and other "dual use" products that could be used for military and civilian purposes.

The second round of sanctions were rolled out last week after an initial set of restrictions on Russian banks and financial assets when the Russian tanks started rolling into Ukraine on Thursday.

HM Treasury did not say when the British sanctions would take effect, but said it would publish legislation "in due course."

Patrick Tiernan, chief of markets at Lloyd's, said it was closely monitoring the situation in Ukraine.

"We are in regular communications with the U.K. government and international regulators and are working closely with the Lloyd's market to uphold the implementation, at pace, of sanctions applied by governments around the world," he added.

Investment bank Peel Hunt LLP said this week that Lloyd's of London could face a sunstantial loss from its share of a $2 billion political risk insurance market in Russia and Ukraine. But the bank said that Lloyd's typically took approximately just 15% of its revenue from Europe, and only a modest portion of that was from Eastern Europe. 

--Editing by Ed Harris.

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