Possessive pronouns are used principally in two contexts:
1. When the thing possessed has already been explicitly expressed in the sentence. E.g.,
Questa non è la tua borsa, è la mia.
This isn’t your bag, it’s mine.
2. In response to a question in which the thing possessed has already been named. E.g.,
È il suo quaderno?
Sì, è (il) suo
Is this his notebook?
Yes, it’s his.
As you can see in the second example above, it is possible to drop the article. But not with loro; again the article cannot be dropped with loro in relation to possession. E.g.,
E’ il loro appartamento?
Sì, è il loro.
Is it their appartment?
Yes, it’s theirs.