Japanese insurer Tokio Marine stated on Monday that the insurance policies that enabled billions of {dollars} in lending by Greensill Capital, the provision chain financing group that collapsed final 12 months, have been “fraudulently obtained”.
The assertion marked the primary time because the March 2021 insolvency of the Anglo-Australian monetary companies firm that the Japanese insurer has formally accused Greensill of fraud.
It additionally offered affirmation that Greensill’s insurers would use allegations of misrepresentation as a important defence towards paying out on cowl offered to the finance group, as reported by the Monetary Occasions in July.
Tokio Marine stated investigations into insurance policies written at subsidiary The Bond & Credit score Co, the Australian unit on the coronary heart of the Greensill relationship, had discovered that “issues materials to the underwriting of the insurance policies have been fraudulently misrepresented to BCC by Greensill”.
It added that there was a “fraudulent failure” to reveal “materials issues” earlier than insurance policies have been agreed and prolonged and that the misrepresentations continued after Tokio Marine purchased the BCC operation in 2019.
“In mild of these fraudulent misrepresentations and fraudulent breaches of an [insured party’s] responsibility of disclosure, Tokio Marine has at present suggested counterparties that these insurance policies and associated obligations are void from inception,” the insurer stated.
The assertion will come as a blow to Greensill traders, who see insurance coverage claims as a approach of recovering their losses.
The fallout from the Greensill scandal has highlighted practices at BCC, the underwriting enterprise that offered it with the essential insurance coverage cowl that allowed traders to deal with money owed originated by the finance group as virtually risk-free.
BCC’s Sydney workplace was as soon as visited by former UK prime minister David Cameron, then an adviser to Greensill, underlining its significance to the agency. When a BCC government was fired in 2020 for exceeding his underwriting authority, Greensill’s principal insurers pulled again and it failed to seek out cowl elsewhere, triggering the group’s demise.
Tokio Marine, which first publicly questioned the validity of the insurance coverage in March 2021, continued to say it could defend itself towards any claims, together with Greensill-related proceedings in Australia towards Insurance coverage Australia Group. Individuals near the Japanese insurer stated the Greensill insolvency course of created a possible “pipeline of claims” in coming months and years.
IAG stated on Monday that it was persevering with to “work collectively” with Tokio Marine to defend the claims and that it “maintains its place that it has no web insurance coverage publicity to commerce credit score insurance policies offered by BCC”.
IAG has beforehand stated it handed any publicity to Tokio Marine as a part of the BCC sale.
Greensill’s administrator declined to remark.
