LONDON – Corporations linked to bancrupt British financier Lex Greensill obtained insurance coverage fraudulently, insurer Tokio Marine mentioned on Monday, including it didn't plan to pay out on the insurance policies and would “vigorously defend” itself in opposition to any authorized claims.
Greensill’s provide chain finance agency collapsed final 12 months, resulting in the failure of $10 billion in supply-chain finance funds run by Credit score Suisse.
Greensill directors Grant Thornton declined to touch upon Monday.
Credit score Suisse mentioned in an announcement that the insurance coverage insurance policies have been legitimate, and that it might additionally “vigorously defend” its place to protect the rights of the provision chain finance funds and their buyers.
Provide chain finance goals to decrease financing prices by permitting suppliers to obtain early cost of their invoices.
Credit score Suisse purchased debt that was issued by Greensill and backed by loans the provision chain finance agency made to corporations.
To handle its threat, Greensill took out credit score insurance coverage with a subsidiary of Insurance coverage Australia Group (IAG). Tokio Marine took on the insurance policies in 2019 when it purchased the unit.
Tokio Marine carried out investigations in 2020 into Greensill-related insurance policies written at its Australian subsidiary BCC Commerce Credit score, it mentioned in an announcement.
“Whereas these investigations stay ongoing, Tokio Marine has discovered that since at the very least September 2018, issues materials to the underwriting of the insurance policies have been fraudulently misrepresented to BCC by Greensill,” Tokio Marine mentioned.
“There was additionally a fraudulent failure to reveal materials issues to BCC previous to the purported inception of quite a few insurance policies, renewals and endorsements,” the assertion mentioned.
Tokio Marine had advised counterparties to the insurance coverage on Monday that their insurance policies have been void and mentioned it might “vigorously defend” any authorized claims in opposition to it.
Credit score Suisse is searching for compensation from insurance coverage to revive belongings to the buyers within the provide chain finance funds.
It mentioned earlier on Monday that litigation associated to Greensill provide chain finance funds might take round 5 years and warned that some buyers wouldn't be capable to recuperate their cash.
The financial institution joined collectors of Greensill Capital by submitting lawsuits in Australia searching for compensation from IAG, court docket filings confirmed final month.
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