IAG may be exposed to almost $300 million in claims related to Greensill Capital, which collapsed in March last year, according to the ‘Australian Financial Review’ (AFR).
The potential exposure stems from IAG’s half-ownership of Bond and Credit Co (BCC), a specialist agency authorised to underwrite trade credit insurance on IAG’s behalf through Insurance Australia Limited (IAL), one of IAG’s two licensed insurance subsidiaries in Australia.
AFR said IAG is “pleading it was in the dark” about trade credit policies BCC wrote and that the cost of mounting lawsuits “comes as the cases raise further questions about the nature of more than $100 million in invoices bought and sold as part of Greensill Capital’s financial schemes. Multinational companies have denied they owed money on the invoices.”
In March 2021, IAG said it had sold its 50 per cent interest in BCC on 9 April 2019 to Tokio Marine Management (Australasia) with the result of eliminating net exposure to trade credit insurance.
IAG said as part of a transition arrangement, after the sale of BCC, new policies were underwritten by IAL from the date of sale up to 30 June 2019 and Tokio Marine & Nichido Fire Insurance Co retained the risk for these policies, net of reinsurance.
According to a report in the Independent Financial Advisor, an IAG spokesperson said there had been no change to the insurer’s position. “We anticipated potential litigation by the administrators of Greensill or other claimants seeking legal confirmation of policy coverage and/or validity of claims,” the spokesperson added.
“We will be defending these matters. As the matters are before the court, we’re unable to provide further comment.”
A hearing to discuss four claims against IAG will reportedly proceed on 7 April 2022.