Greensill transactions too far away from ‘real world’, IAG claims

afr.com:

IAG says a lack of “real world transactions” among the deals arranged by Greensill means it should not have to pay out on the insurance policies now at the centre of a dispute with the collapsed financier’s administrators.

In a 177-page defence to a lawsuit filed by the administrator, IAG – which is already facing more than $3 billion in insurance claims relating to the collapse – has laid out dozens of reasons why it should not be liable for policies written by its former half-owned agency, Bond & Credit Corp.

Insurance was crucial to Greensill’s supply chain finance business, which allowed suppliers of businesses to be paid quickly in exchange for accepting a discount on their invoices because the firm sold securities backed by invoice “receivables” to investors, including Credit Suisse. The insurance policies were issued to give investors confidence that they would get their money back if debtors defaulted on their payments.

IAG denies that it should cover insurance claims taken out by Greensill through its half-owned agency BCC. Bloomberg

Michael Frege, appointed by German courts to administer Greensill’s collapsed bank in 2021, alleges that IAG is liable to pay the insurance claim and BCC said it had agreed to the cover on behalf of the insurer.

Mr Frege is trying to recover billions of dollars for German investors, including dozens of city councils which put taxpayers’ money into Greensill Bank before it became insolvent in March 2021.

In its defence, IAG singles out Greensill’s financing arrangements, which included selling securities backed by invoice “receivables” to investors, including Credit Suisse. Greensill’s entities arranged financing for suppliers irrespective of whether there was “an actual (or even a