IAG discloses $7b in legal claims after Greensill Capital collapse

afr.com:

IAG has disclosed $7 billion in legal claims stemming from insurance written by a former commercial partner, most of which is represented by policies issued to collapsed financier Greensill Capital.

In a detailed footnote to its full-year financial statements, IAG said it is dealing with 20 separate legal claims in Australia’s Federal Court linked to trade credit insurance policies issued by Sydney-based Bond & Credit Co. IAG owned a 50 per cent stake in BCC until April 2019.

IAG has been hit with billions of dollars in insurance claims following the March 2021 collapse of Lex Greensill’s firm, Greensill Capital Peter Braig

While many of the court claims made against BCC and IAG relate to policies written for Greensill Capital and Greensill Bank, which became insolvent in March 2021, IAG said some claims are unrelated to Greensill.

IAG has denied the claims and is defending all proceedings. The insurer maintains it is not bound by the Greensill polices because they were allegedly issued outside the terms of what the agency was authorised to underwrite.

The insurer said the $7 billion face value of claimed amounts – plus interest – was not “a meaningful indication of any potential exposure”. That is because of factors such as the claimed amounts being potentially recovered by other means.

IAG also has arrangements with reinsurers, which cover losses for the insurer, and explain the company’s declaration that it has no “net” payout exposure to policies sold through its former agency.

Still, IAG warned reinsurers could challenge such agreements, and that there may be “timing differences” between any court findings against it and the enforcement of its rights under reinsurance agreements. The company confirmed to The