Insurance manager claims Greensill deceived him to provide insurance coverage

An insurer that underwritten billions of dollars in insurance policies for Greensill Capital before its collapse claimed the finance company had “enticed” it into offering insurance coverage through “misleading and deceptive behavior.”

Greg Brereton, who worked for Sydney-based insurer Bond & Credit Co, was defending himself in a court case in response to a case by US investment firm White Oak, which bought some of the Greensill Capital debt from steel group GFG Alliance. against Australian insurer Insurance Australia Group.

It’s the first time Brereton has issued a statement about the collapse of SoftBank-backed Greensill Capital last year after terminating its insurance coverage.

BCC covered the default risk of Greensill Capital’s $10 billion in lending to its clients, which was then packaged into investment products and sold to investors like Credit Suisse.

Underscoring Brereton’s importance to the company’s funding model, former British Prime Minister David Cameron – who made millions of pounds as an adviser to Greensill – once visited the Australian insurance board at BCC’s Sydney office.

Brereton’s relationship and email exchanges with Australian founder of Greensill Capital, Lex Greensill, form a crucial part of the Australian court case, which will be a test case for insurers and reinsurers and investors who will lose billions on their investments with Greensill if not paying out the policies.

Brereton’s filing alleges that Greensill’s companies engaged in “misleading and deceptive conduct” that led him to sign the cover. He said he would not have consented had he not been misled by Greensill and blamed the “misrepresentations” for any loss or damage claimed by White Oak.

Court documents filed by BCC allege that Greensill failed to disclose material details during negotiations with Brereton over coverage and, in one case, presented clients to him “due to their perceived attractiveness to an insurer.”

However, Brereton also blamed insurer IAG, which he said had also “misled” him.

IAG, whose subsidiary Insurance Australia Limited is named on its top insurance policies, told investors last year that the sale of its 50 percent stake in BCC to Tokio Marine in 2019 eliminated its exposure to Greensill.

It has also argued in its defense that BCC exceeded its powers by providing excessive amounts of cover to Greensill, including outside Australia, and that it failed to approve the wording and structure of the policies.

Brereton said in the filing that BCC had the authority to do so and that IAG not only knew the coverage was in place, but that it received a premium on the products. He said the insurer received a “bordereau” identifying the premium each month.

IAG declined to comment on its response.

Brereton said nonetheless that the policies he signed with Greensill did not indemnify White Oak for the alleged misrepresentations.

Japanese underwriter Tokio Marine – which bought BCC in 2019 – accused Greensill Capital in April of using “fraudulently acquired” insurance policies and said claims against its entity were therefore void.

Brereton and Greensill Administrator Grant Thornton did not immediately respond to requests for further comment.

https://www.ft.com/content/e3883292-c49b-404a-8340-87b854089f51 Insurance manager claims Greensill deceived him to provide insurance coverage

Adam Bradshaw

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