Australian insurance company IAG has announced that its subsidiary Insurance Australia Limited (IAL) has agreed to a confidential settlement of proceedings brought by Greensill Bank AG and its insolvency representative, Dr. Michael C. Frege.
The case, known as the Greensill Bank Litigation, was brought in the Federal Court of Australia following the collapse of Greensill Capital.
Greensill, which specializes in supply chain finance, filed for bankruptcy protection in 2021 after warning it was in “serious financial distress”, unable to repay a $140 million loan from Credit Suisse, losing vital trade credit insurance and suffering a debt default from its largest client, GFG Alliance.
IAG said the terms of the settlement will not have a material impact on its financial position or fiscal 2026 financial results, subject to the terms of the settlement and expected recoveries.
The Greensill Bank litigation is a major part of wider proceedings against IAL and other parties over policies allegedly issued by BCC Trade Credit Pty Ltd to Greensill entities on behalf of IAL.
According to the announcement, the total face value of the claims in this specific case plus interest is approximately A$4 billion.
The collapse of Greensill brought a serious systemic impact to the global trade credit insurance market, triggering a legal dispute over the legality of policies worth billions of dollars, causing IAG’s share price to fall by 10%.
However, IAG has clarified that it does not retain net insurance exposure on trade credit policies related to Greensill’s collapse.
Although Tokio Marine-owned BCC is authorized to provide trade credit insurance on behalf of IAL, IAL can only underwrite new policies until June 30, 2019, under transitional arrangements following the sale of BCC in April 2019.
Tokio Marine & Nichido Fire Insurance Co., Ltd. (Tokio Marine) retains the risks of these policies subject to the terms of the sales agreement and reinsurance arrangement.
Credit Suisse filed an insurance claim in January 2022 over more than $1.1 billion in exposure to two supply chain finance funds linked to Greensill, and the bank is fighting to recover $10 billion in funds tied to the failed financial services company.
Then in August 2022, Credit Suisse Asset Management (CSAM) filed 18 claims against insurers in connection with the liquidation of its Greensill-related funds, with exposure to two supply chain finance funds (SCFF) totaling approximately $2.2 billion.
Additional legal proceedings by the White Oak entities and Credit Suisse against IAL and other parties are ongoing.
These remaining claims involve a total face value of nearly $3 billion plus interest, and IAL continues to defend these proceedings.
