Marsh’s role in Greensill collapse highlighted by Credit Suisse, reports


An internal review conducted by Credit Suisse examines Marsh & McLennan for its role in the collapse of financial services firm Greensill, according to reports published by the Financial Times.

Greensill, who specializes in supply chain finance, filed for administration last week after “serious financial difficulties” prevented him from repaying a $ 140 million loan to Credit Suisse.

The move came after Greensill lost insurance coverage for its debt repackaging business and said its largest client, GFG Alliance, had started to default on its debts.

The FT now reports that the Swiss bank is in the process of liquidating them and expects serious reputational damage, lawsuits from investors and potentially a substantial financial impact.

He reportedly repaid $ 3.1 billion of the $ 10 billion to investors, but says there is considerable uncertainty about the rest.

People familiar with the matter say executives highlighted Marsh’s role as a broker responsible for ensuring that every security in Greensill funds was covered by adequate insurance.

Marsh was Greensill’s commercial insurance broker responsible for finding coverage for the financial group against non-payment.

Insurers, including Tokio Marine and IAG, have been involved in providing the coverage.

Tokio Marine had indicated that its reinsurance cover had to absorb part of the costs the insurer may be faced with commercial credit insurance policies linked to Greensill.

But it has since been claimed that the reinsurance contracts referenced by Tokio Marine may not actually cover the unit that has done the most business with Greensill..

According to Bloomberg, Tokio Marine’s Australia Bond & Credit Co. is not covered by major reinsurance protections, although it has underwritten more than $ 7.7 billion in insurance policies for Greensill at one time. .

IAG confirmed this month that it has no net exposure to trade credit policies, including those sold through the underwriting agency BCC to Greensill entities..

The FT report highlights two separate phone calls between executives at Marsh and Credit Suisse in which the broker’s managing directors gave no indication of the problems with renewing insurance policies.

“They did not identify any red flags even when questioned,” one person told the FT. “The only comment they made was that the cost of insurance would increase due to Covid.”

Printable version, PDF and email

Leave A Reply

Your email address will not be published.