Australian insurer IAG has announced that its subsidiary, Insurance Australia Limited (IAL), has agreed to a confidential settlement of the proceedings brought by Greensill Bank AG and its Insolvency Administrator, Dr Michael C. Frege.
The case, known as Greensill Bank Proceedings, was Filed in the Federal Court of Australia following the collapse of Greensill Capital.
Greensill, which specialises in supply-chain finance, filed for administration in 2021 after warning that it is in “severe financial distress” and unable to repay a $140 million loan to Credit Suisse, losing its vital trade credit insurance coverage and experiencing debt defaults from its largest client GFG Alliance.
IAG stated that the settlement terms will not have a material impact on its financial position or FY26 financial results, based on the settlement terms and anticipated recoveries.
The Greensill Bank Proceedings represented a major portion of the broader litigation against IAL and other parties relating to policies purportedly issued by BCC Trade Credit Pty Ltd on behalf of IAL to Greensill entities.
The total aggregate face value of the claims in this specific case was approximately A$4 billion plus interest, according to the announcement.
Greensill’s collapse caused severe systemic shocks across the global trade credit insurance market, triggering multi-billion-dollar legal disputes over the legitimacy of policies, causing IAG shares to drop by 10%.
However, IAG has clarified that it maintains no net insurance exposure to trade credit policies linked to Greensill’s collapse.
While BCC, owned by Tokio Marine, was authorised to provide trade credit insurance on IAL’s behalf, a transition arrangement following the sale of BCC in April 2019 saw IAL underwrite new policies only until June 30 2019.
Under the terms of the sale agreements and reinsurance setups, Tokio Marine & Nichido Fire Insurance Co. Ltd (Tokio Marine) retained the risk for these policies.
In January 2022 Credit Suisse filed insurance claims related to over $1.1 billion in exposure across two of its Greensill-linked supply chain finance funds, as the bank works to recover $10 billion in funds linked to the insolvent financial services company.
Then in August 2022, Credit Suisse Asset Management (CSAM) filed 18 claims against insurers in relation to the liquidation of its Greensill-linked funds, amounting to exposures of approximately $2.2 billion across the two Supply Chain Finance Funds (SCFFs).
Other legal proceedings initiated by White Oak entities and Credit Suisse against IAL and additional parties are still ongoing.
These remaining claims involve an aggregate face value of nearly A$3 billion plus interest, and IAL continues to defend those proceedings.
