An underwriter who signed off on billions of {dollars} of insurance coverage insurance policies for Greensill Capital forward of its collapse has alleged that the finance firm “induced” him into offering cowl by means of “deceptive and misleading conduct”.
Greg Brereton, who labored for Sydney insurer Bond & Credit score Co, set out his defence in a court docket submitting in response to a case introduced by US funding agency White Oak, which purchased a few of the money owed owed to Greensill Capital by metal group GFG Alliance, towards Australian insurer Insurance coverage Australia Group.
It’s the first time that Brereton has issued any assertion on the collapse final yr of SoftBank-backed Greensill Capital following the cancellation of its insurance coverage cowl.
BCC offered $10bn price of protection towards the danger of default on Greensill Capital’s lending to its purchasers, which was then packaged up into funding merchandise and offered to traders reminiscent of Credit score Suisse.
Underlining Brereton’s significance to the corporate’s financing mannequin, former UK prime minister David Cameron — who earned tens of millions of kilos as an adviser to Greensill — as soon as visited the Australian insurance coverage government in BCC’s Sydney workplace.
Brereton’s relationship and e mail exchanges with Greensill Capital’s Australian founder Lex Greensill type a important a part of the Australian court docket case that shall be a take a look at case for insurers and reinsurers, in addition to traders, who stand to lose billions on their investments with Greensill if the insurance policies don’t pay out.
Brereton’s submitting alleges that Greensill’s firms engaged in “deceptive and misleading conduct” that induced him into signing off on the quilt. He stated he wouldn’t have authorized had he not been misled by Greensill and blamed the “misrepresentations” for any losses or damages claimed by White Oak.
Court docket paperwork filed by BCC allege that Greensill did not disclose materials particulars throughout negotiations with Brereton over insurance coverage cowl and in a single case offered him with clients “primarily based on their perceived attractiveness to an insurer”.
Brereton, nonetheless, additionally laid a few of the blame on insurer IAG, which he stated had additionally “misled” him.
IAG, whose subsidiary Insurance coverage Australia Restricted is known as on the important thing insurance coverage insurance policies, instructed traders final yr that the sale of its 50 per cent stake in BCC to Tokio Marine in 2019 had eradicated its publicity to Greensill.
It has additionally argued in its defence that BCC overstepped its authority by offering outsized ranges of canopy to Greensill, together with outdoors Australia, and that it had not authorized the wording and construction of the insurance policies.
Brereton stated within the submitting that BCC did have the related authority and that IAG was conscious not solely that the protection was in place, however that it acquired a premium on the merchandise. He stated the insurer acquired a “bordereau” every month that recognized the premium.
IAG declined to touch upon his response.
Brereton stated nonetheless that the insurance policies he signed off with Greensill didn’t indemnify White Oak due to the alleged misrepresentations.
Japanese underwriter Tokio Marine — which purchased out BCC in 2019 — in April accused Greensill Capital of utilizing “fraudulently obtained” insurance coverage insurance policies, saying the claims towards its unit have been thus void.
Brereton and Greensill’s administrator Grant Thornton didn’t instantly reply to requests for additional remark.