Marsh has recorded a gross liability of US$425mn ahead of a closely watched trial in Australia, where the broker has been accused of making misrepresentations to lenders over insurance policies held by Greensill.
Marsh said the figure represents its possible losses and legal expenses from the Australian proceedings, which are set to determine claims by Greensill’s administrators and investors for around US$5bn plus interest and costs.
Greensill collapsed into insolvency in March 2021 after insurance policies underwritten by Australia’s Bond & Credit Company (BCC) were not renewed, prompting Credit Suisse to freeze four funds that had invested as much as US$10bn in Greensill-originated notes.
Greensill’s administrators and Credit Suisse have since filed claims in Australia against Marsh, which acted as Greensill’s broker and placed policies with BCC.
Marsh recorded the US$425mn charge after taking part in court-sponsored mediation last month, it said in its quarterly results filing on April 16. The broker said the figure is provisional and additional charges could be recorded as discussions progress.
The dispute is due to go to trial in September this year, with 11 cases being heard together at the Federal Court of Australia.
Credit Suisse has alleged that Marsh failed to take required steps ensuring representations to the lender were “complete and accurate” and that the broker “made misleading statements and omissions”, Marsh said.
Greensill Bank AG, which was based in Germany and became part of the Greensill group in 2014, has alleged that Marsh “did not arrange suitable insurance cover and made misrepresentations regarding trade credit insurance placed for Greensill Bank”, the broker added.
Other applicants in the case include Greensill Bank’s administrator, two Credit Suisse funds and lender White Oak. BCC is also a respondent, along with parent company Tokio Marine and former employee Greg Brereton, who underwrote the Greensill policies.
Separately, Marsh agreed a settlement with San Francisco-headquartered lender White Oak in May last year, in a case brought in London’s High Court.
White Oak had invested in a Greensill receivables purchase programme linked to sales by Liberty Commodities, the trading arm of Sanjeev Gupta’s GFG Alliance.
White Oak had claimed Marsh was aware in May 2020 that Tokio Marine would not renew insurance policies covering those receivables, but did not inform White Oak and so did not “exercise reasonable skill and care”.
Marsh argued it was acting only on behalf of Greensill and had a duty of loyalty and confidentiality to the company, and was only able to communicate what it had been instructed to.
Marsh said on April 16 the settlement was recoverable through its professional indemnity insurance and did not have an impact on its quarterly income.
The broker declined to comment when contacted by GTR.
