Marsh McLennan investigated over Greensill collapse
Credit Suisse is investigating Marsh McLennan’s role in the collapse of Greensill Capital. Marsh was the commercial insurance broker for the London-based supply chain finance group and, according to Credit Suisse executives, was responsible for ensuring that all securities in Greensill funds were adequately insured.
As reported by the Financial Times, Credit Suisse contacted Marsh as part of its due diligence when it granted Greensill a $ 140 million bridging loan in anticipation of listing on the stock exchange.
Sources familiar with the matter told the Financial Times of two separate phone calls between Credit Suisse executives and Marsh executives in October and December last year during which the bank’s representatives inquired about insurance policies related to the funds’ assets, in particular with the policies ‘insured’ shelf life and duration, coverage prices and default rates.
The Marsh executives reportedly raised no concerns about the policy renewal. One person familiar with the calls told the Financial Times, “You haven’t identified any red flags even when asked. The only comment they made was that insurance costs would go up due to COVID. “
However, the broker was forced to crawl in September after Sydney-based underwriter Bond & Credit Co. (BCC), which was acquired by Tokyo Marine in 2019, officially issued a policy to support working capital loans of more than $ 4 billion. Dollar had announced. According to the Financial Times report, BCC announced Marsh and Greensill in August that Tokyo Marine had laid off an underwriter after discovering that he had exceeded his risk limits reporting to Greensill.
Greensill attorneys announced in an Australian court hearing in March that since Greensill had not renegotiated coverage with BCC owner Tokio Marine, Greensill had asked Marsh “to seek offers for alternative commercial credit insurance” to replace the expired coverage . However, the efforts were unsuccessful.