Last summer, Marsh McLennan, the world’s largest insurance broker, took a shot in front of the bow of The Bond and Credit Co, a little-known underwriting firm in Australia.
Marsh’s job was to find insurers to spend on the supply chain deal of London-based company Greensil Capital, which exploded spectacularly after a portion of its cover expired last month.
In July 2020 the broker had just received the bad news. According to an email filed in an Australian court last month, the BCC warned that it would reduce its authority. Greg Bracketton on, The executive responsible for writing the original insurance policy for Greensil.
The New York-based Marsh was clear in his response: this was the first time he had heard of a change in Bracketton’s chances, and he would prove to the BCC the cover already agreed for Greensyl.
“We welcome your commitment to support Grishel Capital as your largest customer as well as your largest broker,” said Toby Guy, director of Julian Massey-Dare, managing director of Marsh. BCC, which was acquired by Japanese insurance group Tokyo Marine in April 2019.
The email gives an insight into the latest attempt by Greensil to maintain its cover in an Australian court, part of a newspaper Relationships Which saw the BCC supply chain finance group provide billions of dollars in insurance.
With 130,000 employees across 130 countries and an annual income of ১ 1 billion, Marsh is a rare moment in the spotlight of a professional service group. In addition to insurance broker Marsh, the group includes reinsurance broker Guy Carpenter, retirement specialist Mercer and management consultant Oliver Wyman.
The BCC’s decision last September not to renew part of its ding 10 billion policy to provide Grisil’s nding – after Bracketton left its “delegated authority” – sparked a futile rush by Marsh to find replacement insurers on adequate terms.
Marsh wasn’t just an insurance broker for Greensil. In 2017, Greensil signed an agreement with Biman Finance Insurance Consortium – a. Collaboration Between Marsh and Boeing – which involved financing the purchase of six aircraft for the Norwegian Air Shuttle.
Greensil praised the invention of the system in glossy marketing materials: AFIC was “added to risk reduction insurance” for acceptors, which were then sold as bonds on the capital market.
A separate AFIC document shows Grameenil and Credit Suisse among a panel of financiers or managers of aircraft financing deals.
Greensyl’s business model focuses on making quick payments to a company’s suppliers, without short discounts, and then paying in full from its clients. It took out trade credit insurance against the risk of not being paid by its tors defaulters.
The group’s relationship with the BCC has come under increasing tension as questions surrounding Breton have come to light.
In a July email to the BCC, Marsh’s Massey-Dyer wrote, “You made it clear this morning that your firm has identified a number of internal process violations by Mr Breton, including policies that may not be properly reflected in your system.” -Dair wrote to the BCC via July email.
Massey-Dyer noted that these violations were “internal matters” for the BCC, adding: “Marsh will co-operate with you to provide evidence of a contractual or proposed venue for Grisil, proving your exposures.”
He met face-to-face between Greensil and BCC officials in March 2016, “to discuss explicitly the portfolio and the appropriate underwriting authority.”
By August 2020, alliances were growing. The BCC informed Marsh and Greensil that Breton had been fired for exceeding its risk limits, and that Greensil had begun an investigation into the insurance policy. It’s made in a jiffy Document request Related to the contract.
In September, Guy gave Greensyl an official notice that the BCC would not renew large insurance contracts ending March 1. He added that “it will only lead to the conclusion of the investigation” that the BCC and the Tokyo Marines would be able to determine its position on all documents signed by Bracketton.
Tokyo Marines since then Questionable The validity of the policy has been first reported in the FT.
Marsh, Tokyo Marine, Greensil, Massey-Dare and Guy declined to comment. Bracketton did not respond to multiple requests for comment.
The BCC was so important to Greensil’s insurance system that David Cameron, the former Prime Minister of the United Kingdom and Greensile’s adviser Inspection Its Sydney office a few years ago.
In comparison, Greensville Marsh’s trade credit is responsible for a small fraction of insurance revenues, according to one person familiar with the matter.
Insurance industry officials say Marsh’s July email uses his muscles to hold an insurer to account for a broker’s promised coverage. Sometimes even larger groups “.
As a result, Marsh also faced questions about his contacts with Credit Suisse regarding insurance cover, which packages Greensil Security and sells it to its clients.
An internal investigation at the bank – shaking up clients’ money after depositing b 10 billion in Greensil-linked funds – is focusing on what Marsh told him about the insurance system, the Financial Times reported last month.
Marsh was instrumental in securing the cover of insurance notes accumulated by Grancil for Credit Suisse. And there were two calls between Credit Suisse and Marsh executives late last year that, according to people familiar with the matter, the bank took out a new loan from Greensil as part of this cost. According to a person with knowledge about the call, no “red flag” related to insurance was raised by Mars.
Marsh stressed in a public statement last month that his job was to be a broker, “not an insurer, banker or credit analyst.” The company “wanted coverage from insurers, made their own decisions about what risks they might take,” the company added.
Industry experts say the Greensil scandal has played a key role played by brokers in finding cover for even the most risky financial risks and the relationship they may have with structured investment product providers such as Credit Suisse.
A Default series Marsh’s difficulty was further compounded by Greensil clients’ replacement of BCC coverage last year, industry officials said. One of these defaulters in the former FTSE 100 Group NMC Health lost the support of insurance company Eura Hermes after the failure of Greensil renewal talks, The Wall Street Journal.
According to people familiar with the matter, two of the other three major trade credit insurance providers, Coffees and Atradias Greensil, never provided coverage. According to the International Credit and Insurance Association, Eurar, Coffees and Atradias make up about three-quarters of this market segment.
At the English Court Filing Show, a separate insurance policy signed with the US insurer Chab in November 2020 was never used, as it does not provide 100 percent cover, the English Court Filing Show
Risk experts say another lesson from this episode is that even the largest brokers have a limit to their capabilities. The tough insurance market facing Greensil was a reflection of the donor’s declining attractiveness rather than a deficit in part of Marsh, said John Ludlow, the outgoing chief executive of Airmick, a trade firm representing business risk managers and insurance buyers.
“If you’re at risk of incompetence, it’s a tough deal, isn’t it?”