Australia's biggest insurer has bought itself out of what was shaping up to be one of the most expensive trials in the country's history. Late last week, Insurance Australia Group (IAG) agreed a confidential settlement with Credit Suisse over roughly A$3 billion (around £1.5 billion at current exchange rates) in claims tied to the 2021 collapse of supply chain finance firm Greensill Capital, according to the Australian Financial Review, which cited people close to the negotiations. The Federal Court in Sydney has since scrapped what was meant to be the opening day of hearings and replaced it with a short procedural mention instead.
It might read as a distant Australian courtroom matter, but the case sits at the centre of the Greensill saga that also dragged in a London insurance broker, a former UK prime minister, and a regulator that has spent four years working out who was asleep at the wheel so it's relevant here.
Read next: UK agency seeks Lex Greensill's director disqualification
Greensill Capital's business model was straightforward on paper: buy up companies' unpaid invoices at a discount, then package and sell that debt on to investors, banks and funds. Credit Suisse alone held around $10 billion of these packaged notes through its asset management arm. The whole structure depended on insurance, if the invoices went bad, credit cover was supposed to make good the loss.
That insurance came from Bond & Credit Co (BCC), a Sydney-based underwriting agency. IAG owned half of BCC until April 2019, when it sold its stake to Japan's Tokio Marine.
Credit Suisse's case argued that IAG remained liable for policies BCC allegedly wrote on its behalf, and specifically for the conduct of a former BCC underwriter, Greg Brereton, who Credit Suisse claimed had exceeded his authority when signing off cover for Greensill. IAG's defence was the reverse: that Brereton and BCC had acted without proper authorisation, so liability couldn't flow back to IAG at all.
UK insurance and credit professionals will know this shape of dispute well, even if the geography is unfamiliar – a coverage fight over who was actually underwriting what, on whose authority, and whether an agency had the power to bind the risk it claims to have placed.
Read next: Tokio Marine addresses speculation regarding Greensill exposure
It covers a business against the risk that a customer doesn't pay an invoice through insolvency, protracted default, or political risk in cross-border trade. Lenders and financiers often require it before extending credit against unpaid invoices, which is exactly the arrangement Greensill relied on to package and sell its receivables. When BCC declined to renew Greensill's cover in 2020, the whole financing structure lost its safety net and its main source of funding along with it.
The case had turned into a genuine legal spectacle. At least seven law firms were instructed across the various parties, including Gilbert + Tobin for Credit Suisse and Allens for IAG, with written submissions reportedly running past 500 pages a side and senior counsel including Noel Hutley and Tony Bannon leading teams of barristers. The wider web of related Greensill litigation in the Federal Court runs to eleven interlinked proceedings covering IAG, BCC, Tokio Marine, global broker Marsh, Credit Suisse (now absorbed into UBS) and Greensill Bank's administrators, with combined claims put at more than A$7 billion.
This latest deal follows an earlier settlement in May, when IAG resolved a roughly A$4 billion claim brought by Greensill Bank AG's insolvency administrator. In its own filing to the Australian Securities Exchange at the time, IAG said that settlement "will not have a material impact on its financial position or FY26 financial results" and confirmed that the Credit Suisse and White Oak claims put at a combined A$3 billion plus interest "remain on foot" separately. White Oak's case against IAG appears to still be live and unaffected by last week's Credit Suisse deal, going by IAG's own most recent public statement on the matter.
Analysts had been watching the numbers closely. In June, Macquarie estimated IAG's net exposure to the Greensill litigation could run as high as A$740 million in a worst case, assuming Credit Suisse recovered only 30% of its claim and IAG's professional indemnity cover held at around A$200 million. Separately, Greensill's insurance broker Marsh disclosed in April that it carried roughly $425 million of liabilities linked to the litigation, with the possibility of more to come.
Read next: Insurer IAG settles one front of the Greensill legal war, but the hardest fight lies ahead
Greensill was headquartered in London before it went bust, and its collapse triggered an uncomfortable episode in British public life. Former prime minister David Cameron worked as an adviser to the firm and lobbied government ministers on its behalf during the pandemic, which a Treasury Select Committee inquiry later found showed a serious lapse in judgement on his part.
The UK's own Insolvency Service has separately pursued the man at the centre of it all. In June, founder Lex Greensill agreed to a nine-year ban from acting as a UK company director, avoiding a trial that had been due to start days later. "A nine-year ban is a significant period, above the average for director disqualifications and reflects the serious nature of Lex Greensill's conduct," said the Insolvency Service's chief executive, Duncan Beach, in a statement at the time. A spokesperson for Greensill said the case had concluded "with no finding that Mr Greensill acted dishonestly or in bad faith."
For the London market, the more instructive thread has always been the broking and underwriting failures the saga exposed. Marsh McLennan, which placed cover for Greensill, has already settled separate litigation brought against it, while Allianz's Euler Hermes unit was drawn into related questions over fidelity cover it had written. The Greensill collapse remains a case study in what happens when trade credit insurance, invoice financing and asset management get layered on top of each other without anyone being entirely sure who is actually carrying the risk.
Read next: Credit Suisse set to face fallout from Greensill debacle
Credit Suisse no longer exists as an independent bank. It was rescued and absorbed by UBS after its 2023 near-collapse, so it's effectively UBS pursuing this claim and banking whatever the confidential settlement figure turns out to be. IAG shares closed largely flat on the news, having traded broadly sideways for most of the year before rallying over the past month, according to the Financial Review's reporting.
With the Greensill Bank and Credit Suisse claims both resolved, IAG has removed two of its largest single liabilities of the past few years. But the settlements also mean the underlying legal question – how far an insurer's liability stretches when an underwriting agency it once part-owned allegedly overstepped its authority will likely never be tested in open court.
For insurers and brokers watching from London, that's the frustrating part: a multi-billion-pound dispute over the basics of underwriting authority settled with no judgment left behind to guide the next one and, with White Oak's claim still on foot, not necessarily the last word from this case either.
