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Marsh McLennan, the world’s biggest insurance broker, has settled a high-profile lawsuit in which it was accused of fraudulent conduct in its work for failed financing firm Greensill Capital.
US private debt firm White Oak had been seeking $143mn in damages from Marsh through a London High Court claim, alleging that the broker made “fraudulent misrepresentations” about insurance covering invoice-backed financial products that White Oak had bought from Greensill.
Marsh has settled the claim for an undisclosed amount, the brokerage firm told the Financial Times on Wednesday.
The settlement came after a trial began earlier this month in which some of Marsh’s senior executives had to testify under oath about their dealings with the company’s now disgraced founder Lex Greensill. A judgment in the case was not expected for several months.
San Francisco-based White Oak had claimed that Marsh repeatedly assured it that crucial insurance policies it had brokered for Greensill were still in force, even after Marsh had learned that a key insurer had threatened to cancel its policy.
Greensill Capital collapsed in March 2021, in large part because of a loss of a key insurance contract, sparking a sprawling financial scandal in which investors such as Credit Suisse lost billions of dollars.
The lawsuit brought to light a series of embarrassing exchanges between executives at Marsh where they discussed the escalating financial crisis engulfing Greensill and its main insurer, Australia’s Bond & Credit Co, in the run-up to Greensill’s collapse.
In an email exchange from 2020 that was shared with the court, a Marsh executive described the situation surrounding Greensill’s insurance contracts as “a frightening absence of corporate governance: this is fraud which may well be in breach of the Australian legal code as it applies to insurance companies”.
In another exchange, a Marsh executive responded to a request from Lex Greensill to tell a key banking partner that the insurance policies remained “in force and fully effective” by saying “Lex, I can’t send those words”.
The Marsh lawsuit is just one piece of a raft of litigation relating to the collapse of Greensill working its way through courts in the UK, Australia and Germany.
White Oak and other investors in Greensill’s financial products are also pursuing lawsuits against Insurance Australia Group and Tokio Marine — the former owners of Bond & Credit Co — for refusing to pay out on insurance contracts.
Marsh has also been dragged into these Australian proceedings, with IAG alleging that the broker should share in any liability if investors in the failed lender win a legal battle to recover their losses.
The Australian insurance trial is not due to take place until August 2026, but other cases are scheduled to be heard in London’s High Court sooner.
This includes an attempt from a UK government agency to strike off Lex Greensill from being able to serve as a corporate director. Greensill is disputing the allegations against him and has sued the UK government in turn for alleged misuse of private information.
Marsh said: “We have reached a confidential settlement and are pleased that this matter has been resolved.”
White Oak also confirmed the settlement, “the terms of which are not being disclosed”.
“White Oak is continuing to pursue routes against other parties to recover additional amounts and maximise returns to investors,” it added.
https://www.ft.com/content/eb81ca78-7cb0-4713-9db0-6b6e3229ce03
