(Sharecast News) - Japanese insurer Tokio Marine said it would not pay out on policies bought by companies associated with collapse finance firm Greensill Capital, claiming they were "fraudulently obtained".
In a statement on Monday, Tokio Marine said it would "vigorously defend" any legal claims made against it. The move comes in response to investigations in 2020 into Greensill-related policies written at its Australian subsidiary BCC Trade Credit.
Greensill became insolvent last year after its insurance cover was cancelled, creating a scandal that swamped former UK prime minister David Cameron over his links to the firm's chief, Australian financier Lex Greensill.
Backed by SoftBank, Greensill provided supply-chain finance to firms to get their invoices paid on time. It used the insurance to guarantee that its borrowers would repay their debts, allowing Greensill to sell on the debt.
"While these investigations remain ongoing, Tokio Marine has found that since at least September 2018, matters material to the underwriting of the policies were fraudulently misrepresented to BCC by Greensill," the company said.
"There was also a fraudulent failure to disclose material matters to BCC prior to the purported inception of numerous policies, renewals and endorsements."
Tokio Marine said the "material misrepresentations and non-disclosures continued after 1 July 2019, during the period when BCC is purported to have issued policies with Tokio Marine as the insurer".
Greensill's supply chain finance firm collapsed last year, which led to the failure of $10bn in supply-chain finance funds run by Credit Suisse. The Swiss bank on Monday said litigation related to those funds could take around five years and warned that some investors would not be able to recover their money.