Euler Hermes sold his business fraud policy to Greensill Bank

Euler Hermes, once one of Greensill Capital’s largest credit insurers, could face a purely supply chain financing group with a policy that covers its German bank against business fraud.

The unit of Europe’s largest insurer, Euler Hermes, is one of the top three commercial credit insurance companies, and was a key provider for Greensill Capital until last year when it had to pay a claim due to the former FTSE 100 hospital operator’s default NMC. Health.

The fall of Greensill to the administration in March has shaken the metal empire of Sanjeev Gupta’s company, which was one of the company’s largest borrowers. Lex Greensill, the founder of the company of the same name, told lawmakers last week that he had met Gupta for the first time, whose companies are grouped into the GFG Alliance, around 2015 through a director at Euler Hermes.

Euler Hermes is no longer affected by Greensill through commercial credit insurance, Allianz Group chief financial officer Giulio Terzariol said in the results for the first quarter last week. But Terzariol said he offered so-called loyalty insurance, adding that he did not “get into the game.”

Euler Hermes policy covers Greensill Bank, according to a person who knows the subject.

Fidelity or business fraud insurance covers a company in the face of economic losses caused by “unintentional unintentional acts” by trusted third parties. It includes the company’s employees, down from the board of directors, depending on the insurer’s marketing material.

In March, the German financial regulator, BaFin, archived criminal prosecution for manipulating the alleged balance sheet against the management of Greensill Bank following a forensic audit conducted by KPMG Consulting. BaFin said the bank has “provided evidence of the receivables it has acquired from the GFG Alliance Group.”

Euler Hermes declined to comment, even on the size of the policy. Greensill Bank administrator Michael Frege, a partner in the CMS Hasche Sigle law firm, declined to comment.

The Bremen prosecutor’s office has told the Financial Times that five former Greensill Bank executives are under criminal investigation and have recently searched their homes.

Greensill told lawmakers last week that no criminal charges had been filed against Greensill Bank employees. According to the German Penal Code, potential suspects are only charged at the end of the investigation if prosecutors file an indictment in court – which often happens months after the investigation begins, if not years.

On Friday, the UK’s most serious fraud office was launched an investigation into alleged fraud at GFG, including financing agreements with Greensill Capital. The GFG has denied that it has said it will “fully cooperate” with the probe.

Greensill and former UK Prime Minister David Cameron, a consultant to the NMC paid last year by Euler Hermes, were mentioned in a speech to parliament last week. They put insurance as an example of how insurance works properly to protect investors from losses.

But insurance experts have told FT the string of customer preferences Greensill suffered last year and Euler Hermes ’losses were key moments for lenders to lose support in the commercial credit insurance market.

In April last year, when Euler had the third-largest exposure to Credit Suisse’s largest supply chain, Greensill’s loans were raised for investment, behind Insurance Australia and Japan’s Tokyo Marine, according to a document seen by FT. At the time, Euler had contracted 12 percent of its credit risk, which was essentially $ 5 billion.

According to people who know the thing, Coface and Atradius were never insured with Greensill for two other two years of high commercial insurance. Greensill’s business model eventually collapsed after failing to replace the Tokyo Marine, which in September 2020 told Greensill that it would not renew its coverage.