David Cameron ‘not aware’ of insurer’s notice to withdraw cover for Greensill Capital

Former UK Prime Minister David Cameron has said he was unaware that Greensill Capital’s insurers were not planning to renew its trade credit insurance cover, which founder Lex Greensill said sounded the death knell for the supply chain finance firm. Speaking to a committee of MPs, Mr Cameron said: “I don’t recall particular discussions on the insurance issue,” adding that he believed Greensill was in “good financial health” until December 2020, with the company entering administration three months later. He said he believed the company was in a good position with about 28 insurers, with more coming on board. “At no stage was I aware of any concern that Greensill would be in any financial difficulty,” Mr Cameron said on being questioned about whether his contact with government cabinet ministers on behalf of Greensill during the Covid-19 pandemic was appropriate. “I did not believe in March or April [2020] when I was making contact [with ministers] that there was a risk of Greensill falling over,” he said. Mr Cameron said he regularly attended Greensill’s board meetings, although he was not a director and not part of the company’s credit or risk committee, but he said he did not recall conversations about Tokio Marine’s decision to pull trade credit cover, which protected Greensill for non-payment of supply chain finance agreements. Mr Cameron said he once met with the company’s insurers in Australia, but he could not recall if he met the Tokio Marine underwriter reported to have been dismissed after breaching risk limits to Greensill Capital. Earlier this week, founder of the firm Lex Greensill told the same committee hearing that Greensill was a “good company brought down by greedy and unreasonable insurance companies”. Mr Greensill said the withdrawal of insurance capacity was to blame for the failure of Greensill. “Our principal insurance provider decided not to renew their insurance, despite being in discussions around renewing their insurance up to the hours before, ultimately, Credit Suisse determined they would no longer fund our business,” Mr Greensill said. The administrators for Greensill, Grant Thornton, said claims on the company’s insurance cover could be a “significant area of recovery” for creditors, in particular from claims on defaulted assets. But the report to creditors also revealed that broker Marsh is owed $2.9m and insurers Bond & Credit Company (BCC), Chubb, Zurich Insurance, Swiss Re and QBE are together owed $500m. Tokio Marine confirmed in March this year that its liabilities to the collapse of Greensill are limited to trade credit insurance cover provided by its Australian agent BCC. Tokio Marine said it does not expect any material impact from the collapse of Greensill in 2021, adding that BCC’s trade credit insurance would only cover Greensill for non-payment, not for money Greensill owes others. Tokio Marine/BCC said it notified Greensill and its broker Marsh in mid-2020 that it would not renew its trade credit insurance. Credit Suisse, which managed Greensill’s securitised funds, suspended the funds at the beginning of March after the trade credit cover did not renew.

David Cameron ‘not aware’ of insurer’s notice to withdraw cover for Greensill Capital

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