Credit Suisse Finances the Dreams of Greensill’s Team—Changing How We Think About Insurance Companies

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Five months before its ultimate downfall, a Swiss bank issued the company a staggering $140 million loan.

Shortly after Greensill Capital’s primary insurance provider resisted renewing its policy, Credit Suisse stepped in and provided the necessary funding for them to form their own internal insurance company.

The loan documents reveal that a portion of the funds was designated to creating a “captive insurance firm”. This money was meant to help Greensill establish an insurer who would provide coverage for the hazardous loans they put out, according to individuals knowledgeable about this situation.

Greensill’s products, bolstered by insurance for added security, attracted numerous investors – including many Credit Suisse clients who invested $10 billion into its supply-chain finance funds that the bank marketed as a safe and secure alternative to cash.

The lending negotiations were dubbed “mind-boggling” by one participant since it seemed inconceivable that Credit Suisse would permit Greensill to construct an insurance company, given the concerns that had been mounting.

Just before Credit Suisse completed their loan on September 1st, 2020, Australian insurance company Bond and Credit Company announced that their policy, which was set to expire in six months, would not be renewed — a devastating blow for Greensill.

Earlier this year, the Bond and Credit Company’s parent company Tokio Marine accused Greensill Capital of deceitfully obtaining their insurance policies.

At an appearance before British lawmakers inquiring into the firm’s collapse last year, Lex Greensill, founder of the company, flatly denied fraud allegations. Also, he expressed his displeasure towards Tokio Marine with these words: “It is deeply tragic that we were betrayed by our major insurer whose behaviour caused Greensill to fall apart.”

Despite these setbacks, Greensill’s founders remained resolute in building a better financial system for the 21st century. Greensill declares on its website: “We believe we can create lasting change—we are committed to transforming our industry and making it work better for everyone.” 

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