IAG has provided an update on its potential exposure following the collapse of financial firm Greensill in 2021.

Since February this year a number of legal proceedings involving 20 separate claims previously anticipated have commenced in the Federal Court and the aggregated value of these claims amounts to about $7 billion plus interest.

The claims relate to policies issued by BCC Trade Credit, an underwriting agency that IAG partially owned until April 2019, when its 50% stake was sold to Tokio Marine Management (Australasia).

IAG provided the update in its 2023 annual report and it is the first time that the insurer has given an aggregate value of the claims lodged in court against the business after Greensill became insolvent in 2021.

The insurer says the $7 billion figure does not provide a “meaningful indication of any potential exposure” of the business because of a number of factors including its recovery rights under reinsurance arrangements.

The insurer has maintained it is not liable for the claims made under policies by BCC Trade Credit.

IAG also revealed in the annual report that it is managing trade credit claims relating to policies “purportedly” issued by BCC on behalf of the insurer to other entities unrelated to Greensill.

The insurer says it “will continue to defend all of the claims and the litigation” and also cautioned it does not expect the matter to be resolved quickly.

“As with any litigation, the potential outcomes are inherently uncertain and there are risks that a court may make a finding contrary to [IAG’s] position and that any finding may become the subject of appeals,” the insurer says in the annual report.

IAG also says it is “currently not known what the outcome of the proceedings or the actual value of any potential exposure to [the business] will be if any claims are successful”.

On the Greensill claims, IAG says it is “not bound by the policies…because they were issued outside the terms of BCC’s underwriting authority”.

And even if IAG is bound by the policies, they do not provide cover for the alleged losses claimed, the insurer said.

“There is complexity around the matters that will need to be determined by the court in the current Federal Court proceedings.”

IAG says allegations have been raised against various parties involved in the proceedings, including allegations against BCC and one of its former trade credit underwriters regarding misleading or deceptive conduct and breaches of warranties of authority.

Allegations were also made against Greensill parties alleging fraudulent non-disclosure and misrepresentations and misleading or deceptive representations.

“Given the complexity and number of parties involved in the litigation, IAG expects that the litigation proceedings will take a number of years,” the insurer said.

IAG says through the protections it has put in place the business has no net insurance exposure to trade credit policies sold through BCC.