Number of insurers could face exposure to claims
Lloyd’s expects the main fall-out from Bernard Madoff’s alleged pyramid or “Ponzi” scam to come from professional indemnity (PI) claims against banks and asset managers who advised clients to entrust their money to the now disgraced Wall Street financier. Companies that could be exposed to such claims include AIG, Ace, Chubb and other Lloyd’s syndicates.
A spokesman for Lloyd’s, said: “These sorts of policies [D&O and PI] are not claimed upon until a law suit is filed that proves failure to exercise reasonable skill or care.”
The Financial Times says many Madoff investors have already filed lawsuits over due diligence failures by hedge funds investing money on their behalf. Some of the world’s biggest banks and fund managers, including HSBC, RBS, the Spanish bank Santander, Bramdean Asset Management and RMF Investment Management (part of Man Group), have admitted they are victims of the alleged fraud.
Insurers have been caught up too. Last month Axa Group said its exposure was well below €100m (£93.3m), while Aviva said its losses were “immaterial”.
Madoff was charged with fraud late last year by the Securities and Exchange Commission.