AIB brings legal proceedings against numerous insurers

AIB has brought legal proceedings against a number of insurers after they declined to cover the bank for losses arising out of $700m (€596m) fraud by rogue trader John Rusnak, writes Ann O'Loughlin.

The bank says its insurance policies, which includes claims due to crime, covered it for sums in excess of $200m.

The case is against a number of well known insurance companies and underwriters, including AIG (as lead insurer), Chubb Insurance of Europe and Lloyds Syndicates over policies taken out by AIB in 2001.

Mr Justice Brian McGovern admitted the case to the Commercial Court today.

Rusnak served five years imprisonment when he pleaded guilty to a number of counts of fraud in a Baltimore court in 2002.

Sharon Daly, a solicitor acting for AIB, said in an affidavit, the policies covered the bank, and its US subsidiary Allfirst, arising from dishonest and fraudulent acts of employees.

Rusnak was a proprietary currency/foreign exchange trader at Allfirst which suffered losses periodically and which he sought to conceal them by caused false assets to be entered into the books of record of Allfirst, Ms Daly said.

When the extent of those false assets became too large he covered up portions of them through unauthorised third party funding, she said.

AIB spent considerable time and money investigating the fraud and its costs for that alone came to $13m, excluding litigation in New York for fraudulent concealment against Rusnak's counterparties, Bank of America and Citibank, she said.

The proceedings against Bank of America were settled in 2012 and against Citibank in 2016. The insurance claim had been held in abeyance pending those proceedings, she said.

On November 30 last, the insurers' solicitors formally declined coverage.

As a result, AIB brought proceedings which require the court to decide, in circumstances where the bank suffered losses of about $700m, whether the policies were responsive to any of those losses, she said.

Related Articles

€35,000 for baby after traumatic car crash

Man held for harassment had balaclava and gloves

Garda had time to avoid hitting woman when he first saw her crossing road, expert witness tells trial

Suspended sentence for man who admitted sexual assault in Cork supermarket

More in this Section

Gardaí investigating after digger used to steal ATM from Monaghan bank

Gardaí appeal to mother of baby found on Dublin beach

17 properties worth €1m or more sold weekly in Ireland

ESB restore power to most homes after Storm Deirdre


Lindsay Woods: At a time of year when the pace is frenzied and days are full of school plays and deadlines, the chance to break from routine is a welcome one

On the red carpet: Margot Robbie, Saoirse Ronan, Diane Kruger and Cheryl

Raise a glass to Christmas festivities

The best festive desserts to try out this Christmas

More From The Irish Examiner