The Frankfurt Court of Cassation ruled in favor of the American insurer AIG against the Japanese Lixil. The case involving 270 million damages after a merger gone badly risks hampering the expansion of “guarantee and indemnity” insurance.
The “stress test” ends badly for clients who have taken out insurance called “liability guarantee” against the risk of fraud during mergers and acquisitions (Warranty and Indemnity, W&I). After five years of proceedings, the Japanese group Lixil still cannot claim its insurance against damage estimated at 270 million euros for the takeover of German Grohe, one of the most important claims concerning this sector of expanding insurance. On November 26, the Frankfurt Court of Cassation once again ruled in favor of the main insurer of a consortium, the American AIG. But the case is not necessarily over.
The story begins when Lixil bought the German bathroom equipment manufacturer Grohe in 2014 for 3 billion euros. A year later, dismay: the German jewel loses its luster when accounting manipulations in a subsidiary of Grohe based in China, but listed in Frankfurt, Joyou, are revealed. The losses amount to $ 560 million. Lixil then tries to use his W&I insurance. In vain for the moment.