Clothing retailer N Brown Group Plc has agreed to pay Allianz Insurance Plc £49.5 million to end their long-term legal dispute.
Allianz originally issued the claim – which eventually reached more than £70m – against JD Williams & Company Limited, a subsidiary of Manchester-headquartered N Brown, in January 2020.
The dispute related to significant amounts of redress paid to customers by JDW and the insurer in respect of certain historic insurance products, including payment protection insurance.
Between 1985 and 2015, JDW sold general insurance policies to its customers that were underwritten by Allianz; however, the Financial Ombudsman Service ruled that Allianz, not JDW, should be responsible for PPI complaints from customers.
After paying out £27m to customers that were mis-sold PPI, Allianz decided to sue JDW, which subsequently issued a counterclaim that Allianz was equally liable for the PPI claims it paid before 2005.
The negotiated settlement has been made without admission of liability. A provision of £25.5m in respect of the claims by the insurer was recognised in N Brown’s balance sheet as at 27th August 2022.
It said it has sufficient liquidity to meet the cash flow requirements of the settlement, including unsecured net cash of £82.9m as well as access to a revolving credit facility of £100m and overdraft of £12.5m which are both fully undrawn.
Payment is expected to be transacted before the end of January 2023.
“The settlement removes a significant element of uncertainty and distraction for JDW and allows the company to focus on creating shareholder value through its core business activities as it continues its transformation,” stated N Brown.
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