As the auto‑parts conglomerate’s collapse exposes a multibillion‑dollar receivables hole, insurers that wrote credit policies—led by Allianz, AIG, and Coface—brace for a wave of potential claims rippling through supply chains and capital markets.

It has been a long time since a single corporate failure rattled so many corners of the financial system at once. In September 2025, First Brands Group—the owner of household auto‑parts names from FRAM filters and TRICO wipers to Raybestos brakes—filed for bankruptcy, stunning lenders and trade partners alike. What began as another leveraged roll‑up running short of cash escalated into something far messier: forensic accountants say they cannot reconcile billions of dollars of receivables that were pledged, repackaged, and refinanced across a web of financiers. For insurers that underwrite trade‑credit risks, the case is rapidly becoming a defining loss event.

The immediate concern is straightforward. For years, First Brands used the sale and financing of its invoices to fund day‑to‑day operations, a practice that sits at the core of global trade finance. Insurers provide the safety net that allows that machinery to run smoothly: they guarantee payment on receivables if a buyer defaults or a seller’s paperwork fails to clear. According to people familiar with the programs and market participants, at least three large carriers—Allianz (through its trade‑credit arm, Allianz Trade), AIG, and Coface—have written policies that touch portions of First Brands‑related receivables or financing structures. Should the bankruptcy court confirm that significant receivables are impaired or missing, those policies could be triggered at scale, sending claims coursing through primary insurers and their reinsurers.

The numbers swirling around the case are stark. Court filings and creditor motions reference more than $11 billion in total liabilities, with investigative filings alleging that roughly $2 billion—or more—of receivables and related collateral cannot be readily accounted for. Several lending groups provided term debt and asset‑based facilities; others financed or purchased trade invoices. Each strand now points back to the same core uncertainty: what is the true amount of collectable receivables, who owns which cash flows, and which insurance policy—if any—was meant to sit behind each tranche?

Why insurers matter so much here

Trade‑credit insurance is an unglamorous product with outsized systemic importance. It lets suppliers offer customers longer payment terms without strangling their own cash flow. It also lubricates the securitization of receivables, since banks and private credit funds will lend more cheaply—often at all—if an investment‑grade insurer promises to pick up the tab when buyers don’t. In normal times, claim frequencies are low and margins are steady. But when a large corporate suddenly fails and the chain of invoices is clouded by disputed assignments, the loss triangle can broaden quickly. That’s the specter now facing Allianz, AIG, and Coface: a stew of counterparty disputes, overlapping assignments, and allegations that some receivables were double‑pledged.

Market participants describe two distinct channels of potential losses. The first involves policies directly covering receivables owed to First Brands by retailers and distributors—big‑box auto‑parts chains, warehouse distributors, and export buyers. If those receivables were valid but now trapped in bankruptcy or were misapplied, insured creditors may file claims for non‑payment. The second channel relates to credit‑enhanced financing facilities—such as supply‑chain finance or receivables securitizations—that used insurance as a loss‑mitigation layer for investors. In those structures, a policy may be written to a special‑purpose vehicle or a funding conduit; the insured is a bank or fund, not First Brands itself. Sorting out which policies sit where will be the work of months.

A map of the claimants

Allianz Trade, the global leader in trade‑credit insurance by premium volume, has long dominated coverage for cross‑border and domestic receivables programs. People familiar with the matter say Allianz policies supported certain First Brands‑related exposures held by trade finance funds and bank conduits. AIG, a major player in structured trade credit for capital markets investors, is also understood to be on risk for portions of the financing stack. Coface, a Paris‑based carrier with deep North American distribution, has been linked by market sources to coverage on select customer receivables. None of the carriers has publicly disclosed precise limits or probable maximum losses, and all three have declined to comment on specific insureds during the early stages of the case.

Beyond the headline names, insurers’ retrocession partners could also feel the pinch. Large trade‑credit panels routinely cede slices of risk to reinsurers to manage peak exposures. Any concentrated loss on First Brands programs will therefore diffuse—first through quota‑share and excess‑of‑loss treaties, then into the broader reinsurance market. Several brokers say facultative placements written during the credit boom of 2021–2023 may come under scrutiny if policy language proves ambiguous on the treatment of disputed assignments or fraud.

A timeline that confounded Wall Street

By late summer 2025, First Brands’ house of cards began to wobble. Lenders probing discrepancies in borrowing‑base certificates pressed for more information about the receivables being used as collateral. Amid mounting questions and executive departures, the company filed for court protection in September. Early filings referenced a multibillion‑dollar hole and the appointment of a chief restructuring officer, even as the company sought fresh debtor‑in‑possession financing to keep plants running. On October 30, the court is scheduled to hold the initial meeting of creditors, a milestone that will set the pace for discovery and determine how quickly insurers will see formal notices of loss cascade through their inboxes.

What, exactly, will be covered?

Not every loss tied to First Brands will be insurable. Trade‑credit policies are precise instruments. They respond to defined “insured events,” such as buyer insolvency or protracted default, and only for receivables that meet detailed eligibility criteria—valid invoices, clean underlying sales, and proper assignment chains. If a receivable never existed, was already assigned elsewhere, or was tainted by fraud prior to shipment, insurers may argue there was no covered loss. Conversely, where a bona fide shipment was made to a solvent buyer who then paid into the wrong lockbox or was directed to offset the balance, the policy may respond once the waiting period elapses. Expect months of forensic file‑building and eligibility testing before reserves become public.

Policy wordings written to finance structures introduce further complexity. Some facilities use “non‑cancellable limits,” in which the insurer cannot withdraw cover during the policy period except under narrow circumstances. Others rely on aggregate stop‑loss or excess layers that only kick in after portfolio losses breach a threshold. Insurers will now be combing through wording around assignment warranties, notice requirements, and exclusions for fraud or misrepresentation. The question of whether any party “knew or ought to have known” about defects in the receivables will loom large—particularly if investigators substantiate claims of double‑pledging.

Why this is bigger than one bankruptcy

The First Brands saga lands at a fragile moment for private credit and trade finance. Over the past five years, non‑bank lenders have poured capital into receivables‑backed funding lines, often on the strength of insurance wraps that made the paper palatable to institutional investors. If the market concludes that insurance cannot easily be relied upon when documentation is murky, funding costs for similar structures will rise across the board. Some insurers have already tightened underwriting, reduced limits to certain sectors, and raised prices for supply‑chain finance programs with complex servicer arrangements. For mid‑market manufacturers that depend on those channels for working capital, the spillovers could be painful.

What to watch next

• Examiner and discovery outcomes. Creditors have petitioned for an independent examiner to trace the receivables flows. If the examiner confirms that large pools were double‑pledged or never existed, many trade‑credit claims may morph into fraud investigations and coverage disputes.

• Carrier reserving and disclosures. As claims are formally lodged, Allianz, AIG, and Coface will be pressed to disclose case reserves and probable maximum losses. Watch fourth‑quarter updates and reinsurance renewals for clues.

• Court treatment of proceeds. A central fight will be who controls cash collected on receivables post‑petition—the estate, secured lenders, or SPVs. The answer determines who presents claims and when.

• Secondary‑market marks. Investors holding insured notes backed by First Brands receivables will mark down positions pending clarity. Spreads on similar insured deals may widen—especially for issuers with complex multi‑factor financing.

• Regulatory interest. Trade‑finance transparency is again in the spotlight. Expect calls for clearer disclosures of off‑balance‑sheet financing and tighter audit trails on receivables assignments.

The bottom line

For years, trade‑credit insurance operated as quiet plumbing behind global commerce. First Brands’ messy collapse threatens to clog that system at a chokepoint: the murky intersection of securitized receivables and lightly policed documentation. For now, insurers are stock‑taking. If the missing cash turns out to be a paperwork snarl, losses may be manageable. If it is something worse, the bill could reshape how credit insurance is written—and what price capital demands—to keep the wheels of commerce turning.