A prominent gay entrepreneur claims that his multi-million pound financial services business was wrecked when he was tricked into entering a partnership with a “homophobic” life insurance company.

Ivan Massow made his fortune selling insurance and mortgages to gay men at the height of the Aids scare when most financial institutions demanded huge premiums and HIV tests or refused to insure homosexuals. At one time he was worth £30 million.

A court was told yesterday that Mr Massow’s business collapsed in 2003, shortly after he entered into a partnership with Zurich, one of the world’s largest financial institutions. The partnership had given Zurich, which Mr Massow, 39, had previously accused in a poster campaign of discriminating against gay men, a slice of a large and potentially lucrative market.

As part of the deal Zurich promised to stop discriminating against homosexuals and offer them the same terms as heterosexual clients. It made a “transitional payment” of £330,000 to Mr Massow’s company in the form of a loan to cover the cost of relocating its office and staff training. But within 13 months Ivan Massow Consultants (IMC) had been wound up and Zurich was demanding its money back.

Mr Massow claims his business collapsed because Zurich reneged on promises it had made to end its policy of discrimination. As a result he was unable to offer a competitive product and his former clients deserted to competitors.

He claims that because Zurich misrepresented the terms of the franchise agreement he should not have to repay the loan, which has now risen to £348,000 including interest. He initially began a counter claim for £13 million which he has now dropped.

A High Court judge sitting in Bristol refused yesterday to give summary judgment in Zurich’s favour. He said Zurich had confirmed to Mr Massow at a meeting after the partnership had begun that it would continue to load premiums for all gay men under 30 and any single gay men over 30.

He said that there were two alternate theories why Zurich was anxious to go into business with IMC. He said: “The first is perhaps Zurich appreciated there was substantial business to be made by selling to the gay community. Its status would be enhanced by doing so.

“The second is that Zurich disliked IMC’s campaign by saying Zurich discriminated against homosexuals. It had been Zurich’s policy not to accept insurance applications from anyone who said they were openly gay. Zurich could then either control IMC or shut it down. I make no judgment on either of those suppositions.”

He granted Mr Massow 28 days to prove that he could raise sufficient money to repay Zurich’s loan and legal costs in the event he were to lose the case at a full hearing.

Hélène Barnes, Zurich’s official spokeswoman, said the company “rejected entirely” Mr Massow’s allegations.

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