Porch Group subsidiary Homeowners of America Insurance Company (HOA), a managing general agent (MGA) and insurance carrier hybrid, has now filed to appear as a creditor in the Chapter 11 bankruptcy case of beleaguered insurtech Vesttoo, as HOA looks to protect its rights and any possible recoveries that can be made.
Porch’s Homeowners of America Insurance Company (HOA) now becomes the third company to file an interest to appear as a creditor in the Vesttoo bankruptcy case.
The first to do so was fronting specialist Clear Blue Insurance Group, which is seen as a company particularly exposed given the amount of business it had fronted where Vesttoo facilitated collateralized reinsurance arrangements backed up the liabilities.
The next to file to appear as a creditor was White Rock Insurance (SAC) Ltd., the Bermuda-domiciled segregated account and reinsurance transformer company of broker Aon, alongside the JPL’s in the Bermuda court action, another entity seen as having a particularly large exposure to and therefore claim against Vesttoo.
With Porch and its HOA subsidiary, as we reported the company had revealed exposure to reinsurance contracts arranged via Vesttoo, then realising a charge of $48.2 million in its second-quarter results, while pursuing $300 million of collateral from a letter of credit (LOC).
Porch stated that it believed there had been appropriate checks on the letter of credit (LOC) in question.
The $300 million in letters of credit (LOCs) appear to be look like they were from the China Construction Bank, the main bank named as being on fraudulent LOCs used in reinsurance deals facilitated by Vesttoo.
Creditors need to protect their interests in the bankruptcy case and we suspect the number appearing will steadily rise, before the first meeting of creditors on September 18th.
More cedents may emerge soon, to join the creditor list, particularly as it now appears that fraudulent letters of credit (LOC) had been seen in Vesttoo facilitated reinsurance arrangements since as far back as 2019, as we reported yesterday.
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