Insurtech, Insurance Technology in reinsurance and insurance-linked securities (ILS)

Fronting specialist Clear Blue Insurance Insurance Group has already managed to replace over half of the coverage needed for reinsurance programs affected by the collateral issues linked to insurtech Vesttoo, the company said in an update.

Speaking today, Everest COO and Head of Reinsurance Jim Williamson said the company has the flexibility to lean in to any underwriting opportunities that emerge as a result of the fall-out from collateral issues linked to Vesttoo, although it would see them as secondary in terms of priority to its core focus.

Rating agency DBRS Morningstar says that the credit implications of the Vesttoo linked collateral issues should remain manageable for most insurance and reinsurance firms, but that “a number of fronting specialist insurers could have more significant exposure.”

Speaking this morning during his firm’s earnings call, Adrian Cox, the CEO of London headquartered specialty insurance and reinsurance firm Beazley, gave a “hypothetical” answer to a question about potential exposure to the Vesttoo linked collateral issue.

Fronting specialist Clear Blue Insurance Insurance Group has had its A- financial strength rating placed under review with negative implications by AM Best as the fall-out from the Vesttoo collateral issues continues.

Insurtech Vesttoo has issued an updated statement related to the allegations that some of the letter of credit (LOC) collateral used to underpin its transactions was forged or fraudulent.

Rating agency AM Best has said that it will review the collateral arrangements of all fronting companies that it provides ratings for, in light of the claims that collateral involved in transactions facilitated by Vesttoo could be fraudulent.

Obsidian Insurance Holdings, Inc., a hybrid program insurance and fronting carrier holding company, has told us that any impact from the fall-out of collateral related issues at insurtech Vesttoo could only have “de minimus” impact to its business.

Program fronting specialist Clear Blue Insurance Group has stated that while it does not expect a material impact to its ratings from the ramification of issues at Vesttoo, the company may seek out more reinsurance to protect its surplus and capital.

According to Artemis’ sources, the audit at under fire insurtech Vesttoo continues, but the effort to uncover what exactly has happened, in relation to claims of forged or fraudulent letters of credit (LOCs), is said to have found that multiple LOCs are involved and all were issued by the same bank.