Vesttoo news

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.

Hybrid fronting specialist MS Transverse has stated that Vesttoo only participates directly on one program with MS Transverse and that this business is fully collateralized with cash.

The insurance and reinsurance industry faces a potential crisis of confidence over some forms of collateral, as the fall-out from the Vesttoo fraudulent, or forged, letter of credit (LOC) claims spread, which might elevate the profile of the fully-collateralised model of reinsurance adopted by the insurance-linked securities (ILS) market.

A new report from Israeli tech media group Calcalist claims that the audit at insurtech Vesttoo has turned up an issue with letters of credit (LOCs) that total a significant sum in collateral held for transactions facilitated by the company.

Vesttoo, the insurtech that has been working to connect capital markets with diverse types of re/insurance risk, has come under scrutiny after claims of fraudulent collateral emerged in an Israeli tech publication yesterday.

Vesttoo, the insurance-linked securities (ILS) focused insurtech, has an investment grade ILS deal in the market, Artemis has learned, with circa $109 million of ‘BBB’ rated Vesttoo Bermudian Bay Ltd. (Vescor Series 2023-1) notes on offer that are linked to the performance of a risk pool featuring non-cat largely casualty risks.