Vesttoo

Clear Blue originally filed the suit in late 2023, alleging reckless conduct and misrepresentation.

The documents figure in a potential criminal case against a CCB employee.

The man is alleged to have conspired with others to falsify LOCs and collateral letters.

White Rock claims CCB was responsible for the “lion’s share” of fraudulent letters of credit.

Bermuda liquidators had earlier objected to out-of-court agreements between parties.

The approval takes account of several out-of-court settlements.

Procedural expenses in the case have been as high as $100,000 per day.

All parties interested in the case have agreed to participate in the process.

The conflict between US and Bermuda legal systems offers no easy route for counterparties to fraud-impacted transactions.

Growth driven by 14% expansion in reinsurance solutions division.

The committee claims Chaucer waited until it had ‘maximum leverage’ over other debtors.

The debtors are challenging the US courts for not addressing cross-border issues.

The investment comes in exchange for a $49mn surplus note from HOA and the acquisition of HOA’s rights to potential claims stemming from the Vesttoo fraud.

The motion was filed by Chaucer Insurance Company and Chaucer Syndicates, as managing agent of Lloyd’s Syndicate 1084.

The “convenience claims” route to payout will be limited to claims up to $200,000.

The year brought a degree of closure on the loss-hit years of 2017-2021, while the outlook remains changeable for ILS managers.

The lawsuit, filed Thursday on behalf of Clear Blue and its subsidiaries, alleges that Aon conducted insufficient due diligence on the ILS InsurTech.

The Trustee had sought to accelerate the liquidation process while avoiding significant admin costs.

Under the agreement, reached late on Monday, Vesttoo would sell its assets in a transaction that would close by December 1, 2023.

A credit loss owing to a fraudulent letter of credit from Vestto added 1 point to the combined ratio in Q3, insurance president Jeremy Noble told analysts during a conference call.

In a motion filed Friday, the trustee requested to convert Vesttoo’s Chapter 11 case to Chapter 7 so that “an independent fiduciary can wind down the debtor’s affairs and avoid significant administrative costs”.

Doing so would save “at least $8.5mn in cash” based on the firm’s monthly operational expenditures, according to a recent motion.

Creditors already have authorisation to access Vesttoo’s data as part of their investigation.

The motion seeks discovery of information and documents about the structure and operation of White Rock’s cells.

The company has also been appointed to the statutory committee of unsecured creditors in Vesttoo’s bankruptcy case.

The InsurTech claims five former staff, including the CEO and CFO, forged signatures and impersonated bank staff.

A Delaware judge has ruled in favour of Vesttoo’s automatic stay in the bankruptcy case.

The Official Committee of Unsecured Creditors is turning the spotlight on Vesttoo’s current board and management.

The company also said that it has secured the replacement of all reinsurance on its ongoing portfolio of business through third-party reinsurers and an affiliated reinsurer.

Since 2020, Vesttoo has quoted 96 and closed 65 transactions with collateral totaling roughly $3.9bn, according to a court filing.

Through legal representatives, Bertele “strongly” rejected all allegations made against him by Vesttoo in a Thursday statement.

Court filings indicate use of “phony phone numbers” and creation of a “wholly fictitious person” in the letters of credit fraud that has engulfed Vesttoo.

A committee of unsecured debtors was appointed, including Markel, Clear Blue, Porch’s HOA, United Automobile Insurance and Proventus.

Markel Bermuda entered into two collateralized reinsurance transactions with White Rock for the benefit of a segregated account owned by a Vesttoo affiliate.

The Aon transformer is seeking information on the origins of alleged fraudulent letters of credit.

The Aon unit noted 37 LOCs “purportedly procured by China Construction Bank (CCB), Banco Santander and Standard Chartered Bank US”.

If the assets of the cell form part of the Vesttoo estate, this may impact the priority of returning associated capital to cedants.

The Court has granted the stay based on a revised order agreed between Vesttoo and White Rock.

Vesttoo has filed documents at the Bankruptcy Court for the District of Delaware that seek an automatic stay against White Rock and its putative liquidators.

The company's Ebitda for 2022 was estimated at $60mn compared to $20mn in 2021.

Both organizations have agreed for the appointment of a liquidator for Vesttoo transaction structures at the Supreme Court of Bermuda.

The top five fronting companies by dollar exposure to CCB are: Clear Blue, Homeowners of America, Clear Blue Specialty, Trisura Specialty and Highlander Specialty.

The embattled ILS InsurTech said its investigation into fraudulent letters of credit used as collateral in the company’s transactions was in “advanced stages”.

The firm’s interim CEO Ami Barlev has argued that, with Vesttoo’s weekly expenses being $360,000, freezing assets above $1m would be “catastrophic for the company”.

The process is being initiated to facilitate restructuring and “provide breathing room” to pursue legal actions against all parties responsible for damages caused to the company, Vesttoo said.

The ILS transformer platform claims Vesttoo is in breach of shareholder agreements.

The incoming CEO said initial recommendations from investigators had been adopted in full.

White Rock’s petition to the New York Southern District Court stated that, "on information and belief, Vesttoo intends to remove all or substantially all funds from its US bank accounts”.

New CEO Ami Barlev – who has a background in tech, AI, comms and real estate – said he took the role at an “extremely difficult moment” for the InsurTech.

As part of a restructuring, Vesttoo is liquidating its collateralized insurer in Bermuda, but continues to operate its branches in New York, London and other territories.

The firm has written to brokers and counterparties urging them to continue working with it to deliver solutions.

The company said it had completed ‘Know Your Customer’ checks on all parties, as the alleged fraudulent LOC crisis continues.

The company has already seen submissions from MGAs that are potentially looking for a new fronting partner.

The scandal over letters of credit at Vesttoo has put a spotlight on the casualty ILS segment, where Ledger Investing is growing market share.

Issues with faked letters of credit are not limited to one banking provider, sources said.

The embattled ILS platform took the decision in an attempt to reassure its trading partners.

The broker said it believes it has meritorious defenses and intends to vigorously fight the claims and seek recourse against third parties where appropriate.

The scale of the coverage offered by the firm means buyers in the emerging line of business face a challenge to swap out their capacity.

This came after the firm said it had begun the process of moving its US E&S business off its Lloyd’s paper as it sets up a new E&S carrier.

The ratings agency is currently in discussions with Clear Blue’s management regarding the company’s ability to replace certain programs or letters of credit.

The firm said it will use the results of an analysis being conducted by experienced investigators to "take appropriate measures”.

The agency said it will take rating actions where warranted.

The obvious question is where is the capital behind the letters of credit that were being pledged on its transactions.

The company’s targeted Vescor cat bond would have provided collateral to meet auto and other obligations, but there were multiple structural points of risk for investors.

The fronting company said impairment to Vesttoo’s LoC collateral will be "immaterial".

Fronting companies typically hold premiums in reserve meaning that credit exposure to letters of credit on Vesttoo transactions should only be required in the event of deteriorating losses.

The firm said it had identified two specific transactions in which “collateral inconsistencies” were in question.

The firm’s statement followed allegations in Israeli tech media of missing collateral linked to deals it was concerned in.

The bulk of risks linked to a new investment grade cat bond it is working on relate to US private motor risks, with a fifth from commercial motor.

Howden Tiger worked on the structure of the deal with the unnamed syndicate.

The non-catastrophe ILS platform hit a valuation of $1bn after a Series C funding round.

The marketing executive previously worked at iCapital and Fitch.

The executive will build out Vesttoo’s capital markets team in the region.

The former analyst at Aeolus joins the growing number of ILS experts to join the firm.

The company will use the funds to expand its global presence, enhance its marketplace platform and widen its offering.

Julia Henderson served for nine months on Vesttoo’s board before taking up her new role.

The firm has been hiring staff at fast pace, including many from reinsurance backgrounds.

Vesttoo's aim for the partnership is to bridge the gap between the insurance and capital markets, scaling insurance-linked investments as a source for reinsurance capacity.

As ILS players such as Vesttoo seek to grow beyond cat risk, Trading Risk looks at some of the questions surrounding how casualty ILS deals will operate and the amount of risk transfer undertaken to date.

Kalachian moves from Allianz where he was a managing director.

They will join the team led by Stefano Sola to bolster Vesttoo’s alternative investment products.

Dan Dijak is to oversee business development and retention in North America.

He will lead capital raising for its insurance linked programme.

The incoming CFO brings with him more than 15 years of experience in financial services, insurance and capital markets.

The AI-driven platform has been building out its team this year.

Acrisure Re brokered the deal.

The company is focusing on non-catastrophe offerings, such as P&C.

Brian Kirwan, Douglas Min and Omar Ali have been appointed as general managers of Europe, Korea and the UAE, respectively.

The Cayman Islands reinsurer will source underwriting risk for a new feeder fund investing in non-cat securities.

The firm said he would oversee transactions and assist in growing AuM.

Daniel Butzbaugh will work at the company’s New York office and lead its cat and industry loss warranty transactions.

The business acts as a transformer, allowing traditional asset managers the chance to participate on collateralised (re)insurance transactions.

Robert Schumaker will lead the firm’s programme to bring in investors for securitised insurance risk.

CEO Bertele said poor macroeconomic conditions caused by the pandemic could be an opportunity for investors to become more involved in non-cat risk.

The start-up aims to place $1bn in capacity this year.