BMA and Aon business take Bermuda Vesttoo action

The Bermuda Monetary Authority (BMA) has joined Aon business White Rock Insurance (White Rock) to take action over alleged fraud involving insurtech Vesttoo.

The BMA and White Rock have jointly agreed to a course of action in the Supreme Court of Bermuda. The move is intended to pursue “maximum recovery” for insureds affected by alleged fraud involving Vesttoo and fake letters of credit (LOC), the BMA said in a news release on Friday.

The pair have agreed for the Supreme Court of Bermuda to appoint Charles Thresh and Michael Morrison of Teneo (Bermuda) to act as joint provisional liquidators for impacted White Rock Vesttoo cells, the BMA said.

“This action applies only to the impacted Vesttoo Cells. White Rock Bermuda continues to operate in the ordinary course of business, and this action has no effect on any other cells or White Rock Bermuda clients,” the BMA said in the news release.

Vesttoo scandal – what led to BMA and Aon taking action

The Vesttoo scandal, which relates to the emergence of allegedly fraudulent LOCs provided for reinsurance transactions through the insurtech’s platform, has led to some fronting insurance companies being placed under ratings reviews, and at risk of potential downgrades and credit profile weakening.

The source of the fraud is external to Vesttoo, Israeli insurtech Vesttoo has said.

Earlier this week, the insurtech commenced Chapter 11 proceedings as it faced court action in Israel and the US.

“Not only will they result in a strong, more sustainable capital structure, but they will provide us with the platform to aggressively pursue all parties that harmed our business.”