A new court filing in the Vesttoo bankruptcy case has placed Bermuda squarely back at the centre of the alleged $1 billion reinsurance fraud, this time accusing Aon’s Bermuda insurance-management arm and its segregated-account company of breaching Bermuda’s own laws and regulatory codes.

The 75-page complaint, filed on Monday in Delaware bankruptcy court by the Vesttoo Liquidating Trustee, names Aon (Bermuda) Ltd, Aon Insurance Managers (Bermuda) Ltd and White Rock Insurance (SAC) Ltd as defendants.

It alleges that the firms failed to verify or monitor letters of credit backing White Rock’s segregated accounts and ignored red flags that ultimately contributed to what regulators have called one of the largest frauds in Bermuda’s reinsurance market.

For the first time, the trustee is framing the misconduct as violations of Bermuda statutes, including the Insurance Manager Code of Conduct, anti-money-laundering and anti-terrorist-financing regulations and provisions of the Segregated Accounts Companies Act.

The filing claims Aon’s Bermuda management “conducted virtually no due diligence” on Vesttoo or its collateral providers and failed to ensure the authenticity of the LOCs underpinning White Rock’s transformer structures.

The trustee argues these breaches amount to negligence and contractual default, exposing Aon’s Bermudian-based entities to potentially major liability.

The document also reveals that the Bermuda Monetary Authority contacted White Rock as early as October 2022, warning that the company had not completed an internal audit since 2017, describing this as a serious governance weakness. That regulatory concern was not previously public.

The trustee further describes difficulties engaging with the BMA after the alleged fraud came to light, saying efforts to co-ordinate investigations were hindered by parallel Bermuda winding-up and Chapter 15 proceedings involving White Rock. The filing calls for a formal co-operation protocol between the BMA and American bankruptcy authorities.

New details also implicate insiders at China Construction Bank (Hong Kong) and Standard Chartered Bank (Hong Kong), who allegedly issued or confirmed fraudulent LOCs used in the Bermudian-based transactions, widening the scope beyond the CCB litigation already under way in Bermuda.

Vesttoo’s collapse in 2023 exposed a global web of falsified LOCs used to collateralise reinsurance contracts written through White Rock’s Bermuda cells. The case prompted a sweeping review of collateral practices in the insurance-linked-securities sector.

In 2023, the BMA and White Rock initiated legal action in the Supreme Court following the revelation of the alleged fraud. White Rock later filed suit against China Construction Bank seeking $140 million in damages.

The filing did not indicate whether Aon, White Rock or the BMA have responded publicly to the new allegations.