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BMA steps in over Vesttoo

The Bermuda Monetary Authority, the financial services regulator (File photograph)

The fallout continues from the scandal that has enveloped the Israeli insurtech, Vesttoo, as the Bermuda Monetary Authority and White Rock Bermuda have jointly agreed to take related matters to the courts.

The BMA said today that together with White Rock Insurance (SAC) Ltd. they agreed to a course of action in the Supreme Court of Bermuda that will focus on pursuing maximum recovery for the (re)insureds impacted by the alleged fraud involving Vesttoo related segregated accounts (Vesttoo Cells).

The statement said that both parties have agreed for the Bermuda Supreme Court to appoint Charles Thresh and Michael Morrison of Teneo (Bermuda) Limited to act as joint provisional liquidators for White Rock Bermuda with respect to the impacted Vesttoo Cells.

The statement added: “The JPLs and the board of directors and management of White Rock Bermuda will bring their resources together to address the matter.

“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.”

Meanwhile, a new AM Best commentary says the Vesttoo saga highlights the importance of managing counterparty risk.

AM Best surveyed reinsurance counterparty credit risk and the forms of collateral held by US-domiciled insurers in statutory filing statements, and although it cannot identify which bank letters of credit are related directly to Vesttoo transactions, a broad analysis shows that LOCs against business with unaffiliated reinsurers account for 22 per cent of total collateral held.

The 2021-2022 data also shows insurers have added some new banks to their roster of LOC providers, and that the growth in LOCs by some banks has been notable, and particularly at China Construction Bank Corp., which increased its LOC exposure by $1.2 billion in 2022 and has been named in published news reports.

The data also shows companies with LOC exposure to China Construction Bank Corp., totaling nearly $1.3 billion for the US insurance industry.

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Published August 18, 2023 at 1:19 pm (Updated August 20, 2023 at 3:30 pm)

BMA steps in over Vesttoo

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