A court filing in the Vesttoo bankruptcy case has Bermuda at the centre of the alleged $1 billion reinsurance fraud, 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 in Delaware bankruptcy court by the Vesttoo Liquidating Trustee, names defendants that include 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.

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.

Also named in the action were China Construction Bank Corporation, China Construction Bank (Asia) Corporation, Ehud Ginati, Lam Chun-Yin, Cheng Wai, Alan Wang (A/K/A David Fu) and Yu Po Holdings Ltd.

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.

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.

Correction: this article has been amended to correct a series of errors. We apologise for any inconvenience caused.