Insurtech Vesttoo has issued an updated statement regarding allegations that some of the letter of credit (LOC) collateral used to underpin its transactions was forged or fraudulent.
Vesttoo has now released an updated statement, which states: “WeisstAlso take this matter very seriously. While there are still many unknowns at this stage, the company is doing everything it can to determine how and where the fraudulent LOC came from.
“At least, Vesttoo’s procedures appear to have been circumvented.”
Vesttoo has allegedly been conducting a board-initiated audit since the problems first arose.
As we’ve previously reported, while the investigation was sparked by the cedent’s attempt to honor the letter of credit, the ongoing audit is said to have found multiple letters of credit (LOCs) involved, all issued by the same bank.
As far as we understand, this audit is still ongoing and has not yet made any findings.
Vesttoo continued in its updated statement: “The company is conducting a rigorous internal and external analysis of the events leading up to the first report of a fraudulent LOC. This process has included the participation of an experienced investigative team. The company will use the findings of this analysis to take appropriate action.
“In the meantime, Vesttoo is communicating with and actively working with affected parties on potential solutions, including investors, banks and spin-off companies. The company is committed to understanding what happened.”
The latest announcement does not bring much more information to the market, but admits to at least circumventing insurtechs’ own procedures, which underscores the focus on understanding how parties work through existing checks and balances to create bogus or fraudulent LOCs.
It appears that until the results of the audit are released, or leaked like other information related to this incident, we may not know what really went wrong, what parties may have been involved, and where the apparent deficiencies in process and controls actually occurred.
Also read:
July 25th – AM Best examines frontier collateral per Vesttoo News.
25 July – Front office Obsidian says exposure of Vesttoo is “minimal”.
July 24 – Clear Blue: Vesttoo issues have no material impact on ratings. Reinsurance may be required.
21 July – Vesttoo: Multiple LOCs of one bank come into focus. Security controls or KYC failure?
20 July – MS Transverse: Any Vesttoo LOC collateral exposure is “immaterial”.
July 20th – Vesttoo: Collateral damage.
July 19th – Vesttoo: New report claims a large number of fake LOCs. The question is how?
July 18 – Vesttoo faces fraudulent collateral claims. Confirmation of the investigation, some leaders withdrew.
