2023 collapse of an Israeli collateralized-reinsurance platform after the discovery of forged letters of credit backing over a billion dollars of obligations.
Vesttoo was an Israeli technology platform that built, between 2018 and 2023, a collateralized-reinsurance model backed by letters of credit issued by Chinese banks to guarantee obligations owed to ceding insurers and fronting carriers such as Clear Blue Insurance and Trisura. In July 2023, an internal investigation revealed that several of these letters of credit, cumulatively estimated at over a billion dollars, were forged: the banks supposedly issuing them had no record of them. The company suspended operations, hired outside counsel to investigate, and filed for US bankruptcy in January 2024. The episode exposed the fragility of a link in the alternative reinsurance market that few participants audited in depth, verification of collateral resting largely on trust in the issuer rather than systematic counter-checking, and it forced exposed fronting insurers to reclassify their receivables and scramble for replacement collateral.
In July 2023, Vesttoo suspends operations after discovering that letters of credit backing over a billion dollars of collateralized reinsurance, purportedly issued by Chinese banks, were forged; the company files for US bankruptcy in January 2024.
Vesttoo, fraude Vesttoo, lettres de crédit frauduleuses