Re/insurance broker Aon’s White Rock Insurance (SAC) Ltd. is demanding that insurtech Vesttoo return $136.7 million in collateral that the segregated accounts and transformer structure distributed to the company.
Last week, it was revealed that Aon, via its White Rock vehicle, has secured a temporary restraining order to freeze Vesttoo’s funds amid allegations of fraudulent or forged letters of credit (LOCs) backing collateralised reinsurance transactions.
According to court documents seen by Reinsurance News, White Rock is calling for the return of $136.7 million in collateral as the validity of LOCs delivered by the insurtech is being investigated.
A letter from White Rock’s lawyers provides notice of “Vesttoo’s breach” of Participating Shareholder’s Agreements (PSAs).
The document explains that, “Vesttoo presented White Rock with Letters of Credit that purported to enable the PSAs’ Segregated Accounts to meet any and all liabilities and any and all collateral requirements. In reliance on these Letters of Credit and Vesttoo’s representations, White Rock made distributions from the Segregated Accounts to Vesttoo under clause 3 of the PSAs, totaling approximately $136.7 million.
“However, White Rock now understands that the banks identified in the Letters of Credit provided by Vesttoo have taken the position that the Letters of Credit are fraudulent. Indeed, Vesttoo has stated publicly that its procedures were circumvented, leading to the apparent fraud.”
The letter continues to stress that Vesttoo is in breach of its obligations under the PSAs, including its obligation to provide Acceptable Security.
“White Rock demands that Vesttoo immediately return all distributions made from the Segregated Accounts and comply with its obligations under the PSAs,” says the letter.
