Specialty non-catastrophe focused collateralized P&C reinsurer, Corinthian Group, has agreed to terms on a letter of intent (LOI) with a large investor for funds of up to $200 million to replace letter of credit (LOC) collateral linked to insurtech Vesttoo.
The terms of the LOI have been agreed by all parties and awaits final signatures, which Corinthian expects by this weekend or Monday at the latest, with the replacement collateral expected to be available by the end of this month or by the latest the middle of September.
Corinthian has stated to its partners that the investor has already reviewed extensive information regarding its portfolio of companies and their respective programs.
“As a result, the LOI represents a considerable vote of confidence in Corinthian and its operations that should hopefully provide some short and long term comfort to our partners, especially considering the timeframe in which the LOI was achieved,” said the company.
Corinthian expects that once the terms of this LOI agreement are fully agreed and signed, the capacity afforded will provide the “necessary foundation for other capacity infusion”, which will ultimately provide the firm and its partners with the means to emerge from the Vesttoo forged LOC crisis, which Corinthian describes as an “unprecedented and unfortunate situation”, with the least harm possible.
“To that end, Corinthian has been successful in expanding capacity from its historical and new investors and is in advanced stages of evaluating other potential solutions,” stated the company.
This latest update from Corinthian comes after the firm warned that it could take months to resolve the investigation into alleged forged LOCs issued by China Construction Bank (CCB) sourced by Vesttoo.
Corinthian has underlined the difficulty in rectifying an alleged fraud of this magnitude and sophistication, but is clearly working to give confidence to its cedents and partners that it’s able to navigate this issue by securing terms on a letter of intent to replace the collateral, all while the investigation continues.
“Corinthian is confident that the organization and its partners are going to emerge from this situation as soon as possible and in as favorable a position as possible under the circumstances,” said the company.
The firm said last week that as part of its investigation into the matter its representatives had contacted law enforcement to ensure they are also looking into the alleged fraud, and its recent letter to partners confirms that it has been in “constant communication with the FBI Financial Crimes team who is conducting their own investigation” in the fraud claims.
At the same time, Corinthian has stressed that it continues to “aggressively pursue the investigation into what occurred and what party(ies) are responsible for this alleged fraud,” noting that it’s been “committed to full transparency” as it asks partners for as much time and cooperation as possible “to help navigate this difficult situation.”
