Markel Bermuda Limited (MBL), part of insurer and reinsurer Markel Group, has been appointed to the statutory committee of unsecured creditors in the U.S. Chapter 11 bankruptcy of insurtech Vesttoo, the company has announced.
MBL is a class 4 Bermuda insurer and forms part of Markel’s global specialty insurance business.
The company has joined the list of creditors in the Vesttoo Chapter 11 bankruptcy proceedings and is seeking remedies after two letters of credit (LOC), one for $50 million and another for $77.75 million, were found to be fraudulent in collateralised reinsurance transactions it entered into with White Rock for the benefit of a segregated account owned by an affiliate of Vesttoo.
MBL explains that it ceded collateral protection insurance risk to the segregated account, which was required to provide reinsurance collateral to MBL.
The LOCs in question were provided as collateral backstops in the event claims were made and not paid on the underlying policies. These two LOCs have been deemed fraudulent.
“MBL is exploring remedies against third parties (including Vesttoo in the context of its chapter 11 case) that may be available to MBL to mitigate or eliminate potential losses resulting from the fraudulently tendered letters of credit,” says the company.
Markel has said that at this stage it does not expect any losses arising from these fraudulent LOCs to have a material impact on its results of operations, financial condition, or liquidity.
As reported by our sister publication Artemis, the creditors list in the Vesttoo bankruptcy case is growing. Markel has joined Clear Blue, Porch Group’s Homeowners of America Insurance Company, Corinthian Group’s Proventus Holdings LP, United Automobile Insurance, and Aon’s White Rock in seeking remedy for the fraudulent activity.
