According to Artemis’ sources, the audit at under fire insurtech Vesttoo continues, but the effort to uncover what exactly has happened, in relation to claims of forged or fraudulent letters of credit (LOCs), is said to have found that multiple LOCs are involved and all were issued by the same bank.
As we’ve been reporting, the insurance and reinsurance industry faces a potential crisis of confidence over some forms of collateral, as the fall-out from the Vesttoo fraudulent, or forged, letter of credit (LOC) claims spread.
This investigation was sparked by an incident in which a cedent tried to cash a letter credit. We can now confirm that the audit has found multiple letters of credits (LOCs), all of them issued by the same institution.
This indicates a larger issue, more fraud with more dollars, premiums and transactions affected.
The ramifications of the deal will also affect the insurance industry and reinsurance, through the fronting specialists as well as risk-transformers, and broking groups that are looking after clients and arranging the deals. There is also a possibility that more than just one cedent could be involved.