New Vesttoo CEO vows to pursue legal action

Troubled insurtech Vesttoo’s new chief executive officer has vowed to “decisively pursue” legal actions against the perpetrators of fraudulent letters of credit used for collateral in reinsurance transactions.

Vesttoo, which is based in Israel and whose Bermuda collateral reinsurer has been put into liquidation, named Ami Barlev as chief executive officer on Wednesday.

Vesttoo was plunged into crisis after it was revealed that fraudulent letters from credit purportedly from China Construction Bank had been used as collateral in reinsurance transactions.

Vesttoo, which used artificial intelligence to link cedants and investors in reinsurance transactions, has been forced to lay off 150 of its 200 staff. Its Bermuda based collateral reinsurer has also been forced into liquidation.

The scandal could have ramifications throughout the insurance fronting sector. (See KBRA story)

In a strongly worded statement, Barlev said the company’s “world-class forensic investigation” had revealed that “a number of factors, external to the company, led directly to the current crisis, including the involvement of certain foreign banks and financial institutions”.

He also said the company had made “immediate changes in management, removing some individuals from their positions, also as a result of the findings”.

Chief executive Yaniv Bertele and chief financial engineer Alon Lifshitz were both placed on paid leave some weeks ago. Barlev’s statement did not identify the two, both founders of the company, by name.

Barlev said: ““We will decisively pursue legal actions against all parties who caused harm to the Company and its clients and will take all necessary steps to recover all and any damages, and we will vigilantly protect our partners, customers and our employees.

“At this stage, we can firmly assure that Vesttoo’s remaining core team of professionals, who are of the highest calibre globally in the fields of insurance, capital markets and technology, are free of any suspicion, and our company continues to operate because of these talented individuals. We thank everyone who continues to support us.

“Vesttoo has tightened its KYC procedures and is adopting stringent legal procedures aimed at increasing the level of corporate governance and business integrity at the Company.

“We will demonstrate zero tolerance towards any violation of law and pursue legal actions against any party that caused damage to the Company in the most assertive manner."

He added: “We have also unfortunately had to let many talented people go from the company, as a result of the damage caused. These steps were taken only to secure the financial viability of the company and not as a result of the findings.”