Regulator puts Vesttoo collateralised insurer into liquidation

Troubled insurtech Vesttoo is to liquidate its collateralised insurer in Bermuda as part of its “restructuring” efforts to recover from the recent fraud scandal.

Vesttoo, which last week placed its chief executive officer and chief engineer on paid leave, said it was closing the Bermuda company in order to focus on a “limited number of high-quality and large markets”.

The move comes alongside the closure of multiple offices and significant changes within the company’s leadership after the company was rocked by a scandal last month when it was revealed that the company had accepted fraudulent letters of credit as collateral for insurance transactions,

Israel-based Vesttoo, which at one point was valued at more than $1 billion, used artificial intelligence to match investors and cedants of insurance.

The Bermuda Monetary Authority (BMA) said it had appointed joint provisional liquidators (JPLs) for Vesttoo Alpha P&C, the Bermuda domiciled collateralised insurer of Vesttoo.

The BMA issued proceedings in the Supreme Court of Bermuda, Commercial Court jurisdiction, for the appointment of JPLs Charles Thresh and Michael Morrison of Teneo (Bermuda) with respect to Vesttoo Alpha P&C, according to a notice. The Bermuda Monetary Authority earlier stated that it had been monitoring the situation.

Vesttoo Alpha P&C was registered as a collateralised insurer class of company in Bermuda in August 2022.

Commenting on the decision to liquidate Vesttoo Alpha P&C, a Vesttoo spokesperson said: “As part of Vesttoo's business focus moving forward after the recent events, the company's management has decided to focus its activities on a limited number of high-quality and large markets. As part of this restructuring, Vesttoo is liquidating its collateralised insurer in Bermuda - but continues to operate its branches in New York, London and other territories.

“Vesttoo’s main activity and its core members, which includes an experienced team of 50 people, continue to act vigorously for the benefit of the company's customers and partners.”

Vesttoo revealed last month that at least two collateralised transactions between insurers and investors had been called into question after investor’s letters of credit turned out to be fraudulent. The scandal has raised doubts about the amount of capacity available for collateralised insurance transactions.

Earlier this week, Vesttoo stated that while it is laying off about 75% of its staff, including the removal of Yaniv Bertele, chief executive officer and Alon Lifshitz, chief financial engineer, and closing some offices in Asia, it has no intention to liquidate the company.