Vesttoo to lay off large portion of global workforce

Under pressure insurtech Vesttoo is set to lay off a large portion of its global workforce as it continues to work to identify how the fraudulent letter of credit (LOC) collateral issue occurred.

The goal is to continue working through the audit and any issues found, while doubling-down on the provision of core services, as Vesttoo seeks to come out the other side of this issue without suffering fatal collateral damage.

Read all of our coverage of the alleged fraudulent or forged letter-of-credit (LOC) collateral linked to Vesttoo deals.

Vesttoo stated today, “The company is conducting a rigorous internal and external analysis of the events leading up to the first report of a fraudulent LOC. We have engaged an experienced global risk, audit and compliance expert and external attorneys to advise us throughout this process.

“In order to solidify the foundation of the company and reassure the industry, leadership must return its focus to core services while reducing overall costs, including parting ways with some of our employees. These are painful, but important decisions that we must make at this time. Our focus remains on regaining our footing and emerging from this challenge stronger than before.

“We thank those who are leaving us for their contributions and will be working to support them through this transition.”

We’re told that these lay offs will involve a large portion of the global Vesttoo workforce and that it will be across the board, with all teams and geographies affected.

The insurtech had hired rapidly as it sought to grow out technology, insurance and capital markets teams, having raised significant venture capital.

Now, with the collateral issue hanging over the company, it seems Vesttoo will adopt a strategy to downsize and reduce its costs, while refocusing on the technology promise it had originally offered the industry, as it seeks to come out of this issue either unscathed, or with as minimal as possible damage to its business. Time will tell how successful that can be.

Also read:

August 1st – Corinthian agrees investor terms to replace Vesttoo LOC-linked collateral.

July 31st – Aon facing client & counterparty action over Vesttoo linked letters of credit.

July 28th – No comment from Aon on collateral issues, but LOCs seen as important.

July 28th – Corinthian operating under assumption all Vesttoo-sourced LOCs are fraudulent.

July 28th – Clear Blue: Over 50% of Vesttoo-linked reinsurance already replaced.

July 27th – Everest can lean in if opportunities emerge from Vesttoo collateral issue: Williamson.

July 27th – Vesttoo issue shows importance of sound counterparty risk practices: DBRS.

July 27th – Beazley CEO on Vesttoo: We would look to replace cover & recover premium.

July 26th – Clear Blue rating under review with negative implications on Vesttoo issues.

July 25th – Vesttoo: Updated statement says appears “procedures were circumvented”.

July 25th – AM Best to review fronting collateral in light of Vesttoo news.

July 25th – Fronting company Obsidian says Vesttoo exposure “de minimus”.

July 24th – Clear Blue: No material rating impact from Vesttoo issue. Reinsurance may be required.

July 21st – Vesttoo: Multiple LOCs from one bank in focus. Failure of security controls or KYC?

July 20th – MS Transverse: Any exposure to Vesttoo LOC collateral issues “immaterial”.

July 20th – Vesttoo: Collateral damage.

July 19th – Vesttoo: New report claims significant amount of forged LOCs. The question is how?

July 18th – Vesttoo faces fraudulent collateral claim. Confirms investigation, exit of some leaders.