Aon’s White Rock & Bermuda’s BMA join forces to pursue Vesttoo in court

Insurance and reinsurance broking giant Aon through its White Rock Insurance (SAC) Ltd. company is joining forces with the Bermuda Monetary Authority (BMA) to pursue “maximum recovery” for the re/insureds affected by the alleged fraud involving Vesttoo related segregated accounts.

The Bermuda Monetary Authority (BMA) and White Rock Insurance (SAC) Ltd. have jointly agreed to a course of action in the Supreme Court of Bermuda seeking recovery of assets related to the affected reinsurance transactions that utilised cells of White Rock.

This Supreme Court of Bermuda action will “focus on pursuing maximum recovery for the (re)insureds impacted by the alleged fraud involving Vesttoo related segregated accounts (Vesttoo Cells),” the pair said.

As we reported earlier this week, Aon, via its White Rock SAC vehicle, was pursuing beleaguered insurtech Vesttoo for reparations, after letters of credit (LOCs) backing collateralized reinsurance deals were alleged to be fraudulent or forged.

In that New York court action, the broker was seeking a $136.7 million return of funds from impacted cells.

Since then, Vesttoo has filed for Chapter 11 bankruptcy protection and that process is beginning in New York, while the insurtech has also filed for similar insolvency relief in Israel.

While that halted the New York action against it that was being undertaken by Aon’s White Rock SAC, Vesttoo will still face scrutiny and be subject to discovery in the New York bankruptcy court.

But, it seems Aon’s White Rock and Bermuda regulator the BMA are also following another option to accelerate action against the insurtech, by starting Bermuda Supreme Court action against Vesttoo.

Aon’s White Rock and the BMA have agreed for the Bermuda Supreme Court to appoint Charles Thresh and Michael Morrison of Teneo (Bermuda) Limited to act as Joint Provisional Liquidators (JPLs) for White Rock Bermuda, with respect to the impacted Vesttoo Cells.

As a result, these JPLs, the Board of Directors and management of White Rock Bermuda will all bring their resources together to address this matter, the parties said.

“This action applies only to the impacted Vesttoo Cells,” the parties explained. Adding that, “White Rock Bermuda continues to operate in the ordinary course of business, and this action has no effect on any other cells or White Rock Bermuda clients.”

This latest twist in the saga that has developed around Vesttoo will see the company come under fresh legal pressure in Bermuda, including the need for disclosure of the facts around what has actually occurred.

As it involves the specific White Rock SAC cells that have been exposed to the fraud, rather than any Vesttoo entity or structure, it is possible that the bankruptcy proceedings will not afford any protection, as this legal action begins on another front.

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