Bermuda’s BMA revokes registration of Vesttoo Alpha P&C Fund

As the saga over Vesttoo moves rapidly towards the insurtech’s bankruptcy and liquidation, while the amounts available to claimants in the Chapter 11 case are minimal compared to the damage caused by the fraud that occurred, there are a range of administrative efforts still needed, one of which is the shuttering of investment fund structures the company had formed.

The Bermuda Monetary Authority (BMA), the financial market regulator in Bermuda, has now revoked the registration of Vesttoo Alpha P&C Fund, which was one of the structures the insurtech had used for warehousing collateral instruments and funds.

This Vesttoo fund has been registered as a Professional Class B Fund in Bermuda on 18th August 2022 and was established to raise and house collateral that was supposed to have been used to fully collateralize insurance exposure underwritten by Vesttoo Alpha P&C Ltd.

Of course, the collateral provided by Vesttoo to back the reinsurance deals it facilitated and arranged, is now known to have largely been backed by letters of credit (LOC) that turned out to be forged or fraudulent.

Under the Bermuda Investment Funds Act 2006, the BMA said that it has exercised its powers to revoke the registration because “Vesttoo failed to appoint a fund administrator and failed to provide certain required notices in accordance with the requirements of sections 9(2) and 9(3) of the Act.”

In addition, the BMA said that “there has been no investment activity carried on in relation to the registered fund for the previous twelve months.”

So that dates back to before the whole fraud scandal broke, which was this summer, suggesting Vesttoo had not utilised this structure, perhaps at all, in its relatively short history.

In addition, the Vesttoo collateralized reinsurance underwriting structure, Vesttoo Alpha P&C Ltd., had been served a winding-up order as part of the Bermuda court process that is ongoing, which prevented it from writing any business and as a result meant “the investment objectives for which the Vesttoo Fund was specifically established cannot be achieved,” the BMA said.

There had been no appeal against the winding-up order, the BMA said.

This is just one of numerous administrative actions that are going to be required to dismantle Vesttoo.

It’s clear these structures in Bermuda were not being actively utilised, so there can be no funds remaining that could help bankruptcy claimants increase their recoveries. It’s the structures where any value remains housed that could see more noise around their winding-down.

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