Leadership exits shake Vesttoo amid ‘fraudulent’ collateral probe

Alternative risk transfer and insurance-linked investment platform  Vesttoo has launched an investigation after discovering “inconsistencies” and “fraudulent” collateral in two separate transactions. The move has led to a number of leadership exits as the insurtech proceeds with a third-party audit to further investigate the matter.

Vesttoo, an Israeli-based insurtech company with offices around the world, has launched an internal audit after it was alleged that collateral put up for reinsurance had been misstated in two separate transactions.

A company spokesperson for Vesttoo said “inconsistencies” in the collateral provided by banks in two transactions for which Vesttoo modelled the risk had been discovered.

The spokesperson added: “We take the integrity of our business very seriously and are conducting a comprehensive third-party audit to ensure our due diligence processes continue to be robust.

“We would like to emphasise that we are actively working with our clients and all organisations involved to provide full transparency in this matter and find alternative solutions as soon as possible.

“We want to be clear that Vesttoo did not knowingly participate in any fraudulent acts and there is no evidence of such acts. The collateral in question relates to letters of credit provided under two specific transactions and were not issued by Vesttoo.”

Vesttoo acknowledged that there have been a number of management exits amid the ongoing investigation after claims of fraudulent collateral emerged. “A few members of the leadership team have decided not to wait for the results of the audit and have decided to leave, and we respect their decision,” the spokesperson said.

Vesttoo was valued at more than $1 billion after it raised new funding in October 2022. In June this year, it completed a $120 million renewal of quota share reinsurance cover for a leading London Lloyd’s syndicate. The insurtech uses artificial intelligence to match investors with uncorrelated, low volatility insurance-linked assets.

Vesttoo secured $80 million in late-stage funding with investments from venture capital firms Mouro Capital, Gramercy Ventures, BlackRiver Ventures and Hanaco Ventures. Wall Street giant Goldman Sachs was also reported to have participated.

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