Fronting insurer severs further ties with insurtech Vesttoo
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Fronting insurer Clear Blue Insurance Group said Monday it will no longer accept capacity via online reinsurance intermediary Vestto Ltd.
In a statement, Charlotte, North Carolina-based Clear Blue, which operates four insurers that work with program managers and managing general agents to access the reinsurance market, said it does not expect any negative consequences to its business or policyholders in the wake of alleged fraud concerning letters of credit at Tel Aviv, Israel-based Vesttoo.
“Clear Blue Insurance Group is aware of the allegations that letters of credit issued by the China Construction Bank for reinsurance collateral, on behalf of Vesttoo, are fraudulent,” the insurer said in an emailed statement.
The insurer used Vesttoo for reinsurance capacity on certain programs in the past 18 months but “Clear Blue will not be accepting Vesttoo as reinsurance capacity on new or renewal programs going forward,” the statement said.
Last week, Vesttoo, which connects cedents with investors for noncatastrophe insurance-linked securities and collateralized reinsurance coverage, said it was looking into “inconsistencies” in its operations in the wake of news reports of alleged fraud involving letters of credit for reinsurance transactions it was involved in.
Last year, Vesttoo announced it would supply $1 billion in capital markets-based capacity for Clear Blue.
Regarding programs involving Vesttoo and China Construction Bank-backed reinsurance collateral, Clear Blue said in the statement that it “has retained premiums, which were either directly withheld or retained in trust accounts that are fully accessible by Clear Blue, in accordance with our enterprise risk management procedures. That premium, which we remain in possession of today, is more than sufficient to pay all claims on those programs.”
Clear Blue said it will conduct a full investigation.
