ILS insurtech investigating operations after alleged fraud

Online commercial reinsurance intermediary Vesttoo Ltd. said Thursday it is looking into “inconsistencies” at the company in the wake of news reports of alleged fraud involving letters of credit for reinsurance transactions it was involved in.

Tel Aviv, Israel-based Vesttoo, which works to connect cedents with investors for noncatastrophe insurance linked securities and collateralized reinsurance coverage, said in a statement it had discovered issues with collateral banks had provided for some transactions between insurers and investors that the company had modeled.

The company said it was conducting “a comprehensive third-party audit to ensure our due diligence processes continue to be robust.”

Vesttoo is working to provide “full transparency” to organizations involved and “find alternative solutions as soon as possible,” the statement said.

“We want to be clear that the collateral in question relates to letters of credit provided under certain specific transactions and were not issued by Vesttoo but rather by reputable international banks,” Vesttoo said.

Israeli technology news site CTech reported last week that fake letters of credit had been provided by investors to insurers involved in some of the transactions and several top executives have since left Vesttoo.

A person familiar with the company said several executives have left Vesttoo but none had been dismissed.