Aon working to help clients replace lost capital after Vesttoo fraud: Andersen

Insurance and reinsurance broking giant Aon is continuing to work with clients to help the industry replace lost capital following the letter of credit (LOC) fraud at insurtech Vesttoo, Eric Andersen, President of Aon plc said last week.

Speaking during the Aon third-quarter 2023 earnings call, Andersen acknowledged the ongoing work at the broker, as it looks to help those impacted by reinsurance collateral that turned out to be fraudulent or invalid.

Aon has been working on multiple fronts to protect clients and try to recover value for them, including its participation in court action in the United States and Bermuda.

But, behind the scenes, work in ongoing to also help those affected ensure they have the capital required to run their businesses, with reinsurance and collateral needing to be replaced.

Asked for any updated comments about the Vesttoo fraud during the Q3 earnings call, Aon President Andersen said, “I would just say, Vesttoo is one of the many parties that have been involved in the business, whether it’s reinsurance, whether it’s other areas, and we continue to monitor the situation very carefully, working with our clients, helping them to provide options to replace that lost capital.”

Andersen added that, “We continue to see that work being done, and our expectation is it will continue to evolve as their bankruptcy process works its way through.”

Aon made some minor changes to its 10Q filing disclosure related to the Vesttoo fraud investigation, adding that it could seek recourse from third parties in connection with the bankruptcy proceedings filed by Vesttoo (the bankruptcy proceedings had not begun when its last 10Q was filed).

Also added to the 10Q disclosure is a reference to the Bermuda Supreme Court action, highlighting that joint provisional liquidators were appointed over one of its subsidiaries on the island regarding segregated accounts affected by the Vesttoo fraud and saying, “Aon continues to cooperate with regulators in Bermuda.”

The 10Q disclosure continues to state that Aon faces pending or threatened legal action related to the Vesttoo fraud, that certain “clients and counterparties have initiated or indicated that they may initiate legal proceedings” against the broker and that these “allege, among other theories of liability, that in certain circumstances the Company failed to comply with its alleged duty to procure appropriate letters of credit.”

Again, Aon states that it “believes that it has meritorious defenses and intends to vigorously defend itself against these claims.”

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