Vesttoo vehemently denies Morningstar's figures
The rating agency released a report on Thursday estimating that the the total size of outstanding transactions on Vesttoo is between $5-10 billion, which the Israeli company said “cannot possibly be realistic"
Vesttoo is vehemently denying rating agency DBRS Morningstar's estimate that the total size of outstanding transactions on the platform are between $5 billion and $10 billion
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"The numbers published by Morningstar cannot possibly be realistic, as Vesttoo never obtained that sum of collateral from investors. An external audit is being conducted, at the end of which it will be possible to assess the exposure. Regardless, we can already comment that the numbers are much smaller than what was published."
Morningstar had said that it estimates “the total size of outstanding transactions to be between $5 billion and $10 billion based on the Company’s total revenue of approximately $200 million in 2022. Several insurance companies have already suspended further transactions in the Vesttoo platform until their investigations are complete.”
The Israeli startup released a statement on Tuesday admitting that “at a minimum, it appears that Vesttoo’s procedures were circumvented.”
Calcalist uncovered last week that the allegedly fake letters of credit (LOCs) provided by investors to insurers for reinsurance transactions on the Vesttoo platform are believed to total a sum of around $4 billion.
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The fraud came to light when one of the LOCs was found to be fake, leading to a comprehensive review of all letters of credit issued by the company.
Elsewhere, fronting specialist Clear Blue Insurance Group said that it has already replaced over half of the coverage needed for reinsurance programs affected by the scandal at Vesttoo.
Clear Blue and Vesttoo announced a partnership in August 2022 through which the Israeli startup was set to deploy as much as $1 billion from the capital markets through Clear Blue’s property and casualty programs.
In addition, insurance company Beazley said last week that it is not concerned regarding its reinsurance cover when analysts asked about its exposure to Vesttoo.
