Markel Bermuda Limited (MBL), a subsidiary of the insurer and reinsurer Markel Group, has been appointed to the statutory committee of unsecured creditors in the U.S. Chapter 11 bankruptcy proceedings of InsurTech company Vesttoo.
In this bankruptcy case, MBL is among the creditors seeking remedies after two letters of credit (LOC) used as collateral for reinsurance transactions were discovered to be fraudulent. These transactions involved MBL ceding collateral protection insurance risk to a segregated account, which was obligated to provide reinsurance collateral to MBL.
The fraudulent letters of credit, one valued at $50 million and the other at $77.75 million, were meant to serve as collateral backups in case claims were made and not honored on the underlying policies for these transactions. Both letters listed an affiliate of Vesttoo as the applicant on behalf of White Rock, designating MBL as the beneficiary.
Markel has stated that it does not anticipate these fraudulent LOCs will have a significant impact on its financial results, condition, or liquidity at this stage.
By FCCT Editorial Team
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