Markel discloses Vesttoo exposure
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Markel Group Inc. late Thursday said letters of credit it held backing more than $125 million in collateralized reinsurance deals involving troubled reinsurance intermediary Vesttoo and a unit of Aon PLC had been deemed to be fraudulent.
The disclosure is the latest by a string of companies that had used Vesttoo to broker various nontraditional reinsurance deals.
Markel Bermuda Ltd. has been appointed to the committee of unsecured creditors in the Chapter 11 bankruptcy of Vesttoo, a Markel statement said. The insurer said it is “exploring remedies” against third parties, including Vesttoo.
Markel said it was involved in two collateralized reinsurance transactions involving Vesttoo and White Rock Insurance (SAC) Ltd., Aon’s Bermuda-based segregated account company.
“In the transactions, MBL ceded collateral protection insurance risk to the segregated account, which in turn was required to provide reinsurance collateral to MBL,” the statement said.
The LOCs – one for $77.8 million and one for $50 million – were provided in the event claims were made and not paid on the underlying policies.
The LOCs list Vesttoo as the applicant on behalf of White Rock with Markel Bermuda as the designated beneficiary, the statement said.
Markel said it does not expect losses arising from the fraudulent LOCs will have material effect on its results, financial condition or liquidity.
