The company, which is part of insurer and reinsurer Markel Group, has joined the list of creditors in the Vesttoo Chapter 11 bankruptcy proceedings, and is seeking remedies after two letters of credit (LOC), were found to be fraudulent collateralised reinsurance transactions that it entered into with White Rock.
In the pair of transactions, MBL ceded collateral protection insurance risk to the segregated account, which in turn was required to provide reinsurance collateral to MBL.
The letters of credit, one for $50 million and another for $77.75 million, were provided as collateral backstops in the event claims were made and not paid on the underlying policies for these transactions.
Both letters list an affiliate of Vesttoo as the applicant on behalf of White Rock, with MBL as the designated beneficiary.
Markel has said that at this stage it does not expect any losses arising from these fraudulent LOCs to have a material impact on its results of operations, financial condition, or liquidity.
If you want to read a comprehensive guide regarding the ongoing Vesttoo LOC fraud scandal, you can click the link here.
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