Insurance giant Aon facing legal action over Vesttoo connection
Insurance giant Aon facing legal action over Vesttoo connection
Aon said that Vesttoo is one of the companies it works with to collateralize insurance and for reinsurance purposes
Insurance giant Aon revealed that clients are taking legal action against the company over its connection to Vesttoo. According to its Securities and Exchange Commission filing detailing its second-quarter results, Aon said that some clients and counterparties have either initiated or warned that they may initiate legal proceedings against the brokerage, which has a market cap of $65 billion.
Aon said in the filing that Vesttoo is one of the companies it works with to collateralize insurance and for reinsurance purposes.
“The pending or threatened legal proceedings against the company 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,” Aon said in the filing.
“In certain transactions in which Vesttoo identified third party capital providers to collateralize reinsurance obligations, including transactions in which the company or its affiliates provided brokerage or other services, some letters of credit from third party banks are alleged to have been fraudulent,” the filing stated.
The company added that it believes that it has “meritorious defenses and intends to vigorously defend itself against these claims and to seek recourse against third parties where appropriate.”
Calcalist uncovered earlier this month 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.
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.
