Rating agency DBRS Morningstar has removed from its website the report it published on Thursday about Vesttoo, according to which the scope of the suspected fraud on the Israeli fintech company’s platform was between $5 billion and $10 billion. Previous estimates had the alleged fraud reaching only around $4 billion.
Calcalist contacted Morningstar for a response, but it has not yet been received.
Vesttoo vehemently denied Morningstar’s figures. “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.
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.
Clinton Mora is a reporter for Trending Insurance News. He has previously worked for the Forbes. As a contributor to Trending Insurance News, Clinton covers emerging a wide range of property and casualty insurance related stories.