MS&AD-backed Vesttoo is in hot water

Vesttoo , an alternative reinsurance market, has reportedly discovered that a Chinese investor organization was supplying it with phony letters of credit worth around $4 billion, according to Israeli news outlet Ice.

Since the news first broke two days ago, there have been numerous rumors circulating about the startup; however, the most pressing question now is who’s accountable? After all, it was only a year ago, when Vesttoo announced that it is now supplying Clear Blue Insurance Group with reinsurance capacity sourced from capital markets investors, totaling a sum of $1 billion.

Founded in 2018 by Yaniv Bertele, Ben Zickel, and Alon Lifshitz, Vesttoo operates a marketplace for insurance-based risk transfer and investments. The platform facilitates risk transfer between insurance companies and institutional investors, providing insurance-linked investments to asset managers, while enhancing risk transfer and liquidity in the life and P&C insurance markets.

Last year, it closed an $80 million Series C financing round co-led by Mouro Capital and a private equity fund, that valued the company at $1 billion. Other investors in the company, which raised a total of $110 million, include MS&AD Ventures , Hanaco Venture Capital, and Santander InnoVentures. The company has since been dehorned when SureTech Investments , which purchased about 4% of Vesttoo two years ago, sold the remaining 2% of its holding in May at a valuation of $785 million.

Sources familiar with the company have raised the question of how Vesttoo could sell stop loss covers so cheap while being fully collateralized. One commenter offered a gloomy assessment, predicting the end of the company following this disaster. Another said, how the company raved about its employee growth. The company is a team of around 200 people, which has grown by 71% over the past 12 months, according to LinkedIn data.

Select executives including Vesttoo’s chief commercial officer Julia Henderson, head of insurance William Cheney, deputy chief legal officer Daniel Goldfried, project manager Lior Atias, and director of business development Michael Barrett are no longer working at the startup as of late, according to LinkedIn data.

As an aside, Vesttoo operates in the same space as Ledger Investing , albeit it has raised more funding and has been in business fewer years.

Bottom Line I: Insurtech without the insurance.

Bottom Line II: A company with a catchphrase that hasn’t aged well.