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Chaucer files to appear in Vesttoo bankruptcy case, registers $257m claim


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International specialty insurance and reinsurance group Chaucer plc, part of the China Re group of companies, has formally entered the Vesttoo bankruptcy case, filing its appearance soon after having registered a $257 million claim under the court process.

vesttoo-collateral-safeIt was always understood that Chaucer was likely to emerge as a creditor to the Vesttoo bankruptcy, having exposure to the letters of credit (LOC) for reinsurance fraud that had taken place at the insurtech.

As we had previously reported back last October, Chaucer had a collateralized quota share casualty reinsurance arrangement that was said to have been affected by invalid LOC collateral.

At that time, Chaucer had not formally joined the bankruptcy proceedings, despite this exposure to the Vesttoo fraud.

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Now, Chaucer has filed a notice of appearance in the Delaware bankruptcy case for Vesttoo, with entities Chaucer Insurance Company DAC and Chaucer Syndicates Limited as the managing agent of its Lloyd’s Syndicate 1084 both signing up to the court process through their counsel.

It’s unsurprising when you realise the quantum of the unsecured claim that Chaucer has levelled against Vesttoo and its bankruptcy case.

Chaucer has registered a creditor claim of just over $257 million in the bankruptcy case, which is one of the most significant claims made so far.

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In terms of other claims registered under the bankruptcy case, Markel has registered an unsecured claim of $147 million, Porch $400 million, while Proventus Holdings LP (a Corinthian Group entity) has registered $655 million.

Interestingly, Clear Blue Insurance Group, the fronting specialist, has only registered about $32.5 million in unsecured claims in the bankruptcy case, but of course also has litigation ongoing against broker Aon.

Of course Aon and the joint provisional liquidators have somewhere north of $3.1 billion in claims against Vesttoo, although these aren’t registered under the bankruptcy case currently, it appears.

Chaucer joining the official bankruptcy means it will be able to follow the formal process and likely take a share of the bankruptcy estate, once that is finalised.

As we’ve said before though, the ultimate value of the Vesttoo estate that is recovered will barely scratch the surface of the claims total logged so far, meaning litigation may be the way others choose to try and recover more of the value lost to the reinsurance related fraud.

Documents show that the eventual recovery for creditors may be minimal and certainly well-below the level of claims made against the estate.

Read all of our coverage of the alleged fraudulent or forged letter-of-credit (LOC) collateral linked to Vesttoo deals.

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