The Vesttoo Creditors Liquidating Trust has filed a lawsuit in the US Bankruptcy Court for the District of Delaware against Aon, China Construction Bank (CCB), and others, alleging fraudulent conduct that destabilised the reinsurance market and contributed to Vesttoo’s collapse. Vesttoo, which provided reinsurance capacity backed by letters of credit (LOCs), entered bankruptcy in 2023 after the discovery of more than US$2.8 billion in allegedly forged collateral. The complaint claims Aon used Vesttoo to scale its collateral protection insurance (CPI) product — involving transactions that transferred reinsurance risk — while ignoring clear red flags about Vesttoo’s collateral providers. Lawrence Hirsh, liquidating trustee, says: “Aon knew there were serious flaws in its CPI product, yet continued to falsely market it. Absent Aon’s false representations, failure to satisfy its due diligence obligations, and CCB’s facilitation of forged letters of credit, Vesttoo’s business would not have relied on the misvalued deals and forged collateral that led to its demise.” The Trust alleges CCB, through employee Lam Chun-Yin, helped create the forged LOCs used to back Vesttoo’s reinsurance transactions. CCB’s reported US-facing LOC exposure rose from US$80 million in 2021 to US$1.28 billion in 2022, propelling it into AM Best’s top-15 list of reinsurance LOC issuers. According to the filing, defaults on CPI deals revealed that Aon’s valuations of intellectual property collateral were significantly inflated, leaving cedants unable to recover from the forged LOCs. The collapse triggered hundreds of millions of dollars in claims across the reinsurance sector. Aon vigorously denies the allegations. In a formal statement, the firm states: "This lawsuit represents a perverse attempt by Vesttoo’s bankruptcy estate to shift responsibility for Vesttoo’s deliberate fraud to Aon, one of the fraud’s biggest victims. "Vesttoo has already acknowledged in its own investigative report that executives of the company, along with other co-conspirators, were responsible for the fraud and intentionally sought to mislead Aon and other impacted parties. We will vigorously defend Aon against these meritless claims and continue to take steps to both maximise recoveries for our clients and strengthen standards across our industry." The Trust is seeking damages against Aon, CCB, and named individuals for their role in the events, which it says caused “widespread harm” to insurers, reinsurers and the broader market.
