Vesttoo, a unicorn insurtech with a Bermuda entity at its core, is reeling after a big hole was allegedly found in its books.

Billions of dollars of collateral claimed may never have existed, according to a report in CTech, an Israel-based publication.

In an interview last year, a company executive said the innovative Bermuda entity Vesttoo established stood at the centre of it business model, which aims to provide flexibility and security for a wide range of participants.

Tel Aviv’s Vesttoo was founded in 2018 and describes itself as a marketplace for non-catastrophe insurance-based risk transfer and investments, an innovative twist on the insurance-linked securities market.

The company has raised $110 million in six funding rounds, according to data from Crunchbase. Goldman Sachs participated in the most recent round of funding, which was led by the UK’s Mouro Capital and valued the company at over $1 billion, meeting the definition of a unicorn.

Vesttoo has offices in New York, London, Dubai, Seoul, Hong Kong, Berlin and Bermuda.

The company registered Vesttoo Alpha P&C in late 2022 with the Bermuda Monetary Authority as a collateralised insurer, which is a new class of licence. Collateralised insurers must maintain a head office in Bermuda and appoint a resident principal representative.

Vesttoo was a pioneer in the use of this structure, and Bermuda was the lynchpin of the company’s business model.

In an interview conducted by Artemis in 2022, Rob Hauff, who was a portfolio manager at Vesttoo and remains an adviser, said the company provides clients with four “entry points”: a fund, structured note transactions, bespoke transactions and a marketplace, which he describes as an eBay-type platform.

He said in the interview: “All the entry points, though, I want to emphasise, revolve around a collateralised insurer we have built in Bermuda.

“That will help us fully collateralise risk for cedants, giving them maximum comfort for the exposure they are looking to have. That is really the centrepiece that sits in the middle.“

In comments to insurance trade publications in recent days, the company conceded that there may have been issues with its accounts. It has found that in two transactions “inconsistencies” were found in the collateral, according to one article, though Vesttoo insists there has been no fraud.

The company also said that a third-party audit is currently being undertaken.

Since the news broke of potential collateral problems, resignations of company leaders have been reported. According to the Insurer, Bermuda-based Julia Henderson has resigned from Vesttoo as chief commercial officer, though she is still listed as being in that position on the company’s website.

Mr Hauff said in the interview: “We can achieve more consistent returns over time and reach a broader audience of investors

“The result is that we have a product that compares favourably with something like inflation adjusted returns on the S&P 500. We have a product that compares favourably to that. It also compares quite favourably to the historical average in the ILS market.

“It has taken some tweaking to get it right, but once we get out there, I think it will look attractive to investors with low volatility. ”

Vesttoo and the BMA were contacted about trouble at the company and did not immediately respond.