(Reuters) – Insurance and home inspection software provider Porch Group is suing China Construction Bank Corp for allegedly enabling “large-scale fraud” that caused Porch “huge losses.”
Porch and its units accused the Chinese lender of conspiring with employees of the now-bankrupt Israeli insurer Vestu to issue dozens of fraudulent reinsurance letters that were fraudulently issued to insurers, according to a complaint filed Thursday in the U.S. Southern District of California. Guarantees access to reinsurance funds. New York court.
Porch and its unit Homeowners of America Insurance Company paid millions of dollars in premiums for this non-existent reinsurance, until it was revealed in July 2023 that some of the letters of credit backing Vestu’s reinsurance transactions were counterfeit, the company said. Were.
The CCB did not immediately respond to a Reuters request for comment.
West2 filed for Chapter 11 bankruptcy protection in the US last year after it was discovered that fraudulent letters of credit were used on its platform. The company provided insurers with access to insurance-linked securities, an alternative form of reinsurance. These securities may be backed by collateral in the form of letters of credit.
Porch said America’s Homeowners lost millions of dollars when its reinsurance facility, which was backed by CCB’s false $300 million letter of credit, suddenly proved worthless.
Porch’s complaint states that he will seek monetary damages in an amount to be determined at trial. The complaint says Homeowners of America had to pay $80 million to cover insurance claims that should have been reinsured and Porch had to provide $57 million to stabilize the unit. It also said that Porch’s share price fell after the scam was exposed.
