Aon, the world’s second-largest insurance broker, is facing a lawsuit in Delaware bankruptcy court over its role in marketing a credit insurance product designed to help start-ups raise financing.
The complaint was filed by a trust representing creditors of Vesttoo, an Israeli artificial intelligence company that went bankrupt in 2023. Vesttoo, once valued at $1 billion and backed by Goldman Sachs, operated a platform connecting insurers and investors in insurance-linked securities. The company collapsed after it was revealed that some policies were backed by allegedly fraudulent letters of credit.
An investigation commissioned by Vesttoo’s board alleged that two senior executives were directly involved in creating fraudulent documents.
Aon’s Response
Aon has rejected the claims, stating that Vesttoo’s own report identified its executives and other co-conspirators as responsible for the fraud. “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,” the company said. Aon has vowed to defend itself against what it calls “meritless claims.”
Credit Insurance and IP-Backed Lending
The case sheds light on Aon’s 2020 entry into the expanding credit insurance market. Traditionally linked to trade — such as insuring goods in shipment — credit insurance has broadened to cover financial guarantees for banks and lenders facing default risk.
Aon’s product aimed to help “high-growth” companies use intellectual property (IP) as collateral for loans. The broker’s team estimated the liquidation value of a company’s IP, allowing businesses to borrow against it alongside tangible assets, with premiums set based on that valuation.
The associated risks were packaged as securities, with Vesttoo assisting in locating capital markets investors.
Allegations in the Lawsuit
The lawsuit claims Aon’s IP valuations were “vastly inflated” and insufficient to cover debt in the event of default. Internal emails cited in the filing indicate Aon acknowledged that projecting IP value for pre-revenue companies was “incredibly difficult.”
As an example, the lawsuit points to men’s razor start-up Shavelogic, whose IP was primarily patents on cartridge attachment mechanisms and related trademarks. Aon allegedly valued this at $468 million; Shavelogic later defaulted, and the company was sold for $70 million.
The filing asserts that default rates were significantly higher than Aon’s estimates of 3–6 percent, leading lenders to rely on IP collateral that ultimately failed to recoup losses.
Market Scale and Developments
In July 2023, Aon’s CEO Greg Case said the firm had built an IP lending marketplace involving nearly 30 insurers and totaling $2 billion in insured transaction value. Since then, Aon has removed references to this business segment from its website.
The trust pursuing the case represents multiple creditors, including units of insurers Beazley and Markel.
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