This securities fraud class action lawsuit charges PXRE Group Limited and certain of its present and former officers with violations of the Securities Exchange Act of 1934.
PXRE is a worldwide provider of catastrophe reinsurance products and services to both primary insurers and reinsurers. Since 1987, PXRE have specialized in offering catastrophe and risk excess reinsurance.
The class action omplaint alleges that PXRE failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them:
(1) that PXRE concealed from investors the full impact on its business of Hurricanes Katrina, Rita, and Wilma ('2005 Hurricanes');
(2) that, in fact, PXRE's cost of the 2005 Hurricanes had doubled to an estimated $758 million to $788 million;
(3) that the magnitude of the loss would cause PXRE to lose key financial-strength and credit ratings from A.M. Best, an influential industry-rating agency;
(4) that PXRE concealed the losses in order to complete a $114 million secondary offering and raise more than $350 million from an offering of perpetual preferred shares; and
(5) that as a consequence of the foregoing, PXRE's statements with respect to its loss estimates for the 2005 Hurricane season lacked in all reasonable basis.
The class action complaint further alleges that on or around February 16, 2006, after the close of the market, PXRE shocked investors when it announced that it would be increasing its estimates of the net pre-tax impact of Hurricanes Katrina, Rita and Wilma by an amount between $281 million to $311 million for the year ended December 31, 2005 compared to the high end of their prior announced estimates. Later that same day, February 16, 2006, A.M. Best announced that it had downgraded the financial strength rating of PXRE to B++ (Very Good) from A- (Excellent).
News of this sent shares of PXRE spiraling downward on February 17, 2006. By the end of the day, shares of PXRE had fallen $7.85 per share, or 65.94 percent, on high trading volume, to close at $4.05 per share.
Name (Stock Symbol)
PXRE Group Limited
Argonaut Group Inc. and PXRE Group Ltd. merged into Argo Group International Holdings Ltd. PXRE is a re-insurance company.
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