News & Events

In a decision released March 5, 2009, the United States District Court for the Southern District of New York dismissed with prejudice a federal securities fraud class action lawsuit against the Firm's client, PXRE Group Ltd. (now known as Argo Group International Holdings, Ltd.), and several of the Company's former officers.

The case concerns Hurricanes Katrina, Rita and Wilma, which struck the United States in the summer and fall of 2005. PXRE, a Bermuda reinsurance company, held numerous policies directly affected by the property damage caused by these unprecedented storms. Plaintiffs brought fraud claims under the Securities Exchange Act of 1934, alleging that PXRE and its officers, faced with financial ruin due to the Company's mounting exposure, knowingly understated the Company's losses in the weeks immediately following the hurricanes in order to maintain its financial viability and raise additional funds. In February 2006, the Company revised its initial loss reserves related to the storms and was subsequently downgraded by the rating agencies. The Company ceased writing new policies and its stock price dropped. In its decision, the Court agreed with Defendants that, notwithstanding allegations that PXRE faced financial collapse, the complaint failed sufficiently to allege that Defendants either knowingly or recklessly misstated the initial loss reserves. The Court also held that, despite allegations of, among other things, internal dissension at PXRE concerning loss estimates and wide-spread public reports detailing losses resulting from the Gulf Hurricanes, plaintiffs failed to sufficiently allege that Defendants acted with fraudulent intent. Given plaintiffs' multiple attempts at pleading a cognizable claim--including the filing of a second amended complaint in response to Defendants' moving papers--the Court dismissed the lawsuit with prejudice.

The team representing PXRE Group Ltd. in this matter included Bruce D. Angiolillo, Jonathan K. Youngwood, John Briody, Lana Maier and Magallie Kortright as well as former associate John Anderson.