US Judge Dismisses Securities Litigation Against Insurance Underwriter

An insurance underwriter in specialty insurance represented by attorneys from Skadden, Arps, Slate, Meagher & Flom has secured dismissal of a securities class action claiming that defendants neglected to share “key risks” of underwriting for construction defect claims.

Bạn đang xem: US Judge Dismisses Securities Litigation Against Insurance Underwriter

U.S. District Judge Lewis Kaplan of the Southern District of New York threw out the lawsuit against Argo Group International Holdings Ltd. and four executives.

Argo was represented by Skadden attorneys Jay B. Kasner, Alexander C. Drylewski, Tansy Woan and Sarah E. Danehy.

Xem thêm : Avoid Having Your Travel Insurance Claim Denied — 5 Tips From an Expert

The plaintiffs, Police & Fire Retirement System City of Detroit and Oklahoma Law Enforcement Retirement System, brought the class action against Argo for allegedly violating the Securities Exchange Act of 1934 for allegedly “repeatedly and misleadingly touting the strength of Argo’s construction business between 2018 and 2022,” the decision said.

Argo announced its aggregate loss reserves would be increased by around $130 million to $140 million due to “underfunded reserves” for claims that cover defective parts for residential and commercial contractors.

Kaplan’s 35-page decision granted Argo’s motion to dismiss for failure to state a claim where relief can be granted.

The court pointed to the U.S. Supreme Court’s 2015 decision in Omnicare v. Laborers District Council Construction Industry Pension Fund, which expanded statements of opinion by corporations that could be used to bring a lawsuit. However, the court said Argo’s statement about the reserves did not fall under those categories.

Xem thêm : How to Appeal Insurance Denials, Abolish Medical Debt, and Fight for Medicare for All

In terms of Argo’s statements about its financial performance, the court held that the plaintiffs did not “provide statement-specific reasons why each quoted passage allegedly is false or misleading, instead listing numerous separate quotations one after the other before supplying a generic explanation at the end.”

The court also concluded that Argo’s statements of “general corporate optimism” did not meet the pleading standard to show they were misleading or false, but were instead described as “puffery” that is “inactionable.”

The plaintiffs also fell short on their claims of scienter. The court held the defendants actions “did not give rise to a strong inference of fraudulent intent.”

Counsel for the plaintiffs, Mica Cocco and Daniel Berger of Grant & Eisenhofer, did not respond to a request for comment.

Read the decision: