A class action lawsuit has been filed against PXRE by its shareholders over supposed violations of the Securities Exchange Act of 1934.

Schiffrin & Barroway gave notice that a class action lawsuit was filed in the US District Court on behalf of all shareholders of PXRE between 28 July 2005 and 16 February 2006.

The complaint charges PXRE, Jeffrey Radke, and John Modin with violations of the Securities Exchange Act of 1934.

The complaint alleges that PXRE failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them:

  • that the company concealed from investors the full impact on its business of Hurricanes Katrina, Rita, and Wilma;

  • that, in fact, the company's cost of the 2005 Hurricanes had doubled to an estimated $758m to $788m;

  • that the magnitude of the loss would cause the company to lose key financial-strength and credit ratings from AM Best;

  • that PXRE concealed the losses in order to complete a $114m secondary offering and raise more than $350m from an offering of perpetual preferred shares;

  • that as a consequence of the foregoing, the company's statements with respect to its loss estimates for the 2005 hurricane season lacked in all reasonable basis.

    On 16 February PXRE was downgraded to B++ (very good) from A- (excellent) by AM Best following the announcement of hurricane losses of between $281m to $311m.

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