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A putative class action lawsuit has been filed against Markel Corp. and its officers in connection with the stock drop that followed the news Bermudian and U.S. authorities were investigating an investment unit of the firm.
The Richmond, Virginia-based insurer announced in December the inquiries related to loss reserves recorded in late 2017 and early 2018 by Market CATCo Investment Management Ltd. and its subsidiaries. Markel bought the unit, which provides collateralized coverage to reinsurers, in 2015.
Markel said at the time it was “fully cooperating” with the inquiries and they did not involve other Markel Corp. companies.
The putative class action suit, David Bergen et al. v. Markel Corp. et al., was filed in U.S. District Court in New York on Friday. Others named as defendants in the lawsuit include co-CEOs Thomas S. Gayner and Richard R. Whitt III.
According to the lawsuit, the company’s stock dropped more than 8% to close at $1,048.23 per share on Dec. 6 “on unusually high trading volume” following news of the inquiries.
The suit, which was filed by plaintiff law firm Bragar Eagel & Squire P.C. in New York, charges the defendants violated securities laws by failing to disclose its subsidiaries did not appropriately record loss reserves, which would result in the reserves having to be adjusted and/or restated, and investors’ financial loss.
The court issued a summons in the case calling on Markel to respond to the litigation on Monday.
A Markel spokesman could not immediately be reached for comment on the litigation.
Richmond, Virginia-based insurance holding company Markel Corp. has entered into an agreement to acquire substantially all assets of Hamilton, Bermuda-based CATCo Investment Management Ltd., the companies announced Thursday.