Bermuda-based reinsurer PXRE Group, Ltd. has been accused in a stockholders lawsuit of making false and misleading statements and withholding hurricane loss information to artificially inflate share prices.

The Radnor, Pa.-based law firm Schiffrin & Barroway, LLP, made the charges in a securities class action lawsuit against the reinsurer filed in U.S. District Court in Manhattan.

According to the complaint, company officials failed to disclose to investors the full impact of Hurricanes Katrina, Rita and Wilma and the losses of up to $788 million. The resulting news caused a downgrade in its credit and financial strength rating.

The law firm accused the company of hiding the information in order to secure a $114 million secondary offering and to raise more than $350 million from investors.

After news of the losses on Feb. 16 company shares fell $7.85, a loss of close to 66 percent, to close at a share value of $4.05 a share.

The suit names Jeffrey L. Radke, PXRE president and chief executive officer, and John M. Modin, executive vice president and chief financial officer, as defendants for withholding information.

The suit seeks payment of compensatory damage and court costs of an unspecified amount.

A call to PXRE for comment was not immediately returned.

Special Reports /

PXRE Stockholder Suit Filed Over Loss Disclosure

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