Meadowbrook Insurance says class-action litigation filed againstit is without merit.

“While we understand that it is not unusual for this type ofcomplaint to be filed when a company experiences a material drop inthe trading price of its shares, we believe that the complaint isinaccurate and the claims are entirely without merit,” says Mike Costello, senior vice president, general counsel andsecretary at Meadowbrook, in a statement. “We emphatically rejectany suggestion that the Company or any of its officers violated thefederal securities laws. Accordingly, we will vigorouslydefend ourselves and will pursue all remedies available to us inconnection with this matter.”

A federal class-action complaint alleging securities fraud hasbeen filed in U.S. District Court for the Southern District of NewYork by the law firm Pomerantz Grossman Hufford Dahlstrom &Gross. The suit seeks to recover damages against the company andcertain of its officers and directors as a result of allegedviolations of the federal securities laws. The insurer misledinvestors of its financial stability and inflated its goodwill, thesuit alleges.

Many other law firms have announced class-actions againstMeadowbrook, which could not file its second-quarter report on timeand announced a non-cash impairment of goodwill of $115.4 millionin the quarter.

In early August insurance industry rating agency A.M. Best Co.downgraded the Meadowbrook's financial strength rating from“A-minus” (Excellent) to “B-plus-plus” (Good) after putting theinsurer on watch with “negative implication” in October 2012.Following this news, shares of Meadowbrook have fallen.

TOWER IN CROSSHAIRS TOO

Also to hit the wire are multiple law firms announcinglitigation or investigations against Tower Group.

Tower recently received $5 million to step away from apreviously announced deal to buy American Safety Reinsurance fromFairfax Financial Holdings.

Fairfax bought American Safety and was going to sell thereinsurance subsidiary to Tower. But Catalina Holdings stepped into reach a deal with Fairfax for the reinsurer.