Law Suits Follow Converium North America Runoff

Law Suits Follow Converium North America Runoff

By Daniel Hays

NU Online News Service, Oct. 6, 11:40 a.m. EDT?The collapse of Swiss reinsurer Converium's North American operations has spawned a barrage of class-action lawsuits.[@@]

The company acknowledged yesterday that it knew suits had been filed in Manhattan's U.S. District Court on behalf of all stockholders of Converium Holding AG who bought shares from Dec. 11, 2001 through July 20, 2004.

Converium said it had not, thus far, been able to obtain the complaints from the court and couldn't comment further.

The law firm of Schiffrin & Barroway in Bala Cynwyd, Pa. announced that its complaint alleges the company violated securities law by failing to disclose and misrepresenting adverse facts that management knew about or "recklessly disregarded."

Specifically, it alleged the company did not disclose that it had inadequate loss reserves for Converium North America, did not establish adequate reserves to cover claims, and announced materially insufficient reserve increases and overstated earnings and assets. Three other law firms have filed suit with similar claims.

The Schiffrin & Barrow action noted that the Zug-based company share price started dropping after a nearly $400 million reserve strengthening for its U.S. casualty business in July.

On Sept. 10--after the company was hit with rating downgrades from A.M. Best Co. and Standard & Poor's--Converium said it was putting the North American operation in runoff, and the president of that unit, Gary Prestia, had resigned.