Meadowbrook Calls Lawsuit “Baseless and Without Merit”

Meadowbrook suitMeadowbrook Insurance Group will defend itself "vigorously" against a class-action lawsuit that accuses the company of not disclosing certain facts about the company to investors.

Source: Source: BestWeek - Michael Buck | Published on August 26, 2013

The company in a written statement said it has reviewed the complaint and thinks the lawsuit is "baseless and without merit." The written statement is the Meadowbrook's first response to the lawsuit.

The two-count lawsuit seeks certification as a class action on behalf of investors that bought Meadowbrook stock between July 30, 2012 and Aug. 8, 2013, and monetary damages for alleged violations of the Securities Exchange Act of 1934. It was filed Aug. 15 in U.S. District Court for the Southern District of New York.

"While we understand that it is not unusual for this type of complaint to be filed when a company experiences a material drop in the trading price of its shares, we believe that the complaint is inaccurate and the claims are entirely without merit," Mike Costello, a Meadowbrook senior vice president and its general counsel, said in the statement. "We emphatically reject any suggestion that the company or any of its officers violated the federal securities laws."

Meadowbrook recently saw its Best's Financial Strength Rating changed to B++ (Good) from A- (Excellent). The change was a triggering event for potential goodwill impairment, the company said in a regulatory filing. Meadowbrook in a financial statement filing said it needed to make a non-cash goodwill impairment charge of $115.4 million.

The morning of Aug. 23, shares of Meadowbrook Insurance Group Inc. were trading at $6.06, down 0.49% from the previous close.