Maiden faces class action lawsuit over AmTrust reinsurance deal

Bermuda reinsurer Maiden Holdings is faced with battling a class action lawsuit, which alleges that the company and some of its former officers misled investors over the nature of underwriting and risk management controls relating to  reinsurance agreements with AmTrust.

The reinsurer posted a significant increase in its net losses in the third quarter of 2018 mainly because of adverse prior year loss development in reinsurance contracts relating to AmTrust.

On November 9, 2018, the Company disclosed quarterly financial results that included a net loss of $308.8 million, a $210.4 million adverse prior year loss development in its AmTrust operating segment, and an impairment loss of $74.2 million resulting from the sale of business assets.

Following the announcement of the results, its share price fell by almost 32 percent.

The class action, pending in the United States District Court for the District of New Jersey, is being filed by law firm Kahn Swick & Foti (KSF). Investors who purchased the company’s shares between March 4, 2014 and November 9, 2018 have until April 12, 2019, to file lead plaintiff applications in the securities class action lawsuit.

The law suit alleges that Maiden and certain of its executives failed to disclose material information during the Class Period, violating federal securities laws.

In January this year, AmTrust dropped Maiden Re as its quota share partner on some business in favour of Swiss Re.

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