ProAssurance Corporation Investors File Class Action Lawsuit to Recover Investment Losses
June 17, 2020by
The Portnoy Law Firm published a press release today advising investors that a class action lawsuit has been filed on behalf of ProAssurance Corporation investors that acquired ProAssurance securities between April 26, 2019 and May 7, 2020, inclusive (the “Class Period”).
The complaint filed in this lawsuit alleges that:
• During the Class Period, ProAssurance misrepresented its underwriting and reserve standards, and failed to adequately reserve for losses. Specifically, ProAssurance made false and/or misleading statements and/or failed to disclose that: (i) ProAssurance lacked adequate underwriting process and risk management controls necessary to set appropriate loss reserves in its Specialty P&C segment; (ii) ProAssurance failed to properly assess a large national healthcare account that experienced losses far exceeding the assumptions made when the account was underwritten; and (iii) as a result, ProAssurance was subject to a materially heightened risk of financial loss and reserve charges.
• On Jan. 22, 2020, ProAssurance announced that because of a deteriorating loss experience related primarily to one large healthcare account underwritten in 2016, it was estimating a $37 million adverse development in its Specialty P&C loss reserves for the fourth quarter of 2019. Additionally, ProAssurance stated that since mid-2019 it had been executing a “comprehensive underwriting strategy in response to emerging trends and changing conditions in healthcare professional liability.” In response to these disclosures, ProAssurance’s stock price fell $4.18 per share, or 11%, to close at $33.40 per share on Jan. 23, 2020.
• On Feb. 20, 2020, ProAssurance announced its 2019 fourth quarter and full year results. ProAssurance revealed that the adverse development from this one large national healthcare account was actually $51.5 million.
• Then, on May 8, 2020, ProAssurance announced that the large healthcare client would likely not renew its policy and instead would likely exercise an option for tail coverage that would result in an additional $50 million in losses in the second quarter of 2020. This loss, when combined with the $51.5 adverse development, meant that ProAssurance would suffer more than $100 million in losses from a single account. In response to these disclosures, ProAssurance’s stock price fell $4.38 per share, or 22%, to close at $15.95 per share on May 8, 2020.