According to a press release dated March 14, 2008, the action has been certified as a class action for settlement purposes only and that a $10.5 million cash settlement ("KPMG Settlement") has been proposed with the sole remaining defendant, KPMG Bermuda, ANR' s outside accountant during the Class Period. A hearing will be held before the Honorable Ellen Bree Burns in the United States Courthouse, 141 Church Street, New Haven, Connecticut 06510, at 10:00 a.m. on June 5, 2008 to determine whether the proposed settlement should be approved by the Court as fair, reasonable, and adequate, and to consider the application of Plaintiffs' Counsel for attorneys' fees and reimbursement of expenses. This KPMG Settlement is in addition to a prior $16.5 million settlement with ANR, XL Capital, Ltd. and certain of ANR' s officers and directors, which was approved by the Court on January 21, 2005.
According to the docket, on January 27, 2005, the Court granted the motion for proposed class action settlement, certification of settlement class and petition for award of attorneys' fees and reimbursement of expenses. The Court entered the Order and Final Judgment.
As reported by the Company's SEC 10-Q/A filing as of September 30, 2004, in October 2004, the court ordered that notice of the settlement be given to class members, set deadlines for class members to exclude themselves from the class or file objections to the settlement, and scheduled a Settlement Fairness Hearing for January 2005. The settlement cannot be consummated until and unless the court approves it.
Further, according to the same 10-Q/A, on July 20, 2004, the company announced that we had reached an agreement in principle with the plaintiffs, subject to full documentation by the parties to the settlement, notice to the class, court approval and other steps required to consummate a class action settlement, to settle the lawsuit. On August 27, 2004, the parties to the settlement executed and filed a Stipulation setting forth their settlement agreement, and sought court approval. The parties to the settlement are the plaintiffs and the class, Annuity and Life Re (Holdings), Ltd. [ALR], all individual defendants and XL Capital, Ltd. The settlement is without any admission of liability or wrongdoing. ALR, along with their directors and officers’ liability carrier and XL Capital Ltd., have agreed to pay an aggregate of $16.5 million. ALR's share of the settlement is $2.5 million in cash, which was paid into escrow in August 2004, and an additional $2.5 million in common shares (subject to a cap of 19.9% of our outstanding shares), although ALR has reserved the right to elect to pay this portion in cash.
The original Complaint alleges that defendants violated the federal securities laws by issuing a series of materially false and misleading statements and/or concealing material adverse facts throughout the Class Period thereby artificially inflating the price of the Company's securities. Specifically, the Complaint alleges that defendants failed to disclose and/or misrepresented the following adverse facts, among others: (i) that the Company had failed to properly account for embedded derivatives contained in its annuity reinsurance contracts in 2001; (ii) that, since at least 2001, the Company had understated a portion of its liabilities and expenses; (iii) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; and (iv) that as a result, the value of the Company's balance sheet and financial results were materially overstated at all relevant times. On November 19, 2002, the last day of the Class Period, the Company announced that it was going to restate its financial results for 2000, 20001 and the first and second quarters of 2002 due to the Company having improperly accounted for embedded derivatives contained in its annuity reinsurance contracts during those years. The Company's stock plummeted 44% upon this revelation.