According to the court docket, the judge entered his Final Order and Judgment on December 12, 2007 approving the terms of the settlement and awarding counsel $4,285,725.54 in fees and expenses. The $15 million settlement will be funded entirely by PMA Capital's insurance carriers.
According to a press release dated September 28, 2007, a settlement for $15,000,000 has been proposed in the Action. A hearing will be held before the Honorable Petrese B. Tucker in the James A. Byrne United States Courthouse, 601 Market Street, Philadelphia, PA 19106-1797, at 9:15 a.m., on December 11, 2007, 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.
In a press release dated May 3, 2007, PMA Capital Corporation also announced that it has reached agreement to settle the securities class action, In re PMA Capital Corporation Securities Litigation (Civil Action No. 03-6121), pending in the U.S. District Court for the Eastern District of Pennsylvania. The settlement is subject to documentation and Court approval. The settlement agreement makes no admission of liability or wrongdoing by the Company or its officers and directors. The amounts necessary to fund this settlement will be paid by insurance carriers for the Company.
As disclosed by the Company’s FORM 10-Q For The Quarterly Period Ended June 30, 2006, the Company and certain of its directors and key executive officers are defendants in several purported class actions that were filed in 2003 in the United States District Court for the Eastern District of Pennsylvania by alleged purchasers of the Company’s Class A Common stock, 4.25% Senior Convertible Debt due 2022 and 8.50% Monthly Income Senior Notes due 2018. On June 28, 2004, the District Court issued an order consolidating the cases under the caption In Re PMA Capital Corporation Securities Litigation (civil action no. 03-6121) and appointing Sheet Metal Workers Local 9 Pension Trust, Alaska Laborers Employers Retirement Fund and Communications Workers of America for Employees’ Pension and Death Benefits as lead plaintiff. On September 20, 2004, the plaintiffs filed an amended and consolidated complaint on behalf of an alleged class of purchasers of the Company’s securities between May 5, 1999 and February 11, 2004. The complaint alleges, among other things, that the defendants violated Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder by making materially false and misleading public statements and material omissions during the class period regarding the Company’s underwriting performance, loss reserves and related internal controls. The complaint alleges, among other things, that the defendants violated Sections 11, 12(a) (2) and 15 of the Securities Act by making materially false and misleading statements in registration statements and prospectuses about the Company’s financial results, underwriting performance, loss reserves and related internal controls. By Order dated July 27, 2005, the District Court partially granted the Company’s previously filed Motion to Dismiss the Amended Complaint, dismissing all allegations with respect to The PMA Insurance Group, and otherwise denied the Motion to Dismiss. By virtue of the Order, the alleged class period was reduced to November 6, 2003
Various lawsuits have been filed against PMA Capital Corporation (PMA) alleging that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by issuing a series of material misrepresentations to the market, causing the company's stock to reach an artificially high price.
The first complaint filed allege that PMA's public statements during the Class Period were materially false and misleading because (a) PMA maintained inadequate loss reserves for its PMA Re subsidiary; (b) reserve increases for PMA Re announced during the Class Period were materially insufficient; and (c) as a consequence of the understatement of loss reserves, PMA's earnings and assets were materially overstated at all relevant times. This action was filed on behalf of all who purchased PMA's securities between May 7, 2003 and November 3, 2003.
Similar complaint filed on behalf of purchasers of the securities of PMA between November 13, 1998 and November 3, 2003, alleges that during the Class Period, the Company represented that it had established adequate loss reserves to pay or settle losses arising from insurance claims made by PMA policy holders, and that any estimated claims were revised according to the availability of new information. According to the complaint, defendants created favorable conditions for PMA to complete two offerings of convertible senior debentures and monthly income senior notes during the Class Period, valued at $75 million and $50 million, respectively. In addition, the complaint alleges, defendants sought to obtain positive ratings from insurance industry rating agencies which would enable them to underwrite insurance policies and negotiate reinsurance treaties, worth millions of dollars in premiums, to purchasers who relied on such ratings as a measurement of PMA's capital structure.
Another complaint was filed on behalf of all persons who specifically purchased or otherwise acquired securities of PMA Capital Corporation issued in public offerings dated October 16, 2002 and June 5, 2003 pursuant to a Registration Statement dated July 18, 2002 and Prospectus filed with the Securities and Exchange Commission and Prospectus Supplements dated October 16, 2002 in connection with the offering of 4.25% Convertible Senior Debentures Due 2022 (the "4.25% Debentures") and dated June 5, 2003 in connection with the offering of 8.5% Monthly Income Senior Notes due 2018 (the "8.5% Notes") (AMEX:PMK) (collectively: the "Offerings"). This Complaint alleges that the defendants violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 by making materially false and misleading statements in the Registration Statement, Prospectus and Prospectus Supplements regarding the net income of PMA for the years 1997 through 2000. The complaint further alleges that PMA's net income was overstated during those years and that as a result of these materially false and misleading statements; the price of PMA's securities in the Offerings was artificially inflated. Open market purchasers of PMA Securities are not represented in this lawsuit. Only persons who purchased the Company's securities pursuant to the registration statement, prospectus and/or a prospectus supplement in connection with the 4.25% debentures or the 8.5% notes are included within the class which is the subject of this notice.