According to the law firm press release, Meadowbrook was founded in 1955 as Meadowbrook Insurance Agency and was subsequently incorporated in Michigan in 1965. Meadowbrook is a holding company organized as a Michigan corporation in 1985. The Company's executive offices are located at 26255 American Drive, Southfield, Michigan 48034. The Company purports to be a specialty niche focused commercial insurance underwriter and insurance administration services.
The Complaint alleges that throughout the Class Period, Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company's business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (1) the Company's financial stability was severely impaired; (2) the Company's reported goodwill was materially inflated; (3) the Company's capital position was not strong enough to support its ongoing insurance operations in a sustainable fashion; (4) the Company was in breach of its financial covenants applicable to its credit facilities; (5) the Company lacked adequate internal and financial controls, including controls over outstanding claims, asset impairment charges and maintenance of an appropriate capital position; and (6) as a result of the foregoing, the Company's statements were materially false and misleading at all relevant times.
On October 19, 2012, A.M. Best Company ("A.M. Best") announced that it had put the financial strength rating and issuer credit rating of Meadowbrook's Insurance Company Subsidiaries, the Company's main operating subsidiary, under review with negative implications. On this news, the Company's shares fell $1.61 per share or over 20% to close on October 19, 2012 at $6.18 per share.
Then, on August 2, 2013, A.M. Best Company downgraded the Company's financial strength rating from "A-" (Excellent) to "B++" (Good) with a "stable" outlook. Following such downgrade, the Company promptly undertook an analysis to quantify asset impairment charges arising from such downgrade. On this news, Meadowbrook securities declined $0.80 per share or over 10%, to close at $6.74 per share on August 5, 2013.
On August 9, 2013, Meadowbrook announced that it was unable, without unreasonable effort or expense, to file its Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 within the prescribed time period. On this news, Meadowbrook securities declined a further $0.19 per share or over 2%, to close at $6.60 per share on August 12, 2013.
Finally, on August 14, 2013, the Company announced that it would take a non-cash impairment of goodwill of $115.4 million in the three months ended June 30, 2013. The impairment wiped out nearly all of the Company's goodwill on its balance sheet, and caused the Company to violate "financial covenants" applicable to the certain credit facilities. On this news the Company's shares fell $0.20 per share to $6.36 per share on August 15, 2013, a decline of 3.05%.
A consolidated complaint was filed on April 25, 2014.
A second amended complaint was filed on October 6, 2014.
Pursuant to a Stipulation of the parties, this case was ordered dismissed with prejudice on December 8, 2014.