According to the law firm press release, Tower is a Bermuda-based insurance and reinsurance holding company that offers commercial, personal and specialty insurance products and services in the U.S. through its U.S. insurance subsidiaries and also offers reinsurance products globally.
The complaint alleges that during the Class Period Tower and certain controlling individuals of Tower made fraudulent material misrepresentations and omissions regarding Tower's business and operations. Among other things, the complaint alleges that defendants materially misrepresented and/or failed to disclose the following adverse facts: (i) that the Company failed to properly estimate its loss reserve provisions as required by Generally Accepted Accounting Principles, and (ii) that the Company failed to properly allocate its goodwill and certain deferred tax assets.
On August 7, 2013, Tower issued a press release announcing that it was postponing the release of its financial results for the second quarter of 2013 and its previously scheduled conference call to discuss the results, originally scheduled for August 8, 2013. In the press release, the Company stated that, "additional time is needed to review matters relating to the estimate of its loss reserves and, primarily due to the integration of the Canopius Bermuda merger, its allocation of goodwill and certain tax accounts." The Company also stated that it does not expect to file its quarterly report on Form 10-Q for the quarter ended June 30, 2013 by the required filing date of August 9, 2013. On August 8, 2013, the Company provided guidance on its second quarter 2013 results wherein it disclosed that the Company may record adverse reserve development of $60 million to $110 million pre-tax. The Company also disclosed that it had hired an independent actuarial firm to review selected areas of its loss reserves as of June 30, 2013. Following this news, the price of Tower's shares dropped $5.20 per share, or more than 24%, to a closing price of $16.41 per share on August 8, 2013. On August 9, 2013, the Company filed a Notification of Late Filing on Form 12b-25 with the United States Securities and Exchange Commission. On August 13, 2013, the rating agency A.M. Best Co. put the ratings of the subsidiaries of Tower under review with negative outlook. The negative rating action also reflects the ratings agency's concern about an anticipated prior-year loss reserve charge of approximately $60 million to $110 million pre-tax. The Company's results might suffer from reserve leverage and the increased uncertainty with respect to future reserve charges.
On July 21, 2015, the parties entered into a Stipulation of Settlement. This Settlement was preliminarily approved by the Court on August 13. Final judgment was entered on November 23.