The U.S. Third Circuit Court of Appeals issued has upheld a judgment of $182.9 million in a malpractice case against the accounting firm PriceWaterhouseCoopers for its dealings with the failed Ambassador Insurance Co.
Ambassador Insurance Co. (a Vermont domiciled surplus lines insurance company with headquarters in New Jersey) was seized in 1983 and placed into court-supervised rehabilitation and subsequent liquidation as a result of its insolvency. Since that time, the
state’s insurance commissioner has been trying to collect and distribute assets under court supervision in order to pay the claims of persons insured and owed money by Ambassador.
An accounting malpractice lawsuit filed in 1985 by the Vermont insurance commissioners against PriceWaterhouseCoopers charged
Ambassador’s outside accountants with negligence in connection with audits of Ambassador’s financial statements that served to conceal from regulators the insurance company’s financial weakness and near insolvency.
A nine week trial in federal court in Newark, N.J., resulted in a jury verdict against PriceWaterhouseCoopers and the estate of
Arnold Chait, Ambassador’s former president.
The U.S. Third Circuit Court of Appeals this week upheld the 2005 verdict and PriceWaterhouseCooper’s obligation to pay all of the resultant damages, and confirmed judgment for the full $182.9 million.
Paulette J. Thabault, commissioner of the Vermont Department of Banking, Insurance, Securities and Health Care Administration
said she considers the outcome another success for state-based regulation of insurance companies, noting that Ambassador
policyholders and claimants will finally have the opportunity to receive the insurance proceeds they were due under Ambassador insurance policies as a result of these proceedings.
“As a department, we’re committed to protecting the interests of policyholders, and pleased that the years of work in connection with these receivership proceedings should allow us to make full payment to all policyholders,” Thabault said
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