Markel Faces Investor Lawsuit Over CATCo Loss Reserves

January 17, 2019

Markel Corp. is facing is class action shareholder lawsuit over reserve statements by its investment management unit that are being investigated by U.S. and Bermuda authorities

New York law firm Bragar Eagel & Squire said it filed the class action U.S. District Court for the Southern District of New York on behalf of purchasers of Markel Corp. securities between July 26, 2017 and December 6, 2018.

On Friday Dec .7, Markel Corp. said it was fully cooperating with inquiries by U.S. and Bermuda authorities into loss reserves recorded in late 2017 and early 2018 at Markel CATCo Investment Management Ltd., the company’s investment manager, and its subsidiaries. The inquiries are limited to Bermuda-based Markel CATCo Investment Management Ltd. and its subsidiaries and do not involve other Markel Corp. entities.

Last November, CATCo Investment Management boosted reserves for Hurricane Michael and typhoon Jebi. It also cautioned about potential a loss creep from 2017 hurricanes and about potential losses from California wildfires that raged in November. In December 2018, CATCo Investment Management announced its intention to boost loss reserves related to the 2017 hurricanes Harvey, Irma, Maria and the California wildfires that raged that year.

CATCo Investment Management manages portfolios of investments linked to reinsurance risks accessed through its reinsurance company Markel CATCo Re.

The investor complaint alleges that CATCo Investment Management failed to disclose to investors that the company’s subsidiaries did not appropriately record loss reserves and that, as a result, the loss reserves would need to be adjusted and/or restated. It further alleges that the firm did not disclose that its alleged misleading accounting practices would lead to regulatory scrutiny and financial loss to investors.

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