James River Group Holdings, Ltd. (NASDAQ:JRVR), a Bermuda-based insurance company with a market capitalization of $185 million, announced on Thursday that the U.S. District Court, Southern District of New York has dismissed a class action lawsuit against the company and some of its officers.
The lawsuit, initiated by plaintiff Paul Glantz on November 13, 2023, claimed that investors purchased the company's stock at inflated prices due to allegedly improper accounting for reinsurance premiums and ineffective internal control over financial reporting. According to InvestingPro data, the company maintains strong liquidity with a current ratio of 3.81, indicating its ability to meet short-term obligations.
The court's decision on Wednesday to dismiss the lawsuit with prejudice means that the case is closed and cannot be refiled. The plaintiff alleged that the misconduct occurred between May 2, 2023, and November 7, 2023. However, the court's ruling did not find merit in the allegations, effectively siding with James River Group's position. The company's stock has experienced significant volatility, trading between $4.35 and $11.49 over the past 52 weeks.
The plaintiff has until February 24, 2025, to file a notice of appeal against the dismissal. The dismissal represents a significant legal victory for James River Group, potentially putting an end to the litigation that has been pending since late 2023.
James River Group specializes in fire, marine, and casualty insurance and operates under the SIC code 6331. The company's business address is Clarendon House, 2 Church Street, Hamilton, Pembroke HM 11, Bermuda. The information regarding the lawsuit's dismissal is based on the company's recent SEC filing.
In other recent news, James River Group Holdings experienced significant corporate finance activities, including amending its investment agreement with Gallatin Point Capital LLC's affiliate, altering the rights of security holders, and executing a subscription agreement with Cavello Bay Reinsurance Limited.
The company also reported a net loss from continuing operations of $1.07 per share in the third quarter of 2024, primarily due to a reinsurance transaction and a significant reserve charge. Despite this, strategic actions were taken to strengthen its financial position, such as securing a $12.5 million investment from Enstar Group and converting preferred shares into common equity.
James River Group also reported a modest profit of $1.8 million and no net catastrophe losses within its segments. The company's Excess and Surplus lines segment witnessed a combined ratio of 136.1%. The net investment income saw an increase of 8.1% to $23.6 million.
These recent developments also include the anticipation of issuing 7.8 million additional common shares from a $50 million equity sale, a reduction in the quarterly common dividend to $0.01 per share, and a planned focus on underwriting opportunities and shareholder value creation. The merger with Enstar is expected to conclude soon, subject to regulatory approval.
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