2009-05-04 16:48:02 -

The commercial insurance industry is exposed to a surge in securities litigation filings in the first quarter of 2009, according to results of a quarterly review of securities litigation by Advisen, the leading provider of market information to the global commercial insurance industry. Advisen tracked 169 securities cases in its Master Significant Case and Action Database (MSCAd), up from 125

cases in Q4 2008 and 134 suits a year earlier in Q1 2008.

Projecting this filing activity forward, 2009 would see 676 securities cases, an increase of 38% over 2008. However, Advisen notes that Madoff-related cases were responsible for 30% of all securities cases in the first quarter, so the brisk pace of filings will likely abate through 2009.

The full report is available at no cost at corner.advisen.com/reports_topical_securities_quarter1_purchase_ .. :

“The Ponzi schemes – Madoff and Stanford – were the big drivers of securities suits filed in the first quarter,” said David K. Bradford, EVP and Co-Founder of Advisen. “Those suits, along with a large number of sub-prime and credit crisis suits filed in the quarter, continue to pound the financial institution sector, much as was the case in 2008.
It’s shaping up to be another tough year for financial institution D&O and E&O underwriters.”

Sixty-Seven securities class action suits (SCAS) were filed in Q1 2009, up from 53 cases the quarter before and 56 suits a year earlier. This translates to an annualized Q1 2009 figure of 268 cases filed, which would surpass the relatively litigious year of 2004 with 263 suits and 23% higher than the 218 suits filed in 2008.

Lists of suits and filing details are available at the Advisen store online at corner.advisen.com/reports_topical_securities_quarter1_purchase_ .. : and available at no extra charge to Advisen subscription members through their advisen.com logins. For more information please call +1.212.897.4800 or e-mail corner@advisen.com : mailto:corner@advisen.com .

After SCAS cases, securities fraud accounted for 34 suits filed in the first quarter, up from 19 in Q4 2008, but down from 54 in Q3 2008. On an annualized basis, securities fraud cases filed in Q1 2009 represented 136 cases, flat with 2008 but down from 175 in 2007. Other types of cases filed in Q1 2009 were: breach of fiduciary duties (26), collective actions in non-US courts (20), derivative shareholder actions and other derivative cases (14), and others (8).

“Advisen tracks all forms of securities litigation in MSCAd. In the past, securities class actions were the most common type of securities suit, but with the increase in breach of fiduciary liability, shareholder derivative and securities fraud suits, securities class action suits now represent less than 40% of filings,” continued Bradford. ”We also are seeing a significant up-tick in the number of securities suits filed outside the US, many of which were triggered by the Madoff scandal.”

MSCAd contains global filings and Advisen reports that the number of suits filed against non-US companies in US courts is on the rise, and so is the number of suits filed against both US and non-US companies in courts outside the US. Of the 169 securities cases filed in Q1 2009, 47 were filed against non-US companies, and 22 were in courts outside the US. A total of 27 suits were filed outside of the US court system, including five against US companies.

The average securities settlement/award in the first quarter was similar to recent year averages, but the quarter was unusual in that the largest awards all were securities fraud suits. Securities fraud cases typically are filed by regulatory agencies such as the US Securities and Exchange Commission.

“Q1 2009 saw 76 cases settled or awarded at an average amount of $27.9 million, which is up slightly from the 2008 average of $25.5 million,” noted John Molka III, CFA, Senior Industry Analyst and author of the report. “Securities fraud cases represented the largest five events totaling $951.8 million including one case awarding $406.5 million to STMicroelectronics from Credit Suisse in an auction-rate securities case.”

Dave Bradford and Jim Blinn of Advisen will be joined by Kevin LaCroix, author of the Internet weblog The D&O Diary www.dandodiary.com : , on a webinar on Friday May 4 th at Noon, EST, to review the findings of this quarterly report and to discuss the implications on the liability insurance market. Kevin is also an attorney and Partner in OakBridge Insurance Services, Beachwood, Ohio. To register for the free webinar, visit www1.gotomeeting.com/register/804065345 : .

As an additional service to readers, Advisen editors have identified five events consisting of 16 lawsuits making up most of the settled/awarded amounts for Q1 2009, totaling $951.8 million. Advisen defines each company named as a defendant in any event as a separate lawsuit, accounting for the 16 lawsuits. All were securities fraud cases, and all but one was a result of a regulatory action.

Lists of suits and filing details are available at the Advisen store online at corner.advisen.com/reports_topical_securities_quarter1_purchase_ .. : and available at no extra charge to Advisen subscription members through their advisen.com logins. For more information please call +1.212.897.4800 or e-mail corner@advisen.com : mailto:corner@advisen.com .


About Advisen

Advisen integrates business information and market data for the commercial insurance industry and maintains critical risk analytics and time-saving workflow tools for over 530 industry leading firms. Through its work for the broadest customer base among information service providers, Advisen delivers actionable information and risk models at a fraction of the cost to have them built internally. Designed and evolved by risk and insurance experts, and used daily by more than 100,000 professionals, Advisen combines the industry’s deepest data sets with proprietary analytics and offers insight into risk and insurance that is not available on any other system. Advisen is headquartered in New York.
For more information, visit www.advisen.com : or call +1.212.897.4800 in New York or +44(0)20.7929.5929 in London.



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