James River Group Holdings, Ltd. (JRVR) Lacked Effective Internal Control Over Financial Reporting
A shareholder filed a class action lawsuit on behalf of persons and entities that purchased or otherwise acquired James River Group Holdings, Ltd. (NASDAQ: JRVR) securities between August 7, 2023 and November 7, 2023. James River is an exempted holding company registered in Bermuda, organized for the purpose of acquiring and managing insurance and reinsurance entities.
According to the complaint, during the class period, defendants failed to disclose to investors that: (1) James River lacked effective internal controls regarding the recognition of reinstatement premiums for reinsurance; (2) as a result, the Company overstated its net income; and (3) the Company was reasonably likely to restate its financial results.
Plaintiff alleges that on November 7, 2023, the Company announced its third quarter 2023 financial results in a press release, wherein James River disclosed that it had “identified an error in the accounting for reinstatement premium . . . in its Excess & Surplus Lines segment” in the previously issued financial statements for the second quarter of 2023. Specifically, the error resulted in overstatements of net income of $7.8 million and $10.4 million for the three and six months ended June 30, 2023, respectively, as well as understatements of ceded written premium, and overstatements of net written premium and net earned premium of $9.4 million and $12.3 million for the three and six months ended June 30, 2023, respectively. Moreover, it had identified a material weakness in its internal control over financial reporting because the “Company’s control over the review of the determination of when reinstatement premiums for reinsurance should be recognized did not operate effectively[.]”
On this news, the Company’s share price fell $0.99, or 7%, to close at $13.15 on November 8, 2023.
What Now: Similarly situated shareholders may be eligible to participate in the class action against James River Group Holdings, Ltd. Shareholders who want to act as lead plaintiff for the class should contact Robbins LLP. Plaintiffs must file their lead plaintiff papers by January 12, 2024. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. You do not have to participate in the case to be eligible for a recovery. If you choose to take no action, you can remain an absent class member.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.