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You are here: Home / Reinsurance Transactions / Accounting for Reinsurance / SECOND CIRCUIT REVERSES DENIAL OF SETTLEMENT CLASS CERTIFICATION IN AIG/GEN RE FINITE REINSURANCE SECURITIES LITIGATION

SECOND CIRCUIT REVERSES DENIAL OF SETTLEMENT CLASS CERTIFICATION IN AIG/GEN RE FINITE REINSURANCE SECURITIES LITIGATION

August 22, 2012 by Carlton Fields

In a case we have reported on previously, AIG purported to settle class action securities law claims arising from alleged finite reinsurance transactions between it and Gen Re. The district court, however, denied the parties’ joint motion for approval of the settlement, finding that it could not certify a settlement class because the “fraud-on-the-market” theory used to prove reliance was not viable under the facts of the case, resulting in a failure to satisfy the predominance requirement of Federal Rule of Civil Procedure 23(b)(3). The Second Circuit reversed, however, finding that the failure of the fraud-on-the-market theory was relevant only to a manageability analysis, and not to a predominance analysis. Since a court need not engage in a manageability analysis to certify a settlement class under the Supreme Court’s Amchem case, a settlement class could be certified. In re American International Group Securities Litigation, No. 10-4401-cv (2d Cir. Aug. 13, 2012)

This post written by John Pitblado.

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Filed Under: Accounting for Reinsurance, Contract Interpretation, Criminal Actions, Reserves

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