Coventry First LLC, a life insurance company headquartered at 7111 E Valley Green Road in Fort Washington, is being sued by Abacus Global Management, Inc., an alternative asset management company, due to an alleged “concentrated effort to manipulate market sentiment” about Abacus, described as Coventry’s “biggest competitor” in a statement released July 1.
According to the statement, Coventry’s founder/chairman Alan Buerger organized “a systematic campaign to disseminate false and misleading statements about Abacus to regulators, auditors, market analysts, customers, investors and the public, causing confusion, concern, and financial injury to Abacus, its clients, and its shareholders.”
The lawsuit alleges that a report published by Morpheus Research on June 4 was “Coventry’s latest attack on Abacus. Coventry will be responsible for hundreds of millions of dollars in damages should Abacus prove that Morpheus was acting as Coventry and Buerger’s willing partner.”
The lawsuit details a multi-year effort by Coventry and Buerger “to cast doubt on Abacus’ valuation practices and stock price. Unable to compete with Abacus’ transparent pricing model and performance, Coventry and Buerger devised a scheme to undermine Abacus through false and misleading statements to convince the market that Abacus pays policyholders too much for their policies, causing an overvaluation of Abacus’ assets”, the statement says.
On July 3, Coventry released a statement in response to the accusations.
“Abacus’s lawsuit is its latest misdirection and a transparent ploy designed to delay accountability and deflect attention from serious problems of Abacus’s own making,” Buerger said, noting that “Coventry had never heard of Morpheus Research before Morpheus published its initial short report on Abacus”.
The statement continues:
Coventry continues to believe that Lapetus systematically underestimates life expectancies, which directly threatens investor returns. This belief is validated by expert analysis that concluded exactly that. The studies are available at https://www.coventry.com/research/. It is telling that Abacus’s lawsuit does not directly challenge this bottom line finding, just as it is telling that Lapetus is currently litigating to prevent the disclosure of information that could reflect upon the accuracy (or inaccuracy) of its estimates.
Abacus’s complaint claims that none of its valuations for policies it owns depend on Lapetus’s life expectancy estimates. The complaint also states that Abacus does not use a life expectancy valuation model to value the policies on its balance sheet, instead using “market-based fair value accounting.”
These claims contradict numerous statements Abacus has made in SEC filings, including that it “utilizes a multitude of inputs to determine the fair value of the policies it holds, which may include life expectancy reports generated by a company in which [Abacus] holds a minority ownership interest”, i.e., Lapetus, and that “[t]he valuation of the life insurance policies will vary depending on the dates of the related mortality estimates and the medical underwriting firms that provide the supporting information.”