Suit Alleges 20th Century Could Have Avoided Losses
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20th Century Industries was hit with a shareholder lawsuit alleging the Woodland Hills insurance company’s huge financial losses after the Northridge earthquake could have been avoided had the company held more reinsurance coverage.
The company nearly went out of business after being inundated with $990 million in quake damage claims. Eventually, state insurance regulators allowed the company to exit the homeowner’s insurance business, enabling 20th Century to concentrate solely on its auto insurance business.
20th Century’s chief executive, William Mellick, and other officials were named in the suit.
The company said in a statement that “the actions taken in connection with the Northridge earthquake were appropriate and in the best interest of all shareholders of 20th Century.”
In December 1994, American International Group, a New York-based insurer, provided a major capital infusion for 20th Century and is now its biggest shareholder.
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