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Trenwick’s and Trenwick America’s financial statements were tainted by improper

accounting practices, when those financial statements were made public, and the

circumstances that suggest that any inaccuracies were intentional, rather than good faith

mistakes in estimation. Perhaps of paramount importance is the insinuation that

Trenwick and Trenwick America made knowingly false estimates of the potential

insurance claims their operating companies faced. The very public disclosures the

complaint refers to expressly indicate that estimates regarding potential claims and the

reserves necessary to address them are imprecise and cannot be guaranteed.117 That such

estimates later turned out to be too low does not buttress a fraud claim. What is

necessary is the pleading of facts suggesting that the original estimates were fraudulently

conceived, from the get-go. This does not require a plaintiff to probe the mindset of the

defendants, what it does require is that the plaintiff set forth particularized facts regarding

the precise estimates in question, the circumstances suggesting they were unsound from

the inception, and why the defendants had an incentive to intentionally low-ball them.

The Litigation Trust has not even made a good faith effort to plead its claim. Instead of

attempting to meet a Rule 9(b) standard, the Litigation Trust simply argues backwards

from the fact of the Trenwick family’s eventual bankruptcy that all of its financial

statements during the period of the challenged transactions must have contained knowing

falsehoods.

117 , Hefter Decl. Ex. A at 12 (Trenwick 10-K filed Aug. 22, 2000); Stone Aff. Ex. 6 at 11 (Trenwick 10-K filed Apr. 2, 2001).

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