A federal appeals court in New York has upheld a lower court's ruling that threw out a lawsuit alleging that failed Bermuda-based reinsurer PXRE Group Ltd. deceived investors in reporting 2005 hurricane losses, according to a report by Business Insurance.

The publication said that, in its ruling last Monday, the second US Circuit Court of Appeals affirmed a March ruling by a federal judge, who dismissed the case brought against the reinsurer and three former executives.

Investors were seeking to have the dismissal overturned. However, the appeals court upheld the lower court's ruling that plaintiffs did not provide facts that would lead to a "strong inference" of wrongdoing.

The 2006 shareholder securities lawsuit argued that PXRE concealed the magnitude of losses from hurricanes Katrina, Rita and Wilma. The suit alleged PXRE engaged in a scheme to understate its losses to rebuild its balance sheet by raising capital and, after raising the capital, increased its loss estimates to more than $800 million. That resulted in ratings downgrades, according to the complaint.

The suit named three former PXRE executives, including former President and CEO Jeffrey Radke, former chief financial officer John Modin, and former president Guy Hengesbaugh.

An attorney for the defendants said he was "very pleased with the court's quick decision".

"While it is correct the company did change its loss estimates, they did not engage in any deceptive action," said Jonathan Youngwood, a partner with Simpson Thacher & Bartlett LLP in New York who represents PXRE Group Ltd.

Business Insurance said that an attorney for the investors could not be reached immediately for comment.

PXRE, whose primary focus was property catastrophe reinsurance and retrocessional coverage, stopped writing new business in 2006 and asked major rating agencies to withdraw their ratings after it faced downgrades following the 2005 losses. In 2007, San Antonio-based Argonaut Group Inc. bought PXRE in a cash-and-stock deal, at which time Mr. Radke resigned.