PwC to Pay Millions for Insurer's Collapse

PricewaterhouseCoopers was ordered to pay $182.9 million in connection with audits it performed for Ambassador Insurance Co., more than 20 years after the company collapsed into bankruptcy.

A third of the penalties are due to interest accrued on the decades-old case.

U.S. District Judge Harold Ackerman handed down the judgment in Newark, N.J., about two months after a jury awarded nearly $120 million in damages to Ambassador's receiver. PwC has said that it will appeal both judgments.

Judge Ackerman ruled that PwC and the estate for Ambassador's former president were jointly liable for the amounts awarded. Another $63 million was included in the settlement for interest. The estate for Ambassador's former president, the late Arnold Chait , has said that it has no significant assets, which means PwC may be required to pay the full amount.

PwC was the successor of Coopers & Lybrand LLP, a firm that the State of Vermont, where Ambassador was incorporated, accused of negligent audits. The case itself, which accused Ambassador's management and auditor PwC of covering up its weak financial condition and mismanagement, is decades old -- the insurance company became insolvent in 1983 and was seized by Vermont's insurance commissioner.The lawsuit, originally brought in Vermont in 1985, took so long to resolve because it languished, with related cases, in federal court in Brooklyn, N.Y., before being sent to a New Jersey in the late 1990s, where the insurer had been located.