Property and casualty insurer,
Tower Group Inc.
) reported second quarter 2012 operating loss of 39 cents per
share, 2 cents lower the Zacks Consensus Estimate loss of 41 cents.
In the year-ago quarter, the company had reported operating
earnings of 63 cents per share. The lower-than-expected results
were due to a charge related to reserve strengthening and
The New York-based insurer posted total revenue of $506.1
million, up 16% year over year. The growth was primarily
attributable to increased net premiums earned.
Gross premiums written were $537.6 million, up 15% year over
Net investment income for the reported quarter remained
unchanged against the year-ago level of $31.8 million.
Total expenses were $531.7 million, surging 35% year over
The net loss ratio was 76.0% in the quarter under review,
compared with 61.2% recorded in the comparable quarter last
Net combined ratio, a measure of underwriting profitability,
declined to 110.8% from 94.9% in the prior-year quarter.
segment witnessed a 16.3% hike in net premium written to $343.7
million. Total revenues for the segment increased 27% year over
year to $342.9 million.
segment's net written premiums escalated 6.7% year over year to
segment revenues surged 22.2% year over year to $9.3 million,
attributable to mounted management fee as well as higher other
Book value per share was $26.53 at June 30, 2012 compared to
$26.37 at December 31, 2011.
Tower reiterated its fiscal 2012 operating earnings guidance
range of $1.45 - $1.55 and anticipates 2013 operating earnings per
share to be in a range of $2.85 - $3.05.
During the quarter, Tower announced a merger with Canopius'
Bermuda operations. This merger will result in huge benefits for
Tower and will further help it gain access to Bermuda and Lloyd's
Tower's results reveal that the company is benefiting from
strong organic growth from newly-created businesses and from
slightly positive trends in insurance pricing in certain lines of
business. A major tailwind for the company is the favorable pricing
trend, which is expected to continue in 2012. However, a low
interest rate environment, exposure to catastrophe-prone areas and
an overall soft insurance market are some of the near-term
Tower competes with other property and casualty insurers, such
The Travelers Companies, Inc.
Tower Group currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating. We are also maintaining our
long-term Neutral recommendation on its shares.
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