Property and casualty insurer
Tower Group Inc
) reported first quarter 2012 operating earnings of 56 cents per
share, 2 cents below the Zacks Consensus Estimate. Earnings,
however, increased 14% year over year, led by higher revenue and
lower share count, partly offset by an increase in operating
The New York-based insurer posted total revenue of $466.5
million, up 8.4% year over year. The growth was primarily
attributable to increased net premiums earned and higher net
investment income, partly offset by declines in ceding commission
revenues and net realized investment gains.
Gross premiums written were $467.4 million, up 20% year over
Net investment income for the reported quarter improved 5.1%
year over year to $32.3 million owing to a higher invested asset
base, partially offset by low investment yield.
Total expenses were $435.0 million, up 11.2% year over year. The
net loss ratio was 64.2% compared with 64.7% in the prior-year
Net combined ratio, a measure of underwriting profitability,
declined 170 basis points year over year to 99.4%.
segment witnessed a 27.5% increase in net premium written to $297.8
million. Total revenues for the segment increased 17% year over
year to $299.4 million.
segment's net written premiums decreased 3.1% year over year to
$122.3 million, owing to Tower's decision to discontinue certain
businesses obtained after the One Beacon Personal Lines ("OBPL")
acquisition, partly offset by modest organic growth in the
segment revenues increased 0.9% year over year to $7.4 million,
attributable to higher management fee; partly offset by lower other
Book value per share of $26.83 as of March 31, 2012 was up 1.7%
sequentially and 6.3% year over year.
Tower reiterated its fiscal 2012 operating earnings guidance
range of $2.60-$2.70 per share.
Recently, Tower announced that it would invest $75 million in
Canopius Group, Ltd. The deal is, however, dependent on the
acquisition of Omega Insurance Holdings Limited by Canopius.
Tower results reveal that the company is benefiting from strong
organic growth from newly-created businesses and 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 headwinds.
Tower competes with other property and casualty insurers, such
The Travelers Companies, Inc.
CHUBB CORP (CB): Free Stock Analysis Report
TRAVELERS COS (TRV): Free Stock Analysis Report
TOWER GROUP INC (TWGP): Free Stock Analysis
To read this article on Zacks.com click here.