Back to top

Analyst Blog

Following the announcement from Tower Group International, Ltd. (TWGP - Analyst Report) last week, that it would postpone its second quarter earnings release date, the rating agency A.M. Best Co. had taken a negative rating action on the company. 
 
The rating agency has put the ratings of the subsidiaries of Tower Group under review with negative outlook, This includes the financial strength ratings (FSR) of A- (Excellent) and issuer credit ratings (ICR) of “a-” of the pooled and reinsured members of the Tower US Pool (Tower); bbb-” as well as the debt rating of “bbb-” on $142.5 million 5.00% senior convertible notes, due 2014 of the intermediate holding company, Tower Group, Inc; the FSR of A- and ICR of “a-” of CastlePoint Reinsurance Company, Ltd.
 
The negative rating action also reflects the rating agency’s concern about an anticipated prior-year loss reserve charge of approximately $60 million to $110 million pre-tax. The company’s results might suffer from reserve leverage and the increased uncertainty with respect to future reserve charges.
 
However, the rating agency is confident that despite the reserve charge, Tower’s risk- adjusted capital will remain at levels supportive of its current investment grade ratings. 
 
Tower’s ratings will remain under the agency’s scanner. Further rating action will take place after gaining enhanced clarity about the company’s reserve position.   
 
The Zacks Consensus Estimate for second quarter is currently pegged at 49 cents per share. In the year-ago quarter Tower Group had reported loss of 34 cents per share.  
 
Tower Group presently carries a Zacks Rank #3 (Hold). Property and casualty insurers , HCI Group Inc. (HCI - Snapshot Report), Everest Re Ltd. (RE - Analyst Report) and State Auto Financial Corp. (STFC - Snapshot Report), carry favorable Zacks Rank #1 (Strong Buy) and look impressive.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
STRATTEC SE… STRT 80.24 +3.00%
PATTERSON-U… PTEN 34.54 +2.98%