Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Property and casualty insurer Tower Group Inc. (TWGP - Analyst Report) 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 expenses.

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 year, 

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 quarter.

Net combined ratio, a measure of underwriting profitability, declined 170 basis points year over year to 99.4%.

Segment Performance

Tower’s Commercial 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.

Personal 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 homeowners business.

Insurance Services segment revenues increased 0.9% year over year to $7.4 million, attributable to higher management fee; partly offset by lower other revenue.

Book value per share of $26.83 as of March 31, 2012 was up 1.7% sequentially and 6.3% year over year.

2012 Guidance

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 as Chubb Corp. (CB - Analyst Report), and The Travelers Companies, Inc. (TRV - Analyst Report).

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

Learn more

Start for as little as $4.50 per trade.

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
DIXIE GROUP DXYN 15.84 +7.90%
BOFL HOLDING BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%