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| [January 16, 2013] |
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Tower Group Provides Update on Merger Status and Announces Filing of 2012 Form 10-Q/As
NEW YORK --(Business Wire)--
Tower Group announced today that it has received all required insurance
regulatory approvals for its merger agreement with Canopius Holdings
Bermuda Limited (CHBL). Tower Group also announced today that it is
restating its reports issued on Form 10-Q for the periods ended March
31, 2012, June 30, 2012 and September 30, 2012. During the review by the
Securities and Exchange Commission (SEC (News - Alert)) of the CHBL Form S-4, in
connection with the previously announced merger between Tower and the
Bermuda reinsurance operations of Canopius Group Ltd., Tower determined
that a $3.1 million deferred tax item that had been recorded as a
reduction to tax expense and disclosed in Tower's report on Form 10-Q
for the period ended March 31, 2012 should more appropriately be
recorded as a reduction to goodwill. Tower has made this change and has
also recorded into the periods in which they originated other immaterial
adjustments that were initially recorded in the periods in which they
were identified. In addition, Tower also recorded adjustments affecting
the net income of the reciprocal businesses which did not affect
earnings per share or book value per share for Tower's common
shareholders, because the reciprocal businesses are consolidated with
Tower but are not included in net income attributable to Tower Group,
Inc. or in Tower Group, Inc. stockholders' equity. As a result of these
immaterial adjustments, Tower is also revising its Form 10-K for the
year ended December 31, 2011. Below is a summary of the impact of the
adjustments on various shareholder measures:
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($ in thousands, except per share data)
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9/30/12 Year to
date
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As reported
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As restated
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Tower Group, Inc. Stockholders' Equity
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$1,054,981
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$1,051,473
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Per Share
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$27.49
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$27.40
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Tower Group, Inc. Tangible Equity (1)
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$703,072
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$704,119
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Per Share
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$18.32
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$18.35
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Net Income Attributable to Tower Group, Inc.
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$27,150
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$23,985
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Per Share - diluted
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$0.70
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$0.62
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Operating Income (1)
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$30,242
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$27,077
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Per Share - diluted
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$0.78
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$0.69
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Operating Return on Average Equity (1)
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3.9%
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3.5%
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Year ended
12/31/11
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As reported
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As revised
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Tower Group, Inc. Stockholders' Equity
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$1,034,142
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$1,033,799
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Per Share
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$26.37
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$26.36
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Tower Group, Inc. Tangible Equity (1)
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$673,958
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$678,170
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Per Share
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$17.18
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$17.29
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Net Income Attributable to Tower Group, Inc.
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$60,198
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$60,481
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Per Share - diluted
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$1.47
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$1.48
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Operating Income (1)
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$56,048
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$56,331
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Per Share - diluted
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$1.37
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$1.38
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Operating Return on Average Equity (1)
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5.4%
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5.4%
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Year ended
12/31/10
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As reported
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As revised
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Tower Group, Inc. Stockholders' Equity
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$1,045,001
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$1,042,962
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Per Share
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$25.19
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$25.14
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Tower Group, Inc. Tangible Equity (1)
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$676,582
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$679,098
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Per Share
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$16.31
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$16.37
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Net Income Attributable to Tower Group, Inc.
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$103,890
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$106,356
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Per Share - diluted
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$2.38
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$2.44
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Operating Income (1)
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$97,155
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$98,861
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Per Share - diluted
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$2.23
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$2.26
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Operating Return on Average Equity (1)
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9.4%
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9.5%
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Year ended
12/31/09
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As reported
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As revised
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Net Income Attributable to Tower Group, Inc.
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$96,798
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$94,724
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Per Share - diluted
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$2.45
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$2.39
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Operating Income (1)
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$107,288
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$105,975
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Per Share - diluted
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$2.71
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$2.68
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Operating Return on Average Equity (1)
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14.0%
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13.9%
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Tower expects to have such revised reports filed with the SEC on or
about January 17, 2013.
About Tower Group, Inc.
Tower Group, Inc. offers diversified property and casualty insurance
products and services through its operating subsidiaries.
Our Commercial Insurance Segment offers a broad range of commercial
lines property and casualty insurance products to small to mid-sized
businesses distributed through a network of retail, wholesale and
program underwriting agents on both an admitted and non-admitted basis.
This segment also provides reinsurance, primarily on a quota share
basis, to other insurance providers.
Our Personal Insurance Segment offers a broad range of personal lines
property and casualty insurance products to individuals distributed
through a network of retail and wholesale agents.
Our Insurance Services Segment provides underwriting, claims and
reinsurance brokerage services to insurance companies.
Cautionary Note Regarding Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. This press release and any other
written or oral statements made by or on behalf of Tower may include
forward-looking statements that reflect Tower's current views with
respect to future events and financial performance. All statements other
than statements of historical fact included in this press release are
forward-looking statements. Forward-looking statements can generally be
identified by the use of forward-looking terminology such as "may,"
"will," "plan," "expect," "project," "intend," "estimate," "anticipate,"
"believe" and "continue" or their negative or variations or similar
terminology. All forward-looking statements address matters that involve
risks and uncertainties. Accordingly, there are or will be important
factors that could cause the actual results of Tower to differ
materially from those indicated in these statements. Please refer to
Tower's filings with the SEC, including among others Tower's Annual
Report on Form 10-K for the year ended December 31, 2011 and subsequent
filings on Form 10-Q, for a description of the important factors that
could cause the actual results of Tower to differ materially from those
indicated in these statements. Forward-looking statements speak only as
of the date on which they are made, and Tower undertakes no obligation
to update publicly or revise any forward-looking statement, whether as a
result of new information, future developments or otherwise.
For more information visit Tower's website at http://www.twrgrp.com/
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Reconciliation of non-GAAP financial measures:
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($ in thousands)
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9/30/12 Year to date
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Year ended 12/31/11
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Year ended 12/31/10
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As reported
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As restated
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As reported
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As restated
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As reported
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As restated
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Tower Group, Inc. Stockholders' Equity
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$1,054,981
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$1,051,473
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$1,034,142
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$1,033,799
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$1,045,001
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$1,042,962
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Less Tower goodwill and intangible assets
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(351,909
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(347,354
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)
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(360,184
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(355,629
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)
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(368,419
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(363,864
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)
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Tower Group, Inc. Tangible Equity
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$703,072
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$704,119
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$673,958
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$678,170
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$676,582
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$679,098
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Year ended 12/31/09
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As reported
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As restated
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Net Income Attributable to Tower Group, Inc.
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$27,150
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$23,985
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$60,198
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$60,481
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$103,890
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$106,356
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$96,798
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$94,724
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Net realized (gains) losses on investments
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(1,108
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(1,108
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(6,980
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(6,980
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)
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(13,740
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(14,910
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)
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(1,501
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(331
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Acquisition-related transaction costs
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4,661
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4,661
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360
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360
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2,369
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2,369
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14,038
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14,038
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Income tax
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(461
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)
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(461
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2,470
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2,470
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4,636
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5,046
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(2,017
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(2,456
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Operating Income
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$30,242
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$27,077
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$56,048
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$56,331
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$97,155
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$98,861
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$107,288
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$105,975
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Notes on non-GAAP financial measures:
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(1) Operating income excludes realized gains and losses,
acquisition-related transaction costs and the results of the
reciprocal business, net of tax. Tangible equity excludes goodwill
and intangible assets. Operating income and tangible equity are
common measurements for property and casualty insurance companies.
We believe this presentation enhances the understanding of our
results of operations by highlighting the underlying profitability
of our insurance business. Additionally, these measures are a key
internal management performance standard. Operating income per
share is operating income divided by diluted weighted average
shares outstanding. Operating return on equity is annualized
operating income divided by average common stockholders' equity.
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