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Financially troubled Tower Group bolsters reserves, posts quarterly loss

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Financially troubled Tower Group bolsters reserves, posts quarterly loss

Hamilton, Bermuda-based Tower Group International Ltd. posted a third-quarter 2013 loss of $344.1 million compared with net income of $25.9 million in the third quarter of 2012, the financially troubled insurer said.

“Adverse loss reserve charges of $143.7 million in the third quarter of 2013 exceeded the previous estimate of $75 million to $105 million,” Tower Group said Tuesday in a statement.

The reserve strengthening was “primarily from accident years 2008-2011 within the workers compensation, commercial multiperil liability, other liability and commercial auto liability lines of business,” Tower said in the statement.

Tower earlier attributed its difficulty to losses in its North American business.

Its third-quarter 2013 combined ratio deteriorated to 151.8% compared with 95.3% in the year-earlier period.

Revenue for the quarter fell 6.7% to $442.9 million, “reflecting lower earned premiums and investment income offset by increased ceding commissions and net realized investment gains,” the insurer said in the statement.

Net written premiums dropped 43% to $237.6 million while net investment income was down 18.5% to $25.6 million for the period.

For the first nine months of 2013, Tower said it had a loss of $849.0 million compared with net income of $31.8 million a year earlier.

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Nine-month revenue fell 4.7% to $1.38 billion while net written premiums declined 18.2% to $1.09 billion. Net investment income fell 13.1% to $84.4 million.

Tower's nine-month combined ratio was 142.7% compared to 101.5% in the year-earlier period.

Tower last week said that Chairman, President and CEO Michael H. Lee had resigned. Tower's board of directors appointed Jan R. Van Gorder as chairman and William W. Fox, Jr. as president and CEO to succeed Mr. Lee.

In January, Tower said it would be bought by Bermuda-based ACP Re Ltd., a privately owned reinsurer, for $172 million.