Insurer Tower Group to strengthen loss reserves by $365M
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Tower Group International Ltd. will strengthen its loss reserves by approximately $365 million and expects to report a noncash goodwill impairment charge of approximately $215 million for the second quarter of 2013, the company said Tuesday.
The Hamilton, Bermuda-based insurer also said its board of directors is “reviewing a range of strategic options” with lead financial adviser J.P. Morgan Securities L.L.C.
The charge follows a string of troubling news from the insurer, beginning with the August disclosures that it could have adverse loss reserve developments of as much as $110 million before taxes, due primarily to its integration of Canopius Holdings Bermuda Ltd., with which it merged in March. Last week, Towers announced that it was ceding portions of its business to other insurers and reinsurers.
Tower said in a statement that it expects to announce its full-second quarter results “promptly upon the conclusion of management's evaluation of the results,” after saying last week that it would release results the week of Oct. 7.
The increase to the loss reserves, approximately $185 million of which was due to U.S. insurance subsidiaries, is primarily for accident years 2009 through 2011 in commercial insurance lines of business, including workers' compensation, commercial multiperil, commercial auto and other liability lines.
The changes come as a result of a review performed with outside actuarial consultants and “reflects adverse loss emergence, coupled with changes in judgment, including actuarial factors,” according to the statement.
Tower added that its U.S. insurance subsidiaries continue to maintain risk-based capital levels in excess of those required by their respective domiciliary states.
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