Financially troubled Tower Group cedes business to three reinsurers
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Financially troubled insurer Tower Group International Ltd. on Wednesday said it has entered into agreements with three reinsurers to cede portions of its business and enhance its financial flexibility.
The move followed Hamilton, Bermuda-based Tower Group's 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.
Tower Group also has delayed announcing its second-quarter results as it works with an outside actuarial firm on its loss reserves. There also have been reports that the insurer and reinsurer has hired an outside firm to shop some of its troubled units.
Under the agreements announced Wednesday, Tower Insurance Co. of New York will:
• Cede to Arch Reinsurance Ltd. a 17.5% quota share of certain brokerage commercial automobile liability, multiperil property, multiperil liability and monoline liability for losses occurring on or after July 1;
• Cede to Hannover Re (Ireland) P.L.C. a 14% quota share of certain brokerage commercial automobile liability, multiperil property, liability, monoline liability and workers compensation business for losses on or after July 1;
• Cede to Southport Re (Cayman) Ltd. a 30% quota share of its workers compensation and employers liability business for losses occurring on or after July 1:
• Cede to Southport Re an undisclosed portion of losses on its workers compensation and employers liability business from Jan. 1, 2011, through May 31 this year but paid on or after June 1 of this year.
