Exhibit 99.1
Tower Group, Inc. Reports First Quarter 2012 Results
NEW YORK--(BUSINESS WIRE)--May 7, 2012--Tower Group, Inc. (NASDAQ: TWGP) today reported net income available to common shareholders of $20.6 million and diluted earnings per share of $0.52 for the first quarter 2012, compared to $25.7 million, or $0.61 per share, in the first quarter of 2011.
Operating income(1) increased 7.8% to $21.9 million in the first quarter compared to $20.3 million in the first quarter of 2011. Operating earnings per share(1) increased by 14.3% to $0.56 in the first quarter from $0.49 per share in the first quarter of 2011. The 2012 results include an after-tax charge of $8.4 million associated with prior year reserve strengthening and also reflect lower than expected property losses, as unseasonably warm weather on the East Coast of the United States resulted in lower property claims. Operating income in the first quarter of 2011 was impacted by unusually severe weather-related claims. After-tax losses from these events amounted to $9.8 million or $0.23 per share.
The effective tax rate, excluding the reciprocal exchanges, was 20.9%, a decrease of 11.5 points compared to 2011. The reduced tax rate is primarily due to a revaluation of certain tax liabilities which reduced the tax rate by 10 points and resulted in a $2.6 million benefit which is not expected to be recurring.
Highlights (all percentage increases compare first quarter 2012 results for Tower Group, Inc., excluding the reciprocal exchanges, to the results for the same period in 2011 except as noted otherwise):
- Gross premiums written and managed increased by 20.0% to $467.4 million.
- For the combined insurance segments, the net combined ratio was 99.2% compared to 97.6%.
- The net loss ratio was 64.2% compared to 64.7%.
- The net expense ratio was 35.0% compared to 32.9%.
- Net investment income increased by 5.1% to $32.3 million.
- Consolidated cash flows from operating activities increased by 193.7% to $30.9 million.
- Book value per share was $26.83, an increase of 1.7% from December 31, 2011 and an increase of 6.3% from March 31, 2011. Tower Group, Inc. stockholders’ equity was $1.1 billion as of March 31, 2012.
- Tower paid 18.75 cents per share in dividends in the first quarter 2012, compared to 12.5 cents per share in the first quarter 2011.
Michael H. Lee, President and Chief Executive Officer of Tower Group, Inc., said, “During the first quarter, we were able to achieve strong top line growth and meaningful rate increases due to improved market conditions across several areas of our business. We also continued to execute our organic growth strategy by enhancing our product offerings to drive our strong top line growth. In addition, we successfully initiated implementation of our personal lines technology platform and expect all new personal lines business to be written through this new system by the middle of this year. We expect to retire the existing system by next year. Finally, we are very pleased with our recently announced commitment to invest in Canopius Group Ltd. as well the options we will receive with this investment to access, subject to the approval of Lloyd’s and the FSA, the Lloyd's market to underwrite profitable specialty and international business and to combine Tower with a Bermuda reinsurance business currently operated by Canopius. With the improvement in our core business in the United States and the opportunities from our transaction with Canopius, we expect our operating results and return on equity to continue to improve throughout the remainder of 2012 and beyond.”
| Financial Summary ($ in thousands, except per share data): | |||||||||||||||||||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||
| 2012 | 2011 | ||||||||||||||||||||||||||||||||
| Reciprocal |
| Elimina- |
| Reciprocal |
| Elimina- | ||||||||||||||||||||||||||
| Tower |
| Exchanges |
| tions | Total | Tower |
| Exchanges |
| tions | Total | ||||||||||||||||||||||
| Net premiums written | $ | 387,591 | $ | 38,093 | $ | - | $ | 425,684 | $ | 319,390 | $ | 40,628 | $ | - | $ | 360,018 | |||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||||
| Net premiums earned | $ | 378,669 | $ | 41,489 | $ | - | $ | 420,158 | $ | 334,537 | $ | 45,258 | $ | - | $ | 379,795 | |||||||||||||||||
| Ceding commission revenue | 2,078 | 3,085 | - | 5,163 | 6,817 | 1,364 | - | 8,181 | |||||||||||||||||||||||||
| Insurance services revenue | 7,359 | - | (6,862 | ) | 497 | 7,297 | - | (6,695 | ) | 602 | |||||||||||||||||||||||
| Policy billing fees | 3,002 | 132 | - | 3,134 | 2,034 | 144 | - | 2,178 | |||||||||||||||||||||||||
| Net investment income | 32,257 | 3,349 | (1,663 | ) | 33,943 | 30,688 | 3,344 | (1,654 | ) | 32,378 | |||||||||||||||||||||||
| Total net realized investment gains | (393 | ) | 3,976 | - | 3,583 | 8,237 | (877 | ) | - | 7,360 | |||||||||||||||||||||||
| Total revenues | 422,972 | 52,031 | (8,525 | ) | 466,478 | 389,610 | 49,233 | (8,349 | ) | 430,494 | |||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||
| Loss and loss adjustment expenses | 243,249 | 24,244 | - | 267,493 | 216,448 | 23,728 | - | 240,176 | |||||||||||||||||||||||||
Direct and ceding commission expense | 71,912 | 7,773 | - | 79,685 | 66,029 | 10,574 | - | 76,603 | |||||||||||||||||||||||||
| Other operating expenses | 72,896 | 12,937 | (6,862 | ) | 78,971 | 61,002 | 12,032 | (6,695 | ) | 66,339 | |||||||||||||||||||||||
| Acquisition-related transaction costs | 1,262 | - | - | 1,262 | 12 | - | - | 12 | |||||||||||||||||||||||||
| Interest expense | 7,576 | 1,663 | (1,663 | ) | 7,576 | 8,100 | 1,654 | (1,654 | ) | 8,100 | |||||||||||||||||||||||
| Total expenses | 396,895 | 46,617 | (8,525 | ) | 434,987 | 351,591 | 47,988 | (8,349 | ) | 391,230 | |||||||||||||||||||||||
| Income before income taxes | 26,077 | 5,414 | - | 31,491 | 38,019 | 1,245 | - | 39,264 | |||||||||||||||||||||||||
| Income tax expense | 5,443 | (3,593 | ) | - | 1,850 | 12,334 | 424 | - | 12,758 | ||||||||||||||||||||||||
| Net income | $ | 20,634 | $ | 9,007 | $ | - | $ | 29,641 | $ | 25,685 | $ | 821 | $ | - | $ | 26,506 | |||||||||||||||||
| Ratios | |||||||||||||||||||||||||||||||||
| Net calendar year loss and LAE | 64.2 | % | 58.4 | % | 63.7 | % | 64.7 | % | 52.4 | % | 63.2 | % | |||||||||||||||||||||
| Net underwriting expenses | 35.0 | % | 42.2 | % | 35.7 | % | 32.9 | % | 46.6 | % | 34.5 | % | |||||||||||||||||||||
| Net Combined | 99.2 | % | 100.6 | % | 99.4 | % | 97.6 | % | 99.0 | % | 97.7 | % | |||||||||||||||||||||
| Return on Average Equity | 7.9 | % | 9.9 | % | |||||||||||||||||||||||||||||
| Reconciliation of non-GAAP financial measures: | |||||||||||||||||||||||||||||||||
| Net income attributable to Tower Group, Inc. | $ | 20,634 | $ | 25,685 | |||||||||||||||||||||||||||||
| Net realized (gains) losses on investments | 393 | (8,237 | ) | ||||||||||||||||||||||||||||||
| Acquisition-related transaction costs | 1,262 | 12 | |||||||||||||||||||||||||||||||
| Income tax (expense) benefit | (368 | ) | 2,882 | ||||||||||||||||||||||||||||||
| Operating income attributable to Tower Group, Inc. | $ | 21,921 | $ | 20,342 | |||||||||||||||||||||||||||||
| Operating earnings per share - Basic | $ | 0.56 | $ | 0.49 | |||||||||||||||||||||||||||||
| Operating earnings per share - Diluted |
| $ | 0.56 | $ | 0.49 | ||||||||||||||||||||||||||||
| Operating return on average equity | 8.4 | % | 7.8 | % | |||||||||||||||||||||||||||||
First Quarter 2012 Highlights (unless otherwise noted, amounts exclude reciprocals)
Gross premiums written and managed increased to $467.4 million in the first quarter, 20.0% higher than in the first quarter of 2011. The increase is primarily attributable to growth in our programs and assumed reinsurance. Excluding programs, policies in-force decreased by 3.9% as of March 31, 2012, compared to March 31, 2011. For the three months ended March 31, 2012, premium rates on renewed Commercial Insurance business excluding programs increased 2.7% and premium rates increased 3.0% on renewed Personal Insurance business compared to the same period in 2011, resulting in an overall premium rate increase on renewal business of 2.8%. During the same period, our Commercial Insurance business renewal retention rate excluding programs was 77.3% compared to our Personal Insurance business renewal retention rate of 91.3%, resulting in an overall retention rate of 88.4%.
Total revenues increased 8.6% to $423.0 million from $389.6 million in the prior year's first quarter. This increase is attributed to an increase in earned premiums and net investment income partly offset by declines in ceding commission revenues and net realized investment gains. Net premiums earned represented 89.5% and 85.9% of total revenues for the three months ended March 31, 2012 and 2011, respectively.
Net investment income increased 5.1% to $32.3 million for the three months ended March 31, 2012, up from $30.7 million for the same period in 2011. The tax equivalent investment yield at amortized cost was 4.7% at March 31, 2012, compared to 4.8% at March 31, 2011. The net realized investment loss was $0.4 million for the three months ended March 31, 2012, compared to a gain of $8.2 million in the same period last year. The first quarter gains include other-than-temporarily impaired credit losses of $2.7 million, compared to $0.1 million of such losses in the first quarter of 2011.
Total commission and fee income decreased 23.0% to $12.4 million in the first quarter of 2012 compared to $16.1 million in the first quarter of 2011. This decrease is mainly due to a reduction in ceding commission revenues. We recognized a change in loss ratio on a prior year’s quota share treaty which had an unfavorable impact on our ceding commission revenue of $3.0 million during the first quarter.
The net loss ratio was 64.2% the three months ended March 31, 2012 compared to 64.7% for the same time period last year. During the quarter the Company’s actuaries completed their annual review of loss development factors to reflect loss data observed through December 31, 2011. The prior year reserve strengthening in Commercial Insurance arises from changes in estimated ultimate losses for accident years 2010 and prior based on reserve studies completed during the quarter. The majority of these changes arise from the updated loss development factors. The unfavorable development in Personal Insurance was mostly from Automobile Physical Damage and attributable to accident year 2011.
Our net expense ratio was 35.0% for the three months ended March 31, 2012 compared to the 32.9% we recorded during the same period in 2011.
The effective tax rate was 20.9% in the first quarter , a decrease of 11.5 points compared to 2011. The reduced tax rate excluding the reciprocal exchanges is primarily due to a revaluation of certain tax liabilities which reduced the tax rate by 10 points and resulted in a $2.6 million benefit that is not expected to be recurring.
Interest expense decreased by $0.5 million for the three months ended March 31, 2012, compared to the same period in 2011.
Additional Highlights and Disclosures:
Dividend Declaration
Tower’s Board of Directors approved a quarterly dividend on May 3, 2012 of $0.1875 per share payable on June 22, 2012 to stockholders of record as of June 11, 2012.
2012 Guidance
Tower expects full year 2012 operating earnings per share to be in a range of $2.60 to $2.70
Notes on Non-GAAP Financial Measures
(1) Operating income (loss) excludes realized gains and losses, acquisition-related transaction costs and the results of the reciprocal business, net of tax. Operating income is a common measurement 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 earnings (loss) per share is operating income (loss) divided by diluted weighted average shares outstanding. Operating return on equity is annualized operating income (loss) divided by average common stockholders' equity.
Conference Call
Tower will host a conference call and webcast to discuss these results on May 8, 2012 at 9:00 a.m. ET. This conference call will be broadcast live over the Internet. To access a listen-only webcast over the Internet, please visit the Investor Information section of Tower Group, Inc.’s website, www.twrgrp.com, or use this link: http://investor.twrgrp.com/events.cfm
Please access the website at least 15 minutes prior to the call to register and to download any necessary audio software. If you are unable to participate during the live conference call, a webcast will be archived in the Investor Information section of Tower Group, Inc.'s website at www.twrgrp.com.
About Tower Group, Inc.
Tower Group, Inc. offers diversified property and casualty insurance products and services through its operating subsidiaries. Its insurance company subsidiaries offer insurance products to individuals and small to medium-sized businesses through its network of retail and wholesale agents and specialty business through program underwriting agents. Tower's insurance services subsidiaries provide underwriting, claims and reinsurance brokerage services to other 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, 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/.
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 and wholesale agents on both an admitted and non-admitted basis. This segment also includes reinsurance solutions provided primarily to small insurance companies;
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; and
Our Insurance Services Segment provides underwriting, claims and reinsurance brokerage services to insurance companies.
| Commercial Insurance & Personal Insurance Combined | |||||||||||
| ($ in thousands) | |||||||||||
| (Unaudited) | |||||||||||
| Three Months Ended March 31, | |||||||||||
| 2012 | 2011 | Change(%) | |||||||||
| Net premiums written | $ | 425,684 | $ | 360,018 | 18.2 | % | |||||
| Revenues | |||||||||||
| Net premiums earned | $ | 420,158 | $ | 379,795 | 10.6 | % | |||||
| Ceding commission revenue | 5,163 | 8,181 | -36.9 | % | |||||||
| Policy billing fees | 3,134 | 2,178 | 43.9 | % | |||||||
| Total revenues | 428,455 | 390,154 | 9.8 | % | |||||||
| Expenses | |||||||||||
| Net loss and loss adjustment expenses | 267,493 | 240,176 | 11.4 | % | |||||||
| Underwriting expenses | |||||||||||
| Direct commission expense | 79,684 | 76,348 | 4.4 | % | |||||||
| Other underwriting expenses | 78,510 | 65,153 | 20.5 | % | |||||||
| Total underwriting expenses | 158,194 | 141,501 | 11.8 | % | |||||||
| Underwriting profit | $ | 2,768 | $ | 8,477 | -67.3 | % | |||||
| Underwriting Ratios | |||||||||||
| Net loss ratio | 63.7 | % | 63.2 | % | |||||||
| Net expense ratio | 35.7 | % | 34.5 | % | |||||||
| Net combined ratio | 99.4 | % | 97.7 | % | |||||||
| Commercial Insurance Segment Information | ||||||||
| ($ in thousands) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2012 | 2011 | |||||||
| Net premiums written | $ | 320,205 | $ | 251,121 | ||||
| Revenues | ||||||||
| Net premiums earned | $ | 297,835 | $ | 251,768 | ||||
| Ceding commission revenue | 10 | 4,018 | ||||||
| Policy billing fees | 1,513 | 764 | ||||||
| Total revenues | 299,358 | 256,550 | ||||||
| Expenses | ||||||||
| Net loss and loss adjustment expenses | 201,438 | 164,490 | ||||||
| Underwriting expenses | ||||||||
| Direct commission expenses | 55,549 | 50,478 | ||||||
| Other underwriting expenses | 48,247 | 36,750 | ||||||
| Total underwriting expenses | 103,796 | 87,228 | ||||||
| Underwriting profit | $ | (5,876 | ) | $ | 4,832 | |||
| Underwriting Ratios | ||||||||
| Net loss ratio | 67.6 | % | 65.3 | % | ||||
| Net expense ratio | 34.3 | % | 32.7 | % | ||||
| Net combined ratio | 101.9 | % | 98.0 | % | ||||
| Personal Insurance Segment Information | ||||||||||||||||||||||||
| ($ in thousands) | ||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| Three Months Ended March 31, | ||||||||||||||||||||||||
| 2012 | 2011 | |||||||||||||||||||||||
| Reciprocal | Reciprocal | |||||||||||||||||||||||
| Tower | Exchanges | Total | Tower | Exchanges | Total | |||||||||||||||||||
| Net premiums written | $ | 67,386 | $ | 38,093 | $ | 105,479 | $ | 68,269 | 40,628 | 108,897 | ||||||||||||||
| Revenues | ||||||||||||||||||||||||
| Net premiums earned | $ | 80,834 | $ | 41,489 | $ | 122,323 | $ | 82,769 | $ | 45,258 | $ | 128,027 | ||||||||||||
| Ceding commission revenue | 2,068 | 3,085 | 5,153 | 2,800 | 1,363 | 4,163 | ||||||||||||||||||
| Policy billing fees | 1,489 | 132 | 1,621 | 1,270 | 144 | 1,414 | ||||||||||||||||||
| Total revenues | 84,391 | 44,706 | 129,097 | 86,839 | 46,765 | 133,604 | ||||||||||||||||||
| Expenses | ||||||||||||||||||||||||
| Net loss and loss adjustment expenses | 41,811 | 24,244 | 66,055 | 51,958 | 23,728 | 75,686 | ||||||||||||||||||
| Underwriting expenses | ||||||||||||||||||||||||
| Direct commission expense | 16,362 | 7,773 | 24,135 | 15,296 | 10,574 | 25,870 | ||||||||||||||||||
| Other underwriting expenses | 17,326 | 12,937 | 30,263 | 16,371 | 12,032 | 28,403 | ||||||||||||||||||
| Total underwriting expenses | 33,688 | 20,710 | 54,398 | 31,667 | 22,606 | 54,273 | ||||||||||||||||||
| Underwriting profit | $ | 8,892 | $ | (248 | ) | $ | 8,644 | $ | 3,214 | 431 | 3,645 | |||||||||||||
| Underwriting Ratios | ||||||||||||||||||||||||
| Net loss ratio | 51.7 | % | 58.4 | % | 54.0 | % | 62.8 | % | 52.4 | % | 59.1 | % | ||||||||||||
| Net expense ratio | 37.3 | % | 42.2 | % | 38.9 | % | 33.3 | % | 46.6 | % | 38.0 | % | ||||||||||||
| Net combined ratio | 89.0 | % | 100.6 | % | 92.9 | % | 96.1 | % | 99.0 | % | 97.1 | % | ||||||||||||
| Insurance Services Segment Results of Operations | ||||||
| ($ in thousands) | ||||||
| (Unaudited) | ||||||
| Three Months Ended | ||||||
| March 31, | ||||||
| 2012 | 2011 | |||||
| Revenue | ||||||
| Management fee income | $ | 6,862 | $ | 6,695 | ||
| Other revenue | 497 | 602 | ||||
| Total revenue | 7,359 | 7,297 | ||||
| Expenses | ||||||
| Other expenses | 4,463 | 5,041 | ||||
| Total expenses | 4,463 | 5,041 | ||||
| Insurance services pre-tax income | $ | 2,896 | $ | 2,256 | ||
| Tower Group, Inc. | ||||||||
| Consolidated Balance Sheets | ||||||||
| (Unaudited) | ||||||||
| March 31, |
| December 31, | |||||
| ($ in thousands, except par value and share amounts) |
| 2012 |
| 2011 | ||||
| Assets | ||||||||
| Investments - Tower | ||||||||
| Available-for-sale investments, at fair value: | ||||||||
| Fixed-maturity securities (amortized cost of $2,035,235 and $2,046,932) | $ | 2,154,771 | $ | 2,153,620 | ||||
| Equity securities (cost of $111,100 and $91,069) | 111,840 | 87,479 | ||||||
| Other invested assets | 47,839 | 44,347 | ||||||
| Investments - Reciprocal Exchanges | ||||||||
| Available-for-sale investments, at fair value: | ||||||||
| Fixed-maturity securities (amortized cost of $277,406 and $288,180) | 292,793 | 300,054 | ||||||
| Equity securities (cost of $6,092 and $1,965) | 6,781 | 1,866 | ||||||
| Total investments | 2,614,024 | 2,587,366 | ||||||
| Cash and cash equivalents (includes $19,899 and $666 relating to Reciprocal Exchanges) | 143,081 | 114,098 | ||||||
| Investment income receivable (includes $3,042 and $2,978 relating to Reciprocal Exchanges) | 29,605 | 26,782 | ||||||
| Premiums receivable (includes $38,954 and $41,290 relating to Reciprocal Exchanges) | 415,933 | 408,626 | ||||||
| Reinsurance recoverable on paid losses (includes $3,366 and $5,670 relating to Reciprocal Exchanges) | 24,859 | 23,903 | ||||||
| Reinsurance recoverable on unpaid losses (includes $22,905 and $11,253 relating to Reciprocal Exchanges) | 285,381 | 319,664 | ||||||
| Prepaid reinsurance premiums (includes $14,997 and $14,685 relating to Reciprocal Exchanges) | 52,739 | 54,037 | ||||||
| Deferred acquisition costs, net (includes $11,672 and $11,866 relating to Reciprocal Exchanges) | 171,651 | 168,858 | ||||||
| Intangible assets (includes $7,293 and $4,839 relating to Reciprocal Exchanges) | 111,038 | 114,920 | ||||||
| Goodwill | 250,103 | 250,103 | ||||||
| Other assets (includes $4,342 and $2,685 relating to Reciprocal Exchanges) | 357,136 | 373,838 | ||||||
| Total assets | $ | 4,455,550 | $ | 4,442,195 | ||||
| Liabilities | ||||||||
| Loss and loss adjustment expenses (includes $142,618 and $136,274 relating to Reciprocal Exchanges) | $ | 1,597,439 | $ | 1,632,113 | ||||
| Unearned premium (includes $99,907 and $102,991 relating to Reciprocal Exchanges) | 897,402 | 893,176 | ||||||
| Reinsurance balances payable (includes $5,479 and $3,466 relating to Reciprocal Exchanges) | 19,354 | 20,794 | ||||||
| Funds held under reinsurance agreements | 95,731 | 96,726 | ||||||
| Other liabilities (includes $25,252 and $7,154 relating to Reciprocal Exchanges) | 272,799 | 266,155 | ||||||
| Deferred income taxes (includes $(1,635) and $4,511 relating to Reciprocal Exchanges) | 32,148 | 29,337 | ||||||
| Debt | 427,590 | 426,901 | ||||||
| Total liabilities | 3,342,463 | 3,365,202 | ||||||
| Stockholders' equity | ||||||||
Common stock ($0.01 par value; 100,000,000 shares authorized, 46,769,519 and 46,448,341 shares issued, and 39,441,136 and 39,221,102 shares outstanding) | 468 | 465 | ||||||
| Treasury stock (7,328,383 and 7,227,239 shares) | (160,327 | ) | (158,185 | ) | ||||
| Paid-in-capital | 774,963 | 772,938 | ||||||
| Accumulated other comprehensive income | 73,369 | 62,244 | ||||||
| Retained earnings | 369,916 | 356,680 | ||||||
| Tower Group, Inc. stockholders' equity | 1,058,389 | 1,034,142 | ||||||
| Noncontrolling interests | 54,698 | 42,851 | ||||||
| Total stockholders' equity | 1,113,087 | 1,076,993 | ||||||
| Total liabilities and stockholders' equity | $ | 4,455,550 | $ | 4,442,195 | ||||
| Tower Group, Inc. | ||||||||
| Consolidated Statements of Income | ||||||||
| (Unaudited) | Three Months Ended | |||||||
| March 31, | ||||||||
| (in thousands, except per share amounts) | 2012 | 2011 | ||||||
| Revenues | ||||||||
| Net premiums earned | $ | 420,158 | $ | 379,795 | ||||
| Ceding commission revenue | 5,163 | 8,181 | ||||||
| Insurance services revenue | 497 | 602 | ||||||
| Policy billing fees | 3,134 | 2,178 | ||||||
| Net investment income | 33,943 | 32,378 | ||||||
| Net realized investment gains (losses): | ||||||||
| Other-than-temporary impairments | (2,721 | ) | (168 | ) | ||||
| Portion of loss recognized in other comprehensive income | - | 24 | ||||||
| Other net realized investment gains | 6,304 | 7,504 | ||||||
| Total net realized investment gains (losses) | 3,583 | 7,360 | ||||||
| Total revenues | 466,478 | 430,494 | ||||||
| Expenses | ||||||||
| Loss and loss adjustment expenses | 267,493 | 240,176 | ||||||
| Direct and ceding commission expense | 79,685 | 76,603 | ||||||
| Other operating expenses | 78,971 | 66,339 | ||||||
| Acquisition-related transaction costs | 1,262 | 12 | ||||||
| Interest expense | 7,576 | 8,100 | ||||||
| Total expenses | 434,987 | 391,230 | ||||||
| Income before income taxes | 31,491 | 39,264 | ||||||
| Income tax expense | 1,850 | 12,758 | ||||||
| Net income | $ | 29,641 | $ | 26,506 | ||||
| Less: Net income attributable to Noncontrolling interests | 9,007 | 821 | ||||||
| Net income attributable to Tower Group, Inc. | $ | 20,634 | $ | 25,685 | ||||
| Earnings per share attributable to Tower Group, Inc. stockholders: | ||||||||
| Basic | $ | 0.53 | $ | 0.61 | ||||
| Diluted | $ | 0.52 | $ | 0.61 | ||||
| Weighted average common shares outstanding: | ||||||||
| Basic | 39,233 | 41,794 | ||||||
| Diluted | 39,307 | 41,930 | ||||||
| Dividends declared and paid per common share | $ | 0.19 | $ | 0.13 | ||||
CONTACT:
Tower Group, Inc.
Bill Hitselberger, 212-655-2110
Executive Vice President and Chief Financial Officer
bhitselberger@twrgrp.com