Tower Group International (TWGP) 8-K Tower Group International, Ltd. Reports Second Quarter 2013 Results

Exhibit 99.1

Tower Group International, Ltd. Reports Second Quarter 2013 Results

HAMILTON, Bermuda--(BUSINESS WIRE)--November 22, 2013--Tower Group International, Ltd. (NASDAQ:TWGP) today announced financial results for the second quarter and first half of 2013. These results reflect the second quarter of results following the March 13, 2013 merger between Tower Group, Inc. (TGI) and Canopius Holdings Bermuda Limited (Canopius Bermuda), which was renamed Tower Group International, Ltd. (Tower) upon completion of the merger and became the ultimate parent company. Since the merger transaction was accounted for as a reverse acquisition and recapitalization, under which TGI was identified and treated as the accounting acquirer, historical results prior to the first quarter of 2013 reflect only the financial results reported by TGI, with equity accounts and earnings per share restated to reflect Tower’s new capitalization.

As previously disclosed, Tower has completed, with the assistance of its independent actuarial consultants, a comprehensive review of the Company's loss reserves as of June 30, 2013. As a result of this review, the Company strengthened loss reserves in the second quarter of 2013 by $326.7 million. This reserve strengthening arose primarily from accident years 2008-2011 within the workers’ compensation, commercial multi-peril liability, other liability and commercial auto liability lines of business. In addition, as previously disclosed, the Company had restatement adjustments of $37.4 million to loss reserves as of December 31, 2012, bringing the total prior year reserve strengthening to $364.1 million.

The reserve strengthening was viewed by Tower as an event or circumstance that required the Company to perform, in the second quarter of 2013, a detailed quantitative analysis of whether its recorded goodwill was impaired. As a result of this analysis, Tower reported a non-cash goodwill impairment charge of $214.0 million for the second quarter of 2013, representing all goodwill associated with its Commercial Insurance reporting unit at January 1, 2013. As of June 30, 2013, all of Tower’s remaining goodwill of $55.5 million is associated with the Personal Insurance reporting unit.

During the three months ended June 30, 2013, Tower’s U.S. taxed subsidiaries (excluding the Reciprocal Exchanges) recognized pre-tax losses of $394.9 million. This resulted in a net deferred tax asset, before any valuation allowance, as of June 30, 2013. The Company concluded that a full valuation allowance was required for Tower’s U.S. taxed subsidiaries. For the three months ended June 30, 2013, $113.9 million of the valuation allowance was recorded in the statement of operations and $25.8 million was recorded in other comprehensive income as a direct charge to Tower’s shareholders’ equity.

Net loss attributable to common shareholders for the second quarter of 2013 was $(507.3) million, or $(8.88) per diluted share, compared to a net loss attributable to common shareholders of $(16.8) million, or $(0.39) per diluted share, in the second quarter of 2012.

Operating loss ⁽¹⁾ in the second quarter of 2013 was $(291.1) million, or $(5.10) per share, compared to an operating loss of $(17.3) million, or ($0.40) per share, in the second quarter of 2012. Earnings per share for both periods reflect Tower’s post-merger shares, with diluted weighted average shares outstanding of 57.1 million in the second quarter of 2013 and 43.3 million in the second quarter of 2012.

Tower shareholders’ equity was $579.2 million at June 30, 2013, compared with $950.1 million at December 31, 2012. Book value per share ⁽²⁾ at June 30, 2013 was $10.09, compared with $21.83 at December 31, 2012. Tangible book value per share ⁽²⁾ at June 30, 2013 was $7.50, compared with $13.99 at December 31, 2012. Book value per share and tangible book value per share for both periods reflects Tower’s new shares, with 57,429,099 shares outstanding at June 30, 2013, compared with 43,513,678 shares outstanding at December 31, 2012.

Michael H. Lee, President and Chief Executive Officer, said, “We are deeply disappointed by our second quarter operating results, including the significant reserve charge as well as the delay in our financial reporting. The reserve strengthening stemmed primarily from certain types of business that we underwrote from accident years 2008 to 2011. While we began to re-underwrite this business in 2010, the loss emergence from this business from those accident years that we noticed in the second quarter caused us to significantly increase our reserve position. The type of business that contributed to the reserve strengthening comprised 39% of our business in 2008, and we reduced this percentage to 3% in the first half of 2013. Due to this re-underwriting and rate increases that we are achieving in most of the other segments of our business, we believe our current business that we are underwriting is performing well. After the reserve strengthening and goodwill impairment in the second quarter, Tower Group International, Ltd. shareholders' equity and consolidated statutory surplus at June 30, 2013 were $579 million and $493 million, respectively.”

Mr. Lee continued, “Our Board continues to review various strategic options, and management is continuing to address the challenges presented by the current situation. The recent downgrades in our ratings from A.M. Best and other rating agencies represent a new challenge to us. To manage this, we are continuing to underwrite our core business of homeowners and small commercial business that are less ratings sensitive, and evaluating various options to retain certain of our ratings sensitive business by placing it with other highly rated insurance companies. To address current liquidity needs at the holding company, we are exploring the sale of some of our holding company and operating assets as well as exploring the possibility of raising additional capital. We are working diligently to address these challenges.”

Segment Reporting

As a result of the merger with Canopius Bermuda, Tower changed the presentation of its business results in the second quarter of 2013 to reflect the way management organizes the company for operating decisions and assessing profitability post-merger. Tower now operates and reports in three business segments: Commercial Insurance; Specialty Insurance and Reinsurance, which includes its specialty business and assumed reinsurance previously reported in the Commercial Insurance segment; and Personal Insurance, which includes its management companies that provide certain services to the Reciprocal Exchanges for a management fee. Prior period segment disclosures have been restated to conform to the current presentation, and these realignments have no impact on consolidated operating results.

Second Quarter 2013 Details (all figures compare results in the second quarter of 2013 to the results for the second quarter of 2012 except as noted otherwise):

Gross premiums written and managed were $475.6 million, compared with $537.6 million. Net premiums earned were $418.4 million, compared to $460.2 million, as growth in commercial insurance was offset by lower assumed reinsurance and increased premium cessions to the homeowners’ quota share reinsurance treaty effective in January 2013.

Total revenues were $460.5 million compared with $506.4 million, reflecting lower earned premiums and investment income offset by increased ceding commissions from the quota share reinsurance treaty for Tower’s homeowners business. Net investment income was $28.4 million compared to $31.8 million. Net investment income in the second quarter of 2013 excludes $7.8 million in income from Tower’s investment in Canopius Group Limited, which is reported separately as “Equity income in unconsolidated affiliate.” The tax equivalent investment yield at amortized cost was 4.0% at June 30, 2013, compared to 4.8% at June 30, 2012. Net realized investment losses were $2.0 million, compared to net realized investment gains of $19,000.

Strategic Review and Expense Control Initiative

On October 7, 2013, Tower announced that its Board of Directors is reviewing a range of strategic options with its lead financial advisor, JP Morgan Securities LLC. While this process is continuing, the Company is implementing an expense control initiative to streamline its operations and focus resources on its most profitable lines of business. As part of this initiative, the Company is completing a workforce reduction affecting approximately 10% of the total employee population of approximately 1,400. The areas that are most significantly impacted are commercial lines underwriting as well as operations. This workforce reduction is expected to result in annualized cost savings of approximately $21.0 million. The Company currently estimates that it will recognize pre-tax charges of approximately $5.0 million in the fourth quarter of 2013 for severance and other one-time termination benefits and other associated costs.

The Company experienced significant losses and reductions of statutory surplus in its insurance subsidiaries in the first half of 2013 and there are currently no commitments or assurances to raise additional capital, execute strategic alternatives or to liquidate certain investments at prices sufficient to repay the outstanding balance under its credit facility. In addition, there can be no guarantees that the Company will be able to remedy current statutory capital deficiencies in certain insurance subsidiaries or maintain adequate levels of statutory capital in the future. Until the completion of a definitive executable plan to remedy statutory capital deficiencies and repay the credit facility, there is substantial doubt about the Company’s ability to continue as a going concern.

Notes on Non-GAAP Financial Measures

(1) Operating income excludes realized gains and losses, goodwill impairment, 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 per share is operating income divided by diluted weighted average shares outstanding. The computation of operating income and operating earnings per share is provided in an accompanying table.

(2) Book value per share is calculated as Tower Group International, Ltd. shareholders’ equity divided by the number of shares outstanding. We believe that book value per share is an important measure of our ability to grow shareholder value. Tangible book value per share is calculated as Tower Group International, Ltd. shareholders’ equity, less intangible assets, divided by the number of shares outstanding. The computation of book value per share and tangible book value per share is provided in an accompanying table.

About Tower Group International, Ltd.

Tower Group International, Ltd. is a Bermuda-based global diversified insurance and reinsurance holding company and is listed on the NASDAQ Global Select Market under the symbol TWGP. Through our insurance and reinsurance subsidiaries in the U.S. and Bermuda, collectively referred to as Tower Group Companies, we deliver a broad range of commercial, personal and specialty insurance products and services in the U.S. and specialty reinsurance products globally through our distribution and underwriting partners.

For more information, visit Tower's website at http://www.twrgrpintl.com.

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 Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2012 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.

Financial Summary ($ in thousands):
			Three Months Ended June 30,
			2013								2012
				Reciprocal		Elimina-						Reciprocal		Elimina-
($ in thousands)			Tower	Exchanges		tions			Total		Tower	Exchanges		tions			Total
Net premiums written		$	360,935	$	42,776	$	-	$	403,711	$	441,613	$	44,620	$	-	$	486,233
Revenues
Net premiums earned		$	376,554	$	41,810	$	-	$	418,364	$	417,612	$	42,541	$	-	$	460,153
Ceding commission revenue			5,966		4,628		1,339		11,933		6,855		3,225		-		10,080
Insurance services revenue			8,804		-		(8,272)		532		9,324		-		(7,965)		1,359
Policy billing fees			3,287		34		-		3,321		2,871		129		-		3,000
Net investment income			27,611		2,459		(1,668)		28,402		30,268		3,177		(1,664)		31,781
Total net realized investment gains
(losses)			(2,243)		209		-		(2,034)		(110)		129		-		19
	Total revenues		419,979		49,140		(8,601)		460,518		466,820		49,201		(9,629)		506,392
Expenses
Loss and loss adjustment expenses			537,435		22,457		-		559,892		322,842		26,933		-		349,775
Direct and ceding
	commission expense		96,241		8,698		1,339		106,278		87,024		8,162		-		95,186
Other operating expenses			81,161		15,419		(8,272)		88,308		72,533		13,532		(7,965)		78,100
Acquisition-related transaction costs			665		-		-		665		720		-		-		720
Interest expense			7,640		1,663		(1,668)		7,635		7,902		1,664		(1,664)		7,902
	Total expenses		723,142		48,237		(8,601)		762,778		491,021		50,291		(9,629)		531,683
Other income (expense)
Equity in income (loss)
of unconsolidated affiliate			7,838		-		-		7,838		-		-	-	-		-
Goodwill impairment			(214,049)		-	-	-		(214,049)		-		-	-	-		-
Income (loss) before income taxes			(509,374)		903		-		(508,471)		(24,201)		(1,090)		-		(25,291)
Income tax expense (benefit)			(2,032)		102		-		(1,930)		(7,392)		(1,527)		-		(8,919)
Net income (loss)		$	(507,342)	$	801	$	-	$	(506,541)	$	(16,809)	$	437	$	-	$	(16,372)
Ratios
Net loss ratio			142.7%		53.7%				133.8%		77.3%		63.3%				76.0%
Net expense ratio			40.4%		49.7%				41.0%		33.0%		45.6%				34.1%
Net combined ratio			183.1%		103.4%				174.8%		110.3%		108.9%				110.1%

Financial Summary ($ in thousands):
			Six Months Ended June 30,
			2013								2012
				Reciprocal		Elimina-						Reciprocal		Elimina-
			Tower	Exchanges		tions			Total		Tower	Exchanges		tions			Total
Net premiums written		$	776,200	$	79,902	$	-	$	856,102	$	829,204	$	82,713	$	-	$	911,917
Revenues
Net premiums earned		$	757,438	$	82,812	$	-	$	840,250	$	796,281	$	84,030	$	-	$	880,311
Ceding commission revenue			18,419		7,619		46		26,084		8,933		6,310		-		15,243
Insurance services revenue			16,093		-		(15,433)		660		16,683		-		(14,827)		1,856
Policy billing fees			6,134		337		-		6,471		5,873		261		-		6,134
Net investment income			57,195		4,839		(3,315)		58,719		62,525		6,526		(3,327)		65,724
Total net realized investment gains
	(losses)		3,990		827		-		4,817		1,028		2,319		-		3,347
	Total revenues		859,269		96,434		(18,702)		937,001		891,323		99,446		(18,154)		972,615
Expenses
Loss and loss adjustment expenses			777,769		57,855		-		835,624		566,091		51,177		-		617,268
Commission expense			178,808		17,000		46		195,854		159,636		15,935		-		175,571
Other operating expenses			159,492		28,642		(15,433)		172,701		143,529		26,469		(14,827)		155,171
Acquisition-related transaction costs			19,721		-		-		19,721		1,982		-		-		1,982
Interest expense			15,443		3,315		(3,315)		15,443		16,513		3,327		(3,327)		16,513
	Total expenses		1,151,233		106,812		(18,702)		1,239,343		887,751		96,908		(18,154)		966,505
Other income (expense)
Equity in income (loss)
	of unconsolidated affiliate		7,966		-		-		7,966		-		-		-		-
Goodwill impairment			(214,049)		-		-		(214,049)		-		-		-		-
Income (loss) before income taxes			(498,047)		(10,378)		-		(508,425)		3,572		2,538		-		6,110
Income tax expense (benefit)			(3,622)		102		-		(3,520)		1,216		(910)		-		306
Net income		$	(494,425)	$	(10,480)	$	-	$	(504,905)	$	2,356	$	3,448	$	-	$	5,804
Ratios
Net loss ratio			102.7%		69.9%				99.4%		71.1%		60.9%				70.1%
Net expense ratio			38.0%		45.6%				38.7%		33.5%		43.9%				34.5%
Net combined ratio			140.7%		115.5%				138.1%		104.6%		104.8%				104.6%

Commercial Insurance Segment Information
($ in thousands)
(Unaudited)
			Three Months Ended					Six Months Ended
			June 30,					June 30,
			2013		2012	Change(%)		2013		2012	Change(%)
Key Measures
Premiums written
	Gross premiums written	$	179,680	$	214,835	-16.4%	$	364,536	$	422,627	-13.7%
	Less: ceded premiums written		(10,616)		(13,155)	-19.3%		(20,914)		(20,336)	2.8%
	Net premiums written	$	169,064	$	201,680	-16.2%	$	343,622	$	402,291	-14.6%
Revenues
Net premiums earned			170,832		193,793	-11.8%	$	348,827	$	381,651	-8.6%
Ceding commission revenue			(8,301)		(732)	1034.0%		(8,237)		(2,778)	196.5%
Policy billing fees			1,422		1,390	2.3%		2,792		2,903	-3.8%
Total revenues			163,953		194,451	-15.7%		343,382		381,776	-10.1%
Expenses
Net loss and loss adjustment expenses			249,906		155,395	60.8%		373,293		272,239	37.1%
Underwriting expenses
	Direct commission expenses		34,141		33,485	2.0%		64,156		66,184	-3.1%
	Other underwriting expenses		32,473		30,347	7.0%		65,227		62,061	5.1%
	Total underwriting expenses		66,614		63,832	4.4%		129,383		128,245	0.9%
Underwriting profit (loss)		$	(152,567)	$	(24,776)	515.8%	$	(159,294)	$	(18,708)	751.5%
Underwriting Ratios
	Net loss ratio		146.3%		80.2%			107.0%		71.3%
	Net expense ratio		43.0%		32.6%			38.7%		33.6%
	Net combined ratio		189.3%		112.8%			145.7%		104.9%

Specialty Insurance and Reinsurance Segment Information
($ in thousands)
(Unaudited)
			Three Months Ended					Six Months Ended
			June 30,					June 30,
			2013		2012	Change(%)		2013		2012	Change(%)
Key Measures
Premiums written
	Gross premiums written	$	121,340	$	154,923	-21.7%	$	343,008	$	284,161	20.7%
	Less: ceded premiums written		(17,653)		(12,855)	37.3%		(36,421)		(22,499)	61.9%
	Net premiums written	$	103,687	$	142,068	-27.0%	$	306,587	$	261,662	17.2%
Revenues
Net premiums earned		$	122,211	$	143,857	-15.0%	$	251,999	$	253,834	-0.7%
Ceding commission revenue			3,528		4,626	-23.7%		6,751		6,682	1.0%
Total revenues			125,739		148,483	-15.3%		258,750		260,516	-0.7%
Expenses
Net loss and loss adjustment expenses			248,466		125,814	97.5%		321,442		210,408	52.8%
Underwriting expenses
	Direct commission expenses		37,612		33,054	13.8%		71,320		56,485	26.3%
	Other underwriting expenses		19,160		17,068	12.3%		35,595		32,366	10.0%
	Total underwriting expenses		56,772		50,122	13.3%		106,915		88,851	20.3%
Underwriting profit (loss)		$	(179,499)	$	(27,453)	553.8%	$	(169,607)	$	(38,743)	337.8%
Underwriting Ratios
	Net loss ratio		203.3%		87.5%			127.6%		82.9%
	Net expense ratio		43.6%		31.6%			39.7%		32.4%
	Net combined ratio		246.9%		119.1%			167.3%		115.3%

Personal Insurance Segment Information
($ in thousands)
(Unaudited)
			Three Months Ended June 30,
			2013						2012
					Reciprocal					Reciprocal
			Tower		Exchanges		Total		Tower	Exchanges	Total
Key Measures
Premiums written
	Gross premiums written	$	118,430	$	56,106	$	174,536	$	115,719	52,147	167,866
	Less: ceded premiums written		(30,245)		(13,331)		(43,576)		(17,854)	(7,527)	(25,381)
	Net premiums written	$	88,185	$	42,775	$	130,960	$	97,865	44,620	142,485
Revenues
Net premiums earned			83,512		41,809		125,321		79,962	42,541	122,503
Ceding commission revenue			6,078		5,966		12,044		2,961	3,225	6,186
Policy billing fees			1,865		34		1,899		1,481	129	1,610
Total revenues			91,455		47,809		139,264		84,404	45,895	130,299
Expenses
Net loss and loss adjustment expenses			39,063		22,457		61,520		41,633	26,933	68,566
Underwriting expenses
	Direct commission expense		19,826		10,036		29,862		20,486	8,162	28,648
	Other underwriting expenses		18,427		15,420		33,847		12,909	14,607	27,516
	Total underwriting expenses		38,253		25,456		63,709		33,395	22,769	56,164
Underwriting profit (loss)		$	14,139	$	(104)	$	14,035	$	9,376	(3,807)	5,569
Underwriting Ratios
	Net loss ratio		46.8%		53.7%		49.1%		52.1%	63.3%	56.0%
	Net expense ratio		36.3%		46.5%		39.7%		36.2%	45.6%	39.5%
	Net combined ratio		83.1%		100.2%		88.8%		88.3%	108.9%	95.5%

Personal Insurance Segment Information
($ in thousands)
(Unaudited)
			Six Months Ended June 30,
			2013						2012
					Reciprocal						Reciprocal
			Tower		Exchanges		Total		Tower		Exchanges		Total
Key Measures
Premiums written
	Gross premiums written	$	213,881	$	104,554	$	318,435	$	196,384		101,814		298,198
	Less: ceded premiums written		(87,889)		(24,653)		(112,542)		(31,133)		(19,101)		(50,234)
	Net premiums written	$	125,992	$	79,901	$	205,893	$	165,251		82,713		247,964
Revenues
Net premiums earned		$	156,612	$	82,812	$	239,424	$	160,796	$	84,030	$	244,826
Ceding commission revenue			15,243		7,665		22,908		5,029		6,310		11,339
Policy billing fees			3,342		337		3,679		2,970		261		3,231
Total revenues			175,197		90,814		266,011		168,795		90,601		259,396
Expenses
Net loss and loss adjustment expenses			83,034		57,855		140,889		83,444		51,177		134,621
Underwriting expenses
	Direct commission expense		38,668		17,046		55,714		36,967		15,935		52,902
	Other underwriting expenses		37,339		28,643		65,982		27,171		27,544		54,715
	Total underwriting expenses		76,007		45,689		121,696		64,138		43,479		107,617
Underwriting profit (loss)		$	16,156	$	(12,730)	$	3,426	$	21,213		(4,055)		17,158
Underwriting Ratios
	Net loss ratio		53.0%		69.9%		58.8%		51.9%		60.9%		55.0%
	Net expense ratio		36.7%		45.5%		39.7%		34.9%		43.9%		38.0%
	Net combined ratio		89.7%		115.4%		98.5%		86.8%		104.8%		93.0%

Tower Group International, Ltd.
Consolidated Balance Sheets
	June 30,		December 31,
($ in thousands, except par value and share amounts)	2013		2012
Assets
Investments - Tower
Available-for-sale investments, at fair value:
Fixed-maturity securities (amortized cost of $1,980,652 and $1,926,236)	$	2,035,770	$	2,064,148
Equity securities (cost of $127,598 and $144,204)		134,650		140,695
Short-term investments (cost of $13,415 and $4,749)		13,379		4,750
Other invested assets		77,038		57,786
Investments - Reciprocal Exchanges
Available-for-sale investments, at fair value:
Fixed-maturity securities (amortized cost of $248,755 and $263,950)		253,775		280,563
Equity securities (cost of $2,751 and $5,144)		2,750		5,563
Total investments		2,517,362		2,553,505
Cash and cash equivalents (includes $12,744 and $9,782 relating to Reciprocal Exchanges)		108,535		102,269
Investment income receivable (includes $2,609 and $2,610 relating to Reciprocal Exchanges)		26,182		25,332
Investment in unconsolidated affiliate		76,196		71,894
Premiums receivable (includes $45,385 and $44,285 relating to Reciprocal Exchanges)		392,433		412,045
Reinsurance recoverable on paid losses (includes $6,556 and $682 relating to Reciprocal Exchanges)		27,333		17,609
Reinsurance recoverable on unpaid losses (includes $24,897 and $52,389 relating to Reciprocal Exchanges)		690,069		459,457
Prepaid reinsurance premiums (includes $19,988 and $17,803 relating to Reciprocal Exchanges)		126,159		63,923
Deferred acquisition costs, net (includes $9,912 and $11,364 relating to Reciprocal Exchanges)		192,887		181,198
Intangible assets (includes $6,596 and $6,854 relating to Reciprocal Exchanges)		99,507		106,768
Goodwill		55,540		241,458
Funds held by reinsured companies		890,186		137,545
Other assets (includes $1,687 and $1,559 relating to Reciprocal Exchanges)		465,548		338,769
Total assets	$	5,667,937	$	4,711,772
Liabilities
Loss and loss adjustment expenses (includes $119,263 and $135,791 relating to Reciprocal Exchanges)	$	2,552,351	$	1,895,679
Unearned premium (includes $102,492 and $103,216 relating to Reciprocal Exchanges)		998,624		921,271
Reinsurance balances payable (includes $7,266 and $6,979 relating to Reciprocal Exchanges)		46,442		40,569
Funds held under reinsurance agreements (includes $0 and $500 relating to Reciprocal Exchanges)		657,275		98,581
Other liabilities (includes $10,851 and $21,321 relating to Reciprocal Exchanges)		350,838		296,960
Deferred income taxes (includes $19,818 and $19,719 relating to Reciprocal Exchanges)		20,282		24,763
Debt		451,224		449,731
Total liabilities		5,077,036		3,727,554
Shareholders' equity
Common stock ($0.01 par value; 100,000,000 shares authorized, 57,437,157 and
53,048,011 shares issued, and 57,429,099 and 43,513,678 shares outstanding)		574		530
Treasury stock (8,058 and 9,534,333 shares)		(17)		(181,435)
Paid-in-capital		812,547		780,036
Accumulated other comprehensive income		9,060		82,756
Retained earnings (accumulated deficit)		(242,930)		268,171
Tower Group International, Ltd. shareholders' equity		579,234		950,058
Noncontrolling interests		11,667		34,160
Total shareholders' equity		590,901		984,218
Total liabilities and shareholders' equity	$	5,667,937	$	4,711,772

Tower Group International, Ltd.
Consolidated Statements of Operations
				Three Months Ended				Six Months Ended
				June 30,				June 30,
($ in thousands, except per share amounts)				2013		2012		2013		2012
Revenues
Net premiums earned			$	418,364	$	460,153	$	840,250	$	880,311
Ceding commission revenue				11,933		10,080		26,084		15,243
Insurance services revenue				532		1,359		660		1,856
Policy billing fees				3,321		3,000		6,471		6,134
Net investment income				28,402		31,781		58,719		65,724
Net realized investment gains (losses):
	Other-than-temporary impairments			(4,456)		(2,270)		(5,145)		(5,246)
	Portion of loss recognized in other comprehensive income			-		286		-		286
	Other net realized investment gains			2,422		2,003		9,962		8,307
		Total net realized investment gains		(2,034)		19		4,817		3,347
	Total revenues			460,518		506,392		937,001		972,615
Expenses
Loss and loss adjustment expenses				559,892		349,775		835,624		617,268
Commission expense				106,278		95,186		195,854		175,571
Other operating expenses				88,308		78,100		172,701		155,171
Acquisition-related transaction costs				665		720		19,721		1,982
Interest expense				7,635		7,902		15,443		16,513
	Total expenses			762,778		531,683		1,239,343		966,505
Other income (expense)
Equity in income (loss) of unconsolidated affiliate				7,838		-		7,966		-
Goodwill impairment				(214,049)		-		(214,049)		-
Income before income taxes				(508,471)		(25,291)		(508,425)		6,110
Income tax expense				(1,930)		(8,919)		(3,520)		306
Net income			$	(506,541)	$	(16,372)	$	(504,905)	$	5,804
Less: Net income attributable to Noncontrolling interests				801		437		(10,480)		3,448
Net income attributable to Tower Group International, Ltd.			$	(507,342)	$	(16,809)	$	(494,425)	$	2,356
Earnings per share attributable to Tower Group International, Ltd. shareholders:
	Basic		$	(8.88)	$	(0.39)	$	(9.60)	$	0.04
	Diluted		$	(8.88)	$	(0.39)	$	(9.60)	$	0.04
Weighted average common shares outstanding:
	Basic			57,134		43,286		51,487		43,340
	Diluted			57,134		43,286		51,487		43,419
Dividends declared and paid per common share			$	0.17	$	0.17	$	0.34	$	0.34

	Three Months Ended					Six Months Ended
($ in thousands except per share amounts)		June 30,				June 30,
Reconciliation of non-GAAP financial measures:		2013		2012			2013			2012
Net income (loss) attributable to Tower Group International, Ltd.	$	(507,342)	$	(16,809)		$	(494,425)		$	2,356
Net realized gains (losses) on investments		(2,243)		1,676			3,990			1,028
Acquisition-related transaction costs		(665)		(720)			(19,721)			(1,982)
Goodwill impairment		(214,049)		-			(214,049)			-
Income tax		729		(452)			2,574			5
Operating income (loss) attributable to
Tower Group International, Ltd.	$	(291,114)	$	(17,313)		$	(267,219)		$	3,305
Operating EPS and ROE:
Operating earnings (loss) per share - Basic	$	(5.10)	$	(0.40)		$	(5.19)		$	0.07
Operating earnings (loss) per share - Diluted	$	(5.10)	$	(0.40)		$	(5.19)		$	0.07
Operating return on average equity		-123.6%		-6.8%			-56.8%			0.7%
Book Value Per Share and Tangible Book Value Per Share							June 30, 2013			Dec. 31, 2012
Tower Group International, Ltd. shareholders' equity						579,234			950,058
Intangible assets							148,451			341,372
Tower Group International, Ltd. shareholder's equity excluding intangible assets							430,783			608,686
Shares outstanding						57,429			43,514
Book Value Per Share					$	10.09		$	21.83
Tangible Book Value Per Share					$	7.50		$	13.99

CONTACT:
Tower Group International, Ltd.
Bernie Kilkelly, 212-655-8943
Managing Vice President, Investor Relations
bkilkelly@twrgrp.com