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Tower Group forecasts larger loss reserves, shares crash

  • Tower Group (TWGP -28%) expects to report a $75M-$105M Q3 increase in its loss reserves, due largely to reserve increases for its "workers compensation, commercial multi-peril liability, other liability and commercial auto liability lines of business." (PR)
  • Tower also expects its U.S. combined statutory surplus (exc. cessions to a Bermuda affiliate) to drop to $315M-$335M at the end of Q3 from $374M at the end of Q2.
  • Separately, Tower announces it's selling its 10.7% stake in insurance firm Canopius Group to a Bregan Capital fund for $69.7M. The company has used the proceeds to help pay down $70M outstanding for a credit facility.
  • Last month, Tower announced it's restating its 2011/2012 results, and said "substantial doubt" exists about its "ability to continue as a going concern."
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