Tower Group (TWGP)

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Top Contributors Eric Rothmann www.zacks.com

Based in New York City, Tower Group was started in 1990 to provide specialty property-casualty lines to small to mid-sized businesses and individuals in New York State and surrounding areas. The company went public through an IPO in October 20, 2004, selling 14,129,007 shares of common stock (a 76% interest in the company), to raise $108 million. Tower Group focuses on markets typically underserved by the major carriers. Many of these markets are too small or risky for the national carriers to underwrite profitably. By developing an expertise in certain product lines and geographic markets, the company believes it can profitably grow in areas shunned by other carriers. These products include several commercial lines for small businesses: property, liability, workers' compensation and auto insurance and personal lines products such as homeowner's policies and auto. The risks are low severity and short tailed exposures with small premiums per policy. Tower Group carries an A- (Excellent) financial strength rating from A.M. Best Co.

The company operates in three segments:

Insurance 82.6% of 3Q07 underwriting and fee revenues of $112.0 million through Tower Insurance Company of New York (TICNY) the company underwrites commercial automobile, property, workers' comp, and multi-peril package insurance products. Also underwrites homeowners and other personal lines.

Reinsurance 0.8% of 3Q07 underwriting and fee revenues through TICNY, the company assumes reinsurance premiums directly from the clients of the company's in-house broker, Tower Risk Management (TRM), or from the reinsurers that reinsure those clients. Reinsurers often require that Tower take a share of business. The company's reinsurance business has historically been unprofitable but the losses are more than offset by commissions generated from TRM for placing the reinsurance programs with underwriters.

Insurance Services 8.16% of 3Q07 underwriting and fee revenues - through its managing general agency, TRM, places risks with primary underwriters and arranges reinsurance programs for those carriers, and provides claims administration services.

 Tower Group

	Select All  |  Select None Metrics Premiums Earned Premiums Assumed Investment Gain Total Investments Life Insurance Premiums Property & Casualty Premiums Health Insurance Premiums Reinsurance Recoverables Net Income Gross Premiums Premiums Ceded Investment Income Combined Ratio Loss Ratio Cancel

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Company	Data From	Gross Premiums	Loss Ratio	Premiums Ceded	Investment Income	Combined Ratio
Darwin Professional Underwriters (DR)	2006	$246M	66.9%	($89.2M)	$16.4M	94.3%
National Interstate (NATL)	2006	$306M	59.6%	($63.6M)	$17.6M	83.5%
Tower Group (TWGP)	2006	$433M	60.3%	($188M)	$23M	87.6%
United America Indemnity (INDM)	2006	$653M	55.7%	$92.4M	$66.5M	87.5%

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[edit] References

1. ↑ Source: 2006 DR 10 - K pg 14
2. ↑ ^{2.0 2.1 2.2} Source: 2006 DR 10 - K pg 51
3. ↑ Source: 2006 DR 10 - K pg F- 19
4. ↑ ^{4.0 4.1 4.2 4.3} Source 2006 NATL Page 29 Form 10 K
5. ↑ Source 2006 NATL Page 70 Form 10 K
6. ↑ ^{6.0 6.1 6.2 6.3} Source : 2006 THG 10-K pg 59
7. ↑ Source : 2006 THG 10-K pg F 22
8. ↑ ^{8.0 8.1} Source : 2006 INDM 10-K pg 46
9. ↑ ^{9.0 9.1} Source : 2006 INDM 10-K pg 47
10. ↑ Source : 2006 INDM 10-K pg 98