Tower Group Inc. (TWGP, Financial) filed Annual Report for the period ended 2010-12-31.
Tower Group Inc. has a market cap of $1.13 billion; its shares were traded at around $27.18 with a P/E ratio of 11 and P/S ratio of 1.1. The dividend yield of Tower Group Inc. stocks is 1.8%. Tower Group Inc. had an annual average earning growth of 31.4% over the past 5 years.Hedge Fund Gurus that owns TWGP: Paul Tudor Jones of The Tudor Group. Mutual Fund and Other Gurus that owns TWGP: Columbia Wanger of Columbia Wanger Asset Management, RS Investment Management, Chuck Royce of Royce& Associates, NWQ Managers of NWQ Investment Management Co.
In connection with recording the acquisition, the previous investment in CastlePoint was revalued resulting in a gain of $7.4 million, before income taxes. This gain was included in the Consolidated Statements of Income in the first quarter of 2009. There were $11.4 million of transaction costs, including legal, accounting, investment advisory and other costs directly related to the acquisition incurred, which were expensed in the first quarter of 2009.
On July 1, 2010 the Company completed the acquisition of OBPL. The Company acquired Massachusetts Homeland Insurance Company, York Insurance Company of Maine and two management companies. The management companies are the attorneys-in-fact for Adirondack Insurance Exchange, a New York reciprocal insurer, and New Jersey Skylands Insurance Association, a New Jersey reciprocal insurer. The consideration for this transaction was $167 million. Effective July 1, 2010, the Company entered into transition service agreements with OneBeacon Insurance Group, LLC (OneBeacon) whereby OneBeacon provides certain information technology and operational support to the Company for a certain period of time. Expenses incurred under such transition service agreements were $13.3 million during 2010. This acquisition expanded the Companys suite of personal lines insurance products to include private passenger automobile, homeowners, personal umbrella, and the signature package product, OneChoice CustomPac, which provides customers with one policy for all of their homeowners, automobile and umbrella needs.
We offer our products on an admitted basis in the preferred, standard, and non-standard pricing and coverage tiers and on a non-admitted basis using our E&S coverage and pricing tier. For each of the preferred, standard, non-standard and E&S coverage and pricing tiers, we have developed different pricing, coverage and underwriting guidelines. For example, the pricing for the preferred risk segment is generally the lowest, followed by the pricing for the standard, non-standard and E&S segments. The underwriting guidelines are correspondingly stricter for preferred risks in order to justify the lower premium rates charged for these risks with underwriting guidelines becoming progressively less restrictive for standard, non-standard and E&S risks. We generally distribute policies for risks with preferred and standard underwriting characteristics through our retail agents and policies for risks with non-standard and E&S underwriting characteristics through our wholesale agents. In addition to segmenting our products into various pricing and coverage tiers, we further classify our products into the following premium size segments: under $25,000 (small), $25,000 to $150,000 (medium) and over $150,000 (large).
In our Insurance Services segment, we generate fees from performing various aspects of insurance company functions for other insurance companies, including underwriting, claims administration, reinsurance intermediary, operational and technology services. We provide these services through our managing general agencies, TRM, CPM and CPRMFL. Prior to the acquisition of CastlePoint in February of 2009, TRM generated fees from managing business on behalf of CPIC, whereas CPM generated fees from managing program business on behalf of Tower. After CastlePoint was acquired by Tower in February of 2009, these fees earned by TRM and CPM were eliminated. Tower generates fees from placing Towers business with other insurers and reinsurers, although as a result of the CastlePoint acquisition, the amount of fee income was limited to $2.2 million and $5.1 million for 2010 and 2009, respectively, as compared to $68.5 million in 2008.
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Tower Group Inc. has a market cap of $1.13 billion; its shares were traded at around $27.18 with a P/E ratio of 11 and P/S ratio of 1.1. The dividend yield of Tower Group Inc. stocks is 1.8%. Tower Group Inc. had an annual average earning growth of 31.4% over the past 5 years.Hedge Fund Gurus that owns TWGP: Paul Tudor Jones of The Tudor Group. Mutual Fund and Other Gurus that owns TWGP: Columbia Wanger of Columbia Wanger Asset Management, RS Investment Management, Chuck Royce of Royce& Associates, NWQ Managers of NWQ Investment Management Co.
Highlight of Business Operations:
On February 5, 2009 the acquisition of 100% of the issued and outstanding common stock of CastlePoint, a Bermuda exempted corporation, was completed. The consideration for this transaction was $491.4 million consisting of 16.9 million shares of Tower common stock with an aggregate value of $421.7 million, $4.4 million related to the fair value of unexercised warrants, and $65.3 million of cash. The Company issued 1.1 million employee stock options to replace the CastlePoint employee and director stock options as of the acquisition date. The value of the Companys stock options attributed to the services rendered by the CastlePoint employees as of the acquisition date totaled $9.1 million and was included in the purchase consideration. This transaction has expanded and diversified revenues by accessing CastlePoints programs and risk sharing businesses.In connection with recording the acquisition, the previous investment in CastlePoint was revalued resulting in a gain of $7.4 million, before income taxes. This gain was included in the Consolidated Statements of Income in the first quarter of 2009. There were $11.4 million of transaction costs, including legal, accounting, investment advisory and other costs directly related to the acquisition incurred, which were expensed in the first quarter of 2009.
On July 1, 2010 the Company completed the acquisition of OBPL. The Company acquired Massachusetts Homeland Insurance Company, York Insurance Company of Maine and two management companies. The management companies are the attorneys-in-fact for Adirondack Insurance Exchange, a New York reciprocal insurer, and New Jersey Skylands Insurance Association, a New Jersey reciprocal insurer. The consideration for this transaction was $167 million. Effective July 1, 2010, the Company entered into transition service agreements with OneBeacon Insurance Group, LLC (OneBeacon) whereby OneBeacon provides certain information technology and operational support to the Company for a certain period of time. Expenses incurred under such transition service agreements were $13.3 million during 2010. This acquisition expanded the Companys suite of personal lines insurance products to include private passenger automobile, homeowners, personal umbrella, and the signature package product, OneChoice CustomPac, which provides customers with one policy for all of their homeowners, automobile and umbrella needs.
We offer our products on an admitted basis in the preferred, standard, and non-standard pricing and coverage tiers and on a non-admitted basis using our E&S coverage and pricing tier. For each of the preferred, standard, non-standard and E&S coverage and pricing tiers, we have developed different pricing, coverage and underwriting guidelines. For example, the pricing for the preferred risk segment is generally the lowest, followed by the pricing for the standard, non-standard and E&S segments. The underwriting guidelines are correspondingly stricter for preferred risks in order to justify the lower premium rates charged for these risks with underwriting guidelines becoming progressively less restrictive for standard, non-standard and E&S risks. We generally distribute policies for risks with preferred and standard underwriting characteristics through our retail agents and policies for risks with non-standard and E&S underwriting characteristics through our wholesale agents. In addition to segmenting our products into various pricing and coverage tiers, we further classify our products into the following premium size segments: under $25,000 (small), $25,000 to $150,000 (medium) and over $150,000 (large).
In our Insurance Services segment, we generate fees from performing various aspects of insurance company functions for other insurance companies, including underwriting, claims administration, reinsurance intermediary, operational and technology services. We provide these services through our managing general agencies, TRM, CPM and CPRMFL. Prior to the acquisition of CastlePoint in February of 2009, TRM generated fees from managing business on behalf of CPIC, whereas CPM generated fees from managing program business on behalf of Tower. After CastlePoint was acquired by Tower in February of 2009, these fees earned by TRM and CPM were eliminated. Tower generates fees from placing Towers business with other insurers and reinsurers, although as a result of the CastlePoint acquisition, the amount of fee income was limited to $2.2 million and $5.1 million for 2010 and 2009, respectively, as compared to $68.5 million in 2008.
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