Tower Group Intl. Q2 Loss Widens Sharply; Cutting Jobs

(RTTNews) - Tower Group International, Ltd. (TWGP) reported a net loss attributable to common shareholders for the second quarter of $507.3 million or $8.88 per share, compared to a net loss attributable to common shareholders of $16.8 million or $0.39 per share for the year-ago quarter.

The latest quarter results include a non-cash goodwill impairment charge of $214.0 million.

Operating loss for the second quarter 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 prior year quarter.

Total revenues for the second quarter fell to $460.5 million from $506.4 million a year ago.

Analysts polled by Thomson Reuters expected the company to report a loss of $5.42 per share on revenue of $446.56 million for the second quarter.

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.

On October 7, Tower announced that its Board of Directors is reviewing a range of strategic options with its lead financial advisor, JP Morgan Securities LLC.

While that process is continuing, the company said Friday that it is implementing an expense control initiative to streamline its operations and focus resources on its most profitable lines of business. As part of the initiative, the company is completing a workforce reduction affecting about 10% of the total employee population of about 1,400.

The workforce reduction is expected to result in annualized cost savings of about $21.0 million. The company currently estimates that it will recognize pre-tax charges of about $5.0 million in the fourth quarter of 2013 for severance and other one-time termination benefits and other associated costs.