Tower Group International, Ltd. - FORM 8-K - EX-99.1

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8-K - FORM 8-K - Tower Group International, Ltd.	y91271e8vk.htm
EX-99.2 - EX-99.2 - Tower Group International, Ltd.	y91271exv99w2.htm

EXHIBIT 99.1

Tower Group, Inc.
Schedule of Adjusted Financial Information
Consolidated Balance Sheets


	December 31,			March 31,			June 30,			September 30,			December 31,
($ in thousands)	2009			2010			2010			2010			2010

Assets
Investments — Tower
Available-for-sale investments, at fair value:
Fixed-maturity securities	$	1,783,596		$	1,833,499		$	1,685,727		$	2,189,524		$	2,041,557
Equity securities		76,733			78,579			36,825			40,480			90,317
Short-term investments		36,500			6,699			—			26,902			1,560
Investments — Reciprocal Exchanges
Available-for-sale investments, at fair value:
Fixed-maturity securities		—			—			—			316,602			341,054

Total investments		1,896,829			1,918,777			1,722,552			2,573,508			2,474,488
Cash and cash equivalents		164,882			156,855			348,451			118,436			102,877
Investment income receivable		20,240			22,264			19,414			26,264			23,562
Premiums receivable		308,075			300,785			308,766			361,030			387,584
Reinsurance recoverable on paid losses		14,819			18,929			14,715			27,084			18,214
Reinsurance recoverable on unpaid losses		199,687			214,807			237,963			299,970			282,682
Prepaid reinsurance premiums		94,818			76,670			67,889			90,510			77,627
Deferred acquisition costs, net		126,689			124,096			128,939			164,713			164,123
Deferred income taxes		57,144			51,731			44,213			19,293			2,245
Intangible assets		53,350			52,018			50,686			114,808			123,820
Goodwill		244,690			243,748			243,748			249,404			250,103
Other assets		103,153			130,418			157,127			197,569			230,405

Total assets	$	3,284,376		$	3,311,098		$	3,344,463		$	4,242,589		$	4,137,730

Liabilities
Loss and loss adjustment expenses	$	1,131,989		$	1,195,840		$	1,188,375		$	1,632,361		$	1,610,421
Unearned premium		658,940			620,401			631,094			873,122			872,026
Reinsurance balances payable		89,080			46,273			48,661			57,176			35,037
Funds held under reinsurance agreements		13,737			60,242			69,269			78,358			93,153
Other liabilities		133,647			112,194			81,714			143,954			84,989
Debt		235,058			235,058			291,058			373,637			374,266

Total liabilities		2,262,451			2,270,008			2,310,171			3,158,608			3,069,892
Stockholders’ equity
Common stock		451			455			455			456			457
Treasury stock		(1,995	)		(10,636	)		(50,603	)		(87,303	)		(91,779	)
Paid-in-capital		751,878			754,265			755,992			759,598			763,064
Accumulated other comprehensive income		34,554			50,031			58,843			87,560			48,883
Retained earnings		237,037			246,975			269,605			292,873			324,376

Tower Group, Inc. stockholders’ equity		1,021,925			1,041,090			1,034,292			1,053,184			1,045,001

Noncontrolling interests — Reciprocal Exchanges		—			—			—			30,797			22,837

Total stockholders’ equity		1,021,925			1,041,090			1,034,292			1,083,981			1,067,838

Total liabilities and stockholders’ equity	$	3,284,376		$	3,311,098		$	3,344,463		$	4,242,589		$	4,137,730

Tower Group, Inc.
Schedule of Adjusted Financial Information
Consolidated Statements of Income


	Year ended			Three months ended												Year ended
	December 31,			March 31,			June 30,			September 30,			December 31,			December 31,
($ in thousands)	2009			2010			2010			2010			2010			2010

Revenues
Net premiums earned	$	854,711		$	268,046		$	272,967		$	378,779		$	372,877		$	1,292,669
Ceding commission revenue		43,937			10,188			8,453			10,916			8,511			38,068
Insurance services revenue		5,123			556			250			1,116			247			2,169
Policy billing fees		2,965			771			1,010			1,896			2,578			6,255
Net investment income		74,866			23,175			23,931			29,294			29,690			106,090
Net realized investment gains (losses):
Other-than-temporary impairments		(44,210	)		(6,146	)		(2,836	)		(4,953	)		(2,165	)		(16,100	)
Portion of loss recognized in other comprehensive income		20,722			3,215			2,505			4,400			1,789			11,909
Other net realized investment gains		24,989			3,671			5,497			2,270			6,236			17,674

Total net realized investment gains		1,501			740			5,166			1,717			5,860			13,483

Total revenues		983,103			303,476			311,777			423,718			419,763			1,458,734
Expenses
Loss and loss adjustment expenses		475,497			169,337			159,868			231,463			223,355			784,023
Direct and ceding commission expense		204,565			58,045			58,619			81,173			69,372			267,209
Other operating expenses		149,127			51,008			49,741			63,475			66,265			230,489
Acquisition-related transaction costs		14,038			857			393			148			971			2,369
Interest expense		18,122			4,881			5,214			6,192			8,307			24,594

Total expenses		861,349			284,128			273,835			382,451			368,270			1,308,684
Other income (expense)
Equity in income (loss) of unconsolidated affiliate		(777	)		—			—			—			—			—
Gain on investment in acquired unconsolidated affiliate		7,388			—			—			—			—			—
Gain on bargain purchase		13,186			—			—			—			—			—
Other		—			(466	)		—			—			—			(466	)

Income before income taxes		141,551			18,882			37,942			41,267			51,493			149,584
Income tax expense		44,753			5,830			12,300			14,109			18,134			50,373

Net income	$	96,798		$	13,052		$	25,642		$	27,158		$	33,359		$	99,211
Add: Net loss attributable to Reciprocal Exchanges		—			—			—			(1,405	)		(3,274	)		(4,679	)

Net income attributable to Tower Group, Inc.	$	96,798		$	13,052		$	25,642		$	28,563		$	36,633		$	103,890

Earnings per share attributable to Tower Group, Inc. stockholders:
Basic	$	2.46		$	0.29		$	0.58		$	0.67		$	0.88		$	2.39
Diluted	$	2.45		$	0.29		$	0.58		$	0.66		$	0.88		$	2.38

Weighted average common shares outstanding:
Basic		39,363			45,204			44,330			42,924			41,538			43,462
Diluted		39,581			45,406			44,515			43,098			41,715			43,648

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Tower Group International, Ltd. - FORM 8-K - EX-99.1 - May 11, 2011

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