|[December 18, 2013]
Fitch Comments on Tower Group on Reserve Charge
CHICAGO --(Business Wire)--
Fitch Ratings comments that Tower Group International, Ltd.'s (TWGP)
filing yesterday announcing that it will be taking additional adverse
reserve development in the third quarter of 2013 (3Q'13) of
approximately $75 million-$105 million in addition to the $364 million
the company took in 2Q'13 is outside of previous rating expectations.
The third quarter development relates to workers' compensation,
commercial multi-peril liability, other liability, and commercial auto
liability, which were the same lines experiencing unfavorable loss
experience that led to TWGP's 2Q'13 charge.
However, TWGP's announcement of the sale of its investment in Canopius
Group Ltd.'s sale to Bregal Capital LLP for approximately $70 million
and using the proceeds to fund payment of its outstanding $70 million
bank line is a favorable development. The company's next maturing debt
obligation is $150 million of 5% convertible senior notes due Sept. 15,
The company continues to explore strategic alternatives with the
services of an investment banker.
Fitch plans on reviewing the ratings once the company files third
quarter GAAP and statutory statements, which are anticipated to be
released shortly. The ratings are listed below.
Tower Group International, Ltd.
--Issuer Defaut Rating (IDR) 'B', Rating Watch Negative.
Tower Group, Inc.
--IDR 'B', Rating Watch Negative;
--5% senior convertible debt rating 'B-'.
Tower Insurance Company of New York
Tower National Insurance Company
Preserver Insurance Company
CastlePoint National Insurance Company
York Insurance Company of Maine
Hermitage Insurance Company
CastlePoint Florida Insurance Company
North East Insurance Company
Massachusetts Homeland Insurance Company
CastlePoint Insurance Company
Kodiak Insurance Company
--Insurer Financial Strength ratings 'BB', Rating Watch Negative.
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