Tower Group Earnings Cheat Sheet: Revenues Jump 41.9% on Strong Quarter

Tower Group, Inc. (NASDAQ:TWGP) reported net income above Wall Street’s expectations for the first quarter. Tower Group, Inc. through its subsidiaries offers property and casualty insurance products and insurance services and products.

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Tower Group Earnings Cheat Sheet for the First Quarter

Results: Net income for Tower Group, Inc. rose to $25.7 million (61 cents/share) vs. $13.1 million or $0.29 per share.

Revenue: Rose 41.9% to $430.5 million YoY.

Actual vs. Wall St. Expectations: TWGP beat the mean analyst estimate of 46 cents/share. Estimates ranged from 45 cents per share to 48 cents per share.

Quoting Management: Michael H. Lee, President and Chief Executive Officer of Tower Group, Inc., said, “Our operating results this quarter, while affected by winter storm losses in the northeast, continue to demonstrate strong operating fundamentals and positive trends. Our robust premium growth during the quarter was driven by our 2010 acquisition of OneBeacon’s personal lines business, expansion into specialty niche markets, territorial expansion and new organic growth initiatives. We also continued to maintain a favorable loss ratio by exercising underwriting and pricing discipline. Finally, we were successful in increasing our investment income by increasing our invested asset base and by enhancing our investment asset allocation. Based on these strong operating fundamentals and positive trends this quarter, we are confident in our outlook for the remainder of 2011. Consistent with our focus on enhancing value to our shareholders, we are pleased to announce that our Board has authorized a 50% increase in our quarterly dividends from 12.5 cents per share to 18.75 cents per share to stockholders of record as of June 13, 2011.”

Key Stats: The company has enjoyed double-digit year-over-year revenue growth for the past five quarters. Over that span, the company has averaged growth of 47.1%, with the biggest boost coming in the third quarter of the last fiscal year when revenue rose 65.3% from the year earlier quarter.

Competitors to Watch: The Travelers Companies, Inc. (NYSE:TRV), W.R. Berkley Corporation (NYSE:WRB), The Progressive Corp. (NYSE:PGR), Markel Corporation (NYSE:MKL), American Financial Group (NYSE:AFG), RLI Corp. (NYSE:RLI), Harleysville Group Inc. (NASDAQ:HGIC), The Hanover Insurance Group, Inc. (NYSE:THG), American International Group (NYSE:AIG) and Selective Insurance Group (NASDAQ:SIGI)

Stock Performance: Shares of TWGP are unchanged from the previous close.


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