Tower Group, Inc. Earnings Cheat Sheet: Swinging to a Loss After Two Quarters of Profit

Tower Group, Inc. (NASDAQ:TWGP) swung to a loss in the third quarter, missing analysts’ forecast. Tower Group, 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 Third Quarter

Results: Reported a loss of $16.4 million (40 cents per diluted share) in the quarter. Tower Group, Inc. had a net income of $28.6 million or 66 cents per share in the year earlier quarter.

Actual vs. Wall St. Expectations: TWGP fell short of the mean analyst estimate of a loss of 17 cents per share.

Quoting Management: Michael H. Lee, President and Chief Executive Officer of Tower Group, Inc., said, “Irene delivered the single largest loss event in our twenty-year history, and led to our first quarterly loss since going public in 2004. In addition, we conducted a comprehensive review of our loss and loss expense reserves, including the reserves of the companies that we have acquired during the last few years. Based on this review, we made an adjustment to our reserves to reflect adverse development in commercial lines, including certain discontinued program business, which was partially offset by a release in reserves from the personal lines business. Despite these losses, we continue to see great strength in our core business, as reflected by the favorable combined ratio excluding these losses, strong organic growth from the newly created businesses, positive pricing trends and our declining expense ratio.”

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the fourth quarter has moved down from 78 cents a share to 75 cents over the last thirty days. The average estimate for the fiscal year is $1.72 per share, down from $2.65 ninety days ago.

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), and Selective Insurance Group (NASDAQ:SIGI).

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)