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Tower Group International, Ltd. Message Board

  • hjkl2944 hjkl2944 Sep 26, 2013 5:17 PM Flag

    Clearly a lot on this board aren't seeing facts

    Insurance co's are regulated, audited, and re-audited. Loss reserves can vary by changing assumptions or uncovering a new fact but for a company with TBV of $14.33 as of 3/31 you would need a loss reserve adjustment of $363 million to make TBV drop to where the shares are trading now, $8. Profitable insurance co's NEVER sell below TBV. Book value would still be much higher than this because of the profitable acquisition in 1Q (goodwill creating). For the shorts leaning on this at these levels, please give us longs a real and rationale reason to sell not your $6 darts. Kind of reminds me of Citi at $26.

    Sentiment: Strong Buy

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    • All true but loss reserving is an art as much as a science and this is a company which traditionally plays in very tough classes of business; urban habitational, taxis etc. Remember that auditors are not actuaries and usually accept the conclusions of the company actuaries for reserving picks. There have been any number of companies which have gone out of business due to inadequate reserves because it can dig a deep hole and create a very challenging dynamic from which to recover.

      It is not a good sign that they've put themselves up for sale prior to releasing their restated/delayed earnings as it implies they cannot raise sufficient equity or debt capital to maintain their AM Best ratings. Whether there is a buyer is a different question and it will very much depend on the nature of the shortfall, the lines of business and the degree to which a prospective buyer is satisfied that there isn't more bad news down the road.

    • Think Wall Street sees blood in the water and wants a big discount on TWGP assets. Leads to Tower Group floating a buyout to stop a 50% off sale on their investment portfolio?

      Hurricane Sandy
      Canopias Merger
      Tower Group Terminates Deal To Buy American Safety Reinsurance (8-19)
      ---------------------------------------------------------------------------
      equals - Tower Group postpones release of financial results. Wall Street has it's way, hmmm?!

    • Many insurer's have, and probably do, trade below tangible book value. I've purchased many below book tangible book. And we have no idea how profitable TWGP was/is since they may not have been reserving correctly for years. They may need several hundred million dollar reserve chage +, in other case I have seen, smaller charges keep on going quarter after quarter for many quarters hitting earnings as the 'experts' they hire review their book of business for many years back. It looks like TWGP's loss adjustment expense was underestimated for a long time giving them false profits.

      It is amazing that they are trying to sell the company instead of 'right the ship'....if the they weren't in serious trouble, why wouldn't they spend the next several quarters hunkering down and making proper corrections....let the share price rise back up, and then sell. They are selling at the lows, as if the company is in a distressed situation needing immediate assistance.

      best.

      • 4 Replies to fabulouspoodle
      • Your logic is false. Basically what you stated could apply any company that was sold. You are saying that any company that is looking for a buyout thinks the company has no future. Clearly that's wrong.

      • Can you tell us what insurance companies are currently trading below TBV that are reporting correctly?

      • You hit the nail right on the head when you stated this:
        "It is amazing that they are trying to sell the company instead of 'right the ship..."
        The fact that they are trying to arrange a buy out and not right the ship tells you they cannot continue
        as a going concern when their numbers come out. If they could, they would never consider selling at such a large discount to their last reported book value. I suspect the GS rumors of a few days back were correct, in that they were trying to raise money. If they really are shopping the company around they must not have liked the answer GS gave them.

        Sentiment: Hold

      • fabulouspoodle,
        (( trade )) below tangible book value. Who gets the assests at half price. Then you still have that nasty pile of cash, nobody gets that at 50% off.

        Luvin that handle you use. Appreciate reasonable negative posting. However, I do believe Wall Street is doing everything possible to accumulate horribly priced assets during the nasty headlines. That is just how the game is played. Floating the recent buyout news should help put more focus on the companies valuable assets and scare aware the vultures looking for an 80% off sale.

 
TWGP
2.55+0.01(+0.39%)Apr 15 4:00 PMEDT

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