Maintain the going forward and you will be surprised what the stock can do. Valuation of assets on the books are not taking a hit and that holds huge promise for TBV. A $360M hit on assets would leave a lot of TBV?
Looking forward to the complete filing of the 2nd quarter and their decision on can they continue the dividend, while keeping head above water. I think it's possible if the assets Tower holds have been good to great choices.
I think dividend will at best be put on hiatus. All focus will now be trying to convince policy holders are going to be paid if a claim is filed. If they are going to survive in an ongoing business, they must focus on making the balance sheet a fortress. Question is, can they survive without a reorganization. Reorganization would make sure policyholders are covered, and in such, shareholders could be wiped out.
I'm expecting a .01 dividend for the next couple of quarters. I was stunned by the .16 dividend paid out last quarter, so who knows. The second quarter report will tell a lot about the strategy going forward. It will be the "kitchen sink" quarter to clean out the closet.
What I liked from 10-7's 8-K:
* Since 2010, Tower has been shifting its business mix, significantly de-emphasizing the lines that contributed to the reserve strengthening and modifying its book of commercial lines business.
* Tower’s U.S. insurance subsidiaries continue to maintain risk based capital levels in excess of those required by their respective domiciliary states.
* $365M - with the assistance of its independent actuarial consultants, a comprehensive review of the Company's loss reserves as of June 30, 2013. As a result of the review, the Company expects to strengthen loss reserves by approximately $365 million....The reserve strengthening reflects adverse loss emergence, coupled with changes in judgment, including actuarial factors.
So it looks like the reserve includes losses that include looking forward, as it should.
I want to throw things every time someone talks about dividend yields, or whether they will cut/eliminate the dividend as though it has any impact on the value of the company. If they survive it's the remaining assets and any earnings they can salvage that will drive the value of the stock. A large dividend is an eventual outcome of a profitable business, but by itself it adds no value and is therefore meaningless in any analysis of the company.