According to Seeking Alpha...
Assuming that the deal goes through as announced, ACP Re will be acquiring Tower Group for $3 per share or $172 million in total deal value. That's only a part of the deal, though. Assuming that the deal with ACP Re goes through, AmTrust Financial Services will buy the renewal rights and commercial line assets of Tower (from ACP Re) for $125 million.
This price would be 78 percent higher than the current trading price. Maybe they will get a competing bid in the $7 - $10 range, after all.
The way renewal rights work is that Tower will give AmTrust a list of all commercial policies and AmTrust can quote on them if they wish. Since AmTrust's rates are also in the gutter they will probably pick up most of it, though they have a slightly different appetite. They then pay a commission to the new Tower if they write it. The business can still move of its own free will. I think AmTrust has agreed to quote on at least 60% of that business so expect there to be a lot of business that moves over. So ACP is actually purchasing, in theory, the run off value of Tower, whether they decide to make it an ongoing entity or not. If AmTrust and the other company take all the good business, they certainly would want to run off the rest. So, in essence, ACP is purchasing the net worth for 172 mil less whatever they are paid by the other companies on the renewals. I am sure they have looked at the reserves and decided it is worth it. I suspect ACP will be the biggest winner and I am unsure if AmTrust will win. My guess is AmTrust itself will end up losing big time by this deal, but the biggest holders of the stock is who controls ACP, apparently, Certainly, though for Tower, this is the best deal that will come around. If this does not work, then it is receivership.
Renewal rights deals are highly "performance" sensitive. There may be a notional number of front, but the amount actually paid depends on how many (count) policies renew and at what premium. Given the historical inability of Tower to properly price their business, the actual number and amount of renewal premium may be very low as it depends on the client agreeing to the new terms and premium.
As far as renewal rights goes, Tower operates through independent agent, any agent wanting to protect their clients are most likely having the other carriers in their shop looking at the best business and trying to make deals to roll the books. Carriers marketing departments are also working these tower agents looking to cherry pick the best risks. These policy holders are not customers of Tower, but customers of the agent, so the reality of many renewal rights is that the carrier with the renewal rights ends up with adverse selection of the only a portion of the current tower policy holders and generally the lower quality insured at that.