Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Tower Group International (NASDAQ:TWGP) sank a staggering 40% today after the insurer said it needed to add $365 million to its loss reserves and take a $215 million goodwill impairment charge.

So what: The charge is obviously much higher than investors had expected and substantially reduces statutory capital, suggesting that Tower will have a tough time maintaining prior levels of profitability and operating leverage. In fact, the news prompted Fitch Ratings to slash Tower's credit rating from "BBB" to "B'' on "a material weakening in the insurer's financial profile," implying that the company is a particularly risky investment right now.

Now what: Management says it's now reviewing a range of "strategic options," which could include an injection of capital, the divestiture of assets, or even an outright sale of the company. "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," wrote the company in a statement. "Tower is completing its evaluation of other intangible assets associated with its commercial and specialty and reinsurance segments, as well as the goodwill associated with its personal lines segment." Of course, given all the uncertainty surrounding Tower right now, conservative Fools would likely be better off watching things unfold from the sidelines. 

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.