Tower Group International Merging With ACP Re

After a fall in which it disclosed account discrepancies and delayed financial results, Tower Group International is set to merge with ACP Re.

Jan 6, 2014 at 1:09PM

Following its November announcement that it would begin "exploring the sale of some of our holding company and operating assets," Tower Group International (NASDAQ:TWGP) announced today that it had come to a merger agreement with ACP Re, in which Tower Group International would merge into ACP Re.

The merger will in turn value Tower Group International at $172.1 million, and will allow current shareholders to receive $3.00 per share. Tower Group International shares closed Friday at $2.94.

As a part of the merger agreement Tower Group International also announced it would be selling certain assets and renewal rights of its commercial insurance operations to AmTrust Financial Services (NASDAQ:AFSI) for $125 million. In addition, the renewal rights and assets of Tower's personal insurance lines will be acquired by National General Holdings Corp.

Tower Group had a tumultuous fall after it realized that it did not appropriately account for its loss reserves, which resulted in it adding $327 million to its loss reserves in the second quarter. It did not announce its second-quarter results until November 22, 2013, three months later than it originally planned. 

When the results were announced, the company reported an operating loss of $291 million. In addition, shareholder equity fell from $950 million on December 31, 2012, to $579 million at the end of the second quarter.

"We are deeply disappointed by our second quarter operating results, including the significant reserve charge as well as the delay in our financial reporting," said Tower Group President and CEO Michael Lee when the results were announced. "The reserve strengthening stemmed primarily from certain types of business that we underwrote from accident years 2008 to 2011. While we began to reunderwrite this business in 2010, the loss emergence from this business from those accident years that we noticed in the second quarter caused us to significantly increase our reserve position."

As a result of the accounting delays and the tripling of its expected loss reserves, Tower Group International shares had fallen more than 80% over the last year. The company announced that Lee, who owns 4.2% of the shares, voted in favor of the merger agreement. 

According to the company press release, ACP Re is a Bermuda-based reinsurance company. Tower Group is also headquartered in Bermuda. The controlling shareholder of ACP Re is a trust established by the founder of AmTrust Financial Services, Inc., National General Holdings Corporation, and Maiden Holdings, Ltd.

Fool contributor Patrick Morris has no position in any stocks mentioned. The Motley Fool owns shares of Amtrust Financial Services. 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers