Tower Group beats Q1 earnings estimates
Tower Group has reported its gross premiums written rose 17.8 percent to $550.4 million in its first quarterly earnings report since acquiring Canopius Bermuda last March.
The company says the top-line growth was driven largely by assumed reinsurance while overall premium rate increases on renewal business reached 5.3 percent. There were rate rises of 6.4 percent and 4.6 percent in commercial and personal lines respectively, the company reported.
Tower posted a net operating income of $0.56 per share in the first quarter of 2013, comfortably exceeding the consensus of the six analysts polled by Yahoo Finance who estimated an operating income of $0.54 per share. Earnings improved 21.7 percent year over year. Operating income was $25.9 million in Q1 of this year compared to $20.6 million in the first quarter of 2012.
Tower president and CEO Michael Lee said the group was off to a “strong start” marked by “solid financial performance” and the successful completion of the Canopius Bermuda merger.
“The merger enables us to realise our long-term vision of creating a global diversified insurance and reinsurance company with access to the world’s three key insurance markets — the US, Bermuda and London,” Mr Lee said. “It also fulfills an important strategic goal to enhance our business model by merging with a Bermuda-based international holding company and reinsurer to increase our profitability.”
“We are already beginning to realise the benefit of this merger by operating our assumed reinsurance business from Bermuda as well as utilising our Bermuda reinsurance company to provide an efficient source of reinsurance to support our growth in the US. We are also reviewing new growth opportunities utilising our Bermuda reinsurance platform to develop new products and businesses to generate growth in the specialty insurance and reinsurance markets,” Mr Lee added.
Including net realised gains on investments and acquisition-related transaction costs, net income attributable to common stockholders for the first quarter was $15.1 million, or $0.33 per diluted share, compared to $19.2 million or $0.43 per diluted share in the first three months of last year.
Total revenue was $475.3 million, up 1.9 percent year over year. The upside was driven by higher ceding commissions from quota share reinsurance treaty for Tower’s homeowners business and higher net realised investment gains. However, lower net investment income was a partial offset. Results surpassed Wall Street estimates of $415.48 million.
Net investment income was $30.3 million, declining 10.7 percent year over year.
Total expenses were $474.3 million, up 9.1 percent year over year. The company’s combined ratio was 99.1 percent compared to 98.8 percent a year prior.