Tower Group International Ltd., which is in the process of being acquired by ACP Re Ltd., reported that it had received a letter, dated Aug. 28, 2014, from the Securities and Exchange Commission (SEC) stating that the SEC is conducting an investigation and attaching a subpoena for various documents.
“The investigation and the subpoena do not mean that we have concluded that you or anyone else has broken the law. Also, the investigation does not mean that we have a negative opinion of any person, entity or security,” the SEC’s letter states at one point.
Tower reported the development in an 8-K filing on Aug. 28, the same day it said it received the SEC letter. Tower said it intends to cooperate fully with the SEC’s investigation.
On August 28, 2014, A.M. Best Co. downgraded the issuer credit ratings from “cc” to “c” of Tower and its wholly-owned subsidiary, Tower Group, Inc. , as well as the debt rating on the convertible senior notes due September 2014 of TGI. Additionally, the financial strength ratings of Tower’s insurance company subsidiaries have been downgraded from “C++” (Marginal) to “C” (Weak). The ratings remain under review with developing implications pending the planned merger with ACP Re Ltd.
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