Tower Group reported a net loss of $16.4 million attributable to common shareholders in the third quarter. In contrast, the insurer had $28.6 million net income one year ago.
Like many other insurers this past quarter, Tower Group saw big catastrophe losses hurting its bottom line. The insurer’s result was affected by $60 million loss from Irene.
During the Tuesday, Nov. 8, earnings call, CEO Michael Lee called the Irene loss the largest single loss event his company has ever had. “Irene is the first hurricane to make landfall in the tri-state region since 1985 and the first to make landfall in New Jersey since 1903. In addition to being the largest single loss event in our 20-year history, it is also greater than the total of all catastrophe losses experienced by Tower throughout its history,” he said.
Excluding Irene, the net combined ratio improved to 93.8 percent for the quarter compared to 96.8 percent during the same period last year.
Despite the unprecedented losses from Irene, the company continues to see great strength in its core business, CEO Lee added. “While our growth during the last few years has resulted primarily from acquisitions, our 16 percent premium growth during this quarter was driven primarily by organic growth from 2 newly created business units, Customized Solutions and Assumed Reinsurance.”
“For the first time in several years, our growth was driven almost exclusively by organic growth rather than external growth from acquisitions,” he said. “We’re also seeing positive pricing trends, which bode well for our business going into the fourth quarter and 2012.”
The company had a $15.3 million operating loss for the quarter due to the $60 million loss from Hurricane Irene and net after-tax loss reserve strengthening of $6.3 million, primarily from terminated business.
Net premiums written for the quarter was $468.7 million, up from $389.7 million one year ago. Net investment income also rose to $31.4 million, up from $29.2 million. Total revenue was $455.3 million, up from $423.8 million.
For the combined insurance segments, the net combined ratio (including Irene losses) rose to 109.9 percent from 96.8 percent.
The net loss ratio increased to 75.0 percent from 61.1 percent. The catastrophe losses added 16.1 points to the third-quarter net loss ratio. The net expense ratio improved to 34.9 percent from 35.7 percent.
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