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Tower Group Provides Update On Merger Status And Announces Filing Of 2012 Form 10-Q/As

Stocks in this article: TWGP

Tower Group announced today that it has received all required insurance regulatory approvals for its merger agreement with Canopius Holdings Bermuda Limited (CHBL). Tower Group also announced today that it is restating its reports issued on Form 10-Q for the periods ended March 31, 2012, June 30, 2012 and September 30, 2012. During the review by the Securities and Exchange Commission (SEC) of the CHBL Form S-4, in connection with the previously announced merger between Tower and the Bermuda reinsurance operations of Canopius Group Ltd., Tower determined that a $3.1 million deferred tax item that had been recorded as a reduction to tax expense and disclosed in Tower’s report on Form 10-Q for the period ended March 31, 2012 should more appropriately be recorded as a reduction to goodwill. Tower has made this change and has also recorded into the periods in which they originated other immaterial adjustments that were initially recorded in the periods in which they were identified. In addition, Tower also recorded adjustments affecting the net income of the reciprocal businesses which did not affect earnings per share or book value per share for Tower’s common shareholders, because the reciprocal businesses are consolidated with Tower but are not included in net income attributable to Tower Group, Inc. or in Tower Group, Inc. stockholders’ equity. As a result of these immaterial adjustments, Tower is also revising its Form 10-K for the year ended December 31, 2011. Below is a summary of the impact of the adjustments on various shareholder measures:

($ in thousands, except per share data)      

9/30/12 Year todate

As reported As restated
Tower Group, Inc. Stockholders' Equity $1,054,981 $1,051,473

Per Share

$27.49 $27.40
Tower Group, Inc. Tangible Equity (1) $703,072 $704,119

Per Share

$18.32 $18.35
Net Income Attributable to Tower Group, Inc. $27,150 $23,985

Per Share - diluted

$0.70 $0.62
Operating Income (1) $30,242 $27,077

Per Share - diluted

$0.78 $0.69
Operating Return on Average Equity (1) 3.9% 3.5%
 

Year ended12/31/11

As reported As revised
Tower Group, Inc. Stockholders' Equity $1,034,142 $1,033,799

Per Share

$26.37 $26.36
Tower Group, Inc. Tangible Equity (1) $673,958 $678,170

Per Share

$17.18 $17.29
Net Income Attributable to Tower Group, Inc. $60,198 $60,481

Per Share - diluted

$1.47 $1.48
Operating Income (1) $56,048 $56,331

Per Share - diluted

$1.37 $1.38
Operating Return on Average Equity (1) 5.4% 5.4%
 

Year ended12/31/10

As reported As revised
Tower Group, Inc. Stockholders' Equity $1,045,001

$1,042,962

Per Share

$25.19

$25.14

Tower Group, Inc. Tangible Equity (1) $676,582

$679,098

Per Share

$16.31

$16.37

Net Income Attributable to Tower Group, Inc. $103,890 $106,356

Per Share - diluted

$2.38 $2.44
Operating Income (1) $97,155 $98,861

Per Share - diluted

$2.23 $2.26
Operating Return on Average Equity (1) 9.4% 9.5%
 

Year ended12/31/09

As reported As revised
Net Income Attributable to Tower Group, Inc. $96,798 $94,724

Per Share - diluted

$2.45 $2.39
Operating Income (1) $107,288 $105,975

Per Share - diluted

$2.71 $2.68
Operating Return on Average Equity (1) 14.0% 13.9%

Tower expects to have such revised reports filed with the SEC on or about January 17, 2013.

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