|[December 17, 2013]
Tower Group International Announces Sale of Its 10.7% Equity Stake in Canopius Group Limited
HAMILTON, Bermuda --(Business Wire)--
Tower Group International, Ltd. (NASDAQ:TWGP) ("Tower" or "the Company")
today announced that its wholly-owned subsidiary, Tower Group, Inc.,
closed on December 13, 2013 the sale to an investment fund managed by
Bregal Capital LLP ("Bregal") of all of the shares of the capital stock
of Canopius Group Limited ("Canopius") owned by Tower. The initial sales
price for the Canopius shares is $69.7 million (£42.5 million), which
has been paid in full to Tower.
As part of Tower's agreement to sell its shares, if a legally binding
contract for the sale or other transfer of shares representing a
majority of the voting power of Canopius is entered into within six
months after the date of Tower's stock purchase agreement with Bregal, a
further cash payment would be made by Bregal to Tower. This additional
cash payment would be equivalent to the excess, if any, of (1) one-third
of the difference between the amount in GBP paid for the shares
previously owned by Tower in such sale and £40.6 million (plus Tower's
share of expenses of such sale), minus (2) £1.95 million. Tower
purchased its 10.7% equity stake in Canopius in August 2012 for $71.5
million. Canopius is the privately-owned Guernsey (Channel Islands)
domiciled parent company of the Canopius Group, an international
insurance and reinsurance group with operations at Lloyd's of London and
in certain other countries around the world.
With proceeds from the sale, Tower Group, Inc. has paid in full the
$70.0 million outstanding on its credit facility led by Bank of America,
N.A., and the credit facility has been terminated. The sale of the
Canopius shares permits Tower's Board to continue its strategic
evaluation of various alternatives without any current liquidity
concerns arising from its former bank credit facility, while also
permitting Tower to participate in any future transaction involving the
sale of Canopius that occurs within the next sx months.
Tower also stated that it anticipates strengthening of its loss reserves
in the third quarter in an amount between $75 million and $105 million
primarily in workers' compensation, commercial multi-peril liability,
other liability and commercial auto liability lines of business, and
that it expects its U.S. combined statutory surplus, net of cessions to
its Bermuda affiliate, to decrease from $374 million at June 30, 2013 to
an amount between $315 million and $335 million at September 30, 2013.
Tower further stated it is still in the process of preparing its
statutory financial filings, but it anticipates filing its statutory
financial statements for the third quarter by the end of 2013.
Michael H. Lee, President and Chief Executive Officer, said, "With the
sale of our interest in Canopius, we were pleased with our ability to
repay our $70 million debt and improve our financial flexibility. While
we are disappointed in the additional reserve strengthening, we believe
our statutory capital remains sufficient to meet all of our financial
obligations. Furthermore, we continue to work diligently and believe we
are making progress in addressing the issues that have recently affected
About Tower Group International, Ltd.
Tower Group International, Ltd. is a Bermuda-based global diversified
insurance and reinsurance holding company and is listed on the NASDAQ
Global Select Market under the symbol TWGP. Through our insurance and
reinsurance subsidiaries in the U.S. and Bermuda, collectively referred
to as Tower Group Companies, we deliver a broad range of commercial,
personal and specialty insurance products and services in the U.S. and
specialty reinsurance products globally through our distribution and
For more information, visit Tower's website at http://www.twrgrpintl.com.
Cautionary Note Regarding Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. This press release and any other
written or oral statements made by or on behalf of Tower may include
forward-looking statements that reflect Tower's current views with
respect to future events and financial performance. All statements other
than statements of historical fact included in this press release are
forward-looking statements. Forward-looking statements can generally be
identified by the use of forward-looking terminology such as "may,"
"will," "plan," "expect," "project," "intend," "estimate," "anticipate,"
"believe" and "continue" or their negative or variations or similar
terminology. All forward-looking statements address matters that involve
risks and uncertainties. Accordingly, there are or will be important
factors that could cause the actual results of Tower to differ
materially from those indicated in these statements. Please refer to
Tower's filings with the SEC (News - Alert), including among others Tower's Annual
Report on Form 10-K for the year ended December 31, 2012 and subsequent
filings on Forms 10-K/A, 10-Q and 10-Q/A, for a description of the
important factors that could cause the actual results of Tower to differ
materially from those indicated in these statements. Forward-looking
statements speak only as of the date on which they are made, and Tower
undertakes no obligation to update publicly or revise any
forward-looking statement, whether as a result of new information,
future developments or otherwise.
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