Wunderlich Gives Tower Group Earnings Preview

Tower Group TWGP is expected to report 3Q10 results on November 8, after the market close. Wunderlich forecasts 3Q10 operating EPS of $0.75 compared to $0.74 a year ago and within the company's guidance of $0.75-$0.80 per share; the consensus estimate is $0.75. It expects top-line growth of 25% and an increase in invested assets due to acquisitions will drive a 26.5% increase in revenues. Wunderlich estimates a combined ratio of 90.8%, down from 93.1% in 2Q10, as the integration of the personal division of OneBeacon OB is finalized and the expense ratio declines to 30%. We estimate book value increased 8% in 3Q10 to $25.44 from $23.50 a year ago. It reiterate a Buy rating and $27 price target. TWGP closed Thursday at $25.44