Property and casualty insurer Tower Group Inc. (TWGP) has sold $135 million of senior notes due 2014. The notes carry a coupon interest of 5%, which will be paid at half yearly intervals to investors on March 15 and September 15, every year with the first payment commencing in the year 2011.
The issue carries a clause according to which the notes can be converted at a premium of 27.5% from the closing price of $21.56 on September 14, 2010, before March 2010, only on the occurrence of certain specified events.
The issue, which is expected to close on September 20, will result in net proceeds of $130 million to Tower. The company expects to use $50 million for share buybacks, $10.4 million will be used for interest payment on convertible notes, and the remaining amount will be utilized for the payment of $56 million of revolving loan and for other corporate general purposes.
Tower stands solid from the balance sheet perspective, with a moderate debt-to-capital ratio of 21.4% as of June 30, 2010 and $348.5 million in cash and cash equivalents. It also remains in compliance with minimum risk-based capital ratio. Its effective use of capital is reflected by return on equity, which averaged 19.2% for the past five years. A solid balance sheet has also enabled it to raise quarterly dividend by 79% during August 2010 to 12.5 cents from 7 cents. Its book value has also grown at a 5-year CAGR (2005−2009) of 28.9%.
During the second quarter of 2010, Tower posted earnings of 57 cents per share, beating the Zacks Consensus Estimate by a penny led by an increase in premiums written, higher commissions and fee income, and improved net investment income.
Tower Group has a diversified business platform, comprising a broad range of products in various industry segments and different regions throughout the country, utilizing multiple distribution channels. During the last several years, it has gradually expanded outside the State of New York to neighboring states throughout the Northeast and then to Florida, Texas and California.
Though the current economic climate offers a limited scope for organic growth, Tower is considering growing inorganically via acquisitions. To this effect, it completed five acquisitions over the past eighteen months -- Hermitage, CastlePoint, Specialty Underwriters' Alliance, the renewal rights of AequiCap Program Administrators and the personal insurance business of OneBeacon Insurance Group. Thus, the challenging economic environment with its ripe-for-acquisition scenario has poised Tower to benefit from the turn of the market cycle.
TOWER GROUP INC (TWGP): Free Stock Analysis Report
Zacks Investment Research
Market News and Data brought to you by Benzinga APIsThe issue carries a clause according to which the notes can be converted at a premium of 27.5% from the closing price of $21.56 on September 14, 2010, before March 2010, only on the occurrence of certain specified events.
The issue, which is expected to close on September 20, will result in net proceeds of $130 million to Tower. The company expects to use $50 million for share buybacks, $10.4 million will be used for interest payment on convertible notes, and the remaining amount will be utilized for the payment of $56 million of revolving loan and for other corporate general purposes.
Tower stands solid from the balance sheet perspective, with a moderate debt-to-capital ratio of 21.4% as of June 30, 2010 and $348.5 million in cash and cash equivalents. It also remains in compliance with minimum risk-based capital ratio. Its effective use of capital is reflected by return on equity, which averaged 19.2% for the past five years. A solid balance sheet has also enabled it to raise quarterly dividend by 79% during August 2010 to 12.5 cents from 7 cents. Its book value has also grown at a 5-year CAGR (2005−2009) of 28.9%.
During the second quarter of 2010, Tower posted earnings of 57 cents per share, beating the Zacks Consensus Estimate by a penny led by an increase in premiums written, higher commissions and fee income, and improved net investment income.
Tower Group has a diversified business platform, comprising a broad range of products in various industry segments and different regions throughout the country, utilizing multiple distribution channels. During the last several years, it has gradually expanded outside the State of New York to neighboring states throughout the Northeast and then to Florida, Texas and California.
Though the current economic climate offers a limited scope for organic growth, Tower is considering growing inorganically via acquisitions. To this effect, it completed five acquisitions over the past eighteen months -- Hermitage, CastlePoint, Specialty Underwriters' Alliance, the renewal rights of AequiCap Program Administrators and the personal insurance business of OneBeacon Insurance Group. Thus, the challenging economic environment with its ripe-for-acquisition scenario has poised Tower to benefit from the turn of the market cycle.
TOWER GROUP INC (TWGP): Free Stock Analysis Report
Zacks Investment Research
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Loading...
Posted In: FinancialsProperty & Casualty Insurance
Benzinga simplifies the market for smarter investing
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
Join Now: Free!
Already a member?Sign in
