-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JsoSgGgEGaoKtgJBz8hIvgcG2khTLYkZkywjhkiD2ZQc48rLEM7P/VJKOTRmnwE5 wLy/cCYevggOiOMWOuAJEw== 0001157523-06-007873.txt : 20060803 0001157523-06-007873.hdr.sgml : 20060803 20060803083444 ACCESSION NUMBER: 0001157523-06-007873 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060803 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060803 DATE AS OF CHANGE: 20060803 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Tower Group, Inc. CENTRAL INDEX KEY: 0001289592 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 133894120 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-50990 FILM NUMBER: 061000080 BUSINESS ADDRESS: STREET 1: 120 BROADWAY STREET 2: 14TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10271 BUSINESS PHONE: (212) 655-2000 MAIL ADDRESS: STREET 1: 120 BROADWAY STREET 2: 14TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10271 8-K 1 a5202213.txt TOWER GROUP, INC. 8-K FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) August 3, 2006 ------------------------------- Tower Group, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 000-50990 13-3894120 - -------------------------------------------------------------------------------- (State or other jurisdiction Commission File (IRS Employer or incorporation) Number: Identification No.) 120 Broadway, 14th Floor, New York, NY 10271 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212) 655-2000 ----------------------------- - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.133-4(c)) Item 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. The following information, including the Exhibit to this Form 8-K, is being furnished pursuant to Item 2.02 - Results of Operations and Financial Condition on Form 8-K. On August 3, 2006 Tower Group, Inc. issued a press release announcing its results of operations for the second quarter ended June 30, 2006. A copy of the press release is attached as Exhibit 99.1 to this Form 8-K and is incorporated by reference to this Item 2.02 as if fully set forth herein. Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS. The following exhibits are filed as part of this report. Number Description - ---------------------------------------------- 99.1 Copy of press release issued by Tower Group, Inc. dated August 3, 2006. This information is not deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 and is not incorporated by reference into any Securities Act registration statements. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Tower Group, Inc. --------------------------------- (Registrant) Date August 3, 2006 -------------------------- /s/ Francis M. Colalucci --------------------------------- (Signature) Francis M. Colalucci Senior Vice President, Chief Financial Officer and Treasurer EX-99.1 2 a5202213ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 Tower Group, Inc. Reports a 158% Increase in Second Quarter of 2006 Net Income NEW YORK--(BUSINESS WIRE)--Aug. 3, 2006--Tower Group, Inc. (NASDAQ: TWGP) today reported a 158% increase in second quarter of 2006 net income to $12.3 million ($0.61 per diluted share) as compared to net income of $4.8 million ($0.24 per diluted share) in the second quarter of 2005. For the first six months of 2006, net income increased 122% to $18.8 million ($0.93 per diluted share) as compared to $8.5 million ($0.42 per diluted share) for the first six months of 2005. GAAP Financial Highlights: Three Months Six Months Ended June 30, Ended June 30, ------------------ ------------------- 2006 2005 2006 2005 --------- -------- --------- --------- ($ in thousands) Gross premiums written $124,414 $84,006 $211,787 $148,674 Net premiums written 45,473 59,185 128,351 104,546 Net premiums earned 59,286 37,591 116,542 67,609 Total commission and fee income 12,553 8,908 21,954 18,736 Net investment income 5,292 3,733 9,952 6,348 Net realized gain on investments 29 20 (116) 229 Total revenues 77,160 50,252 148,332 92,922 Other income 12,434 - 12,434 - Net Income 12,285 4,765 18,795 8,482 EPS - Basic $0.62 $0.24 $0.95 $0.43 EPS - Diluted $0.61 $0.24 $0.93 $0.42 Return on Average Equity 31.8% 14.3% 24.7% 12.7% ========= ======== ========= ========= During the three and six months ended June 30, 2006, significant events affected the consolidated results of Tower and the exclusion of these is more indicative of Tower's operating performance. The following table reconciles the effect of these events to GAAP results. Non-GAAP Financial Measures: Three Months Six Months Ended June 30, Ended June 30, ----------------- ----------------- 2006 2005 2006 2005 -------- -------- -------- -------- ($ in thousands) Pre-tax GAAP income as reported $18,845 $ 7,184 $28,993 $12,918 Significant Events: Less: Gain on CastlePoint Shares (7,883) - (7,883) - Less: Warrant received from unconsolidated affiliate (4,605) - (4,605) - Add: PXRE commutation/novation 5,459 - 5,459 - Add: CastlePoint start-up costs - - 472 - Adjusted pre-tax income 11,816 7,184 22,436 12,918 Income tax expense (excludes the tax effect of adjustments) 4,100 2,419 7,738 4,436 Adjusted net income 7,716 4,765 14,698 8,482 Adjusted EPS - Diluted $0.38 $0.24 $0.73 $0.42 Adjustment to return on average equity (11.6%) (5.1%) Return on average equity, excluding the effects of the PXRE transactions and CastlePoint items 20.2% 14.3% 19.6% 12.7% ======== ======== ======== ======== Michael H. Lee, President and Chief Executive Officer of Tower Group, Inc. commented, "Our second quarter results established new records for both revenue and earnings as reflected by our increasing return on equity. During the quarter, we achieved strong growth in gross and net premiums earned and investment income while continuing to maintain a disciplined underwriting approach. In addition, we eliminated our exposure to reinsurance recoverables from an unrated reinsurer at favorable terms to further strengthen our balance sheet. This was also our first quarter with CastlePoint Re as our quota share reinsurer, and this relationship further strengthened our business model by supporting our growth and improving our return on average equity to the upper end of our target range for the year." During the three months ended June 30, 2006 significant events that affected the consolidated results of operations included the execution of commutation and novation agreements between us and PXRE Reinsurance Company ("PXRE") to eliminate our exposure to uncollateralized reinsurance recoverables from PXRE, which had requested the withdrawal of its financial strength and issuer rating from A.M.Best. Tower recorded charges totaling $5.5 million as a result of these agreements. Additionally, Tower recognized a gain relating to its investment in CastlePoint Holdings, Ltd. ("CastlePoint") as result of the sale of unissued common shares by CastlePoint in a private offering. This resulted in an increase in the book value per share of Tower's existing investment in CastlePoint which resulted in a $7.9 million gain for Tower. Tower recognized its share of CastlePoint's operating results and investment portfolio fair value change for the three months ending June 30, 2006 using the equity method of accounting. Additionally, Tower received a warrant to purchase additional CastlePoint shares valued at $4.6 million in exchange for sponsorship services, which includes management, organizational and industry expertise to establish CastlePoint and prepare for CastlePoint's private placement offering. The warrant was valued at the high end of the previously announced range. The net effect of these transactions and gains on pre-tax income was $7.0 million in the second quarter of 2006. Total revenues increased by 53.5% to $77.2 million for the three months ended June 30, 2006 compared to $50.3 million for the same period in 2005. Net premiums earned increased by 57.7% to $59.3 million for the three months ended June 30, 2006 compared to $37.6 million for the same period in 2005. The increase in net premiums earned was due to the overall increase in gross premiums written in the second quarter of 2006 and the novation agreements with PXRE, which added $11.4 million of net premiums earned in the second quarter of 2006. Consideration received under novation agreements is recorded as premiums written and earned. Since Tower did not place quota share reinsurance during the first quarter of 2006, we ceded to CastlePoint Reinsurance $40.9 million of unearned premiums as of April 1, 2006, and $30.0 million of premiums written on policies that incepted during the second quarter of 2006 with both cessions reflecting a 30% quota share ceding percentage as compared to 25% in the three months ended June 30, 2005. Total commission and fee income increased by 40.9% to $12.6 million in the second quarter of 2006 compared to $8.9 million in the second quarter of 2005. Net investment income increased by 41.8% to $5.3 million for the three months ended June 30, 2006 compared to $3.7 million for the same period in 2005. On a tax equivalent basis, the investment yield was 5.4% as of June 30, 2006 and 5.1% as of June 30, 2005. Gross loss and loss adjustment expenses and the gross loss ratio for the insurance and reinsurance segments combined for the three months ended June 30, 2006 were $58.6 million and 61.3%, respectively, compared to $31.4 million and 57.1%, respectively, for the same period in 2005. The net loss ratio for the combined segments was 69.9% for the three months ended June 30, 2006, which reflected charges resulting from the commutation and novation agreements with PXRE, as compared to 58.6% in the same period of 2005. The effects of these agreements added 12.2% to the net loss ratio for the combined segments for the three months ended June 30, 2006. Underwriting expenses for the insurance and reinsurance segments combined, which include direct commission expenses and other underwriting expenses, were $25.0 million for the three months ended June 30, 2006 as compared with $16.9 million for the same period in 2005. Our gross expense ratio was 25.9% for the three months ended June 30, 2006 as compared with 30.3% for the same period in 2005. The net underwriting expense ratio, which reflects the benefit of ceding commission revenue that lowers the gross expense ratio, was 24.8% for the three months ended June 30, 2006 as compared to 30.2% for the same period in 2005. The net expense ratio was adversely affected by the reduction in ceding commissions of $3.2 million resulting from the commutations with PXRE. The effect of this charge added 0.9% to the net expense ratio which included the benefit of additional ceding commission revenue during the second quarter due to the additional ceded earned premiums arising from the ceded unearned premium as of April 1, 2006. The gross combined ratio was 87.2% for the three months ended June 30, 2006 as compared with 87.4% for the same period in 2005. The net combined ratio was 94.7% for the three months ended June 30, 2006 as compared to 88.8% for the same period in 2005. The effect of the commutation and novation added 13.1% to the net combined ratio. Additional Highlights: Catastrophe Reinsurance Tower successfully completed the placement of its catastrophe reinsurance program during very difficult conditions in the property catastrophe reinsurance market. The property catastrophe models utilized in the insurance industry had changed recently to reflect on more significant loss scenarios, and this increased the level of protection required above the growth rate in exposures. Reinsurance protection was renewed on July 1, and Tower will continue to actively monitor the exposure. Dividend Declaration Tower Group, Inc. announced today that the Company's Board of Directors approved a quarterly dividend on July 27, 2006 of $0.025 per share payable September 27, 2006 to stockholders of record as of September 15, 2006. 2006 Guidance For the third quarter of 2006, we project net income to increase to a range between $8.2 million and $8.7 million. We project the diluted earnings per share in the third quarter to be in the range between $0.41 and $0.43 per diluted share. For the full year, we anticipate net income to be in a range between $36.5 million and $37.5 million and diluted earnings per share to be between $1.80 and $1.85 on a GAAP basis which includes the effects of the PXRE transactions, CastlePoint items and increased catastrophe reinsurance costs. About Tower Group, Inc. Tower Group, Inc. offers property and casualty insurance products and services through its insurance company and insurance service subsidiaries. Its two insurance company subsidiaries are Tower Insurance Company of New York which is rated A- (Excellent) by A.M. Best Company and Tower National Insurance Company which is also rated A- (Excellent) by A.M. Best Company. Both subsidiaries offer commercial insurance products to small to medium-size businesses and personal insurance products to individuals. Cautionary Note Regarding Forward-Looking Statements The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. This release or any other written or oral statements made by or on behalf of the Company may include forward-looking statements that reflect the Company's current views with respect to future events and financial performance. All statements other than statements of historical fact included in this 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," "intend," "estimate," "anticipate," "believe" or "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 our actual results to differ materially from those indicated in these statements. We believe that these factors include but are not limited to ineffectiveness or obsolescence of our business strategy due to changes in current or future market conditions; increased competition on the basis of pricing, capacity, coverage terms or other factors; greater frequency or severity of claims and loss activity, including as a result of natural or man-made catastrophic events, than our underwriting, reserving or investment practices anticipate based on historical experience or industry data; the effects of acts of terrorism or war; developments in the world's financial and capital markets that adversely affect the performance of our investments; changes in regulations or laws applicable to us, our subsidiaries, brokers or customers; acceptance of our products and services, including new products and services; changes in the availability, cost or quality of reinsurance and failure of our reinsurers to pay claims timely or at all; decreased demand for our insurance or reinsurance products; loss of the services of any of our executive officers or other key personnel; the effects of mergers, acquisitions and divestitures; changes in rating agency policies or practices; changes in legal theories of liability under our insurance policies; changes in accounting policies or practices; and changes in general economic conditions, including inflation and other factors. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. For more information visit Tower's Web site at http://www.twrgrp.com/. Insurance Overall Results of Operations Insurance and Reinsurance Segments Second Quarter ($ in thousands) Three Months ended June 30, % 2006 2005 Change Revenues Earned premiums: Gross premiums earned $ 95,568 $ 55,060 73.6% Less: Ceded premiums earned (36,281) (17,469) 107.7% Net premiums earned 59,287 37,591 57.7% Ceded commission revenue 10,077 5,330 89.1% Policy Billings Fees 272 230 18.3% -------------------- Total Revenue 69,636 43,151 61.4% Expenses Loss and Loss Adjustment Expenses Gross loss and loss adjustment expenses 58,562 31,419 86.4% Less: Ceded loss and loss adjustment expenses (17,137) (9,406) 82.2% -------------------- Net loss and loss adjustment expense 41,425 22,013 88.2% Underwriting Expenses Commissions paid to producers 14,533 9,495 53.1% Other underwriting expenses 10,509 7,410 41.8% -------------------- Total Underwriting Expense 25,042 16,905 48.1% Underwriting Profit $ 3,169 $ 4,233 -25.1% ==================== Key Measures Written Premiums Gross $124,414 $ 84,006 48.1% Ceded (78,941) (24,821) 218.0% -------------------- Net $ 45,473 $ 59,185 -23.2% ==================== Loss ratios Gross 61.3% 57.1% Net 69.9% 58.6% Accident Year Loss Ratio Gross 61.2% 57.9% Net 67.4% 60.1% Expense ratios Gross 25.9% 30.3% Net 24.8% 30.2% Combined ratios (GAAP) Gross 87.2% 87.4% Net 94.7% 88.8% Insurance Overall Results of Operations Insurance and Reinsurance Segments First Six Months ($ in thousands) Six Months ended June 30, % 2006 2005 Change Revenues Earned premiums: Gross premiums earned $172,184 $100,928 70.6% Less: Ceded premiums earned (55,641) (33,319) 67.0% Net premiums earned 116,543 67,609 72.4% Ceded commission revenue 17,379 11,176 55.5% Policy Billings Fees 539 426 26.5% -------------------- Total Revenue 134,461 79,211 69.8% Expenses Loss and Loss Adjustment Expenses Gross loss and loss adjustment expenses 101,874 57,495 77.2% Less: Ceded loss and loss adjustment expenses (27,239) (17,420) 56.4% -------------------- Net loss and loss adjustment expense 74,635 40,075 86.2% Underwriting Expenses Commissions paid to producers 27,010 17,076 58.2% Other underwriting expenses 21,684 14,370 50.9% -------------------- Total Underwriting Expense 48,694 31,446 54.8% Underwriting Profit $ 11,132 $ 7,690 44.8% ==================== Key Measures Written Premiums Gross $211,787 $148,674 42.5% Ceded (83,436) (44,128) 89.1% -------------------- Net $128,351 $104,546 22.8% ==================== Loss ratios Gross 59.2% 57.0% Net 64.0% 59.3% Accident Year Loss Ratio Gross 59.6% 57.9% Net 63.3% 60.1% Expense ratios Gross 28.0% 30.7% Net 26.4% 29.4% Combined ratios (GAAP) Gross 87.2% 87.7% Net 90.4% 88.7% Insurance Services Segment Results of Operations Three Months Ended Six Months Ended June 30, June 30, -------------------------------------- 2006 2005 2006 2005 ------- --------- -------- ---------- ($ in thousands) Revenues Direct commission revenue from managing general agency $1,105 $ 2,166 $ 1,911 $ 4,691 Claims administration revenue 922 1,097 1,884 2,150 Reinsurance intermediary fees(1) 174 79 235 282 Policy billing fees 2 6 5 11 ------- --------- -------- ---------- Total Revenues 2,203 3,348 4,035 7,134 ------- --------- -------- ---------- Expenses Direct commissions expense paid to producers 731 1,174 1,334 2,385 Other insurance services expenses(2) 305 455 542 940 Claims expense reimbursement to TICNY 911 1,091 1,869 2,141 ------- --------- -------- ---------- Total Expenses 1,947 2,720 3,745 5,466 ------- --------- -------- ---------- Insurance Services Pre-tax Income $ 256 $ 628 $ 290 $ 1,668 ======= ========= ======== ========== Premium produced by TRM on behalf of issuing companies $4,834 $ 8,431 $ 8,862 $ 16,875 ======= ========= ======== ========== Tower Group, Inc. Consolidated Statements of Income and Comprehensive Net Income (Unaudited) Three Months Ended Six Months Ended June 30, June 30, --------------------- ---------------------- 2006 2005 2006 2005 ---------- ---------- ---------- ----------- ($ in thousands, except share and per share amounts) Revenues Net premiums earned $ 59,286 $ 37,591 $ 116,542 $ 67,609 Ceding commission revenue 10,077 5,330 17,379 11,176 Insurance services revenue 2,202 3,342 4,031 7,123 Net investment income 5,292 3,733 9,952 6,348 Net realized gains on investments 29 20 (116) 229 Policy billing fees 274 236 544 437 ---------- ---------- ---------- ----------- Total revenues 77,160 50,252 148,332 92,922 ---------- ---------- ---------- ----------- Expenses Loss and loss adjustment expenses 41,424 22,013 74,634 40,075 Direct commission expense 15,265 10,669 28,345 19,461 Other operating expenses 12,207 9,280 25,591 18,197 Interest expense 1,853 1,106 3,203 2,271 ---------- ---------- ---------- ----------- Total expenses 70,749 43,068 131,773 80,004 ---------- ---------- ---------- ----------- Other Income Equity in (loss) of unconsolidated affiliate (54) - (54) - Gain from issuance of common stock of unconsolidated affiliate 7,883 - 7,883 - Warrant received from unconsolidated affiliate 4,605 - 4,605 - ---------- ---------- ---------- ----------- Income before income taxes 18,845 7,184 28,993 12,918 ---------- ---------- ---------- ----------- Income tax expense 6,560 2,419 10,198 4,436 ---------- ---------- ---------- ----------- Net income $ 12,285 $ 4,765 $ 18,795 $ 8,482 ========== ========== ========== =========== Comprehensive Net Income Net income $ 12,285 $ 4,765 $ 18,795 $ 8,482 Other comprehensive income: Gross unrealized investment holding (losses) gains arising during period (2,478) 4,827 (5,877) 341 Equity in net unrealized (losses) gains in investment in unconsolidated affiliate's investment portfolio (112) - (112) - Less: reclassification adjustment for (gains) losses included in net income (29) (20) 116 (229) ---------- ---------- ---------- ----------- (2,619) 4,807 (5,873) 112 Income tax benefit (expense) related to items of other comprehensive income 917 (1,683) 1,998 (39) ---------- ---------- ---------- ----------- Total other comprehensive net (loss) income (1,702) 3,124 (3,875) 73 ---------- ---------- ---------- ----------- Comprehensive Net Income $ 10,583 $ 7,889 $ 14,920 $ 8,555 ========== ========== ========== =========== Earnings Per Share Basic earnings per common share $ 0.62 $ 0.24 $ 0.95 $ 0.43 ========== ========== ========== =========== Diluted earnings per common share $ 0.61 $ 0.24 $ 0.93 $ 0.42 ========== ========== ========== =========== Weighted Average Common Shares Outstanding: Basic 19,742,004 19,555,327 19,713,453 19,538,219 Diluted 20,265,054 20,108,917 20,241,611 20,093,198 Tower Group, Inc. Consolidated Balance Sheets (Unaudited) June 30, Dec. 31 2006 2005 ----------- --------- ($ in thousands, except par value and share amounts) Assets Fixed-maturity securities, available-for-sale, at fair value (amortized cost $374,300 in 2006 and $331,123 in 2005) $363,562 $326,681 Equity securities, available-for-sale, at fair value (cost $6,681 in 2006 and $6,681 in 2005) 6,624 5,934 Equity securities, at cost 25,191 24,558 Common trust securities - statutory business trusts, equity method 2,045 1,426 --------- --------- Total investments 397,422 358,599 Cash and cash equivalents 81,829 38,760 Investment income receivable 4,057 3,337 Agents' balances receivable 54,307 46,004 Assumed premiums receivable 6,983 1,076 Ceding commission receivable - 8,727 Reinsurance recoverable 95,987 104,811 Receivable - claims paid by agency 3,167 2,309 Prepaid reinsurance premiums 73,449 43,319 Deferred acquisition costs net of deferred ceding commission revenue 32,855 29,192 State income taxes recoverable 84 365 Deferred income taxes 5,536 3,204 Intangible assets 5,940 5,835 Fixed assets, net of accumulated depreciation 11,027 7,920 Investment in unconsolidated affiliate 26,849 - Other assets 6,350 3,999 --------- --------- Total Assets $805,842 $657,457 ========= ========= Liabilities Loss and loss adjustment expenses $254,412 $198,724 Unearned premium 199,718 157,779 Reinsurance balances payable 33,121 19,200 Payable to issuing carriers 3,585 5,252 Funds held as agent 8,195 8,191 Funds held under reinsurance agreements 59,792 59,042 Accounts payable and accrued expenses 12,495 13,694 Other liabilities 2,867 2,867 Federal income taxes payable 3,696 460 Subordinated debentures 68,045 47,426 --------- --------- Total Liabilities 645,926 512,635 --------- --------- Stockholders' Equity Common stock ($0.01 par value per share; 40,000,000 shares authorized; and 19,956,606 shares issued in 2006 and 19,872,672 in 2005) 199 199 Paid-in-capital 112,293 111,066 Accumulated other comprehensive net income (7,226) (3,352) Retained earnings 54,827 37,019 Treasury stock (23,457 shares in 2006 and 17,881 in 2005) (177) (110) --------- --------- Total Stockholders' Equity 159,916 144,822 --------- --------- Total Liabilities and Stockholders' Equity $805,842 $657,457 ========= ========= CONTACT: Tower Group, Inc. Thomas Song, 212-655-4789 tsong@twrgrp.com -----END PRIVACY-ENHANCED MESSAGE-----