8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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): May 9, 2013

Tower Group International, Ltd.

(Exact name of registrant as specified in its charter)

Bermuda	001-35834	N/A
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

Crown House, 4 Par-La-Ville Road

Hamilton HM 08, Bermuda

(Address of principal executive offices)

(441) 269-6611

(Registrant’s telephone number, including area code)

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 240.13e-4(c))

Item 7.01 Regulation FD Disclosure.

On Thursday, May 9, 2013, Michael H. Lee, President and Chief Executive Officer of Tower Group International, Ltd. (“Tower”) and William E. Hitselberger, Executive Vice President and Chief Financial Officer of Tower will give a presentation at the conference call to discuss financial results for the quarter ended March 31, 2013. The presentation will include a slide show in the form attached hereto as Exhibit 99.1 to this report.

The information under this Item 7.01 and the Earnings Call Presentation attached to this Form 8-K as Exhibit 99.1 shall be deemed to be “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Number	Description
99.1	Earnings Call Presentation

SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Tower Group International, Ltd.
	Registrant
Date: May 9, 2013	/s/ William E. Hitselberger
	WILLIAM E. HITSELBERGER
	Executive Vice President and Chief Financial Officer

EX-99.1

1

First Quarter 2013

Earnings Call Presentation

May 9, 2013

Exhibit 99.1

2

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. This presentation 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 presentation

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, including among others Tower’s Annual Report on Form 10-K for the year ended December 31, 2012, 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.

Notes on Non-GAAP Financial Measures

Operating income (loss) excludes realized gains and losses, acquisition-related transaction costs and the results of the reciprocal

business, net of tax. Operating income is a common measurement for property and casualty insurance companies. We believe this

presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business.

Additionally, these measures are a key internal management performance standard. Operating earnings (loss) per share is operating

income (loss) divided by diluted weighted average shares outstanding. Net income (loss) attributable to Tower Group International, Ltd. is

the most directly comparable GAAP measure. Operating return on equity is annualized operating income (loss) divided by average

common equity, and operating return on equity excluding the impact of catastrophes and reserve development is calculated by eliminating

the impact of catastrophes and reserve development on operating income (loss). See footnote 2 for additional discussion of the exclusion

of catastrophes and reserve development. A reconciliation of net income (loss) attributable to Tower Group International, Ltd. to operating

income (loss) and return on average equity to operating return on average equity is provided in an accompanying table.

Combined ratio excluding the impact of catastrophes and reserve development is the sum of the loss and loss adjustment expense ratio

and the expense ratio excluding the impact of catastrophes and reserve development. We believe this presentation enhances the

understanding of our results by eliminating what we believe are volatile and unusual events and presenting the ratios with what we believe

are the underlying run rates of the business. A reconciliation of combined ratio to combined ratio excluding the impact of catastrophes and

reserve development is provided in an accompanying table.

Book value per share is calculated as Tower Group International, Ltd. stockholders’ equity divided by the number of shares outstanding.

We believe that book value per share is an important measure of our ability to grow shareholder value. The computation of book value per

share is provided in an accompanying table.

Total premiums include gross premiums written through our insurance subsidiaries and produced as managing general agent on behalf of

other insurance companies, including the reciprocal exchanges.

3

First Quarter 2013 Snapshot

•

Completion of Canopius Bermuda merger on March 13

–

Achieved long term vision of creating a global diversified insurance

company with access to U.S, Bermuda and London markets

–

Due to successful restructuring, Tower Reinsurance, Ltd. (newly-

established Bermuda reinsurance company) generated significant

portion of group’s net income

•

Strong growth in premiums and profits

–

Operating income of $25.9 million or 56 cents per share, up from

$20.6

million or 46 cents per share in 1Q 2012

•

Operating income excludes $19.1 million in pre-tax acquisition costs

–

Premium growth up 18% to $550.4 million driven by organic growth

initiative and positive pricing trends

•

Positive outlook 

–

Continued benefits from the Canopius Bermuda merger, profitable

expansion into specialty and international business and improving

market conditions

4

Canopius Bermuda Merger Highlights

•

Transaction summary

–

Canopius Group was successful in selling their shares in Canopius Bermuda to third party

investors raising approximately $206 million

–

After this placement, Tower merged with Canopius Bermuda on March 13, creating a new

holding company called Tower Group International, Ltd. listed under the same TWGP symbol 

–

Tower Group considered as accounting acquirer, and therefore prior year results are only those

of Tower Group, Inc.

•

Merger impact on shares

(in 000's)

Shares Outstanding at 12-31-2012 (pre-merger)

38,406

Shares Outstanding at 12-31-2012 (post-merger) *

43,514

Restricted Stock granted and vested

-107

New Shares Issued in Merger

14,026

Shares Outstanding at 3-31-2013

57,432

*Adjusted for merger conversion ratio of 1.133 to 1

5

High Level Corporate Structure

Tower Group, Inc.

Delaware Holding Company

*CP Re used solely to reinsure US Pool

Tower

Stockholders

100%

US Pool*

Castle Point Re*     

(“CP Re”)

PRE MERGER

Post  Merger New

Stockholders

Pre Merger Tower

Stockholders

Tower  Group International, Ltd.

Bermuda Holding Company

Bermuda Operations

Tower Reinsurance, Ltd to

assume CP Re’s

operations

U.S. Operations

Tower and its

Subsidiaries

POST MERGER

6

Pre-Merger Tower*

2013 Pro Forma

Global Diversified Insurance Company

U.S.

Bermuda

Lloyd’s

•

Continue expansion of commercial,

personal and specialty businesses

•

Establish Tower Reinsurance Ltd. as

efficient reinsurance platform to

support U.S. and international

business

•

Expand existing relationships with

Lloyd’s syndicates to access $38B

market

•

Expect to acquire or develop Tower’s

own Lloyd’s syndicate

* Percentage of total premium for the year ended 12/31/12

Commercial

General

36%

Personal

Lines

32%

Commercial

Specialty

32%

Commercial

General

31%

Personal

Lines

31%

Commercial

Specialty

23%

Quota share

of Lloyd's

business

15%

7

Impact of Post Merger Restructuring

•

Bermuda: 

–

Established Tower Reinsurance, Ltd.  to replace CastlePoint Re (CP Re)

–

Strong earnings expected from affiliated and third party reinsurance business

•

Expect $850 million to $950 million in GPW in 2013 from affiliated reinsurance from

U.S pool and third party reinsurance 

–

Strong balance sheet

•

Total

capitalization

of

$506

million

($206

million

from

Canopius

Bermuda

and

$300

million from restructuring of CP Re)

•

Strong

reserve

position

with

additional

risk

premium

on

Canopius

Bermuda

carried

reserves

•

U.S.:

–

Reduced level of profitability due to expenses associated with significant

investment in technology and elimination of assumed reinsurance business.

•

Impact on operating results:

–

Higher than expected earnings in Bermuda offset by weaker operating results

in U.S. due to restructuring

–

Results in lower taxes in U.S. until U.S. operations gradually improve

profitability from increased premium production and lower expenses

8

1Q 2013 Business Segment Results

Commercial  Lines

Personal

Insurance

General

Specialty

Lines*

Services

Business Units / Products

Small business;

Middle market

National Programs, E&S,

Customized Solutions,

Transportation and 

Assumed Reinsurance

Homeowners and

private passenger

auto

1Q 2013 GPW ($ millions)

$173

$234

$144

$7.3**

1Q 2012 GPW ($ millions)

191

146

130

7.4**

2013 % of total GPW

31%

43%

26%

n/a

Commercial Consolidated

Loss Ratio

63.8%

60.1%

n/a

Expense Ratio

35.1%

40.1%

n/a

Combined Ratio

98.9%

100.2%

n/a

Retention

82%

90%

n/a

Renewal Premium Change

6.4%

4.6%

n/a

•

Personal  Lines GPW includes reciprocals,

Personal Lines ratios exclude reciprocals. 

** Insurance services total revenue.

9

Business Segment Summary

•

Personal

–

Premium growth of 10.7% due to higher renewal retention and strong

growth in new business.

–

Pricing increases of 4.6% occurring in first quarter

–

Higher expenses are related to the system conversion

–

Management fee from managing reciprocal exchanges was $7.3M in

1Q and will be included in personal lines segment reporting beginning

in 2Q

•

Commercial

–

General

–

Small Business up 4% due to strong renewals

–

Middle Market down in line with plan

–

California workers compensation business down 41% overall with 

Middle Market down approximately 60%

10

Business Segment Summary

•

Commercial

–

Specialty

Insurance

–

Continued focus on re-underwriting programs positioned in competitive

markets and shift towards specialty programs in profit niche markets

–

Focus on growing risk-bearing program underwriting agents or joint

venturing with agents positioned in specialty markets

–

Expansion into specialty businesses in 2013 by focusing on acquiring

underwriting teams or program agencies

•

Commercial

–

Specialty

Reinsurance

–

Moved assumed reinsurance department from U.S to Bermuda in 1Q

–

Significant growth rate in assumed reinsurance primarily from

relationship with Lloyd’s syndicates, including Canopius

–

Expect significant growth from various sources, including continued

growth of business from Lloyds’

syndicates, introduction of risk sharing

solutions with a focus on small insurance companies and risk bearing

managing general agencies

–

Results will

be

reported

in

a

new

business

segment

–

Specialty

Reinsurance beginning in 2Q

11

(in 000's except per share data)

Three months ended

3/31/2013

3/31/2012

Operating income

$25,900

$20,618

26%

Operating EPS

$0.56

$0.46

22%

WASO

45,984

44,535

3%

Operating ROE

9.8%

7.9%

Insurance Ratios

Loss ratio

63.1%

64.2%

Expense ratio

36.0%

34.6%

Combined ratio

99.1%

98.8%

Financial Highlights    (Tower

only

–

excludes

reciprocals)

12

Balance Sheet Highlights

(in millions except per share data)

3/31/2013

3/31/2012

Total assets

$6,395

$4,749

35%

Debt

451

450

0%

Tower Stockholders' equity

1,197

981

22%

Tower Capital

$1,648

$1,431

15%

Tower debt to capital ratio

27%

31%

Book value per share

$20.85

$22.54

-7%

Shares outstanding

57,432

43,515

32%

13

1Q 2013 Consolidated Loss Ratio

•

No adverse development in first quarter 2013

•

Currently accident year 2012 is developing better than original expectations

•

Acquisitions reserved at high end of the actuarial range;  Canopius Bermuda

risk premium of $20 million included in loss reserves

•

Major events have consistently been reserved conservatively (Irene, Sandy)

with no adverse development noted

(Tower only –

excludes reciprocals)

63.1

64.2

1Q 2013

1Q 2012

Loss Ratio (%)

14

1Q 2013 Expense Ratio

•

As systems initiatives relating to personal lines are completed,

we expect scale advantage to drive expense ratio down

18.2%

18.6%

14.0%

12.3%

3.8%

3.7%

36.0%

34.6%

1Q13

1Q12

Commissions, net of ceding commissions

OUE, net of fees

BB&T expenses

(Tower only –

excludes reciprocals)

15

1Q 2013 Investment Performance

•

Portfolio yield impacted at 1Q 2013 by large cash balances obtained

through merger and by portfolio sales to fund Sandy losses

•

Bermuda platform will provide a better after tax return environment on

reinsurance portfolio assets

•

Continuing to look at real estate and alternative investments as

classes to

enhance investment returns

Note: Cash & Invested Assets, Tax–Equivalent Fixed Income Yield and Net Investment Income exclude reciprocals

$2,589

$2,359

03-31-2013

03-31-2012

Cash and Invested Assets ($millions)

4.1

4.5

1Q 2013

1Q 2012

Tax-

Equivalent Fixed Income

Yield (%)

$30

$32

03-31-2013

03-31-2012

Net Investment Income

($millions)

16

Capital Management Strategy

•

Capital increase due to $206 million from the merger and should also

increase from anticipated 2013 earnings growth

•

Capital management strategy will be utilized to balance support of

business production and to achieve targeted return on equity

•

Dividends

–

Maintained 1Q 2013 dividend at pre-merger level of 16.5 cents

(adjusted for merger conversion ratio)

•

Share repurchase plan

–

$50 million authorization approved

17

Positive Outlook for Remainder of 2013

Original Forecast

1Q13

2013 Target*

1

st

quarter analysis and outlook for the rest of 2013

GPW & Managed 

Growth Rate 

5% -

10%

18.0%

5% -

10%

Higher than expected growth rate in  1Q  due to continued growth

from specialty reinsurance business in Bermuda. 

Loss Ratio

62.3%

63.1%

62% -

63%

Overall loss ratio slightly higher due restructuring of business

segments that increased loss ratio in U.S offset partially by lower loss

ratio in Bermuda.  

Expense Ratio

35.5%

36.0%

34.5% -

35.5%

Higher expense ratio in U.S due to technology costs.  Expense should

gradually trend lower as technology projected are completed. 

Combined Ratio

97.8%

99.1%

96.5% -

98.5%

Higher gross premiums written offset by higher combined ratio from higher

expense and loss ratios 

Investment Yield

4.6%

4.1%

4.3% -

4.6%

Investment returns lower due to payout for Sandy claims and higher

capital from merger. 

Tax Rate

Operating ROE

Operating EPS

11.5%

12%

$2.40 -

$2.60

(12.5%)

9.8%

$0.56

2% -

4%

10% -

12%

$2.40 -

$2.60

Lower tax rate due to restructuring of business in U.S and Bermuda. ROE

should improve close to target as full impact of merger is realized

throughout 2013.

*Excludes reciprocals