Investors in the troubled property insurance/casualty company Tower Group International Ltd. (TWGP) sold off the stock in a panic on Sept. 27, as they braced themselves for exceedingly bad news in next week’s twice-delayed second quarter earnings report. On the panic, the stock hit an all-time low, as shareholders scrambled to pull their money out of a plummeting investment.
While it is unclear exactly how bad the earnings report for the Bermuda-based insurer will be, the company has shifted down guidance considerably. Tower Group claimed that they needed more time to fully assess their “adverse reserve losses,” or a series of sudden, unexpected simultaneous claims, which could total as much as $110 million.
The adverse reserve losses likely stem from claims over property damage caused by Hurricane Sandy in October 2012.
Tower Group was first set to release their second quarter earnings on Aug. 8 but instead delayed the issuance of the earnings call, and instead gave worse than expected guidance and promised the earnings report “within 30 days.”
However, 30 days came and went with no report. On Sept 18 the company announced they would be delaying the report for a second time. Tower Group once again declined to give an exact date for the reschedule, saying only that the long-delayed earnings report would be issued “the week of Oct. 7.”
In the lead-up to the supposed, final issuance of their earnings report, investors got cold feet en masse and fled the stock in droves. The stock plunged 16.03 percent on the day to hit $6.86 a share. Tower Group has lost over 66 percent of its value since Aug. 8, when the earnings report mess first began.
Of note is that Tower Group is the Financials sector representative in the Equities Turnaround Stock portfolio, which we began tracking on Sept. 25.