Tower Group Inc. said 2010 second-quarter net income was $28.3 million, down from $30.6 million a year ago, while gross premiums written increased 26.7 percent from the integration of its CastlePoint and Specialty Underwriters' Alliance acquisitions.
President and Chief Executive Officer Michael H. Lee said during a conference call that Tower's operating performance the last several quarters has been adversely affected as it deployed capital from the CastlePoint purchase and integrated acquisitions. But he said Tower's performance should improve for the remainder of 2010 with the closing of another acquisition, OneBeacon Insurance Group's personal lines division, in July.
Results were also affected by "the need to adjust our expected loss ratio upward to reflect the competitive underwriting environment," Mr. Lee said.
During the current challenging market conditions, Mr. Lee said New York-based Tower has focused on consolidating profitable businesses through acquisitions while maintaining underwriting discipline, rather than compete for new business. The focus has been on small-premium-size commercial policies, he added.
"We believe the pricing and retention on small-account business is better than the middle and large account business," Mr. Lee said during the call.
Tower also consolidated its specialty division with its commercial lines operations during the second quarter--a move Mr. Lee said would enable regional offices to offer customized niche products.
Net written premiums increased 24.1 percent to $292.6 million during the second quarter compared to last year. The net combined ratio for the second quarter was 93 compared to 84.6 for the same period a year ago.
