Tower Group International says filed financial statements forthe years 2011 and 2012 cannot be relied upon and because of“inadvertent mistakes.”
|Last month Tower said it strengthened loss reserves by about $365 million for accidentyears 2009-2011, resulting in an impairment charge of $215 millionfor the second quarter. The Hamilton, Bermuda-based company thendove in to review its reserve analyses.
|Tower says it has reached the conclusion that “materialweaknesses exist in internal control over financial reportingrelated to the company's loss reserving and premiums receivablereconciliation processes.”
|The company outlines several reserving adjustments for insuranceas well as decreases on reinsurance recoverables in the years 2010,2011 and 2012.
|Tower says it was not aware of the mistakes when it announcedthe reserve strengthening last month and the errors do not increasethe charge of $365 million.
|The company says it will file its second-quarter results as soonas possible, and has warned it could record loss reserve hits of$60 million to $110 million.
|Read Also: A.M.Best Downgrades Tower Group After Reserve Shortfall Comes toLight | PCIExec Panel Predicts More Industry Consolidation, Possible ReserveCrisis
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