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Tower Group International, Ltd. (Tower) is a Bermuda-based global diversified insurance and reinsurance holding company. Tower’s insurance subsidiaries are focused on providing commercial, personal and specialty insurance and reinsurance products. Tower is listed on the NASDAQ Global Select Market under the symbol TWGP. Tower provides personal insurance products to individuals and commercial insurance products to small to medium-sized businesses through a dedicated team of retail and wholesale agents. It is operating as Tower Select Insurance Company in California with offices in Irvine.

On August 7, 2013, the Company announced that it was delaying the release of its financial results for the second quarter of 2013 due to issues, “relating to the estimate of its loss reserves.” By October 7, 2013, TWGP announced that it would increase its loss reserves by approximately $365 million, primarily for accident years 2009 through 2011 in its commercial insurance lines of business, including workers’ compensation, commercial multi-peril, commercial auto and other liability lines. TWGP’s most recent Securities and Exchange Commission 10Q filing included a net loss of $106 million and GAAP shareholders’ equity (excluding noncontrolling interests) of negative $11 million.

Tower Group has seen multi-notch rating downgrades from rating agencies Fitch and A.M. Best for a number of times in recent months. On August 28, 2014, A.M. Best Co. downgraded the issuer credit ratings from “cc” to “c” of Tower and its wholly-owned subsidiary, Tower Group, Inc. , as well as the debt rating on the convertible senior notes due September 2014 of TGI. Additionally, the financial strength ratings of Tower’s insurance company subsidiaries have been downgraded from “C++” (Marginal) to “C” (Weak). The ratings remain under review with developing implications pending the planned merger with ACP Re Ltd. The company has a planned merger with ACP Re, which is anticipated to close in September 2014, but may be delayed to as late as Nov. 15, 2014, which is the merger termination date. Recently, the terms of the deal were amended to reduce the cash payment per share to $2.50 from $3.00 agreed to earlier. At least one analyst (Zacks) says that “there remains a high degree of uncertainty about the deal. As a backup to rescue itself from the debt holders, in May 2014, Tower Group hired Greenhill and Co. to seek advice on repaying debt (due in Sep 2014), if the merger fails to materialize.”

To add to these worries, the Insurance Journal reports that the company received a letter, dated Aug. 28, 2014, from the Securities and Exchange Commission (SEC) stating that the SEC is conducting an investigation and attaching a subpoena for various documents. “The investigation and the subpoena do not mean that we have concluded that you or anyone else has broken the law. Also, the investigation does not mean that we have a negative opinion of any person, entity or security,” the SEC’s letter states at one point. Tower said it intends to cooperate fully with the SEC’s investigation.