Tower Group International (TWGP) has been downgraded to ‘Strong Sell’ by Zacks Investment Research following the company’s poor performance in multiple areas.
The company has already started out the year on a low note with TWGP stock down over 11% in mid-afternoon trading Friday. Tower Group International added $75 to $105 million on Dec. 2013 to make up for losses related to workers’ compensation, commercial liability and commercial auto policies. The company also increased its reserves in October by close to $365 million in order to cover up losses suffered from 2009 to 2011.
The downgrade can also be attributed to the company’s decision to cut down expenses by $21 million per year by getting rid of 10% of its staff. Tower Group International also delayed its 2013 financial results and sold its stake in Canopius Group to repay a $70 million outstanding credit facility from Bank of America (BAC).
The Zacks Consensus Estimate has Tower Group International’s 2014 earnings at 54 cents per share, down 67% in the last 60 days. TWGP stock is down over 17% YTD.