I decided to purchase 50 shares of Tower Group, Inc. (TWGP) today. I’ve been looking for a P&C Insurance company ever since I sold Harleysville Group (HGIC) due to the buyout last year. They are only a 900 Mil Market Cap company. P&C businesses didn’t do well in 2011, with many losses occuring from natural disasters. I believe the company has a lot of room for growth as does the dividend.
TWGP has increased it’s yearly dividend from .1500 in 2007 to .6875 in 2011. It has a Price/Book of .85 and payout ratio < 50%. It has a low beta of 0.6 and its current yield is 3.3%.
Overview:
Headquarted in New York, NY, Tower Group, Inc. (Tower), through its subsidiaries, offers a range of commercial, personal and specialty property and casualty insurance products and services to businesses in various industries and to individuals. The Company provides coverage for many different market segments, including non-standard risks that do not fit the underwriting criteria of standard risk carriers due to factors, such as type of business, location and premium per policy. It provides these products on both an admitted and excess and surplus (E&S) basis. The Company operates in three segments: Commercial Insurance, Personal Insurance and Insurance Services. On July 1, 2010, it acquired OneBeacon Personal Lines Division (OBPL). On November 2, 2010, Tower acquired the renewal rights to the commercial automobile liability and physical damage business of AequiCap Program Administrators Inc. (AequiCap II), an underwriting agency based in Fort Lauderdale, Florida.
Cheap, cheap, cheap! This stock is cheap by almost every metric, including P/E, P/B, P/S, P/CF and PEG. Solid yield that’s been growing for 5 years. I’ll have to take a look at it, as I don’t have a lot of small cap stuff in the Fund. The balance sheet is pretty solid too.
Best wishes.
Thanks DM. I think it will be a good fit for my portfolio. Without a market correction I’m going to start investigating more small and mid-caps.
I looked at TWGP recently but I need to take the time and effort to better understand the risk profile of insurance companies and other financial entities such as banks. TWGP did look appealing to me, though.
Another reason I liked them was that they didn’t seem as risky as other financials. They have a beta of only .6 , 52-week range is 19.78-24.64, and 15.76 looks to be the lowest they ever got during the financial panic in October of 2008. They were back in the 20’s a couple weeks later. We will see how it plays out.