Zacks Investment Research downgraded shares of Tower Group International, Inc. (TWGP) from NEUTRAL to UNDERPERFORM on January 06, 2014, with a target price of $2.75.
We are downgrading our recommendation on Tower Group to Underperform from Neutral, reflecting concerns regarding a number of negative issues facing the company. These include mounting losses, reserve shortfall, job cuts, selling stake in Canopius and cancellation of the previously announced acquisition of American Safety Reinsurance, Ltd. (ASRe). Tower Group experienced significant losses and reductions of statutory surplus in its insurance subsidiaries in the first half of 2013. There are currently no commitments or assurances to raise additional capital, execute strategic alternatives or liquidate certain investments to repay the outstanding balance under its credit facility. Until the completion of a definitive executable plan to remedy statutory capital deficiencies and repay the credit facility, there is substantial doubt about Tower Group's ability to continue as a going concern. The subsequent rating downgrade by A.M.Best and Fitch Ratings further represent a new challenge for the company.
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