Insurance rating agency A.M. Best Co. has downgraded the financial strength rating of Tower Group following the insurer’s reserve-strengthening announcement.
Tower Group International says it needs to strengthen loss reserves by about $365 million for accident years 2009-2011, resulting in an impairment charge of $215 million for the second quarter.
Tower has yet to announce second-quarter results. A.M. Best says its decision to lower Tower’s financial strength rating to "B++" from "A-" considers, in part, the “reduced flexibility given the delay in earnings, the decline in shareholder confidence and the corresponding decline in share price.”
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