The insurer also cut its 2010 profit target to a range of $2.60 to $2.70 a share from $3 to $3.20, reflecting storm-related losses and this quarter's expected closing of OneBeacon Personal Lives Division acquisition. For the second quarter, Tower Group expects to earn 55 cents to 60 cents; analysts on average projected 70 cents, according to Thomson Reuters.
A number of property and casualty insurers have been hit by catastrophe losses in the period, be it from wicked winter weather in the U.S., Chile's earthquake or windstorms in Europe. Tower's losses were in the Northeast U.S.
Meanwhile, Tower Group had been reporting growth in recent quarters through acquisitions and organic expansion of its specialty and brokerage business from its Northeast base.
Its first-quarter profit dropped to $17.5 million, or 38 cents a share, from $18 million, or 53 cents a share, a year earlier. Operating income, which excluding investment gains and losses, fell to 39 cents from 84 cents. The company said in early March that it expected to earn 65 cents to 70 cents, which trailed analysts' estimates at the time, and later that month said earnings would be cut 16 cents to 20 cents by the Northeast storms.
Net premiums earned surged 59% to $268 million. Analysts forecast $280 million.
Net premiums written increased 33%, and net investment income jumped 59%. Combined ratio, the proportion of premiums paid out to claims and expenses, rose to 96.8% from 86.7%.
Tower Group shares closed Friday at $22.35 and were inactive premarket. The stock has fallen 19% in the past year, far trailing the broader market.