Tag -  TWGP 

The broad markets were all down today on the negative outlook from the World Bank. The Dow was down 2.35% to close at 8,339; the Nasdaq posted even bigger losses, down 3.35%, closing at 1,766; and the S&P 500 shaved 3.06% off from its open.

The Russell 2000, the widely followed index of the 2,000 largest small cap stocks, was down 3.68% to close at 494.

Fighting the overall downward trend and leading small-caps was Specialty Underwriters' Alliance, Inc. (Nasdaq:SUAI) posting at 56% gain to close at $6.18 on news that it agreed to be purchased by Tower Group (Nasdaq:TWGP) at year end. Specialty Underwriters' offers commercial property and casualty insurance products in the United States. Tower Group was down 4% to close at $23.04.

Other small-caps bucking the selling include Oncothyreon (Nasdaq:ONTY) up 33% on news of testing start for a late-stage study on the breast cancer treatment Stimuvax; MTR Gaming (Nasdaq:MNTG) up 21%; and Security National Financial Corp. (Nasdaq:SNFCA) up 20%.

Leading small-cap decliners today was LodgeNet Interactive (Nasdaq:LNET) posting a 22% loss for the day to close at $3.54. LodgeNet, a provider of Internet and advertising services, announced on Monday that it plans a profit offering of $50 million worth of convertible preferred shares. One half of the proceeds will be used to pay down the outstanding balance on its loan while the remainder will be used as general working capital.

Other small-cap decliners include Rex Energy (Nasdaq:REXX) down 19.5%; Warren Resources (Nasdaq:WRES) down 20%; and China Medical (Nasdaq:CMED) down 19%.

*****Oil is down again. The World Bank has lowered its growth projections for the global economy. In March, the World Bank was calling for a 1.7% contraction in global GDP. Now, it says the global economy will shrink by 2.7%. That's a pretty big revision.

The forecasts for China and India are about the only bright spots.

Traders are taking profits on oil stocks, which suggests they don't see a lot of upside for oil prices right now. Demand is still down, and we're not seeing a runaway economic recovery.

*****Here's your look ahead at the economic data for the week. Tomorrow, June 24, we get existing home sales.

We get new home sales on Wednesday as well as durable goods orders, oil inventories and the Fed will tell us that they aren't changing the overnight lending rate.

Durable goods orders will be a market mover. Last month, you'll recall, the number came in above expectations. Another strong reading would be great, but I have my doubts that it will happen. We should be expecting month to month swings in data like durable goods orders. It seems too early to establish a trend higher.

Thursday, we get initial jobless claims and the final First Quarter GDP number. The initial report is that the economy contracted at a 5.7% annualized rate. There may be an upward revision but I doubt that would be significant. Investors want to believe that the economy bottomed in the First Quarter, so this number gets a pass.

Finally on Friday, we get personal income and spending, the Michigan sentiment review.

*****Jason Cimpl, technical analyst at TradeMaster Daily Stock Alerts, gave us his weekly forecast for the major indices on Friday. If you missed it, here's the LINK. Jason's forecast was near perfect last week. We'll see how he does this week. 

*****We'll be discussing our bullish outlook for commodity stocks in next Wednesday's Video Conference. It's titled Inflation Busters: Discover the Stocks to Grow and Protect Your Wealth and will air on Wednesday, June 24 at 6 pm. It's free to attend, you can sign up HERE.

 

DryShips Inc (Nasdaq:DRYS), Geron Corp (Nasdaq:GERN) and Eagle Bulk Shipping Inc (Nasdaq:EGLE) are among the most actively traded companies in Monday's trading among companies with market capitalizations under $1 billion.

Also included among the results: Palm Inc (Nasdaq:PALM), Tower Group Inc (Nasdaq:TWGP), TBS International Ltd (Nasdaq:TBSI), GMX Resources Inc (Nasdaq:GMXR), GT Solar International Inc (Nasdaq:SOLR) and Neogen Corp (Nasdaq:NEOG).

DryShips Inc. (Nasdaq:DRYS), Solarfun Power Holdings Co Ltd. (Nasdaq:SOLF) and USANA Health Sciences Inc. (Nasdaq:USNA) are among the most actively traded companies in Wednesday's trading among companies with market capitalizations under $1 billion.

Also included among the results: Canadian Solar Inc. (Nasdaq:CSIQ), VisionChina Media Inc (Nasdaq:VISN), OYO Geospace Corp. (Nasdaq:OYOG), Synta Pharmaceuticals Corp (Nasdaq:SNTA), Tower Group Inc. (Nasdaq:TWGP) and Northwest Pipe Co (Nasdaq:NWPX).

Bermuda-based provider of property and casualty insurance CastlePoint Holdings, Ltd. (Nasdaq:CPHL) said this morning that it will be acquired by property and casualty insurance products company Tower Group, Inc. (Nasdaq:TWGP) for approximately $490 million, or $12.68 per share.

Shares spiked 27%, or $2.37, to $11.25 in pre-market trading. For detailed price information and recent news stories about CastlePoint Holdings, click CPHL. 

You say synergy, I say mutually beneficial strategic relationship but let’s not call the whole thing off. Either way, when it comes to taking on insurance risk in an increasingly competitive rate market, it pays to have a friend to lean on — even if you’re a tower.

And it’s not hard to make friends when you have the charm of two years of approximately 20% return-on-equity and a 70% year-over-year rise in net income like New York-based property and casualty insurer Tower Group, Inc. (Nasdaq: TWGP) had in the third quarter of 2007.

The secret behind Tower’s market-defying profitability amid the softening North American insurance landscape is its expert specialization in serving small segments of the market that are less competitive, yet still lucrative and offer a unique strategic reinsurance relationship (more on that later).

“The company has been very successful in identifying underserved markets where pricing competition is less severe, allowing them to write new business at a faster rate than the industry average,” KeyBanc Capital Markets analyst Elizabeth Malone told SmallCapInvestor.com. Tower’s bread and butter has always been writing low- to moderate-risk small-sized “main street” policies (think restaurants, small businesses, retail stores, modestly priced homes), but it is now beginning to offer an even wider range of products.

The $633 million insurer is still a fairly small fish in the property and casualty pond, competing directly with the likes of Erie Indemnity Co. (Nasdaq: ERIE) and The Allstate Corp. (NYSE: ALL). With the purchase of a book of renewal premiums here and a debt offering there, however, Tower has moved slowly but surely from its modest beginnings in 1989 along a profitably expansionary path. The 2007 acquisition of New Jersey-based Preserver Group Inc. and its 300 retail agents in particular has enabled meaningful growth into New England markets and has opened up a new opportunity to move into the auto insurance segment.

While competitive pressures are pushing rates and premiums down for many property and casualty insurance providers, two specialty suppliers, SeaBright Insurance Holdings, Inc. (Nasdaq: SEAB) and Tower Group Inc. (Nasdaq: TWGP) are continuing to post robust growth due to their niche focuses. 

Seabright Insurance Holdings specializes in niche products such as maritime workers insurance, alternative dispute resolution (ADR) insurance and State Act workers compensation insurance. It is licensed to sell insurance in 45 states and distributes its products through independent brokers and wholesalers. 

SeaBright is growing premiums faster than the overall market because of its focus on specialty segments of the workers compensation insurance market. Although workers compensation is a huge market (generating premiums of $46 billion annually), premiums declined last year because of competitive pricing. Premium growth is forecast at only 1.5% in 2007, the slowest growth since 1998.

This company is one of only a handful of insurance providers authorized to write maritime coverage under the USL&H Act, a federal law covering longshoremen injured in shipyards and vessel unloading areas. SeaBright is also authorized to provide coverage under the Jones Act, a federal law protecting seamen and offshore workers injured through employer negligence and under OCSLA, which covers maritime workers on off-shore drilling platforms.

In addition, SeaBright is one of a few select insurance companies that provides coverage to employers subject to collectively bargained workers compensation agreements. These agreements, also known as ADR programs, reduce litigation costs by using informal arbitration rather than litigation to resolve disputes. ADR programs are prevalent in California. In addition, SeaBright provides coverage under State Act workers compensation laws, which vary from state to state. SeaBright focuses mainly on State Act workers compensation customers in California, Alaska, Illinois and Hawaii.