Specialty Underwriters Alliance Inc
Specialty Underwriters Alliance — Merger or Acquisition (June 2009)
24 slides from Specialty Underwriters Alliance's merger presentation, Jun 23, 2009
Slide 1: Presentation to Investors: Tower Group to acquire Specialty Underwriters' Alliance
Presentation to Investors TOWER GROUP, INC. to acquire Specialty Underwriters' Alliance Inc. June 23, 2009 TOWER GROUP, INC.
Slide 2: Forward-Looking Statements
Forward-Looking Statements The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. This press release or any other written or oral statements made by or on behalf of Tower or SUA may include forward-looking statements that reflect Tower's or SUA'
Slide 3: Presentation Outline
Presentation Outline Tower and SUA Overview Transaction Overview Transaction Benefits and Rationale - Tower Transaction Benefits and Rationale - SUA Summary
Slide 4: Tower and SUA Overview
TOWER AND SUA OVERVIEW
Slide 5: Snapshot of Companies
Snapshot of Companies Exchange / Ticker NASDAQ / TWGP NASDAQ / SUAI Shares Outstanding 40.3 MM shares 15.8 MM shares Market Capitalization1 $970.6 MM $62.6 MM Stockholders Equity Per Share2 $19.46 $8.73 Book Value2 $786.9 MM $138.1 MM Debt / Total Capitalization 23.0% 0.0% 2008 Total Premiums3 $805.
Slide 6: Overview of Tower (TWGP)
Overview of Tower ("TWGP") Specialty property and casualty insurance company and service provider headquartered in New York City (rated A- by A.M. Best) National presence Number of employees: Approximately 700 Tower differentiation Diversified business platform Favorable ROE High growth platform Fav
Slide 7: Superior Performance vs. Industry
Superior Performance vs. Industry 2004 2005 2006 2007 2008* 1Q 2009 Tower 0.329 0.454 0.262 0.444 0.323 0.343 P&C Industry 0.044 0 0.04 -0.008 -0.008 Total Premium Growth 2004 2005 2006 2007 2008* 1Q 2009 Tower 0.756 0.881 0.876 0.837 0.824 0.867 P&C Industry 0.989 1.012 0.924 0.956 1.047 Combined R
Slide 8: Tower Group Track Record Since IPO
Tower Group Track Record Since IPO Book Value Per Share Diluted Operating EPS Per Share *Book value per share on a pro forma basis for the acquisition of CastlePoint.
Slide 9: Overview of SUA
Overview of SUA Formed in 2004 to write specialty program business for niche customer classes in the following segments: PEOs Temporary Staffing Public Entities Not-for-Profit Trucking Towing Small Contractors E-Comp Over 140 employees Rated B+ (Good) by A.M. Best Strong distribution relationships t
Slide 10: Transaction Overview
TRANSACTION OVERVIEW
Slide 11: Transaction Summary
Transaction Summary Transaction Tower Group, Inc. (TWGP) to acquire Specialty Underwriters' Alliance Inc. (SUAI) Purchase Price of approximately $107 million for 100% stock Valuation $6.72 per SUAI share based on TWGP's closing price on 06/19/2009 Final price is based on the 15 day volume weighted a
Slide 12: Transaction Benefits and Rationale - Tower
TRANSACTION BENEFITS AND RATIONALE - Tower
Slide 13: Financially Compelling - Tower
Financially Compelling - Tower Increased capitalization Increases Tower's Stockholders' equity by 13% from $787 million at 03/31/09 to approximately $890 million on a pro forma basis Cost of raising capital is less than a normal capital raise via follow on offering Accretive to BVPS and EPS BVPS exp
Slide 14: Diversified Business Platform
Diversified Business Platform Segment Markets Based Upon Premium Size, Pricing and Coverage Tier Access Multiple Distribution Systems Expand Product Lines and Industry Classes of Business Lines of Business Commercial Package Policies Businessowners Policy Commercial Property Commercial Liability Wor
Slide 15: Tower's Acquisition Strategy
Tower's Acquisition Strategy Expand Our Diversified Business Platform Geographical expansion to establish a local presence throughout the country (5 regions). Gain underwriting expertise or established books of business to further broaden our product offerings. Access capital from acquired companies
Slide 16: Tower's Successful Acquisition Track Record
Tower's Successful Acquisition Track Record Empire renewal rights - 2001 Expanded retail distribution system Successfully re-underwrote business to achieve less than 90% combined ratio OneBeacon renewal rights - 2004 Expanded throughout New York State; established two new branch offices Successfully
Slide 17: Key Operational Benefits
Key Operational Benefits Creation of a separate, specialty profit center Less reliant on Tower's brokerage division for internal resources to support growth Allows Tower to take advantage of strong pipeline of opportunities Establishes a Midwest regional office to support continued geographical expa
Slide 18: Action Steps to Achieve Greater Value
Action Steps to Achieve Greater Value Factors SUA Pre-Transaction Combined Post-Transaction Action Steps Gross Written Premium $146 million (2008) Over $1.4 billion after consolidation of specialty units Cross-sell Access to higher pooled rating Expense Ratio Above 40% Below 30% Access greater scale
Slide 19: Transaction Benefits and Rationale - SUA
TRANSACTION BENEFITS AND RATIONALE - SUA
Slide 20: Financially Compelling - SUA
Financially Compelling - SUA Immediate appreciation 87% premium to the 30 day average closing price Increased liquidity and market capitalization from Tower shares Market capitalization - over $1 billion Shares outstanding and float - 40.4 million / 91% Average trading volume - 345K 3 month average
Slide 21: Key Operational Benefits - SUA
Key Operational Benefits - SUA Access to higher pooled rating and capitalization Access to Tower's A- rating by A.M. Best Company allows SUA to expand its business On a pro forma basis as of 3/31/09, Tower's stockholders' equity increases by 13% from $787 million to approximately $890 million Access
Slide 22: Summary
SUMMARY
Slide 23: Summary
Summary Financially compelling transaction Immediate stock appreciation and upside potential to SUA Accretive to Tower's Book Value and EPS Key operational benefits Tower - strengthens Specialty division and establishes Midwest presence SUA - Access to higher rating to expand business and lower expe
Slide 24: Tower Group contact details
120 Broadway, 31st Floor, New York, NY 10271 www.twrgrp.com
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