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***as a follow up to this storyThe author of this has seen nothing to render the public comments below made on June 30'th, 2014 certain or uncertain.  We nor have the public received anything more from this volley of more then a week ago.  This is fact not an editorial.Based on this layman's interpretation:-  Based on a Massachussetts ruling that Tower is insolvent, ACP Re can get out of the deal (see below link)-  Based on the below letter from Tower's General Counsel Eliot Orel... there have been oral reps that ACP Re/Amtrust may back out of this deal for Tower-  The letter below was sent with a "by then" date of June 30, 2014.It is close of market five business days later and I have seen no response or affirmation one way or another.  If anyone has any news, I'd love to hear it so we can appropriately alert our family, friends and policyholders in the PEO industry as it would appear they are part of the whole in the Tower deal, but do not seem to be identified outside of small business America.Paul This letter has been released to the public domain and is of importance to policyholders of Tower Group and thus we have posted it. It would appear that we will know soon(end of day Monday) if Amtrust/ACP Re will close the Tower transaction as it will assumedly go into receivership based on the 2014 Q1 that was released a day after the letter below...If the deal with ACP Re does not go through it is unclear the next steps for Tower Group. We will stay close to this and report as we have more clarity to this situation. Please note this is a public disclosure with no opinions rendered on behalf of the author.EX-99.1 2 d750982dex991.htm EX-99.1Exhibit 99.1LOGOVIA UPS OVERNIGHT MAILJune 26, 2014ACP Re, Ltd.c/o NGIC Insurance Management Limited7 Reid Street, 4th FloorHamilton, BermudaAttn: Chief Financial OfficerGentlemen:Various of your representatives have orally suggested to us that an unwaived Insolvency Event has or may have occurred under Section 6.02(f)(i) of the merger agreement in the form of the Amended Order of Administrative Supervision of the Massachusetts Insurance Department dated May 20, 2014. We do not believe that any such Insolvency Event has occurred. Tower intends to satisfy all conditions to closing the Merger applicable to Tower.Furthermore, we note that on June 26th, the Company confirmed to the Massachusetts Insurance Department that it would immediately contribute $3 million to its wholly owned subsidiary, Tower National Insurance Company, a Massachusetts domiciled insurance company (“TNIC”). In consideration for such payment, and subject to the approval of the Massachusetts Insurance Department, TNIC will issue a surplus note to the Company in the aggregate principal amount of $3 million. The effect of these transactions will be to increase the policyholders’ surplus of TNIC to a level in excess of the minimum required capital and surplus.Tower by this letter requests that ACP Re, Ltd. unequivocally assure Tower in writing of its commitment to close the Merger on the terms and conditions set forth in the merger agreement and affirm that an Insolvency Event has not occurred. If such assurances are not received by Tower by 5:00 p.m. Monday, June 30, 2014, Tower will conclude that ACP Re will not voluntarily close the merger agreement at the price set forth therein. Tower reserves all of its rights, positions, and remedies under the merger agreement or otherwise, including to make disclosures that may be required under applicable law.120 Broadway, 31st Floor • New York, NY 10271-3199MAIN: 212.655.2000 FAX: 212.655.2070All capitalized terms not defined herein shall have the meanings ascribed to them in the Agreement and Plan of Merger by and among Tower Group International, Ltd., ACP Re, Ltd. and London Acquisition Company Limited.Very truly yours,/s/ Elliot S. OrolElliot S. OrolSenior Vice President,General Counsel and Secretarycc: William W. Fox, Jr., Tower Group International, Ltd.Ernest W. Wechsler, Kramer Levin Naftalis & Frankel LLPDaniel A. Rabinowitz, Kramer Levin Naftalis & Frankel LLPMichael Karfunkel, ACP Re, Ltd.Barry D. Zyskind, AmTrust Financial Group, Inc.___________________________________________The specific language is as follows (this straight out of the recently published Tower 10-Q...http://investors.twrgrpintl.com/sec.cfm"On May 8, 2014, Tower entered into Amendment No. 1 to the Agreement and Plan of Merger (the “ACP Re Amendment”, and, together with the Original ACP Re Merger Agreement, the “ACP Re Merger Agreement”) with ACP Re and Merger Sub. The ACP Re Amendment, among other things, (1) reduces the per share consideration to be received by holders of Tower’s common shares in the Merger from $3.00 per share to $2.50 per share, (2) reduces the termination fee that Tower would, under certain circumstances, be required to pay to ACP Re in the event of a termination of the merger agreement, (3) extends to November 15, 2014 both the date by which Tower must hold its shareholders meeting to vote on the Merger and the deadline for completing the merger before either party can terminate the ACP Re Merger Agreement, (4) excludes from the material adverse effect closing condition any continued adverse results of Tower’s operations or deterioration of its financial condition resulting from (a) losses and loss adjustment expenses incurred under new, renewal or in-force insurance and reinsurance related policies, insurance and reinsurance related contracts, and insurance and reinsurance related binders, (b) operating expenses, including acquisition expenses, associated with the maintenance by Tower of its agency relationships, employees and facilities to operate its business in the ordinary course or (c) the insufficiency of Tower’s loss reserves (including IBNR reserves), (5) also excludes from the material adverse effect closing condition any effect resulting from facts or circumstances disclosed in any of Tower’s previous SEC filings, (6) eliminates the condition in the Original ACP Re Merger Agreement that holders of shares representing more than 15% of Tower’s share capital shall not have exercised dissenter’s rights, (7) provides that the closing condition in the Original ACP Re Merger Agreement requiring that each of Tower’s U.S. insurance subsidiaries shall have risk based capital that is equal to or exceeds its relevant company action level risk based capital will be deemed to have been satisfied if Tower and its subsidiaries have, on a consolidated basis, sufficient capital that could be reallocated among Tower’s insurance subsidiaries so that such condition could be satisfied and (8) provides that all of Tower’s representations and warranties in the ACP Re Merger Agreement will be qualified by disclosures made in Tower’s previous SEC filings."The author desperately hopes that this is resolved and the policyholders of Tower are protected from hardship. This has been a long ten months. We will watch this very closely for our clients.Distraction aside, my money is on PEO in a big way. We are at the tipping point of becoming mainstream. PEO is on fire!While news like this is sobering, the future is unbelievably bright ------P