Analysis of Tower Group ,Inc. (easy work, only two questions) Research Paper

Analysis of Tower Group ,Inc. (easy work, only two questions) - Research Paper Example OBPL was acquired by the company in the third quarter of the 2010 financial year. In the financial year that followed, 2010-2011, a progressive trend was realized in total revenues. Up to 21.8% increase in total revenues was recorded as at 31st December, 2011. This trend was as well associated with OBPL acquisition in the previous year. Net premiums and investment income also contributed to this positive trend. Reflection period of the acquisition was now longer than that of the previous financial year. On more specific grounds, $1789.8 million of premiums earnings were recorded in the year 2011. 2010’s figure stood at $1519.6 million. Another measure of financial operation success is operating costs. In order to realize maximum benefits, operational expenses should be minimized up to the point where profits are maximized. In the year 2010, operational costs stood at $497.7 million. In comparison to the previous year, operational expenses had gone up by 40.7%. However, this was expected due to the aforementioned acquisition of OBPL. Commercial Insurance segments were also restructured and improved technologically, thereby increasing the cost of operation. The scenario was not different in the year 2011. However, although there was an increase in operating expenses, the percentage increase in operational costs declined. In the year 2011, operational costs increased by 18.5%. This was as a result of an improved underwriting expense ratio that stood at 35.7% and 34.1% in 2010 and 2011 respectively. Taxation is an inevitable principle in the business environment that the company operates in. It is therefore a critical determinant of any given company’s financial welfare. Tax expense in the company’s context increased between 2009 and 2010. The increase was directly proportional to the total taxable earnings. Taxes applicable to the company are local and state taxes. From the tax perspective, it is evident that the