Tower Group, CastlePoint to buy Hermitage for $135 million

(Reuters) - Reinsurer CastlePoint Holdings Ltd CPHL.O, which recently agreed to be acquired by Tower Group Inc (TWGP.O), said its unit will buy Hermitage Insurance Group Inc for about $135 million in cash.

CastlePoint will pay the seller, a subsidiary of Brookfield Asset Management Inc, $27 million in cash plus the adjusted closing book value of Hermitage, a specialty property and casualty insurance holding company.

Earlier this month, Tower, which agreed to buy CastlePoint for about $490 million, expects the Hermitage deal to add to earnings in 2009 after it completes both the acquisitions.

Tower expects to close both the deals in December.

Tower maintained its 2008 earnings outlook of $2.90 to $3.00 per share. It still sees 2009 earnings of $3.20 to $3.40 a share, but said the Hermitage deal is expected to increase its earnings towards the upper end of the range.

(Reporting by Santosh Nadgir in Bangalore; Editing by Deepak Kannan)