Shares of insurer Tower Group International Ltd plunged to a record low yesterday on investor concerns that its planned merger deal with fellow Bermuda company ACP Re would not go through.

Tower declined 20 percent to $1.62 during morning trading in New York, but recovered somewhat to close on $1.80 — down 23 cents, or 11 percent.

The dip came after the company made a regulatory filing last Friday after the markets had closed. In the filing, Tower disclosed that it had written to ACP Re to set a 5pm Eastern Standard Time deadline yesterday for it to “unequivocally assure” it in writing of its commitment to close the deal under previously agreed terms.

ACP Re agreed in January to acquire Tower for $3 a share, a price that was later reduced to $2.50 when Tower revealed a new $62.5 million reserve charge.

The stock has lost half its market value this year, after plunging 78 percent in 2013 on higher-than-expected claims costs leading to the company having to beef up reserves.

“Tower Group shares will likely be rife with speculation regarding the outcome of its merger with ACP Re,” Ken Billingsley, an analyst at Compass Point Research & Trading LLC, said in a research note yesterday.

The filing also disclosed that Tower is facing increased supervision from a Massachusetts regulator. Tower on May 22 said it hired Greenhill & Co, under pressure from the state watchdog, to provide advice on repaying debt if the takeover collapses

Tower’s demand came after what it described as oral suggestions from ACP Re that an insolvency event may have occurred under the merger agreement relating to requirements set by the Massachusetts Insurance Department in an amended order of administrative supervision on May 20.

In the letter, Tower stated: “We do not believe that any such insolvency event has occurred. Tower intends to satisfy all conditions to closing the merger applicable to Tower.”

It added that last Thursday, the insurer had confirmed to the Massachusetts Insurance Department that it would immediately contribute $3 million to its Tower National subsidiary, which is domiciled in the state.

ACP responded last Friday that it “reserves all its rights under the merger agreement, with respect to the matters referenced in your letter or otherwise”, according to a copy of the letter in Tower’s filing.

Tower said that if it did not receive assurances from ACP Re by 5pm EST yesterday it would conclude that ACP “will not voluntarily close the merger agreement at the price set forth therein”.

ACP Re is owned by a trust established by AmTrust Financial Services Inc’s founder, Michael Karfunkel.