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EX-10.1 - EXHIBIT 10.1 - NAVIGATORS GROUP INC | c14980exv10w1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 28, 2011
The Navigators Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware | 0-15886 | 13-3138397 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
6 International Drive, Rye Brook, NY |
10573 |
|
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (914) 934-8999
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01. Entry Into A Material Definitive Agreement
On March 28, 2011, the Company entered into a $165 million credit facility agreement entitled
Funds at Lloyds Letter of Credit Agreement with ING Bank, N.V., London Branch, individually and
as Administrative Agent and Letter of Credit Agent, JPMorgan Chase Bank, N.A., and Barclays Bank
PLC. The credit facility is a letter of credit facility. This new credit facility replaced a $140
million letter of credit facility that expired by its terms on March 31, 2011. The credit facility
will be used to support the Companys capacity at its Lloyds of London operations for the 2011 and
2012 underwriting years of accounts, as well as prior open years.
The credit facility contains customary covenants for facilities of this type, including
restrictions on indebtedness and liens, limitations on mergers, dividends and the sale of assets,
and requirements as to maintaining certain consolidated tangible net worth, statutory surplus and
other financial ratios. The credit facility also provides for customary events of default,
including failure to pay principal, interest or fees when due, failure to comply with covenants,
any representation or warranty made by the Company being false in any material respect, default
under certain other indebtedness, certain insolvency or receivership events affecting the Company
and its subsidiaries, the occurrence of certain material judgments, or a change in control of the
Company, and upon an event of default the lenders (subject to the consent of the requisite
percentage of the lenders) may immediately terminate their obligations to issue letters of credit,
declare the Companys obligations under the credit facility to become immediately due and payable,
and require the Company to deposit in a collateral account collateral with a value equal to 102% of
the aggregate face amount of any outstanding letters of credit consisting of cash or other
specified collateral including time deposits, certificates of deposit, money market deposits and
U.S. government securities subject to varying advance rates. The ability to have letters of credit
issued under this facility expires on December 31, 2011. The facility is secured by a pledge of
the stock of certain insurance subsidiaries of the Company pursuant to a Security Agreement, dated
as of March 28, 2011 and by collateral accounts established in the United States pursuant to the
security agreement and in the United Kingdom pursuant to a Deed of Charge dated as of March 28,
2011. One or more of the collateral accounts will be required to be funded upon the occurrence of
certain specified events including an event of default, the financial strength rating of the
Company falling below A-, the aggregate balance of the letter of credit obligations exceeding the
aggregate commitments as a result of a reduction in the aggregate commitments or otherwise, the
face amount of the letter of credit exceeding the aggregate commitments as a result of a change in
the conversion rate of British pounds into U.S. dollars, the forecast underwriting losses exceeding
a certain level for any year supported by a letter of credit, any net unfunded solvency deficit on
any open years of account is not funded directly at Lloyds within a specified time, or any expiry
notice is given with respect to any letter of credit.
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Fees payable by the Company under the credit facility include a fee on the daily unused
portion of each lenders letter of credit commitment at the rate of 0.375% and a letter of credit
fee with respect to each letter of credit in an amount equal to the applicable letter of credit fee
rate. The applicable letter of credit fee rate payable under the credit facility is determined in
accordance with the table set forth below based on the Companys status as determined from its
then-current ratings issued by S&P and A.M. Best with respect to the Companys financial strength
rating; provided that if the S&P and A.M. Best ratings are not on the same level, the better rating
will apply if they differ by one level, otherwise the lower rating will apply. If at any
time the Company does not have both an S&P and A.M. Best rating, then the Companys status
will be determined by the rating that it then has. The applicable letter of credit fee is subject
to adjustment in the event of posting of collateral or in the event of a default. As of March 28,
2011, the applicable letter of credit fee rate was 1.35%.
A- or below | ||||||||||||
Financial | ||||||||||||
Strength | ||||||||||||
A+ | A | Rating of | ||||||||||
Financial | Financial | Navigators or | ||||||||||
Strength | Strength | no Financial | ||||||||||
Applicable Letter | Rating of | Rating of | Strength | |||||||||
of Credit Fee Rate | Navigators | Navigators | Rating | |||||||||
Primary FAL ≥25% but less
than 50% |
1.15 | % | 1.35 | % | 1.60 | % | ||||||
Primary FAL ≥50% |
0.95 | % | 1.15 | % | 1.40 | % |
The existing letters of credit which were issued and outstanding under the expired credit
facility in an aggregate amount of £82,500,000 issued in British pounds are being replaced by
letters of credit to be issued under the new credit facility. The foregoing description of the
credit facility is qualified by reference to the full text of the credit facility, which is
attached hereto as Exhibit 10.1.
The Administrative Agent and the Lenders under the credit facility and their respective
affiliates have various relationships with the Company and its subsidiaries, including the
Administrative Agent acting as trustee for the Companys senior unsecured debt.
Item 1.02. Termination of a Material Definitive Agreement.
See Item 1.01 above.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement |
See Item 1.01 above.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
10.1 | Fifth Amended and Restated Credit Agreement among the Company and the Lenders |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
THE NAVIGATORS GROUP, INC. |
||||
By: | /s/ Bruce J. Byrnes | |||
Name: | Bruce J. Byrnes | |||
Title: | Senior Vice President, General Counsel and Assistant Secretary |
Date: April 1, 2011
EXHIBIT INDEX
Exhibit No. | Exhibit | |||
10.1 | Funds at Lloyds Letter of Credit Agreement among the Company, ING Bank, N.V., London Branch,
individually and as Administrative Agent and Letter of Credit Agent, JPMorgan Chase Bank,
N.A., and Barclays Bank PLC. |