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8-K - FORM 8-K - NAVIGATORS GROUP INCd628407d8k.htm

Exhibit 99.1

 

LOGO    The Navigators Group, Inc.   
   CORPORATE NEWS   

Navigators Reports Third Quarter Earnings

Stamford, CT – November 7, 2013 — The Navigators Group, Inc. (NASDAQ:NAVG) reported net income of $21.3 million, or $1.48 per diluted share, for the three months ended September 30, 2013 compared to $12.9 million, or $0.90 per diluted share, for the comparable period in 2012. Operating earnings were $23.1 million, or $1.60 per diluted share, for the third quarter of 2013 compared to operating earnings of $9.8 million, or $0.69 per diluted share, for the comparable period in 2012.

For the nine months ended September 30, 2013, the Company reported net income of $49.1 million, or $3.42 per diluted share, compared to $35.7 million, or $2.51 per diluted share, for the comparable period in 2012. Operating earnings were $45.7 million, or $3.18 per diluted share, for the nine months ended September 30, 2013 compared to $29.1 million, or $2.04 per diluted share, for the comparable period in 2012.

Gross written premiums and net written premiums for the three months ended September 30, 2013 were $312.1 million and $196.6 million, respectively, an increase of 4.5% and 4.5% from the comparable period in 2012. Gross written premiums and net written premiums for the nine months ended September 30, 2013 were $1,037.4 million and $664.5 million, respectively, an increase of 7.5% and 6.9% from the comparable period in 2012.

The combined loss and expense ratio for the three and nine months ended September 30, 2013 were 89.8% and 95.1%, respectively, compared to 99.1% and 99.0% for the comparable periods in 2012.

Stan Galanski, President and Chief Executive Officer, commented, “We are pleased to report a combined ratio of 89.8% for the quarter, which has resulted in record quarterly operating earnings per share of $1.60. Our quarterly results were led by strong underwriting performance in our global marine, global energy and U.S. excess and surplus lines units. We experienced solid premium growth, led by double digit growth in our Navigators Specialty division. We continue to focus on controlling operating expenses in the aggregate while investing in expanding our intellectual capital and technology initiatives.”

Stockholders’ equity was $899.9 million, or $63.61 per share, as of September 30, 2013 compared to $879.5 million, or $62.61 per share, as of December 31, 2012.

Net investment income for the three and nine months ended September 30, 2013 was $14.1 million and $42.0 million, respectively, an increase of 3.7% and 3.4% from the comparable periods in 2012. Net investment income for the nine months ended September 30, 2012 was reduced by $4.5 million as a result of the settlement of our dispute with Equitas over foregone interest on amounts that were due on certain reinsurance contracts. The annualized pre-tax investment yield, excluding net realized gains and losses, net other-than-temporary impairment losses recognized in earnings, and for 2012 the $4.5 million in interest expense for the settlement of our dispute with Equitas, was 2.4% for both the three and nine months ended September 30, 2013, compared to 2.4% and 2.7% for each of the comparable periods in 2012. The effective tax rate on net investment income was 27.5% and 27.9% for the three and nine months ended September 30, 2013, respectively, compared to 26.6% and 26.8% for the comparable periods in 2012.

 

   400 Atlantic Street    Stamford, CT 06901   
   TEL (203) 905-6090    FAX (203) 658-1821   


News Release

November 7, 2013

Page 2

 

The Company’s investment portfolio mainly consists of fixed income securities with an average quality rating of “AA/Aa” as defined by Standard & Poor’s and Moody’s, respectively, and an average effective duration of 3.9 years as of September 30, 2013. As of September 30, 2013, net unrealized gains within our investment portfolio were $51.1 million, a decrease of $52.2 million compared to December 31, 2012.

There were $2.8 million of net realized losses including other-than-temporary impairment losses recognized in earnings for the three months ended September 30, 2013 compared to $4.8 million of net realized gains for the same period in 2012. For the nine months ended September 30, 2013, there were $5.3 million of net realized gains including other-than-temporary impairment losses recognized in earnings, compared to $10.2 million for the same period in 2012.

Consolidated net cash flow from operations for the three and nine months ended September 30, 2013 was $81.5 million and $130.0 million, respectively, compared to $54.1 million and $69.1 million for the comparable periods in 2012.

The Company will hold a conference call on Friday, November 8, 2013 starting at 8:30 a.m. ET to discuss the 2013 third quarter results. The call will be available via live webcast on Navigators’ website (www.navg.com).

To participate by telephone, the domestic dial-in number is (800) 850-2903 and the international dial-in is (224) 357-2399. Participants may connect to the webcast at:

http://www.media-server.com/m/p/6q4eew4g

Operating earnings, or net income excluding after-tax net realized gains (losses) and net other-than-temporary impairment losses recognized in earnings, is a non-GAAP financial measure that is a common performance measurement for insurance companies. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business.

The Navigators Group, Inc. is an international specialty insurance holding company with insurance company operations, underwriting management companies and operations at Lloyd’s. With its corporate headquarters in Connecticut and insurance operations based in New York and London, Navigators has offices in major insurance centers in the United States, the United Kingdom and Continental Europe, as well as representatives in China and Brazil.


News Release

November 7, 2013

Page 3

 

The Navigators Group, Inc. logo is available at http://www.globenewswire.com/newsroom/prs /?pkgid=7778

This press release may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Whenever used in this release, the words “estimate”, “expect”, “believe” or similar expressions are intended to identify such forward-looking statements. Forward-looking statements are derived from information that we currently have and assumptions that we make. We cannot assure that results that we anticipate will be achieved, since results may differ materially because of known and unknown risks and uncertainties that we face. Please refer to Navigators’ most recent reports on Forms 10-K and 10-Q and its other filings with the Securities and Exchange Commission for a description of Navigators’ business and the important factors that may affect that business. Navigators’ undertakes no obligation to publicly update or revise any forward-looking statement.

 

Contact:   Ciro M. DeFalco
  Senior Vice President and Chief Financial Officer
  (203) 905-6343
  cdefalco@navg.com
  www.navg.com


News Release

Page 4

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Financial Highlights

($ in thousands, except share and per share data)

(unaudited)

 

     Three Months Ended           Nine Months Ended        
     September 30,           September 30,        

Results of Operations

   2013     2012     Change     2013     2012     Change  

Gross written premiums

   $ 312,076      $ 298,742        4.5   $ 1,037,426      $ 964,878        7.5

Net written premiums

     196,556        188,046        4.5     664,477        621,343        6.9

Revenues:

            

Net earned premiums

     213,895        201,262        6.3     622,037        580,398        7.2

Net investment income

     14,094        13,597        3.7     41,997        40,632        3.4

Total other-than-temporary impairment losses

     (1,821     —          NM        (1,863     (693     NM   

Portion of loss recognized in other comprehensive income (before tax)

     —          —          NM        —          43        NM   
  

 

 

   

 

 

     

 

 

   

 

 

   

Net other-than-temporary impairment losses recognized in earnings

     (1,821     —          NM        (1,863     (650     NM   

Net realized gains (losses)

     (988     4,761        NM        7,171        10,820        -33.7

Other income

     (210     789        NM        (507     2,087        NM   
  

 

 

   

 

 

     

 

 

   

 

 

   

Total revenues

     224,970        220,409        2.1     668,835        633,287        5.6
  

 

 

   

 

 

     

 

 

   

 

 

   

Expenses:

            

Net losses and loss adjustment expenses

     125,086        128,850        -2.9     387,576        370,242        4.7

Commission expenses

     27,685        31,258        -11.4     82,631        90,211        -8.4

Other operating expenses

     39,056        40,112        -2.6     120,608        116,238        3.8

Interest expense

     2,053        2,049        0.2     6,156        6,147        0.1
  

 

 

   

 

 

     

 

 

   

 

 

   

Total expenses

     193,880        202,269        -4.1     596,971        582,838        2.4
  

 

 

   

 

 

     

 

 

   

 

 

   

Income before income taxes

     31,090        18,140        71.4     71,864        50,449        42.4

Income tax expense (benefit)

     9,804        5,225        87.6     22,731        14,731        54.3
  

 

 

   

 

 

     

 

 

   

 

 

   

Net income (loss)

   $ 21,286      $ 12,915        64.8   $ 49,133      $ 35,718        37.6
  

 

 

   

 

 

     

 

 

   

 

 

   

Per Share Data

            

Net income per common share:

            

Basic

   $ 1.50      $ 0.92        63.4   $ 3.48      $ 2.55        36.4

Diluted

   $ 1.48      $ 0.90        63.3   $ 3.42      $ 2.51        36.4

Average common shares outstanding:

            

Basic

     14,144,478        14,026,855          14,120,788        14,004,302     

Diluted

     14,408,413        14,272,477          14,379,943        14,255,301     

Underwriting Ratios

            

Loss Ratio

     58.5     64.0       62.3     63.8  

Expense Ratio

     31.3     35.1       32.8     35.2  
  

 

 

   

 

 

     

 

 

   

 

 

   

Combined Ratio

     89.8     99.1       95.1     99.0  
     Sept. 30,     June 30,           Sept. 30,     Dec. 31,        

Balance Sheet Data

   2013     2013           2013     2012        

Stockholders’ equity

   $ 899,882      $ 873,952        3.0   $ 899,882      $ 879,485        2.3

Book value per share

   $ 63.61      $ 61.83        2.9   $ 63.61      $ 62.61        1.6


News Release

Page 5

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

($ in thousands, except share data)

 

     September 30,     December 31,  
     2013     2012  
     (unaudited)        
ASSETS     

Investments and cash:

    

Fixed maturities, available-for-sale, at fair value (amortized cost: 2013, $1,958,434; 2012, $2,034,765)

   $ 1,981,731      $ 2,121,833   

Equity securities, available-for-sale, at fair value (cost: 2013, $131,046; 2012, $85,004)

     158,890        101,297   

Short-term investments, at cost which approximates fair value

     152,987        153,788   

Cash

     130,513        45,336   
  

 

 

   

 

 

 

Total investments and cash

     2,424,121        2,422,254   
  

 

 

   

 

 

 

Premiums receivable

     355,578        320,182   

Prepaid reinsurance premiums

     253,435        221,015   

Reinsurance recoverable on paid losses

     44,955        49,282   

Reinsurance recoverable on unpaid losses and loss adjustment expenses

     796,289        880,139   

Deferred policy acquisition costs

     63,171        61,005   

Accrued investment income

     13,746        12,587   

Goodwill and other intangible assets

     7,065        7,093   

Deferred income tax, net

     22,639        3,216   

Receivable for investments sold

     59,453        4,310   

Other assets

     34,124        26,587   
  

 

 

   

 

 

 

Total assets

   $ 4,074,576      $ 4,007,670   
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY     

Liabilities:

    

Reserves for losses and loss adjustment expenses

   $ 2,050,720      $ 2,097,048   

Unearned premiums

     716,236        642,407   

Reinsurance balances payable

     180,563        165,813   

Senior notes

     114,542        114,424   

Current income tax payable, net

     5,449        2,133   

Payable for investments purchased

     48,855        58,345   

Accounts payable and other liabilities

     58,329        48,015   
  

 

 

   

 

 

 

Total liabilities

     3,174,694        3,128,185   
  

 

 

   

 

 

 

Stockholders’ equity:

    

Preferred stock, $.10 par value, authorized 1,000,000 shares, none issued

     —          —     

Common stock, $.10 par value, authorized 50,000,000 shares, issued 17,658,292 shares for 2013 and 17,558,046 shares for 2012

     1,765        1,755   

Additional paid-in capital

     334,421        329,452   

Treasury stock, at cost (3,511,380 shares for 2013 and 2012)

     (155,801     (155,801

Retained earnings

     678,004        628,871   

Accumulated other comprehensive income

     41,493        75,208   
  

 

 

   

 

 

 

Total stockholders’ equity

     899,882        879,485   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 4,074,576      $ 4,007,670   
  

 

 

   

 

 

 


News Release

Page 6

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Comparative Premium Data

($ in thousands)

 

     Three Months            Nine Months         
     2013      2012      Change     2013      2012      Change  

Gross Written Premiums:

                

Insurance Companies:

                

Marine

   $ 38,912       $ 44,879         -13.3   $ 132,836       $ 156,640         -15.2

Property Casualty

     156,228         139,948         11.6 %     527,287         426,494         23.6

Professional Liability

     32,469         33,534         -3.2     97,679         97,629         0.1
  

 

 

    

 

 

      

 

 

    

 

 

    
     227,609         218,361         4.2 %     757,802         680,763         11.3

Lloyd’s Operations:

                

Marine

     36,009         37,716         -4.5     135,546         146,528         -7.5

Property Casualty

     35,869         32,789         9.4 %     102,144         106,063         -3.7

Professional Liability

     12,589         9,876         27.5 %     41,934         31,524         33.0
  

 

 

    

 

 

      

 

 

    

 

 

    
     84,467         80,381         5.1 %     279,624         284,115         -1.6
  

 

 

    

 

 

      

 

 

    

 

 

    

Total

   $ 312,076       $ 298,742         4.5 %   $ 1,037,426       $ 964,878         7.5
  

 

 

    

 

 

      

 

 

    

 

 

    
     Three Months            Nine Months         
     2013      2012      Change     2013      2012      Change  
Net Written Premiums:                 
Insurance Companies:                 

Marine

   $ 26,437       $ 32,615         -18.9   $ 94,944       $ 107,266         -11.5

Property Casualty

     97,553         83,449         16.9 %     338,215         274,823         23.1

Professional Liability

     25,300         26,084         -3.0     75,830         75,374         0.6
  

 

 

    

 

 

      

 

 

    

 

 

    
     149,290         142,148         5.0 %     508,989         457,463         11.3

Lloyd’s Operations:

                

Marine

     26,795         27,939         -4.1     100,413         109,489         -8.3

Property Casualty

     13,761         11,633         18.3 %     33,254         36,693         -9.4

Professional Liability

     6,710         6,326         6.1 %     21,821         17,698         23.3
  

 

 

    

 

 

      

 

 

    

 

 

    
     47,266         45,898         3.0 %     155,488         163,880         -5.1
  

 

 

    

 

 

      

 

 

    

 

 

    

Total

   $ 196,556       $ 188,046         4.5 %   $ 664,477       $ 621,343         6.9
  

 

 

    

 

 

      

 

 

    

 

 

    
     Three Months            Nine Months         
     2013      2012      Change     2013      2012      Change  

Net Earned Premiums:

                

Insurance Companies:

                

Marine

   $ 31,490       $ 40,592         -22.4   $ 100,013       $ 111,402         -10.2

Property Casualty

     105,759         83,993         25.9 %     297,954         240,536         23.9

Professional Liability

     25,713         24,505         4.9 %     75,873         70,277         8.0
  

 

 

    

 

 

      

 

 

    

 

 

    
     162,962         149,090         9.3 %     473,840         422,215         12.2

Lloyd’s Operations:

                

Marine

     34,264         34,002         0.8 %     102,932         101,538         1.4

Property Casualty

     10,472         11,870         -11.8     26,913         41,644         -35.4

Professional Liability

     6,197         6,300         -1.6     18,352         15,001         22.3
  

 

 

    

 

 

      

 

 

    

 

 

    
     50,933         52,172         -2.4     148,197         158,183         -6.3
  

 

 

    

 

 

      

 

 

    

 

 

    

Total

   $ 213,895       $ 201,262         6.3 %   $ 622,037       $ 580,398         7.2
  

 

 

    

 

 

      

 

 

    

 

 

    


News Release

Page 7

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

Three Months Ended

September 30, 2013

($ in thousands)

 

     Insurance     Lloyd’s              
     Companies     Operations     Corporate (1)     Total  

Gross written premiums

   $  227,609      $ 84,467      $ —        $ 312,076   

Net written premiums

     149,290        47,266        —          196,556   

Net earned premiums

     162,962       50,933        —          213,895   

Net losses and loss adjustment expenses

     (95,315 )     (29,771     —          (125,086

Commission expenses

     (20,039 )     (8,289     643       (27,685

Other operating expenses

     (28,510 )     (10,546     —          (39,056

Other income (expense)

     955       (522     (643 )     (210
  

 

 

   

 

 

   

 

 

   

 

 

 

Underwriting profit (loss)

     20,053       1,805        —          21,858   

Net investment income

     12,285       1,807        2       14,094   

Net realized gains (losses)

     (1,890 )     (919     —          (2,809

Interest expense

     —          —          (2,053 )     (2,053
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     30,448       2,693        (2,051 )     31,090   

Income tax expense (benefit)

     9,355       878        (429 )     9,804   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 21,093     $ 1,815      $ (1,622 )   $ 21,286   
  

 

 

   

 

 

   

 

 

   

 

 

 

Losses and loss adjustment expenses ratio

     58.5 %     58.5       58.5

Commission expense ratio

     12.3 %     16.3       12.9

Other operating expense ratio (2)

     16.9 %     21.7       18.4
  

 

 

   

 

 

     

 

 

 

Combined ratio

     87.7 %     96.5       89.8
  

 

 

   

 

 

     

 

 

 

 

(1) The Corporate segment includes intercompany eliminations.
(2) The Other operating expense ratio includes Other income (expense).


News Release

Page 8

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

Three Months Ended

September 30, 2012

($ in thousands)

 

     Insurance     Lloyd’s              
     Companies     Operations     Corporate (1)     Total  

Gross written premiums

   $ 218,361      $ 80,381      $ —        $ 298,742   

Net written premiums

     142,148        45,898        —          188,046   

Net earned premiums

     149,090        52,172       —          201,262   

Net losses and loss adjustment expenses

     (113,303     (15,547 )     —          (128,850

Commission expenses

     (20,827     (10,911 )     480        (31,258

Other operating expenses

     (29,387     (10,725 )     —          (40,112

Other income (expense)

     1,229        40       (480     789   
  

 

 

   

 

 

   

 

 

   

 

 

 

Underwriting profit (loss)

     (13,198     15,029       —          1,831   

Net investment income

     12,004        1,552       41        13,597   

Net realized gains (losses)

     2,609        2,152       —          4,761   

Interest expense

     —          —          (2,049     (2,049
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     1,415        18,733       (2,008     18,140   

Income tax expense (benefit)

     (377     6,525       (923     5,225   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 1,792      $ 12,208     $ (1,085   $ 12,915   
  

 

 

   

 

 

   

 

 

   

 

 

 

Losses and loss adjustment expenses ratio

     76.0     29.8 %       64.0

Commission expense ratio

     14.0     20.9 %       15.5

Other operating expense ratio (2)

     18.9     20.5 %       19.6
  

 

 

   

 

 

     

 

 

 

Combined ratio

     108.9     71.2 %       99.1
  

 

 

   

 

 

     

 

 

 

 

(1) The Corporate segment includes intercompany eliminations.
(2) The Other operating expense ratio includes Other income (expense).


News Release

Page 9

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

Nine Months Ended

September 30, 2013

($ in thousands)

 

     Insurance     Lloyd’s              
     Companies     Operations     Corporate (1)     Total  

Gross written premiums

   $ 757,802      $  279,624      $ —        $  1,037,426   

Net written premiums

     508,989        155,488        —          664,477   

Net earned premiums

     473,840        148,197       —          622,037   

Net losses and loss adjustment expenses

     (308,968     (78,608 )     —          (387,576

Commission expenses

     (59,129     (25,245 )     1,743        (82,631

Other operating expenses

     (87,682     (32,926 )     —          (120,608

Other income (expense)

     2,303        (1,067 )     (1,743     (507
  

 

 

   

 

 

   

 

 

   

 

 

 

Underwriting profit (loss)

     20,364        10,351       —          30,715   

Net investment income

     36,751        5,237       9        41,997   

Net realized gains (losses)

     6,001        (697 )     4        5,308   

Interest expense

     —          —          (6,156     (6,156
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     63,116        14,891       (6,143     71,864   

Income tax expense (benefit)

     19,554        5,120       (1,943     22,731   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 43,562      $ 9,771     $ (4,200   $ 49,133   
  

 

 

   

 

 

   

 

 

   

 

 

 

Losses and loss adjustment expenses ratio

     65.2     53.0 %       62.3

Commission expense ratio

     12.5     17.0 %       13.3

Other operating expense ratio (2)

     18.0     23.0 %       19.5
  

 

 

   

 

 

     

 

 

 

Combined ratio

     95.7     93.0 %       95.1
  

 

 

   

 

 

     

 

 

 

 

(1) The Corporate segment includes intercompany eliminations.
(2) The Other operating expense ratio includes Other income (expense).


News Release

Page 10

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

Nine Months Ended

September 30, 2012

($ in thousands)

 

     Insurance     Lloyd’s              
     Companies     Operations     Corporate (1)     Total  

Gross written premiums

   $ 680,763      $ 284,115      $ —        $ 964,878   

Net written premiums

     457,463        163,880        —          621,343   

Net earned premiums

     422,215        158,183       —          580,398   

Net losses and loss adjustment expenses

     (304,483     (65,759 )     —          (370,242

Commission expenses

     (61,245     (30,735 )     1,769        (90,211

Other operating expenses

     (83,646     (32,592 )     —          (116,238

Other income (expense)

     3,750        106       (1,769     2,087   
  

 

 

   

 

 

   

 

 

   

 

 

 

Underwriting profit (loss)

     (23,409     29,203       —          5,794   

Net investment income

     34,225        6,289       118        40,632   

Net realized gains (losses)

     6,809        3,361       —          10,170   

Interest expense

     —          —          (6,147     (6,147
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     17,625        38,853       (6,029     50,449   

Income tax expense (benefit)

     3,603        13,458       (2,330     14,731   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 14,022      $ 25,395     $ (3,699   $ 35,718   
  

 

 

   

 

 

   

 

 

   

 

 

 

Losses and loss adjustment expenses ratio

     72.1     41.6 %       63.8

Commission expense ratio

     14.5     19.4 %       15.5

Other operating expense ratio (2)

     18.9     20.5 %       19.7
  

 

 

   

 

 

     

 

 

 

Combined ratio

     105.5     81.5 %       99.0
  

 

 

   

 

 

     

 

 

 

 

(1) The Corporate segment includes intercompany eliminations.
(2) The Other operating expense ratio includes Other income (expense).


News Release

Page 11

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Underwriting Results

($ in thousands)

 

     Three Months Ended September 30, 2013  
     Net      Losses                                
     Earned      and LAE     Underwriting     Underwriting     Loss     Expense     Combined  
     Premiums      Incurred     Expenses     Profit (Loss)     Ratio     Ratio     Ratio  

Insurance Companies:

               

Marine

   $ 31,490       $ 14,745      $ 10,997      $ 5,748        46.8     34.9     81.7

Property Casualty

     105,759         64,156        28,203        13,400        60.7     26.6     87.3

Professional Liability

     25,713         16,414        8,394        905        63.8     32.7     96.5
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Insurance Companies

     162,962         95,315        47,594        20,053        58.5     29.2     87.7
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Lloyd’s Operations:

               

Marine

     34,264         22,129        13,240        (1,105     64.6     38.6     103.2

Property Casualty

     10,472         3,661        4,428        2,383        35.0     42.2     77.2

Professional Liability

     6,197         3,981        1,689        527        64.3     27.2     91.5
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Lloyd’s

     50,933         29,771        19,357        1,805        58.5     38.0     96.5
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total All

   $ 213,895       $ 125,086      $ 66,951      $ 21,858        58.5     31.3     89.8
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     Three Months Ended September 30, 2012  
     Net      Losses                                
     Earned      and LAE     Underwriting     Underwriting     Loss     Expense     Combined  
     Premiums      Incurred     Expenses     Profit (Loss)     Ratio     Ratio     Ratio  

Insurance Companies:

               

Marine

   $ 40,592       $ 29,187      $ 14,200      $ (2,795     71.9     35.0     106.9

Property Casualty

     83,993         67,474        25,753        (9,234     80.3     30.7     111.0

Professional Liability

     24,505         16,642        9,032        (1,169     67.9     36.9     104.8
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Insurance Companies

     149,090         113,303        48,985        (13,198     76.0     32.9     108.9
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Lloyd’s Operations:

               

Marine

     34,002         10,936        14,543        8,523        32.2     42.7     74.9

Property Casualty

     11,870         5,441        4,750        1,679        45.8     40.1     85.9

Professional Liability

     6,300         (830     2,303        4,827        -13.2     36.6     23.4
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Lloyd’s Operations

     52,172         15,547        21,596        15,029        29.8     41.4     71.2
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total All

   $ 201,262       $ 128,850      $ 70,581      $ 1,831        64.0     35.1     99.1
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
            Amounts           Loss Ratio        
            Sept. 30,     Sept. 30,           Sept. 30,     Sept. 30,        
            2013     2012           2013     2012        

Net Incurred Loss Activity

For the Three Months Ended:

               

Insurance Companies:

               

Loss and LAE payments

      $ 83,008      $ 98,857          50.9     66.3  

Change in reserves

        12,307        14,446          7.6     9.7  
     

 

 

   

 

 

     

 

 

   

 

 

   

Net incurred loss and LAE

        95,315        113,303          58.5     76.0  
     

 

 

   

 

 

     

 

 

   

 

 

   

Lloyd’s Operations:

               

Loss and LAE payments

        27,038        24,019          53.1     46.0  

Change in reserves

        2,733        (8,472       5.4     -16.2  
     

 

 

   

 

 

     

 

 

   

 

 

   

Net incurred loss and LAE

        29,771        15,547          58.5     29.8  
     

 

 

   

 

 

     

 

 

   

 

 

   

Total

               

Loss and LAE payments

        110,046        122,876          51.5     61.0  

Change in reserves

        15,040        5,974          7.0     3.0  
     

 

 

   

 

 

     

 

 

   

 

 

   

Net incurred loss and LAE

      $ 125,086      $ 128,850          58.5     64.0  
     

 

 

   

 

 

     

 

 

   

 

 

   
            Amounts           Loss Ratio Impact        
            Sept. 30,     Sept. 30,           Sept. 30,     Sept. 30,        
            2013     2012           2013     2012        

Impact of Prior Years Reserves

Favorable / (Unfavorable) Development

For the Three Months Ended:

               

Insurance Companies

      $ 3,094      $ (3,607       1.4     -1.8  

Lloyd’s Operations

        4,591        9,084          2.1     4.5  
     

 

 

   

 

 

     

 

 

   

 

 

   

Total

      $ 7,685      $ 5,477          3.5     2.7  
     

 

 

   

 

 

     

 

 

   

 

 

   


News Release

Page 12

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Underwriting Results

($ in thousands)

 

     Nine Months Ended September 30, 2013  
     Net      Losses                                
     Earned      and LAE     Underwriting     Underwriting     Loss     Expense     Combined  
     Premiums      Incurred     Expenses     Profit (Loss)     Ratio     Ratio     Ratio  

Insurance Companies:

               

Marine

   $ 100,013       $ 55,425      $ 36,949      $ 7,639        55.4     37.0     92.4

Property Casualty

     297,954         196,151        82,844        18,959        65.8     27.8     93.6

Professional Liability

     75,873         57,392        24,715        (6,234     75.6     32.6     108.2
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Insurance Companies

     473,840         308,968        144,508        20,364        65.2     30.5     95.7
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Lloyd’s Operations:

               

Marine

     102,932         59,184        41,266        2,482        57.5     40.1     97.6

Property Casualty

     26,913         11,207        12,109        3,597        41.6     45.0     86.6

Professional Liability

     18,352         8,217        5,863        4,272        44.8     31.9     76.7
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Lloyd’s

     148,197         78,608        59,238        10,351        53.0     40.0     93.0
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total All

   $ 622,037       $ 387,576      $ 203,746      $ 30,715        62.3     32.8     95.1
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     Nine Months Ended September 30, 2012  
     Net      Losses                                
     Earned      and LAE     Underwriting     Underwriting     Loss     Expense     Combined  
     Premiums      Incurred     Expenses     Profit (Loss)     Ratio     Ratio     Ratio  

Insurance Companies:

               

Marine

   $ 111,402       $ 87,240      $ 40,371      $ (16,209     78.3     36.3     114.6

Property Casualty

     240,536         165,346        75,235        (45     68.7     31.3     100.0

Professional Liability

     70,277         51,897        25,535        (7,155     73.8     36.4     110.2
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Insurance Companies

     422,215         304,483        141,141        (23,409     72.1     33.4     105.5
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Lloyd’s Operations:

               

Marine

     101,538         45,224        42,587        13,727        44.5     42.0     86.5

Property Casualty

     41,644         17,213        14,421        10,010        41.3     34.7     76.0

Professional Liability

     15,001         3,322        6,213        5,466        22.1     41.5     63.6
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Lloyd’s Operations

     158,183         65,759        63,221        29,203        41.6     39.9     81.5
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total All

   $ 580,398       $ 370,242      $ 204,362      $ 5,794        63.8     35.2     99.0
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
            Amounts           Loss Ratio        
            Sept. 30,     Sept. 30,           Sept. 30,     Sept. 30,        
            2013     2012           2013     2012        

Net Incurred Loss Activity

For the Nine Months Ended:

               

Insurance Companies:

               

Loss and LAE payments

      $ 263,832      $ 282,820          55.7     67.0  

Change in reserves

        45,136        21,663          9.5     5.1  
     

 

 

   

 

 

     

 

 

   

 

 

   

Net incurred loss and LAE

        308,968        304,483          65.2     72.1  
     

 

 

   

 

 

     

 

 

   

 

 

   

Lloyd’s Operations:

               

Loss and LAE payments

        84,928        79,304          57.3     50.2  

Change in reserves

        (6,320     (13,545       -4.3     -8.6  
     

 

 

   

 

 

     

 

 

   

 

 

   

Net incurred loss and LAE

        78,608        65,759          53.0     41.6  
     

 

 

   

 

 

     

 

 

   

 

 

   

Total

               

Loss and LAE payments

        348,760        362,124          56.1     62.4  

Change in reserves

        38,816        8,118          6.2     1.4  
     

 

 

   

 

 

     

 

 

   

 

 

   

Net incurred loss and LAE

      $ 387,576      $ 370,242          62.3     63.8  
     

 

 

   

 

 

     

 

 

   

 

 

   
            Amounts           Loss Ratio Impact        
            Sept. 30,     Sept. 30,           Sept. 30,     Sept. 30,        
            2013     2012           2013     2012        

Impact of Prior Years Reserves

Favorable / (Unfavorable) Development

For the Nine Months Ended:

               

Insurance Companies

      $ (12,383   $ (1,517       -2.0     -0.3  

Lloyd’s Operations

        14,072        19,232          2.3     3.4  
     

 

 

   

 

 

     

 

 

   

 

 

   

Total

      $ 1,689      $ 17,715          0.3     3.1  
     

 

 

   

 

 

     

 

 

   

 

 

   


News Release

Page 13

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Net Loss Data

($ in thousands)

 

     Case      IBNR         
     Reserves      Reserves      Total  

Net Loss Reserves, September 30, 2013:

        

Insurance Companies:

        

Marine

   $ 136,292       $ 105,123       $ 241,415   

Property Casualty

     198,658         335,065         533,723   

Professional Liability

     74,600         81,596         156,196   
  

 

 

    

 

 

    

 

 

 

Total Insurance Companies

     409,550         521,784         931,334   
  

 

 

    

 

 

    

 

 

 

Lloyd’s Operations:

        

Marine

     131,982         89,023         221,005   

Property Casualty

     25,979         21,816         47,795   

Professional Liability

     12,620         41,677         54,297   
  

 

 

    

 

 

    

 

 

 

Total Lloyd’s Operations

     170,581         152,516         323,097   
  

 

 

    

 

 

    

 

 

 

Total Net Loss Reserves

   $ 580,131       $ 674,300       $ 1,254,431   
  

 

 

    

 

 

    

 

 

 
     Case      IBNR         
     Reserves      Reserves      Total  

Net Loss Reserves, December 31, 2012

        

Insurance Companies:

        

Marine

   $ 137,934       $ 114,236       $ 252,170   

Property Casualty

     204,988         290,455         495,443   

Professional Liability

     54,092         84,493         138,585   
  

 

 

    

 

 

    

 

 

 

Total Insurance Companies

     397,014         489,184         886,198   
  

 

 

    

 

 

    

 

 

 

Lloyd’s Operations:

        

Marine

     125,884         95,122         221,006   

Property Casualty

     27,903         28,463         56,366   

Professional Liability

     14,694         38,645         53,339   
  

 

 

    

 

 

    

 

 

 

Total Lloyd’s Operations

     168,481         162,230         330,711   
  

 

 

    

 

 

    

 

 

 

Total Net Loss Reserves

   $ 565,495       $ 651,414       $ 1,216,909   
  

 

 

    

 

 

    

 

 

 


News Release

Page 14

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Investment Data

September 30, 2013

As of September 30, 2013, the average quality of the investment portfolio as rated by S&P and Moody’s was AA/Aa with an average duration of 3.9 years. The Company does not own any collateralized debt obligations (CDO’s) or asset backed commercial paper.

As of September 30, 2013, the Company owned two asset-backed securities approximating $0.6 million with subprime mortgage exposures. The securities have an effective maturity of 4.0 years. In addition, the Company owned a total of seven collateralized mortgage obligations and asset-backed securities approximating $2.0 million classified as Alt-A which is a credit category between prime and subprime. They have an effective maturity of 5.0 years. Such subprime and Alt-A categories are as defined by S&P. The Company is receiving principal and/or interest payments on all these securities and believes such amounts are fully collectible.

The following table sets forth our cash and investments as of September 30, 2013:

 

September 30, 2013

   Fair Value      Gross
Unrealized
Gains
     Gross
Unrealized
(Losses)
    Cost or
Amortized
Cost
 
     ($ in thousands)  

Fixed maturities:

          

U.S.Treasury bonds, agency bonds and foreign government bonds

   $ 445,969       $ 3,683      $ (5,694   $ 447,980  

States, municipalities and political subdivisions

     445,281         9,752        (12,240     447,769  

Mortgage- and asset-backed securities:

          

Agency mortgage-backed securities

     300,347         7,966        (3,925     296,306  

Residential mortgage obligations

     35,277         1,107        (224     34,394  

Asset-backed securities

     88,714         795        (190     88,109  

Commercial mortgage-backed securities

     173,069         8,386        (365     165,048  
  

 

 

    

 

 

    

 

 

   

 

 

 

Subtotal

     597,407         18,254        (4,704     583,857  

Corporate bonds

     493,074         17,104        (2,858     478,828  
  

 

 

    

 

 

    

 

 

   

 

 

 

Total fixed maturities

     1,981,731         48,793        (25,496     1,958,434  
  

 

 

    

 

 

    

 

 

   

 

 

 

Equity securities - common stocks

     158,890         29,548        (1,704     131,046  

Short-term investments

     152,987         —           —          152,987  

Cash

     130,513         —           —          130,513  
  

 

 

    

 

 

    

 

 

   

 

 

 

Total

   $ 2,424,121       $ 78,341      $ (27,200   $ 2,372,980  
  

 

 

    

 

 

    

 

 

   

 

 

 


News Release

Page 15

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Investment Data

September 30, 2013

($ in thousands)

The following tables set forth our agency mortgage-backed securities and residential mortgage obligations, categorized by those issued by GNMA, FNMA and FHLMC and the quality category (prime, Alt-A and subprime) for all other such investments at September 30, 2013:

 

     Fair Value      Gross
Unrealized
Gains
     Gross
Unrealized
(Losses)
    Cost or
Amortized
Cost
 

Agency mortgage-backed securities:

          

GNMA

   $ 128,321       $ 3,086       $ (2,653   $ 127,888   

FNMA

     139,022         3,979         (1,207     136,250   

FHLMC

     33,004         901         (65     32,168   
  

 

 

    

 

 

    

 

 

   

 

 

 

Total

   $ 300,347       $ 7,966       $ (3,925   $ 296,306   
  

 

 

    

 

 

    

 

 

   

 

 

 
     Fair Value      Gross
Unrealized
Gains
     Gross
Unrealized
(Losses)
    Cost or
Amortized
Cost
 

Residential mortgage obligations:

          

Prime

   $ 11,174       $ 371       $ (181   $ 10,984   

Alt-A

     1,968         70         (43     1,941   

Subprime

     583         18         —          565   

Non-US RMBS

     21,552         648         —          20,904   
  

 

 

    

 

 

    

 

 

   

 

 

 

Total

   $ 35,277       $ 1,107       $ (224   $ 34,394