Attached files
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| 8-K - 8-K - NAVIGATORS GROUP INC | d725494d8k.htm |
The Navigators Group, Inc.
CORPORATE NEWS
Navigators Reports First Quarter Earnings,
Operating Earnings Up 94%
Stamford, CT — May 7, 2014 — The Navigators Group, Inc. (NASDAQ:NAVG) reported net income of $28.0 million, or $1.94 per diluted share, for the three months ended March 31, 2014 compared to $13.9 million, or $0.97 per diluted share, for the comparable period in 2013.
Operating earnings were $20.9 million, or $1.45 per diluted share, for the first quarter of 2014 compared to $10.8 million, or $0.75 per diluted share, for the comparable period in 2013.
Gross written premiums and net written premiums for the three months ended March 31, 2014 were $422.8 million and $311.9 million, respectively, an increase of 7.5% and 15.7% from the comparable period in 2013.
The combined loss and expense ratio for the three months ended March 31, 2014 was 92.2% compared to 97.9% for the comparable period in 2013.
Stan Galanski, President and Chief Executive Officer, commented, “We are pleased to report profitable underwriting results for both our Insurance Company and Lloyd’s Operations, leading to a 3.8% increase in stockholder’s equity during the quarter. We achieved double digit net written premium growth for the quarter, with strong production at Lloyd’s and in Navigators Specialty, our insurance company excess and surplus lines unit. We continued to experience favorable loss emergence across most specialty product lines.”
Stockholders’ equity was $936.8 million, or $65.72 per share, as of March 31, 2014 compared to $902.2 million, or $63.54 per share, as of December 31, 2013.
Net investment income for the three months ended March 31, 2014 was $16.6 million, an increase of 21.6% from the comparable period in 2013. The annualized pre-tax investment yield, excluding net realized gains and losses and other-than-temporary impairment losses recognized in earnings, was 2.8% for the three months ended March 31, 2014, compared to 2.3% for the comparable period in 2013. The effective tax rate on net investment income was 28.1% for the three months ended March 31, 2014, compared to 28.5% for the comparable period in 2013.
| 400 Atlantic Street |
Stamford, CT 06901 | |
| TEL (203) 905-6090 |
FAX (203) 658-1821 |
News Release
May 7, 2014
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 3.6 years as of March 31, 2014. As of March 31, 2014, net unrealized gains within our investment portfolio were $55.4 million, an increase of $19.4 million compared to December 31, 2013.
There were $0.8 million of net realized gains recognized in earnings for the three months ended March 31, 2014, compared to $4.8 million for the same periods in 2013.
Other income for the three months ended March 31, 2014 includes a one-time foreign exchange gain of $10.0 million ($6.6 million after-tax) due to a change in the functional currency of our Lloyd’s Operations, which is equally offset by a reversal within the Accumulated Other Comprehensive Income component of stockholders’ equity.
Consolidated net cash flow from operations for the three months ended March 31, 2014 was $8.8 million, compared to $4.3 million for the comparable period in 2013.
The Company will hold a conference call on Thursday, May 8, 2014 starting at 8:30 a.m. ET to discuss the 2014 first 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 (888) 503-8175 and the international dial-in is (719) 325-2472. Participants may connect to the webcast at:
http://www.media-server.com/m/p/38dpgitz
Operating earnings, or net income excluding after-tax net realized gains (losses), net other-than-temporary impairment losses recognized in earnings, and after-tax foreign exchange gains and losses resulting from foreign currency transactions (transactions denominated in a currency other than the entity’s functional currency) and translation adjustments (translation of foreign currency denominated assets and liabilities into the entity’s functional currency), 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. Navigators has offices in the United States, the United Kingdom and Continental Europe, as well as representative offices in China and Brazil.
The Navigators Group, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7778
News Release
May 7, 2014
Page 3
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 March 31, |
||||||||||||
| Results of Operations |
2014 | 2013 | Change | |||||||||
| Gross written premiums |
$ | 422,790 | $ | 393,222 | 7.5 | % | ||||||
| Net written premiums |
311,850 | 269,452 | 15.7 | % | ||||||||
| Revenues: |
||||||||||||
| Net earned premiums |
225,272 | 202,328 | 11.3 | % | ||||||||
| Net investment income |
16,610 | 13,657 | 21.6 | % | ||||||||
| Total other-than-temporary impairment losses |
— | (42 | ) | NM | ||||||||
| Portion of loss recognized in other comprehensive income (before tax) |
— | — | NM | |||||||||
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|
|
|
|||||||||
| Net other-than-temporary impairment losses recognized in earnings |
— | (42 | ) | NM | ||||||||
| Net realized gains (losses) |
833 | 4,814 | -82.7 | % | ||||||||
| Other income |
10,399 | 618 | NM | |||||||||
|
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|
|||||||||
| Total revenues |
253,114 | 221,375 | 14.3 | % | ||||||||
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| Expenses: |
||||||||||||
| Net losses and loss adjustment expenses |
135,067 | 131,342 | 2.8 | % | ||||||||
| Commission expenses |
25,727 | 26,555 | -3.1 | % | ||||||||
| Other operating expenses |
47,146 | 40,874 | 15.3 | % | ||||||||
| Interest expense |
3,852 | 2,051 | 87.8 | % | ||||||||
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|
|||||||||
| Total expenses |
211,792 | 200,822 | 5.5 | % | ||||||||
|
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|
|||||||||
| Income before income taxes |
41,322 | 20,553 | 101.0 | % | ||||||||
| Income tax expense (benefit) |
13,354 | 6,643 | 101.0 | % | ||||||||
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| Net income (loss) |
$ | 27,968 | $ | 13,910 | 101.1 | % | ||||||
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| Per Share Data |
||||||||||||
| Net income per common share: |
||||||||||||
| Basic |
$ | 1.96 | $ | 0.99 | 99.0 | % | ||||||
| Diluted |
$ | 1.94 | $ | 0.97 | 100.6 | % | ||||||
| Average common shares outstanding: |
||||||||||||
| Basic |
14,233,504 | 14,085,821 | ||||||||||
| Diluted |
14,408,416 | 14,374,957 | ||||||||||
| Underwriting Ratios |
||||||||||||
| Loss Ratio |
60.0 | % | 64.9 | % | ||||||||
| Expense Ratio |
32.2 | % | 33.0 | % | ||||||||
|
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|
|||||||||
| Combined Ratio |
92.2 | % | 97.9 | % | ||||||||
| Balance Sheet Data |
|
March 31, 2014 |
|
|
Dec. 31, 2013 |
|
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| Stockholders’ equity |
$ | 936,834 | $ | 902,212 | 3.8 | % | ||||||
| Book value per share |
$ | 65.72 | $ | 63.54 | 3.4 | % | ||||||
News Release
Page 5
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands, except share data)
| March 31, 2014 |
December 31, 2013 |
|||||||
| (unaudited) | ||||||||
| ASSETS |
| |||||||
| Investments and cash: |
||||||||
| Fixed maturities, available-for-sale, at fair value |
$ | 2,162,713 | $ | 2,047,873 | ||||
| Equity securities, available-for-sale, at fair value (cost: 2014, $137,358; 2013, $118,804) |
163,527 | 143,954 | ||||||
| Short-term investments, at cost which approximates fair value |
207,843 | 296,250 | ||||||
| Cash |
55,041 | 86,509 | ||||||
|
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|
|||||
| Total investments and cash |
2,589,124 | 2,574,586 | ||||||
|
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|
|||||
| Premiums receivable |
416,675 | 325,025 | ||||||
| Prepaid reinsurance premiums |
246,545 | 247,822 | ||||||
| Reinsurance recoverable on paid losses |
42,260 | 38,384 | ||||||
| Reinsurance recoverable on unpaid losses and loss adjustment expenses |
830,431 | 822,438 | ||||||
| Deferred policy acquisition costs |
79,334 | 67,007 | ||||||
| Accrued investment income |
14,221 | 13,866 | ||||||
| Goodwill and other intangible assets |
7,174 | 7,177 | ||||||
| Current income tax receivable, net |
3,204 | 9,918 | ||||||
| Deferred income tax, net |
20,928 | 28,187 | ||||||
| Receivable for investments sold |
10,078 | 3 | ||||||
| Other assets |
39,831 | 35,039 | ||||||
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|
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| Total assets |
$ | 4,299,805 | $ | 4,169,452 | ||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
| |||||||
| Liabilities: |
||||||||
| Reserves for losses and loss adjustment expenses |
$ | 2,087,471 | $ | 2,045,071 | ||||
| Unearned premiums |
798,745 | 714,606 | ||||||
| Reinsurance balances payable |
145,948 | 167,252 | ||||||
| Senior notes |
263,340 | 263,308 | ||||||
| Payable for investments purchased |
10,231 | 7,624 | ||||||
| Accounts payable and other liabilities |
57,236 | 69,379 | ||||||
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| Total liabilities |
3,362,971 | 3,267,240 | ||||||
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| 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 17,766,586 shares |
1,776 | 1,770 | ||||||
| Additional paid-in capital |
337,242 | 335,546 | ||||||
| Treasury stock, at cost (3,511,380 shares for 2014 and 2013) |
(155,801 | ) | (155,801 | ) | ||||
| Retained earnings |
720,305 | 692,337 | ||||||
| Accumulated other comprehensive income |
33,312 | 28,360 | ||||||
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| Total stockholders’ equity |
936,834 | 902,212 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 4,299,805 | $ | 4,169,452 | ||||
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News Release
Page 6
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Comparative Premium Data
($ in thousands)
| Gross Written Premiums: |
Three Months | |||||||||||
| Insurance Companies: |
2014 | 2013 | Change | |||||||||
| Marine |
$ | 52,233 | $ | 50,847 | 2.7 | % | ||||||
| Property Casualty |
229,356 | 218,964 | 4.7 | % | ||||||||
| Professional Liability |
30,209 | 31,817 | -5.1 | % | ||||||||
|
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|
|
|||||||||
| 311,798 | 301,628 | 3.4 | % | |||||||||
| Lloyd’s Operations: |
||||||||||||
| Marine |
62,957 | 53,644 | 17.4 | % | ||||||||
| Property Casualty |
33,079 | 25,058 | 32.0 | % | ||||||||
| Professional Liability |
14,956 | 12,892 | 16.0 | % | ||||||||
|
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|
|
|
|||||||||
| 110,992 | 91,594 | 21.2 | % | |||||||||
|
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|
|
|||||||||
| Total |
$ | 422,790 | $ | 393,222 | 7.5 | % | ||||||
|
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| Net Written Premiums: |
Three Months | |||||||||||
| Insurance Companies: |
2014 | 2013 | Change | |||||||||
| Marine |
$ | 41,124 | $ | 41,141 | 0.0 | % | ||||||
| Property Casualty |
172,361 | 149,951 | 14.9 | % | ||||||||
| Professional Liability |
20,466 | 25,227 | -18.9 | % | ||||||||
|
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|
|
|
|||||||||
| 233,951 | 216,319 | 8.2 | % | |||||||||
| Lloyd’s Operations: |
||||||||||||
| Marine |
52,131 | 39,558 | 31.8 | % | ||||||||
| Property Casualty |
16,534 | 7,312 | 126.1 | % | ||||||||
| Professional Liability |
9,234 | 6,263 | 47.4 | % | ||||||||
|
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|
|
|
|||||||||
| 77,899 | 53,133 | 46.6 | % | |||||||||
|
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|
|||||||||
| Total |
$ | 311,850 | $ | 269,452 | 15.7 | % | ||||||
|
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| Net Earned Premiums: |
Three Months | |||||||||||
| Insurance Companies: |
2014 | 2013 | Change | |||||||||
| Marine |
$ | 32,760 | $ | 36,725 | -10.8 | % | ||||||
| Property Casualty |
110,826 | 92,718 | 19.5 | % | ||||||||
| Professional Liability |
22,298 | 24,888 | -10.4 | % | ||||||||
|
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|
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|
|||||||||
| 165,884 | 154,331 | 7.5 | % | |||||||||
| Lloyd’s Operations: |
||||||||||||
| Marine |
38,887 | 34,045 | 14.2 | % | ||||||||
| Property Casualty |
12,958 | 7,879 | 64.5 | % | ||||||||
| Professional Liability |
7,543 | 6,073 | 24.2 | % | ||||||||
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|
|||||||||
| 59,388 | 47,997 | 23.7 | % | |||||||||
|
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|||||||||
| Total |
$ | 225,272 | $ | 202,328 | 11.3 | % | ||||||
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News Release
Page 7
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Three Months Ended
March 31, 2014
($ in thousands)
| Insurance Companies |
Lloyd’s Operations |
Corporate(1) | Total | |||||||||||||
| Gross written premiums |
$ | 311,798 | $ | 110,992 | $ | 422,790 | ||||||||||
| Net written premiums |
233,951 | 77,899 | 311,850 | |||||||||||||
| Net earned premiums |
165,884 | 59,388 | 225,272 | |||||||||||||
| Net losses and loss adjustment expenses |
(106,427 | ) | (28,640 | ) | (135,067 | ) | ||||||||||
| Commission expenses |
(16,710 | ) | (9,526 | ) | 509 | (25,727 | ) | |||||||||
| Other operating expenses |
(33,361 | ) | (13,785 | ) | (47,146 | ) | ||||||||||
| Other underwriting income (expense) |
658 | 6 | (509 | ) | 155 | |||||||||||
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|||||||||
| Underwriting profit (loss) |
10,044 | 7,443 | — | 17,487 | ||||||||||||
| Net investment income |
14,777 | 1,815 | 18 | 16,610 | ||||||||||||
| Net realized gains (losses) |
1,237 | (404 | ) | 0 | 833 | |||||||||||
| Interest expense |
0 | 0 | (3,852 | ) | (3,852 | ) | ||||||||||
| Other income (expense) |
49 | 10,195 | 0 | 10,244 | ||||||||||||
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| Income (loss) before income taxes |
26,107 | 19,049 | (3,834 | ) | 41,322 | |||||||||||
| Income tax expense (benefit) |
8,112 | 6,638 | (1,396 | ) | 13,354 | |||||||||||
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| Net income (loss) |
$ | 17,995 | $ | 12,411 | $ | (2,438 | ) | $ | 27,968 | |||||||
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| Losses and loss adjustment expenses ratio |
64.2 | % | 48.2 | % | 60.0 | % | ||||||||||
| Commission expense ratio |
10.1 | % | 16.0 | % | 11.4 | % | ||||||||||
| Other operating expense ratio (2) |
19.6 | % | 23.3 | % | 20.8 | % | ||||||||||
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| Combined ratio |
93.9 | % | 87.5 | % | 92.2 | % | ||||||||||
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(1) The Corporate segment includes intercompany eliminations.
(2) The Other operating expense ratio includes Other underwriting income
News Release
Page 8
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Three Months Ended
March 31, 2013
($ in thousands)
| Insurance Companies |
Lloyd’s Operations |
Corporate(1) | Total | |||||||||||||
| Gross written premiums |
$ | 301,628 | $ | 91,594 | $ | — | $ | 393,222 | ||||||||
| Net written premiums |
216,319 | 53,133 | — | 269,452 | ||||||||||||
| Net earned premiums |
154,331 | 47,997 | — | 202,328 | ||||||||||||
| Net losses and loss adjustment expenses |
(106,985 | ) | (24,357 | ) | — | (131,342 | ) | |||||||||
| Commission expenses |
(18,517 | ) | (8,621 | ) | 583 | (26,555 | ) | |||||||||
| Other operating expenses |
(29,343 | ) | (11,531 | ) | — | (40,874 | ) | |||||||||
| Other income (expense) |
659 | 542 | (583 | ) | 618 | |||||||||||
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| Underwriting profit (loss) |
145 | 4,030 | — | 4,175 | ||||||||||||
| Net investment income |
11,951 | 1,702 | 4 | 13,657 | ||||||||||||
| Net realized gains (losses) |
4,792 | (20 | ) | — | 4,772 | |||||||||||
| Interest expense |
— | — | (2,051 | ) | (2,051 | ) | ||||||||||
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| Income (loss) before income taxes |
16,888 | 5,712 | (2,047 | ) | 20,553 | |||||||||||
| Income tax expense (benefit) |
5,404 | 2,046 | (807 | ) | 6,643 | |||||||||||
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| Net income (loss) |
$ | 11,484 | $ | 3,666 | $ | (1,240 | ) | $ | 13,910 | |||||||
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| Losses and loss adjustment expenses ratio |
69.3 | % | 50.7 | % | 64.9 | % | ||||||||||
| Commission expense ratio |
12.0 | % | 18.0 | % | 13.1 | % | ||||||||||
| Other operating expense ratio(2) |
18.6 | % | 22.9 | % | 19.9 | % | ||||||||||
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| Combined ratio |
99.9 | % | 91.6 | % | 97.9 | % | ||||||||||
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(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
Underwriting Results
($ in thousands)
| Three Months Ended March 31, 2014 | ||||||||||||||||||||||||||||
| Insurance Companies: | Net Earned Premiums |
Losses and LAE Incurred |
Underwriting Expenses |
Underwriting Profit (Loss) |
Loss Ratio |
Expense Ratio |
Combined Ratio |
|||||||||||||||||||||
| Marine |
$ | 32,760 | $ | 17,408 | $ | 10,442 | $ | 4,910 | 53.1 | % | 31.9 | % | 85.0 | % | ||||||||||||||
| Property Casualty |
110,826 | 75,105 | 30,932 | 4,789 | 67.8 | % | 27.9 | % | 95.7 | % | ||||||||||||||||||
| Professional Liability |
22,298 | 13,914 | 8,039 | 345 | 62.4 | % | 36.1 | % | 98.5 | % | ||||||||||||||||||
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| Total Insurance Companies |
165,884 | 106,427 | 49,413 | 10,044 | 64.2 | % | 29.7 | % | 93.9 | % | ||||||||||||||||||
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| Lloyd’s Operations: |
||||||||||||||||||||||||||||
| Marine |
38,887 | $ | 19,430 | $ | 15,152 | $ | 4,305 | 50.0 | % | 38.9 | % | 88.9 | % | |||||||||||||||
| Property Casualty |
12,958 | 4,626 | 4,809 | 3,523 | 35.7 | % | 37.1 | % | 72.8 | % | ||||||||||||||||||
| Professional Liability |
7,543 | 4,584 | 3,344 | (385 | ) | 60.8 | % | 44.3 | % | 105.1 | % | |||||||||||||||||
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|||||||||||||||
| Total Lloyd’s |
59,388 | 28,640 | 23,305 | 7,443 | 48.2 | % | 39.3 | % | 87.5 | % | ||||||||||||||||||
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| Total All |
$ | 225,272 | $ | 135,067 | $ | 72,718 | $ | 17,487 | 60.0 | % | 32.2 | % | 92.2 | % | ||||||||||||||
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| Three Months Ended March 31, 2013 | ||||||||||||||||||||||||||||
| Insurance Companies: | Net Earned Premiums |
Losses and LAE Incurred |
Underwriting Expenses |
Underwriting Profit (Loss) |
Loss Ratio |
Expense Ratio |
Combined Ratio |
|||||||||||||||||||||
| Marine |
$ | 36,725 | $ | 23,385 | $ | 12,828 | $ | 512 | 63.7 | % | 34.9 | % | 98.6 | % | ||||||||||||||
| Property Casualty |
92,718 | 61,238 | 26,642 | 4,838 | 66.0 | % | 28.8 | % | 94.8 | % | ||||||||||||||||||
| Professional Liability |
24,888 | 22,362 | 7,731 | (5,205 | ) | 89.9 | % | 31.0 | % | 120.9 | % | |||||||||||||||||
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|||||||||||||||
| Total Insurance Companies |
154,331 | 106,985 | 47,201 | 145 | 69.3 | % | 30.6 | % | 99.9 | % | ||||||||||||||||||
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|
|
|
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|
|
|
|
|
|||||||||||||||
| Lloyd’s Operations: |
||||||||||||||||||||||||||||
| Marine |
34,045 | 18,837 | 13,270 | 1,938 | 55.3 | % | 39.0 | % | 94.3 | % | ||||||||||||||||||
| Property Casualty |
7,879 | 751 | 4,320 | 2,808 | 9.5 | % | 54.9 | % | 64.4 | % | ||||||||||||||||||
| Professional Liability |
6,073 | 4,769 | 2,020 | (716 | ) | 78.5 | % | 33.3 | % | 111.8 | % | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total Lloyd’s |
47,997 | 24,357 | 19,610 | 4,030 | 50.7 | % | 40.9 | % | 91.6 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total All |
$ | 202,328 | $ | 131,342 | $ | 66,811 | $ | 4,175 | 64.9 | % | 33.0 | % | 97.9 | % | ||||||||||||||
|
|
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|
|
|
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|
|
|
|||||||||||||||
| Amounts | Loss Ratio | |||||||||||||||
| Net Incurred Loss Activity For the Three Months Ended: | March 31, 2014 |
March 31, 2013 |
March 31, 2014 |
March 31, 2013 |
||||||||||||
| Insurance Companies: |
||||||||||||||||
| Loss and LAE payments |
$ | 74,910 | $ | 79,904 | 45.2 | % | 51.8 | % | ||||||||
| Change in reserves |
31,517 | 27,081 | 19.0 | % | 17.5 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net incurred loss and LAE |
106,427 | 106,985 | 64.2 | % | 69.3 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Lloyd’s Operations: |
||||||||||||||||
| Loss and LAE payments |
25,753 | 30,462 | 43.3 | % | 63.4 | % | ||||||||||
| Change in reserves |
2,887 | (6,105 | ) | 4.9 | % | -12.7 | % | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net incurred loss and LAE |
28,640 | 24,357 | 48.2 | % | 50.7 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
||||||||||||||||
| Loss and LAE payments |
100,663 | 110,366 | 44.7 | % | 54.5 | % | ||||||||||
| Change in reserves |
34,404 | 20,976 | 15.3 | % | 10.4 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net incurred loss and LAE |
$ | 135,067 | $ | 131,342 | 60.0 | % | 64.9 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Amounts | Loss Ratio Impact | |||||||||||||||
| Impact of Prior Years Reserves Favorable/(Unfavorable) Development | March 31, | March 31, | March 31, | March 31, | ||||||||||||
| For the Three Months Ended: | 2014 | 2013 | 2014 | 2013 | ||||||||||||
| Insurance Companies |
$ | (548 | ) | $ | (7,730 | ) | -0.3 | % | -3.8 | % | ||||||
| Lloyd’s Operations |
586 | 3,647 | 0.3 | % | 1.8 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 38 | $ | (4,083 | ) | 0.0 | % | -2.0 | % | |||||||
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News Release
Page 10
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data
($ in thousands)
| Net Loss Reserves, March 31, 2014: | Case Reserves |
IBNR Reserves |
Total | |||||||||
| Insurance Companies: |
||||||||||||
| Marine |
$ | 119,754 | $ | 102,490 | $ | 222,244 | ||||||
| Property Casualty |
152,463 | 407,153 | 559,616 | |||||||||
| Professional Liability |
62,034 | 90,241 | 152,275 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Insurance Companies |
334,251 | 599,884 | 934,135 | |||||||||
|
|
|
|
|
|
|
|||||||
| Lloyd’s Operations: |
||||||||||||
| Marine |
129,943 | 89,109 | 219,052 | |||||||||
| Property Casualty |
26,599 | 17,491 | 44,090 | |||||||||
| Professional Liability |
13,011 | 46,752 | 59,763 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Lloyd’s Operations |
169,553 | 153,352 | 322,905 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Net Loss Reserves |
$ | 503,804 | $ | 753,236 | $ | 1,257,040 | ||||||
|
|
|
|
|
|
|
|||||||
| Net Loss Reserves, December 31, 2013: | Case Reserves |
IBNR Reserves |
Total | |||||||||
| Insurance Companies: |
||||||||||||
| Marine |
$ | 122,909 | $ | 101,077 | $ | 223,986 | ||||||
| Property Casualty |
150,477 | 377,173 | 527,650 | |||||||||
| Professional Liability |
61,117 | 89,865 | 150,982 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Insurance Companies |
334,503 | 568,115 | 902,618 | |||||||||
|
|
|
|
|
|
|
|||||||
| Lloyd’s Operations: |
||||||||||||
| Marine |
133,060 | 85,685 | 218,745 | |||||||||
| Property Casualty |
25,870 | 18,271 | 44,141 | |||||||||
| Professional Liability |
14,013 | 43,116 | 57,129 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Lloyd’s Operations |
172,943 | 147,072 | 320,015 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Net Loss Reserves |
$ | 507,446 | $ | 715,187 | $ | 1,222,633 | ||||||
|
|
|
|
|
|
|
|||||||
News Release
Page 11
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Investment Data
March 31, 2014
As of March 31, 2014, the average quality of the investment portfolio as rated by S&P and Moody’s was AA/Aa with an average duration of 3.6 years. The Company does not own any collateralized debt obligations (CDO’s) or asset backed commercial paper.
As of March 31, 2014, the Company owned two asset-backed securities approximating $0.5 million with subprime mortgage exposures. The securities have an effective maturity of 2.1 years. In addition, the Company owned a total of seven collateralized mortgage obligations and asset-backed securities approximating $1.9 million classified as Alt-A which is a credit category between prime and subprime. They have an effective maturity of 7.6 years. Such subprime and Alt-A categories are as defined by S&P. The Company is receiving principal and/or interest payments on all these securities and believes such amounts are fully collectible.
The following table sets forth our cash and investments as of March 31, 2014:
| March 31, 2014 |
Fair Value |
Gross Unrealized Gains |
Gross Unrealized (Losses) |
Amortized Cost |
||||||||||||
| ($ in thousands) | ||||||||||||||||
| Fixed maturities: |
||||||||||||||||
| U.S.Treasury bonds, agency bondsand foreign government bonds |
$ | 417,942 | 3,066 | (4,956 | ) | 419,832 | ||||||||||
| States, municipalities and political subdivisions |
491,598 | 12,216 | (6,948 | ) | 486,330 | |||||||||||
| Mortgage- and asset-backed securities: |
||||||||||||||||
| Agency mortgage-backed securities |
265,818 | 7,182 | (3,525 | ) | 262,161 | |||||||||||
| Residential mortgage obligations |
57,852 | 1,573 | (136 | ) | 56,415 | |||||||||||
| Asset-backed securities |
162,226 | 639 | (563 | ) | 162,150 | |||||||||||
| Commercial mortgage-backed securities |
173,333 | 7,792 | (272 | ) | 165,813 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Subtotal |
659,229 | 17,186 | (4,496 | ) | 646,539 | |||||||||||
| Corporate bonds |
593,944 | 15,472 | (2,319 | ) | 580,791 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total fixed maturities |
2,162,713 | 47,940 | (18,719 | ) | 2,133,492 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Equity securities — common stocks |
141,476 | 26,589 | (1,271 | ) | 116,158 | |||||||||||
| Equity securities — preferred stocks |
22,051 | 852 | (1 | ) | 21,200 | |||||||||||
| Short-term investments |
207,843 | — | — | 207,843 | ||||||||||||
| Cash |
55,041 | — | — | 55,041 | ||||||||||||
|
|
|
|||||||||||||||
| Total |
$ | 2,589,124 | $ | 75,381 | $ | (19,991 | ) | $ | 2,533,734 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
News Release
Page 12
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Investment Data
March 31, 2014
($ 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 March 31, 2014:
| Agency mortgage-backed securities: | Fair Value |
Gross Unrealized Gains |
Gross Unrealized (Losses) |
Amortized Cost |
||||||||||||
| GNMA |
$ | 98,801 | $ | 3,012 | $ | (2,076 | ) | $ | 97,865 | |||||||
| FNMA |
122,073 | 3,340 | (1,332 | ) | 120,065 | |||||||||||
| FHLMC |
44,944 | 830 | (117 | ) | 44,231 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 265,818 | $ | 7,182 | $ | (3,525 | ) | $ | 262,161 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Residential mortgage obligations: | Fair Value |
Gross Unrealized Gains |
Gross Unrealized (Losses) |
Amortized Cost |
||||||||||||
| Prime |
$ | 34,793 | $ | 822 | $ | (104 | ) | $ | 34,075 | |||||||
| Alt-A |
1,883 | 113 | (32 | ) | 1,802 | |||||||||||
| Subprime |
503 | 11 | — | 492 | ||||||||||||
| Non-US RMBS |
20,673 | 627 | — | 20,046 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 57,852 | $ | 1,573 | $ | (136 | ) | $ | 56,415 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||