Exhibit 99.1

 

		The Navigators Group, Inc.
		CORPORATE NEWS
		Navigators Reports Record Third Quarter Earnings

Stamford, CT – November 6, 2014 — The Navigators Group, Inc. (NASDAQ:NAVG) reported net income of $31.2 million, or $2.14 per diluted share, for the three months ended September 30, 2014 compared to $21.3 million, or $1.48 per diluted share, for the comparable period in 2013. Operating earnings were $26.1 million, or $1.79 per diluted share, for the third quarter of 2014 compared to $23.1 million, or $1.60 per diluted share, for the comparable period in 2013.

For the nine months ended September 30, 2014, the Company reported net income of $76.1 million, or $5.22 per diluted share compared to $49.1 million, or $3.42 per diluted share, for the comparable period in 2013. Operating earnings were $62.0 million, or $4.25 per diluted share, for the nine months ended September 30, 2014 compared to $45.7 million, or $3.18 per diluted share, for the comparable period in 2013.

Gross written premiums and net written premiums for the three months ended September 30, 2014 were $327.5 million and $228.4 million, respectively, an increase of 4.9% and 16.2% from the comparable period in 2013.

Gross written premiums and net written premiums for the nine months ended September 30, 2014 were $1,099.1 million and $772.1 million, respectively, an increase of 5.9% and 16.2% from the comparable period in 2013.

The combined loss and expense ratio for the three and nine months ended September 30, 2014 was 89.5% and 92.3%, respectively, compared to 89.8% and 95.1% for the comparable periods in 2013.

“We are pleased to report excellent underwriting results, continued premium growth, increased book value per share and strong cash flow for the quarter and first nine months of 2014. Despite increasingly challenging competitive conditions, our underwriters continue to focus on risk selection and achieving appropriate rates for exposures” stated Stan Galanski, President and Chief Executive Officer.

Stockholders’ equity was $996.6 million, or $69.85 per share, as of September 30, 2014 compared to $902.2 million, or $63.54 per share, as of December 31, 2013.

 

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

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Net investment income for the three and nine months ended September 30, 2014 was $15.8 million and $48.1 million, respectively, an increase of 12.4% and 14.5% from the comparable periods in 2013. The annualized pre-tax investment yield, excluding net realized gains and losses and other-than-temporary impairment losses recognized in earnings, was 2.2% and 2.4% for the three and nine months ended September 30, 2014, compared to 2.4% for each of the comparable periods in 2013. The effective tax rate on net investment income was 27.5% for both the three and nine months ended September 30, 2014, compared to 27.5% and 27.9% for the comparable periods in 2013.

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 3.7 years as of September 30, 2014. As of September 30, 2014, net unrealized gains within our investment portfolio were $59.5 million, an increase of $23.5 million compared to December 31, 2013.

There were $6.7 million of net realized gains recognized in earnings for the three months ended September 30, 2014, compared to $2.8 million of net realized losses for the same period in 2013. For the nine months ended September 30, there were $12.0 million of net realized gains, compared to $5.3 million of net realized gains for the same period in 2013.

Other income for the nine months ended September 30, 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 and nine months ended September 30, 2014 was $103.2 million and $181.4 million, respectively, compared to $81.5 million and $130.0 million for the comparable periods in 2013.

The Company will hold a conference call on Friday, November 7, 2014 starting at 8:30 a.m. ET to discuss the 2014 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 (888-438-5535) and the international dial-in is (719) 325-2215. Participants may connect to the webcast at:

http://www.media-server.com/m/p/trvmhk48

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

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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

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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		2014				2013				Change				2014				2013				Change
Gross written premiums		$	327,469			$	312,076				4.9	%		$	1,099,054			$	1,037,426				5.9	%
Net written premiums			228,417				196,556				16.2	%			772,131				664,477				16.2	%
Revenues:
Net earned premiums			245,367				213,895				14.7	%			701,723				622,037				12.8	%
Net investment income			15,839				14,094				12.4	%			48,097				41,997				14.5	%
Total other-than-temporary impairment losses			(41	)			(1,821	)		–	97.7	%			158				(1,863	)			NM
Portion of loss recognized in other comprehensive income (before tax)			41				—				NM				(158	)			—				NM
Net other-than-temporary impairment losses recognized in earnings			—				(1,821	)			NM				—				(1,863	)			NM
Net realized gains (losses)			6,718				(988	)			NM				12,024				7,171				67.7	%
Other income			1,336				(210	)			NM				10,070				(507	)			NM
Total revenues			269,260				224,970				19.7	%			771,914				668,835				15.4	%
Expenses:
Net losses and loss adjustment expenses			135,284				125,086				8.2	%			410,571				387,576				5.9	%
Commission expenses			33,943				27,685				22.6	%			91,820				82,631				11.1	%
Other operating expenses			50,388				39,056				29.0	%			145,526				120,608				20.7	%
Interest expense			3,388				2,053				65.0	%			11,559				6,156				87.8	%
Total expenses			223,003				193,880				15.0	%			659,476				596,971				10.5	%
Income before income taxes			46,257				31,090				48.8	%			112,438				71,864				56.5	%
Income tax expense (benefit)			15,032				9,804				53.3	%			36,384				22,731				60.1	%
Net income (loss)		$	31,225			$	21,286				46.7	%		$	76,054			$	49,133				54.8	%
Per Share Data
Net income per common share:
Basic		$	2.19			$	1.50				45.5	%		$	5.34			$	3.48				53.4	%
Diluted		$	2.14			$	1.48				44.6	%		$	5.22			$	3.42				52.7	%
Average common shares outstanding:
Basic			14,265,260				14,144,478								14,252,910				14,120,788
Diluted			14,613,744				14,408,413								14,577,297				14,379,943
Underwriting Ratios
Loss Ratio			55.1	%			58.5	%							58.5	%			62.3	%
Expense Ratio			34.4	%			31.3	%							33.8	%			32.8	%
Combined Ratio			89.5	%			89.8	%							92.3	%			95.1	%
Balance Sheet Data		Sept. 30, 2014				June 30, 2014								Sept. 30, 2014				Dec. 31, 2013
Stockholders’ equity		$	996,593			$	972,080				2.5	%		$	996,593			$	902,212				10.5	%
Book value per share		$	69.85			$	68.16				2.5	%		$	69.85			$	63.54				9.9	%

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

($ in thousands, except share data)

 

		September 30, 2014				December 31, 2013
		(unaudited)
ASSETS
Investments and cash:
Fixed maturities, available-for-sale, at fair value (amortized cost: 2014, $2,277,384; 2013, $2,036,999)		$	2,310,195			$	2,047,873
Equity securities, available-for-sale, at fair value (cost: 2014, $136,762; 2013, $118,804)			163,473				143,954
Short-term investments, at fair value (amortized cost: 2014: $255,434; 2013: $296,250)			255,445				296,250
Cash			74,408				86,509
Total investments and cash			2,803,521				2,574,586
Premiums receivable			363,053				325,025
Prepaid reinsurance premiums			237,094				247,822
Reinsurance recoverable on paid losses			49,327				38,384
Reinsurance recoverable on unpaid losses and loss adjustment expenses			850,582				822,438
Deferred policy acquisition costs			76,268				67,007
Accrued investment income			15,075				13,866
Goodwill and other intangible assets			7,089				7,177
Current income tax receivable, net			2,506				9,918
Deferred income tax, net			14,531				28,187
Other assets			44,267				35,042
Total assets		$	4,463,313			$	4,169,452
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Reserves for losses and loss adjustment expenses		$	2,168,974			$	2,045,071
Unearned premiums			772,755				714,606
Reinsurance balances payable			157,900				167,252
Senior notes			263,406				263,308
Payable for investments purchased			35,757				7,624
Accounts payable and other liabilities			67,928				69,379
Total liabilities			3,466,720				3,267,240
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 17,778,131 shares for 2014 and 17,709,876 shares for 2013			1,777				1,770
Additional paid-in capital			343,407				335,546
Treasury stock, at cost (3,511,380 shares for 2014 and 2013)			(155,801	)			(155,801	)
Retained earnings			768,391				692,337
Accumulated other comprehensive income			38,819				28,360
Total stockholders’ equity			996,593				902,212
Total liabilities and stockholders’ equity		$	4,463,313			$	4,169,452

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Comparative Premium Data

($ in thousands)

 

		Three Months												Nine Months
		2014				2013				Change				2014				2013				Change
Gross Written Premiums:
Insurance Companies:
Marine		$	38,726			$	38,912				–0.5	%		$	139,078			$	132,836				4.7	%
Property Casualty			174,868				156,228				11.9	%			572,821				527,287				8.6	%
Professional Liability			28,888				32,469				–11.0	%			86,110				97,679				–11.8	%
			242,482				227,609				6.5	%			798,009				757,802				5.3	%
Lloyd’s Operations:
Marine			38,568				36,009				7.1	%			147,530				135,546				8.8	%
Property Casualty			31,172				35,869				–13.1	%			101,413				102,144				–0.7	%
Professional Liability			15,247				12,589				21.1	%			52,102				41,934				24.2	%
			84,987				84,467				0.6	%			301,045				279,624				7.7	%
Total		$	327,469			$	312,076				4.9	%		$	1,099,054			$	1,037,426				5.9	%
		Three Months												Nine Months
		2014				2013				Change				2014				2013				Change
Net Written Premiums:
Insurance Companies:
Marine		$	24,166			$	26,437				–8.6	%		$	100,647			$	94,944				6.0	%
Property Casualty			126,665				97,553				29.8	%			418,659				338,215				23.8	%
Professional Liability			21,653				25,300				–14.4	%			61,170				75,830				–19.3	%
			172,484				149,290				15.5	%			580,476				508,989				14.0	%
Lloyd’s Operations:
Marine			32,245				26,795				20.3	%			113,938				100,413				13.5	%
Property Casualty			13,758				13,761				0.0	%			44,684				33,254				34.4	%
Professional Liability			9,930				6,710				48.0	%			33,033				21,821				51.4	%
			55,933				47,266				18.3	%			191,655				155,488				23.3	%
Total		$	228,417			$	196,556				16.2	%		$	772,131			$	664,477				16.2	%
		Three Months												Nine Months
		2014				2013				Change				2014				2013				Change
Net Earned Premiums:
Insurance Companies:
Marine		$	31,123			$	31,490				–1.2	%		$	95,635			$	100,013				–4.4	%
Property Casualty			129,547				105,759				22.5	%			365,068				297,954				22.5	%
Professional Liability			21,381				25,713				–16.8	%			65,644				75,873				–13.5	%
			182,051				162,962				11.7	%			526,347				473,840				11.1	%
Lloyd’s Operations:
Marine			39,368				34,264				14.9	%			110,468				102,932				7.3	%
Property Casualty			12,980				10,472				23.9	%			37,401				26,913				39.0	%
Professional Liability			10,968				6,197				77.0	%			27,507				18,352				49.9	%
			63,316				50,933				24.3	%			175,376				148,197				18.3	%
Total		$	245,367			$	213,895				14.7	%		$	701,723			$	622,037				12.8	%

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

Three Months Ended

September 30, 2014

($ in thousands)

 

		Insurance Companies				Lloyd’s Operations				Corporate (1)				Total
Gross written premiums		$	242,482			$	84,987			$	—			$	327,469
Net written premiums			172,484				55,933				—				228,417
Net earned premiums			182,051				63,316				—				245,367
Net losses and loss adjustment expenses			(108,425	)			(26,859	)			—				(135,284	)
Commission expenses			(22,705	)			(11,788	)			550				(33,943	)
Other operating expenses			(35,161	)			(15,227	)			—				(50,388	)
Other underwriting income (expense)			656				1				(550	)			107
Underwriting profit (loss)			16,416				9,443				—				25,859
Net investment income			13,971				1,849				19				15,839
Net realized gains (losses)			6,673				45				—				6,718
Interest expense			—				—				(3,388	)			(3,388	)
Other income (expense)			(1,100	)			2,329				—				1,229
Income (loss) before income taxes			35,960				13,666				(3,369	)			46,257
Income tax expense (benefit)			11,489				4,787				(1,244	)			15,032
Net income (loss)		$	24,471			$	8,879			$	(2,125	)		$	31,225
Losses and loss adjustment expenses ratio			59.6	%			42.4	%							55.1	%
Commission expense ratio			12.5	%			18.6	%							13.8	%
Other operating expense ratio (2)			18.9	%			24.1	%							20.6	%
Combined ratio			91.0	%			85.1	%							89.5	%

 

(1)	The Corporate segment includes intercompany eliminations.

(2)	The Other operating expense ratio includes Other underwriting income (expense).

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

Three Months Ended

September 30, 2013

($ in thousands)

 

		Insurance Companies				Lloyd’s 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 underwriting 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	)
Other income (expense)			—				—				—				—
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).

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

Nine Months Ended

September 30, 2014

($ in thousands)

 

		Insurance Companies				Lloyd’s Operations				Corporate (1)				Total
Gross written premiums		$	798,009			$	301,045			$	—			$	1,099,054
Net written premiums			580,476				191,655				—				772,131
Net earned premiums			526,347				175,376				—				701,723
Net losses and loss adjustment expenses			(323,354	)			(87,217	)			—				(410,571	)
Commission expenses			(62,436	)			(30,989	)			1,605				(91,820	)
Other operating expenses			(102,963	)			(42,563	)			—				(145,526	)
Other underwriting income (expense)			2,082				20				(1,605	)			497
Underwriting profit (loss)			39,676				14,627				—				54,303
Net investment income			42,553				5,488				56				48,097
Net realized gains (losses)			12,368				(344	)			—				12,024
Interest expense			—				—				(11,559	)			(11,559	)
Other income (expense)			(1,119	)			10,692				—				9,573
Income (loss) before income taxes			93,478				30,463				(11,503	)			112,438
Income tax expense (benefit)			29,650				10,753				(4,019	)			36,384
Net income (loss)		$	63,828			$	19,710			$	(7,484	)		$	76,054
Losses and loss adjustment expenses ratio			61.4	%			49.7	%							58.5	%
Commission expense ratio			11.9	%			17.7	%							13.1	%
Other operating expense ratio (2)			19.2	%			24.3	%							20.7	%
Combined ratio			92.5	%			91.7	%							92.3	%

 

(1)	The Corporate segment includes intercompany eliminations.

(2)	The Other operating expense ratio includes Other underwriting income (expense).

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

Nine Months Ended

September 30, 2013

($ in thousands)

 

		Insurance Companies				Lloyd’s 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 underwriting 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	)
Other income (expense)			—				—				—				—
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).

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Underwriting Results

($ in thousands)

 

		Three Months Ended September 30, 2014
		Net Earned Premiums				Losses and LAE Incurred				Underwriting Expenses				Underwriting Profit (Loss)				Loss Ratio				Expense Ratio				Combined Ratio
Insurance Companies:
Marine		$	31,123			$	13,080			$	12,014			$	6,029				42.0	%			38.6	%			80.6	%
Property Casualty			129,547				81,682				37,171				10,694				63.1	%			28.6	%			91.7	%
Professional Liability			21,381				13,663				8,025				(307	)			63.9	%			37.5	%			101.4	%
Total Insurance Companies			182,051				108,425				57,210				16,416				59.6	%			31.4	%			91.0	%
Lloyd’s Operations:
Marine			39,368				16,389				15,629				7,350				41.6	%			39.7	%			81.3	%
Property Casualty			12,980				4,260				7,105				1,615				32.8	%			54.8	%			87.6	%
Professional Liability			10,968				6,210				4,280				478				56.6	%			39.0	%			95.6	%
Total Lloyd’s			63,316				26,859				27,014				9,443				42.4	%			42.7	%			85.1	%
Total All		$	245,367			$	135,284			$	84,224			$	25,859				55.1	%			34.4	%			89.5	%
		Three Months Ended September 30, 2013
		Net Earned Premiums				Losses and LAE Incurred				Underwriting Expenses				Underwriting Profit (Loss)				Loss Ratio				Expense Ratio				Combined 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	%

 

		Amounts								Loss Ratio
		Sept. 30, 2014				Sept. 30, 2013				Sept. 30, 2014				Sept. 30, 2013
Net Incurred Loss Activity For the Three Months Ended:
Insurance Companies:
Loss and LAE payments		$	84,899			$	83,008				46.7	%			50.9	%
Change in reserves			23,526				12,307				12.9	%			7.6	%
Net incurred loss and LAE			108,425				95,315				59.6	%			58.5	%
Lloyd’s Operations:
Loss and LAE payments			23,181				27,038				36.6	%			53.1	%
Change in reserves			3,678				2,733				5.8	%			5.4	%
Net incurred loss and LAE			26,859				29,771				42.4	%			58.5	%
Total
Loss and LAE payments			108,080				110,046				44.0	%			51.5	%
Change in reserves			27,204				15,040				11.1	%			7.0	%
Net incurred loss and LAE		$	135,284			$	125,086				55.1	%			58.5	%
		Amounts								Loss Ratio Impact
		Sept. 30, 2014				Sept. 30, 2013				Sept. 30, 2014				Sept. 30, 2013
Impact of Prior Years Reserves Favorable / (Unfavorable) Development For the Three Months Ended:
Insurance Companies		$	9,970			$	3,094				4.1	%			1.4	%
Lloyd’s Operations			5,500				4,591				2.2	%			2.1	%
Total		$	15,470			$	7,685				6.3	%			3.5	%

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Underwriting Results

($ in thousands)

 

		Nine Months Ended September 30, 2014
		Net Earned Premiums				Losses and LAE Incurred				Underwriting Expenses				Underwriting Profit (Loss)				Loss Ratio				Expense Ratio				Combined Ratio
Insurance Companies:
Marine		$	95,635			$	41,654			$	34,943			$	19,038				43.6	%			36.5	%			80.1	%
Property Casualty			365,068				244,202				104,024				16,842				66.9	%			28.5	%			95.4	%
Professional Liability			65,644				37,498				24,350				3,796				57.1	%			37.1	%			94.2	%
Total Insurance Companies			526,347				323,354				163,317				39,676				61.4	%			31.1	%			92.5	%
Lloyd’s Operations:
Marine			110,468				60,032				45,492				4,944				54.3	%			41.2	%			95.5	%
Property Casualty			37,401				14,015				17,110				6,276				37.5	%			45.7	%			83.2	%
Professional Liability			27,507				13,170				10,930				3,407				47.9	%			39.7	%			87.6	%
Total Lloyd’s			175,376				87,217				73,532				14,627				49.7	%			42.0	%			91.7	%
Total All		$	701,723			$	410,571			$	236,849			$	54,303				58.5	%			33.8	%			92.3	%

 

		Nine Months Ended September 30, 2014
		Net Earned Premiums				Losses and LAE Incurred				Underwriting Expenses				Underwriting Profit (Loss)				Loss Ratio				Expense Ratio				Combined 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	%

 

		Amounts								Loss Ratio
		Sept. 30, 2014				Sept. 30, 2013				Sept. 30, 2014				Sept. 30, 2013
Net Incurred Loss Activity For the Nine Months Ended:
Insurance Companies:
Loss and LAE payments		$	237,109			$	263,832				45.0	%			55.7	%
Change in reserves			86,245				45,136				16.4	%			9.5	%
Net incurred loss and LAE			323,354				308,968				61.4	%			65.2	%
Lloyd’s Operations:
Loss and LAE payments			75,256				84,928				42.9	%			57.3	%
Change in reserves			11,961				(6,320	)			6.8	%			-4.3	%
Net incurred loss and LAE			87,217				78,608				49.7	%			53.0	%
Total
Loss and LAE payments			312,365				348,760				44.5	%			56.1	%
Change in reserves			98,206				38,816				14.0	%			6.2	%
Net incurred loss and LAE		$	410,571			$	387,576				58.5	%			62.3	%
		Amounts								Loss Ratio Impact
		Sept. 30, 2014				Sept. 30, 2013				Sept. 30, 2014				Sept. 30, 2013
Impact of Prior Years Reserves Favorable / (Unfavorable) Development For the Nine Months Ended:
Insurance Companies		$	23,274			$	(12,383	)			3.3	%			–2.0	%
Lloyd’s Operations			12,749				14,072				1.8	%			2.3	%
Total		$	36,023			$	1,689				5.1	%			0.3	%

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Net Loss Data

($ in thousands)

 

		Case Reserves				IBNR Reserves				Total
Net Loss Reserves, September 30, 2014:
Insurance Companies:
Marine		$	115,304			$	91,775			$	207,079
Property Casualty			167,328				471,193				638,521
Professional Liability			56,937				86,326				143,263
Total Insurance Companies			339,569				649,294				988,863
Lloyd’s Operations:
Marine			138,062				85,430			$	223,492
Property Casualty			26,914				16,679				43,593
Professional Liability			16,246				46,198				62,444
Total Lloyd’s Operations			181,222				148,307				329,529
Total Net Loss Reserves		$	520,791			$	797,601			$	1,318,392

 

		Case Reserves				IBNR Reserves				Total
Net Loss Reserves, December 31, 2013
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

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Investment Data

September 30, 2014

As of September 30, 2014, the average quality of the investment portfolio as rated by S&P and Moody’s was AA/Aa with an average duration of 3.7 years. The Company does not own any collateralized debt obligations (CDO’s) or asset backed commercial paper.

As of September 30, 2014, the Company owned two collateralized mortgage obligations approximating $0.4 million with subprime mortgage exposures. The securities have an effective maturity of 3.2 years. In addition, the Company owned a total of seven collateralized mortgage obligations and asset-backed securities approximating $1.8 million classified as Alt-A which is a credit category between prime and subprime. They have an effective maturity of 7.3 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, 2014:

 

September 30, 2014		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		$	414,348			$	2,712			$	(6,215	)		$	417,851
States, municipalities and political subdivisions			550,327				16,585				(1,360	)			535,102
Mortgage- and asset-backed securities:
Agency mortgage-backed securities			296,198				7,201				(2,363	)			291,360
Residential mortgage obligations			34,738				1,238				(133	)			33,633
Asset-backed securities			195,180				414				(519	)			195,285
Commercial mortgage-backed securities			210,712				6,244				(588	)			205,056
Subtotal			736,828				15,097				(3,603	)			725,334
Corporate bonds			608,692				11,945				(2,350	)			599,097
Total fixed maturities			2,310,195				46,339				(13,528	)			2,277,384
Equity securities - common stocks			113,250				26,251				(772	)			87,771
Equity securities - preferred stocks			50,223				1,481				(249	)			48,991
Short-term investments			255,445				11				—				255,434
Cash			74,408				—				—				74,408
Total		$	2,803,521			$	74,082			$	(14,549	)		$	2,743,988

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Investment Data

September 30, 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 September 30, 2014:

 

		Fair Value				Gross Unrealized Gains				Gross Unrealized (Losses)				Cost or Amortized Cost
Agency mortgage-backed securities:
GNMA		$	87,953			$	2,917			$	(1,341	)		$	86,377
FNMA			150,283				3,144				(953	)			148,092
FHLMC			57,962				1,140				(69	)			56,891
Total		$	296,198			$	7,201			$	(2,363	)		$	291,360

 

		Fair Value				Gross Unrealized Gains				Gross Unrealized (Losses)				Cost or Amortized Cost
Residential mortgage obligations:
Prime		$	13,970			$	574			$	(112	)		$	13,508
Alt-A			1,777				115				(21	)			1,683
Subprime			429				15				—				414
Non-US RMBS			18,562				534				—				18,028
Total		$	34,738			$	1,238			$	(133	)		$	33,633