Exhibit 99.1

 

The Navigators Group, Inc.

CORPORATE NEWS

Navigators Second Quarter Operating Earnings up 31%,

Net Income up 14%

Stamford, CT – August 6, 2015 — The Navigators Group, Inc. (NASDAQ:NAVG) reported net income of $19.2 million, or $1.30 per diluted share, for the three months ended June 30, 2015 compared to $16.9 million, or $1.17 per diluted share, for the comparable period in 2014. Operating earnings were $19.7 million, or $1.34 per diluted share, for the three months ended June 30, 2015 compared to $15.0 million, or $1.04 per diluted share, for the comparable period in 2014.

For the six months ended June 30, 2015, the Company reported net income of $45.1 million, or $3.06 per diluted share compared to $44.8 million, or $3.11 per diluted share, for the comparable period in 2014. 2014 results included 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 Syndicate, which was equally offset by a reversal within the Accumulated Other Comprehensive Income component of stockholders’ equity. Excluding this gain, the six months ended June 30, 2014 net income per diluted share would have been $2.66. Operating earnings were $40.6 million, or $2.76 per diluted share, for the six months ended June 30, 2015 compared to $35.9 million, or $2.49 per diluted share, for the comparable period in 2014. The one-time foreign exchange gain discussed above had no impact on operating earnings.

Gross written premiums and net written premiums for the three months ended June 30, 2015 were $379.5 million and $258.2 million, respectively, an increase of 8.8% and 11.4% from the comparable period in 2014.

Gross written premiums and net written premiums for the six months ended June 30, 2015 were $775.9 million and $547.2 million, respectively, each an increase of 0.6% from the comparable period in 2014.

The combined ratio for the three and six months ended June 30, 2015 was 93.4% and 92.8%, respectively, compared to 95.3% and 93.8% for the comparable periods in 2014.

Stan Galanski, President and Chief Executive Officer commented, “We are pleased to report another quarter of solid performance. We generated profitable underwriting results in each of our three underwriting segments, specifically with strong profit contribution from our US and International Marine units and overall Global Re. Despite challenging competitive conditions in a number of specialty niches, most notably the first-party energy product lines, we achieved double digit net premium growth, led by strong growth in our U.S. Primary and Excess Casualty units.”

Stockholders’ equity was $1,053.6 million, or $73.18 per share, as of June 30, 2015 compared to $1,027.2 million, or $71.93 per share, as of December 31, 2014.

 

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

---

News Release

August 6, 2015

Page 2

 

Net investment income for the three and six months ended June 30, 2015 was $16.6 million and $32.8 million, respectively, an increase of 6.1% and 1.8% from the comparable periods in 2014. The annualized pre-tax investment yield, excluding net realized gains and losses and other-than-temporary impairment losses recognized in earnings, was 2.4% for the three and six months ended June 30, 2015, compared to 2.5% and 2.6%, respectively for the comparable periods in 2014.

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 3.8 years as of June 30, 2015. As of June 30, 2015, net unrealized gains within our investment portfolio were $38.0 million, a decrease of $33.4 million compared to December 31, 2014.

There were $3.9 million of net realized gains recognized in earnings for the three months ended June 30, 2015, compared to $4.5 million for the same period in 2014. For the six months ended June 30, there were $9.5 million of net realized gains, compared to $5.3 million for the same period in 2014.

Other income (loss) for the three months ended June 30, 2015 was ($4.4 million), compared to ($1.7 million) for the same period in 2014, each primarily consisting of a net foreign exchange loss. For the six months ended June 30, 2015 other income (loss) was ($2.1 million), primarily consisting of net foreign exchange, compared to $8.7 million in the same period in 2014; largely impacted by a one-time foreign exchange gain in the first quarter of 2014.

The Company will hold a conference call on Friday, August 7, 2015 starting at 8:30 a.m. ET to discuss the 2015 second 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 (888-240-9373) and the international dial-in is (913) 312-0956. Participants may connect to the webcast at:

http://edge.media-server.com/m/p/3h9rmgcb

Net operating earnings, or net income excluding after-tax net realized gains (losses), after-tax 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.

---

News Release

August 6, 2015

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												Six Months Ended
		June 30,												June 30,
		2015				2014				Change				2015				2014				Change
Results of Operations
Gross written premiums		$	379,471			$	348,795				8.8	%		$	775,931			$	771,585				0.6	%
Net written premiums			258,244				231,864				11.4	%			547,202				543,714				0.6	%
Revenues:
Net earned premiums			242,328				231,084				4.9	%			478,460				456,356				4.8	%
Net investment income			16,595				15,648				6.1	%			32,848				32,258				1.8	%
Net realized gains (losses):
Total other-than-temporary impairment losses			(423	)			—				NM				(423	)			—				NM
Portion of loss recognized in other comprehensive income (before tax)			—				—				NM				—				—				NM
Net other-than-temporary impairment losses recognized in earnings			(423	)			—				NM				(423	)			—				NM
Other realized gains (losses)			4,339				4,473				-3.0	%			9,935				5,306				87.2	%
Net realized gains (losses)			3,916				4,473				-12.5	%			9,512				5,306				79.3	%
Other income (loss)			(4,362	)			(1,665	)			NM				(2,120	)			8,734				-124.3	%
Total revenues			258,477				249,540				3.6	%			518,700				502,654				3.2	%
Expenses:
Net losses and loss adjustment expenses			141,973				140,220				1.3	%			272,171				275,287				-1.1	%
Commission expenses			31,480				32,150				-2.1	%			64,385				57,877				11.2	%
Other operating expenses			52,789				47,992				10.0	%			107,698				95,138				13.2	%
Interest expense			3,856				4,319				-10.7	%			7,711				8,171				-5.6	%
Total expenses			230,098				224,681				2.4	%			451,965				436,473				3.5	%
Income before income taxes			28,379				24,859				14.2	%			66,735				66,181				0.8	%
Income tax expense (benefit)			9,195				7,998				15.0	%			21,622				21,352				1.3	%
Net income (loss)		$	19,184			$	16,861				13.8	%		$	45,113			$	44,829				0.6	%
Per Share Data
Net income per common share:
Basic		$	1.33			$	1.18				12.7	%		$	3.14			$	3.15				-0.3	%
Diluted		$	1.30			$	1.17				11.1	%		$	3.06			$	3.11				-1.6	%
Average common shares outstanding:
Basic			14,396,048				14,259,753								14,370,123				14,246,701
Diluted			14,763,002				14,377,476								14,726,282				14,401,740
Underwriting Ratios
Loss Ratio			58.6	%			60.7	%							56.9	%			60.3	%
Expense Ratio			34.8	%			34.6	%							35.9	%			33.5	%
Combined Ratio			93.4	%			95.3	%							92.8	%			93.8	%
		Jun. 30,				Mar. 31,								Jun. 30,				Dec. 31,
Balance Sheet Data		2015				2015								2015				2014
Stockholders’ equity		$	1,053,629			$	1,053,603				0.0	%		$	1,053,629			$	1,027,224				2.6	%
Book value per share		$	73.18			$	73.21				0.0	%		$	73.18			$	71.93				1.7	%

---

News Release

Page 5

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

($ in thousands, except share data)

 

		June 30,				December 31,
		2015				2014
ASSETS
Investments and cash:
Fixed maturities, available-for-sale, at fair value (amortized cost: 2015, $2,291,137; 2014, $2,323,959)		$	2,313,937			$	2,365,934
Equity securities, available-for-sale, at fair value (cost: 2015, $179,917; 2014, $154,843)			195,078				184,295
Short-term investments, at fair value (amortized cost: 2015: $201,688; 2014: $179,527)			201,748				179,506
Cash			89,250				90,751
Total investments and cash			2,800,013				2,820,486
Premiums receivable			407,122				342,479
Prepaid reinsurance premiums			260,010				237,851
Reinsurance recoverable on paid losses			124,439				51,347
Reinsurance recoverable on unpaid losses and loss adjustment expenses			780,297				851,498
Deferred policy acquisition costs			84,905				79,452
Accrued investment income			14,573				14,791
Goodwill and other intangible assets			6,947				7,013
Current income tax receivable, net			16,109				14,549
Deferred income tax, net			7,658				—
Other assets			39,159				44,710
Total assets		$	4,541,232			$	4,464,176
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Reserves for losses and loss adjustment expenses		$	2,131,157			$	2,159,634
Unearned premiums			857,068				766,167
Reinsurance balances payable			155,423				152,774
Senior notes			263,509				263,440
Deferred income tax, net			—				1,467
Accounts payable and other liabilities			80,446				93,470
Total liabilities			3,487,603				3,436,952
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 17,908,734 shares for 2015 and 17,792,846 shares for 2014			1,791				1,778
Additional paid-in capital			350,151				347,022
Treasury stock, at cost (3,511,380 shares for 2015 and 2014)			(155,801	)			(155,801	)
Retained earnings			832,779				787,666
Accumulated other comprehensive income			24,709				46,559
Total stockholders’ equity			1,053,629				1,027,224
Total liabilities and stockholders’ equity		$	4,541,232			$	4,464,176

---

News Release

Page 6

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

($ in thousands)

 

		Three Months Ended June 30, 2015
		U.S.				International				Global
		Insurance				Insurance				Reinsurance				Corporate (1)				Total
Gross written premiums		$	239,987			$	108,790			$	30,694			$	—			$	379,471
Ceded written premiums			(78,882	)			(41,621	)			(724	)			—				(121,227	)
Net written premiums			161,105				67,169				29,970				—				258,244
Net earned premiums			137,304				63,186				41,838				—				242,328
Net losses and loss adjustment expenses			(84,155	)			(32,363	)			(25,455	)			—				(141,973	)
Commission expenses			(12,275	)			(11,298	)			(8,039	)			132				(31,480	)
Other operating expenses			(31,374	)			(17,366	)			(4,049	)			—				(52,789	)
Other underwriting income (expenses)			121				—				36				(132	)			25
Underwriting profit (loss)		$	9,621			$	2,159			$	4,331			$	—			$	16,111
Net investment income															16,595				16,595
Net realized gains (losses)															3,916				3,916
Interest expense															(3,856	)			(3,856	)
Other income (expense)															(4,387	)			(4,387	)
Income before income taxes		$	9,621			$	2,159			$	4,331			$	12,268			$	28,379
Income tax (expense) benefit															(9,195	)			(9,195	)
Net income (loss)																		$	19,184
Losses and loss adjustment expenses ratio			61.3	%			51.2	%			60.8	%							58.6	%
Commission expense ratio			8.9	%			17.9	%			19.2	%							13.0	%
Other operating expense ratio (2)			22.8	%			27.5	%			9.6	%							21.8	%
Combined ratio			93.0	%			96.6	%			89.6	%							93.4	%

 

(1)	The Corporate segment includes intercompany eliminations.

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

---

News Release

Page 7

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

($ in thousands)

 

		Three Months Ended June 30, 2014
		U.S.				International				Global
		Insurance				Insurance				Reinsurance				Corporate (1)				Total
Gross written premiums		$	206,703			$	120,732			$	21,360			$	—			$	348,795
Ceded written premiums			(60,004	)			(56,345	)			(582	)			—				(116,931	)
Net written premiums			146,699				64,387				20,778				—				231,864
Net earned premiums			125,254				59,661				46,169				—				231,084
Net losses and loss adjustment expenses			(73,131	)			(35,293	)			(31,796	)			—				(140,220	)
Commission expenses			(13,219	)			(11,009	)			(8,468	)			546				(32,150	)
Other operating expenses			(28,840	)			(15,436	)			(3,716	)			—				(47,992	)
Other underwriting income (expenses)			736				11				34				(546	)			235
Underwriting profit (loss)		$	10,800			$	(2,066	)		$	2,223			$	—			$	10,957
Net investment income															15,648				15,648
Net realized gains (losses)															4,473				4,473
Interest expense															(4,319	)			(4,319	)
Other income (expense)															(1,900	)			(1,900	)
Income before income taxes		$	10,800			$	(2,066	)		$	2,223			$	13,902			$	24,859
Income tax (expense) benefit															(7,998	)			(7,998	)
Net income (loss)																		$	16,861
Losses and loss adjustment expenses ratio			58.4	%			59.2	%			68.9	%							60.7	%
Commission expense ratio			10.6	%			18.5	%			18.3	%							13.9	%
Other operating expense ratio (2)			22.4	%			25.8	%			8.0	%							20.7	%
Combined ratio			91.4	%			103.5	%			95.2	%							95.3	%

 

(1)	The Corporate segment includes intercompany eliminations.

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

---

News Release

Page 8

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

($ in thousands)

 

		Six Months Ended June 30, 2015
		U.S.				International				Global
		Insurance				Insurance				Reinsurance				Corporate (1)				Total
Gross written premiums		$	439,314			$	231,217			$	105,400			$	—			$	775,931
Ceded written premiums			(147,612	)			(75,877	)			(5,240	)			—				(228,729	)
Net written premiums			291,702				155,340				100,160				—				547,202
Net earned premiums			268,395				128,711				81,354				—				478,460
Net losses and loss adjustment expenses			(161,954	)			(62,054	)			(48,163	)			—				(272,171	)
Commission expenses			(26,620	)			(22,711	)			(15,337	)			283				(64,385	)
Other operating expenses			(65,062	)			(34,375	)			(8,261	)			—				(107,698	)
Other underwriting income (expenses)			317				—				46				(283	)			80
Underwriting profit (loss)		$	15,076			$	9,571			$	9,639			$	—			$	34,286
Net investment income															32,848				32,848
Net realized gains (losses)															9,512				9,512
Interest expense															(7,711	)			(7,711	)
Other income (expense)															(2,200	)			(2,200	)
Income before income taxes		$	15,076			$	9,571			$	9,639			$	32,449			$	66,735
Income tax (expense) benefit															(21,622	)			(21,622	)
Net income (loss)																		$	45,113
Losses and loss adjustment expenses ratio			60.3	%			48.2	%			59.2	%							56.9	%
Commission expense ratio			9.9	%			17.6	%			18.9	%							13.5	%
Other operating expense ratio (2)			24.2	%			26.8	%			10.1	%							22.4	%
Combined ratio			94.4	%			92.6	%			88.2	%							92.8	%

 

(1)	The Corporate segment includes intercompany eliminations.

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

---

News Release

Page 9

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

($ in thousands)

 

		Six Months Ended June 30, 2014
		U.S.				International				Global
		Insurance				Insurance				Reinsurance				Corporate (1)				Total
Gross written premiums		$	405,051			$	239,924			$	126,610			$	—			$	771,585
Ceded written premiums			(125,070	)			(98,927	)			(3,874	)			—				(227,871	)
Net written premiums			279,981				140,997				122,736				—				543,714
Net earned premiums			240,444				121,715				94,197				—				456,356
Net losses and loss adjustment expenses			(146,095	)			(66,513	)			(62,679	)			—				(275,287	)
Commission expenses			(22,728	)			(19,864	)			(16,340	)			1,055				(57,877	)
Other operating expenses			(56,833	)			(30,495	)			(7,810	)			—				(95,138	)
Other underwriting income (expenses)			1,249				17				179				(1,055	)			390
Underwriting profit (loss)		$	16,037			$	4,860			$	7,547			$	—			$	28,444
Net investment income															32,258				32,258
Net realized gains (losses)															5,306				5,306
Interest expense															(8,171	)			(8,171	)
Other income (expense)															8,344				8,344
Income before income taxes		$	16,037			$	4,860			$	7,547			$	37,737			$	66,181
Income tax (expense) benefit															(21,352	)			(21,352	)
Net income (loss)																		$	44,829
Losses and loss adjustment expenses ratio			60.8	%			54.6	%			66.5	%							60.3	%
Commission expense ratio			9.5	%			16.3	%			17.3	%							12.7	%
Other operating expense ratio (2)			23.0	%			25.1	%			8.2	%							20.8	%
Combined ratio			93.3	%			96.0	%			92.0	%							93.8	%

 

(1)	The Corporate segment includes intercompany eliminations.

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

---

News Release

Page 10

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Reportable Segment Results

($ in thousands)

 

		U.S. Insurance
		Three months ended June 30, 2015																Three months ended June 30, 2014																% Change
amounts in thousands		Marine				P&C				Professional Liability				Total				Marine				P&C				Professional Liability				Total				Total
Gross written premiums		$	41,803			$	170,216			$	27,968			$	239,987			$	42,548			$	137,137			$	27,018			$	206,703				16.1	%
Ceded written premiums			(15,026	)			(49,305	)			(14,551	)			(78,882	)			(11,587	)			(40,452	)			(7,965	)			(60,004	)			31.5	%
Net written premiums			26,777				120,911				13,417				161,105				30,961				96,685				19,053				146,699				9.8	%
Net earned premiums			25,977				96,440				14,887				137,304				26,727				76,585				21,942				125,254				9.6	%
Net losses and LAE			(11,415	)			(67,809	)			(4,931	)			(84,155	)			(10,609	)			(52,619	)			(9,903	)			(73,131	)			15.1	%
Commission expenses			(2,429	)			(8,751	)			(1,095	)			(12,275	)			(4,101	)			(6,095	)			(3,023	)			(13,219	)			-7.1	%
Other operating expenses			(6,402	)			(19,661	)			(5,311	)			(31,374	)			(5,944	)			(17,675	)			(5,221	)			(28,840	)			8.8	%
Other underwriting income (expenses)			24				97				—				121				320				374				42				736				-83.6	%
Underwriting profit (loss)		$	5,755			$	316			$	3,550			$	9,621			$	6,393			$	570			$	3,837			$	10,800				-10.9	%
Losses and LAE ratio			43.9	%			70.3	%			33.1	%			61.3	%			39.7	%			68.7	%			45.1	%			58.4	%
Commission expense ratio			9.4	%			9.1	%			7.4	%			8.9	%			15.3	%			8.0	%			13.8	%			10.6	%
Other operating expense ratio (1)			24.5	%			20.3	%			35.7	%			22.8	%			21.1	%			22.6	%			23.6	%			22.4	%
Combined ratio			77.8	%			99.7	%			76.2	%			93.0	%			76.1	%			99.3	%			82.5	%			91.4	%

 

(1)	The Other operating expense ratio includes Other income (expense).

 

		Int’l Insurance
		Three months ended June 30, 2015																Three months ended June 30, 2014																% Change
amounts in thousands		Marine				P&C				Professional Liability				Total				Marine				P&C				Professional Liability				Total				Total
Gross written premiums		$	41,432			$	41,615			$	25,743			$	108,790			$	47,532			$	51,305			$	21,895			$	120,732				-9.9	%
Ceded written premiums			(9,126	)			(24,513	)			(7,982	)			(41,621	)			(17,033	)			(31,284	)			(8,028	)			(56,345	)			-26.1	%
Net written premiums			32,306				17,102				17,761				67,169				30,499				20,021				13,867				64,387				4.3	%
Net earned premiums			40,132				10,199				12,855				63,186				34,177				16,466				9,018				59,661				5.9	%
Net losses and LAE			(21,432	)			(4,084	)			(6,847	)			(32,363	)			(22,963	)			(9,937	)			(2,393	)			(35,293	)			-8.3	%
Commission expenses			(9,495	)			(155	)			(1,648	)			(11,298	)			(10,020	)			(996	)			7				(11,009	)			2.6	%
Other operating expenses			(6,749	)			(6,166	)			(4,451	)			(17,366	)			(6,468	)			(5,570	)			(3,398	)			(15,436	)			12.5	%
Other underwriting income (expenses)			—				—				—				—				3				5				3				11				NM
Underwriting profit (loss)		$	2,456			$	(206	)		$	(91	)		$	2,159			$	(5,271	)		$	(32	)		$	3,237			$	(2,066	)			NM
Losses and LAE ratio			53.4	%			40.0	%			53.3	%			51.2	%			67.2	%			60.4	%			26.5	%			59.2	%
Commission expense ratio			23.7	%			1.5	%			12.8	%			17.9	%			29.4	%			6.0	%			-0.1	%			18.5	%
Other operating expense ratio (1)			16.8	%			60.5	%			34.6	%			27.5	%			18.9	%			33.8	%			37.8	%			25.8	%
Combined ratio			93.9	%			102.0	%			100.7	%			96.6	%			115.5	%			100.2	%			64.2	%			103.5	%

 

NM - Percentage change not meaningful

(1)	The Other operating expense ratio includes Other income (expense).

---

News Release

Page 11

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Reportable Segment Results

($ in thousands)

 

		U.S. Insurance
		Six months ended June 30, 2015																Six months ended June 30, 2014																% Change
amounts in thousands		Marine				P&C				Professional Liability				Total				Marine				P&C				Professional Liability				Total				Total
Gross written premiums		$	82,638			$	304,362			$	52,314			$	439,314			$	85,573			$	262,256			$	57,222			$	405,051				8.5	%
Ceded written premiums			(31,312	)			(88,863	)			(27,437	)			(147,612	)			(20,757	)			(86,608	)			(17,705	)			(125,070	)			18.0	%
Net written premiums			51,326				215,499				24,877				291,702				64,816				175,648				39,517				279,981				4.2	%
Net earned premiums			49,901				187,175				31,319				268,395				54,713				141,516				44,215				240,444				11.6	%
Net losses and LAE			(21,603	)			(125,856	)			(14,495	)			(161,954	)			(25,292	)			(96,968	)			(23,835	)			(146,095	)			10.9	%
Commission expenses			(6,461	)			(17,307	)			(2,852	)			(26,620	)			(6,648	)			(10,040	)			(6,040	)			(22,728	)			17.1	%
Other operating expenses			(13,375	)			(40,720	)			(10,967	)			(65,062	)			(11,633	)			(34,988	)			(10,212	)			(56,833	)			14.5	%
Other underwriting income (expenses)			175				141				1				317				521				640				88				1,249				-74.6	%
Underwriting profit (loss)		$	8,637			$	3,433			$	3,006			$	15,076			$	11,661			$	160			$	4,216			$	16,037				-6.0	%
Losses and LAE ratio			43.3	%			67.2	%			46.3	%			60.3	%			46.2	%			68.5	%			53.9	%			60.8	%
Commission expense ratio			12.9	%			9.2	%			9.1	%			9.9	%			12.2	%			7.1	%			13.7	%			9.5	%
Other operating expense ratio (1)			26.5	%			21.8	%			35.0	%			24.2	%			20.3	%			24.3	%			22.9	%			23.0	%
Combined ratio			82.7	%			98.2	%			90.4	%			94.4	%			78.7	%			99.9	%			90.5	%			93.3	%

 

(1)	The Other operating expense ratio includes Other income (expense).

 

		Int’l Insurance
		Six months ended June 30, 2015																Six months ended June 30, 2014																% Change
amounts in thousands		Marine				P&C				Professional Liability				Total				Marine				P&C				Professional Liability				Total				Total
Gross written premiums		$	108,842			$	74,565			$	47,810			$	231,217			$	109,514			$	93,555			$	36,855			$	239,924				-3.6	%
Ceded written premiums			(19,948	)			(40,642	)			(15,287	)			(75,877	)			(29,427	)			(55,748	)			(13,752	)			(98,927	)			-23.3	%
Net written premiums			88,894				33,923				32,523				155,340				80,087				37,807				23,103				140,997				10.2	%
Net earned premiums			77,924				26,233				24,554				128,711				72,221				32,907				16,587				121,715				5.7	%
Net losses and LAE			(40,943	)			(8,964	)			(12,147	)			(62,054	)			(42,660	)			(16,894	)			(6,959	)			(66,513	)			-6.7	%
Commission expenses			(18,685	)			(1,182	)			(2,844	)			(22,711	)			(20,007	)			195				(52	)			(19,864	)			14.3	%
Other operating expenses			(13,444	)			(12,150	)			(8,781	)			(34,375	)			(12,883	)			(10,850	)			(6,762	)			(30,495	)			12.7	%
Other underwriting income (expenses)			—				—				—				—				9				5				3				17				NM
Underwriting profit (loss)		$	4,852			$	3,937			$	782			$	9,571			$	(3,320	)		$	5,363			$	2,817			$	4,860				96.9	%
Losses and LAE ratio			52.5	%			34.2	%			49.5	%			48.2	%			59.1	%			51.3	%			42.0	%			54.6	%
Commission expense ratio			24.0	%			4.5	%			11.6	%			17.6	%			27.7	%			-0.6	%			0.3	%			16.3	%
Other operating expense ratio (1)			17.3	%			46.3	%			35.7	%			26.8	%			17.8	%			33.0	%			40.7	%			25.1	%
Combined ratio			93.8	%			85.0	%			96.8	%			92.6	%			104.6	%			83.7	%			83.0	%			96.0	%

 

NM - Percentage change not meaningful

(1)	The Other operating expense ratio includes Other income (expense).

---

News Release

Page 12

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Net Incurred Loss Activity

($ in thousands)

 

		For the Three Months Ended
		Amounts								Loss Ratio
		June 30,				June 30,				June 30,				June 30,
Net Incurred Loss Activity		2015				2014				2015				2014
US Insurance:
Loss and LAE payments		$	56,719			$	49,772				41.3	%			39.8	%
Change in reserves			27,436				23,359				20.0	%			18.6	%
Net incurred loss and LAE			84,155				73,131				61.3	%			58.4	%
International Insurance:
Loss and LAE payments			33,891				31,548				53.6	%			52.9	%
Change in reserves			(1,528	)			3,745				-2.4	%			6.3	%
Net incurred loss and LAE			32,363				35,293				51.2	%			59.2	%
Global Reinsurance:
Loss and LAE payments			20,037				22,302				47.9	%			48.3	%
Change in reserves			5,418				9,494				12.9	%			20.6	%
Net incurred loss and LAE			25,455				31,796				60.8	%			68.9	%
Total
Loss and LAE payments			110,647				103,622				45.7	%			44.9	%
Change in reserves			31,326				36,598				12.9	%			15.8	%
Net incurred loss and LAE		$	141,973			$	140,220				58.6	%			60.7	%
		Amounts								Loss Ratio Impact
Impact of Prior Years Reserves		June 30,				June 30,				June 30,				June 30,
Favorable / (Unfavorable) Development		2015				2014				2015				2014
US Insurance		$	7,829			$	12,582				3.2	%			5.4	%
International Insurance			(581	)			10,373				-0.2	%			4.5	%
Global Reinsurance			7				(2,440	)			0.0	%			-1.0	%
Total		$	7,255			$	20,515				3.0	%			8.9	%

---

News Release

Page 13

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Net Incurred Loss Activity

($ in thousands)

 

		For the Six Months Ended
		Amounts								Loss Ratio
		June 30,				June 30,				June 30,				June 30,
Net Incurred Loss Activity		2015				2014				2015				2014
US Insurance:
Loss and LAE payments		$	119,453			$	99,427				44.5	%			41.4	%
Change in reserves			42,501				46,668				15.8	%			19.4	%
Net incurred loss and LAE			161,954				146,095				60.3	%			60.8	%
International Insurance:
Loss and LAE payments			69,428				63,236				53.9	%			52.0	%
Change in reserves			(7,374	)			3,277				-5.7	%			2.6	%
Net incurred loss and LAE			62,054				66,513				48.2	%			54.6	%
Global Reinsurance:
Loss and LAE payments			41,249				41,622				50.7	%			44.2	%
Change in reserves			6,914				21,057				8.5	%			22.3	%
Net incurred loss and LAE			48,163				62,679				59.2	%			66.5	%
Total
Loss and LAE payments			230,130				204,285				48.1	%			44.7	%
Change in reserves			42,041				71,002				8.8	%			15.6	%
Net incurred loss and LAE		$	272,171			$	275,287				56.9	%			60.3	%
		Amounts								Loss Ratio Impact
Impact of Prior Years Reserves		June 30,				June 30,				June 30,				June 30,
Favorable / (Unfavorable) Development		2015				2014				2015				2014
US Insurance		$	14,238			$	12,134				3.0	%			2.7	%
International Insurance			5,610				10,957				1.2	%			2.4	%
Global Reinsurance			6				(2,538	)			0.0	%			-0.6	%
Total		$	19,854			$	20,553				4.2	%			4.5	%

---

News Release

Page 14

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Net Loss Data

($ in thousands)

 

		As of June 30, 2015
		Case				IBNR
Net Loss Reserves:		Reserves				Reserves				Total
US Insurance:
Marine		$	70,582			$	65,030			$	135,612
Property Casualty			154,775				451,665				606,440
Professional Liability			45,573				71,814				117,387
Total US Insurance			270,930				588,509				859,439
International Insurance:
Marine			176,305				66,970				243,275
Property Casualty			36,429				16,507				52,936
Professional Liability			9,817				56,706				66,523
Total International Insurance			222,551				140,183				362,734
Global Reinsurance			26,964				101,723				128,687
Total Net Loss Reserves		$	520,445			$	830,415			$	1,350,860
		As of December 31, 2014
		Case				IBNR
Net Loss Reserves:		Reserves				Reserves				Total
US Insurance:
Marine		$	74,699			$	64,390			$	139,089
Property Casualty			144,334				391,643				535,977
Professional Liability			56,501				85,369				141,870
Total US Insurance			275,534				541,402				816,936
International Insurance:
Marine			168,575				75,673				244,248
Property Casualty			41,695				21,391				63,086
Professional Liability			12,466				49,712				62,178
Total International Insurance			222,736				146,776				369,512
Global Reinsurance			31,108				90,580				121,688
Total Net Loss Reserves		$	529,378			$	778,758			$	1,308,136

---

News Release

Page 15

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Investment Data

June 30, 2015

As of June 30, 2015, the average quality of the investment portfolio as rated by S&P and Moody’s was AA/Aa with an average duration of 3.8 years. The Company does not own any collateralized debt obligations (CDO’s) or asset backed commercial paper.

The following table sets forth our cash and investments as of June 30, 2015:

 

		As of June 30, 2015
		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		$	295,687			$	3,407			$	(6,173	)		$	298,453
States, municipalities and political subdivisions			565,188				12,511				(2,531	)			555,208
Mortgage- and asset-backed securities:
Agency mortgage-backed securities			343,916				6,501				(2,100	)			339,515
Residential mortgage obligations			32,396				1,010				(102	)			31,488
Asset-backed securities			195,512				433				(488	)			195,567
Commercial mortgage-backed securities			216,185				4,814				(1,481	)			212,852
Subtotal			788,009				12,758				(4,171	)			779,422
Corporate bonds			665,053				10,210				(3,211	)			658,054
Total fixed maturities			2,313,937				38,886				(16,086	)			2,291,137
Equity securities			195,078				18,733				(3,572	)			179,917
Short-term investments			201,748				60				—				201,688
Total		$	2,710,763			$	57,679			$	(19,658	)		$	2,672,742