Exhibit 99.1

 

The Navigators Group, Inc.

CORPORATE NEWS

Navigators Reports Third Quarter Earnings,

Operating Earnings $1.37 per diluted share

Stamford, CT – November 5, 2015 — The Navigators Group, Inc. (NASDAQ:NAVG) reported net income of $18.2 million, or $1.23 per diluted share, for the three months ended September 30, 2015 compared to $31.2 million, or $2.14 per diluted share, for the comparable period in 2014. Operating earnings were $20.3 million, or $1.37 per diluted share, for the three months ended September 30, 2015 compared to $26.1 million, or $1.79 per diluted share, for the comparable period in 2014.

For the nine months ended September 30, 2015, the Company reported net income of $63.3 million, or $4.29 per diluted share compared to $76.1 million, or $5.22 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 nine months ended September 30, 2014 net income per diluted share would have been $4.77. Operating earnings were $60.7 million, or $4.11 per diluted share, for the nine months ended September 30, 2015 compared to $62.0 million, or $4.25 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 September 30, 2015 were $354.1 million and $251.9 million, respectively, an increase of 8.1% and 10.3% from the comparable period in 2014.

Gross written premiums and net written premiums for the nine months ended September 30, 2015 were $1.1 billion and $799.1 million, respectively, an increase of 2.8% and 3.5% from the comparable period in 2014.

The combined ratio for the three and nine months ended September 30, 2015 was 93.4% and 93.0%, respectively, compared to 89.5% and 92.3% for the comparable periods in 2014.

Stan Galanski, President and Chief Executive Officer commented, “We are pleased to report profitable underwriting results and good premium growth for the third quarter and for the first nine months of 2015. The U.S. Insurance and GlobalRe segments generated excellent results for the quarter. We remain optimistic about targeted growth initiatives across all three of our operating segments. Net investment income increased 9.7% for the quarter, contributing to an increase in book value per share to $74.70.”

Stockholders’ equity was $1.1 billion, or $74.70 per share, as of September 30, 2015 compared to $1.0 billion, or $71.93 per share, as of December 31, 2014.

 

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, 2015 was $17.4 million and $50.2 million, respectively, an increase of 9.7% and 4.4% 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 2.5% and 2.4% for the three and nine months ended September 30, 2015, compared to 2.2% and 2.4%, 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-/Aa3” as defined by Standard & Poor’s and Moody’s, respectively, and an average effective duration of 3.8 years as of September 30, 2015. As of September 30, 2015, net unrealized gains within our investment portfolio were $39.0 million, a decrease of $32.4 million compared to December 31, 2014.

There were $0.8 million of net realized losses recognized in earnings for the three months ended September 30, 2015, compared to $6.7 million of net realized gains for the same period in 2014. For the nine months ended September 30, 2015, there were $8.8 million of net realized gains, compared to $12.0 million for the same period in 2014.

Other income (loss) for the three months ended September 30, 2015 was a $2.5 million loss, compared to $1.3 million of income for the same period in 2014. For the nine months ended September 30, 2015, Other income (loss) was a $4.6 million loss compared to $10.1 million of income for the same period in the prior year, largely impacted by a one-time foreign exchange gain in the first quarter of 2014. Other income (loss) primarily consists of realized and unrealized foreign exchange gains and losses.

The Company will hold a conference call on Friday, November 6, 2015 starting at 8:30 a.m. EST to discuss the 2015 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) 572-7033 and the international dial-in is (719) 325-2454. Participants may connect to the webcast at:

http://edge.media-server.com/m/p/rtf74zgm

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.

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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,
		2015				2014				Change				2015				2014				Change
Results of Operations
Gross written premiums		$	354,062			$	327,469				8.1	%		$	1,129,993			$	1,099,054				2.8	%
Net written premiums			251,939				228,417				10.3	%			799,141				772,131				3.5	%
Revenues:
Net earned premiums			254,082				245,367				3.6	%			732,542				701,723				4.4	%
Net investment income			17,371				15,839				9.7	%			50,219				48,097				4.4	%
Net realized gains (losses):
Total other-than-temporary impairment losses			(1,298	)			(41	)			NM				(1,747	)			158				NM
Portion of loss recognized in other comprehensive income (before tax)			23				41				-43.9	%			49				(158	)			NM
Net other-than-temporary impairment losses recognized in earnings			(1,275	)			—				NM				(1,698	)			—				NM
Other realized gains (losses)			518				6,718				-92.3	%			10,453				12,024				-13.1	%
Net realized gains (losses)			(757	)			6,718				NM				8,755				12,024				-27.2	%
Other income (loss)			(2,518	)			1,336				NM				(4,638	)			10,070				NM
Total revenues			268,178				269,260				-0.4	%			786,878				771,914				1.9	%
Expenses:
Net losses and loss adjustment expenses			146,546				135,284				8.3	%			418,717				410,571				2.0	%
Commission expenses			34,253				33,943				0.9	%			98,638				91,820				7.4	%
Other operating expenses			56,599				50,388				12.3	%			164,297				145,526				12.9	%
Interest expense			3,856				3,388				13.8	%			11,567				11,559				0.1	%
Total expenses			241,254				223,003				8.2	%			693,219				659,476				5.1	%
Income before income taxes			26,924				46,257				-41.8	%			93,659				112,438				-16.7	%
Income tax expense (benefit)			8,723				15,032				-42.0	%			30,345				36,384				-16.6	%
Net income (loss)		$	18,201			$	31,225				-41.7	%		$	63,314			$	76,054				-16.8	%
Per Share Data
Net income per common share:
Basic		$	1.26			$	2.19				-42.3	%		$	4.40			$	5.34				-17.5	%
Diluted		$	1.23			$	2.14				-42.5	%		$	4.29			$	5.22				-17.8	%
Average common shares outstanding:
Basic			14,411,927				14,265,260								14,384,291				14,252,910
Diluted			14,811,095				14,613,744								14,767,949				14,577,297
Underwriting Ratios
Loss Ratio			57.7	%			55.1	%							57.2	%			58.5	%
Expense Ratio			35.7	%			34.4	%							35.8	%			33.8	%
Combined Ratio			93.4	%			89.5	%							93.0	%			92.3	%
		Sept. 30,				June 30,								Sept. 30,				Dec. 31,
Balance Sheet Data		2015				2015								2015				2014
Stockholders’ equity		$	1,076,855			$	1,053,629				2.2	%		$	1,076,855			$	1,027,224				4.8	%
Book value per share		$	74.70			$	73.18				2.1	%		$	74.70			$	71.93				3.9	%

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

 

amounts in thousands, except share and per share amounts
		September 30,				December 31,
		2015				2014
ASSETS
Investments and cash:
Fixed maturities, available-for-sale, at fair value (amortized cost: 2015: $2,367,172; 2014: $2,323,959)		$	2,396,987			$	2,365,934
Equity securities, available-for-sale, at fair value (cost: 2015: $265,760; 2014: $154,843)			274,928				184,295
Short-term investments, at fair value (amortized cost: 2015: $233,109; 2014: $179,527)			233,142				179,506
Cash			69,483				90,751
Total investments and cash		$	2,974,540			$	2,820,486
Premiums receivable			343,214			$	342,479
Prepaid reinsurance premiums			252,488				237,851
Reinsurance recoverable on paid losses			53,174				51,347
Reinsurance recoverable on unpaid losses and loss adjustment expenses			794,235				851,498
Deferred policy acquisition costs			88,959				79,452
Accrued investment income			16,130				14,791
Goodwill and other intangible assets			6,906				7,013
Current income tax receivable, net			14,011				14,549
Deferred income tax, net			9,955				—
Receivable for investments sold			2,727				326
Other assets			40,188				44,384
Total assets		$	4,596,527			$	4,464,176
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Reserves for losses and loss adjustment expenses		$	2,175,317			$	2,159,634
Unearned premiums			847,403				766,167
Reinsurance balances payable			133,542				152,774
Senior notes			263,544				263,440
Deferred income tax, net			—				1,467
Payable for investments purchased			31,000				134
Accounts payable and other liabilities			68,866				93,336
Total liabilities		$	3,519,672			$	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 17,926,323 shares for 2015 and 17,792,846 shares for 2014			1,792				1,778
Additional paid-in capital			354,527				347,022
Treasury stock, at cost (3,511,380 shares for 2015 and 2014)			(155,801	)			(155,801	)
Retained earnings			850,980				787,666
Accumulated other comprehensive income			25,357				46,559
Total stockholders’ equity		$	1,076,855			$	1,027,224
Total liabilities and stockholders’ equity		$	4,596,527			$	4,464,176

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

 

		Three Months Ended September 30, 2015
		U.S.				Int’l
amounts in thousands		Insurance				Insurance				GlobalRe				Corporate (1)				Total
Gross written premiums		$	218,783			$	98,788			$	36,491				—			$	354,062
Ceded written premiums			(63,753	)			(37,804	)			(566	)			—				(102,123	)
Net written premiums			155,030				60,984				35,925				—				251,939
Net earned premiums			142,409				68,533				43,140				—				254,082
Net losses and LAE			(85,140	)			(39,182	)			(22,224	)			—				(146,546	)
Commission expenses			(15,157	)			(12,780	)			(7,705	)			1,389				(34,253	)
Other operating expenses			(32,948	)			(19,937	)			(3,714	)			—				(56,599	)
Other underwriting income (expense)			1,013				—				395				(1,389	)			19
Underwriting profit (loss)		$	10,177			$	(3,366	)		$	9,892			$	—			$	16,703
Net investment income															17,371				17,371
Net realized gains (losses)															(757	)			(757	)
Interest expense															(3,856	)			(3,856	)
Other income (loss)															(2,537	)			(2,537	)
Income before income taxes		$	10,177			$	(3,366	)		$	9,892			$	10,221			$	26,924
Income tax (expense) benefit															(8,723	)			(8,723	)
Net income (loss)																		$	18,201
Losses and LAE ratio			59.8	%			57.2	%			51.5	%							57.7	%
Commission expense ratio			10.6	%			18.6	%			17.9	%							13.5	%
Other operating expense ratio (2)			22.5	%			29.1	%			7.7	%							22.2	%
Combined ratio			92.9	%			104.9	%			77.1	%							93.4	%

 

(1)	- Includes Corporate segment intercompany eliminations.

(2)	- Includes Other operating expenses and Other underwriting income (expense).

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

 

		Three Months Ended September 30, 2014
		U.S.				Int’l
amounts in thousands		Insurance				Insurance				GlobalRe				Corporate (1)				Total
Gross written premiums		$	199,723			$	94,161			$	33,585			$	—			$	327,469
Ceded written premiums			(61,654	)			(36,607	)			(791	)			—				(99,052	)
Net written premiums			138,069				57,554				32,794				—				228,417
Net earned premiums			130,420				66,278				48,669				—				245,367
Net losses and LAE			(80,722	)			(24,910	)			(29,652	)			—				(135,284	)
Commission expenses			(12,870	)			(12,792	)			(8,831	)			550				(33,943	)
Other operating expenses			(29,160	)			(17,288	)			(3,940	)			—				(50,388	)
Other underwriting income (expense)			534				1				122				(550	)			107
Underwriting profit (loss)		$	8,202			$	11,289			$	6,368			$	—			$	25,859
Net investment income															15,839				15,839
Net realized gains (losses)															6,718				6,718
Interest expense															(3,388	)			(3,388	)
Other income (loss)															1,229				1,229
Income before income taxes		$	8,202			$	11,289			$	6,368			$	20,398			$	46,257
Income tax (expense) benefit															(15,032	)			(15,032	)
Net income (loss)																		$	31,225
Losses and LAE ratio			61.9	%			37.6	%			60.9	%							55.1	%
Commission expense ratio			9.9	%			19.3	%			18.1	%							13.8	%
Other operating expense ratio (2)			21.9	%			26.1	%			7.9	%							20.6	%
Combined ratio			93.7	%			83.0	%			86.9	%							89.5	%

 

(1)	- Includes Corporate segment intercompany eliminations.

(2)	- Includes Other operating expenses and Other underwriting income (expense).

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

 

		Nine Months Ended September 30, 2015
		U.S.				Int’l
amounts in thousands		Insurance				Insurance				GlobalRe				Corporate (1)				Total
Gross written premiums		$	658,097			$	330,005			$	141,891				—			$	1,129,993
Ceded written premiums			(211,365	)			(113,681	)			(5,806	)			—				(330,852	)
Net written premiums			446,732				216,324				136,085				—				799,141
Net earned premiums			410,804				197,244				124,494				—				732,542
Net losses and LAE			(247,094	)			(101,236	)			(70,387	)			—				(418,717	)
Commission expenses			(41,777	)			(35,491	)			(23,042	)			1,672				(98,638	)
Other operating expenses			(98,010	)			(54,312	)			(11,975	)			—				(164,297	)
Other underwriting income (expense)			1,330				—				441				(1,672	)			99
Underwriting profit (loss)		$	25,253			$	6,205			$	19,531			$	—			$	50,989
Net investment income															50,219				50,219
Net realized gains (losses)															8,755				8,755
Interest expense															(11,567	)			(11,567	)
Other income (loss)															(4,737	)			(4,737	)
Income (loss) before income taxes		$	25,253			$	6,205			$	19,531			$	42,670			$	93,659
Income tax (expense) benefit															(30,345	)			(30,345	)
Net income (loss)																		$	63,314
Losses and LAE ratio			60.1	%			51.3	%			56.5	%							57.2	%
Commission expense ratio			10.2	%			18.0	%			18.5	%							13.5	%
Other operating expense ratio (2)			23.6	%			27.6	%			9.3	%							22.3	%
Combined ratio			93.9	%			96.9	%			84.3	%							93.0	%

 

(1)	- Includes Corporate segment intercompany eliminations.

(2)	- Includes Other operating expenses and Other underwriting income (expense).

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

 

		Nine Months Ended September 30, 2014
		U.S.				Int’l
amounts in thousands		Insurance				Insurance				GlobalRe				Corporate (1)				Total
Gross written premiums		$	604,774			$	334,085			$	160,195			$	—			$	1,099,054
Ceded written premiums			(186,724	)			(135,534	)			(4,665	)			—				(326,923	)
Net written premiums			418,050				198,551				155,530				—				772,131
Net earned premiums			370,864				187,993				142,866				—				701,723
Net losses and LAE			(226,817	)			(91,423	)			(92,331	)			—				(410,571	)
Commission expenses			(35,598	)			(32,656	)			(25,171	)			1,605				(91,820	)
Other operating expenses			(85,993	)			(47,783	)			(11,750	)			—				(145,526	)
Other underwriting income (expense)			1,783				18				301				(1,605	)			497
Underwriting profit (loss)		$	24,239			$	16,149			$	13,915			$	—			$	54,303
Net investment income															48,097				48,097
Net realized gains (losses)															12,024				12,024
Interest expense															(11,559	)			(11,559	)
Other income (loss)															9,573				9,573
Income (loss) before income taxes		$	24,239			$	16,149			$	13,915			$	58,135			$	112,438
Income tax (expense) benefit															(36,384	)			(36,384	)
Net income (loss)																		$	76,054
Losses and LAE ratio			61.2	%			48.6	%			64.6	%							58.5	%
Commission expense ratio			9.6	%			17.4	%			17.6	%							13.1	%
Other operating expense ratio (2)			22.7	%			25.4	%			8.1	%							20.7	%
Combined ratio			93.5	%			91.4	%			90.3	%							92.3	%

 

(1)	- Includes Corporate segment intercompany eliminations.

(2)	- Includes Other operating expenses and Other underwriting income (expense).

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Reportable Segment Results

 

		U.S. Insurance
		Three months ended September 30, 2015																Three months ended September 30, 2014																% Change
amounts in thousands		Marine				P&C				Professional Liability				Total				Marine				P&C				Professional Liability				Total				Total
Gross written premiums		$	35,529			$	154,009			$	29,245			$	218,783			$	34,576			$	138,181			$	26,966			$	199,723				9.5	%
Ceded written premiums			(13,865	)			(34,902	)			(14,986	)			(63,753	)			(13,338	)			(41,180	)			(7,136	)			(61,654	)			3.4	%
Net written premiums			21,664				119,107				14,259				155,030				21,238				97,001				19,830				138,069				12.3	%
Net earned premiums			24,292				104,473				13,644				142,409				27,207				82,635				20,578				130,420				9.2	%
Net losses and LAE			(7,349	)			(69,054	)			(8,737	)			(85,140	)			(13,581	)			(53,955	)			(13,186	)			(80,722	)			5.5	%
Commission expenses			(2,412	)			(11,711	)			(1,034	)			(15,157	)			(3,486	)			(6,697	)			(2,687	)			(12,870	)			17.8	%
Other operating expenses			(6,754	)			(20,581	)			(5,613	)			(32,948	)			(6,086	)			(17,935	)			(5,139	)			(29,160	)			13.0	%
Other underwriting income (expense)			214				735				64				1,013				168				331				35				534				89.7	%
Underwriting profit (loss)		$	7,991			$	3,862				(1,676	)		$	10,177			$	4,222			$	4,379				(399	)		$	8,202				24.1	%
Losses and LAE ratio			30.3	%			66.1	%			64.0	%			59.8	%			49.9	%			65.3	%			64.1	%			61.9	%
Commission expense ratio			9.9	%			11.2	%			7.6	%			10.6	%			12.8	%			8.1	%			13.1	%			9.9	%
Other operating expense ratio (1)			26.9	%			19.0	%			40.7	%			22.5	%			21.8	%			21.3	%			24.7	%			21.9	%
Combined ratio			67.1	%			96.3	%			112.3	%			92.9	%			84.5	%			94.7	%			101.9	%			93.7	%

 

(1)	- Includes Other operating expenses and Other underwriting income (expense).

 

		Int’l Insurance
		Three months ended September 30, 2015																Three months ended September 30, 2014																% Change
amounts in thousands		Marine				P&C				Professional Liability				Total				Marine				P&C				Professional Liability				Total				Total
Gross written premiums		$	41,002			$	37,449			$	20,337			$	98,788			$	41,593			$	35,399			$	17,169			$	94,161				4.9	%
Ceded written premiums			(10,985	)			(20,034	)			(6,785	)			(37,804	)			(6,924	)			(24,267	)			(5,416	)			(36,607	)			3.3	%
Net written premiums			30,017				17,415				13,552				60,984				34,669				11,132				11,753				57,554				6.0	%
Net earned premiums			36,792				16,879				14,862				68,533				40,207				14,300				11,771				66,278				3.4	%
Net losses and LAE			(23,002	)			(8,051	)			(8,129	)			(39,182	)			(14,657	)			(3,565	)			(6,688	)			(24,910	)			57.3	%
Commission expenses			(8,227	)			(2,779	)			(1,774	)			(12,780	)			(9,755	)			(2,565	)			(472	)			(12,792	)			-0.1	%
Other operating expenses			(8,233	)			(6,604	)			(5,100	)			(19,937	)			(7,573	)			(5,675	)			(4,040	)			(17,288	)			15.3	%
Other underwriting income (expense)			—				—				—				—				1				—				—				1				NM
Underwriting profit (loss)			(2,670	)			(555	)			(141	)			(3,366	)		$	8,223			$	2,495			$	571			$	11,289				NM
Losses and LAE ratio			62.5	%			47.7	%			54.7	%			57.2	%			36.5	%			24.9	%			56.8	%			37.6	%
Commission expense ratio			22.4	%			16.5	%			11.9	%			18.6	%			24.3	%			17.9	%			4.0	%			19.3	%
Other operating expense ratio (1)			22.4	%			39.1	%			34.4	%			29.1	%			18.7	%			39.8	%			34.4	%			26.1	%
Combined ratio			107.3	%			103.3	%			101.0	%			104.9	%			79.5	%			82.6	%			95.2	%			83.0	%

 

NM - Percentage change not meaningful

(1)	- Includes Other operating expenses and Other underwriting income (expense).

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November 5, 2015

Page 11

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Reportable Segment Results

 

		U.S. Insurance
		Nine months ended September 30, 2015																Nine months ended September 30, 2014																% Change
amounts in thousands		Marine				P&C				Professional Liability				Total				Marine				P&C				Professional Liability				Total				Total
Gross written premiums		$	118,167			$	458,371			$	81,559			$	658,097			$	120,149			$	400,437			$	84,188			$	604,774				8.8	%
Ceded written premiums			(45,177	)			(123,765	)			(42,423	)			(211,365	)			(34,095	)			(127,788	)			(24,841	)			(186,724	)			13.2	%
Net written premiums			72,990				334,606				39,136				446,732				86,054				272,649				59,347				418,050				6.9	%
Net earned premiums			74,193				291,648				44,963				410,804				81,920				224,151				64,793				370,864				10.8	%
Net losses and LAE			(28,952	)			(194,910	)			(23,232	)			(247,094	)			(38,873	)			(150,924	)			(37,020	)			(226,817	)			8.9	%
Commission expenses			(8,873	)			(29,018	)			(3,886	)			(41,777	)			(10,134	)			(16,737	)			(8,727	)			(35,598	)			17.4	%
Other operating expenses			(20,129	)			(60,976	)			(16,905	)			(98,010	)			(17,720	)			(52,923	)			(15,350	)			(85,993	)			14.0	%
Other underwriting income (expense)			389				876				65				1,330				691				971				121				1,783				-25.4	%
Underwriting profit (loss)		$	16,628			$	7,620			$	1,005			$	25,253			$	15,884			$	4,538			$	3,817			$	24,239				4.2	%
Losses and LAE ratio			39.0	%			66.8	%			51.7	%			60.1	%			47.5	%			67.3	%			57.1	%			61.2	%
Commission expense ratio			12.0	%			9.9	%			8.6	%			10.2	%			12.4	%			7.5	%			13.5	%			9.6	%
Other operating expense ratio (1)			26.6	%			20.7	%			37.5	%			23.6	%			20.7	%			23.2	%			23.5	%			22.7	%
Combined ratio			77.6	%			97.4	%			97.8	%			93.9	%			80.6	%			98.0	%			94.1	%			93.5	%

 

(1)	- Includes Other operating expenses and Other underwriting income (expense).

 

		Int’l Insurance
		Nine months ended September 30, 2015																Nine months ended September 30, 2014																% Change
amounts in thousands		Marine				P&C				Professional Liability				Total				Marine				P&C				Professional Liability				Total				Total
Gross written premiums		$	149,844			$	112,014			$	68,147			$	330,005			$	151,107			$	128,954			$	54,024			$	334,085				-1.2	%
Ceded written premiums			(30,933	)			(60,676	)			(22,072	)			(113,681	)			(36,351	)			(80,015	)			(19,168	)			(135,534	)			-16.1	%
Net written premiums			118,911				51,338				46,075				216,324				114,756				48,939				34,856				198,551				9.0	%
Net earned premiums			114,716				43,112				39,416				197,244				112,428				47,207				28,358				187,993				4.9	%
Net losses and LAE			(63,945	)			(17,015	)			(20,276	)			(101,236	)			(57,316	)			(20,460	)			(13,647	)			(91,423	)			10.7	%
Commission expenses			(26,912	)			(3,961	)			(4,618	)			(35,491	)			(29,763	)			(2,370	)			(523	)			(32,656	)			8.7	%
Other operating expenses			(21,677	)			(18,754	)			(13,881	)			(54,312	)			(20,454	)			(16,526	)			(10,803	)			(47,783	)			13.7	%
Other underwriting income (expense)			—				—				—				—				9				5				4				18				NM
Underwriting profit (loss)		$	2,182			$	3,382			$	641			$	6,205			$	4,904			$	7,856			$	3,389			$	16,149				-61.6	%
Losses and LAE ratio			55.7	%			39.5	%			51.4	%			51.3	%			51.0	%			43.3	%			48.1	%			48.6	%
Commission expense ratio			23.5	%			9.2	%			11.7	%			18.0	%			26.5	%			5.0	%			1.8	%			17.4	%
Other operating expense ratio (1)			18.9	%			43.5	%			35.3	%			27.6	%			18.1	%			35.1	%			38.2	%			25.4	%
Combined ratio			98.1	%			92.2	%			98.4	%			96.9	%			95.6	%			83.4	%			88.1	%			91.4	%

 

NM - Percentage change not meaningful

(1)	- Includes Other operating expenses and Other underwriting income (expense).

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November 5, 2015

Page 12

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Net Incurred Loss Activity

($ in thousands)

 

		For the Three Months Ended September 30,
		Amounts								Loss Ratio
Net Incurred Loss Activity		2015				2014				2015				2014
US Insurance:
Loss and LAE payments		$	67,327			$	64,436				47.3	%			49.4	%
Change in reserves			17,813				16,286				12.5	%			12.5	%
Net incurred loss and LAE			85,140				80,722				59.8	%			61.9	%
International Insurance:
Loss and LAE payments			29,306				27,018				42.8	%			40.8	%
Change in reserves			9,876				(2,108	)			14.4	%			-3.2	%
Net incurred loss and LAE			39,182				24,910				57.2	%			37.6	%
Global Reinsurance:
Loss and LAE payments			16,899				16,626				39.2	%			34.1	%
Change in reserves			5,325				13,026				12.3	%			26.8	%
Net incurred loss and LAE			22,224				29,652				51.5	%			60.9	%
Total
Loss and LAE payments			113,532				108,080				44.7	%			44.0	%
Change in reserves			33,014				27,204				13.0	%			11.1	%
Net incurred loss and LAE		$	146,546			$	135,284				57.7	%			55.1	%
		Amounts								Loss Ratio Impact
Impact of Prior Years Reserves		Sept. 30,				Sept. 30,				Sept. 30,				Sept. 30,
Favorable / (Unfavorable) Development		2015				2014				2015				2014
US Insurance		$	7,057			$	4,831				2.8	%			2.0	%
International Insurance			2,794				10,139				1.1	%			4.1	%
Global Reinsurance			4,264				500				1.7	%			0.2	%
Total		$	14,115			$	15,470				5.6	%			6.3	%

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Page 13

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Net Incurred Loss Activity

($ in thousands)

 

		For the Nine Months Ended September 30,
		Amounts								Loss Ratio
Net Incurred Loss Activity		2015				2014				2015				2014
US Insurance:
Loss and LAE payments		$	186,780			$	163,863				45.4	%			44.2	%
Change in reserves			60,314				62,954				14.7	%			17.0	%
Net incurred loss and LAE			247,094				226,817				60.1	%			61.2	%
International Insurance:
Loss and LAE payments			98,734				90,254				50.0	%			48.0	%
Change in reserves			2,502				1,169				1.3	%			0.6	%
Net incurred loss and LAE			101,236				91,423				51.3	%			48.6	%
Global Reinsurance:
Loss and LAE payments			58,148				58,248				46.7	%			40.8	%
Change in reserves			12,239				34,083				9.8	%			23.8	%
Net incurred loss and LAE			70,387				92,331				56.5	%			64.6	%
Total
Loss and LAE payments			343,662				312,365				47.0	%			44.5	%
Change in reserves			75,055				98,206				10.2	%			14.0	%
Net incurred loss and LAE		$	418,717			$	410,571				57.2	%			58.5	%
		Amounts								Loss Ratio Impact
Impact of Prior Years Reserves		Sept. 30,				Sept. 30,				Sept. 30,				Sept. 30,
Favorable / (Unfavorable) Development		2015				2014				2015				2014
US Insurance		$	21,295			$	16,965				2.9	%			2.4	%
International Insurance			8,404				21,096				1.1	%			3.0	%
Global Reinsurance			4,270				(2,038	)			0.6	%			-0.3	%
Total		$	33,969			$	36,023				4.6	%			5.1	%

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Page 14

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Net Loss Data

($ in thousands)

 

		As of September 30, 2015
		Case				IBNR
Net Loss Reserves:		Reserves				Reserves				Total
US Insurance:
Marine		$	69,067			$	61,475			$	130,542
Property Casualty			162,634				478,821				641,455
Professional Liability			38,642				66,637				105,279
Total US Insurance			270,343				606,933				877,276
International Insurance:
Marine			171,492				71,114				242,606
Property Casualty			37,906				17,793				55,699
Professional Liability			10,347				61,648				71,995
Total International Insurance			219,745				150,555				370,300
Global Reinsurance			27,907				105,601				133,508
Total Net Loss Reserves		$	517,995			$	863,089			$	1,381,084
		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

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Investment Data

As of September 30, 2015, the average quality of the investment portfolio as rated by S&P and Moody’s was AA-/Aa3 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 investments as of September 30, 2015:

 

		As of September 30, 2015
amounts in thousands		Fair Value				Gross Unrealized Gains				Gross Unrealized (Losses)				Cost or Amortized Cost
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds		$	301,915			$	4,327			$	(8,812	)		$	306,400
States, municipalities and political subdivisions			571,104				17,402				(927	)			554,629
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities			360,198				7,200				(912	)			353,910
Residential mortgage obligations			31,568				854				(104	)			30,818
Asset-backed securities			197,934				591				(846	)			198,189
Commercial mortgage-backed securities			204,876				5,335				(958	)			200,499
Subtotal		$	794,576			$	13,980			$	(2,820	)		$	783,416
Corporate bonds			729,392				10,776				(4,111	)			722,727
Total fixed maturities		$	2,396,987			$	46,485			$	(16,670	)		$	2,367,172
Equity securities			274,928				16,486				(7,318	)			265,760
Short-term investments			233,142				33								233,109
Total investments		$	2,905,057			$	63,004			$	(23,988	)		$	2,866,041