November 2, 2017

Navigators Reports Third Quarter 2017 Results

STAMFORD, Conn., Nov. 02, 2017 (GLOBE NEWSWIRE) -- The Navigators Group, Inc. (NASDAQ:NAVG) reported a Net Loss of $(28.0) million, or $(0.95) per diluted share, for the three months ended September 30, 2017 compared to Net Income of $22.0 million, or $0.73 per diluted share, for the same period in 2016. Net Operating Earnings (Loss)1 were $(29.6) million, or $(1.00) per diluted share, for the three months ended September 30, 2017 compared to $21.1 million, or $0.70 per diluted share, for the same period in 2016.

Gross Written Premiums and Net Written Premiums for the three months ended September 30, 2017 were $402.0 million and $296.0 million, respectively, increasing 7.2% and 6.9%, respectively, from the comparable period in 2016. Our Combined Ratio for the three months ended September 30, 2017 was 121.9%, compared to 95.6% for the same period in 2016.

The current quarter includes Net Losses and Loss Adjustment Expenses and related net reinsurance reinstatement premiums of $75.1 million from Hurricanes Maria, Irma and Harvey and the Puebla, Mexico Earthquake, as well as prior accident year reserve strengthening of $29.5 million primarily within our U.S. and International Insurance reporting segments.

Net Investment Income for the three months ended September 30, 2017 was $22.6 million, an increase of 13.7% as compared to the same period in 2016. Our annualized pre-tax investment yield, excluding Net Realized Gains and Losses and Other-Than-Temporary Impairment Losses Recognized in Earnings, was 2.7% for the three months ended September 30, 2017, compared to 2.5% for the same period in 2016.

Other Income (Loss) for the three months ended September 30, 2017 was $(1.7) million, compared to $(0.2) million for the same period in 2016, and primarily consists of realized and unrealized foreign exchange gains and losses.

For the nine months ended September 30, 2017, our Company reported Net Income of $13.6 million, or $0.45 per diluted share, compared to $61.1 million, or $2.04 per diluted share, for the same period in 2016. Net Operating Earnings were $10.5 million, or $0.35 per diluted share, for the nine months ended September 30, 2017 compared to $53.5 million, or $1.79 per diluted share, for the same period in 2016.

Gross Written Premiums and Net Written Premiums for the nine months ended September 30, 2017 were $1.3 billion and $1.0 billion, respectively, increasing 8.6% and 7.0%, respectively, from the comparable period in 2016. Our Combined Ratio for the nine months ended September 30, 2017 was 105.5%, compared to 96.7% for the same period in 2016, mostly due to the net loss activity noted above.

Net Investment Income for the nine months ended September 30, 2017 was $66.3 million, an increase of 11.7% as compared to the same period in 2016. Our annualized pre-tax investment yield, excluding Net Realized Gains and Losses and Other-Than-Temporary Impairment Losses Recognized in Earnings, was 2.7% for the nine months ended September 30, 2017, compared to 2.6% for the same period in 2016.

Other Income (Loss) for the nine months ended September 30, 2017 was $(1.0) million, compared to $6.8 million for the same period in 2016.

Stan Galanski, President and Chief Executive Officer, commented, "Navigators' financial impact from our exposure to multiple natural catastrophe events in the third quarter was well within our tolerance and expectations, reflected in the modest decline in Book Value per Share of 1.7% for the quarter and increase of 2.6% for the nine month period. Our underwriting teams are well positioned to respond to anticipated improvement in regional property markets. Premium volume was up across all three segments, led by strong growth in GlobalRe, our global reinsurance segment. Our investment portfolio continued to perform well, with Net Investment Income up 13.7% for the quarter. During the quarter, we made a modest strengthening of prior year loss reserves across a number of lines of business, reflecting our commitment to maintaining prudent levels of loss reserving and a solid balance sheet."

Our Company's investment portfolio mainly consists of fixed income securities with an average quality rating of "AA-/Aa3" as defined by S&P and Moody's, respectively, with an average effective duration of 3.6 years as of September 30, 2017. As of September 30, 2017, Net Unrealized Gains within our investment portfolio were $87.2 million, an increase of $12.9 million compared to June 30, 2017 and an increase of $58.2 million compared to December 31, 2016. We recognized $4.2 million of Net Realized Gains (inclusive of Net Other-Than-Temporary Impairment Losses Recognized in Earnings) for the three months ended September 30, 2017, compared to $1.6 million of Net Realized Gains for the same period in 2016. For the nine months ended September 30, 2017 we recognized $5.9 million of Net Realized Gains (inclusive of Net Other-Than-Temporary Impairment Losses Recognized in Earnings), compared to $5.0 million of Net Realized Gains (inclusive of Net Other-Than-Temporary Impairment Losses Recognized in Earnings) for the same period in 2016.

Stockholders' Equity was $1.2 billion, or $41.49 per share, as of September 30, 2017 compared to $42.21 per share, as of June 30, 2017 and $40.45 per share, as of December 31, 2016.

During the three months ended September 30, 2017, our Company declared and paid a quarterly cash dividend of $0.06 per share of Common Stock.

On November 2, 2017 our Board of Directors declared a cash dividend on our Company's Common Stock of $0.06 per share, payable on December 15, 2017 to stockholders of record on November 24, 2017.

Our Company will hold a conference call on Friday, November 3, 2017 starting at 8:30 a.m. (ET) to discuss the 2017 third quarter results. The call will be available via live webcast on Navigators' website (www.navg.com).

To participate by telephone, the domestic dial-in number is 800-850-2903 and the international dial-in is 224-357-2399. Participants may also connect to the webcast at: https://edge.media-server.com/m6/p/on47jdtw.

On December 6, 2016, our Board of Directors declared a two-for-one stock split of The Navigators Group, Inc. Common Stock, to be effected in the form of a stock dividend. Stockholders of record at the close of business on December 30, 2016 received one additional share of Common Stock for every share of Common Stock held. All disclosures of shares and per share data in this earnings release have been retroactively adjusted to reflect the stock split for all periods presented. The additional shares of Common Stock were issued on January 20, 2017

The Navigators Group, Inc. is an international specialty insurance holding company with operations in the United States, the United Kingdom, Continental Europe and Asia.

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.

______________________________
1
Net Operating Earnings (Loss) is a "non-GAAP financial measure" as defined in Regulation G. A reconciliation of Net Income (Loss) (the nearest GAAP financial measure) to Net Operating Earnings (Loss) is provided on page 4 of this release, as is a discussion of the rationale for the presentation of this item.


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

 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)
 
  Three Months Ended      Nine Months Ended     
amounts in thousands, except per share amounts September 30,      September 30,     
Results of Operations 2017   2016  Change  2017  2016  Change 
                         
Gross Written Premiums $402,038  $374,930   7.2% $1,304,522  $1,201,372    8.6%
Net Written Premiums  296,016   277,001    6.9%  966,461   903,356   7.0%
                         
Revenues:                         
Net Earned Premiums $301,355  $284,010   6.1% $881,321  $816,360   8.0%
Net Investment Income  22,598   19,875   13.7%  66,311   59,344   11.7%
Net Realized Gains (Losses):                        
   Total Other-Than-Temporary Impairment Losses  (957)  23  NM   (2,005)  (248) NM 
   Portion of Loss Recognized in Other Comprehensive Income (Before Tax)  (15)  (23)  (34.8%)  (60)  98  NM 
Net Other-Than-Temporary Impairment Losses Recognized In Earnings  (972)    NM   (2,065 )  (150) NM 
Other Realized Gains  5,190   1,586  NM   7,933   5,143   54.2%
Net Realized Gains  4,218   1,586  NM   5,868   4,993   17.5%
Other Income (Loss)  (1,699)  (183) NM   (1,042)  6,796  NM 
Total Revenues $326,472  $305,288   6.9% $952,458  $887,493   7.3%
                         
Expenses:                         
Net Losses and Loss Adjustment Expenses $276,171  $172,793   59.8% $622,881  $492,955   26.4%
Commission Expenses  45,509   42,611   6.8%  141,526   120,891   17.1%
Other Operating Expenses  45,773   56,137   (18.5%)  165,077   176,020   (6.2%)
Interest Expense  3,862   3,859    0.1%  11,584   11,575   0.1%
Total Expenses $371,315  $275,400   34.8% $941,068  $801,441   17.4%
                         
Income (Loss) Before Income Taxes  $(44,843) $29,888  NM   $11,390  $86,052    (86.8%)
                          
Income Tax Expense (Benefit)  (16,864)  7,875   NM   (2,243)  24,917  NM 
                          
Net Income (Loss) $(27,979) $22,013  NM  $13,633  $61,135   (77.7%)
                         
                         
Per Share Data (1)                        
                         
Net Income (Loss)  Per Common Share:                         
Basic $(0.95) $0.76  NM  $0.46  $2.10   (78.0%)
Diluted $(0.95) $0.73  NM  $0.45  $2.04   (77.7%)
                          
Average Common Shares Outstanding:                         
Basic  29,500   29,115       29,419   29,058     
Diluted   29,500   30,141       30,006   29,997     
                         
Underwriting Ratios                         
Loss Ratio  91.6%  60.8%      70.7%  60.4%    
Expense Ratio  30.3%  34.8%      34.8%  36.3%    
Combined Ratio  121.9%  95.6%      105.5%  96.7%     
                          
Balance Sheet Data September 30,  June 30,      September 30,  December 31,     
  2017  2017      2017  2016     
Stockholders' Equity $1,224,191  $1,244,168   (1.6%) $1,224,191  $1,178,188    3.9%
Book Value per Share (1) $41.49  $42.21    (1.7%) $41.49  $40.45   2.6%

(1) - We completed a two-for-one stock split on January 20, 2017. All share and per share data prior to January 20, 2017 has been retroactively restated on a post-split basis.
NM - Percentage change not meaningful.


THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION OF NET INCOME (LOSS) TO NET OPERATING EARNINGS (LOSS)
(Unaudited)

In this release, we present Net Operating Earnings (Loss), which is a "non-GAAP financial measure" as defined in Regulation G.

Net Operating Earnings (Loss) is comprised of Net Income (Loss) 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 recognized in our Consolidated Statements of Income (Loss).

We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our business and enables investors and other users of our financial information to analyze underlying business performance in a manner similar to management. We also believe this measure follows industry practice and, therefore facilitates comparison of our performance with our peer group.

The following tables provide a reconciliation of Net Income (Loss) (the nearest GAAP financial measure) to Net Operating Earnings (Loss):

         
  Three Months Ended September 30, 2017  Three Months Ended September 30, 2016  % Change
amounts in thousands, except per share amounts Pre-Tax  Tax (1)  After-Tax  Pre-Tax  Tax (1)  After-Tax  QTD
Net Income (Loss) $(44,843) $16,864  $(27,979) $29,888  $(7,875) $22,013   NM
Adjustments to Net Income (Loss):                          
Realized Losses (Gains)   (4,218)  1,477   (2,741)  (1,586 )  555   (1,031) NM
FX Losses (Gains)  1,675   (586)  1,089   227   (80)  147  NM
Net Operating Earnings (Loss)  $(47,386) $17,755  $(29,631) $28,529  $(7,400) $21,129  NM
                           
Average Common Shares Outstanding: (2)                           
Basic          29,500           29,115   
Diluted          29,500           30,141   
                           
Net Operating Earnings (Loss) per Common Share: (2)                           
Basic         $(1.00)         $0.73   
Diluted         $(1.00)         $0.70   
                           


  Nine Months Ended September 30, 2017  Nine Months Ended September 30, 2016  % Change 
amounts in thousands, except per share amounts Pre-Tax  Tax (1)  After-Tax  Pre-Tax  Tax (1)  After-Tax  YTD 
Net Income $11,390  $2,243  $13,633  $86,052  $(24,917) $61,135   (77.7%)
Adjustments to Net Income:                            
Realized Losses (Gains)  (5,868)  2,055   (3,813)  (4,993)  1,747    (3,246)  17.5%
FX Losses (Gains)  1,015   (355)  660   (6,679)  2,337   (4,342) NM 
Net Operating Earnings $6,537  $3,943  $10,480  $74,380  $(20,833) $53,547   (80.4 %)
                              
Average Common Shares Outstanding: (2)                             
Basic          29,419           29,058     
Diluted          30,006           29,997     
                             
Net Operating Earnings per Common Share: (2)                             
Basic         $0.36          $1.84     
Diluted         $0.35          $1.79     

(1) - Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of any other relevant factors.
(2) - We completed a two-for-one stock split on January 20, 2017. All share and per share data prior to January 20, 2017 has been retroactively restated on a post-split basis.
NM - Percentage change not meaningful.

 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
         
  September 30,  December 31, 
  2017  2016 
amounts in thousands, except per share amounts (Unaudited)     
ASSETS        
Investments:        
Fixed Maturities, available-for-sale, at fair value (amortized cost: 2017:  $2,752,102; 2016: $2,628,225) $2,798,185  $2,635,882 
Equity Securities, available-for-sale, at fair value (cost: 2017: $334,739; 2016: $327,911)  375,876   349,142 
Other Invested Assets  1,751   1,960 
Short-Term Investments, at fair value (amortized cost: 2017: $247,602; 2016: $143,451)  247,607   143,539 
Total Investments $3,423,419  $3,130,523 
Cash  56,471   64,643 
Premiums Receivable   361,272   306,686 
Prepaid Reinsurance Premiums  231,174   213,377 
Reinsurance Recoverable on Paid Losses  61,054   82,582 
Reinsurance Recoverable on Unpaid Losses and Loss Adjustment Expenses  847,505   779,276 
Deferred Policy Acquisition Costs  134,625   119,660 
Accrued Investment Income  20,420   17,315 
Goodwill and Other Intangible Assets  6,591    6,451 
Current Income Tax Receivable, Net  48,186   20,556 
Deferred Income Tax, Net  13,080   20,938 
Other Assets  71,751   52,030 
Total Assets $5,275,548  $4,814,037 
          
LIABILITIES AND STOCKHOLDERS' EQUITY        
Liabilities:        
Reserves for Losses and Loss Adjustment Expenses $2,558,134  $2,289,727 
Unearned Premiums  990,518   887,344 
Reinsurance Balances Payable  129,306   108,980 
Senior Notes  263,845   263,728 
Payable for Investments Purchased  21,862    
Accounts Payable and Other Liabilities  87,692   86,070 
Total Liabilities $4,051,357  $3,635,849 
         
Stockholders' Equity: (1)        
Preferred Stock ($.10 par value per share, authorized 1,000 shares, none issued) $  $ 
         
Common Stock ($.10 par value per share, authorized 50,000 shares, issued 36,526 shares for 2017 and 36,147 shares for 2016)  3,650   3,612 
Additional Paid-In Capital  371,512   373,983 
Treasury Stock, at cost (7,023 shares for 2017 and 2016)  (155,801)  (155,801)
Retained Earnings  956,290   947,519 
Accumulated Other Comprehensive Income  48,540   8,875 
Total Stockholders' Equity  $1,224,191  $1,178,188 
Total Liabilities and Stockholders' Equity $5,275,548  $4,814,037 

(1) - We completed a two-for-one stock split on January 20, 2017. All share data prior to January 20, 2017 has been retroactively restated on a post-split basis.

 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information 
(Unaudited)
 
  Three Months Ended September 30, 2017 
  U.S.  Int'l              
amounts in thousands Insurance  Insurance  GlobalRe  Corporate (1)  Total 
Gross Written Premiums $235,052  $113,601  $53,385  $  $ 402,038 
Ceded Written Premiums  (64,328)  (38,966)  (2,728)     (106,022)
Net Written Premiums  170,724    74,635   50,657      296,016 
                      
Net Earned Premiums $169,150  $84,407  $ 47,798  $  $301,355 
Net Losses and LAE  (135,340)  (81,713)  (59,118)     (276,171)
Commission Expenses  (18,286)  (16,201)  (11,233)  211   (45,509)
Other Operating Expenses  (25,375)  (16,388)  (4,010)     (45,773)
Other Underwriting Income (Expense)  125      94   (211)   8 
                     
Underwriting Loss $(9,726) $(29,895) $(26,469) $  $(66,090)
                     
Net Investment Income               22,598   22,598 
Net Realized Gains               4,218   4,218 
Interest Expense               (3,862)  (3,862)
Other Loss               (1,707)  (1,707)
Loss Before Income Taxes $(9,726) $(29,895) $(26,469) $21,247  $(44,843)
Income Tax Benefit              16,864   16,864 
Net Loss                 $(27,979)
                     
Losses and LAE Ratio  80.0%  96.8%  123.7%      91.6%
Commission Expense Ratio  10.8%  19.2%  23.5%      15.1%
Other Operating Expense Ratio (2)  14.9%  19.4%  8.2%      15.2%
Combined Ratio  105.7%  135.4%  155.4%      121.9%

(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information 
(Unaudited)
 
  Three Months Ended September 30, 2016 
  U.S.  Int'l              
amounts in thousands Insurance   Insurance  GlobalRe  Corporate (1)  Total 
Gross Written Premiums $234,647  $104,484  $35,799  $  $374,930 
Ceded Written Premiums  (61,359)  (35,194)  (1,376)     (97,929)
Net Written Premiums  173,288   69,290   34,423      277,001 
                      
Net Earned Premiums $161,722  $79,761  $42,527  $  $284,010 
Net Losses and LAE  (106,320)  (45,043)  (21,430)     (172,793)
Commission Expenses  (18,630)  (15,348)  (8,951)  318   (42,611)
Other Operating Expenses  (31,517)  (20,183)  (4,437)     (56,137)
Other Underwriting Income (Expense)  240      122   (318)  44 
                     
Underwriting Profit (Loss) $5,495  $(813) $7,831  $   $12,513 
                     
Net Investment Income               19,875   19,875 
Net Realized Gains              1,586   1,586 
Interest Expense              (3,859)  (3,859)
Other Loss               (227)   (227)
Income (Loss) Before Income Taxes $5,495  $(813) $7,831  $17,375  $29,888 
Income Tax Expense              (7,875)  (7,875)
Net Income                 $22,013 
                      
Losses and LAE Ratio  65.7%  56.5%  50.4%      60.8 %
Commission Expense Ratio  11.5%  19.2%  21.0%      15.0%
Other Operating Expense Ratio (2)  19.4%  25.3 %  10.2%      19.8%
Combined Ratio   96.6%  101.0%  81.6%      95.6%

(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information 
(Unaudited)
 
  Nine Months Ended September 30, 2017 
  U.S.  Int'l             
amounts in thousands Insurance  Insurance   GlobalRe  Corporate (1)  Total 
Gross Written Premiums $729,843  $386,654  $188,025  $  $1,304,522 
Ceded Written Premiums  (199,672)  (129,368)  (9,021)     (338,061)
Net Written Premiums  530,171   257,286   179,004      966,461 
                     
Net Earned Premiums $500,241  $250,593  $130,487  $  $881,321 
Net Losses and LAE  (339,436)  (176,513)  (106,932)     (622,881)
Commission Expenses  (59,130)  (54,435)  (28,695)  734   (141,526)
Other Operating Expenses  (91,987)  (58,687)  (14,403)     (165,077)
Other Underwriting Income (Expense)  335      439   (734)  40 
                     
Underwriting Profit (Loss) $10,023  $(39,042) $(19,104) $  $(48,123)
                      
Net Investment Income              66,311   66,311 
Net Realized Gains              5,868   5,868 
Interest Expense              (11,584)  (11,584)
Other Loss              (1,082)  (1,082)
Income (Loss) Before Income Taxes $10,023  $(39,042) $(19,104) $59,513  $11,390 
Income Tax Benefit              2,243   2,243 
Net Income                 $13,633 
                     
Losses and LAE Ratio  67.9%  70.4%  81.9%      70.7%
Commission Expense Ratio  11.8%  21.7%  22.0%      16.1 %
Other Operating Expense Ratio (2)  18.3%  23.5%  10.7%      18.7%
Combined Ratio  98.0%  115.6%  114.6%      105.5%

(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information 
(Unaudited)
 
  Nine Months Ended September 30, 2016 
  U.S.  Int'l              
amounts in thousands Insurance  Insurance  GlobalRe  Corporate (1)  Total 
Gross Written Premiums $689,218  $384,367  $127,787  $  $1,201,372 
Ceded Written Premiums  (178,474)  (112,075)  (7,467)     (298,016)
Net Written Premiums  510,744   272,292    120,320      903,356 
                       
Net Earned Premiums $462,446  $235,602  $118,312  $  $816,360 
Net Losses and LAE  (291,260)  (133,519)  (68,176)     (492,955)
Commission Expenses  (50,379)  (47,524)  (24,188)  1,200    (120,891)
Other Operating Expenses  (96,848)  (64,997)  (14,175)     (176,020)
Other Underwriting Income (Expense)  943       374   (1,200)  117 
                     
Underwriting Profit (Loss) $24,902  $(10,438 ) $12,147  $  $26,611 
                     
Net Investment Income              59,344   59,344 
Net Realized Gains              4,993   4,993 
Interest Expense              (11,575)  (11,575)
Other Income               6,679   6,679 
Income (Loss) Before Income Taxes $24,902  $ (10,438) $12,147  $59,441  $86,052 
Income Tax Expense              (24,917)  (24,917)
Net Income                 $61,135 
                      
Losses and LAE Ratio  63.0%  56.7%  57.6%      60.4%
Commission Expense Ratio  10.9%  20.2%   20.4%      14.8%
Other Operating Expense Ratio (2)  20.7%  27.5%  11.7%      21.5%
Combined Ratio  94.6%  104.4%  89.7%      96.7%

(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
(Unaudited)
 
  U.S. Insurance 
  Three Months Ended September 30, 2017  Three Months Ended September 30, 2016     
amounts in thousands Marine  P&C  Professional
Liability
   Total  Marine  P&C   Professional
Liability
  Total  %
Change
Total
 
Gross Written Premiums $36,403  $166,097  $32,552  $235,052  $40,271  $161,600  $32,776  $234,647   0.2%
Ceded Written Premiums  (18,859)  (39,952)  (5,517)  (64,328)  (17,636)  (36,011)  (7,712)  (61,359)  4.8%
Net Written Premiums  17,544   126,145   27,035   170,724   22,635   125,589   25,064   173,288   (1.5%)
                                     
Net Earned Premiums $20,129  $125,931  $23,090  $169,150  $25,465  $115,971  $20,286  $161,722   4.6%
Net Losses and LAE  (18,325)  (89,568)  (27,447)  (135,340)  (14,974)  (74,129 )  (17,217)  (106,320)  27.3%
Commission Expenses   (967)  (13,515)  (3,804)  (18,286)  (2,117)  (13,664)  (2,849)  (18,630)  (1.8%)
Other Operating Expenses  (4,661)  (16,897)   (3,817)  (25,375)  (6,767)  (19,997)  (4,753)  (31,517)  (19.5%)
Other Underwriting Income  105   18   2   125   126   104   10   240   (47.9%)
                                       
Underwriting Profit (Loss) $(3,719) $5,969  $(11,976) $(9,726) $1,733  $8,285  $ (4,523) $5,495  NM 
                                      
Losses and LAE Ratio  91.0%  71.1%  118.9%  80.0%  58.8%  63.9%  84.9%  65.7%    
Commission Expense Ratio  4.8%  10.7 %  16.5%  10.8%  8.3%  11.8%  14.0%  11.5%    
Other Operating Expense Ratio (1)  22.7%  13.5%  16.5%  14.9%  26.1%  17.2%  23.4%  19.4%    
Combined Ratio  118.5%  95.3%  151.9%  105.7%  93.2%  92.9%  122.3%  96.6%    

(1) - Includes Other Operating Expenses and Other Underwriting Income.
NM - Percentage change not meaningful

 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
(Unaudited)
 
  Int'l Insurance 
  Three Months Ended September 30, 2017  Three Months Ended September 30, 2016     
amounts in thousands Marine  P&C  Professional
Liability
   Total  Marine  P&C   Professional
Liability
  Total  %
Change
Total
 
Gross Written Premiums $41,689  $37,415  $34,497  $113,601  $38,453  $38,077  $27,954  $104,484   8.7%
Ceded Written Premiums  (9,948)   (19,772)  (9,246)  (38,966)  (12,631)  (15,331)  (7,232)  (35,194)  10.7%
Net Written Premiums  31,741   17,643   25,251    74,635   25,822   22,746   20,722   69,290   7.7%
                                      
Net Earned Premiums $39,038  $21,775  $23,594  $84,407  $34,794  $25,584  $19,383  $79,761   5.8%
Net Losses and LAE  (39,457)  (29,918)   (12,338)  (81,713)  (17,289)  (16,080)   (11,674)  (45,043)  81.4%
Commission Expenses  (8,532)  (2,666)  (5,003)  (16,201)  (8,358)  (3,502)  (3,488)  (15,348)  5.6%
Other Operating Expenses  (6,788)  (5,614)  (3,986)  (16,388)  (7,654)  (7,913)  (4,616)  (20,183)  (18.8%)
                                     
Underwriting Profit (Loss) $(15,739)  $(16,423) $2,267  $(29,895) $1,493  $(1,911) $(395) $(813) NM 
                                      
Losses and LAE Ratio  101.1%  137.4%   52.3%  96.8%  49.7%  62.8%  60.2%  56.5%    
Commission Expense Ratio  21.9%  12.2%  21.2%  19.2%  24.0%  13.7%  18.0%  19.2%    
Other Operating Expense Ratio  17.3%  25.8%   16.9%  19.4%  22.0%  31.0%  23.8%  25.3%    
Combined Ratio  140.3%  175.4%  90.4%  135.4%  95.7%  107.5%  102.0%  101.0%    

NM- Percentage change not meaningful

 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
(Unaudited)
 
  U.S. Insurance 
  Nine Months Ended September 30, 2017  Nine Months Ended September 30, 2016     
amounts in thousands Marine  P&C  Professional
Liability
  Total  Marine   P&C  Professional
Liability
  Total  %
Change
Total
 
Gross Written Premiums $119,040  $524,223   $86,580  $729,843  $129,621  $471,532  $88,065  $689,218   5.9%
Ceded Written Premiums  (55,830)  (129,297)  (14,545)  (199,672)  (53,823)  (103,286)  (21,365)  (178,474)  11.9%
Net Written Premiums  63,210   394,926   72,035   530,171   75,798   368,246   66,700   510,744   3.8%
                                     
Net Earned Premiums $64,635  $366,280  $69,326  $500,241   $73,636  $335,342  $53,468  $462,446   8.2%
Net Losses and LAE  (44,867)  (239,175)  (55,394)  (339,436)  (35,448)  (217,898)  (37,914 )  (291,260)  16.5%
Commission Expenses  (4,014)  (44,113)  (11,003)  (59,130)  (5,775)  (38,337)  (6,267)  (50,379)  17.4%
Other Operating Expenses  (18,280)  (60,356)  (13,351)  (91,987)   (20,956)  (61,568)  (14,324)  (96,848)  (5.0%)
Other Underwriting Income  270   45   20   335   357    550   36   943   (64.5%)
                                      
Underwriting Profit (Loss) $(2,256) $22,681  $(10,402) $10,023  $11,814  $18,089  $(5,001) $24,902   (59.8%)
                                      
Losses and LAE Ratio  69.4%  65.3%  79.9%  67.9%  48.1%  65.0%  70.9%  63.0%    
Commission Expense Ratio  6.2%  12.0%  15.9 %  11.8%  7.8%  11.4%  11.7%  10.9%    
Other Operating Expense Ratio (1)  27.9%   16.5%  19.2%  18.3%  28.1%  18.2%  26.8%  20.7%    
Combined Ratio  103.5%  93.8%  115.0%  98.0%  84.0%  94.6%  109.4%  94.6%    

(1) - Includes Other Operating Expenses and Other Underwriting Income (Expense). 

 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
(Unaudited)
 
  Int'l Insurance 
  Nine Months Ended September 30, 2017  Nine Months Ended September 30, 2016     
amounts in thousands Marine  P&C  Professional
Liability
  Total  Marine   P&C  Professional
Liability
  Total  %
Change
Total
 
Gross Written Premiums $160,119  $124,446  $102,089  $386,654  $151,548  $145,125   $87,694  $384,367   0.6%
Ceded Written Premiums  (33,410)  (69,780)  (26,178)  (129,368)  (33,274 )  (57,025)  (21,776)  (112,075)  15.4%
Net Written Premiums  126,709   54,666   75,911   257,286   118,274   88,100   65,918   272,292   (5.5%)
                                     
Net Earned Premiums $116,058  $67,292  $67,243  $250,593  $109,746  $70,608  $55,248  $235,602   6.4%
Net Losses and LAE  (83,906)  (54,654)  (37,953)  (176,513)  (54,398)  (49,174)  (29,947)  (133,519)  32.2%
Commission Expenses  (27,590)  (10,985)  (15,860)  (54,435)  (26,124)  (11,427)  (9,973)  (47,524)  14.5%
Other Operating Expenses  (24,454)  (19,983)  (14,250)  (58,687)  (24,794)  (25,686)  (14,517)  (64,997)  (9.7%)
                                       
Underwriting Profit (Loss) $(19,892) $(18,330) $(820)  $(39,042) $4,430  $(15,679) $811  $(10,438) NM 
                                     
Losses and LAE Ratio  72.3%  81.2%  56.4%  70.4%  49.6%  69.6%  54.2%  56.7%    
Commission Expense Ratio   23.8%  16.3%  23.6%  21.7%  23.8%  16.2%  18.1%  20.2%    
Other Operating Expense Ratio  21.0%  29.7%  21.2%  23.5%  22.6%  36.4%  26.2%  27.5%    
Combined Ratio  117.1%  127.2%  101.2%  115.6%  96.0%  122.2%  98.5%  104.4%    

NM- Percentage change not meaningful

 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Incurred Loss Activity
(Unaudited)
 
  For the Three Months Ended September 30, 
amounts in thousands Amounts  Loss Ratio 
Net Incurred Loss Activity 2017  2016  2017  2016 
U.S. Insurance:                
Loss and LAE Payments $68,454  $81,461   40.5%  50.4%
Change in Reserves  66,886   24,859   39.5%  15.3%
Net Incurred Loss and LAE $135,340  $106,320   80.0%  65.7%
                 
Int'l Insurance:                
Loss and LAE Payments  $55,148  $43,848   65.3%  55.0%
Change in Reserves  26,565   1,195   31.5%  1.5%
Net Incurred Loss and LAE $81,713  $45,043   96.8%  56.5%
                  
GlobalRe:                
Loss and LAE Payments $13,659  $20,770   28.6%  48.8%
Change in Reserves  45,459   660   95.1%  1.6%
Net Incurred Loss and LAE $59,118  $21,430   123.7%  50.4%
                  
Total                
Loss and LAE Payments $137,261  $146,079   45.5%  51.4%
Change in Reserves  138,910   26,714   46.1%  9.4%
Net Incurred Loss and LAE $276,171  $172,793   91.6%  60.8 %
                 
                 
  For the Three Months Ended September 30, 
Impact of Prior Years Reserves Amounts   Loss Ratio Impact 
Favorable / (Unfavorable) Development 2017   2016  2017  2016 
U.S. Insurance $(18,383) $(4,903)  (6.0%)  (1.7%)
Int'l Insurance  (10,714)  2,860   (3.6%)  1.0%
GlobalRe  (397)  3,074   (0.1%)  1.1%
Total $(29,494) $1,031   (9.7%)  0.4%
                 


 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Incurred Loss Activity
(Unaudited)
 
  For the Nine Months Ended September 30, 
amounts in thousands Amounts  Loss Ratio 
Net Incurred Loss Activity 2017  2016  2017  2016 
U.S. Insurance:                
Loss and LAE Payments $225,017  $226,742   45.0%  49.0%
Change in Reserves  114,419   64,518   22.9%  14.0%
Net Incurred Loss and LAE $339,436  $291,260   67.9%  63.0%
                 
Int'l Insurance:                
Loss and LAE Payments $146,106  $106,087   58.3%  45.0%
Change in Reserves  30,407   27,432   12.1%  11.7%
Net Incurred Loss and LAE $176,513  $133,519   70.4%  56.7%
                 
GlobalRe:                
Loss and LAE Payments $63,268  $63,829   48.5%  53.9%
Change in Reserves  43,664    4,347   33.4%  3.7%
Net Incurred Loss and LAE $106,932  $68,176   81.9%  57.6%
                 
Total                
Loss and LAE Payments $434,391  $396,658   49.3%  48.6%
Change in Reserves  188,490   96,297   21.4%  11.8%
Net Incurred Loss and LAE $622,881  $492,955   70.7%  60.4%
                 
                 
  For the Nine Months Ended September 30, 
Impact of Prior Years Reserves Amounts  Loss Ratio Impact 
Favorable / (Unfavorable) Development 2017  2016  2017  2016 
U.S. Insurance  $(18,206) $1,768   (2.1%)  0.2%
Int'l Insurance  (22,073)  5,359   (2.5%)  0.7%
GlobalRe  (4,330)  4,517   (0.5%)  0.6%
Total $(44,609) $11,644   (5.1%)   1.5%
                 


 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data
(Unaudited)
 
  As of September 30, 2017 
amounts in thousands Case  IBNR     
Net Loss Reserves: Reserves  Reserves  Total 
U.S. Insurance:            
Marine $62,475  $47,364  $109,839 
P&C  197,009   680,855   877,864 
Professional Liability  32,385   84,753    117,138 
Total U.S. Insurance $291,869  $812,972  $1,104,841 
Int'l Insurance:            
Marine $170,658  $51,094  $221,752 
P&C  64,255   42,680   106,935 
Professional Liability  40,178   76,618   116,796 
Total Int'l Insurance $275,091  $170,392  $445,483 
             
GlobalRe $50,351  $109,954  $160,305 
             
Total Net Loss Reserves $617,311  $1,093,318  $1,710,629 
             
             
  As of December 31, 2016 
  Case  IBNR     
Net Loss Reserves: Reserves   Reserves  Total 
U.S. Insurance:            
Marine $56,701  $54,259   $110,960 
P&C  201,368   603,509   804,877 
Professional Liability  24,555   70,559   95,114 
Total U.S. Insurance $282,624  $728,327  $1,010,951 
Int'l Insurance:            
Marine $163,124  $36,118  $199,242 
P&C  66,496   18,192   84,688 
Professional Liability  30,106    70,103   100,209 
Total Int'l Insurance $259,726   $124,413  $384,139 
             
GlobalRe $47,505  $67,856  $115,361 
              
Total Net Loss Reserves $589,855  $920,596  $1,510,451 
             
             

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Investment Data
(Unaudited)

As of September 30, 2017, the average quality of the investment portfolio as rated by S&P and Moody's was "AA-/Aa3", respectively, with an average duration of 3.6 years. Our Company does not own any collateralized debt obligations or asset backed commercial paper.

The following table sets forth our investments as of September 30, 2017:

  As of September 30, 2017 
      Gross  Gross  Cost or 
   Fair  Unrealized  Unrealized  Amortized 
amounts in thousands Value  Gains  (Losses)   Cost 
Fixed Maturities:                
U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds $269,851  $8,169  $(607) $262,289 
States, Municipalities and Political Subdivisions  684,792   20,643   (1,481)  665,630 
Mortgage-Backed and Asset-Backed Securities:                
Agency Mortgage-Backed Securities  426,441   3,365   (4,298)  427,374 
Residential Mortgage Obligations  34,748    570   (27)  34,205 
Asset-Backed Securities  331,646   2,503   (426)  329,569 
Commercial Mortgage-Backed Securities  140,601   2,742   (1,308)  139,167 
   Subtotal $933,436  $9,180  $(6,059) $930,315 
Corporate Exposures  910,106   18,221   (1,983)  893,868 
Total Fixed Maturities  $2,798,185  $56,213  $(10,130) $2,752,102 
Equity Securities:                
Common Stocks $180,771  $35,179  $(815) $146,407 
Preferred Stocks  195,105   7,418   (645)  188,332 
Total Equity Securities $375,876  $42,597  $(1,460) $334,739 
Short-Term Investments  247,607    5      247,602 
Total Investments  $3,421,668  $98,815  $(11,590) $3,334,443 

 

Source: The Navigators Group, Inc.

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