February 16, 2012

Navigators Reports Fourth Quarter Earnings

NEW YORK, Feb. 16, 2012 (GLOBE NEWSWIRE) -- The Navigators Group, Inc. (Nasdaq:NAVG) reported net income of $10.1 million, or $0.70 per diluted share, for the three months ended December 31, 2011 compared to net income of $17.3 million, or $1.07 per diluted share, for the comparable period in 2010. Operating earnings were $5.8 million, or $0.41 per diluted share for the fourth quarter of 2011 compared to $4.7 million, or $0.29 per diluted share, for the comparable period in 2010.

For the twelve months ended December 31, 2011, the Company reported net income of $25.6 million, or $1.69 per diluted share, compared to $69.6 million, or $4.24 per diluted share, for the comparable period in 2010. Operating earnings were $19.1 million, or $1.26 per diluted share for the twelve months ended December 31, 2011 compared to $43.4 million, or $2.65 per diluted share, for the comparable period in 2010.

Gross written premiums and net written premiums for the three months ended December 31, 2011 were $277.9 million and $202.0 million, respectively, an increase of 20.9% and 42.4% from the comparable period in 2010. Gross written premiums and net written premiums for the twelve months ended December 31, 2011 were $1,108.2 million and $753.8 million, respectively, an increase of 12.3% and 15.3% from the comparable period in 2010.

The combined loss and expense ratio for the three and twelve months ended December 31, 2011 were 102.5% and 104.7%, respectively, compared to 106.3% and 100.7% for the comparable periods in 2010. 

Stan Galanski, President and Chief Executive Officer, commented, "Our property casualty business had a solid fourth quarter, as the energy, casualty and treaty reinsurance units each produced profitable underwriting results and double digit premium growth. Following the major energy losses that impacted the industry in early 2011, rates and terms have improved and we have increased our capacity in response. We are achieving positive pricing in many product lines. The notable exception is Directors & Officers liability, which continued to generate underwriting losses as we re-position the portfolio for future profits." He continued, "As a global leader in marine insurance, it comes as no surprise that we participated on hull and liability policies triggered by the grounding of the Costa Concordia. Although this has been characterized as one of the largest losses in the history of marine insurance and it is difficult to predict the ultimate liability losses that may arise from this incident, based upon current industry loss estimates, we expect the pre-tax impact in the first quarter of 2012 to be less than $6 million, net of reinsurance and reinstatement premiums."

Stockholders' equity was $803.4 million, or $57.57 per share, as of December 31, 2011 compared to $829.4 million, or $52.68 per share, as of December 31, 2010. During the three and twelve months ended December 31, 2011, the Company repurchased 376,911 and 1,979,107 shares, respectively, of its common stock for an aggregate purchase price of $17.2 million and $90.9 million pursuant to its share repurchase program. The share repurchase program authorized by the Parent Company's Board of Directors expired December 31, 2011.

Net investment income for the three and twelve months ended December 31, 2011 was $12.4 million and $63.5 million, which was a decrease of 30.9% and 11.4% from the comparable periods in 2010. The annualized pre-tax investment yield, excluding net realized gains and losses and net other-than-temporary impairment losses recognized in earnings, was 2.3% and 3.0% for the three and twelve months ended December 31, 2011, compared to 3.4% and 3.5% for the comparable periods in 2010. The effective tax rate on net investment income was 23.6% and 27.6% for the three and twelve months ended December 31, 2011, compared to 28.1% and 27.0% for the comparable periods in 2010.

The Company's investment portfolio mainly consists of fixed income securities with an average quality rating of "AA/Aa" as defined by Standard & Poor's and Moody's, respectively, and an average effective duration of 3.6 years as of December 31, 2011. As of December 31, 2011, net unrealized gains within our investment portfolio were $93.6 million, an increase of $44.6 million compared to December 31, 2010. There were $6.6 million and $10.0 million of net realized gains and other-than-temporary impairment losses recognized in earnings for the three and twelve months ended December 31, 2011.

Consolidated cash flow from operations for the three and twelve months ended December 31, 2011 was $32.0 million and $118.3 million respectively, compared to $4.1 million and $118.2 million for the comparable periods in 2010.

The Company will hold a conference call on Friday, February 17, 2012 starting at 8:30 a.m. ET to discuss the 2011 fourth 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 connect to the webcast at: 

http://investor.shareholder.com/navg/eventdetail.cfm?eventid=108125

Operating earnings, or net income excluding after-tax net realized gains (losses) and net other-than-temporary impairment losses recognized in earnings, 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 of London. Headquartered in New York, Navigators has offices in major insurance centers in the United States, the United Kingdom and Continental Europe.

The Navigators Group, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7778

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.

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Financial Highlights
($ in thousands, except per share data)
 
             
  Three Months Ended   Twelve Months Ended  
  December 31,   December 31,  
Results of Operations 2011 2010 Change 2011 2010 Change
             
Gross written premiums  $ 277,901  $ 229,850 20.9%  $ 1,108,216  $ 987,201 12.3%
Net written premiums  202,002  141,809 42.4%  753,798  653,938 15.3%
             
Revenues:            
Net earned premiums  191,757  166,158 15.4%  691,645  659,931 4.8%
Net investment income  12,428  17,998 -30.9%  63,500  71,662 -11.4%
 Total other-than-temporary impairment losses  (1,280)  (448) NM  (3,617)  (2,222) NM
 Portion of loss recognized in other comprehensive            
 income (before tax)  691  273 153.1%  1,632  1,142 42.9%
Net other-than-temporary impairment losses             
 recognized in earnings  (589)  (175) NM  (1,985)  (1,080) NM
Net realized gains (losses)  7,141  19,665 -63.7%  11,996  41,319 -71.0%
Other income   586  2,205 -73.4%  1,229  5,143 -76.1%
Total revenues  211,323  205,851 2.7%  766,385  776,975 -1.4%
             
Expenses:            
Net losses and loss adjustment expenses  136,104  110,022 23.7%  476,997  421,155 13.3%
Commission expenses  30,273  32,935 -8.1%  110,437  109,113 1.2%
Other operating expenses  30,688  35,919 -14.6%  138,029  139,700 -1.2%
Interest expense  2,048  2,045 0.1%  8,188  8,178 0.1%
Total expenses  199,113  180,921 10.1%  733,651  678,146 8.2%
             
Income before income taxes  12,210  24,930 -51.0%  32,734  98,829 -66.9%
             
Income tax expense (benefit)  2,122  7,592 -72.0%  7,137  29,251 -75.6%
             
Net income (loss)  $ 10,088  $ 17,338 -41.8%  $ 25,597  $ 69,578 -63.2%
             
             
Per Share Data            
             
Net income per common share:            
Basic  $ 0.71  $ 1.10 -35.5%  $ 1.71  $ 4.33 -60.5%
Diluted  $ 0.70  $ 1.07 -34.6%  $ 1.69  $ 4.24 -60.2%
             
Average common shares outstanding:            
Basic  14,199,491  15,751,048    14,980,429  16,064,770  
Diluted  14,380,161  16,159,486    15,183,285 16,415,266  
             
Underwriting Ratios            
Loss Ratio 71.0% 66.2%   69.0% 63.8%  
Expense Ratio 31.5% 40.1%   35.7% 36.9%  
Combined Ratio 102.5% 106.3%   104.7% 100.7%  
             
             
Balance Sheet Data Dec. 31, Sept. 30,   Dec. 31, Dec. 31,  
  2011 2011   2011 2010  
Stockholders' equity  $ 803,435  $ 799,455 0.5%  $ 803,435  $ 829,354 -3.1%
Book value per share  $ 57.57  $ 55.82 3.1%  $ 57.57  $ 52.68 9.3%
 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands, except share data)
     
  December 31, December 31,
  2011 2010
     
ASSETS    
Investments and cash:    
Fixed maturities, available-for-sale, at fair value (amortized cost: 2011, $1,816,710; 2010, $1,855,598)  $ 1,888,069  $ 1,882,245
Equity securities, available-for-sale, at fair value (cost: 2011, $73,567; 2010, $64,793)  95,849  87,258
Short-term investments, at cost which approximates fair value  122,220  153,057
Cash  127,360  31,768
Total investments and cash  2,233,498  2,154,328
     
Premiums receivable  255,725  188,368
Prepaid reinsurance premiums  164,162  156,869
Reinsurance recoverable on paid losses  43,791  56,658
Reinsurance recoverable on unpaid losses and loss adjustment expenses  845,445  843,296
Deferred policy acquisition costs  63,984  55,201
Accrued investment income  14,492  15,590
Goodwill and other intangible assets  6,869  6,925
Current income tax receivable, net  15,391  1,054
Deferred income tax, net  --  15,141
Other assets  26,650  38,029
     
Total assets  $ 3,670,007  $ 3,531,459
     
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Liabilities:    
Reserves for losses and loss adjustment expenses  $ 2,082,679  $ 1,985,838
Unearned premiums  532,628  463,515
Reinsurance balances payable  108,699  105,904
Senior notes  114,276  114,138
Deferred income tax, net  6,291  --
Accounts payable and other liabilities  21,999  32,710
Total liabilities  2,866,572  2,702,105
     
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 17,467,615 shares    
 for 2011 and 17,274,440 shares for 2010  1,746  1,728
Additional paid-in capital  322,133  312,588
Treasury stock, at cost (3,511,380 shares for 2011 and 1,532,273 shares for 2010)  (155,801)  (64,935)
Retained earnings  565,109  539,512
Accumulated other comprehensive income  70,248  40,461
Total stockholders' equity  803,435  829,354
     
Total liabilities and stockholders' equity  $ 3,670,007  $ 3,531,459
 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Comparative Premium Data
($ in thousands)
             
             
Gross Written Premiums: Three Months   Twelve Months  
Insurance Companies: 2011 2010 Change 2011 2010 Change
Marine  $ 52,688  $ 50,925 3%  $ 228,500  $ 223,061 2%
Property Casualty  121,293  70,157 73%  445,287  312,651 42%
Professional Liability  29,720  32,601 -9%  114,632  129,793 -12%
   203,701  153,683 33%  788,419  665,505 18%
Lloyd's Operations:            
Marine  39,977  48,965 -18%  167,562  182,723 -8%
Property Casualty  24,032  18,031 33%  115,138  94,799 21%
Professional Liability  10,191  9,171 11%  37,097  44,174 -16%
   74,200  76,167 -3%  319,797  321,696 -1%
Total  $ 277,901  $ 229,850 21%  $1,108,216  $ 987,201 12%
             
Net Written Premiums: Three Months   Twelve Months  
Insurance Companies: 2011 2010 Change 2011 2010 Change
Marine  $ 40,442  $ 27,357 48%  $ 170,642  $ 151,059 13%
Property Casualty  91,780  41,171 123%  293,758  197,845 48%
Professional Liability  20,933  20,170 4%  77,991  80,451 -3%
   153,155  88,698 73%  542,391  429,355 26%
Lloyd's Operations:            
Marine  34,844  38,135 -9%  137,206  149,340 -8%
Property Casualty  8,885  11,000 -19%  56,249  54,049 4%
Professional Liability  5,118  3,976 29%  17,952  21,194 -15%
   48,847  53,111 -8%  211,407  224,583 -6%
Total  $ 202,002  $ 141,809 42%  $ 753,798  $ 653,938 15%
             
Net Earned Premiums: Three Months   Twelve Months  
Insurance Companies: 2011 2010 Change 2011 2010 Change
Marine  $ 44,631  $ 33,107 35%  $ 169,018  $ 155,846 8%
Property Casualty  74,426  48,513 53%  231,297  200,741 15%
Professional Liability  20,267  23,397 -13%  72,148  82,264 -12%
   139,324  105,017 33%  472,463  438,851 8%
Lloyd's Operations:            
Marine  36,437  40,684 -10%  145,659  149,225 -2%
Property Casualty  11,798  14,972 -21%  55,903  49,852 12%
Professional Liability  4,198  5,485 -23%  17,620  22,003 -20%
   52,433  61,141 -14%  219,182  221,080 -1%
Total  $ 191,757  $ 166,158 15%  $ 691,645  $ 659,931 5%
 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Three Months Ended
December 31, 2011
         
($ in thousands)
         
  Insurance  Lloyd's    
  Companies Operations Corporate (1) Total
Gross written premiums   $ 203,701  $ 74,200  $ --  $ 277,901
Net written premiums  153,155 48,847  -- 202,002
         
Net earned premiums 139,324 52,433  -- 191,757
Net losses and loss adjustment expenses (112,743) (23,361)  -- (136,104)
Commission expenses (18,909) (11,939)  575 (30,273)
Other operating expenses (22,467) (8,221)  -- (30,688)
Other income (expense) 1,084 77  (575) 586
         
Underwriting profit (loss) (13,711) 8,989  -- (4,722)
         
Net investment income 10,155 2,222 51 12,428
Net realized gains (losses) 6,487 55  10 6,552
Interest expense  --  --  (2,048) (2,048)
         
Income (loss) before income taxes 2,931 11,266 (1,987) 12,210
         
Income tax expense (benefit) (953) 3,770 (695) 2,122
Net income (loss)  $ 3,884  $ 7,496  $ (1,292)  $ 10,088
         
Losses and loss adjustment expenses ratio 80.9% 44.6%   71.0%
Commission expense ratio 13.6% 22.8%   15.8%
Other operating expense ratio (2) 15.3% 15.5%   15.7%
Combined ratio 109.8% 82.9%   102.5%
         
(1) The Corporate segment includes intercompany eliminations.      
(2) The Other operating expense ratio includes Other income (expense).    
 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information 
Three Months Ended
December 31, 2010
         
($ in thousands)
         
  Insurance  Lloyd's    
  Companies Operations Corporate (1) Total 
Gross written premiums  $ 153,683  $ 76,167  $ --  $ 229,850
Net written premiums 88,698 53,111  -- 141,809
         
Net earned premiums 105,017 61,141  -- 166,158
Net losses and loss adjustment expenses (74,549) (35,473)  -- (110,022)
Commission expenses (15,771) (17,164)  -- (32,935)
Other operating expenses (26,973) (8,951)  -- (35,924)
Other income (expense) 1,409 801  -- 2,210
         
Underwriting profit (loss) (10,867) 354  -- (10,513)
         
Net investment income 15,752 2,107 139 17,998
Net realized gains (losses) 15,917 2,945  628 19,490
Interest expense  --  --  (2,045) (2,045)
         
Income (loss) before income taxes 20,802 5,406 (1,278) 24,930
         
Income tax expense (benefit) 6,053 1,986 (447) 7,592
Net income (loss)  $ 14,749  $ 3,420  $ (831)  $ 17,338
         
Losses and loss adjustment expenses ratio 71.0% 58.0%   66.2%
Commission expense ratio 15.0% 28.1%   19.8%
Other operating expense ratio (2) 24.3% 13.3%   20.3%
Combined ratio 110.3% 99.4%   106.3%
         
(1) The Corporate segment includes intercompany eliminations.    
(2) The Other operating expense ratio includes Other income (expense).    
 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Twelve Months Ended
December 31, 2011
         
($ in thousands)
         
  Insurance  Lloyd's    
  Companies Operations Corporate (1) Total
Gross written premiums  $ 788,419  $ 319,797  $ --  $1,108,216
Net written premiums  542,391 211,407  -- 753,798
         
Net earned premiums 472,463 219,182  -- 691,645
Net losses and loss adjustment expenses (341,625) (135,372)  -- (476,997)
Commission expenses (64,165) (48,341)  2,069 (110,437)
Other operating expenses (101,517) (36,512)  -- (138,029)
Other income (expense) 3,955 (657)  (2,069) 1,229
         
Underwriting profit (loss) (30,889) (1,700)  -- (32,589)
         
Net investment income 54,164 8,955 381 63,500
Net realized gains (losses) 12,151 (2,354) 214 10,011
Interest expense  --  --  (8,188) (8,188)
         
Income (loss) before income taxes 35,426 4,901 (7,593) 32,734
         
Income tax expense (benefit) 8,271 1,523 (2,657) 7,137
Net income (loss)  $ 27,155  $ 3,378  $ (4,936)  $ 25,597
         
Losses and loss adjustment expenses ratio 72.3% 61.8%   69.0%
Commission expense ratio 13.6% 22.1%   16.0%
Other operating expense ratio (2) 20.6% 16.9%   19.7%
Combined ratio 106.5% 100.8%   104.7%
         
(1) The Corporate segment includes intercompany eliminations.    
(2) The Other operating expense ratio includes Other income (expense).    
 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information 
Twelve Months Ended
December 31, 2010
         
($ in thousands)
         
  Insurance  Lloyd's    
  Companies Operations Corporate (1) Total 
Gross written premiums  $ 665,505  $ 321,696  $ --  $ 987,201
Net written premiums 429,355 224,583  -- 653,938
         
Net earned premiums 438,851 221,080  -- 659,931
Net losses and loss adjustment expenses (280,120) (141,035)  -- (421,155)
Commission expenses (59,122) (49,991)  -- (109,113)
Other operating expenses (106,631) (33,112)  -- (139,743)
Other income (expense) 1,698 3,488  -- 5,186
         
Underwriting profit (5,324) 430  -- (4,894)
         
Net investment income 62,792 8,286 584 71,662
Net realized gains (losses) 36,057 3,323  859 40,239
Interest expense  --  --  (8,178) (8,178)
         
Income (loss) before income taxes 93,525 12,039 (6,735) 98,829
         
Income tax expense (benefit) 27,219 4,389 (2,357) 29,251
Net income (loss)  $ 66,306  $ 7,650  $ (4,378)  $ 69,578
         
Losses and loss adjustment expenses ratio 63.8% 63.8%   63.8%
Commission expense ratio 13.5% 22.6%   16.5%
Other operating expense ratio (2) 23.9% 13.4%   20.4%
Combined ratio 101.2% 99.8%   100.7%
         
(1) The Corporate segment includes intercompany eliminations.    
(2) The Other operating expense ratio includes Other income (expense).    
 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results
($ in thousands)
               
  Three Months Ended December 31, 2011
  Net  Losses           
  Earned and LAE Underwriting Underwriting Loss Expense Combined
Insurance Companies: Premiums Incurred Expenses Profit (Loss) Ratio Ratio Ratio
Marine  $ 44,631  $ 28,321  $ 13,537  $ 2,773 63.5% 30.3% 93.8%
Property Casualty  74,426  41,297  20,227  12,902 55.5% 27.2% 82.7%
Professional Liability  20,267  43,125  6,528  (29,386) 212.8% 32.2% 245.0%
   139,324  112,743  40,292  (13,711) 80.9% 28.9% 109.8%
Lloyd's Operations  52,433  23,361  20,083  8,989 44.6% 38.3% 82.9%
Total  $ 191,757  $ 136,104  $ 60,375  $ (4,722) 71.0% 31.5% 102.5%
               
               
  Three Months Ended December 31, 2010
  Net  Losses           
  Earned and LAE Underwriting Underwriting Loss Expense Combined
Insurance Companies: Premiums Incurred Expenses Profit (Loss) Ratio Ratio Ratio
Marine  $ 33,107  $ 22,668  $ 13,526  $ (3,087) 68.5% 40.8% 109.3%
Property Casualty  48,513  21,265  19,182  8,066 43.8% 39.6% 83.4%
Professional Liability  23,397  30,616  8,627  (15,846) 130.9% 36.8% 167.7%
   105,017  74,549  41,335  (10,867) 71.0% 39.3% 110.3%
Lloyd's Operations  61,141  35,473  25,314  354 58.0% 41.4% 99.4%
Total  $ 166,158  $ 110,022  $ 66,649  $ (10,513) 66.2% 40.1% 106.3%
               
               
               
    Amounts   Loss Ratio  
Net Incurred Loss Activity   Dec. 31, Dec. 31   Dec. 31, Dec. 31,  
For the Three Months Ended: 2011 2010   2011 2010  
Insurance Companies:              
 Loss and LAE payments    $ 70,377  $ 70,855   50.5% 67.5%  
 Change in reserves    42,366  3,694   30.4% 3.5%  
 Net incurred loss and LAE    112,743  74,549   80.9% 71.0%  
               
Lloyd's Operations:              
 Loss and LAE payments    29,656  33,147   56.6% 54.2%  
 Change in reserves    (6,295)  2,326   -12.0% 3.8%  
 Net incurred loss and LAE    23,361  35,473   44.6% 58.0%  
               
Total              
 Loss and LAE payments    100,033  104,002   52.2% 62.6%  
 Change in reserves    36,071  6,020   18.8% 3.6%  
 Net incurred loss and LAE  $ 136,104  $ 110,022   71.0% 66.2%  
               
               
Impact of Prior Years Reserves Amounts   Loss Ratio Impact  
Favorable / (Unfavorable) Development Dec. 31, Dec. 31,   Dec. 31, Dec. 31,  
For the Three Months Ended: 2011 2010   2011 2010  
Insurance Companies    $ (13,161)  $ (199)   -9.4% -0.2%  
Lloyd's Operations    13,651  3,346   26.0% 5.5%  
 Total    $ 490  $ 3,147   0.3% 1.9%  
 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results
($ in thousands)
               
  Twelve Months Ended December 31, 2011
  Net  Losses           
  Earned and LAE Underwriting Underwriting Loss Expense Combined
Insurance Companies: Premiums Incurred Expenses Profit (Loss) Ratio Ratio Ratio
Marine  $ 169,018  $ 111,209  $ 57,471  $ 338 65.8% 34.0% 99.8%
Property Casualty  231,297  151,934  77,889  1,474 65.7% 33.7% 99.4%
Professional Liability  72,148  78,482  26,367  (32,701) 108.8% 36.5% 145.3%
   472,463  341,625  161,727  (30,889) 72.3% 34.2% 106.5%
Lloyd's Operations  219,182  135,372  85,510  (1,700) 61.8% 39.0% 100.8%
Total  $ 691,645  $ 476,997  $ 247,237  $ (32,589) 69.0% 35.7% 104.7%
               
               
  Twelve Months Ended December 31, 2010
  Net  Losses           
  Earned and LAE Underwriting Underwriting Loss Expense Combined
Insurance Companies: Premiums Incurred Expenses Profit (Loss) Ratio Ratio Ratio
Marine  $ 155,846  $ 100,579  $ 56,092  $ (825) 64.5% 36.0% 100.5%
Property Casualty  200,741  110,902  77,040  12,799 55.2% 38.4% 93.6%
Professional Liability  82,264  68,639  30,923  (17,298) 83.4% 37.6% 121.0%
   438,851  280,120  164,055  (5,324) 63.8% 37.4% 101.2%
Lloyd's Operations  221,080  141,035  79,615  430 63.8% 36.0% 99.8%
Total  $ 659,931  $ 421,155  $ 243,670  $ (4,894) 63.8% 36.9% 100.7%
               
               
               
    Amounts   Loss Ratio  
Net Incurred Loss Activity   Dec. 31, Dec. 31,   Dec. 31, Dec. 31,  
For the Twelve Months Ended: 2011 2010   2011 2010  
Insurance Companies:              
 Loss and LAE payments    $ 277,823  $ 278,969   58.8% 63.5%  
 Change in reserves    63,802  1,151   13.5% 0.3%  
 Net incurred loss and LAE    341,625  280,120   72.3% 63.8%  
               
Lloyd's Operations:              
 Loss and LAE payments    104,482  112,578   47.7% 50.9%  
 Change in reserves    30,890  28,457   14.1% 12.9%  
 Net incurred loss and LAE    135,372  141,035   61.8% 63.8%  
               
Total              
 Loss and LAE payments    382,305  391,547   55.3% 59.3%  
 Change in reserves    94,692  29,608   13.7% 4.5%  
 Net incurred loss and LAE  $ 476,997  $ 421,155   69.0% 63.8%  
               
               
Impact of Prior Years Reserves Amounts   Loss Ratio Impact  
Favorable / (Unfavorable) Development Dec. 31, Dec. 31,   Dec. 31, Dec. 31,  
For the Twelve Months Ended: 2011 2010   2011 2010  
Insurance Companies    $ (12,102)  $ 5,455   -2.6% 1.2%  
Lloyd's Operations    9,957  8,347   4.5% 3.8%  
 Total    $ (2,145)  $ 13,802   -0.3% 2.1%  
 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data
($ in thousands)
     
  Case IBNR  
Net Loss Reserves, December 31, 2011: Reserves Reserves Total
Insurance Companies:      
 Marine  $ 127,912  $ 121,875  $ 249,787
 Property Casualty  185,822  296,177  481,999
 Professional Liability  56,953  83,490  140,443
 Total Insurance Companies  370,687  501,542  872,229
Lloyd's Operations:      
 Marine  117,448  123,136  240,584
 Property Casualty  37,877  25,846  63,723
 Professional Liability  13,580  47,118  60,698
 Total Lloyd's Operations  168,905  196,100  365,005
       
 Total Net Loss Reserves  $ 539,592  $ 697,642  $ 1,237,234
       
       
  Case IBNR  
Net Loss Reserves, December 31, 2010: Reserves Reserves Total
Insurance Companies:      
 Marine  $ 107,147  $ 109,361  $ 216,508
 Property Casualty  158,740  308,613  467,353
 Professional Liability  46,096  78,469  124,565
 Total Insurance Companies  311,983  496,443  808,426
Lloyd's Operations:      
 Marine  111,914  112,708  224,622
 Property Casualty  30,327  29,792  60,119
 Professional Liability  9,904  39,471  49,375
 Total Lloyd's Operations  152,145  181,971  334,116
       
 Total Net Loss Reserves  $ 464,128  $ 678,414  $ 1,142,542
 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Investment Data
December 31, 2011
 
As of December 31, 2011, the average quality of the investment portfolio as rated by S&P and Moody's was AA/Aa
with an average duration of 3.6 years. The Company does not own any collateralized debt obligations (CDO's),
collateralized loan obligations (CLO's) or asset backed commercial paper.
           
As of December 31, 2011, the Company owned two asset-backed securities approximating $0.8 million with subprime
mortgage exposures. The securities have an effective maturity of 1.7 years. In addition, the Company owned a total
of seven collateralized mortgage obligations and asset-backed securities approximating $1.9 million classified as Alt-A
which is a credit category between prime and subprime. They have an effective maturity of 5.7 years. Such subprime
and Alt-A categories are as defined by S&P. The Company is receiving principal and/or interest payments on all these
securities and believes such amounts are fully collectible.
 
The following table sets forth our cash and investments as of December 31, 2011:
           
           
    Gross Gross Cost or OTTI
December 31, 2011 Value Gains (Losses) Cost in OCI
  ($ in thousands)
Fixed maturities:          
U.S. Government Treasury bonds,          
agency bonds and foreign government bonds  $ 336,070  $ 8,979  $ (383)  $ 327,474  $ --
States, municipalities and political          
 subdivisions  410,836  28,887  (108)  382,057  --
Mortgage- and asset-backed securities:          
 Agency mortgage-backed securities  395,860  17,321  (3)  378,542  --
 Residential mortgage obligations  23,148  8  (2,848)  25,988  (1,682)
 Asset-backed securities  48,934  695  (75)  48,314  --
 Commercial mortgage-backed securities  216,034  10,508  (593)  206,119  --
 Subtotal  683,976  28,532  (3,519)  658,963  (1,682)
Corporate bonds  457,187  15,743  (6,772)  448,216  --
           
Total fixed maturities  1,888,069  82,141  (10,782)  1,816,710  (1,682)
           
Equity securities - common stocks  95,849  23,240  (958)  73,567  --
           
Short-term investments  122,220  --  --  122,220  --
           
Cash  127,360  --  --  127,360  --
           
Total  $ 2,233,498  $ 105,381  $ (11,740)  $ 2,139,857  $ (1,682)
 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Investment Data
December 31, 2011
($ in thousands)
         
The following tables set forth our agency mortgage-backed securities and residential
mortgage obligations, categorized by those issued by GNMA, FNMA and FHLMC and the
quality category (prime, Alt-A and subprime) for all other such investments at December 31, 2011:
 
         
         
     Gross   Gross   Cost or 
   Fair   Unrealized   Unrealized   Amortized 
Agency mortgage-backed securities:  Value   Gains   (Losses)   Cost 
GNMA  $ 124,612  $ 7,113  $ --  $ 117,499
FNMA  191,197  8,072  (3)  183,128
FHLMC  80,051  2,136  --  77,915
Total  $ 395,860  $ 17,321  $ (3)  $ 378,542
         
         
     Gross   Gross   Cost or 
   Fair   Unrealized   Unrealized   Amortized 
Residential mortgage obligations:  Value   Gains   (Losses)   Cost 
Prime   $ 12,831  $ 8  $ (2,279)  $ 15,102
Alt-A  1,926  --  (527)  2,453
Subprime  --  --  --  --
Non-US RMBS  8,391  --  (42)  8,433
Total  $ 23,148  $ 8  $ (2,848)  $ 25,988
CONTACT: Ciro M. DeFalco

         Senior Vice President and Chief Financial Officer

         (914) 933-6043

         cdefalco@navg.com

         www.navg.com

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Source: The Navigators Group, Inc.

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