Market Overview

Navigators Reports Fourth Quarter and Full Year Earnings

Share:

STAMFORD, Conn., Feb. 10, 2016 (GLOBE NEWSWIRE) -- The Navigators Group, Inc. (NASDAQ: NAVG) reported net income of $17.7 million, or $1.19 per diluted share, for the three months ended December 31, 2015 compared to $19.3 million, or $1.31 per diluted share, for the comparable period in 2014. Operating earnings were $16.4 million, or $1.10 per diluted share, for the three months ended December 31, 2015 compared to $18.4 million, or $1.25 per diluted share, for the comparable period in 2014. 

For the twelve months ended December 31, 2015, the Company reported net income of $81.1 million, or $5.47 per diluted share compared to $95.3 million, or $6.51 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 twelve months ended December 31, 2014 net income per diluted share would have been $6.06. Operating earnings were $77.1 million, or $5.20 per diluted share, for the twelve months ended December 31, 2015 compared to $80.5 million, or $5.49 per diluted share, for the comparable period in 2014. The one-time foreign exchange gain discussed above had no impact on operating earnings.

Gross written premiums and net written premiums for the three months ended December 31, 2015 were $323.5 million and $244.7 million, respectively, a decrease of 2.9% and an increase of 7.3% from the comparable period in 2014.

Gross written premiums and net written premiums for the twelve months ended December 31, 2015 were $1.454 billion and $1.044 billion, respectively, an increase of 1.5% and 4.4% from the comparable period in 2014.

The combined ratio for the three and twelve months ended December 31, 2015 was 97.2% and 94.1%, respectively, compared to 93.8% and 92.6% for the comparable periods in 2014.

Stan Galanski, President and Chief Executive Officer commented, "We are pleased to report profitable underwriting results across all three of our reporting segments for 2015. Net income was $81 million, representing our third best year ever, and book value per share increased to $75.96. Market conditions were challenging, particularly in economically-sensitive products like Offshore Energy and Marine Liability, for which gross written premium decreased during the fourth quarter and year. Our U.S. P&C operating segment continued to perform well and we remain encouraged by the momentum of our newer initiatives, including our property insurance and reinsurance product lines."

Stockholders' equity was $1.096 billion, or $75.96 per share, as of December 31, 2015 compared to $1.027 billion, or $71.93 per share, as of December 31, 2014.

Net investment income for the three and twelve months ended December 31, 2015 was $18.5 million and $68.7 million, respectively, an increase of 15.1% and 7.1% 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 twelve months ended December 31, 2015, compared to 2.3% for both 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 December 31, 2015.  As of December 31, 2015, net unrealized gains within our investment portfolio were $37.3 million, a decrease of $34.1 million compared to December 31, 2014.

There were $2.1 million of net realized losses recognized in earnings for the three months ended December 31, 2015, compared to $0.8 million of net realized gains for the same period in 2014.  For the twelve months ended December 31, 2015, there were $6.7 million of net realized gains, compared to $12.8 million of net realized gains for the same period in 2014.

Other income (loss) for the three months ended December 31, 2015 was $4.1 million of income, compared to $0.6 million of income for the same period in 2014. For the twelve months ended December 31, 2015, Other income (loss) was a $0.5 million loss compared to $10.7 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 Thursday, February 11, 2016 starting at 8:30 a.m. (EST) to discuss the 2015 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://edge.media-server.com/m/p/i53d9p2k 

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.

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 share and per share data) 
(unaudited) 
            
   Three Months Ended   Twelve Months Ended  
   December 31,   December 31,  
Results of Operations  2015  2014 Change   2015  2014 Change 
            
Gross written premiums $   323,509  $   333,299   -2.9%  $   1,453,502  $   1,432,353   1.5% 
Net written premiums    244,719     228,007   7.3%     1,043,860     1,000,138   4.4% 
            
Revenues:          
 Net earned premiums    251,545    234,172  7.4%     984,087    935,895  5.1% 
 Net investment income    18,499    16,071  15.1%     68,718    64,168  7.1% 
 Net realized gains (losses):          
 Total other-than-temporary impairment losses    (123)   (21) NM      (1,870)   137  NM  
 Portion of loss recognized in other comprehensive             
 income (before tax)    123    21  NM      172    (137) NM  
 Net other-than-temporary impairment losses               
 recognized in earnings    -     -   NM      (1,698)   -   NM  
 Other realized gains (losses)    (2,080)   788  NM      8,373    12,812  -34.6% 
 Net realized gains (losses)    (2,080)   788  NM      6,675    12,812  -47.9% 
 Other income (loss)    4,147    586  NM      (491)   10,656  NM  
 Total revenues    272,111     251,617   8.1%     1,058,989     1,023,531   3.5% 
            
Expenses:          
 Net losses and loss adjustment expenses    153,881    134,658  14.3%     572,598    545,229  5.0% 
 Commission expenses    31,339    33,708  -7.0%     129,977    125,528  3.5% 
 Other operating expenses    59,219    51,299  15.4%     223,516    196,825  13.6% 
 Interest expense    3,857    3,854  0.1%     15,424    15,413  0.1% 
 Total expenses    248,296     223,519   11.1%     941,515     882,995   6.6% 
            
Income before income taxes    23,815     28,098   -15.2%     117,474     140,536   -16.4% 
            
Income tax expense (benefit)    6,072     8,823   -31.2%     36,417     45,207   -19.4% 
            
Net income (loss) $   17,743  $   19,275   -7.9%  $   81,057  $   95,329   -15.0% 
            
            
Per Share Data          
            
Net income per common share:          
 Basic $   1.23  $   1.35   -8.9%  $   5.63  $   6.69   -15.8% 
 Diluted $   1.19  $   1.31   -9.2%  $   5.47  $   6.51   -16.0% 
            
Average common shares outstanding:          
 Basic    14,416,947     14,280,045        14,392,522     14,259,768    
 Diluted    14,917,646     14,715,265        14,825,745     14,646,369    
            
Underwriting Ratios          
Loss Ratio  61.2% 57.5%    58.2% 58.3%  
Expense Ratio  36.0% 36.3%    35.9% 34.3%  
Combined Ratio  97.2% 93.8%    94.1% 92.6%  
            
            
Balance Sheet Data Dec. 31,Sept. 30,   Dec. 31,Dec. 31,  
    2015  2015     2015  2014   
Stockholders' equity $   1,096,148  $   1,076,855   1.8%  $   1,096,148  $   1,027,224   6.7% 
Book value per share $   75.96  $   74.70   1.7%  $   75.96  $   71.93   5.6% 

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

 
CONSOLIDATED BALANCE SHEETS (Unaudited)

 
   
  amounts in thousands, except share and per share amounts.      
    December 31,  December 31,  
  2015   2014   
ASSETS      
Investments:      
Fixed maturities, available-for-sale, at fair value (amortized cost: 2015: $2,400,245; 2014: $2,323,959) $2,414,210  $ 2,365,934   
Equity securities, available-for-sale, at fair value (cost: 2015: $281,943; 2014: $154,843)    305,271     184,295   
Short-term investments, at fair value (amortized cost: 2015: $217,743; 2014: $179,527)    217,745     179,506   
Total investments $  2,937,226  $  2,729,735   
         
Cash    69,901     90,751   
Premiums receivable    276,616     342,479   
Prepaid reinsurance premiums    232,588     237,851   
Reinsurance recoverable on paid losses    49,506     51,347   
Reinsurance recoverable on unpaid losses and loss adjustment expenses    809,518     851,498   
Deferred policy acquisition costs    91,983     79,452   
Accrued investment income    16,001     14,791   
Goodwill and other intangible assets    6,807     7,013   
Current income tax receivable, net.    22,323     14,549   
Deferred income tax, net     3,900     -   
Other assets

     67,643     56,719   
Total assets $  4,584,012  $  4,476,185   
         
LIABILITIES AND STOCKHOLDERS' EQUITY      
Liabilities:      
Reserves for losses and loss adjustment expenses $  2,202,644  $  2,159,634   
Unearned premiums    820,676     766,167   
Reinsurance balances payable    107,411     152,774   
Senior notes    263,580     263,440   
Deferred income tax, net    -     1,467   
Payable for investments purchased    1,495     134   
Accounts payable and other liabilities    92,058     105,345   
Total liabilities $  3,487,864  $  3,448,961   
         
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 17,942,269 shares for 2015      
 and 17,792,846 shares for 2014    1,793     1,778   
Additional paid-in capital     357,829     347,022   
Treasury stock, at cost (3,511,380 shares for 2015 and 2014)    (155,801)    (155,801)  
Retained earnings    868,723     787,666   
Accumulated other comprehensive income    23,604     46,559   
Total stockholders' equity $  1,096,148  $  1,027,224   
Total liabilities and stockholders' equity $  4,584,012  $  4,476,185   

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES 
Segment Information 
            
  Three Months Ended December 31, 2015 
  U.S.  Int'l       
amounts in thousands Insurance Insurance GlobalRe Corporate (1) Total 
Gross written premiums $  207,684  $  81,942  $  33,883  $-  $  323,509  
Ceded written premiums    (57,410)    (20,324)    (1,056)  -     (78,790) 
Net written premiums    150,274     61,618     32,827   -     244,719  
            
Net earned premiums    145,032     62,716     43,797   -     251,545  
Net losses and LAE  (96,403)  (33,466)  (24,012)  -   (153,881) 
Commission expenses  (14,542)  (8,185)  (9,198)    586   (31,339) 
Other operating expenses  (33,397)  (21,555)  (4,267)  -   (59,219) 
Other underwriting income (expense)  360   -   249     (586)  23  
            
Underwriting profit (loss) $  1,050  $  (490) $  6,569  $  -   $  7,129  
            
Net investment income          18,499   18,499  
Net realized gains (losses)          (2,080)  (2,080) 
Interest expense          (3,857)  (3,857) 
Other income (loss)          4,124   4,124  
Income before income taxes $  1,050  $  (490) $  6,569  $  16,686  $  23,815  
Income tax (expense) benefit        (6,072)  (6,072) 
Net income (loss)          $  17,743  
            
            
Losses and LAE ratio  66.5%  53.4%  54.8%    61.2% 
Commission expense ratio  10.0%  13.1%  21.0%    12.5% 
Other operating expense ratio (2)  22.8%  34.3%  9.2%    23.5% 
Combined ratio  99.3%  100.8%  85.0%    97.2% 
            
 (1) - Includes Corporate segment intercompany eliminations.  
 (2) - Includes Other operating expenses and Other underwriting income (expense).  

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
           
  Three Months Ended December 31, 2014
  U.S.  Int'l      
amounts in thousands Insurance Insurance GlobalRe Corporate (1) Total
Gross written premiums $  202,334  $  90,819  $  40,146  $  -  $  333,299 
Ceded written premiums    (68,259)    (36,387)    (646)    -     (105,292)
Net written premiums    134,075     54,432     39,500     -     228,007 
           
Net earned premiums    133,425     55,492     45,255     -     234,172 
Net losses and LAE  (85,022)  (23,656)  (25,980)    -   (134,658)
Commission expenses  (14,242)  (11,770)  (8,258)  562   (33,708)
Other operating expenses  (29,824)  (17,492)  (3,983)    -   (51,299)
Other underwriting income (expense)  458   14   188   (562)  98 
           
Underwriting profit (loss) $  4,795  $  2,588  $  7,222  $  -   $  14,605 
           
Net investment income        16,071   16,071 
Net realized gains (losses)          788   788 
Interest expense          (3,854)  (3,854)
Other income (loss)          488   488 
Income before income taxes $  4,795  $  2,588  $  7,222  $  13,493  $  28,098 
Income tax (expense) benefit        (8,823)  (8,823)
Net income (loss)          $  19,275 
           
           
Losses and LAE ratio  63.7%  42.6%  57.4%    57.5%
Commission expense ratio  10.7%  21.2%  18.2%    14.4%
Other operating expense ratio (2)  22.0%  31.5%  8.4%    21.9%
Combined ratio  96.4%  95.3%  84.0%    93.8%
_______________          
 (1) - Includes Corporate segment intercompany eliminations.

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

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES 
Segment Information 
            
  Twelve Months Ended December 31, 2015 
  U.S.  Int'l       
amounts in thousands Insurance Insurance GlobalRe Corporate (1) Total 
Gross written premiums $  865,781  $  411,947  $  175,774  $-  $  1,453,502  
Ceded written premiums    (268,775)    (134,005)    (6,862)  -     (409,642) 
Net written premiums    597,006     277,942     168,912   -     1,043,860  
            
Net earned premiums    555,836     259,960     168,291   -     984,087  
Net losses and LAE  (343,497)  (134,702)  (94,399)  -   (572,598) 
Commission expenses  (56,319)  (43,676)  (32,240)    2,258   (129,977) 
Other operating expenses  (131,407)  (75,867)  (16,242)  -   (223,516) 
Other underwriting income (expense)  1,690   -   690     (2,258)  122  
            
Underwriting profit (loss) $  26,303  $  5,715  $  26,100  $  -   $  58,118  
            
Net investment income          68,718   68,718  
Net realized gains (losses)          6,675   6,675  
Interest expense          (15,424)  (15,424) 
Other income (loss)          (613)  (613) 
Income (loss) before income taxes $  26,303  $  5,715  $  26,100  $  59,356  $  117,474  
Income tax (expense) benefit        (36,417)  (36,417) 
Net income (loss)          $  81,057  
            
            
Losses and LAE ratio  61.8%  51.8%  56.1%    58.2% 
Commission expense ratio  10.1%  16.8%  19.2%    13.2% 
Other operating expense ratio (2)  23.4%  29.2%  9.2%    22.7% 
Combined ratio  95.3%  97.8%  84.5%    94.1% 
            
 (1) - Includes Corporate segment intercompany eliminations.  
 (2) - Includes Other operating expenses and Other underwriting income (expense).  

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
           
  Twelve Months Ended December 31, 2014
  U.S.  Int'l      
amounts in thousands Insurance Insurance GlobalRe Corporate (1) Total
Gross written premiums $  807,108  $  424,904  $  200,341  $  -   $  1,432,353 
Ceded written premiums    (254,983)    (171,921)    (5,311)    -      (432,215)
Net written premiums    552,125     252,983     195,030     -      1,000,138 
           
Net earned premiums    504,289     243,485     188,121     -      935,895 
Net losses and LAE    (311,839)    (115,079)    (118,311)    -      (545,229)
Commission expenses    (49,840)    (44,426)    (33,429)    2,167     (125,528)
Other operating expenses    (115,817)    (65,275)    (15,733)    -      (196,825)
Other underwriting income (expense)    2,241     32     489     (2,167)    595 
           
Underwriting profit (loss) $  29,034  $  18,737  $  21,137  $  -   $  68,908 
           
Net investment income          64,168     64,168 
Net realized gains (losses)          12,812     12,812 
Interest expense          (15,413)    (15,413)
Other income (loss)          10,061     10,061 
Income (loss) before income taxes $  29,034  $  18,737  $  21,137  $  71,628  $  140,536 
Income tax (expense) benefit          (45,207)    (45,207)
Net income (loss)          $  95,329 
           
           
Losses and LAE ratio  61.8%  47.3%  62.9%    58.3%
Commission expense ratio  9.9%  18.2%  17.8%    13.4%
Other operating expense ratio (2)  22.5%  26.8%  8.1%    20.9%
Combined ratio  94.2%  92.3%  88.8%    92.6%
           
 (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 
              
  U.S. Insurance 
  Three months ended December 31, 2015 Three months ended December 31, 2014   
amounts in thousands MarineP&CProfessional
Liability
Total MarineP&CProfessional
Liability
Total %
Change
Total

 
Gross written premiums $  40,045 $  138,214 $  29,425 $  207,684  $  37,055 $  139,637 $  25,642 $  202,334   2.6% 
Ceded written premiums    (16,747)   (28,395)   (12,268)   (57,410)    (13,320)   (41,435)   (13,504)   (68,259)  -15.9% 
Net written premiums    23,298    109,819    17,157    150,274     23,735    98,202    12,138    134,075   12.1% 
              
Net earned premiums    21,976    109,673    13,383    145,032     26,057    88,355    19,013    133,425   8.7% 
Net losses and LAE    (14,619)   (71,878)   (9,906)   (96,403)    (4,337)   (68,187)   (12,498)   (85,022)  13.4% 
Commission expenses    (2,254)   (11,392)   (896)   (14,542)    (2,970)   (8,681)   (2,591)   (14,242)  2.1% 
Other operating expenses    (6,953)   (20,890)   (5,554)   (33,397)    (6,486)   (17,980)   (5,358)   (29,824)  12.0% 
Other underwriting income (expense)    100    246    14    360     150    292    16    458   -21.2% 
              
Underwriting profit (loss) $  (1,750)$  5,759 $  (2,959)$  1,050  $  12,414 $  (6,201)$  (1,418)$  4,795   -78.1% 
              
Losses and LAE ratio  66.5% 65.5% 74.0% 66.5%  16.6% 77.2% 65.7% 63.7%   
Commission expense ratio  10.3% 10.4% 6.7% 10.0%  11.4% 9.8% 13.6% 10.7%   
Other operating expense ratio (1)  31.2% 18.8% 41.4% 22.8%  24.4% 20.0% 28.2% 22.0%   
Combined ratio  108.0% 94.7% 122.1% 99.3%  52.4% 107.0% 107.5% 96.4%   
              
          
 (1) - Includes Other operating expenses and Other underwriting income (expense).  
              
              
  Int'l Insurance 
  Three months ended December 31, 2015 Three months ended December 31, 2014   
amounts in thousands  Marine  P&C  Professional
Liability
 
 Total  MarineP&CProfessional
Liability
Total %
Change
Total

 
Gross written premiums $  33,863 $  18,715 $  29,364 $  81,942  $  39,680 $  29,185 $  21,954 $  90,819   -9.8% 
Ceded written premiums    (5,582)   (7,046)   (7,696)   (20,324)    (11,454)   (18,072)   (6,861)   (36,387)  -44.1% 
Net written premiums    28,281    11,669    21,668    61,618     28,226    11,113    15,093    54,432   13.2% 
              
Net earned premiums    34,540    12,208    15,968    62,716     28,669    15,313    11,510    55,492   13.0% 
Net losses and LAE    (15,792)   (3,463)   (14,211)   (33,466)    (14,669)   (2,858)   (6,129)   (23,656)  41.5% 
Commission expenses    (5,275)   (1,038)   (1,872)   (8,185)    (7,898)   (2,925)   (947)   (11,770)  -30.5% 
Other operating expenses    (8,742)   (7,540)   (5,273)   (21,555)    (7,766)   (5,631)   (4,095)   (17,492)  23.2% 
Other underwriting income (expense)    -     -     -     -      6    4    4    14   NM  
              
Underwriting profit (loss) $  4,731 $  167 $  (5,388)$  (490) $  (1,658)$  3,903 $  343 $  2,588   NM  
              
Losses and LAE ratio  45.7% 28.4% 89.0% 53.4%  51.2% 18.7% 53.2% 42.6%   
Commission expense ratio  15.3% 8.5% 11.7% 13.1%  27.6% 19.1% 8.2% 21.2%   
Other operating expense ratio (1)  25.3% 61.7% 33.0% 34.3%  27.1% 36.7% 35.7% 31.5%   
Combined ratio  86.3% 98.6% 133.7% 100.8%  105.9% 74.5% 97.1% 95.3%   
              
              
 NM - Percentage change not meaningful  
 (1) - Includes Other operating expenses and Other underwriting income (expense).  
              

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES 
Reportable Segment Results 
              
  U.S. Insurance 
  Twelve Months Ended December 31, 2015 Twelve Months Ended December 31, 2014   
amounts in thousands MarineP&CProfessional
Liability
Total MarineP&CProfessional
Liability
Total %
Change
Total

 
Gross written premiums $  158,124 $  596,673 $  110,984 $  865,781  $  154,233 $  543,045 $  109,830 $  807,108   7.3% 
Ceded written premiums    (61,916)   (152,168)   (54,691)   (268,775)    (46,685)   (169,953)   (38,345)   (254,983)  5.4% 
Net written premiums    96,208    444,505    56,293    597,006     107,548    373,092    71,485    552,125   8.1% 
              
Net earned premiums    96,082    401,408    58,346    555,836     105,650    314,833    83,806    504,289   10.2% 
Net losses and LAE    (43,553)   (266,806)   (33,138)   (343,497)    (42,057)   (220,263)   (49,519)   (311,839)  10.2% 
Commission expenses    (11,606)   (39,931)   (4,782)   (56,319)    (13,025)   (25,497)   (11,318)   (49,840)  13.0% 
Other operating expenses    (27,082)   (81,866)   (22,459)   (131,407)    (24,205)   (70,903)   (20,709)   (115,817)  13.5% 
Other underwriting income (expense)    489    1,122    79    1,690     839    1,263    139    2,241   -24.6% 
              
Underwriting profit (loss) $  14,330 $  13,927 $  (1,954)$  26,303  $  27,202 $  (567)$  2,399 $  29,034   -9.4% 
              
Losses and LAE ratio  45.3% 66.5% 56.8% 61.8%  39.8% 70.0% 59.1% 61.8%   
Commission expense ratio  12.1% 9.9% 8.2% 10.1%  12.3% 8.1% 13.5% 9.9%   
Other operating expense ratio (1)  27.7% 20.1% 38.3% 23.4%  22.2% 22.1% 24.5% 22.5%   
Combined ratio  85.1% 96.5% 103.3% 95.3%  74.3% 100.2% 97.1% 94.2%   
              
          
 (1) - Includes Other operating expenses and Other underwriting income (expense).  
              
              
  Int'l Insurance 
  Twelve Months Ended December 31, 2015 Twelve Months Ended December 31, 2014   
amounts in thousands  Marine  P&C  Professional
Liability
 
 Total  MarineP&CProfessional
Liability
Total %
Change
Total

 
Gross written premiums $  183,707 $  130,729 $  97,511 $  411,947  $  190,787 $  158,139 $  75,978 $  424,904   -3.0% 
Ceded written premiums    (36,515)   (67,722)   (29,768)   (134,005)    (47,805)   (98,087)   (26,029)   (171,921)  -22.1% 
Net written premiums    147,192    63,007    67,743    277,942     142,982    60,052    49,949    252,983   9.9% 
              
Net earned premiums    149,256    55,320    55,384    259,960     141,097    62,520    39,868    243,485   6.8% 
Net losses and LAE    (79,737)   (20,478)   (34,487)   (134,702)    (71,986)   (23,317)   (19,776)   (115,079)  17.1% 
Commission expenses    (32,187)   (4,999)   (6,490)   (43,676)    (37,660)   (5,295)   (1,471)   (44,426)  -1.7% 
Other operating expenses    (30,419)   (26,294)   (19,154)   (75,867)    (28,222)   (22,156)   (14,897)   (65,275)  16.2% 
Other underwriting income (expense)    -     -     -     -      16    9    7    32   NM  
              
Underwriting profit (loss) $  6,913 $  3,549 $  (4,747)$  5,715  $  3,245 $  11,761 $  3,731 $  18,737   -69.5% 
              
Losses and LAE ratio  53.4% 37.0% 62.3% 51.8%  51.0% 37.3% 49.6% 47.3%   
Commission expense ratio  21.6% 9.0% 11.7% 16.8%  26.8% 8.5% 3.7% 18.2%   
Other operating expense ratio (1)  20.4% 47.6% 34.6% 29.2%  20.0% 35.4% 37.4% 26.8%   
Combined ratio  95.4% 93.6% 108.6% 97.8%  97.8% 81.2% 90.7% 92.3%   
              
              
 NM - Percentage change not meaningful  
 (1) - Includes Other operating expenses and Other underwriting income (expense).  
              

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES 
Net Incurred Loss Activity 
($ in thousands) 
        
  For the Three Months Ended December 31, 
  Amounts Loss Ratio 
Net Incurred Loss Activity  2015  2014   2015  2014  
US Insurance:       
  Loss and LAE payments $  60,750 $  58,374   41.9% 43.7% 
  Change in reserves    35,653    26,648   24.6% 20.0% 
  Net incurred loss and LAE    96,403    85,022   66.5% 63.7% 
        
International Insurance:       
  Loss and LAE payments    27,933    38,198   44.6% 68.8% 
  Change in reserves    5,533    (14,542)  8.8% -26.2% 
  Net incurred loss and LAE    33,466    23,656   53.4% 42.6% 
        
Global Reinsurance:       
  Loss and LAE payments    48,320    45,396   110.3% 100.4% 
  Change in reserves    (24,308)   (19,416)  -55.5% -43.0% 
  Net incurred loss and LAE    24,012    25,980   54.8% 57.4% 
        
Total       
  Loss and LAE payments    137,003    141,968   54.5% 60.6% 
  Change in reserves    16,878    (7,310)  6.7% -3.1% 
  Net incurred loss and LAE $  153,881 $  134,658   61.2% 57.5% 
        
  Amounts Loss Ratio Impact 
Impact of Prior Years Reserves Dec. 31Dec. 31 Dec. 31Dec. 31 
Favorable / (Unfavorable) Development 2015  2014   2015  2014  
US Insurance $  8,023 $  (1,545)  3.2% -0.7% 
International Insurance    17,812    17,156   7.1% 7.3% 
Global Reinsurance    4,865    4,178   1.9% 1.8% 
  Total $  30,700 $  19,789   12.2% 8.4% 
        

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES 
Net Incurred Loss Activity 
($ in thousands) 
        
  For the Twelve Months Ended December 31, 
  Amounts Loss Ratio 
Net Incurred Loss Activity  2015  2014   2015  2014  
US Insurance:       
  Loss and LAE payments $  247,530 $  222,237   44.5% 44.0% 
  Change in reserves    95,967    89,602   17.3% 17.8% 
  Net incurred loss and LAE    343,497    311,839   61.8% 61.8% 
        
International Insurance:       
  Loss and LAE payments    126,667    128,452   48.7% 52.8% 
  Change in reserves    8,035    (13,373)  3.1% -5.5% 
  Net incurred loss and LAE    134,702    115,079   51.8% 47.3% 
        
Global Reinsurance:       
  Loss and LAE payments    106,468    103,644   63.3% 55.1% 
  Change in reserves    (12,069)   14,667   -7.2% 7.8% 
  Net incurred loss and LAE    94,399    118,311   56.1% 62.9% 
        
Total       
  Loss and LAE payments    480,665    454,333   48.9% 48.6% 
  Change in reserves    91,933    90,896   9.3% 9.7% 
  Net incurred loss and LAE $  572,598 $  545,229   58.2% 58.3% 
        
  Amounts Loss Ratio Impact 
Impact of Prior Years Reserves Dec. 31Dec. 31 Dec. 31Dec. 31 
Favorable / (Unfavorable) Development 2015  2014   2015  2014  
US Insurance $  29,319 $  15,420   3.0% 1.6% 
International Insurance    26,216    38,252   2.7% 4.1% 
Global Reinsurance    9,134    2,140   0.9% 0.2% 
  Total $  64,669 $  55,812   6.6% 5.9% 
        

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES 
Net Loss Data 
($ in thousands) 
          
    As of December 31, 2015 
    Case IBNR   
Net Loss Reserves:  Reserves Reserves Total 
US Insurance:        
  Marine   $  68,677  $  55,408  $  124,085  
  Property Casualty     170,988     514,777     685,765  
  Professional Liability    42,546     60,528     103,074  
  Total US Insurance     282,211     630,713     912,924  
International Insurance:        
  Marine      167,157     61,409     228,566  
  Property Casualty     40,313     19,735     60,048  
  Professional Liability    19,583     63,229     82,812  
  Total International Insurance    227,053     144,373     371,426  
          
Global Reinsurance     32,160     76,616     108,776  
          
  Total Net Loss Reserves $  541,424  $  851,702  $  1,393,126  
          
          
    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  
          

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES 
Investment Data 
                
As of December 31, 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 December 31, 2015:

 
                
        As of December 31, 2015 
          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 $  252,880  $  2,273  $  (9,214) $  259,821  
 States, municipalities and political subdivisions    576,859     21,233     (781)    556,407  
 Mortgage-backed and asset-backed securities:                 
  Agency mortgage-backed securities    379,270     5,573     (2,082)    375,779  
  Residential mortgage obligations    30,465     694     (82)    29,853  
  Asset-backed securities    225,012     85     (1,624)    226,551  
  Commercial mortgage-backed securities    189,714     3,119     (1,864)    188,459  
   Subtotal $  824,461  $  9,471  $  (5,652) $  820,642  
 Corporate bonds    760,010     7,373     (10,738)    763,375  
Total fixed maturities $  2,414,210  $  40,350  $  (26,385) $  2,400,245  
Equity securities    305,271     26,341     (3,013)    281,943  
Short-term investments    217,745     2     -      217,743  
Total investments $  2,937,226  $  66,693  $  (29,398) $  2,899,931  
                
Contact: Ciro M. DeFalco Senior Vice President and Chief Financial Officer (203) 905-6343 cdefalco@navg.com www.navg.com

Primary Logo

View Comments and Join the Discussion!