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Navigators Reports Second Quarter 2016 Earnings

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STAMFORD, Conn., Aug. 04, 2016 (GLOBE NEWSWIRE) -- The Navigators Group, Inc. (NASDAQ: NAVG) reported Net income of $16.2 million, or $1.08 per diluted share, for the three months ended June 30, 2016 compared to $19.2 million, or $1.30 per diluted share, for the comparable period in 2015. Operating earnings were $12.2 million, or $0.81 per diluted share, for the three months ended June 30, 2016 compared to $19.7 million, or $1.34 per diluted share, for the comparable period in 2015. 

For the six months ended June 30, 2016, our Company reported Net income of $39.1 million, or $2.62 per diluted share, compared to $45.1 million, or $3.06 per diluted share, for the comparable period in 2015. Operating earnings were $32.4 million, or $2.17 per diluted share, for the six months ended June 30, 2016 compared to $40.6 million, or $2.76 per diluted share, for the comparable period in 2015.

Gross written premiums and Net written premiums for the three months ended June 30, 2016 were $412.6 million and $306.5 million, respectively, increases of 8.7% and 18.7% from the comparable period in 2015.

Gross written premiums and Net written premiums for the six months ended June 30, 2016 were $826.4 million and $626.4 million, respectively, increases of 6.5% and 14.5% from the comparable period in 2015.

The combined ratio for the three and six months ended June 30, 2016 was 99.6% and 97.4%, respectively, compared to 93.4% and 92.8% for the comparable periods in 2015.

Stan Galanski, President and Chief Executive Officer commented, "We are pleased to have produced our fourteenth consecutive quarter of profitable underwriting results despite absorbing $18.3 million of property catastrophe loss in the second quarter. Our U.S. Insurance business had another solidly profitable quarter, while our International Insurance business was adversely impacted by property catastrophe activity, largely stemming from the Fort McMurray fires. We achieved double digit Net written premium growth for the second quarter and first six months of 2016, driven by strong growth in both the P&C and Professional Liability operating segments within International Insurance. Net investment income was up nearly 20.0% over the second quarter of 2015, leading to a 3.2% increase in Book value per share from March 31, 2016. Given the turmoil in the global financial markets and the level of natural catastrophe loss activity impacting the industry during the second quarter, we believe our results reflect a well balanced risk portfolio and a sound investment philosophy."

Stockholders' equity was $1.182 billion, or $81.24 per share, as of June 30, 2016 compared to $1.096 billion, or $75.96 per share, as of  December 31, 2015.

On August 4, 2016, the Board of Directors declared a quarterly cash dividend of $0.09 per share of common stock to be paid on September 30, 2016 to stockholders of record at the close of business on August 19, 2016. 

Net investment income for the three and six months ended June 30, 2016 was $19.9 million and $39.5 million, respectively, increases of 19.8% and 20.2% from the comparable periods in 2015. The annualized pre-tax investment yield, excluding net realized gains and losses and other-than-temporary impairment losses recognized in earnings, was 2.6% for both the three and six months ended June 30, 2016, compared to 2.4% for both comparable periods in 2015.

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 3.9 years as of June 30, 2016.  As of June 30, 2016, Net unrealized gains within our investment portfolio were $110.6 million, an increase of $73.3 million compared to December 31, 2015.

There were $1.8 million of Net realized gains recognized in earnings for the three months ended June 30, 2016, compared to $3.9 million for the same period in 2015.  For the six months ended June 30, 2016, there were $3.4 million of Net realized gains, compared to $9.5 million for the same period in 2015.

Other income (loss) for the three months ended June 30, 2016 was $4.4 million of income, compared to $4.4 million of loss for the same period in 2015.  For the six months ended June 30, 2016 Other income (loss) was $7.0 million of income, compared to $2.1 million of loss for the same period in 2015.  Other income (loss) primarily consists of realized and unrealized foreign exchange gains and losses.

Our Company will hold a conference call on Friday, August 5, 2016 starting at 8:30 a.m. (EDT) to discuss the 2016 second quarter results.  The call will be available via live webcast on Navigators' website (www.navg.com).

To participate by telephone, the domestic dial-in number is 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/bx9cyqqq

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      Six Months Ended     
  June 30,      June 30,     
Results of Operations 2016  2015  Change  2016  2015  Change 
                         
Gross written premiums $412,565  $379,471   8.7% $826,442  $775,931   6.5%
Net written premiums  306,535   258,244   18.7%  626,355   547,202   14.5%
                         
Revenues:                        
Net earned premiums  267,992   242,328   10.6%  532,350   478,460   11.3%
Net investment income  19,875   16,595   19.8%  39,469   32,848   20.2%
Net realized gains (losses):                        
Total other-than-temporary impairment losses  (162)  (472)  -65.7%  (271)  (450)  -39.8%
Portion of loss recognized in other comprehensive income (before tax)  12   49   -75.5%  121   27  NM 
Net other-than-temporary impairment losses recognized in earnings  (150)  (423)  -64.6%  (150)  (423)  -64.6%
Other realized gains (losses)  1,960   4,339   -54.8%  3,557   9,935   -64.2%
Net realized gains (losses)  1,810   3,916   -53.8%  3,407   9,512   -64.2%
Other income (loss)  4,430   (4,362) NM   6,979   (2,120) NM 
Total revenues $294,107  $258,477   13.8% $582,205  $518,700   12.2%
                         
Expenses:                        
Net losses and loss adjustment expenses  167,206   141,973   17.8%  320,162   272,171   17.6%
Commission expenses  40,726   31,480   29.4%  78,280   64,385   21.6%
Other operating expenses  59,074   52,789   11.9%  119,883   107,698   11.3%
Interest expense  3,858   3,856   0.1%  7,716   7,711   0.1%
Total expenses $270,864  $230,098   17.7% $526,041  $451,965   16.4%
                         
Income before income taxes $

23,243  $28,379   -18.1% $56,164  $66,735   -15.8%
                         
Income tax expense (benefit)  7,053   9,195   -23.3%  17,042   21,622   -21.2%
                         
Net income (loss) $16,190  $19,184   -15.6% $39,122  $45,113   -13.3%
                         
                         
Per Share Data                        
                         
Net income per common share:                        
Basic $1.11  $1.33   -16.5% $2.70  $3.14   -14.1%
Diluted $1.08  $1.30   -16.8% $2.62  $3.06   -14.5%
                         
Average common shares outstanding:                        
Basic  14,536,849   14,396,048       14,514,532   14,370,123     
Diluted  14,976,593   14,763,002       14,942,193   14,726,282     
                         
Underwriting Ratios                        
Loss Ratio  62.4%  58.6%      60.1%  56.9%    
Expense Ratio  37.2%  34.8%      37.3%  35.9%    
Combined Ratio  99.6%  93.4%      97.4%  92.8%    
                         
Balance Sheet Data June 30,  March 31,      June 30,  Dec. 31,     
  2016  2016      2016  2015     
Stockholders' equity $1,181,558  $1,143,879   3.3% $1,181,558  $1,096,148   7.8%
Book value per share $81.24  $78.72   3.2% $81.24  $75.96   6.9%
                         

NM- Percentage change not meaningful











THE NAVIGATORS GROUP, INC AND SUBSIDIARIES
NON-GAAP RECONCILIATION OF NET INCOME TO NET OPERATING EARNINGS
 ($ in thousands, except per share data)

 
  Three Months Ended
June 30,
  Six Months Ended
June 30,
  % Change 
amounts in thousands 2016  2015  2016  2015  QTD  YTD 
Net income $16,190  $19,184  $39,122  $45,113   (15.6%)  (13.3%)
After-tax realized losses (gains)  (1,176)  (2,398)  (2,214)  (6,035)  (50.9%)  (63.3%)
After-tax FX losses (gains)  (2,838)  2,915   (4,490)  1,497  NM  NM 
Net operating earnings $12,176  $19,701  $32,418  $40,575   (38.2%)  (20.1%)
                         
Net operating earnings per common share:                        
Basic $0.84  $1.37  $2.23  $2.82         
Diluted $0.81  $1.34  $2.17  $2.76         
                         
 NM - Percentage change not meaningful                        











THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)

 
amounts in thousands, except share and per share amounts.        
  June 30,  December 31, 
  2016  2015 
ASSETS        
Investments:        
Fixed maturities, available-for-sale, at fair value (amortized cost: 2016:  $2,558,621; 2015: $2,400,245) $2,632,313  $2,414,210 
Equity securities, available-for-sale, at fair value (cost: 2016: $292,698; 2015: $281,943)  329,635   305,271 
Short-term investments, at fair value (amortized cost: 2016: $144,845; 2015: $217,743)  144,843   217,745 
Total investments $3,106,791  $2,937,226 
         
Cash  121,868   69,901 
Premiums receivable  363,343   276,616 
Prepaid reinsurance premiums  222,414   232,588 
Reinsurance recoverable on paid losses  59,950   49,506 
Reinsurance recoverable on unpaid losses and loss adjustment expenses  814,261   809,518 
Deferred policy acquisition costs  113,394   91,983 
Accrued investment income  16,176   16,001 
Goodwill and other intangible assets  6,579   6,807 
Current income tax receivable, net  18,522   22,323 
Deferred income tax, net  -   3,900 
Other assets  53,323   67,643 
Total assets $4,896,621  $4,584,012 
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Liabilities:        
Reserves for losses and loss adjustment expenses $2,268,763  $2,202,644 
Unearned premiums  904,507   820,676 
Reinsurance balances payable  127,742   107,411 
Senior notes  263,653   263,580 
Deferred income tax, net  14,475   - 
Payable for investments purchased  48,558   1,495 
Accounts payable and other liabilities  87,365   92,058 
Total liabilities $3,715,063  $3,487,864 
         
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
  18,055,818 shares for 2016 and 17,942,269 shares for 2015
  1,805   1,793 
Additional paid-in capital  363,588   357,829 
Treasury stock, at cost (3,511,380 shares for 2016 and 2015)  (155,801)  (155,801)
Retained earnings  906,536   868,723 
Accumulated other comprehensive income  65,430   23,604 
Total stockholders' equity $1,181,558  $1,096,148 
Total liabilities and stockholders' equity $4,896,621  $4,584,012 











THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information 

 
  Three Months Ended June 30, 2016 
  U.S.  Int'l             
amounts in thousands Insurance  Insurance  GlobalRe  Corporate (1)  Total 
Gross written premiums $243,924  $135,740  $32,901  $-  $412,565 
Ceded written premiums  (62,618)  (41,910)  (1,502)  -   (106,030)
Net written premiums  181,306   93,830   31,399   -   306,535 
                     
Net earned premiums  152,384   77,833   37,775   -   267,992 
Net losses and LAE  (93,428)  (48,066)  (25,712)  -   (167,206)
Commission expenses  (16,894)  (16,821)  (7,492)  481   (40,726)
Other operating expenses  (31,570)  (23,043)  (4,461)  -   (59,074)
Other underwriting income (expense)  342   -   203   (481)  64 
                     
Underwriting profit (loss) $10,834  $(10,097) $313  $-  $1,050 
                     
Net investment income              19,875   19,875 
Net realized gains (losses)              1,810   1,810 
Interest expense              (3,858)  (3,858)
Other income (loss)              4,366   4,366 
Income before income taxes $10,834  $(10,097) $313  $22,193  $23,243 
Income tax (expense) benefit              (7,053)  (7,053)
Net income (loss)                 $16,190 
                     
Losses and LAE ratio  61.3%  61.8%  68.1%      62.4%
Commission expense ratio  11.1%  21.6%  19.8%      15.2%
Other operating expense ratio (2)  20.5%  29.6%  11.3%      22.0%
Combined ratio  92.9%  113.0%  99.2%      99.6%
 

(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other operating expenses and Other underwriting income (expense).











THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information 

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

(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other operating expenses and Other underwriting income (expense).











THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information 

 
  Six Months Ended June 30, 2016 
  U.S.  Int'l             
amounts in thousands Insurance  Insurance  GlobalRe  Corporate (1)  Total 
Gross written premiums $454,571  $279,883  $91,988  $-  $826,442 
Ceded written premiums  (117,115)  (76,881)  (6,091)  -   (200,087)
Net written premiums  337,456   203,002   85,897   -   626,355 
                     
Net earned premiums  300,724   155,841   75,785   -   532,350 
Net losses and LAE  (184,940)  (88,476)  (46,746)  -   (320,162)
Commission expenses  (31,749)  (32,176)  (15,237)  882   (78,280)
Other operating expenses  (65,331)  (44,814)  (9,738)  -   (119,883)
Other underwriting income (expense)  703   -   252   (882)  73 
                     
Underwriting profit (loss) $19,407  $(9,625) $4,316  $-  $14,098 
                     
Net investment income              39,469   39,469 
Net realized gains (losses)              3,407   3,407 
Interest expense              (7,716)  (7,716)
Other income (loss)              6,906   6,906 
Income (loss) before income taxes $19,407  $(9,625) $4,316  $42,066  $56,164 
Income tax (expense) benefit              (17,042)  (17,042)
Net income (loss)                 $39,122 
                     
Losses and LAE ratio  61.5%  56.8%  61.7%      60.1%
Commission expense ratio  10.6%  20.6%  20.1%      14.7%
Other operating expense ratio (2)  21.4%  28.8%  12.5%      22.6%
Combined ratio  93.5%  106.2%  94.3%      97.4%
 

(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other operating expenses and Other underwriting income (expense).









THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information 

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

(1) - 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 June 30, 2016  Three Months Ended June 30, 2015     
amounts in thousands Marine  P&C  Professional
Liability
  Total  Marine  P&C  Professional
Liability
  Total  %
Change
Total

 
Gross written premiums $46,187  $168,654  $29,083  $243,924  $41,803  $170,216  $27,968  $239,987   1.6%
Ceded written premiums  (18,540)  (36,768)  (7,310)  (62,618)  (15,026)  (49,305)  (14,551)  (78,882)  -20.6%
Net written premiums  27,647   131,886   21,773   181,306   26,777   120,911   13,417   161,105   12.5%
                                     
Net earned premiums $24,921  $110,212  $17,251  $152,384  $25,977  $96,440  $14,887  $137,304   11.0%
Net losses and LAE  (10,699)  (72,172)  (10,557)  (93,428)  (11,415)  (67,809)  (4,931)  (84,155)  11.0%
Commission expenses  (2,176)  (12,821)  (1,897)  (16,894)  (2,429)  (8,751)  (1,095)  (12,275)  37.6%
Other operating expenses  (6,817)  (20,049)  (4,704)  (31,570)  (6,402)  (19,661)  (5,311)  (31,374)  0.6%
Other underwriting income (expense)  152   178   12   342   24   97   -   121  NM 
                                     
Underwriting profit (loss) $5,381  $5,348  $105  $10,834  $5,755  $316  $3,550  $9,621   12.6%
                                     
Losses and LAE ratio  42.9%  65.5%  61.2%  61.3%  43.9%  70.3%  33.1%  61.3%    
Commission expense ratio  8.7%  11.6%  11.0%  11.1%  9.4%  9.1%  7.4%  8.9%    
Other operating expense ratio (1)  26.8%  18.0%  27.2%  20.5%  24.5%  20.3%  35.7%  22.8%    
Combined ratio  78.4%  95.1%  99.4%  92.9%  77.8%  99.7%  76.2%  93.0%    
 

NM - Percentage change not meaningful
(1) - Includes Other operating expenses and Other underwriting income (expense).










THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results

 
  Int'l Insurance 
  Three Months Ended June 30, 2016  Three Months Ended June 30, 2015     
amounts in thousands Marine  P&C  Professional
Liability
  Total  Marine  P&C  Professional
Liability
  Total  %
Change
Total

 
Gross written premiums $41,147  $63,002  $31,591  $135,740  $41,432  $41,615  $25,743  $108,790   24.8%
Ceded written premiums  (9,554)  (24,465)  (7,891)  (41,910)  (9,126)  (24,513)  (7,982)  (41,621)  0.7%
Net written premiums  31,593   38,537   23,700   93,830   32,306   17,102   17,761   67,169   39.7%
                                     
Net earned premiums $36,096  $23,815  $17,922  $77,833  $40,132  $10,199  $12,855  $63,186   23.2%
Net losses and LAE  (17,021)  (21,878)  (9,167)  (48,066)  (21,432)  (4,084)  (6,847)  (32,363)  48.5%
Commission expenses  (8,361)  (5,150)  (3,310)  (16,821)  (9,495)  (155)  (1,648)  (11,298)  48.9%
Other operating expenses  (8,698)  (9,065)  (5,280)  (23,043)  (6,749)  (6,166)  (4,451)  (17,366)  32.7%
Other underwriting income (expense)  -   -   -   -   -   -   -   -  NM 
                                     
Underwriting profit (loss) $2,016  $(12,278) $165  $(10,097) $2,456  $(206) $(91) $2,159  NM 
                                     
Losses and LAE ratio  47.2%  91.9%  51.2%  61.8%  53.4%  40.0%  53.3%  51.2%    
Commission expense ratio  23.2%  21.6%  18.5%  21.6%  23.7%  1.5%  12.8%  17.9%    
Other operating expense ratio (1)  24.0%  38.1%  29.4%  29.6%  16.8%  60.5%  34.6%  27.5%    
Combined ratio  94.4%  151.6%  99.1%  113.0%  93.9%  102.0%  100.7%  96.6%    
 

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 
  Six Months Ended June 30, 2016  Six Months Ended June 30, 2015     
amounts in thousands Marine  P&C  Professional
Liability
  Total  Marine  P&C  Professional
Liability
  Total  %
Change
Total

 
Gross written premiums $89,350  $309,932  $55,289  $454,571  $82,638  $304,362  $52,314  $439,314   3.5%
Ceded written premiums  (36,187)  (67,275)  (13,653)  (117,115)  (31,312)  (88,863)  (27,437)  (147,612)  -20.7%
Net written premiums  53,163   242,657   41,636   337,456   51,326   215,499   24,877   291,702   15.7%
                                     
Net earned premiums $48,171  $219,371  $33,182  $300,724  $49,901  $187,175  $31,319  $268,395   12.0%
Net losses and LAE  (20,474)  (143,769)  (20,697)  (184,940)  (21,603)  (125,856)  (14,495)  (161,954)  14.2%
Commission expenses  (3,658)  (24,673)  (3,418)  (31,749)  (6,461)  (17,307)  (2,852)  (26,620)  19.3%
Other operating expenses  (14,189)  (41,571)  (9,571)  (65,331)  (13,375)  (40,720)  (10,967)  (65,062)  0.4%
Other underwriting income (expense)  231   446   26   703   175   141   1   317   121.7%
                                     
Underwriting profit (loss) $10,081  $9,804  $(478) $19,407  $8,637  $3,433  $3,006  $15,076   28.7%
                                     
Losses and LAE ratio  42.5%  65.5%  62.4%  61.5%  43.3%  67.2%  46.3%  60.3%    
Commission expense ratio  7.6%  11.2%  10.3%  10.6%  12.9%  9.2%  9.1%  9.9%    
Other operating expense ratio (1)  29.0%  18.8%  28.7%  21.4%  26.5%  21.8%  35.0%  24.2%    
Combined ratio  79.1%  95.5%  101.4%  93.5%  82.7%  98.2%  90.4%  94.4%    
 

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





THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results

 
  Int'l Insurance 
  Six Months Ended June 30, 2016  Six Months Ended June 30, 2015     
amounts in thousands Marine  P&C  Professional
Liability
  Total  Marine  P&C  Professional
Liability
  Total  %
Change
Total

 
Gross written premiums $113,095  $107,048  $59,740  $279,883  $108,842  $74,565  $47,810  $231,217   21.0%
Ceded written premiums  (20,643)  (41,694)  (14,544)  (76,881)  (19,948)  (40,642)  (15,287)  (75,877)  1.3%
Net written premiums  92,452   65,354   45,196   203,002   88,894   33,923   32,523   155,340   30.7%
                                     
Net earned premiums $74,952  $45,024  $35,865  $155,841  $77,924  $26,233  $

24,554  $

128,711   21.1%
Net losses and LAE  (37,109)  (33,094)  (18,273)  (88,476)  (40,943)  (8,964)  (12,147)  (62,054)  42.6%
Commission expenses  (17,766)  (7,925)  (6,485)  (32,176)  (18,685)  (1,182)  (2,844)  (22,711)  41.7%
Other operating expenses  (17,140)  (17,773)  (9,901)  (44,814)  (13,444)  (12,150)  (8,781)  (34,375)  30.4%
Other underwriting income (expense)  -   -   -   -   -   -   -   -  NM 
                                     
Underwriting profit (loss) $2,937  $(13,768) $1,206  $(9,625) $4,852  $3,937  $782  $9,571  NM 
                                     
Losses and LAE ratio  49.5%  73.5%  50.9%  56.8%  52.5%  34.2%  49.5%  48.2%    
Commission expense ratio  23.7%  17.6%  18.1%  20.6%  24.0%  4.5%  11.6%  17.6%    
Other operating expense ratio (1)  22.9%  39.5%  27.6%  28.8%  17.3%  46.3%  35.7%  26.8%    
Combined ratio  96.1%  130.6%  96.6%  106.2%  93.8%  85.0%  96.8%  92.6%    
 

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

 
   For the Three Months Ended June 30, 
amounts in thousands Amounts  Loss Ratio 
Net Incurred Loss Activity 2016  2015  2016  2015 
U.S. Insurance:                
Loss and LAE payments $72,246  $56,719   47.4%  41.3%
Change in reserves  21,182   27,436   13.9%  20.0%
Net incurred loss and LAE $

93,428  $84,155   61.3%  61.3%
                 
Int'l Insurance:                
Loss and LAE payments  32,996   33,891   42.4%  53.6%
Change in reserves  15,070   (1,528)  19.4%  -2.4%
Net incurred loss and LAE $

48,066  $32,363   61.8%  51.2%
                 
GlobalRe:                
Loss and LAE payments  17,928   20,037   47.5%  47.9%
Change in reserves  7,784   5,418   20.6%  12.9%
Net incurred loss and LAE $

25,712  $

25,455   68.1%  60.8%
                 
Total                
Loss and LAE payments  123,170   110,647   46.0%  45.7%
Change in reserves  44,036   31,326   16.4%  12.9%
Net incurred loss and LAE $167,206  $141,973   62.4%  58.6%
                 
  Amounts  Loss Ratio Impact 
Impact of Prior Years Reserves June 30,  June 30,  June 30,  June 30, 
Favorable / (Unfavorable) Development 2016  2015  2016  2015 
U.S. Insurance $4,002  $7,829   1.5%  3.2%
Int'l Insurance  3,354   (581)  1.3%  -0.2%
GlobalRe  1,423   7   0.5%  0.0%
Total $8,779  $7,255   3.3%  3.0%











THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Incurred Loss Activity

 
   For the Six Months Ended June 30, 
amounts in thousands Amounts  Loss Ratio 
Net Incurred Loss Activity 2016  2015  2016  2015 
U.S. Insurance:                
Loss and LAE payments $145,281  $119,453   48.3%  44.5%
Change in reserves  39,659   42,501   13.2%  15.8%
Net incurred loss and LAE $

184,940  $161,954   61.5%  60.3%
                 
Int'l Insurance:                
Loss and LAE payments  62,239   69,428   39.9%  53.9%
Change in reserves  26,237   (7,374)  16.9%  -5.7%
Net incurred loss and LAE $88,476  $62,054   56.8%  48.2%
                 
GlobalRe:                
Loss and LAE payments  43,059   41,249   56.8%  50.7%
Change in reserves  3,687   6,914   4.9%  8.5%
Net incurred loss and LAE $46,746  $

48,163   61.7%  59.2%
                 
Total                
Loss and LAE payments  250,579   230,130   47.1%  48.1%
Change in reserves  69,583   42,041   13.0%  8.8%
Net incurred loss and LAE $320,162  $272,171   60.1%  56.9%
                 
  Amounts  Loss Ratio Impact 
Impact of Prior Years Reserves June 30,  June 30,  June 30,  June 30, 
Favorable / (Unfavorable) Development 2016  2015  2016  2015 
U.S. Insurance $6,671  $14,238   1.3%  3.0%
Int'l Insurance  2,499   5,610   0.5%  1.2%
GlobalRe  1,443   6   0.3%  0.0%
Total $10,613  $19,854   2.1%  4.2%











THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data

 
   As of June 30, 2016 
amounts in thousands Case  IBNR     
Net Loss Reserves: Reserves  Reserves  Total 
U.S. Insurance:            
Marine $57,895  $52,573  $110,468 
P&C

  192,440   555,945   748,385 
Professional Liability  30,150   63,592   93,742 
Total U.S. Insurance $

280,485  $

672,110  $

952,595 
Int'l Insurance:            
Marine  162,364   59,347   221,711 
P&C  55,811   19,815   75,626 
Professional Liability  28,850   63,843   92,693 
Total Int'l Insurance $247,025  $

143,005  $390,030 
             
GlobalRe $45,705  $66,172  $111,877 
             
Total Net Loss Reserves $573,215  $881,287  $1,454,502 
             
             
  As of December 31, 2015 
  Case  IBNR     
Net Loss Reserves: Reserves  Reserves  Total 
U.S. Insurance:            
Marine $68,677  $55,408  $124,085 
P&C  170,988   514,777   685,765 
Professional Liability  42,546   60,528   103,074 
Total U.S. Insurance $

282,211  $630,713  $912,924 
Int'l Insurance:            
Marine  167,157   61,409   228,566 
P&C  40,313   19,735   60,048 
Professional Liability  19,583   63,229   82,812 
Total Int'l Insurance $227,053  $144,373  $371,426 
             
GlobalRe $32,160  $76,616  $108,776 
             
Total Net Loss Reserves $541,424  $851,702  $1,393,126 



THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES


Investment Data

As of June 30, 2016, the average quality of the investment portfolio as rated by S&P and Moody's was "AA-/Aa3" with an average duration of 3.9 years. Our Company does not own any collateralized debt obligations (CDO's) or asset backed commercial paper.

The following table sets forth our investments as of June 30, 2016:

  As of  June 30, 2016 
      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
 $353,579  $6,019  $(3,860) $351,420 
States, municipalities and political subdivisions  553,824   34,183   (602)  520,243 
Mortgage-backed and asset-backed securities:                
Agency mortgage-backed securities  504,731   11,203   (183)  493,711 
Residential mortgage obligations  28,258   470   (130)  27,918 
Asset-backed securities  262,903   1,339   (836)  262,400 
Commercial mortgage-backed securities  172,579   6,581   (1,028)  167,026 
Subtotal $968,471  $19,593  $(2,177) $951,055 
Corporate bonds  756,439   22,172   (1,636)  735,903 
Total fixed maturities $2,632,313  $81,967  $(8,275) $2,558,621 
Equity securities  329,635   39,159   (2,222)  292,698 
Short-term investments  144,843   -   (2)  144,845 
Total investments $3,106,791  $121,126  $(10,499) $2,996,164 

 

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

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