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Navigators Second Quarter Operating Earnings up 31%

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STAMFORD, Conn., Aug. 06, 2015 (GLOBE NEWSWIRE) -- The Navigators Group, Inc. (NASDAQ: NAVG) reported net income of $19.2 million, or $1.30  per diluted share, for the three months ended June 30, 2015 compared to $16.9 million, or $1.17 per diluted share, for the comparable period in 2014. Operating earnings were $19.7 million, or $1.34 per diluted share, for the three months ended June 30, 2015 compared to $15.0 million, or $1.04 per diluted share, for the comparable period in 2014. 

For the six months ended June 30, 2015, the Company reported net income of $45.1 million, or $3.06 per diluted share compared to $44.8 million, or $3.11 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 six months ended June 30, 2014 net income per diluted share would have been $2.66. Operating earnings were $40.6 million, or $2.76 per diluted share, for the six months ended June 30, 2015 compared to $35.9 million, or $2.49 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 June 30, 2015 were $379.5 million and $258.2 million, respectively, an increase of 8.8% and 11.4% from the comparable period in 2014.

Gross written premiums and net written premiums for the six months ended June 30, 2015 were $775.9 million and $547.2 million, respectively, each an increase of 0.6% from the comparable period in 2014.

The combined ratio for the three and six months ended June 30, 2015 was 93.4% and 92.8%, respectively, compared to 95.3% and 93.8% for the comparable periods in 2014.

Stan Galanski, President and Chief Executive Officer commented, "We are pleased to report another quarter of solid performance. We generated profitable underwriting results in each of our three underwriting segments, specifically with strong profit contribution from our US and International Marine units and overall Global Re. Despite challenging competitive conditions in a number of specialty niches, most notably the first-party energy product lines, we achieved double digit net premium growth, led by strong growth in our U.S. Primary and Excess Casualty units."

Stockholders' equity was $1,053.6 million, or $73.18 per share, as of June 30, 2015 compared to $1,027.2 million, or $71.93 per share, as of December 31, 2014.

Net investment income for the three and six months ended June 30, 2015 was $16.6 million and $32.8 million, respectively, an increase of 6.1% and 1.8% 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 2.4% for the three and six months ended June 30, 2015, compared to 2.5% and 2.6%, respectively for the comparable periods in 2014.

The Company's investment portfolio mainly consists of fixed income securities with an average quality rating of "AA/Aa" as defined by Standard & Poor's and Moody's, respectively, and an average effective duration of 3.8 years as of June 30, 2015.  As of June 30, 2015, net unrealized gains within our investment portfolio were $38.0 million, a decrease of $33.4 million compared to December 31, 2014.

There were $3.9 million of net realized gains recognized in earnings for the three months ended June 30, 2015, compared to $4.5 million for the same period in 2014.  For the six months ended June 30, there were $9.5 million of net realized gains, compared to $5.3 million for the same period in 2014.

Other income (loss) for the three months ended June 30, 2015 was ($4.4 million), compared to ($1.7 million) for the same period in 2014, each primarily consisting of a net foreign exchange loss. For the six months ended June 30, 2015 other income (loss) was ($2.1 million), primarily consisting of net foreign exchange, compared to $8.7 million in the same period in 2014; largely impacted by a one-time foreign exchange gain in the first quarter of 2014. 

The Company will hold a conference call on Friday, August 7, 2015 starting at 8:30 a.m. ET to discuss the 2015 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 (888-240-9373) and the international dial-in is (913) 312-0956. Participants may connect to the webcast at: 

http://edge.media-server.com/m/p/3h9rmgcb

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  2015  2014 Change   2015  2014 Change
           
Gross written premiums $  379,471  $  348,795   8.8%  $  775,931  $  771,585   0.6%
Net written premiums    258,244     231,864   11.4%     547,202     543,714   0.6%
           
Revenues:         
 Net earned premiums    242,328    231,084  4.9%     478,460    456,356  4.8%
 Net investment income    16,595    15,648  6.1%     32,848    32,258  1.8%
 Net realized gains (losses):         
 Total other-than-temporary impairment losses    (423)   -  NM     (423)   -  NM
 Portion of loss recognized in other comprehensive         
 income (before tax)    -     -  NM     -     -  NM
 Net other-than-temporary impairment losses         
 recognized in earnings    (423)   -  NM     (423)   -  NM
 Other realized gains (losses)    4,339    4,473  -3.0%     9,935    5,306  87.2%
 Net realized gains (losses)    3,916    4,473  -12.5%     9,512    5,306  79.3%
 Other income (loss)    (4,362)   (1,665)NM     (2,120)   8,734  -124.3%
 Total revenues    258,477     249,540   3.6%     518,700     502,654   3.2%
           
Expenses:         
 Net losses and loss adjustment expenses    141,973    140,220  1.3%     272,171    275,287  -1.1%
 Commission expenses    31,480    32,150  -2.1%     64,385    57,877  11.2%
 Other operating expenses    52,789    47,992  10.0%     107,698    95,138  13.2%
 Interest expense    3,856    4,319  -10.7%     7,711    8,171  -5.6%
 Total expenses    230,098     224,681   2.4%     451,965     436,473   3.5%
           
Income before income taxes    28,379     24,859   14.2%     66,735     66,181   0.8%
           
Income tax expense (benefit)    9,195     7,998   15.0%     21,622     21,352   1.3%
           
Net income (loss) $  19,184  $  16,861   13.8%  $  45,113  $  44,829   0.6%
           
           
Per Share Data         
           
Net income per common share:         
 Basic $  1.33  $  1.18   12.7%  $  3.14  $  3.15   -0.3%
 Diluted $  1.30  $  1.17   11.1%  $  3.06  $  3.11   -1.6%
           
Average common shares outstanding:         
 Basic    14,396,048     14,259,753        14,370,123     14,246,701   
 Diluted    14,763,002     14,377,476        14,726,282     14,401,740   
           
Underwriting Ratios         
Loss Ratio  58.6% 60.7%    56.9% 60.3% 
Expense Ratio  34.8% 34.6%    35.9% 33.5% 
Combined Ratio  93.4% 95.3%    92.8% 93.8% 
           
           
Balance Sheet Data Jun. 30,Mar. 31,   Jun. 30,Dec. 31, 
    2015  2015     2015  2014  
Stockholders' equity $  1,053,629  $  1,053,603   0.0%  $  1,053,629  $  1,027,224   2.6%
Book value per share $  73.18  $  73.21   0.0%  $  73.18  $  71.93   1.7%


THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
($ in thousands, except share data)
      
   June 30, December 31,
    2015   2014 
ASSETS
Investments and cash:   
 Fixed maturities, available-for-sale, at fair value   
 (amortized cost: 2015, $2,291,137; 2014, $2,323,959)$  2,313,937  $  2,365,934 
 Equity securities, available-for-sale, at fair value (cost: 2015, $179,917; 2014, $154,843)   195,078     184,295 
 Short-term investments, at fair value (amortized cost: 2015: $201,688; 2014: $179,527)   201,748     179,506 
 Cash    89,250     90,751 
  Total investments and cash   2,800,013      2,820,486  
      
 Premiums receivable   407,122     342,479 
 Prepaid reinsurance premiums   260,010     237,851 
 Reinsurance recoverable on paid losses   124,439     51,347 
 Reinsurance recoverable on unpaid losses and loss adjustment expenses   780,297     851,498 
 Deferred policy acquisition costs   84,905     79,452 
 Accrued investment income   14,573     14,791 
 Goodwill and other intangible assets   6,947     7,013 
 Current income tax receivable, net   16,109     14,549 
 Deferred income tax, net   7,658     - 
 Other assets   39,159     44,710 
  Total assets$  4,541,232   $  4,464,176  
      
      
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:    
 Reserves for losses and loss adjustment expenses$  2,131,157  $  2,159,634 
 Unearned premiums   857,068     766,167 
 Reinsurance balances payable   155,423     152,774 
 Senior notes   263,509     263,440 
 Deferred income tax, net   -      1,467 
 Accounts payable and other liabilities   80,446     93,470 
  Total liabilities   3,487,603      3,436,952  
      
Stockholders' equity:   
 Preferred stock, $.10 par value, authorized 1,000,000 shares, none issued$  -   $  -  
 Common stock, $.10 par value, authorized 50,000,000 shares, issued 17,908,734 shares   
 for 2015 and 17,792,846 shares for 2014   1,791     1,778 
 Additional paid-in capital   350,151     347,022 
 Treasury stock, at cost (3,511,380 shares for 2015 and 2014)   (155,801)    (155,801)
 Retained earnings   832,779     787,666 
 Accumulated other comprehensive income   24,709     46,559 
  Total stockholders' equity   1,053,629      1,027,224  
      
  Total liabilities and stockholders' equity$  4,541,232   $  4,464,176  

 

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
($ in thousands)
           
  Three Months Ended June 30, 2015
  U.S.  International Global    
  Insurance Insurance Reinsurance 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 loss adjustment expenses  (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 (expenses)    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 (expense)          (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 loss adjustment expenses 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) The Corporate segment includes intercompany eliminations.        
(2) The Other operating expense ratio includes Other underwriting income (expense).      


THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
($ in thousands)
           
  Three Months Ended June 30, 2014
  U.S.  International Global    
  Insurance Insurance Reinsurance Corporate (1) Total
Gross written premiums $  206,703   $  120,732   $  21,360   $  -   $  348,795  
Ceded written premiums    (60,004)    (56,345)    (582)    -      (116,931)
Net written premiums  146,699    64,387    20,778      -    231,864  
           
Net earned premiums  125,254   59,661   46,169     -   231,084 
Net losses and loss adjustment expenses  (73,131)  (35,293)  (31,796)    -   (140,220)
Commission expenses  (13,219)  (11,009)  (8,468)  546   (32,150)
Other operating expenses  (28,840)  (15,436)  (3,716)    -   (47,992)
Other underwriting income (expenses)  736   11   34   (546)  235 
           
Underwriting profit (loss) $  10,800   $  (2,066) $  2,223   $  -    $  10,957  
           
Net investment income        15,648   15,648 
Net realized gains (losses)          4,473   4,473 
Interest expense          (4,319)  (4,319)
Other income (expense)          (1,900)  (1,900)
           
Income before income taxes $  10,800  $  (2,066) $  2,223  $  13,902  $  24,859 
           
Income tax (expense) benefit        (7,998)  (7,998)
Net income (loss)         $  16,861  
           
Losses and loss adjustment expenses ratio  58.4%  59.2%  68.9%    60.7%
Commission expense ratio  10.6%  18.5%  18.3%    13.9%
Other operating expense ratio (2)  22.4%  25.8%  8.0%    20.7%
Combined ratio  91.4%  103.5%  95.2%    95.3%
           
(1) The Corporate segment includes intercompany eliminations.        
(2) The Other operating expense ratio includes Other underwriting income (expense).      


THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
($ in thousands)
           
  Six Months Ended June 30, 2015
  U.S.  International Global    
  Insurance Insurance Reinsurance 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 loss adjustment expenses  (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 (expenses)    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 (expense)          (2,200)  (2,200)
           
Income 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 loss adjustment expenses 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) The Corporate segment includes intercompany eliminations.        
(2) The Other operating expense ratio includes Other underwriting income (expense).      


THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
($ in thousands)
           
  Six Months Ended June 30, 2014
  U.S.  International Global    
  Insurance Insurance Reinsurance Corporate (1) Total
Gross written premiums $  405,051   $  239,924   $  126,610   $  -   $  771,585  
Ceded written premiums    (125,070)    (98,927)    (3,874)    -      (227,871)
Net written premiums  279,981    140,997    122,736      -    543,714  
           
Net earned premiums  240,444   121,715   94,197     -   456,356 
Net losses and loss adjustment expenses  (146,095)  (66,513)  (62,679)    -   (275,287)
Commission expenses  (22,728)  (19,864)  (16,340)  1,055   (57,877)
Other operating expenses  (56,833)  (30,495)  (7,810)    -   (95,138)
Other underwriting income (expenses)  1,249   17   179   (1,055)  390 
           
Underwriting profit (loss) $  16,037   $  4,860   $  7,547   $  -    $  28,444  
           
Net investment income        32,258   32,258 
Net realized gains (losses)          5,306   5,306 
Interest expense          (8,171)  (8,171)
Other income (expense)          8,344   8,344 
           
Income before income taxes $  16,037  $  4,860  $  7,547  $  37,737  $  66,181 
           
Income tax (expense) benefit        (21,352)  (21,352)
Net income (loss)         $  44,829  
           
Losses and loss adjustment expenses ratio  60.8%  54.6%  66.5%    60.3%
Commission expense ratio  9.5%  16.3%  17.3%    12.7%
Other operating expense ratio (2)  23.0%  25.1%  8.2%    20.8%
Combined ratio  93.3%  96.0%  92.0%    93.8%
           
(1) The Corporate segment includes intercompany eliminations.        
(2) The Other operating expense ratio includes Other underwriting income (expense).      


THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
($ in thousands)
             
  U.S. Insurance  
  Three months ended June 30, 2015 Three months ended June 30, 2014 % Change
amounts in thousands MarineP&CProfessional
Liability
Total MarineP&CProfessional
Liability
Total Total
Gross written premiums $  41,803 $  170,216 $  27,968 $  239,987  $  42,548 $  137,137 $  27,018 $  206,703   16.1%
Ceded written premiums    (15,026)   (49,305)   (14,551)   (78,882)    (11,587)   (40,452)   (7,965)   (60,004)  31.5%
Net written premiums    26,777    120,911    13,417    161,105     30,961    96,685    19,053    146,699   9.8%
             
Net earned premiums    25,977    96,440    14,887    137,304     26,727    76,585    21,942    125,254   9.6%
Net losses and LAE    (11,415)   (67,809)   (4,931)   (84,155)    (10,609)   (52,619)   (9,903)   (73,131)  15.1%
Commission expenses    (2,429)   (8,751)   (1,095)   (12,275)    (4,101)   (6,095)   (3,023)   (13,219)  -7.1%
Other operating expenses    (6,402)   (19,661)   (5,311)   (31,374)    (5,944)   (17,675)   (5,221)   (28,840)  8.8%
Other underwriting income (expenses)    24    97    -     121     320    374    42    736   -83.6%
             
Underwriting profit (loss) $  5,755 $  316 $  3,550 $  9,621  $  6,393 $  570 $  3,837 $  10,800   -10.9%
             
Losses and LAE ratio  43.9% 70.3% 33.1% 61.3%  39.7% 68.7% 45.1% 58.4%  
Commission expense ratio  9.4% 9.1% 7.4% 8.9%  15.3% 8.0% 13.8% 10.6%  
Other operating expense ratio (1)  24.5% 20.3% 35.7% 22.8%  21.1% 22.6% 23.6% 22.4%  
Combined ratio  77.8% 99.7% 76.2% 93.0%  76.1% 99.3% 82.5% 91.4%  
                             
             
(1) The Other operating expense ratio includes Other income (expense).         
             
  Int'l Insurance  
  Three months ended June 30, 2015 Three months ended June 30, 2014 % Change
amounts in thousands  Marine  P&C  Professional
Liability
 Total  MarineP&CProfessional
Liability
Total Total
Gross written premiums $  41,432 $  41,615 $  25,743 $  108,790  $  47,532 $  51,305 $  21,895 $  120,732   -9.9%
Ceded written premiums    (9,126)   (24,513)   (7,982)   (41,621)    (17,033)   (31,284)   (8,028)   (56,345)  -26.1%
Net written premiums    32,306    17,102    17,761    67,169     30,499    20,021    13,867    64,387   4.3%
             
Net earned premiums    40,132    10,199    12,855    63,186     34,177    16,466    9,018    59,661   5.9%
Net losses and LAE    (21,432)   (4,084)   (6,847)   (32,363)    (22,963)   (9,937)   (2,393)   (35,293)  -8.3%
Commission expenses    (9,495)   (155)   (1,648)   (11,298)    (10,020)   (996)   7    (11,009)  2.6%
Other operating expenses    (6,749)   (6,166)   (4,451)   (17,366)    (6,468)   (5,570)   (3,398)   (15,436)  12.5%
Other underwriting income (expenses)    -     -     -     -      3    5    3    11  NM
             
Underwriting profit (loss) $  2,456 $  (206)$  (91)$  2,159  $  (5,271)$  (32)$  3,237 $  (2,066) NM
             
Losses and LAE ratio  53.4% 40.0% 53.3% 51.2%  67.2% 60.4% 26.5% 59.2%  
Commission expense ratio  23.7% 1.5% 12.8% 17.9%  29.4% 6.0% -0.1% 18.5%  
Other operating expense ratio (1)  16.8% 60.5% 34.6% 27.5%  18.9% 33.8% 37.8% 25.8%  
Combined ratio  93.9% 102.0% 100.7% 96.6%  115.5% 100.2% 64.2% 103.5%  
             
NM - Percentage change not meaningful            
(1) The Other operating expense ratio includes Other income (expense).         


THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
($ in thousands)
             
  U.S. Insurance  
  Six months ended June 30, 2015 Six months ended June 30, 2014 % Change
amounts in thousands MarineP&CProfessional
Liability
Total MarineP&CProfessional
Liability
Total Total
Gross written premiums $  82,638 $  304,362 $  52,314 $  439,314  $  85,573 $  262,256 $  57,222 $  405,051   8.5%
Ceded written premiums    (31,312)   (88,863)   (27,437)   (147,612)    (20,757)   (86,608)   (17,705)   (125,070)  18.0%
Net written premiums    51,326    215,499    24,877    291,702     64,816    175,648    39,517    279,981   4.2%
             
Net earned premiums    49,901    187,175    31,319    268,395     54,713    141,516    44,215    240,444   11.6%
Net losses and LAE    (21,603)   (125,856)   (14,495)   (161,954)    (25,292)   (96,968)   (23,835)   (146,095)  10.9%
Commission expenses    (6,461)   (17,307)   (2,852)   (26,620)    (6,648)   (10,040)   (6,040)   (22,728)  17.1%
Other operating expenses    (13,375)   (40,720)   (10,967)   (65,062)    (11,633)   (34,988)   (10,212)   (56,833)  14.5%
Other underwriting income (expenses)    175    141    1    317     521    640    88    1,249   -74.6%
             
Underwriting profit (loss) $  8,637 $  3,433 $  3,006 $  15,076  $  11,661 $  160 $  4,216 $  16,037   -6.0%
             
Losses and LAE ratio  43.3% 67.2% 46.3% 60.3%  46.2% 68.5% 53.9% 60.8%  
Commission expense ratio  12.9% 9.2% 9.1% 9.9%  12.2% 7.1% 13.7% 9.5%  
Other operating expense ratio (1)  26.5% 21.8% 35.0% 24.2%  20.3% 24.3% 22.9% 23.0%  
Combined ratio  82.7% 98.2% 90.4% 94.4%  78.7% 99.9% 90.5% 93.3%  
                             
             
(1) The Other operating expense ratio includes Other income (expense).         
             
  Int'l Insurance  
  Six months ended June 30, 2015 Six months ended June 30, 2014 % Change
amounts in thousands  Marine  P&C  Professional
Liability
 Total  MarineP&CProfessional
Liability
Total Total
Gross written premiums $  108,842 $  74,565 $  47,810 $  231,217  $  109,514 $  93,555 $  36,855 $  239,924   -3.6%
Ceded written premiums    (19,948)   (40,642)   (15,287)   (75,877)    (29,427)   (55,748)   (13,752)   (98,927)  -23.3%
Net written premiums    88,894    33,923    32,523    155,340     80,087    37,807    23,103    140,997   10.2%
             
Net earned premiums    77,924    26,233    24,554    128,711     72,221    32,907    16,587    121,715   5.7%
Net losses and LAE    (40,943)   (8,964)   (12,147)   (62,054)    (42,660)   (16,894)   (6,959)   (66,513)  -6.7%
Commission expenses    (18,685)   (1,182)   (2,844)   (22,711)    (20,007)   195    (52)   (19,864)  14.3%
Other operating expenses    (13,444)   (12,150)   (8,781)   (34,375)    (12,883)   (10,850)   (6,762)   (30,495)  12.7%
Other underwriting income (expenses)    -     -     -     -      9    5    3    17  NM
             
Underwriting profit (loss) $  4,852 $  3,937 $  782 $  9,571  $  (3,320)$  5,363 $  2,817 $  4,860   96.9%
             
Losses and LAE ratio  52.5% 34.2% 49.5% 48.2%  59.1% 51.3% 42.0% 54.6%  
Commission expense ratio  24.0% 4.5% 11.6% 17.6%  27.7% -0.6% 0.3% 16.3%  
Other operating expense ratio (1)  17.3% 46.3% 35.7% 26.8%  17.8% 33.0% 40.7% 25.1%  
Combined ratio  93.8% 85.0% 96.8% 92.6%  104.6% 83.7% 83.0% 96.0%  
             
NM - Percentage change not meaningful            
(1) The Other operating expense ratio includes Other income (expense).         


THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Incurred Loss Activity
($ in thousands)
       
  For the Three Months Ended
  Amounts Loss Ratio
  June 30,June 30, June 30,June 30,
Net Incurred Loss Activity  2015  2014   2015  2014 
US Insurance:      
Loss and LAE payments $  56,719 $  49,772   41.3% 39.8%
Change in reserves    27,436    23,359   20.0% 18.6%
Net incurred loss and LAE    84,155    73,131   61.3% 58.4%
       
International Insurance:      
Loss and LAE payments    33,891    31,548   53.6% 52.9%
Change in reserves    (1,528)   3,745   -2.4% 6.3%
Net incurred loss and LAE    32,363    35,293   51.2% 59.2%
       
Global Reinsurance:      
Loss and LAE payments    20,037    22,302   47.9% 48.3%
Change in reserves    5,418    9,494   12.9% 20.6%
Net incurred loss and LAE    25,455    31,796   60.8% 68.9%
       
Total      
Loss and LAE payments    110,647    103,622   45.7% 44.9%
Change in reserves    31,326    36,598   12.9% 15.8%
Net incurred loss and LAE $  141,973  $  140,220    58.6% 60.7%
       
  Amounts Loss Ratio Impact
Impact of Prior Years Reserves June 30,June 30, June 30,June 30,
Favorable / (Unfavorable) Development  2015  2014   2015  2014 
US Insurance $  7,829 $  12,582   3.2% 5.4%
International Insurance    (581)   10,373   -0.2% 4.5%
Global Reinsurance    7    (2,440)  0.0% -1.0%
Total $  7,255  $  20,515    3.0% 8.9%


THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Incurred Loss Activity
($ in thousands)
       
  For the Six Months Ended
  Amounts Loss Ratio
  June 30,June 30, June 30,June 30,
Net Incurred Loss Activity  2015  2014   2015  2014 
US Insurance:      
Loss and LAE payments $  119,453 $  99,427   44.5% 41.4%
Change in reserves    42,501    46,668   15.8% 19.4%
Net incurred loss and LAE    161,954    146,095   60.3% 60.8%
       
International Insurance:      
Loss and LAE payments    69,428    63,236   53.9% 52.0%
Change in reserves    (7,374)   3,277   -5.7% 2.6%
Net incurred loss and LAE    62,054    66,513   48.2% 54.6%
       
Global Reinsurance:      
Loss and LAE payments    41,249    41,622   50.7% 44.2%
Change in reserves    6,914    21,057   8.5% 22.3%
Net incurred loss and LAE    48,163    62,679   59.2% 66.5%
       
Total      
Loss and LAE payments    230,130    204,285   48.1% 44.7%
Change in reserves    42,041    71,002   8.8% 15.6%
Net incurred loss and LAE $  272,171  $  275,287    56.9% 60.3%
       
  Amounts Loss Ratio Impact
Impact of Prior Years Reserves June 30,June 30, June 30,June 30,
Favorable / (Unfavorable) Development  2015  2014   2015  2014 
US Insurance $  14,238 $  12,134   3.0% 2.7%
International Insurance    5,610    10,957   1.2% 2.4%
Global Reinsurance    6    (2,538)  0.0% -0.6%
Total $  19,854  $  20,553    4.2% 4.5%


THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data
($ in thousands)
         
    As of June 30, 2015
    Case IBNR  
Net Loss Reserves:  Reserves Reserves Total
US Insurance:       
Marine   $  70,582  $  65,030  $  135,612 
Property Casualty     154,775     451,665     606,440 
Professional Liability    45,573     71,814     117,387 
Total US Insurance     270,930     588,509     859,439 
International Insurance:       
Marine      176,305     66,970     243,275 
Property Casualty     36,429     16,507     52,936 
Professional Liability    9,817     56,706     66,523 
Total International Insurance    222,551     140,183     362,734 
         
Global Reinsurance     26,964     101,723     128,687 
         
Total Net Loss Reserves $  520,445   $  830,415   $  1,350,860  
         
    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
June 30, 2015
 
As of June 30, 2015, the average quality of the investment portfolio as rated by S&P and Moody's was AA/Aa 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 cash and investments as of June 30, 2015:
         
  As of June 30, 2015
    Gross Gross Cost or
  Fair Unrealized Unrealized Amortized
  Value Gains (Losses) Cost
  ($ in thousands)
Fixed maturities:        
U.S.Treasury bonds, agency bonds        
and foreign government bonds $  295,687  $  3,407  $  (6,173) $  298,453 
States, municipalities and political        
subdivisions    565,188     12,511     (2,531)    555,208 
Mortgage- and asset-backed securities:        
Agency mortgage-backed securities    343,916     6,501     (2,100)    339,515 
Residential mortgage obligations    32,396     1,010     (102)    31,488 
Asset-backed securities    195,512     433     (488)    195,567 
Commercial mortgage-backed securities    216,185     4,814     (1,481)    212,852 
Subtotal    788,009     12,758     (4,171)    779,422 
                 
Corporate bonds    665,053     10,210     (3,211)    658,054 
         
Total fixed maturities    2,313,937     38,886     (16,086)    2,291,137 
         
Equity securities    195,078     18,733     (3,572)    179,917 
         
Short-term investments    201,748     60     -      201,688 
         
Total $  2,710,763  $  57,679  $  (19,658) $  2,672,742 
         
Contact: Ciro M. DeFalco Senior Vice President and Chief Financial Officer (203) 905-6343 cdefalco@navg.com www.navg.com

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