Market Overview

Navigators Reports Third Quarter Earnings

Share:

STAMFORD, Conn., Nov. 05, 2015 (GLOBE NEWSWIRE) -- The Navigators Group, Inc. (NASDAQ: NAVG) reported net income of $18.2 million, or $1.23 per diluted share, for the three months ended September 30, 2015 compared to $31.2 million, or $2.14 per diluted share, for the comparable period in 2014. Operating earnings were $20.3 million, or $1.37 per diluted share, for the three months ended September 30, 2015 compared to $26.1 million, or $1.79 per diluted share, for the comparable period in 2014. 

For the nine months ended September 30, 2015, the Company reported net income of $63.3 million, or $4.29 per diluted share compared to $76.1 million, or $5.22 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 nine months ended September 30, 2014 net income per diluted share would have been $4.77. Operating earnings were $60.7 million, or $4.11 per diluted share, for the nine months ended September 30, 2015 compared to $62.0 million, or $4.25 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 September 30, 2015 were $354.1 million and $251.9 million, respectively, an increase of 8.1% and 10.3% from the comparable period in 2014.

Gross written premiums and net written premiums for the nine months ended September 30, 2015 were $1.1 billion and $799.1 million, respectively, an increase of 2.8% and 3.5% from the comparable period in 2014.

The combined ratio for the three and nine months ended September 30, 2015 was 93.4% and 93.0%, respectively, compared to 89.5% and 92.3% for the comparable periods in 2014.

Stan Galanski, President and Chief Executive Officer commented, "We are pleased to report profitable underwriting results and good premium growth for the third quarter and for the first nine months of 2015. The U.S. Insurance and GlobalRe segments generated excellent results for the quarter. We remain optimistic about targeted growth initiatives across all three of our operating segments. Net investment income increased 9.7% for the quarter, contributing to an increase in book value per share to $74.70."

Stockholders' equity was $1.1 billion, or $74.70 per share, as of September 30, 2015 compared to $1.0 billion, or $71.93 per share, as of December 31, 2014.

Net investment income for the three and nine months ended September 30, 2015 was $17.4 million and $50.2 million, respectively, an increase of 9.7% and 4.4% 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 nine months ended September 30, 2015, compared to 2.2% and 2.4%, 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-/Aa3" as defined by Standard & Poor's and Moody's, respectively, and an average effective duration of 3.8 years as of September 30, 2015.  As of September 30, 2015, net unrealized gains within our investment portfolio were $39.0 million, a decrease of $32.4 million compared to December 31, 2014.

There were $0.8 million of net realized losses recognized in earnings for the three months ended September 30, 2015, compared to $6.7 million of net realized gains for the same period in 2014.  For the nine months ended September 30, 2015, there were $8.8 million of net realized gains, compared to $12.0 million for the same period in 2014.

Other income (loss) for the three months ended September 30, 2015 was a $2.5 million loss, compared to $1.3 million of income for the same period in 2014. For the nine months ended September 30, 2015, Other income (loss) was a $4.6 million loss compared to $10.1 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 Friday, November 6, 2015 starting at 8:30 a.m. EST to discuss the 2015 third quarter results.  The call will be available via live webcast on Navigators' website (www.navg.com).

To participate by telephone, the domestic dial-in number is (888) 572-7033 and the international dial-in is (719) 325-2454. Participants may connect to the webcast at: 

http://edge.media-server.com/m/p/rtf74zgm

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  Nine Months Ended 
  September 30,  September 30, 
Results of Operations  2015  2014 Change  2015  2014 Change
         
Gross written premiums $   354,062  $   327,469   8.1% $   1,129,993  $   1,099,054   2.8%
Net written premiums    251,939     228,417   10.3%    799,141     772,131   3.5%
         
Revenues:        
Net earned premiums    254,082    245,367  3.6%    732,542    701,723  4.4%
Net investment income    17,371    15,839  9.7%    50,219    48,097  4.4%
Net realized gains (losses):        
Total other-than-temporary impairment losses    (1,298)   (41) NM     (1,747)   158  NM 
Portion of loss recognized in other comprehensive          
income (before tax)    23    41  -43.9%    49    (158) NM 
Net other-than-temporary impairment losses           
recognized in earnings    (1,275)   -   NM     (1,698)   -   NM 
Other realized gains (losses)    518    6,718  -92.3%    10,453    12,024  -13.1%
Net realized gains (losses)    (757)   6,718  NM     8,755    12,024  -27.2%
Other income (loss)    (2,518)   1,336  NM     (4,638)   10,070  NM 
Total revenues    268,178     269,260   -0.4%    786,878     771,914   1.9%
         
Expenses:        
Net losses and loss adjustment expenses    146,546    135,284  8.3%    418,717    410,571  2.0%
Commission expenses    34,253    33,943  0.9%    98,638    91,820  7.4%
Other operating expenses    56,599    50,388  12.3%    164,297    145,526  12.9%
Interest expense    3,856    3,388  13.8%    11,567    11,559  0.1%
Total expenses    241,254     223,003   8.2%    693,219     659,476   5.1%
         
Income before income taxes    26,924     46,257   -41.8%    93,659     112,438   -16.7%
         
Income tax expense (benefit)    8,723     15,032   -42.0%    30,345     36,384   -16.6%
         
Net income (loss) $   18,201  $   31,225   -41.7% $   63,314  $   76,054   -16.8%
         
         
Per Share Data        
         
Net income per common share:        
Basic $   1.26  $   2.19   -42.3% $   4.40  $   5.34   -17.5%
Diluted $   1.23  $   2.14   -42.5% $   4.29  $   5.22   -17.8%
         
Average common shares outstanding:        
Basic    14,411,927     14,265,260       14,384,291     14,252,910   
Diluted    14,811,095     14,613,744       14,767,949     14,577,297   
         
Underwriting Ratios        
Loss Ratio  57.7% 55.1%   57.2% 58.5% 
Expense Ratio  35.7% 34.4%   35.8% 33.8% 
Combined Ratio  93.4% 89.5%   93.0% 92.3% 
         
         
Balance Sheet Data Sept. 30,June 30,  Sept. 30,Dec. 31, 
   2015  2015    2015  2014  
Stockholders' equity $   1,076,855  $   1,053,629   2.2% $   1,076,855  $   1,027,224   4.8%
Book value per share $   74.70  $   73.18   2.1% $   74.70  $   71.93   3.9%
         

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES 
CONSOLIDATED BALANCE SHEETS (Unaudited) 
      
amounts in thousands, except share and per share amounts 
  September 30,  December 31, 
   2015   2014  
ASSETS     
Investments and cash:     
Fixed maturities, available-for-sale, at fair value (amortized cost: 2015: $2,367,172; 2014: $2,323,959) $  2,396,987  $  2,365,934  
Equity securities, available-for-sale, at fair value (cost: 2015: $265,760; 2014: $154,843)    274,928     184,295  
Short-term investments, at fair value (amortized cost: 2015: $233,109; 2014: $179,527)    233,142     179,506  
Cash    69,483     90,751  
Total investments and cash $ 2,974,540  $2,820,486  
      
Premiums receivable    343,214  $  342,479  
Prepaid reinsurance premiums    252,488     237,851  
Reinsurance recoverable on paid losses    53,174     51,347  
Reinsurance recoverable on unpaid losses and loss adjustment expenses    794,235     851,498  
Deferred policy acquisition costs    88,959     79,452  
Accrued investment income    16,130     14,791  
Goodwill and other intangible assets    6,906     7,013  
Current income tax receivable, net    14,011     14,549  
Deferred income tax, net    9,955     -  
Receivable  for investments sold    2,727     326  
Other assets    40,188     44,384  
Total assets $ 4,596,527  $ 4,464,176  
      
LIABILITIES AND STOCKHOLDERS' EQUITY     
Liabilities:     
Reserves for losses and loss adjustment expenses $ 2,175,317  $ 2,159,634  
Unearned premiums    847,403     766,167  
Reinsurance balances payable    133,542     152,774  
Senior notes    263,544     263,440  
Deferred income tax, net    -      1,467  
Payable for investments purchased    31,000     134  
Accounts payable and other liabilities    68,866     93,336  
Total liabilities $ 3,519,672  $ 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 17,926,323 shares for 2015     
  and 17,792,846 shares for 2014    1,792     1,778  
Additional paid-in capital    354,527     347,022  
Treasury stock, at cost (3,511,380 shares for 2015 and 2014)    (155,801)    (155,801) 
Retained earnings    850,980     787,666  
Accumulated other comprehensive income    25,357     46,559  
Total stockholders' equity $  1,076,855  $  1,027,224  
Total liabilities and stockholders' equity $  4,596,527  $  4,464,176  
      

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
           
  Three Months Ended September 30, 2015
  U.S.  Int'l      
amounts in thousands Insurance Insurance GlobalRe Corporate (1) Total
Gross written premiums $  218,783  $  98,788  $  36,491   -  $  354,062 
Ceded written premiums  (63,753)  (37,804)  (566)  -   (102,123)
Net written premiums  155,030   60,984   35,925   -   251,939 
           
Net earned premiums  142,409   68,533   43,140   -   254,082 
Net losses and LAE  (85,140)  (39,182)  (22,224)  -   (146,546)
Commission expenses  (15,157)  (12,780)  (7,705)  1,389   (34,253)
Other operating expenses  (32,948)  (19,937)  (3,714)  -   (56,599)
Other underwriting income (expense)  1,013   -   395   (1,389)  19 
           
Underwriting profit (loss) $  10,177  $  (3,366) $  9,892  $  -  $  16,703 
           
Net investment income        17,371   17,371 
Net realized gains (losses)        (757)  (757)
Interest expense        (3,856)  (3,856)
Other income (loss)        (2,537)  (2,537)
Income before income taxes $  10,177  $  (3,366) $  9,892  $  10,221  $  26,924 
Income tax (expense) benefit        (8,723)  (8,723)
Net income (loss)          $  18,201 
           
           
Losses and LAE ratio  59.8%  57.2%  51.5%    57.7%
Commission expense ratio  10.6%  18.6%  17.9%    13.5%
Other operating expense ratio (2)  22.5%  29.1%  7.7%    22.2%
Combined ratio  92.9%  104.9%  77.1%    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
           
  Three Months Ended September 30, 2014
  U.S.  Int'l      
amounts in thousands Insurance Insurance GlobalRe Corporate (1) Total
Gross written premiums $  199,723  $  94,161  $  33,585  $  -  $  327,469 
Ceded written premiums    (61,654)    (36,607)    (791)    -     (99,052)
Net written premiums    138,069     57,554     32,794     -     228,417 
           
Net earned premiums    130,420     66,278     48,669     -     245,367 
Net losses and LAE  (80,722)  (24,910)  (29,652)    -   (135,284)
Commission expenses  (12,870)  (12,792)  (8,831)  550   (33,943)
Other operating expenses  (29,160)  (17,288)  (3,940)    -   (50,388)
Other underwriting income (expense)  534   1   122   (550)  107 
           
Underwriting profit (loss) $  8,202  $  11,289  $  6,368  $  -   $  25,859 
           
Net investment income        15,839   15,839 
Net realized gains (losses)          6,718   6,718 
Interest expense          (3,388)  (3,388)
Other income (loss)          1,229   1,229 
Income before income taxes $  8,202  $  11,289  $  6,368  $  20,398  $  46,257 
Income tax (expense) benefit        (15,032)  (15,032)
Net income (loss)          $  31,225 
           
           
Losses and LAE ratio  61.9%  37.6%  60.9%    55.1%
Commission expense ratio  9.9%  19.3%  18.1%    13.8%
Other operating expense ratio (2)  21.9%  26.1%  7.9%    20.6%
Combined ratio  93.7%  83.0%  86.9%    89.5%
_______________          
 (1) - Includes Corporate segment intercompany eliminations. 
 (2) - Includes Other operating expenses and Other underwriting income (expense). 
           
           
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
           
  Nine Months Ended September 30, 2015
  U.S.  Int'l      
amounts in thousands Insurance Insurance GlobalRe Corporate (1) Total
Gross written premiums $  658,097  $  330,005  $  141,891   -  $  1,129,993 
Ceded written premiums  (211,365)  (113,681)  (5,806)  -   (330,852)
Net written premiums  446,732   216,324   136,085   -   799,141 
           
Net earned premiums  410,804   197,244   124,494   -   732,542 
Net losses and LAE  (247,094)  (101,236)  (70,387)  -   (418,717)
Commission expenses  (41,777)  (35,491)  (23,042)  1,672   (98,638)
Other operating expenses  (98,010)  (54,312)  (11,975)  -   (164,297)
Other underwriting income (expense)  1,330   -   441   (1,672)  99 
           
Underwriting profit (loss) $  25,253  $  6,205  $  19,531  $  -  $  50,989 
           
Net investment income        50,219   50,219 
Net realized gains (losses)        8,755   8,755 
Interest expense        (11,567)  (11,567)
Other income (loss)        (4,737)  (4,737)
Income (loss) before income taxes $  25,253  $  6,205  $  19,531  $  42,670  $  93,659 
Income tax (expense) benefit        (30,345)  (30,345)
Net income (loss)          $  63,314 
           
           
Losses and LAE ratio  60.1%  51.3%  56.5%    57.2%
Commission expense ratio  10.2%  18.0%  18.5%    13.5%
Other operating expense ratio (2)  23.6%  27.6%  9.3%    22.3%
Combined ratio  93.9%  96.9%  84.3%    93.0%
           
 (1) - Includes Corporate segment intercompany eliminations. 
 (2) - Includes Other operating expenses and Other underwriting income (expense). 
           
           
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
           
  Nine Months Ended September 30, 2014
  U.S.  Int'l      
amounts in thousands Insurance Insurance GlobalRe Corporate (1) Total
Gross written premiums $  604,774  $  334,085  $  160,195  $  -  $  1,099,054 
Ceded written premiums    (186,724)    (135,534)    (4,665)    -     (326,923)
Net written premiums  418,050   198,551   155,530     -   772,131 
           
Net earned premiums  370,864   187,993   142,866     -   701,723 
Net losses and LAE  (226,817)  (91,423)  (92,331)    -   (410,571)
Commission expenses  (35,598)  (32,656)  (25,171)  1,605   (91,820)
Other operating expenses  (85,993)  (47,783)  (11,750)    -   (145,526)
Other underwriting income (expense)  1,783   18   301   (1,605)  497 
           
Underwriting profit (loss) $  24,239  $  16,149  $  13,915  $  -   $  54,303 
           
Net investment income        48,097   48,097 
Net realized gains (losses)          12,024   12,024 
Interest expense          (11,559)  (11,559)
Other income (loss)          9,573   9,573 
Income (loss) before income taxes $  24,239  $  16,149  $  13,915  $  58,135  $  112,438 
Income tax (expense) benefit        (36,384)  (36,384)
Net income (loss)          $  76,054 
           
           
Losses and LAE ratio  61.2%  48.6%  64.6%    58.5%
Commission expense ratio  9.6%  17.4%  17.6%    13.1%
Other operating expense ratio (2)  22.7%  25.4%  8.1%    20.7%
Combined ratio  93.5%  91.4%  90.3%    92.3%
           
 (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 September 30, 2015Three months ended September 30, 2014 
    Professional   Professional % Change
amounts in thousands MarineP&CLiabilityTotalMarineP&CLiabilityTotalTotal
Gross written premiums $  35,529 $  154,009 $  29,245 $  218,783 $  34,576 $  138,181 $  26,966 $  199,723  9.5%
Ceded written premiums  (13,865) (34,902) (14,986) (63,753) (13,338) (41,180) (7,136) (61,654) 3.4%
Net written premiums  21,664  119,107  14,259  155,030  21,238  97,001  19,830  138,069  12.3%
           
Net earned premiums  24,292  104,473  13,644  142,409  27,207  82,635  20,578  130,420  9.2%
Net losses and LAE  (7,349) (69,054) (8,737) (85,140) (13,581) (53,955) (13,186) (80,722) 5.5%
Commission expenses  (2,412) (11,711) (1,034) (15,157) (3,486) (6,697) (2,687) (12,870) 17.8%
Other operating expenses  (6,754) (20,581) (5,613) (32,948) (6,086) (17,935) (5,139) (29,160) 13.0%
Other underwriting income (expense)  214  735  64  1,013  168  331  35  534  89.7%
           
Underwriting profit (loss) $  7,991 $  3,862  (1,676)$  10,177 $  4,222 $  4,379  (399)$  8,202  24.1%
           
Losses and LAE ratio  30.3% 66.1% 64.0% 59.8% 49.9% 65.3% 64.1% 61.9% 
Commission expense ratio  9.9% 11.2% 7.6% 10.6% 12.8% 8.1% 13.1% 9.9% 
Other operating expense ratio (1)  26.9% 19.0% 40.7% 22.5% 21.8% 21.3% 24.7% 21.9% 
Combined ratio  67.1% 96.3% 112.3% 92.9% 84.5% 94.7% 101.9% 93.7% 
           
 (1) - Includes Other operating expenses and Other underwriting income (expense). 
           
   
  Int'l Insurance
  Three months ended September 30, 2015Three months ended September 30, 2014 
    Professional   Professional % Change
amounts in thousands  Marine  P&C  Liability  Total MarineP&CLiabilityTotalTotal
Gross written premiums $  41,002 $  37,449 $  20,337 $  98,788 $  41,593 $  35,399 $  17,169 $  94,161  4.9%
Ceded written premiums  (10,985) (20,034) (6,785) (37,804) (6,924) (24,267) (5,416) (36,607) 3.3%
Net written premiums  30,017  17,415  13,552  60,984  34,669  11,132  11,753  57,554  6.0%
           
Net earned premiums  36,792  16,879  14,862  68,533  40,207  14,300  11,771  66,278  3.4%
Net losses and LAE  (23,002) (8,051) (8,129) (39,182) (14,657) (3,565) (6,688) (24,910) 57.3%
Commission expenses  (8,227) (2,779) (1,774) (12,780) (9,755) (2,565) (472) (12,792) -0.1%
Other operating expenses  (8,233) (6,604) (5,100) (19,937) (7,573) (5,675) (4,040) (17,288) 15.3%
Other underwriting income (expense)  -  -  -  -  1  -  -  1  NM 
           
Underwriting profit (loss)  (2,670) (555) (141) (3,366)$  8,223 $  2,495 $  571 $  11,289  NM 
           
Losses and LAE ratio  62.5% 47.7% 54.7% 57.2% 36.5% 24.9% 56.8% 37.6% 
Commission expense ratio  22.4% 16.5% 11.9% 18.6% 24.3% 17.9% 4.0% 19.3% 
Other operating expense ratio (1)  22.4% 39.1% 34.4% 29.1% 18.7% 39.8% 34.4% 26.1% 
Combined ratio  107.3% 103.3% 101.0% 104.9% 79.5% 82.6% 95.2% 83.0% 
           
 NM - Percentage change not meaningful 
 (1) - Includes Other operating expenses and Other underwriting income (expense). 
           
 
   
  U.S. Insurance
  Nine months ended September 30, 2015Nine months ended September 30, 2014 
    Professional   Professional % Change
amounts in thousands MarineP&CLiabilityTotalMarineP&CLiabilityTotalTotal
Gross written premiums $  118,167 $  458,371 $  81,559 $  658,097 $  120,149 $  400,437 $  84,188 $  604,774  8.8%
Ceded written premiums  (45,177) (123,765) (42,423) (211,365) (34,095) (127,788) (24,841) (186,724) 13.2%
Net written premiums  72,990  334,606  39,136  446,732  86,054  272,649  59,347  418,050  6.9%
           
Net earned premiums  74,193  291,648  44,963  410,804  81,920  224,151  64,793  370,864  10.8%
Net losses and LAE  (28,952) (194,910) (23,232) (247,094) (38,873) (150,924) (37,020) (226,817) 8.9%
Commission expenses  (8,873) (29,018) (3,886) (41,777) (10,134) (16,737) (8,727) (35,598) 17.4%
Other operating expenses  (20,129) (60,976) (16,905) (98,010) (17,720) (52,923) (15,350) (85,993) 14.0%
Other underwriting income (expense)  389  876  65  1,330  691  971  121  1,783  -25.4%
           
Underwriting profit (loss) $  16,628 $  7,620 $  1,005 $  25,253 $  15,884 $  4,538 $  3,817 $  24,239  4.2%
           
Losses and LAE ratio  39.0% 66.8% 51.7% 60.1% 47.5% 67.3% 57.1% 61.2% 
Commission expense ratio  12.0% 9.9% 8.6% 10.2% 12.4% 7.5% 13.5% 9.6% 
Other operating expense ratio (1)  26.6% 20.7% 37.5% 23.6% 20.7% 23.2% 23.5% 22.7% 
Combined ratio  77.6% 97.4% 97.8% 93.9% 80.6% 98.0% 94.1% 93.5% 
           
 (1) - Includes Other operating expenses and Other underwriting income (expense). 
           
   
  Int'l Insurance
  Nine months ended September 30, 2015Nine months ended September 30, 2014 
    Professional   Professional % Change
amounts in thousands  Marine  P&C  Liability  Total MarineP&CLiabilityTotalTotal
Gross written premiums $  149,844 $  112,014 $  68,147 $  330,005 $  151,107 $  128,954 $  54,024 $  334,085  -1.2%
Ceded written premiums  (30,933) (60,676) (22,072) (113,681) (36,351) (80,015) (19,168) (135,534) -16.1%
Net written premiums  118,911  51,338  46,075  216,324  114,756  48,939  34,856  198,551  9.0%
           
Net earned premiums  114,716  43,112  39,416  197,244  112,428  47,207  28,358  187,993  4.9%
Net losses and LAE  (63,945) (17,015) (20,276) (101,236) (57,316) (20,460) (13,647) (91,423) 10.7%
Commission expenses  (26,912) (3,961) (4,618) (35,491) (29,763) (2,370) (523) (32,656) 8.7%
Other operating expenses  (21,677) (18,754) (13,881) (54,312) (20,454) (16,526) (10,803) (47,783) 13.7%
Other underwriting income (expense)  -  -  -  -  9  5  4  18  NM 
           
Underwriting profit (loss) $  2,182 $  3,382 $  641 $  6,205 $  4,904 $  7,856 $  3,389 $  16,149  -61.6%
           
Losses and LAE ratio  55.7% 39.5% 51.4% 51.3% 51.0% 43.3% 48.1% 48.6% 
Commission expense ratio  23.5% 9.2% 11.7% 18.0% 26.5% 5.0% 1.8% 17.4% 
Other operating expense ratio (1)  18.9% 43.5% 35.3% 27.6% 18.1% 35.1% 38.2% 25.4% 
Combined ratio  98.1% 92.2% 98.4% 96.9% 95.6% 83.4% 88.1% 91.4% 
           
 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 September 30, 
  AmountsLoss Ratio 
Net Incurred Loss Activity  2015  2014  2015  2014  
US Insurance:      
Loss and LAE payments $  67,327 $  64,436  47.3% 49.4% 
Change in reserves  17,813    16,286  12.5% 12.5% 
Net incurred loss and LAE  85,140    80,722  59.8% 61.9% 
       
International Insurance:      
Loss and LAE payments  29,306    27,018  42.8% 40.8% 
Change in reserves  9,876    (2,108) 14.4% -3.2% 
Net incurred loss and LAE  39,182    24,910  57.2% 37.6% 
       
Global Reinsurance:      
Loss and LAE payments  16,899    16,626  39.2% 34.1% 
Change in reserves  5,325    13,026  12.3% 26.8% 
Net incurred loss and LAE  22,224    29,652  51.5% 60.9% 
       
Total      
Loss and LAE payments  113,532    108,080  44.7% 44.0% 
Change in reserves  33,014    27,204  13.0% 11.1% 
Net incurred loss and LAE $  146,546 $  135,284  57.7% 55.1% 
       
  AmountsLoss Ratio Impact 
Impact of Prior Years Reserves Sept. 30,Sept. 30,Sept. 30,Sept. 30, 
Favorable / (Unfavorable) Development  2015  2014  2015  2014  
US Insurance $  7,057 $  4,831  2.8% 2.0% 
International Insurance  2,794    10,139  1.1% 4.1% 
Global Reinsurance  4,264    500  1.7% 0.2% 
Total $  14,115 $  15,470  5.6% 6.3% 
       

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES 
Net Incurred Loss Activity 
($ in thousands) 
       
  For the Nine Months Ended September 30, 
  AmountsLoss Ratio 
Net Incurred Loss Activity  2015  2014  2015  2014  
US Insurance:      
Loss and LAE payments $  186,780 $  163,863  45.4% 44.2% 
Change in reserves  60,314    62,954  14.7% 17.0% 
Net incurred loss and LAE  247,094    226,817  60.1% 61.2% 
       
International Insurance:      
Loss and LAE payments  98,734    90,254  50.0% 48.0% 
Change in reserves  2,502    1,169  1.3% 0.6% 
Net incurred loss and LAE  101,236    91,423  51.3% 48.6% 
       
Global Reinsurance:      
Loss and LAE payments  58,148    58,248  46.7% 40.8% 
Change in reserves  12,239    34,083  9.8% 23.8% 
Net incurred loss and LAE  70,387    92,331  56.5% 64.6% 
       
Total      
Loss and LAE payments  343,662    312,365  47.0% 44.5% 
Change in reserves  75,055    98,206  10.2% 14.0% 
Net incurred loss and LAE $  418,717 $  410,571  57.2% 58.5% 
       
  AmountsLoss Ratio Impact 
Impact of Prior Years Reserves Sept. 30,Sept. 30,Sept. 30,Sept. 30, 
Favorable / (Unfavorable) Development 2015  2014  2015  2014  
US Insurance $  21,295 $  16,965  2.9% 2.4% 
International Insurance  8,404    21,096  1.1% 3.0% 
Global Reinsurance  4,270    (2,038) 0.6% -0.3% 
 Total $  33,969 $  36,023  4.6% 5.1% 
       

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data
($ in thousands)
 
 As of September 30, 2015
 Case IBNR 
Net Loss Reserves: Reserves Reserves Total
US Insurance: 
Marine $  69,067  $  61,475  $  130,542 
Property Casualty  162,634   478,821   641,455 
Professional Liability  38,642   66,637   105,279 
Total US Insurance  270,343   606,933   877,276 
International Insurance:      
Marine  171,492   71,114   242,606 
Property Casualty  37,906   17,793   55,699 
Professional Liability  10,347   61,648   71,995 
Total International Insurance  219,745   150,555   370,300 
      
Global Reinsurance  27,907   105,601   133,508 
      
Total Net Loss Reserves $  517,995  $  863,089  $  1,381,084 
 
 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 September 30, 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 September 30, 2015:

         
 As of September 30, 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 $  301,915  $  4,327  $  (8,812) $  306,400 
States, municipalities and political subdivisions  571,104   17,402   (927)  554,629 
Mortgage-backed and asset-backed securities:                
Agency mortgage-backed securities  360,198   7,200   (912)  353,910 
Residential mortgage obligations  31,568   854   (104)  30,818 
Asset-backed securities  197,934   591   (846)  198,189 
Commercial mortgage-backed securities  204,876   5,335   (958)  200,499 
Subtotal $  794,576  $  13,980  $  (2,820) $  783,416 
Corporate bonds  729,392   10,776   (4,111)  722,727 
Total fixed maturities $  2,396,987  $  46,485  $  (16,670) $  2,367,172 
Equity securities  274,928   16,486   (7,318)  265,760 
Short-term investments  233,142   33       233,109 
Total investments $  2,905,057  $  63,004  $  (23,988) $  2,866,041 

 


 

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!