A.M. Best Affirms Credit Ratings of The Navigators Group, Inc. and Its Subsidiaries

A.M. Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of "a+" of Navigators Insurance Company and its wholly owned and 100% reinsured subsidiary, Navigators Specialty Insurance Company, collectively referred to as Navigators. Both companies are domiciled in New York, NY. Concurrently, A.M. Best has affirmed the Long-Term ICR of "bbb+" and the Long-Term Issue Credit Rating (Long-Term IR) on $265 million 5.75% senior unsecured notes due 2023, as well as the shelf rating of "bbb+" on senior unsecured notes, "bbb" on subordinated notes and "bbb-" on preferred securities of Navigators' publicly traded ultimate parent, The Navigators Group, Inc. (NAVG) (Delaware) NAVG. The outlook of these Credit Ratings (ratings) is positive.

At the same time, A.M. Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of "a+" of Navigators International Insurance Company Ltd. (NIIC) (United Kingdom). The outlook of these ratings remains stable.

The ratings of Navigators, which is considered the lead rating unit in the NAVG enterprise, reflect its balance sheet strength, which A.M. Best categorizes as strongest, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).

The balance sheet strength assessment is derived from risk-adjusted capitalization at the strongest level, which benefits from a high quality investment portfolio and strong reinsurance protection. Navigators also maintains solid liquidity measures, which compare favorably with the averages for the commercial casualty composite. The group benefits from the financial flexibility of its parent, NAVG, which has modest financial leverage, and an ability to access the public debt and equity markets if needed.

Navigators reported consistently profitable operating performance over the recent five and 10-year periods. Average pre-tax operating returns during these periods are generally in line with the averages for the industry composite. Five-year average underwriting performance, as measured by the combined ratio, has outperformed the composite peer group. Net investment income is solid and has improved steadily over the past five years, supported by a high quality investment portfolio.

The favorable business profile reflects Navigators' leading position as a global provider of insurance to the marine sector, the group's well-diversified Specialty book of business, the multi-channel distribution platform that utilizes global, national and regional brokers, as well as wholesalers, and management's conservative approach to risk management, underwriting and claims handling.

A.M. Best views Navigators' ERM as appropriate for the group's size and complexity of its underwriting, investment and other risks based on its ERM framework and controls.

The positive outlooks for Navigators reflect its improved underwriting and operating performance in recent years, along with a strengthening of its risk-adjusted capitalization. The performance in its core lines of business have benefited from strict underwriting discipline.

The ratings of NIIC reflect its balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM. The ratings also reflect the implicit and explicit support provided to NIIC by its parent company, NAVG. NIIC commenced writing marine, casualty and professional liability business in 2017, and benefits from the established specialist market position of NAVG in Europe.

This press release relates to Credit Ratings that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating Action Press Releases.

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