Market Overview

The Hartford Signs Agreement To Acquire Navigators, A Global Specialty Underwriter

  • Broadens and deepens The Hartford's product offerings and
    underwriting risk appetite
  • Expands global underwriting reach; includes an established presence
    at Lloyd's
  • Brings together two underwriting-centric organizations with a
    commitment to attracting and retaining top talent
  • Expected to be accretive to The Hartford's net income and core
    earnings* in 2020

has signed a definitive agreement to acquire all
outstanding common shares of The Navigators Group, Inc. (NASDAQ:NAVG), a
global specialty underwriter, for $70 a share, or $2.1 billion in cash.
The transaction has been approved by the boards of directors of both
companies and is subject to approval by Navigators' shareholders and
other customary closing conditions, including regulatory approvals. It
is expected to close in the first half of 2019.

"We are excited to announce the acquisition of Navigators, which we are
confident will achieve key strategic and financial objectives for The
Hartford," said The Hartford's Chairman and CEO Christopher Swift. "It
expands our product offerings and geographic reach, and adds tenured and
proven underwriting and industry talent while strengthening our value
proposition to agents and customers. We are optimistic about our
combined growth opportunities and expect the acquisition to generate
attractive returns."

Navigators, which was founded in 1974, is recognized as a market leader
in the global marine, construction and energy industries, as well as in
U.S. excess casualty and surplus lines. In addition to an established
presence at Lloyd's, the company also has growing underwriting
operations in Europe, Asia and Latin America. The company currently
operates three business segments: U.S. Insurance (58 percent of 2017
gross written premiums), International Insurance (29 percent) and Global
Reinsurance (13 percent). 1

The Hartford's President Doug Elliot added, "This transaction combines
two organizations with disciplined underwriting cultures and a shared
commitment to innovation, financial performance, and attracting and
retaining top talent. Together, we will leverage a more complete product
and service offering through a best-in-class distribution network
enabled by our combined underwriting, claim capabilities and risk
engineering, and enhanced by The Hartford's strong brand."

Navigators is headquartered in Stamford, Conn., with 22 locations in the
U.S. and eight locations internationally. The company has approximately
820 employees globally who will join The Hartford upon closing.
Approximately 600 of its employees are based in the U.S. and 150 are
located in the U.K.

"We look forward to bringing Navigators' specialty lines capabilities to
The Hartford," said Stanley A. Galanski, Navigators President and CEO.
"By joining The Hartford and leveraging the strength of its balance
sheet and quality of its core commercial insurance products, we will
create exciting opportunities to deliver enhanced value to our brokers
and policyholders."

The Hartford has sufficient existing resources to fund the total
purchase price of approximately $2.1 billion, but will consider
alternative sources of capital prior to the closing. The Hartford does
not intend to issue common equity in connection with the acquisition.

The Hartford expects the acquisition to generate an attractive return
over time. The impact of the acquisition on The Hartford's consolidated
2019 and 2020 financial results will depend on a variety of factors,
including the timing of the close, finalization of purchase accounting
impacts, such as determination of goodwill and other intangible assets,
integration costs, and acquisition-related charges, including
transaction costs and changes in Navigators' loss reserves or other
balance sheet items.

The acquisition is expected to result in an immaterial reduction in 2019
net income before considering the impact of acquisition-related charges,
which have not yet been finalized. Excluding acquisition-related charges
as well as integration costs*, the company expects the acquisition to be
immediately accretive to 2019 net income.

For 2020, The Hartford expects the acquisition to be accretive to net
income by $30 million to $75 million and to core earnings by $60 million
to $95 million. This is comprised of a contribution by Navigators of $80
million to $125 million to net income and $110 million to $145 million
to core earnings, offset by a reduction of approximately $50 million in
The Hartford's net investment income, after tax, due to the cash used to
fund the acquisition. All of these estimates are preliminary and will be
updated based on market conditions, business plans, financial results
and other developments between now and closing.

The Hartford will host a webcast and conference call to review the
acquisition at 8:30 a.m. EDT on Aug. 22, 2018. The conference call can
be accessed at 877-685-7362 (U.S.) or 478-219-0241 (International),
passcode 6087567. The live listen-only webcast is available through the
Investor Relations section of The Hartford's website at
A replay of the call along with a transcript of the event will be
available for at least 90 days.

Citigroup Global Markets Inc. acted as lead financial advisor to The
Hartford, with Deutsche Bank Securities Inc. also providing financial
advice. Mayer Brown provided legal counsel to The Hartford.

Additional information regarding the transaction can be found on The
Hartford's website at,
including a presentation deck that summarizes key financial terms and
benefits of the acquisition, and in Current Reports on Form 8-K filed
today with the Securities and Exchange Commission by The Hartford and

About The Hartford

The Hartford is a leader in property and casualty insurance, group
benefits and mutual funds. With more than 200 years of expertise, The
Hartford is widely recognized for its service excellence, sustainability
practices, trust and integrity. More information on the company and its
financial performance is available at
Follow us on Twitter at

The Hartford Financial Services Group, Inc., (NYSE:HIG) operates through
its subsidiaries under the brand name, The Hartford, and is
headquartered in Hartford, Conn. For additional details, please read The
Hartford's legal notice


*Denotes financial measure not calculated in accordance with generally
accepted accounting principles (non-GAAP). See below under the heading
"Discussion of Non-GAAP Financial Measures" for additional information,
including the most directly comparable U.S. GAAP measure.

Forward-Looking Statements

Certain statements made in this release should be considered
forward-looking statements as defined in the Private Securities
Litigation Reform Act of 1995. These include statements about The
Hartford's future results of operations and projections regarding the
impact of the acquisition of Navigators. We caution investors that these
forward-looking statements are not guarantees of future performance, and
actual results may differ materially.

Factors that could cause The Hartford's actual results to differ,
possibly materially, from those in the forward looking statements
include but are not limited to (i) receipt of regulatory approvals for
the transaction; (ii) the successful closing of the transaction within
the estimated timeframe; (iii) the failure to realize the expected
synergies from the transaction or delay in realization thereof; (iv)
purchase accounting impacts, including determination of goodwill and
other intangible assets at closing; (v) integration costs; (vi)
acquisition-related charges, including transaction costs and changes in
Navigators' loss reserves or other balance sheet items that are deemed
necessary at closing; (vii) industry conditions; and (viii) other
factors that can be found in The Hartford's news releases and SEC
filings, including those discussed in The Hartford's news release issued
on July 26, 2018, The Hartford's Quarterly Reports on Form 10-Q, The
Hartford's 2017 Annual Report on Form 10-K, and other filings we make
with the U.S. Securities and Exchange Commission. We assume no
obligation to update this release, which speaks as of today's date.

Additional Information and Where to Find It

From time to time, The Hartford may use its website to disseminate
material company information. Financial and other important information
regarding The Hartford is routinely accessible through and posted on our
website at
In addition, you may automatically receive email alerts and other
information about The Hartford when you enroll your email address by
visiting the "Email Alerts" section at

Discussion of Non-GAAP Financial Measures

This press release includes the financial measure core earnings, which
is not derived from generally accepted accounting principles ("GAAP").
The Company uses core earnings to assist investors in analyzing the
projected impact of the acquisition on the Company's operating
performance for the periods presented. The Company believes core
earnings provides investors with a valuable measure of the performance
of the Company's ongoing businesses because it reveals trends in our
insurance and financial services businesses that may be obscured by
including the net effect of certain realized capital gains and losses,
certain restructuring and other costs, integration and transaction costs
in connection with an acquired business, pension settlements, loss on
extinguishment of debt, gains and losses on reinsurance gain
transactions, income tax benefit from reduction in deferred income tax
valuation allowance, impact of tax reform on net deferred tax assets,
and results of discontinued operations. Some realized capital gains and
losses are primarily driven by investment decisions and external
economic developments, the nature and timing of which are unrelated to
the insurance and underwriting aspects of our business. Accordingly,
core earnings excludes the effect of all realized gains and losses (net
of tax and the effects of DAC) that tend to be highly variable from
period to period based on capital market conditions. The Company
believes, however, that some realized capital gains and losses are
integrally related to our insurance operations, so core earnings
includes net realized gains and losses such as net periodic settlements
on credit derivatives. These net realized gains and losses are directly
related to an offsetting item included in the income statement such as
net investment income.

Net income (loss) is the most directly comparable U.S. GAAP measures to
core earnings. Core earnings should not be considered as a substitute
for net income (loss) and does not reflect the overall profitability of
the company's business. Therefore, the Company believes that it is
useful for investors to evaluate both net income (loss) and core
earnings when reviewing the company's performance. A quantitative
reconciliation of net income (loss) to core earnings (loss) is not
calculable on a forward-looking basis because it is not possible to
provide a reliable forecast of realized capital gains and losses, which
typically vary substantially from period to period.

Because the Company's calculation of core earnings may differ from
similar measures used by other companies, investors should be careful
when comparing the Company's core earnings with non-GAAP financial
measures used by other companies.

The Company uses net income, before integration costs and
acquisition-related charges, herein to assist investors in analyzing the
projected impact of the acquisition on the Company's operating
performance for the periods presented. The Company believes it is a
valuable measure to illustrate the immediate run-rate impact to earnings
that the acquisition is expected to have that may be obscured by
acquisition-related charges, including transaction costs and changes in
Navigators' loss reserves or other balance sheet items that The Hartford
may record at closing. Net income (loss) is the most directly comparable
U.S. GAAP measure.

1 Source: Navigators' 2017 Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q filed with the Securities and Exchange
Commission and other information provided by Navigators.

View Comments and Join the Discussion!