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8-K - FORM 8-K - NAVIGATORS GROUP INC | c12874e8vk.htm |
Exhibit 99.1
The Navigators Group, Inc.
CORPORATE NEWS
CORPORATE NEWS
Navigators Reports Fourth Quarter Earnings
New York February 17, 2011 The Navigators Group, Inc. (NASDAQ:NAVG) reported net income
of $17.3 million, or $1.07 per diluted share, for the three months ended December 31, 2010 compared
to net income of $6.1 million, or $0.35 per diluted share, for the comparable period in 2009.
Operating earnings (1) were $4.7 million, or $0.29 per diluted share for the fourth
quarter of 2010 compared to $5.3 million, or $0.30 per diluted share, for the comparable period in
2009. As previously announced on January 21, 2011, during the fourth quarter of 2010 Navigators
recognized $9.2 million of after-tax reinsurance reinstatement costs related to the April 2010
Deepwater Horizon loss event in the Gulf of Mexico, which reduced net written and net earned
premiums by $14.2 million.
For the twelve months ended December 31, 2010, the Company reported net income of $69.6 million, or
$4.24 per diluted share, compared to $63.2 million, or $3.65 per diluted share, for the comparable
period in 2009. Operating earnings were $43.4 million, or $2.65 per diluted share for
the twelve months ended December 31, 2010 compared to $65.2 million, or $3.76 per diluted share,
for the comparable period of 2009. For the twelve months ended December 31, 2010, Navigators
recognized $12.4 million of after-tax reinstatement costs related to the Deepwater Horizon loss
event, which reduced net written and net earned premiums by $19.0 million.
Gross written premiums and net written premiums for the three months ended December 31, 2010 were
$229.9 million and $141.8 million, respectively, a decrease of 8.7% and 12.2% from the comparable
2009 periods. Gross written premiums and net written premiums for the twelve months ended December
31, 2010 were $987.2 million and $653.9 million, respectively, a decrease of 5.5% and 6.7% from the
comparable 2009 periods.
The combined loss and expense ratios for the three and twelve months ended December 31, 2010 were
106.3% and 100.7%, respectively, compared to 106.5% and 97.2% for the comparable 2009 periods. The
combined loss and expense ratio for the three months ended December 31, 2010 was favorably impacted
by 1.9 loss ratio points due to favorable development in prior period loss reserves. The combined
loss and expense ratio for the twelve months ended December 31, 2010 was favorably impacted by 2.1
loss ratio points due to favorable development in prior period loss reserves.
Navigators Chief Executive Officer Stan Galanski commented: Although we see pockets of
opportunity, such as the energy sector, most of the insurance markets in which we operate continued
to be challenging during the fourth quarter due to intense industry competition and the continued
fragile nature of the economic recovery. Despite those factors, along with historically low
investment yields and the Deepwater Horizon industry loss, Navigators maintained its strong capital
position and grew book value per share 11% during 2010. The Navigators franchise has never been
stronger as we improved our distribution capabilities, added new products and walked away from
underperforming business. We enter 2011 cautious, but poised to capitalize as opportunities arise
to extend Navigators superior record of book value per share growth.
6 International Drive | Rye Brook, NY 10573 | |||
TEL (914) 933-6000 | FAX(914) 934-2355 |
News
Release
February 17, 2011
Page 2
February 17, 2011
Page 2
During the three and twelve months ended December 31, 2010, the Company repurchased 35,566 and
1,264,284 shares of its common stock for an aggregate purchase price of $1.7 million and $52.0
million, respectively, pursuant to its share repurchase program. The Company did not repurchase any
additional shares of its common stock between January 1, 2011 and February 16, 2011 pursuant to its
share repurchase program. Approximately $41.3 million remains available under the Companys
current share repurchase program that expires on December 31, 2011.
Net investment income for the three and twelve months ended December 31, 2010 was $18.0 million and
$71.7 million, respectively, which were decreases of 5.3% and 5.1% from the comparable 2009
periods. The annualized pre-tax investment yield, excluding net realized gains and losses
and net other-than-temporary impairment losses recognized in earnings, was 3.4% and 3.5% for
the three and twelve months ended December 31, 2010, respectively, compared to 3.7% and 3.8% for
the 2009 comparable periods. The effective tax rate on net investment income was 28.1% and 27.0%
for the three and twelve months ended December 31, 2010, respectively, compared to 24.7% and 25.0%
for the comparable 2009 periods.
The Companys investment portfolio mainly consists of fixed income securities with an average
quality rating of AA/Aa as defined by Standard & Poors and Moodys, respectively, and an average
effective duration of 4.4 years at December 31, 2010. At December 31, 2010, net unrealized gains
within our investment portfolio were $49.1 million, a decrease of $4.8 million compared to December
31, 2009. There were $19.5 million and $40.2 million of net realized gains and other-than temporary
impairment losses recognized in earnings for the three and twelve months ended December 31, 2010.
Consolidated cash flow from operations for the three and twelve months ended December 31, 2010 was
$4.1 million and $118.2 million, respectively, compared to $(1.3) million and $103.9 million for
the comparable 2009 periods.
Stockholders equity was $829.4 million, or $52.68 per share, at December 31, 2010 compared to
$801.5 million, or $47.58 per share, at December 31, 2009. The statutory surplus of Navigators
Insurance Company was $686.9 million at December 31, 2010 compared to $645.8 million at December
31, 2009.
(1) | Operating earnings, or net income excluding after-tax net realized gains (losses) and net
other-than-temporary impairment losses recognized in earnings, 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 Company will hold a conference call on Friday, February 18, 2011 starting at 8:30 a.m. ET to
discuss the 2010 fourth 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://investor.shareholder.com/navg/eventdetail.cfm?eventid=91365
The Navigators Group, Inc. is an international specialty insurance holding company with insurance
company operations, underwriting management companies, and operations at Lloyds of London.
Headquartered in New York, Navigators has offices in major insurance centers in the United States,
the United Kingdom and Continental Europe.
News
Release
February 17, 2011
Page 3
February 17, 2011
Page 3
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.
Contact:
|
Francis W. McDonnell | |
Senior Vice President and Chief Financial Officer | ||
(914) 933-6270 | ||
fmcdonnell@navg.com | ||
www.navg.com |
News Release
Page 4
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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Financial Highlights
($ in thousands, except per share data)
(unaudited)
Financial Highlights
($ in thousands, except per share data)
(unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||
Results of Operations | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Gross written premiums |
$ | 229,850 | $ | 251,739 | -9 | % | $ | 987,201 | $ | 1,044,918 | -6 | % | ||||||||||||
Net written premiums |
141,809 | 161,595 | -12 | % | 653,938 | 701,255 | -7 | % | ||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Net earned premiums |
166,158 | 177,278 | -6 | % | 659,931 | 683,363 | -3 | % | ||||||||||||||||
Investment income |
17,998 | 19,003 | -5 | % | 71,662 | 75,512 | -5 | % | ||||||||||||||||
Total other-than-temporary impairment losses |
(448 | ) | (496 | ) | -10 | % | (2,222 | ) | (29,265 | ) | -92 | % | ||||||||||||
Portion of
loss recognized in other comprehensive income (before tax) |
273 | 335 | -19 | % | 1,142 | 17,388 | -93 | % | ||||||||||||||||
Net other-than-temporary impairment losses
recognized in earnings |
(175 | ) | (161 | ) | 9 | % | (1,080 | ) | (11,877 | ) | -91 | % | ||||||||||||
Net realized gains |
19,665 | 1,476 | 1232 | % | 41,319 | 9,217 | 348 | % | ||||||||||||||||
Other income (expense) |
2,205 | (21 | ) | NM | 5,143 | 6,665 | -23 | % | ||||||||||||||||
Total revenues |
205,851 | 197,575 | 4 | % | 776,975 | 762,880 | 2 | % | ||||||||||||||||
Expenses: |
||||||||||||||||||||||||
Net losses and loss adjustment expenses |
110,022 | 127,432 | -14 | % | 421,155 | 435,998 | -3 | % | ||||||||||||||||
Commission expenses |
32,935 | 27,330 | 21 | % | 109,113 | 98,908 | 10 | % | ||||||||||||||||
Other operating expenses |
35,919 | 34,099 | 5 | % | 139,700 | 132,671 | 5 | % | ||||||||||||||||
Interest expense |
2,045 | 2,044 | 0 | % | 8,178 | 8,455 | -3 | % | ||||||||||||||||
Total expenses |
180,921 | 190,905 | -5 | % | 678,146 | 676,032 | 0 | % | ||||||||||||||||
Income before income taxes |
24,930 | 6,670 | 274 | % | 98,829 | 86,848 | 14 | % | ||||||||||||||||
Income tax expense |
7,592 | 594 | 1178 | % | 29,251 | 23,690 | 23 | % | ||||||||||||||||
Net income |
$ | 17,338 | $ | 6,076 | 185 | % | $ | 69,578 | $ | 63,158 | 10 | % | ||||||||||||
Per Share Data |
||||||||||||||||||||||||
Net income per common share: |
||||||||||||||||||||||||
Basic |
$ | 1.10 | $ | 0.36 | 206 | % | $ | 4.33 | $ | 3.73 | 16 | % | ||||||||||||
Diluted |
$ | 1.07 | $ | 0.35 | 207 | % | $ | 4.24 | $ | 3.65 | 16 | % | ||||||||||||
Average shares outstanding: |
||||||||||||||||||||||||
Basic |
15,751 | 16,955 | 16,065 | 16,935 | ||||||||||||||||||||
Diluted |
16,159 | 17,355 | 16,415 | 17,322 | ||||||||||||||||||||
Underwriting Ratios |
||||||||||||||||||||||||
Loss Ratio |
66.2 | % | 71.9 | % | 63.8 | % | 63.8 | % | ||||||||||||||||
Expense Ratio |
40.1 | % | 34.6 | % | 36.9 | % | 33.4 | % | ||||||||||||||||
Combined Ratio |
106.3 | % | 106.5 | % | 100.7 | % | 97.2 | % | ||||||||||||||||
Dec. 31, | Sept. 30, | Dec. 31, | Dec. 31, | |||||||||||||||||||||
Balance Sheet Data | 2010 | 2010 | 2010 | 2009 | ||||||||||||||||||||
Stockholders equity |
$ | 829,354 | $ | 854,013 | -3 | % | $ | 829,354 | $ | 801,519 | 3 | % | ||||||||||||
Book value per share |
$ | 52.68 | $ | 54.17 | -3 | % | $ | 52.68 | $ | 47.58 | 11 | % |
News Release
Page 5
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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands, except share data)
CONSOLIDATED BALANCE SHEETS
($ in thousands, except share data)
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
(unaudited) | ||||||||
ASSETS |
||||||||
Investments and cash: |
||||||||
Fixed maturities, available-for-sale, at fair value
(amortized cost: 2010, $1,855,598; 2009, $1,777,983) |
$ | 1,882,245 | $ | 1,816,669 | ||||
Equity securities, available-for-sale, at fair value (cost: 2010, $64,793; 2009, $47,376) |
87,258 | 62,610 | ||||||
Short-term investments, at cost which approximates fair value |
153,057 | 176,799 | ||||||
Cash |
31,768 | 509 | ||||||
Total investments and cash |
2,154,328 | 2,056,587 | ||||||
Premiums receivable |
188,368 | 193,460 | ||||||
Prepaid reinsurance premiums |
156,869 | 162,344 | ||||||
Reinsurance recoverable on paid losses |
56,658 | 76,505 | ||||||
Reinsurance recoverable on unpaid losses and loss adjustment expenses |
843,296 | 807,352 | ||||||
Deferred policy acquisition costs |
55,201 | 56,575 | ||||||
Accrued investment income |
15,590 | 17,438 | ||||||
Goodwill and other intangible assets |
6,925 | 7,057 | ||||||
Current income tax receivable, net |
1,054 | 4,854 | ||||||
Deferred income tax, net |
15,141 | 31,222 | ||||||
Other assets |
38,029 | 40,600 | ||||||
Total assets |
$ | 3,531,459 | $ | 3,453,994 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Liabilities: |
||||||||
Reserves for losses and loss adjustment expenses |
$ | 1,985,838 | $ | 1,920,286 | ||||
Unearned premiums |
463,515 | 475,171 | ||||||
Reinsurance balances payable |
105,904 | 98,555 | ||||||
Senior notes |
114,138 | 114,010 | ||||||
Accounts payable and other liabilities |
32,710 | 44,453 | ||||||
Total liabilities |
2,702,105 | 2,652,475 | ||||||
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 17,274,440 shares
for 2010 and 17,212,814 shares for 2009 |
1,728 | 1,721 | ||||||
Additional paid-in capital |
312,588 | 304,505 | ||||||
Retained earnings |
539,512 | 469,934 | ||||||
Treasury stock, at cost (1,532,273 shares for 2010 and 366,330 shares for 2009) |
(64,935 | ) | (18,296 | ) | ||||
Accumulated other comprehensive income |
40,461 | 43,655 | ||||||
Total stockholders equity |
829,354 | 801,519 | ||||||
Total liabilities and stockholders equity |
$ | 3,531,459 | $ | 3,453,994 | ||||
News Release
Page 6
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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Comparative Premium Data
($ in thousands)
Comparative Premium Data
($ in thousands)
Three Months | Twelve Months | |||||||||||||||||||||||
Gross Written Premiums: | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Insurance Companies: |
||||||||||||||||||||||||
Marine |
$ | 50,925 | $ | 53,986 | -6 | % | $ | 223,061 | $ | 241,438 | -8 | % | ||||||||||||
Property Casualty |
70,157 | 80,158 | -12 | % | 312,651 | 352,285 | -11 | % | ||||||||||||||||
Professional Liability |
32,601 | 35,264 | -8 | % | 129,793 | 137,053 | -5 | % | ||||||||||||||||
153,683 | 169,408 | -9 | % | 665,505 | 730,776 | -9 | % | |||||||||||||||||
Lloyds Operations: |
||||||||||||||||||||||||
Marine |
48,965 | 51,703 | -5 | % | 182,723 | 191,959 | -5 | % | ||||||||||||||||
Property Casualty |
18,031 | 19,093 | -6 | % | 94,799 | 78,151 | 21 | % | ||||||||||||||||
Professional Liability |
9,171 | 11,535 | -20 | % | 44,174 | 44,032 | 0 | % | ||||||||||||||||
76,167 | 82,331 | -7 | % | 321,696 | 314,142 | 2 | % | |||||||||||||||||
Total |
$ | 229,850 | $ | 251,739 | -9 | % | $ | 987,201 | $ | 1,044,918 | -6 | % | ||||||||||||
Three Months | Twelve Months | |||||||||||||||||||||||
Net Written Premiums: | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Insurance Companies: |
||||||||||||||||||||||||
Marine |
$ | 27,357 | $ | 38,242 | -28 | % | $ | 151,059 | $ | 171,289 | -12 | % | ||||||||||||
Property Casualty |
41,171 | 43,987 | -6 | % | 197,845 | 227,234 | -13 | % | ||||||||||||||||
Professional Liability |
20,170 | 19,970 | 1 | % | 80,451 | 79,150 | 2 | % | ||||||||||||||||
88,698 | 102,199 | -13 | % | 429,355 | 477,673 | -10 | % | |||||||||||||||||
Lloyds Operations: |
||||||||||||||||||||||||
Marine |
38,135 | 42,286 | -10 | % | 149,340 | 156,153 | -4 | % | ||||||||||||||||
Property Casualty |
11,000 | 11,316 | -3 | % | 54,049 | 45,097 | 20 | % | ||||||||||||||||
Professional Liability |
3,976 | 5,794 | -31 | % | 21,194 | 22,332 | -5 | % | ||||||||||||||||
53,111 | 59,396 | -11 | % | 224,583 | 223,582 | 0 | % | |||||||||||||||||
Total |
$ | 141,809 | $ | 161,595 | -12 | % | $ | 653,938 | $ | 701,255 | -7 | % | ||||||||||||
Three Months | Twelve Months | |||||||||||||||||||||||
Net Earned Premiums: | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Insurance Companies: |
||||||||||||||||||||||||
Marine |
$ | 33,107 | $ | 43,075 | -23 | % | $ | 155,846 | $ | 157,534 | -1 | % | ||||||||||||
Property Casualty |
48,513 | 57,283 | -15 | % | 200,741 | 246,143 | -18 | % | ||||||||||||||||
Professional Liability |
23,397 | 19,446 | 20 | % | 82,264 | 75,444 | 9 | % | ||||||||||||||||
105,017 | 119,804 | -12 | % | 438,851 | 479,121 | -8 | % | |||||||||||||||||
Lloyds Operations: |
||||||||||||||||||||||||
Marine |
40,684 | 40,800 | 0 | % | 149,225 | 142,958 | 4 | % | ||||||||||||||||
Property Casualty |
14,972 | 11,080 | 35 | % | 49,852 | 39,330 | 27 | % | ||||||||||||||||
Professional Liability |
5,485 | 5,594 | -2 | % | 22,003 | 21,954 | 0 | % | ||||||||||||||||
61,141 | 57,474 | 6 | % | 221,080 | 204,242 | 8 | % | |||||||||||||||||
Total |
$ | 166,158 | $ | 177,278 | -6 | % | $ | 659,931 | $ | 683,363 | -3 | % | ||||||||||||
News Release
Page 7
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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Three Months Ended
December 31, 2010
Segment Information
Three Months Ended
December 31, 2010
($ in thousands)
Insurance | Lloyds | |||||||||||||||
Companies | Operations | Corporate(1) | Total | |||||||||||||
Gross written premiums |
$ | 153,683 | $ | 76,167 | $ | | $ | 229,850 | ||||||||
Net written premiums |
88,698 | 53,111 | | 141,809 | ||||||||||||
Net earned premiums |
105,017 | 61,141 | | 166,158 | ||||||||||||
Net losses and loss adjustment expenses |
(74,549 | ) | (35,473 | ) | | (110,022 | ) | |||||||||
Commission expenses |
(15,771 | ) | (17,164 | ) | | (32,935 | ) | |||||||||
Other operating expenses |
(26,973 | ) | (8,951 | ) | | (35,924 | ) | |||||||||
Other income (expense) |
1,409 | 801 | | 2,210 | ||||||||||||
Underwriting profit (loss) |
(10,867 | ) | 354 | | (10,513 | ) | ||||||||||
Investment income |
15,752 | 2,107 | 139 | 17,998 | ||||||||||||
Net realized gains (losses) |
15,917 | 2,945 | 628 | 19,490 | ||||||||||||
Interest expense |
| | (2,045 | ) | (2,045 | ) | ||||||||||
Income (loss) before income tax
expense (benefit) |
20,802 | 5,406 | (1,278 | ) | 24,930 | |||||||||||
Income tax expense (benefit) |
6,053 | 1,986 | (447 | ) | 7,592 | |||||||||||
Net income (loss) |
$ | 14,749 | $ | 3,420 | $ | (831 | ) | $ | 17,338 | |||||||
Loss and loss expenses ratio |
71.0 | % | 58.0 | % | 66.2 | % | ||||||||||
Commission expense ratio |
15.0 | % | 28.1 | % | 19.8 | % | ||||||||||
Other operating expenses ratio (2) |
24.3 | % | 13.3 | % | 20.3 | % | ||||||||||
Combined ratio |
110.3 | % | 99.4 | % | 106.3 | % | ||||||||||
(1) | The Corporate segment includes intercompany eliminations. |
|
(2) | The Other operating expenses ratio includes Other income (expense).
|
News Release
Page 8
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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Three Months Ended
December 31, 2009
Segment Information
Three Months Ended
December 31, 2009
($ in thousands)
Insurance | Lloyds | |||||||||||||||
Companies | Operations | Corporate(1) | Total | |||||||||||||
Gross written premiums |
$ | 169,408 | $ | 82,331 | $ | | $ | 251,739 | ||||||||
Net written premiums |
102,199 | 59,396 | | 161,595 | ||||||||||||
Net earned premiums |
119,804 | 57,474 | | 177,278 | ||||||||||||
Net losses and loss adjustment expenses |
(89,838 | ) | (37,594 | ) | | (127,432 | ) | |||||||||
Commission expenses |
(16,575 | ) | (11,194 | ) | 439 | (27,330 | ) | |||||||||
Other operating expenses |
(26,141 | ) | (7,963 | ) | | (34,104 | ) | |||||||||
Other income (expense) |
341 | 82 | (439 | ) | (16 | ) | ||||||||||
Underwriting profit (loss) |
(12,409 | ) | 805 | | (11,604 | ) | ||||||||||
Investment income |
16,674 | 2,169 | 160 | 19,003 | ||||||||||||
Net realized gains (losses) |
1,520 | (205 | ) | | 1,315 | |||||||||||
Interest expense |
| | (2,044 | ) | (2,044 | ) | ||||||||||
Income (loss) before income tax
expense (benefit) |
5,785 | 2,769 | (1,884 | ) | 6,670 | |||||||||||
Income tax expense (benefit) |
142 | 1,112 | (660 | ) | 594 | |||||||||||
Net income (loss) |
$ | 5,643 | $ | 1,657 | $ | (1,224 | ) | $ | 6,076 | |||||||
Loss and loss expenses ratio |
75.0 | % | 65.4 | % | 71.9 | % | ||||||||||
Commission expense ratio |
13.8 | % | 19.5 | % | 15.4 | % | ||||||||||
Other operating expenses ratio (2) |
21.6 | % | 13.7 | % | 19.2 | % | ||||||||||
Combined ratio |
110.4 | % | 98.6 | % | 106.5 | % | ||||||||||
(1) | The Corporate segment includes intercompany eliminations. |
|
(2) | The Other operating expenses ratio includes Other income (expense). |
News Release
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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Twelve Months Ended
December 31, 2010
Segment Information
Twelve Months Ended
December 31, 2010
($ in thousands)
Insurance | Lloyds | |||||||||||||||
Companies | Operations | Corporate(1) | Total | |||||||||||||
Gross written premiums |
$ | 665,505 | $ | 321,696 | $ | | $ | 987,201 | ||||||||
Net written premiums |
429,355 | 224,583 | | 653,938 | ||||||||||||
Net earned premiums |
438,851 | 221,080 | | 659,931 | ||||||||||||
Net losses and loss adjustment expenses |
(280,120 | ) | (141,035 | ) | | (421,155 | ) | |||||||||
Commission expenses |
(59,122 | ) | (49,991 | ) | | (109,113 | ) | |||||||||
Other operating expenses |
(106,631 | ) | (33,112 | ) | | (139,743 | ) | |||||||||
Other income (expense) |
1,698 | 3,488 | | 5,186 | ||||||||||||
Underwriting profit (loss) |
(5,324 | ) | 430 | | (4,894 | ) | ||||||||||
Investment income |
62,792 | 8,286 | 584 | 71,662 | ||||||||||||
Net realized gains (losses) |
36,057 | 3,323 | 859 | 40,239 | ||||||||||||
Interest expense |
| | (8,178 | ) | (8,178 | ) | ||||||||||
Income (loss) before income tax
expense (benefit) |
93,525 | 12,039 | (6,735 | ) | 98,829 | |||||||||||
Income tax expense (benefit) |
27,219 | 4,389 | (2,357 | ) | 29,251 | |||||||||||
Net income (loss) |
$ | 66,306 | $ | 7,650 | $ | (4,378 | ) | $ | 69,578 | |||||||
Loss and loss expenses ratio |
63.8 | % | 63.8 | % | 63.8 | % | ||||||||||
Commission expense ratio |
13.5 | % | 22.6 | % | 16.5 | % | ||||||||||
Other operating expenses ratio (2) |
23.9 | % | 13.4 | % | 20.4 | % | ||||||||||
Combined ratio |
101.2 | % | 99.8 | % | 100.7 | % | ||||||||||
(1) | The Corporate segment includes intercompany eliminations. |
|
(2) | The Other operating expenses ratio includes Other income (expense). |
News Release
Page 10
Page 10
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Twelve Months Ended
December 31, 2009
Segment Information
Twelve Months Ended
December 31, 2009
($ in thousands)
Insurance | Lloyds | |||||||||||||||
Companies | Operations | Corporate(1) | Total | |||||||||||||
Gross written premiums |
$ | 730,776 | $ | 314,142 | $ | | $ | 1,044,918 | ||||||||
Net written premiums |
477,673 | 223,582 | | 701,255 | ||||||||||||
Net earned premiums |
479,121 | 204,242 | | 683,363 | ||||||||||||
Net losses and loss adjustment expenses |
(304,672 | ) | (131,326 | ) | | (435,998 | ) | |||||||||
Commission expenses |
(61,949 | ) | (37,727 | ) | 768 | (98,908 | ) | |||||||||
Other operating expenses |
(104,801 | ) | (27,896 | ) | | (132,697 | ) | |||||||||
Other income (expense) |
3,498 | 961 | (768 | ) | 3,691 | |||||||||||
Underwriting profit |
11,197 | 8,254 | | 19,451 | ||||||||||||
Investment income |
65,717 | 9,229 | 566 | 75,512 | ||||||||||||
Net realized gains (losses) |
533 | (3,193 | ) | | (2,660 | ) | ||||||||||
Gain on debt repurchase |
| | 3,000 | 3,000 | ||||||||||||
Interest expense |
| | (8,455 | ) | (8,455 | ) | ||||||||||
Income (loss) before income tax
expense (benefit) |
77,447 | 14,290 | (4,889 | ) | 86,848 | |||||||||||
Income tax expense (benefit) |
19,819 | 5,582 | (1,711 | ) | 23,690 | |||||||||||
Net income (loss) |
$ | 57,628 | $ | 8,708 | $ | (3,178 | ) | $ | 63,158 | |||||||
Loss and loss expenses ratio |
63.6 | % | 64.3 | % | 63.8 | % | ||||||||||
Commission expense ratio |
12.9 | % | 18.5 | % | 14.5 | % | ||||||||||
Other operating expenses ratio (2) |
21.1 | % | 13.2 | % | 18.9 | % | ||||||||||
Combined ratio |
97.6 | % | 96.0 | % | 97.2 | % | ||||||||||
(1) | The Corporate segment includes intercompany eliminations. |
|
(2) | The Other operating expenses ratio includes Other income (expense). |
News Release
Page 11
Page 11
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results
($ in thousands)
Underwriting Results
($ in thousands)
Three Months Ended December 31, 2010 | ||||||||||||||||||||||||||||
Net | Losses | |||||||||||||||||||||||||||
Earned | and LAE | Underwriting | Underwriting | Combined Ratio | ||||||||||||||||||||||||
Insurance Companies: | Premiums | Incurred | Expenses | Gain(Loss) | Loss | Expense | Total | |||||||||||||||||||||
Marine |
$ | 33,107 | $ | 22,668 | $ | 13,526 | $ | (3,087 | ) | 68.5 | % | 40.8 | % | 109.3 | % | |||||||||||||
Property Casualty |
48,513 | 21,265 | 19,182 | 8,066 | 43.8 | % | 39.6 | % | 83.4 | % | ||||||||||||||||||
Professional Liability |
23,397 | 30,616 | 8,627 | (15,846 | ) | 130.9 | % | 36.8 | % | 167.7 | % | |||||||||||||||||
105,017 | 74,549 | 41,335 | (10,867 | ) | 71.0 | % | 39.3 | % | 110.3 | % | ||||||||||||||||||
Lloyds Operations |
61,141 | 35,473 | 25,314 | 354 | 58.0 | % | 41.4 | % | 99.4 | % | ||||||||||||||||||
Total |
$ | 166,158 | $ | 110,022 | $ | 66,649 | $ | (10,513 | ) | 66.2 | % | 40.1 | % | 106.3 | % | |||||||||||||
Three Months Ended December 31, 2009 | ||||||||||||||||||||||||||||
Net | Losses | |||||||||||||||||||||||||||
Earned | and LAE | Underwriting | Underwriting | Combined Ratio | ||||||||||||||||||||||||
Insurance Companies: | Premiums | Incurred | Expenses | Gain(Loss) | Loss | Expense | Total | |||||||||||||||||||||
Marine |
$ | 43,075 | $ | 26,677 | $ | 14,998 | $ | 1,400 | 61.9 | % | 34.8 | % | 96.7 | % | ||||||||||||||
Property Casualty |
57,283 | 43,444 | 20,474 | (6,635 | ) | 75.8 | % | 35.7 | % | 111.5 | % | |||||||||||||||||
Professional Liability |
19,446 | 19,717 | 6,903 | (7,174 | ) | 101.4 | % | 35.5 | % | 136.9 | % | |||||||||||||||||
119,804 | 89,838 | 42,375 | (12,409 | ) | 75.0 | % | 35.4 | % | 110.4 | % | ||||||||||||||||||
Lloyds Operations |
57,474 | 37,594 | 19,075 | 805 | 65.4 | % | 33.2 | % | 98.6 | % | ||||||||||||||||||
Total |
$ | 177,278 | $ | 127,432 | $ | 61,450 | $ | (11,604 | ) | 71.9 | % | 34.6 | % | 106.5 | % | |||||||||||||
Amounts | Loss Ratio | |||||||||||||||
Net Incurred Loss Activity | Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||
For the Three Months Ended: | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Insurance Companies: |
||||||||||||||||
Loss and LAE payments |
$ | 70,855 | $ | 75,175 | 67.5 | % | 62.8 | % | ||||||||
Change in reserves |
3,694 | 14,663 | 3.5 | % | 12.2 | % | ||||||||||
Net incurred loss and LAE |
74,549 | 89,838 | 71.0 | % | 75.0 | % | ||||||||||
Lloyds Operations: |
||||||||||||||||
Loss and LAE payments |
33,147 | 24,130 | 54.2 | % | 42.0 | % | ||||||||||
Change in reserves |
2,326 | 13,464 | 3.8 | % | 23.4 | % | ||||||||||
Net incurred loss and LAE |
35,473 | 37,594 | 58.0 | % | 65.4 | % | ||||||||||
Total |
||||||||||||||||
Loss and LAE payments |
104,002 | 99,305 | 62.6 | % | 56.0 | % | ||||||||||
Change in reserves |
6,020 | 28,127 | 3.6 | % | 15.9 | % | ||||||||||
Net incurred loss and LAE |
$ | 110,022 | $ | 127,432 | 66.2 | % | 71.9 | % | ||||||||
Impact of Prior Years Reserves | Amounts | Loss Ratio Impact | ||||||||||||||
Favorable / (Unfavorable) Development | Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||
For the Three Months Ended: | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Insurance Companies |
$ | (199 | ) | $ | (10,164 | ) | -0.2 | % | -8.5 | % | ||||||
Lloyds Operations |
3,346 | 9 | 5.5 | % | 0.0 | % | ||||||||||
Total |
$ | 3,147 | $ | (10,155 | ) | 1.9 | % | -5.7 | % | |||||||
News Release
Page 12
Page 12
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results
($ in thousands)
Underwriting Results
($ in thousands)
Twelve Months Ended December 31, 2010 | ||||||||||||||||||||||||||||
Net | Losses | |||||||||||||||||||||||||||
Earned | and LAE | Underwriting | Underwriting | Combined Ratio | ||||||||||||||||||||||||
Insurance Companies: | Premiums | Incurred | Expenses | Gain(Loss) | Loss | Expense | Total | |||||||||||||||||||||
Marine |
$ | 155,846 | $ | 100,579 | $ | 56,092 | $ | (825 | ) | 64.5 | % | 36.0 | % | 100.5 | % | |||||||||||||
Property Casualty |
200,741 | 110,902 | 77,040 | 12,799 | 55.2 | % | 38.4 | % | 93.6 | % | ||||||||||||||||||
Professional Liability |
82,264 | 68,639 | 30,923 | (17,298 | ) | 83.4 | % | 37.6 | % | 121.0 | % | |||||||||||||||||
438,851 | 280,120 | 164,055 | (5,324 | ) | 63.8 | % | 37.4 | % | 101.2 | % | ||||||||||||||||||
Lloyds Operations |
221,080 | 141,035 | 79,615 | 430 | 63.8 | % | 36.0 | % | 99.8 | % | ||||||||||||||||||
Total |
$ | 659,931 | $ | 421,155 | $ | 243,670 | $ | (4,894 | ) | 63.8 | % | 36.9 | % | 100.7 | % | |||||||||||||
Twelve Months Ended December 31, 2009 | ||||||||||||||||||||||||||||
Net | Losses | |||||||||||||||||||||||||||
Earned | and LAE | Underwriting | Underwriting | Combined Ratio | ||||||||||||||||||||||||
Insurance Companies: | Premiums | Incurred | Expenses | Gain(Loss) | Loss | Expense | Total | |||||||||||||||||||||
Marine |
$ | 157,534 | $ | 109,916 | $ | 50,451 | $ | (2,833 | ) | 69.8 | % | 32.0 | % | 101.8 | % | |||||||||||||
Property Casualty |
246,143 | 123,775 | 86,116 | 36,252 | 50.3 | % | 35.0 | % | 85.3 | % | ||||||||||||||||||
Professional Liability |
75,444 | 70,981 | 26,685 | (22,222 | ) | 94.1 | % | 35.4 | % | 129.5 | % | |||||||||||||||||
479,121 | 304,672 | 163,252 | 11,197 | 63.6 | % | 34.0 | % | 97.6 | % | |||||||||||||||||||
Lloyds Operations |
204,242 | 131,326 | 64,662 | 8,254 | 64.3 | % | 31.7 | % | 96.0 | % | ||||||||||||||||||
Total |
$ | 683,363 | $ | 435,998 | $ | 227,914 | $ | 19,451 | 63.8 | % | 33.4 | % | 97.2 | % | ||||||||||||||
Amounts | Loss Ratio | |||||||||||||||
Net Incurred Loss Activity | Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||
For the Twelve Months Ended: | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Insurance Companies: |
||||||||||||||||
Loss and LAE payments |
$ | 278,969 | $ | 246,457 | 63.5 | % | 51.4 | % | ||||||||
Change in reserves |
1,151 | 58,215 | 0.3 | % | 12.2 | % | ||||||||||
Net incurred loss and LAE |
280,120 | 304,672 | 63.8 | % | 63.6 | % | ||||||||||
Lloyds Operations: |
||||||||||||||||
Loss and LAE payments |
112,578 | 76,478 | 50.9 | % | 37.4 | % | ||||||||||
Change in reserves |
28,457 | 54,848 | 12.9 | % | 26.9 | % | ||||||||||
Net incurred loss and LAE |
141,035 | 131,326 | 63.8 | % | 64.3 | % | ||||||||||
Total |
||||||||||||||||
Loss and LAE payments |
391,547 | 322,935 | 59.3 | % | 47.3 | % | ||||||||||
Change in reserves |
29,608 | 113,063 | 4.5 | % | 16.5 | % | ||||||||||
Net incurred loss and LAE |
$ | 421,155 | $ | 435,998 | 63.8 | % | 63.8 | % | ||||||||
Impact of Prior Years Reserves | Amounts | Loss Ratio Impact | ||||||||||||||
Favorable / (Unfavorable) Development | Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||
For the Twelve Months Ended: | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Insurance Companies |
$ | 5,455 | $ | 3,079 | 1.2 | % | 0.6 | % | ||||||||
Lloyds Operations |
8,347 | 5,862 | 3.8 | % | 2.9 | % | ||||||||||
Total |
$ | 13,802 | $ | 8,941 | 2.1 | % | 1.3 | % | ||||||||
News Release
Page 13
Page 13
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data
($ in thousands)
Net Loss Data
($ in thousands)
Case | IBNR | |||||||||||
Net Loss Reserves, December 31, 2010: | Reserves | Reserves | Total | |||||||||
Insurance Companies: |
||||||||||||
Marine |
$ | 107,147 | $ | 109,361 | $ | 216,508 | ||||||
Property Casualty |
158,740 | 308,613 | 467,353 | |||||||||
Professional Liability |
46,096 | 78,469 | 124,565 | |||||||||
Total Insurance Companies |
311,983 | 496,443 | 808,426 | |||||||||
Lloyds Operations: |
||||||||||||
Marine |
111,914 | 112,708 | 224,622 | |||||||||
Property Casualty |
30,327 | 29,792 | 60,119 | |||||||||
Professional Liability |
9,904 | 39,471 | 49,375 | |||||||||
Total Lloyds Operations |
152,145 | 181,971 | 334,116 | |||||||||
Total Net Loss Reserves |
$ | 464,128 | $ | 678,414 | $ | 1,142,542 | ||||||
Case | IBNR | |||||||||||
Net Loss Reserves, December 31, 2009: | Reserves | Reserves | Total | |||||||||
Insurance Companies: |
||||||||||||
Marine |
$ | 113,604 | $ | 100,042 | $ | 213,646 | ||||||
Property Casualty |
134,427 | 351,985 | 486,412 | |||||||||
Professional Liability |
38,410 | 68,807 | 107,217 | |||||||||
Total Insurance Companies |
286,441 | 520,834 | 807,275 | |||||||||
Lloyds Operations: |
||||||||||||
Marine |
107,800 | 101,851 | 209,651 | |||||||||
Property Casualty |
27,148 | 25,175 | 52,323 | |||||||||
Professional Liability |
7,442 | 36,243 | 43,685 | |||||||||
Total Lloyds Operations |
142,390 | 163,269 | 305,659 | |||||||||
Total Net Loss Reserves |
$ | 428,831 | $ | 684,103 | $ | 1,112,934 | ||||||
News Release
Page 14
Page 14
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Investment Data
December 31, 2010
($ in thousands)
Investment Data
December 31, 2010
($ in thousands)
At December 31, 2010, the average quality of the investment portfolio as rated by S&P and Moodys
was AA/Aa with an average duration of 4.4 years. The Company does not own any collateralized debt
obligations (CDOs), collateralized loan obligations (CLOs) or asset backed commercial paper.
At December 31, 2010, the Company owned two asset-backed securities approximating $0.9 million with
subprime mortgage exposures. The securities have an effective maturity of 5.4 years. In addition,
the Company owned a total of seven collateralized mortgage obligations and asset-backed securities
approximating $2.5 million classified as Alt-A which is a credit category between prime and
subprime. They have an effective maturity of 6.0 years. Such subprime and Alt-A categories are as
defined by S&P. The Company is receiving principal and/or interest payments on all these securities
and believes such amounts are fully collectible.
The following table sets forth our cash and investments at December 31, 2010:
Gross | Gross | Cost or | OTTI | |||||||||||||||||
Fair | Unrealized | Unrealized | Amortized | Recognized | ||||||||||||||||
December 31, 2010 | Value | Gains | (Losses) | Cost | in OCI | |||||||||||||||
($ in thousands) | ||||||||||||||||||||
Fixed maturities: |
||||||||||||||||||||
U.S. Government Treasury bonds,
agency bonds and foreign government bonds |
$ | 324,145 | $ | 5,229 | $ | (4,499 | ) | $ | 323,415 | $ | | |||||||||
States, municipalities and political
subdivisions |
392,250 | 11,903 | (3,805 | ) | 384,152 | | ||||||||||||||
Mortgage- and asset-backed securities |
||||||||||||||||||||
Agency mortgage-backed securities |
382,628 | 10,127 | (2,434 | ) | 374,935 | | ||||||||||||||
Residential mortgage obligations |
20,463 | 24 | (2,393 | ) | 22,832 | (1,646 | ) | |||||||||||||
Asset-backed securities |
46,093 | 247 | (292 | ) | 46,138 | | ||||||||||||||
Commercial mortgage-backed securities |
190,015 | 4,804 | (1,794 | ) | 187,005 | | ||||||||||||||
Subtotal |
639,199 | 15,202 | (6,913 | ) | 630,910 | (1,646 | ) | |||||||||||||
Corporate bonds |
526,651 | 15,075 | (5,545 | ) | 517,121 | | ||||||||||||||
Total fixed maturities |
1,882,245 | 47,409 | (20,762 | ) | 1,855,598 | (1,646 | ) | |||||||||||||
Equity securities common stocks |
87,258 | 22,475 | (10 | ) | 64,793 | | ||||||||||||||
Cash |
31,768 | | | 31,768 | | |||||||||||||||
Short-term investments |
153,057 | | | 153,057 | | |||||||||||||||
Total |
$ | 2,154,328 | $ | 69,884 | $ | (20,772 | ) | $ | 2,105,216 | $ | (1,646 | ) | ||||||||
News Release
Page 15
Page 15
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Investment Data
December 31, 2010
($ in thousands)
Investment Data
December 31, 2010
($ in thousands)
The following tables set forth our agency mortgage-backed securities and residential mortgage
obligations, by those issued by GNMA, FNMA and FHLMC and the quality category (prime, Alt-A and
subprime) for all other such investments at December 31, 2010:
Gross | Gross | Cost or | ||||||||||||||
Fair | Unrealized | Unrealized | Amortized | |||||||||||||
Agency mortgage-backed securities: | Value | Gains | (Losses) | Cost | ||||||||||||
GNMA |
$ | 142,677 | $ | 3,478 | $ | (1,006 | ) | $ | 140,205 | |||||||
FNMA |
191,682 | 5,386 | (937 | ) | 187,233 | |||||||||||
FHLMC |
48,269 | 1,263 | (491 | ) | 47,497 | |||||||||||
Total |
$ | 382,628 | $ | 10,127 | $ | (2,434 | ) | $ | 374,935 | |||||||
Gross | Gross | Cost or | ||||||||||||||
Fair | Unrealized | Unrealized | Amortized | |||||||||||||
Residential mortgage obligations: | Value | Gains | (Losses) | Cost | ||||||||||||
Prime |
$ | 15,369 | $ | 24 | $ | (1,999 | ) | $ | 17,344 | |||||||
Alt-A |
2,453 | | (379 | ) | 2,832 | |||||||||||
Subprime |
| | | | ||||||||||||
Non-US RMBS |
2,641 | | (15 | ) | 2,656 | |||||||||||
Total |
$ | 20,463 | $ | 24 | $ | (2,393 | ) | $ | 22,832 | |||||||