Exhibit 99.1

 

		The Navigators Group, Inc.

CORPORATE NEWS

Navigators Reports Fourth Quarter Earnings

New York — February 16, 2012 — The Navigators Group, Inc. (NASDAQ:NAVG) reported net income of $10.1 million, or $0.70 per diluted share, for the three months ended December 31, 2011 compared to net income of $17.3 million, or $1.07 per diluted share, for the comparable period in 2010. Operating earnings were $5.8 million, or $0.41 per diluted share for the fourth quarter of 2011 compared to $4.7 million, or $0.29 per diluted share, for the comparable period in 2010.

For the twelve months ended December 31, 2011, the Company reported net income of $25.6 million, or $1.69 per diluted share, compared to $69.6 million, or $4.24 per diluted share, for the comparable period in 2010. Operating earnings were $19.1 million, or $1.26 per diluted share for the twelve months ended December 31, 2011 compared to $43.4 million, or $2.65 per diluted share, for the comparable period in 2010.

Gross written premiums and net written premiums for the three months ended December 31, 2011 were $277.9 million and $202.0 million, respectively, an increase of 20.9% and 42.4% from the comparable period in 2010. Gross written premiums and net written premiums for the twelve months ended December 31, 2011 were $1,108.2 million and $753.8 million, respectively, an increase of 12.3% and 15.3% from the comparable period in 2010.

The combined loss and expense ratio for the three and twelve months ended December 31, 2011 were 102.5% and 104.7%, respectively, compared to 106.3% and 100.7% for the comparable periods in 2010.

Stan Galanski, President and Chief Executive Officer, commented, “Our property casualty business had a solid fourth quarter, as the energy, casualty and treaty reinsurance units each produced profitable underwriting results and double digit premium growth. Following the major energy losses that impacted the industry in early 2011, rates and terms have improved and we have increased our capacity in response. We are achieving positive pricing in many product lines. The notable exception is Directors’ & Officers liability, which continued to generate underwriting losses as we re-position the portfolio for future profits.” He continued, “As a global leader in marine insurance, it comes as no surprise that we participated on hull and liability policies triggered by the grounding of the Costa Concordia. Although this has been characterized as one of the largest losses in the history of marine insurance and it is difficult to predict the ultimate liability losses that may arise from this incident, based upon current industry loss estimates, we expect the pre-tax impact in the first quarter of 2012 to be less than $6 million, net of reinsurance and reinstatement premiums.”

Stockholders’ equity was $803.4 million, or $57.57 per share, as of December 31, 2011 compared to $829.4 million, or $52.68 per share, as of December 31, 2010. During the three and twelve months ended December 31, 2011, the Company repurchased 376,911 and 1,979,107 shares, respectively, of its common stock for an aggregate purchase price of $17.2 million and $90.9 million pursuant to its share repurchase program. The share repurchase program authorized by the Parent Company’s Board of Directors expired December 31, 2011.

 

		6 International Drive		Rye Brook, NY 10573
		TEL (914) 933-6000		FAX (914) 934-2355

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Net investment income for the three and twelve months ended December 31, 2011 was $12.4 million and $63.5 million, which was a decrease of 30.9% and 11.4% from the comparable periods in 2010. The annualized pre-tax investment yield, excluding net realized gains and losses and net other-than-temporary impairment losses recognized in earnings, was 2.3% and 3.0% for the three and twelve months ended December 31, 2011, compared to 3.4% and 3.5% for the comparable periods in 2010. The effective tax rate on net investment income was 23.6% and 27.6% for the three and twelve months ended December 31, 2011, compared to 28.1% and 27.0% for the comparable periods in 2010.

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 3.6 years as of December 31, 2011. As of December 31, 2011, net unrealized gains within our investment portfolio were $93.6 million, an increase of $44.6 million compared to December 31, 2010. There were $6.6 million and $10.0 million of net realized gains and other-than-temporary impairment losses recognized in earnings for the three and twelve months ended December 31, 2011.

Consolidated cash flow from operations for the three and twelve months ended December 31, 2011 was $32.0 million and $118.3 million respectively, compared to $4.1 million and $118.2 million for the comparable periods in 2010.

The Company will hold a conference call on Friday, February 17, 2012 starting at 8:30 a.m. ET to discuss the 2011 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=108125

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 Navigators Group, Inc. is an international specialty insurance holding company with insurance company operations, underwriting management companies, and operations at Lloyd’s of London. Headquartered in New York, Navigators has offices in major insurance centers in the United States, the United Kingdom and Continental Europe.

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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:          Ciro M. DeFalco

Senior Vice President and Chief Financial Officer

(914) 933-6043

cdefalco@navg.com

www.navg.com

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Financial Highlights

($ in thousands, except per share data)

 

			September 30,				September 30,				September 30,				September 30,				September 30,				September 30,
		Three Months Ended December 31,												Twelve Months Ended December 31,
Results of Operations		2011				2010				Change				2011				2010				Change
Gross written premiums		$	277,901			$	229,850				20.9	%		$	1,108,216			$	987,201				12.3	%
Net written premiums			202,002				141,809				42.4	%			753,798				653,938				15.3	%
Revenues:
Net earned premiums			191,757				166,158				15.4	%			691,645				659,931				4.8	%
Net investment income			12,428				17,998				-30.9	%			63,500				71,662				-11.4	%
Total other-than-temporary impairment losses			(1,280	)			(448	)			NM				(3,617	)			(2,222	)			NM
Portion of loss recognized in other comprehensive income (before tax)			691				273				153.1	%			1,632				1,142				42.9	%
Net other-than-temporary impairment losses recognized in earnings			(589	)			(175	)			NM				(1,985	)			(1,080	)			NM
Net realized gains (losses)			7,141				19,665				-63.7	%			11,996				41,319				-71.0	%
Other income			586				2,205				-73.4	%			1,229				5,143				-76.1	%
Total revenues			211,323				205,851				2.7	%			766,385				776,975				-1.4	%
Expenses:
Net losses and loss adjustment expenses			136,104				110,022				23.7	%			476,997				421,155				13.3	%
Commission expenses			30,273				32,935				-8.1	%			110,437				109,113				1.2	%
Other operating expenses			30,688				35,919				-14.6	%			138,029				139,700				-1.2	%
Interest expense			2,048				2,045				0.1	%			8,188				8,178				0.1	%
Total expenses			199,113				180,921				10.1	%			733,651				678,146				8.2	%
Income before income taxes			12,210				24,930				-51.0	%			32,734				98,829				-66.9	%
Income tax expense (benefit)			2,122				7,592				-72.0	%			7,137				29,251				-75.6	%
Net income (loss)		$	10,088			$	17,338				-41.8	%		$	25,597			$	69,578				-63.2	%
Per Share Data
Net income per common share:
Basic		$	0.71			$	1.10				-35.5	%		$	1.71			$	4.33				-60.5	%
Diluted		$	0.70			$	1.07				-34.6	%		$	1.69			$	4.24				-60.2	%
Average common shares outstanding:
Basic			14,199,491				15,751,048								14,980,429				16,064,770
Diluted			14,380,161				16,159,486								15,183,285				16,415,266
Underwriting Ratios
Loss Ratio			71.0	%			66.2	%							69.0	%			63.8	%
Expense Ratio			31.5	%			40.1	%							35.7	%			36.9	%
Combined Ratio			102.5	%			106.3	%							104.7	%			100.7	%
		Dec. 31,				Sept. 30,								Dec. 31,				Dec. 31,
Balance Sheet Data		2011				2011								2011				2010
Stockholders’ equity		$	803,435			$	799,455				0.5	%		$	803,435			$	829,354				-3.1	%
Book value per share		$	57.57			$	55.82				3.1	%		$	57.57			$	52.68				9.3	%

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

($ in thousands, except share data)

 

			September 30,				September 30,
		December 31,				December 31,
		2011				2010
ASSETS
Investments and cash:
Fixed maturities, available-for-sale, at fair value (amortized cost: 2011, $1,816,710; 2010, $1,855,598)		$	1,888,069			$	1,882,245
Equity securities, available-for-sale, at fair value (cost: 2011, $73,567; 2010, $64,793)			95,849				87,258
Short-term investments, at cost which approximates fair value			122,220				153,057
Cash			127,360				31,768
Total investments and cash			2,233,498				2,154,328
Premiums receivable			255,725				188,368
Prepaid reinsurance premiums			164,162				156,869
Reinsurance recoverable on paid losses			43,791				56,658
Reinsurance recoverable on unpaid losses and loss adjustment expenses			845,445				843,296
Deferred policy acquisition costs			63,984				55,201
Accrued investment income			14,492				15,590
Goodwill and other intangible assets			6,869				6,925
Current income tax receivable, net			15,391				1,054
Deferred income tax, net			—				15,141
Other assets			26,650				38,029
Total assets		$	3,670,007			$	3,531,459
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Reserves for losses and loss adjustment expenses		$	2,082,679			$	1,985,838
Unearned premiums			532,628				463,515
Reinsurance balances payable			108,699				105,904
Senior notes			114,276				114,138
Deferred income tax, net			6,291				—
Accounts payable and other liabilities			21,999				32,710
Total liabilities			2,866,572				2,702,105
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 17,467,615 shares for 2011 and 17,274,440 shares for 2010			1,746				1,728
Additional paid-in capital			322,133				312,588
Treasury stock, at cost (3,511,380 shares for 2011 and 1,532,273 shares for 2010)			(155,801	)			(64,935	)
Retained earnings			565,109				539,512
Accumulated other comprehensive income			70,248				40,461
Total stockholders’ equity			803,435				829,354
Total liabilities and stockholders’ equity		$	3,670,007			$	3,531,459

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Comparative Premium Data

($ in thousands)

 

			September 30,				September 30,				September 30,				September 30,				September 30,				September 30,
		Three Months												Twelve Months
Gross Written Premiums:		2011				2010				Change				2011				2010				Change
Insurance Companies:
Marine		$	52,688			$	50,925				3	%		$	228,500			$	223,061				2	%
Property Casualty			121,293				70,157				73	%			445,287				312,651				42	%
Professional Liability			29,720				32,601				-9	%			114,632				129,793				-12	%
			203,701				153,683				33	%			788,419				665,505				18	%
Lloyd’s Operations:
Marine			39,977				48,965				-18	%			167,562				182,723				-8	%
Property Casualty			24,032				18,031				33	%			115,138				94,799				21	%
Professional Liability			10,191				9,171				11	%			37,097				44,174				-16	%
			74,200				76,167				-3	%			319,797				321,696				-1	%
Total		$	277,901			$	229,850				21	%		$	1,108,216			$	987,201				12	%
		Three Months												Twelve Months
Net Written Premiums:		2011				2010				Change				2011				2010				Change
Insurance Companies:
Marine		$	40,442			$	27,357				48	%		$	170,642			$	151,059				13	%
Property Casualty			91,780				41,171				123	%			293,758				197,845				48	%
Professional Liability			20,933				20,170				4	%			77,991				80,451				-3	%
			153,155				88,698				73	%			542,391				429,355				26	%
Lloyd’s Operations:
Marine			34,844				38,135				-9	%			137,206				149,340				-8	%
Property Casualty			8,885				11,000				-19	%			56,249				54,049				4	%
Professional Liability			5,118				3,976				29	%			17,952				21,194				-15	%
			48,847				53,111				-8	%			211,407				224,583				-6	%
Total		$	202,002			$	141,809				42	%		$	753,798			$	653,938				15	%
		Three Months												Twelve Months
Net Earned Premiums:		2011				2010				Change				2011				2010				Change
Insurance Companies:
Marine		$	44,631			$	33,107				35	%		$	169,018			$	155,846				8	%
Property Casualty			74,426				48,513				53	%			231,297				200,741				15	%
Professional Liability			20,267				23,397				-13	%			72,148				82,264				-12	%
			139,324				105,017				33	%			472,463				438,851				8	%
Lloyd’s Operations:
Marine			36,437				40,684				-10	%			145,659				149,225				-2	%
Property Casualty			11,798				14,972				-21	%			55,903				49,852				12	%
Professional Liability			4,198				5,485				-23	%			17,620				22,003				-20	%
			52,433				61,141				-14	%			219,182				221,080				-1	%
Total		$	191,757			$	166,158				15	%		$	691,645			$	659,931				5	%

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

Three Months Ended

December 31, 2011

($ in thousands)

 

			September 30,				September 30,				September 30,				September 30,
		Insurance				Lloyd’s
		Companies				Operations				Corporate (1)				Total
Gross written premiums		$	203,701			$	74,200			$	—			$	277,901
Net written premiums			153,155				48,847				—				202,002
Net earned premiums			139,324				52,433				—				191,757
Net losses and loss adjustment expenses			(112,743	)			(23,361	)			—				(136,104	)
Commission expenses			(18,909	)			(11,939	)			575				(30,273	)
Other operating expenses			(22,467	)			(8,221	)			—				(30,688	)
Other income (expense)			1,084				77				(575	)			586
Underwriting profit (loss)			(13,711	)			8,989				0				(4,722	)
Net investment income			10,155				2,222				51				12,428
Net realized gains (losses)			6,487				55				10				6,552
Interest expense			—				—				(2,048	)			(2,048	)
Income (loss) before income taxes			2,931				11,266				(1,987	)			12,210
Income tax expense (benefit)			(953	)			3,770				(695	)			2,122
Net income (loss)		$	3,884			$	7,496			$	(1,292	)		$	10,088
Losses and loss adjustment expenses ratio			80.9	%			44.6	%							71.0	%
Commission expense ratio			13.6	%			22.8	%							15.8	%
Other operating expense ratio (2)			15.3	%			15.5	%							15.7	%
Combined ratio			109.8	%			82.9	%							102.5	%

 

(1)	The Corporate segment includes intercompany eliminations.

 

(2)	The Other operating expense ratio includes Other income (expense).

 

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

Three Months Ended

December 31, 2010

($ in thousands)

 

			September 30,				September 30,				September 30,				September 30,
		Insurance				Lloyd’s
		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	)
Net 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 taxes			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
Losses and loss adjustment expenses ratio			71.0	%			58.0	%							66.2	%
Commission expense ratio			15.0	%			28.1	%							19.8	%
Other operating expense 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 expense ratio includes Other income (expense).

 

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

Twelve Months Ended

December 31, 2011

($ in thousands)

 

			September 30,				September 30,				September 30,				September 30,
		Insurance Companies				Lloyd’s Operations				Corporate (1)				Total
Gross written premiums		$	788,419			$	319,797			$	—			$	1,108,216
Net written premiums			542,391				211,407				—				753,798
Net earned premiums			472,463				219,182				—				691,645
Net losses and loss adjustment expenses			(341,625	)			(135,372	)			—				(476,997	)
Commission expenses			(64,165	)			(48,341	)			2,069				(110,437	)
Other operating expenses			(101,517	)			(36,512	)			—				(138,029	)
Other income (expense)			3,955				(657	)			(2,069	)			1,229
Underwriting profit (loss)			(30,889	)			(1,700	)			0				(32,589	)
Net investment income			54,164				8,955				381				63,500
Net realized gains (losses)			12,151				(2,354	)			214				10,011
Interest expense			—				—				(8,188	)			(8,188	)
Income (loss) before income taxes			35,426				4,901				(7,593	)			32,734
Income tax expense (benefit)			8,271				1,523				(2,657	)			7,137
Net income (loss)		$	27,155			$	3,378			$	(4,936	)		$	25,597
Losses and loss adjustment expenses ratio			72.3	%			61.8	%							69.0	%
Commission expense ratio			13.6	%			22.1	%							16.0	%
Other operating expense ratio (2)			20.6	%			16.9	%							19.7	%
Combined ratio			106.5	%			100.8	%							104.7	%

 

(1)	The Corporate segment includes intercompany eliminations.

 

(2)	The Other operating expense ratio includes Other income (expense).

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

Twelve Months Ended

December 31, 2010

($ in thousands)

 

			September 30,				September 30,				September 30,				September 30,
		Insurance Companies				Lloyd’s 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			(5,324	)			430				—				(4,894	)
Net 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 taxes			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
Losses and loss adjustment expenses ratio			63.8	%			63.8	%							63.8	%
Commission expense ratio			13.5	%			22.6	%							16.5	%
Other operating expense 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 expense ratio includes Other income (expense).

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Underwriting Results

($ in thousands)

 

			September 30,				September 30,				September 30,				September 30,				September 30,				September 30,				September 30,
		Three Months Ended December 31, 2011
		Net				Losses
		Earned				and LAE				Underwriting				Underwriting				Loss				Expense				Combined
		Premiums				Incurred				Expenses				Profit (Loss)				Ratio				Ratio				Ratio
Insurance Companies:
Marine		$	44,631			$	28,321			$	13,537			$	2,773				63.5	%			30.3	%			93.8	%
Property Casualty			74,426				41,297				20,227				12,902				55.5	%			27.2	%			82.7	%
Professional Liability			20,267				43,125				6,528				(29,386	)			212.8	%			32.2	%			245.0	%
			139,324				112,743				40,292				(13,711	)			80.9	%			28.9	%			109.8	%
Lloyd’s Operations			52,433				23,361				20,083				8,989				44.6	%			38.3	%			82.9	%
Total		$	191,757			$	136,104			$	60,375			$	(4,722	)			71.0	%			31.5	%			102.5	%

 

			September 30,				September 30,				September 30,				September 30,				September 30,				September 30,				September 30,
		Three Months Ended December 31, 2010
		Net				Losses
		Earned				and LAE				Underwriting				Underwriting				Loss				Expense				Combined
		Premiums				Incurred				Expenses				Profit (Loss)				Ratio				Ratio				Ratio
Insurance Companies:
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	%
Lloyd’s 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	%

 

			September 30,				September 30,				September 30,				September 30,
		Amounts								Loss Ratio
Net Incurred Loss Activity For the Three Months Ended:		Dec. 31, 2011				Dec. 31 2010				Dec. 31, 2011				Dec. 31, 2010
Insurance Companies:
Loss and LAE payments		$	70,377			$	70,855				50.5	%			67.5	%
Change in reserves			42,366				3,694				30.4	%			3.5	%
Net incurred loss and LAE			112,743				74,549				80.9	%			71.0	%
Lloyd’s Operations:
Loss and LAE payments			29,656				33,147				56.6	%			54.2	%
Change in reserves			(6,295	)			2,326				-12.0	%			3.8	%
Net incurred loss and LAE			23,361				35,473				44.6	%			58.0	%
Total
Loss and LAE payments			100,033				104,002				52.2	%			62.6	%
Change in reserves			36,071				6,020				18.8	%			3.6	%
Net incurred loss and LAE		$	136,104			$	110,022				71.0	%			66.2	%

 

			September 30,				September 30,				September 30,				September 30,
Impact of Prior Years Reserves		Amounts								Loss Ratio Impact
Favorable / (Unfavorable) Development For the Three Months Ended:		Dec. 31, 2011				Dec. 31, 2010				Dec. 31, 2011				Dec. 31, 2010
Insurance Companies		$	(13,161	)		$	(199	)			-9.4	%			-0.2	%
Lloyd’s Operations			13,651				3,346				26.0	%			5.5	%
Total		$	490			$	3,147				0.3	%			1.9	%

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Underwriting Results

($ in thousands)

 

			September 30,				September 30,				September 30,				September 30,				September 30,				September 30,				September 30,
		Twelve Months Ended December 31, 2011
		Net				Losses
		Earned				and LAE				Underwriting				Underwriting				Loss				Expense				Combined
		Premiums				Incurred				Expenses				Profit (Loss)				Ratio				Ratio				Ratio
Insurance Companies:
Marine		$	169,018			$	111,209			$	57,471			$	338				65.8	%			34.0	%			99.8	%
Property Casualty			231,297				151,934				77,889				1,474				65.7	%			33.7	%			99.4	%
Professional Liability			72,148				78,482				26,367				(32,701	)			108.8	%			36.5	%			145.3	%
			472,463				341,625				161,727				(30,889	)			72.3	%			34.2	%			106.5	%
Lloyd’s Operations			219,182				135,372				85,510				(1,700	)			61.8	%			39.0	%			100.8	%
Total		$	691,645			$	476,997			$	247,237			$	(32,589	)			69.0	%			35.7	%			104.7	%

 

			September 30,				September 30,				September 30,				September 30,				September 30,				September 30,				September 30,
		Twelve Months Ended December 31, 2010
		Net				Losses
		Earned				and LAE				Underwriting				Underwriting				Loss				Expense				Combined
		Premiums				Incurred				Expenses				Profit (Loss)				Ratio				Ratio				Ratio
Insurance Companies:
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	%
Lloyd’s 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	%

 

			September 30,				September 30,				September 30,				September 30,
		Amounts								Loss Ratio
Net Incurred Loss Activity For the Twelve Months Ended:		Dec. 31, 2011				Dec. 31, 2010				Dec. 31, 2011				Dec. 31, 2010
Insurance Companies:
Loss and LAE payments		$	277,823			$	278,969				58.8	%			63.5	%
Change in reserves			63,802				1,151				13.5	%			0.3	%
Net incurred loss and LAE			341,625				280,120				72.3	%			63.8	%
Lloyd’s Operations:
Loss and LAE payments			104,482				112,578				47.7	%			50.9	%
Change in reserves			30,890				28,457				14.1	%			12.9	%
Net incurred loss and LAE			135,372				141,035				61.8	%			63.8	%
Total
Loss and LAE payments			382,305				391,547				55.3	%			59.3	%
Change in reserves			94,692				29,608				13.7	%			4.5	%
Net incurred loss and LAE		$	476,997			$	421,155				69.0	%			63.8	%

 

			September 30,				September 30,				September 30,				September 30,
Impact of Prior Years Reserves		Amounts								Loss Ratio Impact
Favorable / (Unfavorable) Development For the Twelve Months Ended:		Dec. 31, 2011				Dec. 31, 2010				Dec. 31, 2011				Dec. 31, 2010
Insurance Companies		$	(12,102	)		$	5,455				-2.6	%			1.2	%
Lloyd’s Operations			9,957				8,347				4.5	%			3.8	%
Total		$	(2,145	)		$	13,802				-0.3	%			2.1	%

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Net Loss Data

($ in thousands)

 

			September 30,				September 30,				September 30,
		Case				IBNR
Net Loss Reserves, December 31, 2011:		Reserves				Reserves				Total
Insurance Companies:
Marine		$	127,912			$	121,875			$	249,787
Property Casualty			185,822				296,177				481,999
Professional Liability			56,953				83,490				140,443
Total Insurance Companies			370,687				501,542				872,229
Lloyd’s Operations:
Marine			117,448				123,136				240,584
Property Casualty			37,877				25,846				63,723
Professional Liability			13,580				47,118				60,698
Total Lloyd’s Operations			168,905				196,100				365,005
Total Net Loss Reserves		$	539,592			$	697,642			$	1,237,234

 

			September 30,				September 30,				September 30,
		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
Lloyd’s 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 Lloyd’s Operations			152,145				181,971				334,116
Total Net Loss Reserves		$	464,128			$	678,414			$	1,142,542

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Page 14

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Investment Data

December 31, 2011

As of December 31, 2011, the average quality of the investment portfolio as rated by S&P and Moody’s was AA/Aa with an average duration of 3.6 years. The Company does not own any collateralized debt obligations (CDO’s), collateralized loan obligations (CLO’s) or asset backed commercial paper.

As of December 31, 2011, the Company owned two asset-backed securities approximating $0.8 million with subprime mortgage exposures. The securities have an effective maturity of 1.7 years. In addition, the Company owned a total of seven collateralized mortgage obligations and asset-backed securities approximating $1.9 million classified as Alt-A which is a credit category between prime and subprime. They have an effective maturity of 5.7 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 as of December 31, 2011:

 

			September 30,				September 30,				September 30,				September 30,				September 30,
December 31, 2011		Fair Value				Gross Unrealized Gains				Gross Unrealized (Losses)				Cost or Amortized Cost				OTTI Recognized in OCI
		($ in thousands)
Fixed maturities:
U.S. Government Treasury bonds, agency bonds and foreign government bonds		$	336,070			$	8,979			$	(383	)		$	327,474			$	—
States, municipalities and political subdivisions			410,836				28,887				(108	)			382,057				—
Mortgage- and asset-backed securities:
Agency mortgage-backed securities			395,860				17,321				(3	)			378,542				—
Residential mortgage obligations			23,148				8				(2,848	)			25,988				(1,682	)
Asset-backed securities			48,934				695				(75	)			48,314				—
Commercial mortgage-backed securities			216,034				10,508				(593	)			206,119				—
Subtotal			683,976				28,532				(3,519	)			658,963				(1,682	)
Corporate bonds			457,187				15,743				(6,772	)			448,216				—
Total fixed maturities			1,888,069				82,141				(10,782	)			1,816,710				(1,682	)
Equity securities — common stocks			95,849				23,240				(958	)			73,567				—
Short-term investments			122,220				—				—				122,220				—
Cash			127,360				—				—				127,360				—
Total		$	2,233,498			$	105,381			$	(11,740	)		$	2,139,857			$	(1,682	)

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Page 15

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Investment Data

December 31, 2011

($ in thousands)

The following tables set forth our agency mortgage-backed securities and residential mortgage obligations, categorized 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, 2011:

 

			September 30,				September 30,				September 30,				September 30,
						Gross				Gross				Cost or
		Fair				Unrealized				Unrealized				Amortized
Agency mortgage-backed securities:		Value				Gains				(Losses)				Cost
GNMA		$	124,612			$	7,113			$	—			$	117,499
FNMA			191,197				8,072				(3	)			183,128
FHLMC			80,051				2,136				—				77,915
Total		$	395,860			$	17,321			$	(3	)		$	378,542

 

			September 30,				September 30,				September 30,				September 30,
						Gross				Gross				Cost or
		Fair				Unrealized				Unrealized				Amortized
Residential mortgage obligations:		Value				Gains				(Losses)				Cost
Prime		$	12,831			$	8			$	(2,279	)		$	15,102
Alt-A			1,926				—				(527	)			2,453
Subprime			—				—				—				—
Non-US RMBS			8,391				—				(42	)			8,433
Total		$	23,148			$	8			$	(2,848	)		$	25,988