NAVIGATORS GROUP INC - FORM 8-K - EX-99.1

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Exhibit 99.1


		The Navigators Group, Inc.

CORPORATE NEWS

Navigators Reports Second Quarter Earnings

New York — August 2, 2012 — The Navigators Group, Inc. (NASDAQ:NAVG) reported net income of $14.9 million, or $1.05 per diluted share, for the three months ended June 30, 2012 compared to $9.5 million, or $0.60 per diluted share, for the comparable period in 2011. Operating earnings were $12.5 million, or $0.88 per diluted share, for the second quarter of 2012 compared to operating earnings of $8.0 million, or $0.51 per diluted share, for the comparable period in 2011.

For the six months ended June 30, 2012, the Company reported net income of $22.8 million, or $1.60 per diluted share, compared to $1.6 million, or $0.10 per diluted share, for the comparable period in 2011. Operating earnings were $19.3 million, or $1.35 per diluted share, for the six months ended June 30, 2012 compared to $1.2 million, or $0.08 per diluted share, for the comparable period in 2011.

Gross written premiums and net written premiums for the three months ended June 30, 2012 were $323.0 million and $190.3 million, respectively, an increase of 15.9% and 3.8% from the comparable period in 2011. Gross written premiums and net written premiums for the six months ended June 30, 2012 were $666.1 million and $433.3 million, respectively, an increase of 15.9% and 15.1% from the comparable period in 2011.

The combined loss and expense ratio for the three and six months ended June 30, 2012 were 98.1% and 99.0%, respectively, compared to 101.9% and 109.0% for the comparable periods in 2011.

Stan Galanski, President and Chief Executive Officer, commented, “We are pleased to have produced profitable underwriting results and particularly with the performance of our Lloyd’s unit. Our underwriters continue to be highly selective and focused on identifying good opportunities in what are generally improving market conditions. We continue to invest in expanding our underwriting teams as well as our executive management.”

Stockholders’ equity was $841.8 million, or $60.08 per share, as of June 30, 2012 compared to $803.4 million, or $57.57 per share, as of December 31, 2011.

Net investment income for the three and six months ended June 30, 2012 was $15.8 million and $27.0 million, respectively, a decrease of 9.5% and 22.3% from the comparable periods in 2011. Investment income for the six months ended June 30, 2012 was reduced by $4.5 million as a result of the settlement of a dispute with Equitas over foregone interest on amounts that were due on certain reinsurance contracts. The annualized pre-tax investment yield, excluding net realized gains and losses and net other-than-temporary impairment losses recognized in earnings, was 2.8% and 2.4% for the three and six months ended June 30, 2012, compared to 3.3% for each of the comparable periods in 2011. The effective tax rate on net investment income was 28.2% and 26.9% for the three and six months ended June 30, 2012, compared to 28.7% and 28.6% for the comparable periods in 2011.


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

News Release

August 2, 2012

Page 2

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 3.9 years as of June 30, 2012. As of June 30, 2012, net unrealized gains within our investment portfolio were $118.0 million, an increase of $24.3 million compared to December 31, 2011. There were $3.7 million and $5.4 million of net realized gains including other-than-temporary impairment losses recognized in earnings for the three and six months ended June 30, 2012, respectively, compared to $2.5 million and $0.8 million for the same periods in 2011.

Consolidated net cash flow from operations for the three and six months ended June 30, 2012 were $(1.3) million and $15.0 million, respectively, compared to $1.1 million and $14.4 million for the comparable periods in 2011.

The Company will hold a conference call on Friday, August 3, 2012 starting at 8:30 a.m. ET to discuss the 2012 second 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=115554

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.

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

News Release

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Financial Highlights

($ in thousands, except share and per share data)

(unaudited)


	Three Months Ended									Six Months Ended
	June 30,									June 30,
Results of Operations	2012			2011			Change			2012			2011			Change
Gross written premiums	$	322,987		$	278,714			15.9	%	$	666,136		$	574,997			15.9	%
Net written premiums		190,252			183,363			3.8	%		433,297			376,439			15.1	%

Revenues:
Net earned premiums		196,017			173,777			12.8	%		379,136			326,255			16.2	%
Net investment income		15,777			17,429			-9.5	%		27,035			34,813			-22.3	%
Total other-than-temporary impairment losses		(496	)		(833	)		-40.5	%		(693	)		(1,096	)		-36.8	%
Portion of loss recognized in other comprehensive income (before tax)		—			301			NM			43			322			-86.6	%

Net other-than-temporary impairment losses recognized in earnings		(496	)		(532	)		-6.8	%		(650	)		(774	)		-16.0	%
Net realized gains (losses)		4,217			3,006			40.3	%		6,059			1,618			NM
Other income		387			573			-32.5	%		1,298			1,564			-17.0	%

Total revenues		215,902			194,253			11.1	%		412,878			363,476			13.6	%

Expenses:
Net losses and loss adjustment expenses		123,407			113,863			8.4	%		241,392			230,651			4.7	%
Commission expenses		29,503			28,030			5.3	%		58,953			54,230			8.7	%
Other operating expenses		39,819			35,777			11.3	%		76,126			72,352			5.2	%
Interest expense		2,049			2,047			0.1	%		4,098			4,093			0.1	%

Total expenses		194,778			179,717			8.4	%		380,569			361,326			5.3	%

Income before income taxes		21,124			14,536			45.3	%		32,309			2,150			NM

Income tax expense (benefit)		6,225			5,032			23.7	%		9,506			539			NM

Net income (loss)	$	14,899		$	9,504			56.8	%	$	22,803		$	1,611			NM

Per Share Data
Net income per common share:
Basic	$	1.06		$	0.62			71.6	%	$	1.63		$	0.10			NM
Diluted	$	1.05		$	0.60			74.8	%	$	1.60		$	0.10			NM

Average common shares outstanding:
Basic		14,006,361			15,372,670						13,992,901			15,554,670
Diluted		14,208,759			15,725,850						14,245,947			15,943,804

Underwriting Ratios
Loss Ratio		63.0	%		65.5	%					63.7	%		70.7	%
Expense Ratio		35.1	%		36.4	%					35.3	%		38.3	%

Combined Ratio		98.1	%		101.9	%					99.0	%		109.0	%

Balance Sheet Data	June 30, 2012			March 31, 2012						June 30, 2012			Dec. 31, 2011
Stockholders’ equity	$	841,808		$	818,217			2.9	%	$	841,808		$	803,435			4.8	%
Book value per share	$	60.08		$	58.44			2.8	%	$	60.08		$	57.57			4.4	%

News Release

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

($ in thousands, except share data)


	June 30,			December 31,
	2012			2011
	(unaudited)
ASSETS
Investments and cash:
Fixed maturities, available-for-sale, at fair value (amortized cost: 2012, $1,935,631; 2011, $1,816,710)	$	2,024,429		$	1,888,069
Equity securities, available-for-sale, at fair value (cost: 2012, $74,457; 2011, $73,567)		103,649			95,849
Short-term investments, at cost which approximates fair value		161,983			122,220
Cash		45,842			127,360

Total investments and cash		2,335,903			2,233,498

Premiums receivable		372,379			255,725
Prepaid reinsurance premiums		211,089			164,162
Reinsurance recoverable on paid losses		37,431			43,791
Reinsurance recoverable on unpaid losses and loss adjustment expenses		849,146			845,445
Deferred policy acquisition costs		64,509			63,984
Accrued investment income		14,079			14,492
Goodwill and other intangible assets		6,925			6,869
Current income tax receivable, net		13,032			15,391
Other Assets		34,573			26,650

Total assets	$	3,939,066		$	3,670,007

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Reserves for losses and loss adjustment expenses	$	2,088,524		$	2,082,679
Unearned premiums		633,920			532,628
Reinsurance balances payable		144,078			108,699
Senior notes		114,348			114,276
Deferred income tax, net		3,120			6,291
Accounts payable and other liabilities		113,268			21,999

Total liabilities		3,097,258			2,866,572

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 17,522,949 shares for 2012 and 17,467,615 shares for 2011		1,752			1,746
Additional paid-in capital		324,956			322,133
Treasury stock, at cost (3,511,380 shares for 2012 and 2011)		(155,801	)		(155,801	)
Retained earnings		587,912			565,109
Accumulated other comprehensive income		82,989			70,248

Total stockholders’ equity		841,808			803,435

Total liabilities and stockholders’ equity	$	3,939,066		$	3,670,007

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Comparative Premium Data

($ in thousands)


	Three Months							Six Months
	2012		2011		Change			2012		2011		Change
Gross Written Premiums:
Insurance Companies:
Marine	$	49,896	$	58,323		-14.4	%	$	111,761	$	128,671		-13.1	%
Property Casualty		130,627		100,131		30.5	%		286,546		213,019		34.5	%
Professional Liability		33,541		28,313		18.5	%		64,095		51,853		23.6	%

		214,064		186,767		14.6	%		462,402		393,543		17.5	%
Lloyd’s Operations:
Marine		46,482		39,451		17.8	%		108,812		100,606		8.2	%
Property Casualty		49,533		42,122		17.6	%		73,274		61,424		19.3	%
Professional Liability		12,908		10,374		24.4	%		21,648		19,424		11.4	%

		108,923		91,947		18.5	%		203,734		181,454		12.3	%

Total	$	322,987	$	278,714		15.9	%	$	666,136	$	574,997		15.9	%


	Three Months							Six Months
	2012		2011		Change			2012		2011		Change
Net Written Premiums:
Insurance Companies:
Marine	$	31,786	$	41,802		-24.0	%	$	74,651	$	96,020		-22.3	%
Property Casualty		76,842		62,015		23.9	%		191,374		124,922		53.2	%
Professional Liability		25,437		19,387		31.2	%		49,290		33,002		49.4	%

		134,065		123,204		8.8	%		315,315		253,944		24.2	%
Lloyd’s Operations:
Marine		33,025		32,042		3.1	%		81,550		81,713		-0.2	%
Property Casualty		16,172		22,682		-28.7	%		25,060		31,068		-19.3	%
Professional Liability		6,990		5,435		28.6	%		11,372		9,714		17.1	%

		56,187		60,159		-6.6	%		117,982		122,495		-3.7	%

Total	$	190,252	$	183,363		3.8	%	$	433,297	$	376,439		15.1	%


	Three Months							Six Months
	2012		2011		Change			2012		2011		Change
Net Earned Premiums:
Insurance Companies:
Marine	$	35,535	$	41,877		-15.1	%	$	70,810	$	82,436		-14.1	%
Property Casualty		82,175		55,351		48.5	%		156,543		98,286		59.3	%
Professional Liability		23,867		17,759		34.4	%		45,772		33,085		38.3	%

		141,577		114,987		23.1	%		273,125		213,807		27.7	%
Lloyd’s Operations:
Marine		32,927		37,734		-12.7	%		67,536		74,712		-9.6	%
Property Casualty		16,617		16,259		2.2	%		29,774		28,153		5.8	%
Professional Liability		4,896		4,797		2.1	%		8,701		9,583		-9.2	%

		54,440		58,790		-7.4	%		106,011		112,448		-5.7	%

Total	$	196,017	$	173,777		12.8	%	$	379,136	$	326,255		16.2	%

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

Three Months Ended

June 30, 2012

($ in thousands)


	Insurance			Lloyd’s
	Companies			Operations			Corporate ⁽¹⁾			Total
Gross written premiums	$	214,064		$	108,923		$	—		$	322,987
Net written premiums		134,065			56,187			—			190,252

Net earned premiums		141,577			54,440			—			196,017
Net losses and loss adjustment expenses		(100,003	)		(23,404	)		—			(123,407	)
Commission expenses		(21,117	)		(8,938	)		552			(29,503	)
Other operating expenses		(28,914	)		(10,905	)		—			(39,819	)
Other income (expense)		879			60			(552	)		387

Underwriting profit (loss)		(7,578	)		11,253			—			3,675

Net investment income		13,286			2,454			37			15,777
Net realized gains (losses)		2,325			1,396			—			3,721
Interest expense		—			—			(2,049	)		(2,049	)

Income (loss) before income taxes		8,033			15,103			(2,012	)		21,124

Income tax expense (benefit)		2,101			5,207			(1,083	)		6,225

Net income (loss)	$	5,932		$	9,896		$	(929	)	$	14,899

Losses and loss adjustment expenses ratio		70.6	%		43.0	%					63.0	%
Commission expense ratio		14.9	%		16.4	%					15.1	%
Other operating expense ratio ⁽²⁾		19.9	%		19.9	%					20.0	%

Combined ratio		105.4	%		79.3	%					98.1	%

(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

June 30, 2011

($ in thousands)


	Insurance Companies			Lloyd’s Operations			Corporate ⁽¹⁾			Total
Gross written premiums	$	186,767		$	91,947		$	—		$	278,714
Net written premiums		123,204			60,159			—			183,363

Net earned premiums		114,987			58,790			—			173,777
Net losses and loss adjustment expenses		(77,330	)		(36,533	)		—			(113,863	)
Commission expenses		(16,402	)		(12,042	)		414			(28,030	)
Other operating expenses		(26,516	)		(9,261	)		—			(35,777	)
Other income (expense)		626			361			(414	)		573

Underwriting profit (loss)		(4,635	)		1,315			—			(3,320	)

Net investment income		14,989			2,320			120			17,429
Net realized gains (losses)		3,100			(798	)		172			2,474
Interest expense		—			—			(2,047	)		(2,047	)

Income (loss) before income taxes		13,454			2,837			(1,755	)		14,536

Income tax expense (benefit)		4,617			1,029			(614	)		5,032

Net income (loss)	$	8,837		$	1,808		$	(1,141	)	$	9,504

Losses and loss adjustment expenses ratio		67.3	%		62.1	%					65.5	%
Commission expense ratio		14.3	%		20.5	%					16.1	%
Other operating expense ratio ⁽²⁾		22.4	%		15.2	%					20.3	%

Combined ratio		104.0	%		97.8	%					101.9	%

(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

Six Months Ended

June 30, 2012

($ in thousands)


	Insurance Companies			Lloyd’s Operations			Corporate ⁽¹⁾			Total
Gross written premiums	$	462,402		$	203,734		$	—		$	666,136
Net written premiums		315,315			117,982			—			433,297

Net earned premiums		273,125			106,011			—			379,136
Net losses and loss adjustment expenses		(191,180	)		(50,212	)		—			(241,392	)
Commission expenses		(40,418	)		(19,824	)		1,289			(58,953	)
Other operating expenses		(54,259	)		(21,867	)		—			(76,126	)
Other income (expense)		2,521			66			(1,289	)		1,298

Underwriting profit (loss)		(10,211	)		14,174			—			3,963

Net investment income		22,221			4,737			77			27,035
Net realized gains (losses)		4,200			1,209			—			5,409
Interest expense		—			—			(4,098	)		(4,098	)

Income (loss) before income taxes		16,210			20,120			(4,021	)		32,309

Income tax expense (benefit)		3,980			6,933			(1,407	)		9,506

Net income (loss)	$	12,230		$	13,187		$	(2,614	)	$	22,803

Losses and loss adjustment expenses ratio		70.0	%		47.4	%					63.7	%
Commission expense ratio		14.8	%		18.7	%					15.5	%
Other operating expense ratio ⁽²⁾		18.9	%		20.5	%					19.8	%

Combined ratio		103.7	%		86.6	%					99.0	%

(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

Six Months Ended

June 30, 2011

($ in thousands)


	Insurance Companies			Lloyd’s Operations			Corporate ⁽¹⁾			Total
Gross written premiums	$	393,543		$	181,454		$	—		$	574,997
Net written premiums		253,944			122,495			—			376,439

Net earned premiums		213,807			112,448			—			326,255
Net losses and loss adjustment expenses		(152,127	)		(78,524	)		—			(230,651	)
Commission expenses		(28,742	)		(26,449	)		961			(54,230	)
Other operating expenses		(53,315	)		(19,037	)		—			(72,352	)
Other income (expense)		2,317			208			(961	)		1,564

Underwriting profit (loss)		(18,060	)		(11,354	)		—			(29,414	)

Net investment income		29,972			4,575			266			34,813
Net realized gains (losses)		2,855			(2,183	)		172			844
Interest expense		—			—			(4,093	)		(4,093	)

Income (loss) before income taxes		14,767			(8,962	)		(3,655	)		2,150

Income tax expense (benefit)		4,845			(3,027	)		(1,279	)		539

Net income (loss)	$	9,922		$	(5,935	)	$	(2,376	)	$	1,611

Losses and loss adjustment expenses ratio		71.2	%		69.8	%					70.7	%
Commission expense ratio		13.4	%		23.5	%					16.6	%
Other operating expense ratio ⁽²⁾		23.8	%		16.8	%					21.7	%

Combined ratio		108.4	%		110.1	%					109.0	%

(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)


	Three Months Ended June 30, 2012
	Net		Losses
	Earned		and LAE		Underwriting		Underwriting			Loss			Expense			Combined
	Premiums		Incurred		Expenses		Profit (Loss)			Ratio			Ratio			Ratio
Insurance Companies:
Marine	$	35,535	$	30,283	$	13,516	$	(8,264	)		85.2	%		38.1	%		123.3	%
Property Casualty		82,175		49,724		26,628		5,823			60.5	%		32.4	%		92.9	%
Professional Liability		23,867		19,996		9,008		(5,137	)		83.8	%		37.7	%		121.5	%

Total Insurance Companies		141,577		100,003		49,152		(7,578	)		70.6	%		34.8	%		105.4	%

Lloyd’s Operations:
Marine	$	32,927	$	12,730	$	13,362	$	6,835			38.7	%		40.5	%		79.2	%
Property Casualty		16,617		7,724		4,612		4,281			46.5	%		27.7	%		74.2	%
Professional Liability		4,896		2,950		1,809		137			60.3	%		36.9	%		97.2	%

Total Lloyd’s		54,440		23,404		19,783		11,253			43.0	%		36.3	%		79.3	%

Total All	$	196,017	$	123,407	$	68,935	$	3,675			63.0	%		35.1	%		98.1	%


	Three Months Ended June 30, 2011
	Net		Losses
	Earned		and LAE		Underwriting		Underwriting			Loss			Expense			Combined
	Premiums		Incurred		Expenses		Profit (Loss)			Ratio			Ratio			Ratio
Insurance Companies:
Marine	$	41,877	$	26,808	$	15,082	$	(13	)		64.0	%		36.0	%		100.0	%
Property Casualty		55,351		38,429		20,458		(3,536	)		69.4	%		37.0	%		106.4	%
Professional Liability		17,759		12,093		6,752		(1,086	)		68.1	%		38.0	%		106.1	%

Total Insurance Companies		114,987		77,330		42,292		(4,635	)		67.3	%		36.7	%		104.0	%

Lloyd’s Operations:
Marine		37,734		25,532		14,574		(2,372	)		67.7	%		38.6	%		106.3	%
Property Casualty		16,259		6,097		4,606		5,556			37.5	%		28.3	%		65.8	%
Professional Liability		4,797		4,904		1,762		(1,869	)		102.2	%		36.8	%		139.0	%

Total Lloyd’s		58,790		36,533		20,942		1,315			62.1	%		35.7	%		97.8	%

Total All	$	173,777	$	113,863	$	63,234	$	(3,320	)		65.5	%		36.4	%		101.9	%


	Amounts						Loss Ratio
Net Incurred Loss Activity	June 30,			June 30,			June 30,			June 30,
For the Three Months Ended:	2012			2011			2012			2011
Insurance Companies:
Loss and LAE payments	$	90,311		$	77,278			63.8	%		67.3	%
Change in reserves		9,692			52			6.8	%		0.0	%

Net incurred loss and LAE		100,003			77,330			70.6	%		67.3	%

Lloyd’s Operations:
Loss and LAE payments	$	30,641			26,646			56.3	%		45.3	%
Change in reserves		(7,237	)		9,887			-13.3	%		16.8	%

Net incurred loss and LAE		23,404			36,533			43.0	%		62.1	%

Total
Loss and LAE payments		120,952			103,924			61.7	%		59.8	%
Change in reserves		2,455			9,939			1.3	%		5.7	%

Net incurred loss and LAE	$	123,407		$	113,863			63.0	%		65.5	%


Impact of Prior Years Reserves	Amounts						Loss Ratio Impact
Favorable / (Unfavorable) Development	June 30,			June 30,			June 30,			June 30,
For the Three Months Ended:	2012			2011			2012			2011
Insurance Companies	$	(626	)	$	137			-0.4	%		0.1	%
Lloyd’s Operations		5,998			(952	)		11.0	%		-1.6	%

Total	$	5,372		$	(815	)		2.7	%		-0.5	%

News Release

Page 11

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Underwriting Results

($ in thousands)


	Six Months Ended June 30, 2012
	Net Earned Premiums		Losses and LAE Incurred		Underwriting Expenses		Underwriting Profit (Loss)			Loss Ratio			Expense Ratio			Combined Ratio
Insurance Companies:
Marine	$	70,810	$	58,053	$	26,171	$	(13,414	)		82.0	%		36.9	%		118.9	%
Property Casualty		156,543		97,872		49,482		9,189			62.5	%		31.6	%		94.1	%
Professional Liability		45,772		35,255		16,503		(5,986	)		77.0	%		36.1	%		113.1	%

Total Insurance Companies		273,125		191,180		92,156		(10,211	)		70.0	%		33.7	%		103.7	%

Lloyd’s Operations:
Marine		67,536		34,288		28,044		5,204			50.8	%		41.5	%		92.3	%
Property Casualty		29,774		11,772		9,671		8,331			39.5	%		32.5	%		72.0	%
Professional Liability		8,701		4,152		3,910		639			47.7	%		45.0	%		92.7	%

Total Lloyd’s		106,011		50,212		41,625		14,174			47.4	%		39.2	%		86.6	%

Total All	$	379,136	$	241,392	$	133,781	$	3,963			63.7	%		35.3	%		99.0	%


	Six Months Ended June 30, 2011
	Net Earned Premiums		Losses and LAE Incurred		Underwriting Expenses		Underwriting Profit (Loss)			Loss Ratio			Expense Ratio			Combined Ratio
Insurance Companies:
Marine	$	82,436	$	54,806	$	28,880	$	(1,250	)		66.5	%		35.0	%		101.5	%
Property Casualty		98,286		74,364		38,056		(14,134	)		75.7	%		38.7	%		114.4	%
Professional Liability		33,085		22,957		12,804		(2,676	)		69.4	%		38.7	%		108.1	%

Total Insurance Companies		213,807		152,127		79,740		(18,060	)		71.2	%		37.2	%		108.4	%

Lloyd’s Operations:
Marine		74,712		50,422		29,352		(5,062	)		67.5	%		39.3	%		106.8	%
Property Casualty		28,153		15,379		11,718		1,056			54.6	%		41.6	%		96.2	%
Professional Liability		9,583		12,723		4,208		(7,348	)		132.8	%		43.9	%		176.7	%

Total Lloyd’s		112,448		78,524		45,278		(11,354	)		69.8	%		40.3	%		110.1	%

Total All	$	326,255	$	230,651	$	125,018	$	(29,414	)		70.7	%		38.3	%		109.0	%


	Amounts						Loss Ratio
Net Incurred Loss Activity	June 30,			June 30,			June 30,			June 30,
For the Six Months Ended:	2012			2011			2012			2011
Insurance Companies:
Loss and LAE payments	$	183,963		$	143,971			67.4	%		67.4	%
Change in reserves		7,217			8,156			2.6	%		3.8	%

Net incurred loss and LAE		191,180			152,127			70.0	%		71.2	%

Lloyd’s Operations:
Loss and LAE payments		55,285			48,658			52.2	%		43.2	%
Change in reserves		(5,073	)		29,866			-4.8	%		26.6	%

Net incurred loss and LAE		50,212			78,524			47.4	%		69.8	%

Total
Loss and LAE payments		239,248			192,629			63.1	%		59.0	%
Change in reserves		2,144			38,022			0.6	%		11.7	%

Net incurred loss and LAE	$	241,392		$	230,651			63.7	%		70.7	%


Impact of Prior Years Reserves	Amounts						Loss Ratio Impact
Favorable / (Unfavorable) Development	June 30,			June 30,			June 30,			June 30,
For the Six Months Ended:	2012			2011			2012			2011
Insurance Companies	$	2,090		$	(1,085	)		0.8	%		-0.5	%
Lloyd’s Operations		10,148			(3,163	)		9.6	%		-2.8	%

Total	$	12,238		$	(4,248	)		3.2	%		-1.3	%

News Release

Page 12

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Net Loss Data

($ in thousands)


	Case		IBNR
	Reserves		Reserves		Total
Net Loss Reserves, June 30, 2012:
Insurance Companies:
Marine	$	145,716	$	114,672	$	260,388
Property Casualty		177,971		304,875		482,846
Professional Liability		53,184		83,028		136,212

Total Insurance Companies		376,871		502,575		879,446

Lloyd’s Operations:
Marine		122,804		116,820		239,624
Property Casualty		30,282		27,951		58,233
Professional Liability		15,439		46,636		62,075

Total Lloyd’s Operations		168,525		191,407		359,932

Total Net Loss Reserves	$	545,396	$	693,982	$	1,239,378


	Case		IBNR
	Reserves		Reserves		Total
Net Loss Reserves, December 31, 2011:
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

News Release

Page 13

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Investment Data

June 30, 2012

As of June 30, 2012, the average quality of the investment portfolio as rated by S&P and Moody’s was AA/Aa with an average duration of 3.9 years. The Company does not own any collateralized debt obligations (CDO’s), collateralized loan obligations (CLO’s) or asset backed commercial paper.

As of June 30, 2012, the Company owned two asset-backed securities approximating $0.7 million with subprime mortgage exposures. The securities have an effective maturity of 1.5 years. In addition, the Company owned a total of seven collateralized mortgage obligations and asset-backed securities approximating $2.0 million classified as Alt-A which is a credit category between prime and subprime. They have an effective maturity of 5.5 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 June 30, 2012:


			Gross		Gross			Cost or		OTTI
	Fair		Unrealized		Unrealized			Amortized		Recognized
June 30, 2012	Value		Gains		(Losses)			Cost		in OCI
	($ in thousands)
Fixed maturities:
U.S.Treasury bonds, agency bonds and foreign government bonds	$	454,523	$	10,330	$	(160	)	$	444,353	$	—
States, municipalities and political subdivisions		426,218		29,960		(115	)		396,373		—
Mortgage- and asset-backed securities:
Agency mortgage-backed securities		398,310		17,393		(44	)		380,961		—
Residential mortgage obligations		37,805		44		(1,651	)		39,412		(887	)
Asset-backed securities		54,416		933		(33	)		53,516		—
Commercial mortgage-backed securities		209,273		14,456		(55	)		194,872		—

Subtotal		699,804		32,826		(1,783	)		668,761		(887	)

Corporate bonds		443,884		18,519		(779	)		426,144		—

Total fixed maturities		2,024,429		91,635		(2,837	)		1,935,631		(887	)

Equity securities—common stocks		103,649		29,709		(517	)		74,457		—

Short-term investments		161,983		—		—			161,983		—

Cash		45,842		—		—			45,842		—

Total	$	2,335,903	$	121,344	$	(3,354	)	$	2,217,913	$	(887	)

News Release

Page 14

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Investment Data

June 30, 2012

($ 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 June 30, 2012:


			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
	Value		Gains		(Losses)			Cost
Agency mortgage-backed securities:
GNMA	$	112,901	$	6,673	$	(44	)	$	106,272
FNMA		214,172		8,589		—			205,583
FHLMC		71,237		2,131		—			69,106

Total	$	398,310	$	17,393	$	(44	)	$	380,961


			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
	Value		Gains		(Losses)			Cost
Residential mortgage obligations:
Prime	$	12,537	$	23	$	(1,251	)	$	13,765
Alt-A		1,975		—		(340	)		2,315
Subprime		—		—		—			—
Non-US RMBS		23,293		21		(60	)		23,332

Total	$	37,805	$	44	$	(1,651	)	$	39,412

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