-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JPrO4OddC87tnVJnI5Y9+9wPe28FypUCZs4pehI2U0F94MwqqWn7z/TpOQh9hwMi hbuOBy83MUS4EvkE4We10w== 0000898080-04-000156.txt : 20040310 0000898080-04-000156.hdr.sgml : 20040310 20040309214927 ACCESSION NUMBER: 0000898080-04-000156 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040309 ITEM INFORMATION: ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20040310 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NAVIGATORS GROUP INC CENTRAL INDEX KEY: 0000793547 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 133138397 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-15886 FILM NUMBER: 04658727 BUSINESS ADDRESS: STREET 1: ONE PENN PLAZA STREET 2: 55TH FL CITY: NEW YORK STATE: NY ZIP: 10119 BUSINESS PHONE: 2122442333 MAIL ADDRESS: STREET 1: ONE PENN PLAZA 55TH FL CITY: NEW YORK STATE: NY ZIP: 10119 8-K 1 form8k.txt FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------------------ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: March 9, 2004 Commission File No. 0-15886 (Date of Earliest Event Reported: March 9, 2004) THE NAVIGATORS GROUP, INC. (Exact name of registrant as specified in its charter) DELAWARE 13-3138397 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) One Penn Plaza New York, New York 10119 (212) 244-2333 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Item 9. Regulation FD Disclosure Item 12. Results of Operations and Financial Condition The following information is furnished pursuant to Item 9 "Regulation FD Disclosure" and Item 12 "Results of Operations and Financial Condition." This information shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. On March 9, 2004, The Navigators Group, Inc. (the "Company") issued a press release announcing its earnings for the fourth quarter and the full fiscal year of 2003. This press release is attached hereto as Exhibit 99.1. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. THE NAVIGATORS GROUP, INC. (Registrant) /s/ Bradley D. Wiley ---------------------------------------------- Name: Bradley D. Wiley Title: Senior Vice President, Financial Compliance Officer and Secretary Date: March 9, 2004 INDEX TO EXHIBITS Number Description - ------ ----------- 99.1 Press Release dated March 9, 2004. EX-99.1 3 ex99-1.txt PRESS RELEASE The Navigators Group, Inc. CORPORATE NEWS Navigators Reports 2003 Fourth Quarter and Full Year Results New York - March 9, 2004 - The Navigators Group, Inc. (NAVG/NASDAQ) reported net income of $7,685,000 or $0.80 per diluted share for the year ended December 31, 2003 compared to $16,397,000 or $1.89 per diluted share for the year ended 2002. The net loss for the 2003 fourth quarter was $9,490,000 or $0.78 per basic share compared to net income of $3,901,000 or $0.45 per diluted share for the 2002 fourth quarter. Included in the 2003 fourth quarter and full year results is the previously announced after-tax charge of $20.5 million or $1.68 per basic share and $2.14 per diluted share, respectively for incurred losses related to asbestos exposures. The 2003 fourth quarter and full year results include net realized capital gains of $0.03 per basic share and $0.13 per diluted share, respectively compared to $0.04 per diluted share and $0.14 per diluted share included in the comparable 2002 fourth quarter and full year results. Gross written premium and net written premium for the 2003 fourth quarter were $150,966,000 and $83,833,000 respectively, both increases of 40% from the comparable 2002 period. Gross written premium and net written premium for the 2003 full year were $606,492,000 and $307,128,000 respectively, increases of 35% and 15% respectively, from the 2002 year. The increase in our 2003 fourth quarter net written premium reflects a reduction of approximately $11 million in ceded reinsurance premium for specialty business due to a reinsurance treaty change effective October 1, 2003. The reinsurance treaty had provided a statutory capital benefit and was changed given the increased level of statutory surplus of Navigators Insurance Company. The change had no impact on net income. The combined loss and expense ratio for the 2003 fourth quarter and full year was 129.9% and 104.0%, respectively compared to 98.0% and 98.5% for the comparable 2002 year periods. The combined loss and expense ratio for the 2003 fourth quarter and full year were negatively impacted by 44.2% and 11.7%, respectively for incurred losses related to asbestos and environmental exposures. Navigators' Chief Executive Officer, Stan Galanski, commented, "The Company achieved strong but controlled growth in line with our expectations. We are pleased with the profitability of our current book of business, and have taken appropriate action to maintain adequate loss reserves across all lines of business, including reserves for asbestos and environmental exposures. We are particularly proud of the strong results generated by our London operations, both in the U.K. branch of Navigators Insurance Company and Syndicate 1221." Consolidated cash flow from operations for the 2003 full year was $134,527,000, an increase of 24% from the comparable 2002 period. Net investment income for the 2003 fourth quarter and full year was $5,703,000 and $19,550,000, respectively, increases of 25% and 8% from the comparable 2002 periods. The 2003 fourth quarter increase in net investment income reflects the strong cash flow from operations generated throughout 2003 coupled with the $110.8 million net proceeds received in October from the sale of 3,977,500 new One Penn Plaza New York, NY 10119 TEL (212) 244-2333 FAX (212) 244-4077 News Release March 9, 2004 Page 2 shares of common stock. Pre-tax investment yields for the 2003 fourth quarter and year were 3.8%, compared to 4.2% and 4.8% respectively, for the comparable 2002 periods. Navigators adopted the fair value method of accounting for stock-based employee compensation in the 2003 fourth quarter retroactive as of January 1, 2003. The per-share amounts for the 2003 fourth quarter and full year reflect after-tax charges of $0.01 and $0.05, respectively for the expensing of stock options, compared to no similar charge in 2002. Included in the 2003 fourth quarter and full year results were tax benefits related to the elimination of a tax valuation allowance related to the Company's foreign operations of $2,885,000 or $0.24 per basic share and $5,284,000 or $0.55 per diluted share, respectively compared to $226,000 or $0.03 per diluted share and $1,267,000, or $0.15 per diluted share, respectively for the comparable 2002 fourth quarter and full year periods. The tax valuation allowance was eliminated in the 2003 fourth quarter in recognition of the current and continued level of profitability of the Company's foreign operations. Accordingly, future taxable income from foreign operations will be subject to a 35% tax rate. Stockholders' equity increased to $290,028,000 or $23.14 per share at December 31, 2003 compared to $171,275,000 or $20.18 per share at December 31, 2002. Statutory surplus of Navigators Insurance Company was $210,324,000 at December 31, 2003. The Company will hold a conference call on Wednesday, March 10, 2004 starting at 9:00 a.m. Eastern Standard Time. To access the call, please dial 1-800-884-5695, using confirmation code 68604198. Internationally, the call may be accessed by dialing 1-617-786-2960 using the same confirmation code. To listen via live audio webcast, please visit the Company's website (www.navg.com) at least ten minutes prior to the start of the call and click on the March 10th Live Audio Webcast link. The webcast will also be available as a replay starting one hour after the call is finished at the same location. The Navigators Group, Inc. is an international insurance holding company with insurance company operations, underwriting management companies, and operations at Lloyd's of London. Headquartered in New York City, Navigators has offices in major insurance centers in the United States and the United Kingdom. This press release may contain "forward looking statements" as defined in the Private Securities Litigation Act of 1995. We cannot assure that results which we anticipate will be achieved, since results may differ materially because of known and unknown risks and uncertainties which we face. Please refer to Navigators' prospectus dated October 1, 2003 and its most recent Forms 10-K and 10-Q for a description of Navigators' business and the important factors which may affect that business. Navigators undertakes no obligation to publicly update or revise any forward looking statement. Contact: Paul J. Malvasio Executive Vice President and Chief Financial Officer (914) 933-6088 pmalvasio@navg.com www.navg.com News Release March 9, 2004 Page 3 THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Financial Highlights ($'s in thousands, except per share data)
Three Months Ended Twelve Months Ended December 31, December 31, ---------------------------- ---------------------------- Financial Highlights 2003 2002 Change 2003 2002 Change - -------------------- ---- ---- ------ ---- ---- ------ Gross written premium $150,966 $ 108,120 40% $606,492 $447,838 35% Net written premium 83,833 59,985 40% 307,128 266,090 15% Revenues: Net earned premium 71,536 66,812 7% 277,651 222,104 25% Commission income 1,533 1,545 -1% 4,281 4,827 -11% Net investment income 5,703 4,564 25% 19,550 18,058 8% Net realized capital gains 640 496 29% 1,875 1,668 12% Other income 633 608 4% 1,361 1,821 -25% -------------- ------------- ---------- -------------- ------------- --------- Total revenues 80,045 74,025 8% 304,718 248,478 23% -------------- ------------- ---------- -------------- ------------- --------- Operating expenses: Net losses and loss adjustment expenses incurred 75,232 43,781 72% 211,089 143,400 47% Commission expense 11,569 13,712 -16% 40,267 43,215 -7% Other operating expenses 12,581 11,080 14% 50,315 39,076 29% Interest expense 4 108 -96% 255 571 -55% -------------- ------------- ---------- -------------- ------------- --------- Total operating expenses 99,386 68,681 45% 301,926 226,262 33% -------------- ------------- ---------- -------------- ------------- --------- Income(loss) before income taxes (19,341) 5,344 NM 2,792 22,216 -87% -------------- ------------- ---------- -------------- ------------- --------- Income tax expense(benefit) (9,851) 1,443 NM (4,893) 5,819 NM -------------- ------------- ---------- -------------- ------------- --------- Net income(loss) $ (9,490) $ 3,901 NM $ 7,685 $ 16,397 -53% ============== ============= ========== ============== ============= ========= Per Share Data Net income (loss) per common share: Basic $ (0.78) $ 0.46 -270% $ 0.81 $ 1.94 -58% Diluted $ (0.78) $ 0.45 -273% $ 0.80 $ 1.89 -58% Average common shares outstanding: Basic 12,210 8,485 9,446 8,463 Diluted 12,210 8,680 9,585 8,676 Underwriting Ratios Loss Ratio 105.2% 65.5% 76.0% 64.6% Expense Ratio 24.7% 32.5% 28.0% 33.9% -------------- ------------- -------------- ------------- Combined Ratio 129.9% 98.0% 104.0% 98.5% Book value per share at December 31, 2003 and 2002 $ 23.14 $ 20.18 15% Certain amounts for the prior period have been reclassified to conform to the presentation in the current period.
News Release March 9, 2004 Page 4 THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ($'s in thousands, except share data)
December 31, 2003 2002 ---- ---- ASSETS Investments and cash: Fixed maturities, available-for-sale, at fair value (amortized cost: 2003, $577,904: 2002, $351,821) $ 588,545 $ 366,676 Equity securities, available-for-sale, at fair value (cost: 2003, $11,977: 2002, $12,286) 13,446 11,674 Short-term investments, at cost which approximates fair value 83,202 61,092 Cash 8,399 13,443 -------------- --------------- Total investments and cash 693,592 452,885 -------------- --------------- Premiums in course of collection 128,676 108,672 Commissions receivable 3,970 3,112 Prepaid reinsurance premiums 102,141 58,902 Reinsurance receivable on paid losses 26,270 18,158 Reinsurance receivable on unpaid losses and loss adjustment expense 350,441 224,995 Federal income tax recoverable 8,747 826 Net deferred income tax benefit 15,195 6,470 Deferred policy acquisition costs 24,720 23,632 Accrued investment income 5,546 3,309 Goodwill 5,093 5,167 Other assets 15,067 11,791 -------------- --------------- Total assets $ 1,379,458 $ 917,919 ============== =============== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Reserves for losses and loss adjustment expenses $ 724,612 $ 489,642 Unearned premium 238,803 167,372 Reinsurance balances payable 97,583 55,574 Notes payable to banks - 14,500 Payable for securities purchased 12,857 5,327 Accounts payable and other liabilities 15,575 14,229 -------------- --------------- Total liabilities 1,089,430 746,644 -------------- --------------- Stockholders' equity: Preferred stock, $.10 par value, authorized 1,000,000 shares, none issued - - Common stock, $.10 par value, 20,000,000 shares authorized for 2003 and 2002; issued and outstanding: 12,535,360 for 2003 and 8,486,272 (net of 16,423 treasury shares) for 2002 1,254 851 Additional paid-in capital 151,765 40,141 Treasury stock held at cost - (236) Accumulated other comprehensive income 8,537 9,732 Retained earnings 128,472 120,787 -------------- --------------- Total stockholders' equity 290,028 171,275 -------------- --------------- Total liabilities and stockholders' equity $1,379,458 $ 917,919 ============== ===============
News Release March 9, 2004 Page 5 The Navigators Group, Inc. Segment Information Three Months Ended 12/31/03 ($'s in thousands)
Insurance Lloyd's Navigators Parent & Companies Operations Agencies Other (1) Total ------------------------------------------------------------------------- Gross premium written $102,870 $ 54,370 $ (6,274) $ 150,966 Net premium written 64,853 18,980 83,833 Revenues: Net earned premium 53,652 17,884 71,536 Commission income 58 4,191 (2,716) 1,533 Net investment income 5,049 596 2 56 5,703 Net realized capital gains 589 51 640 Other income (expense) 182 265 312 (126) 633 ------------------------------------------------------------------------- Total revenues 59,472 18,854 4,505 (2,786) 80,045 ------------------------------------------------------------------------- Operating expenses: Net losses and loss adjustment expenses 64,948 10,284 75,232 Commission expense (3) 11,382 2,903 (2,716) 11,569 Other operating expenses 881 2,554 8,100 1,046 12,581 Interest expense 4 4 ------------------------------------------------------------------------- Total operating expenses 77,211 15,741 8,100 (1,666) 99,386 ------------------------------------------------------------------------- Income (loss) before income tax (17,739) 3,113 (3,595) (1,120) (19,341) expense (benefit) Income tax expense (benefit) (6,465) (1,727) (1,268) (391) (9,851) ------------------------------------------------------------------------- Net income (loss) $ (11,274) $ 4,840 $ (2,327) $ (729) $ (9,490) ========================================================================= Loss and loss expenses ratio 121.1% 57.5% 105.2% Commission expense ratio 21.2% 16.2% 19.9% Other operating expense ratio 1.6% 14.3% 4.8% ---------------------------- --------------- Combined ratio 143.9% 88.0% 129.9% ============================ =============== Adjusted combined ratio (2) 84.9% 88.0% 85.7% ============================ ===============
Notes: (1)Includes inter-segment eliminations. (2)Adjusted combined ratio excludes $ 31,648 incurred losses for asbestos $ (31,568) and environmental $ (80) exposures. (3)Inter-segment profit commissions of $ 5,552 recorded as commission expense of the Insurance Companies and commission income of the Navigators Agencies was reduced as a result of the $ 31,648 incurred losses for asbestos and environmental exposures. News Release March 9, 2004 Page 6 The Navigators Group, Inc. Segment Information Three Months Ended 12/31/02 ($'s in thousands)
Insurance Lloyd's Navigators Parent & Companies Operations Agencies Other (1) Total --------------------------------------------------------------------------- Gross premium written $ 86,989 $ 27,814 $ (6,683) $ 108,120 Net premium written 50,783 9,202 59,985 Revenues: Net earned premium 48,260 18,552 66,812 Commission income 138 7,967 (6,560) 1,545 Net investment income 3,888 656 17 3 4,564 Net realized capital gains 305 191 496 Other income (expense) 372 25 336 (125) 608 --------------------------------------------------------------------------- Total revenues 52,825 19,562 8,320 (6,682) 74,025 --------------------------------------------------------------------------- Operating expenses: Net losses and loss adjustment expenses 29,688 14,093 43,781 Commission expense 16,892 3,380 (6,560) 13,712 Other operating expenses (2) (37) 1,429 8,649 1,039 11,080 Interest expense 108 108 --------------------------------------------------------------------------- Total operating expenses 46,543 18,902 8,649 (5,413) 68,681 --------------------------------------------------------------------------- Income (loss) before income tax 6,282 660 (329) (1,269) 5,344 expense (benefit) Income tax expense (benefit) 1,984 (97) (444) 1,443 --------------------------------------------------------------------------- Net income (loss) $ 4,298 $ 660 $ (232) $ (825) $ 3,901 =========================================================================== Loss and loss expenses ratio 61.5% 76.0% 65.5% Commission expense ratio 35.0% 18.2% 30.4% Other operating expense ratio -0.1% 7.7% 2.1% ------------------------------ ----------------- Combined ratio 96.4% 101.9% 98.0% ============================== =================
Notes: (1)Includes inter-segment eliminations. (2)Included in the Insurance Companies other operating expenses was an expense reimbursement benefit of $ 1,141 in connection with a claims settlement. News Release March 9, 2004 Page 7 The Navigators Group Underwriting Results ($'s in thousands)
Three Months Ended December 31, 2003 Gross Net Net Losses Written Written Earned and LAE Underwriting Underwriting Insurance Companies: ........................... Premium Premium Premium Incurred Expenses Gain(Loss) ------- ------- ------- -------- -------- ---------- Marine ......................................... $ 47,229 $ 18,749 $ 21,876 $ 32,297 $ 2,520 $ (12,941) Specialty ...................................... 33,661 34,330 22,531 25,195 7,104 (9,768) Professional Liability ......................... 15,023 4,825 3,225 1,969 738 518 Assumed from Lloyd's Operations ................ 6,855 6,811 5,867 4,128 1,894 (155) Other (includes runoff business) ............... 102 139 153 1,359 7 (1,213) ----------------------------------------------------------------------- 102,870 64,854 53,652 64,948 12,263 (23,559) Lloyd's Operations ............................. 54,370 18,979 17,884 10,284 5,457 2,143 Intercompany elimination ....................... (6,274) ----------------------------------------------------------------------- Total .......................................... $ 150,966 $ 83,833 $ 71,536 $ 75,232 $ 17,720 $ (21,416) ======================================================================= Three Months Ended December 31, 2003 Adjusted* Underwriting Combined Ratio Adjusted* Insurance Companies: ........................... Expenses Loss Expense Combined Combined -------- ---- ------------------------- Marine ......................................... $ 17,323 147.6% 11.5% 159.2% 20.8% Specialty ...................................... (9,768) 111.8% 31.5% 143.4% 143.4% Professional Liability ......................... 518 61.1% 22.9% 83.9% 83.9% Assumed from Lloyd's Operations ................ (155) 70.4% 32.3% 102.6% 102.6% Other (includes runoff business) ............... 171 NM NM NM NM ------------------------------------------------- 8,089 121.1% 22.9% 143.9% 84.9% Lloyd's Operations ............................. 2,143 57.5% 30.5% 88.0% 88.0% Intercompany elimination ....................... ------------------------------------------------- Total .......................................... $ 10,232 105.2% 24.8% 129.9% 85.7% ================================================= * Excludes $31,648 incurred losses for asbestos $ (31,568) and environmental $ (80) exposures
Three Months Ended December 31, 2002 Insurance Companies: Marine ............................. $ 38,130 $ 15,344 $ 19,008 $ 10,733 $ 6,282 $ 1,993 Specialty .......................... 30,489 23,712 21,772 13,673 9,046 (947) Professional Liability ............. 9,296 2,355 899 626 433 (160) Assumed from Lloyd's Operations .... 8,243 8,243 5,548 3,356 1,914 278 Other (includes runoff business) (1) 831 1,129 1,033 1,300 (820) 553 ------------------------------------------------------------------------- 86,989 50,783 48,260 29,688 16,855 1,717 Lloyd's Operations ................. 27,814 9,202 18,552 14,093 4,809 (350) Intercompany elimination ........... (6,683) ------------------------------------------------------------------------- Total .............................. $ 108,120 $ 59,985 $ 66,812 $ 43,781 $ 21,664 $ 1,367 ========================================================================= Three Months Ended December 31, 2002 Insurance Companies: Marine ............................. 56.5% 33.0% 89.5% Specialty .......................... 62.8% 41.5% 104.3% Professional Liability ............. 69.6% 48.2% 117.8% Assumed from Lloyd's Operations .... 60.5% 34.5% 95.0% Other (includes runoff business) (1) NM NM NM ------------------------ 61.5% 34.9% 96.4% Lloyd's Operations ................. 76.0% 25.9% 101.9% Intercompany elimination ........... ------------------------ Total .............................. 65.5% 32.4% 98.0% ========================
Noteds: (1) Included in the Insurance Companies other operating expenses was an expense reimbursement benefit of $ 1,141 in connection with a claims settlement. News Release March 9, 2004 Page 8 The Navigators Group, Inc. Segment Information Year Ended 12/31/03 ($'s in thousands)
Insurance Lloyd's Navigators Parent & Companies Operations Agencies Other (1) Total -------------------------------------------------------------------------- Gross premium written $ 414,194 $223,850 $ (31,552) $ 606,492 Net premium written 225,142 81,986 307,128 Revenues: Net earned premium 208,189 69,462 277,651 Commission income 538 27,904 (24,161) 4,281 Net investment income 17,455 2,009 22 64 19,550 Net realized capital gains 1,231 644 1,875 Other income (expense) 188 381 1,292 (500) 1,361 -------------------------------------------------------------------------- Total revenues 227,063 73,034 29,218 (24,597) 304,718 -------------------------------------------------------------------------- Operating expenses: Net losses and loss adjustment expenses 167,550 43,539 211,089 Commission expense (3) 52,313 12,115 (24,161) 40,267 Other operating expenses 4,845 8,449 31,913 5,108 50,315 Interest expense 255 255 -------------------------------------------------------------------------- Total operating expenses 224,708 64,103 31,913 (18,798) 301,926 -------------------------------------------------------------------------- Income (loss) before income tax 2,355 8,931 (2,695) (5,799) 2,792 expense (benefit) Income tax expense (benefit) (104) (1,727) (1,061) (2,001) (4,893) -------------------------------------------------------------------------- Net income (loss) $ 2,459 $ 10,658 $ (1,634) $ (3,798) $ 7,685 ========================================================================== Loss and loss expenses ratio 80.5% 62.7% 76.0% Commission expense ratio 25.1% 17.4% 23.2% Other operating expense ratio 2.3% 12.2% 4.8% ----------------------------- ---------------- Combined ratio 107.9% 92.3% 104.0% ============================= ================ Adjusted combined ratio (2) 92.3% 92.3% 92.3% ============================= ================
Notes: (1)Includes inter-segment eliminations. (2)Adjusted combined ratio excludes $ 32,479 incurred losses for asbestos $ (31,680) and environmental $ (799) exposures. (3)Inter-segment profit commissions of $ 5,718 recorded as profit commission expense of the Insurance Companies and commission income of the Navigators Agencies was reduced as a result of the $ 32,479 incurred losses for asbestos and environmental exposures. News Release March 9, 2004 Page 9 The Navigators Group, Inc. Segment Information Year Ended 12/31/02 ($'s in thousands)
Insurance Lloyd's Navigators Parent & Companies Operations Agencies Other (1) Total -------------------------------------------------------------------------- Gross premium written $ 328,601 $ 125,920 $ (6,683) $ 447,838 Net premium written 189,673 76,417 266,090 Revenues: Net earned premium 148,411 73,693 222,104 Commission income 418 27,046 (22,637) 4,827 Net investment income 15,489 2,507 42 20 18,058 Net realized capital gains 1,207 461 1,668 Other income (expense) 461 465 1,395 (500) 1,821 -------------------------------------------------------------------------- Total revenues 165,568 77,544 28,483 (23,117) 248,478 -------------------------------------------------------------------------- Operating expenses: Net losses and loss adjustment expenses 90,492 52,908 143,400 Commission expense 50,121 15,731 (22,637) 43,215 Other operating expenses (2) 3,311 6,234 26,102 3,429 39,076 Interest expense 571 571 -------------------------------------------------------------------------- Total operating expenses 143,924 74,873 26,102 (18,637) 226,262 -------------------------------------------------------------------------- Income (loss) before income tax 21,644 2,671 2,381 (4,480) 22,216 expense (benefit) Income tax expense (benefit) 6,780 780 (1,741) 5,819 -------------------------------------------------------------------------- Net income (loss) $ 14,864 $ 2,671 $ 1,601 $ (2,739) $ 16,397 ========================================================================== Loss and loss expenses ratio 61.0% 71.8% 64.6% Commission expense ratio 33.8% 21.3% 29.6% Other operating expense ratio 2.2% 8.5% 4.3% ------------------------------ ---------------- Combined ratio 97.0% 101.6% 98.5% ============================== ================
Notes: (1)Includes inter-segment eliminations. (2)Included in the Insurance Companies other operating expenses was an expense reimbursement benefit of $ 1,141 in connection with a claims settlement. News Release March 9, 2004 Page 10 The Navigators Group, Inc. Underwriting Results ($'s in thousands)
Year Ended December 31, 2003 Gross Net Net Losses Written Written Earned and LAE Underwriting Underwriting . Premium Premium Premium Incurred Expenses Gain(Loss) --------------------------------------------------------------------------- Insurance Companies: Marine ......................................... $ 196,309 $ 91,976 $ 92,448 $ 74,799 $ 23,543 $ (5,894) Specialty ...................................... 131,136 85,886 84,842 68,986 25,077 (9,221) Professional Liability ......................... 53,009 14,280 9,410 5,856 2,136 1,418 Assumed from Lloyd's Operations ................ 33,019 32,962 21,368 13,761 6,368 1,239 Other (includes runoff business) ............... 721 38 121 4,148 34 (4,061) --------------------------------------------------------------------------- 414,194 225,142 208,189 167,550 57,158 (16,519) Lloyd's Operations ............................. 223,850 81,986 69,462 43,539 20,564 5,359 Intercompany elimination ....................... (31,552) --------------------------------------------------------------------------- Total .......................................... $ 606,492 $ 307,128 $ 277,651 $ 211,089 $ 77,722 $ (11,160) =========================================================================== Year Ended December 31, 2003 Adjusted* Underwriting Combined Ratio Adjusted* Insurance Companies: ........................... Expenses Loss Expense Combined Combined -------- ---- ------------------------- Insurance Companies: Marine ......................................... $ 25,201 80.9% 25.5% 106.4% 72.7% Specialty ...................................... (9,221) 81.3% 29.6% 110.9% 110.9% Professional Liability ......................... 1,418 62.2% 22.7% 84.9% 84.9% Assumed from Lloyd's Operations ................ 1,239 64.4% 29.8% 94.2% 94.2% Other (includes runoff business) ............... (2,677) NM NM NM NM --------------------------------------------------- 15,960 80.5% 27.5% 107.9% 92.3% Lloyd's Operations ............................. 5,359 62.7% 29.6% 92.3% 92.3% Intercompany elimination ....................... --------------------------------------------------- Total .......................................... $ 21,319 76.0% 28.0% 104.0% 92.3% =================================================== *Excludes $32,479 losses incurred for asbestos $ (31,680) and environmental $ (799) exposures
Year Ended December 31, 2002 Insurance Companies: Marine ............................ $ 179,119 $ 81,189 $ 71,122 $ 38,629 $ 21,949 $ 10,544 Specialty ......................... 115,684 94,392 69,073 43,758 28,649 (3,334) Professional Liability ............ 23,430 4,489 1,780 1,243 1,225 (688) Assumed from Lloyd's Operations (1) 8,243 8,243 5,548 3,356 1,915 277 Other (includes runoff business) .. 2,125 1,360 888 3,506 (306) (2,312) ------------------------------------------------------------------------ 328,601 189,673 148,411 90,492 53,432 4,487 Lloyd's Operations ................ 125,920 76,417 73,693 52,908 21,965 (1,180) Intercompany elimination .......... (6,683) ------------------------------------------------------------------------ Total ............................. $ 447,838 $ 266,090 $ 222,104 $ 143,400 $ 75,397 $ 3,307 ======================================================================== Year Ended December 31, 2002 Insurance Companies: Marine ............................ 54.3% 30.9% 85.2% Specialty ......................... 63.4% 41.5% 104.8% Professional Liability ............ 69.8% 68.8% 138.7% Assumed from Lloyd's Operations (1) 60.5% 34.5% 95.0% Other (includes runoff business) .. NM NM NM ------------------------ 61.0% 36.0% 97.0% Lloyd's Operations ................ 71.8% 29.8% 101.6% Intercompany elimination .......... ------------------------ Total ............................. 64.6% 33.9% 98.5% ========================
Notes: (1) Included in the Insurance Companies other operating expenses was an expense reimbursement benefit of $ 1,141 in connection with a claims settlement. News Release March 9, 2004 Page 11 The Navigators Group, Inc. Asbestos & Environmental Claim Data ($'s in thousands)
Three Months Ended Year Ended December 31, 2003 December 31, 2003 Asbestos Environmental Total Asbestos Environmental Total -------- ------------- ----- -------- ------------- ----- Gross of Reinsurance A. Beginning reserve $ 886 $ 6,980 $ 7,866 $ 813 $ 6,620 $ 7,433 B. Incurred loss & LAE 77,641 91 77,732 77,837 1,971 79,808 C. Calendar year payments 55 271 326 178 1,791 1,969 ------------------------------------------ ------------------------------------------ D. Ending reserves $ 78,472 $ 6,800 $ 85,272 $ 78,472 $ 6,800 $ 85,272 ========================================== ========================================== Net of Reinsurance A. Beginning reserve $ 489 $ 1,262 $ 1,751 $ 441 $ 1,072 $ 1,513 B. Incurred loss & LAE * 31,568 80 31,648 31,680 799 32,479 C. Calendar year payments (26) 189 163 38 718 756 ------------------------------------------ ------------------------------------------ D. Ending reserves $ 32,083 $ 1,153 $ 33,236 $ 32,083 $ 1,153 $ 33,236 ========================================== ========================================== Outstanding Claim Count 108 86 194 ==========================================
* includes a charge for unrecoverable reinsurance of approximately $25.7 million in the fourth quarter 2003. Net Loss Reserves ($'s in thousands) December 31, 2003 2002 ---- ---- Insurance Companies: Marine $ 110,698 $ 70,017 Specialty 114,167 64,956 Professional Liability 7,059 1,240 Assumed from Lloyd's Operations 14,323 3,029 Other (primarily run-off business) 24,390 27,165 -------------- -------------- Total Insurance Companies 270,637 166,407 -------------- -------------- Lloyd's Operations: 103,534 98,240 -------------- -------------- Total net loss reserves $ 374,171 $ 264,647 ============== ============== Total net case loss reserves $ 154,531 $ 135,260 Total net IBNR loss reserves 219,640 129,387 -------------- -------------- Total net loss reserves $ 374,171 $ 264,647 ============== ============== -----END PRIVACY-ENHANCED MESSAGE-----