Condensed Financial Information of Registrant

12 Months Ended

Dec. 31, 2014

Condensed Financial Information of Registrant

SCHEDULE II

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Condensed Financial Information of Registrant

The Navigators Group, Inc.

Balance Sheets

(Parent Company)

(In thousands, except share amounts)

	December 31,
	2014			2013
ASSETS
Cash and investments	$	101,032		$	100,676
Investments in subsidiaries		1,163,822			1,040,214
Goodwill and other intangible assets		2,534			2,534
Other assets		27,531			26,538
Total assets	$	1,294,919		$	1,169,962
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Senior Notes	$	263,440		$	263,308
Accounts payable and other liabilities		1,081			802
Accrued interest payable		3,174			3,640
Total liabilities	$	267,695		$	267,750
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 17,792,846 shares for 2014 and 17,709,876 shares for 2013		1,778			1,770
Additional paid-in capital		347,022			335,546
Treasury stock, at cost (3,511,380 shares for 2014 and 2013)		(155,801	)		(155,801	)
Retained earnings		787,666			692,337
Accumulated other comprehensive income:
Net unrealized gains (losses) on securities available-for-sale, net of tax		46,573			23,387
Foreign currency translation adjustment, net of tax		(14	)		4,973
Total stockholders’ equity	$	1,027,224		$	902,212
Total liabilities and stockholders’ equity	$	1,294,919		$	1,169,962

The Navigators Group, Inc.

Statements of Income

(Parent Company)

(In thousands)

	Year Ended December 31,
	2014			2013			2012
Revenues:
Net investment income	$	76		$	13		$	341
Dividends received from wholly-owned subsidiaries		—			—			15,000
Total revenues	$	76		$	13		$	15,341
Expenses:
Call premium on Senior Notes	$	—		$	17,895		$	—
Interest expense		15,413			10,507			8,198
Other (income) expense		—			2			1,749
Total expenses	$	15,413		$	28,404		$	9,947
Income (loss) before income tax benefit	$	(15,337	)	$	(28,391	)	$	5,394
Income tax benefit		(5,287	)		(9,886	)		(3,332	)
Income (loss) before equity in undistributed net income of wholly owned subsidiaries	$	(10,050	)	$	(18,505	)	$	8,726
Equity in undistributed net income of wholly-owned subsidiaries		105,379			81,971			55,036
Net income	$	95,329		$	63,466		$	63,762

The Navigators Group, Inc.

Statements of Cash Flows

(Parent Company)

(In thousands)

	Year Ended December 31,
	2014			2013			2012
Operating activities:
Net income	$	95,329		$	63,466		$	63,762
Adjustments to reconcile net income to net cash provided by (used in) operations:
Equity in undistributed net income of wholly-owned subsidiaries		(105,379	)		(81,971	)		(70,036	)
Dividends received from subsidiaries		—			—			15,000
Call premium on redemption of Senior Notes		—			17,895			—
Other		9,211			2,098			(3,265	)
Net cash provided by (used in) operating activities	$	(839	)	$	1,488		$	5,461
Investing activities:
Fixed maturities, available-for-sale
Sales	$	3,200		$	8,754		$	7,986
Purchases		—			(1,249	)		(14,700	)
Equity securities
Sales		—			—			—
Purchases		—			—			—
Net increase in short-term investments		(3,424	)		(89,988	)		(167	)
Net cash provided by (used in) investing activities	$	(224	)	$	(82,483	)	$	(6,881	)
Financing activities:
Capital contribution to subsidiary	$	—		$	(50,000	)	$	—
Net Proceeds from Debt Offering		—			263,278			—
Redemption of 7.0% Senior Notes Due May 1, 2016		—			(132,437	)		—
Purchase of treasury stock		—			—			—
Proceeds of stock issued from employee stock purchase plan		1,067			821			672
Proceeds of stock issued from exercise of stock options		153			2,495			404
Net cash provided by (used in) financing activities	$	1,220		$	84,157		$	1,076
Increase (decrease) in cash	$	157		$	3,162		$	(344	)
Cash at beginning of year		6,143			2,981			3,325
Cash at end of year	$	6,300		$	6,143		$	2,981