-----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, LAixdEYa6cCt76xhgmYUXlsdcDc7bEIsL7mCNMrb9O+U9zIBnC/zIcn1k6+d/9yc AIYRqzP+KDh9rqWhtFAkGA== 0001157523-04-010315.txt : 20041104 0001157523-04-010315.hdr.sgml : 20041104 20041103190623 ACCESSION NUMBER: 0001157523-04-010315 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041103 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20041104 DATE AS OF CHANGE: 20041103 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: 041117654 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 a4757790.txt NAVIGATORS GROUP 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section13 or15 (d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest reported event): November 3, 2004 The Navigators Group, Inc. (Exact name of registrant as specified in its chapter) DELAWARE 0-15886 13-3138397 - -------------------------------------------------------------------------------- (State of (Commission (I.R.S. Employer organization) File Number) Identification No.) One Penn Plaza, New York, NY 10119 ----------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 244-2333 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (SEE General Instruction A.2. below): [_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [_] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition Item 7.01 Regulation FD Disclosure The following information is furnished pursuant to Item 2.02 "Results of Operations and Financial Condition" and Item 7.01 "Regulation FD Disclosure". This information, including the Exhibit attached hereto, 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 November 3, 2004, The Navigators Group, Inc. issued a press release announcing its earnings for the third quarter and nine months ending September 30, 2004. 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: November 3, 2004 INDEX TO EXHIBITS Number Description - ------ ----------- 99.1 Third Quarter Earnings Release dated November 3, 2004. EX-99.1 2 a4757790ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Navigators Reports Third Quarter Results NEW YORK--(BUSINESS WIRE)--Nov. 3, 2004--The Navigators Group, Inc. (NASDAQ:NAVG) reported net income of $6,280,000 or $0.50 per share for the 2004 third quarter compared to $6,308,000 or $0.73 per share for the 2003 third quarter. Net income for the 2004 and 2003 third quarters includes net realized capital gains of $0.01 per share and $0.03 per share, respectively. Diluted average shares outstanding for the 2004 and 2003 third quarter were 12,679,000 and 8,691,000, respectively. Net income for the 2004 third quarter was reduced by $3.3 million or $0.26 per share for the after-tax loss related to Hurricane Ivan. Gross written premium for the 2004 third quarter was $151,178,000, an increase of 8% from the comparable 2003 period. Net written premium for the 2004 third quarter was $65,992,000, a decrease of 7% from the 2003 comparable period. The 2003 third quarter includes net written premium and net earned premium of $11,776,000 and $8,597,000, respectively, recorded by the Company as a result of a commutation agreement with a former member of the marine pool whereby the Company retroactively increased its participation in the marine pool from 70% to 80% for the 2003 underwriting year. The 2004 net written premium increased 12% and net earned premium increased 14% compared to the 2003 third quarter exclusive of such commutation. Net income for the nine month period ended September 30, 2004 was $24,230,000 or $1.91 per share, compared to $17,175,000 or $1.99 per share for the nine month period ended September 30, 2003. Included in these results were net realized capital gains of $0.03 per share and $0.12 per share for the nine months ended September 30, 2004 and 2003, respectively. Gross written premium and net written premium for the nine month period ended September 30, 2004 were $508,756,000 and $235,616,000 respectively, increases of 12% and 6% from the comparable 2003 periods. The combined loss and expense ratios for the 2004 third quarter and nine month period were 93.4% and 90.4%, respectively, compared to 92.9% and 95.0% for the comparable 2003 periods. The combined loss and expense ratios for the 2004 third quarter and nine month period were increased by an aggregate 6.5 and 2.2 loss and expense ratio points, respectively, for the net loss from Hurricane Ivan which is inclusive of expected reinsurance recoveries and related cost for reinsurance reinstatement premiums. Offsetting such increases were redundancies of prior year loss reserves recorded by our Lloyd's operations which reduced the 2004 third quarter and nine month combined loss and expense ratios by 1.6 and 2.3 loss ratio points, respectively. Stan Galanski, Navigators' Chief Executive Officer, commented, "Our business continues to perform well, with favorable incurred loss activity aside from Hurricane Ivan. While certain product lines have experienced some price softening, market conditions remain generally favorable. Both our insurance companies and Lloyd's operation produced profitable underwriting results, and cash flow continues to grow." Consolidated cash flow from operations for the 2004 third quarter and nine month period ended September 30, 2004 was $48,588,000 and $141,748,000 respectively, compared to $45,383,000 and $110,933,000 for the comparable 2003 periods. Net investment income for the 2004 third quarter and nine month period was $6,881,000 and $19,408,000 respectively, increases of 48% and 40% from the 2003 comparable periods. The pre-tax investment yields for both the 2004 third quarter and nine month periods were 3.5% compared to 3.6% and 3.9% for the comparable 2003 periods. The Company adopted the fair value method of accounting for stock-based employee compensation in the 2003 fourth quarter retroactive to January 1, 2003. As a result of the 2003 accounting change, net income for the 2004 third quarter and nine month period reflect after-tax charges of $179,000 or $0.01 per share and $490,000 or $0.04 per share, respectively, compared to $124,000 or $0.01 per share and $385,000 or $0.04 per share for the comparable 2003 periods. The Company's effective tax rate for foreign operations was 35% for the 2004 third quarter. Included in the 2003 third quarter and nine month period were tax benefits of $572,000 or $0.07 per share and $2,056,000 or $0.24 per share, respectively, resulting from the reduction of a tax valuation allowance related to the Company's foreign operations. The balance of the tax valuation allowance was eliminated in the 2003 fourth quarter. Stockholders' equity was $316,598,000 or $25.08 per share at September 30, 2004 compared to $290,028,000 or $23.14 per share at December 31, 2003. Statutory surplus of Navigators Insurance Company was $231,206,000 at September 30, 2004. The Company will hold a conference call on Thursday, November 4, 2004 starting at 8:30 a.m. EST to discuss the third quarter's results. To access the call, please dial 1-800-229-7928, using confirmation code 60750399. Internationally, the call may be accessed by dialing 617-614-3926 using the same confirmation code. To listen via live audio webcast, please visit the Company's website (www.navg.com) at least ten minutes prior to the start of the call and click on the November 4th Live Audio Webcast link. The webcast will also be available as a replay at the same location starting one hour after the call is finished. The Navigators Group, Inc. is an international insurance holding company with insurance company operations, underwriting management companies, and operations at Lloyd's of London. Headquartered in New York City, Navigators has offices in major insurance centers in the United States and the United Kingdom. This press release may contain "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Whenever used in this release, the words "estimate", "expect", "believe" or similar expressions are intended to identify such forward-looking statements. We cannot assure that results which we anticipate will be achieved, since results may differ materially because of known and unknown risks and uncertainties which we face. Please refer to Navigators' most recent Forms 10-K and 10-Q and its other filings with the Securities and Exchange Commission for a description of Navigators' business and the important factors which may affect that business. Navigators undertakes no obligation to publicly update or revise any forward- looking statement. THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Financial Highlights ($'s in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, ------------------ ------------------ Financial Highlights 2004 2003 Change 2004 2003 Change - -------------------- -------- -------- ----- -------- -------- ------ Gross written premium $151,178 $139,632 8% $508,756 $455,526 12% Net written premium 65,992 70,631 -7% 235,616 223,295 6% Revenues: Net earned premium 75,137 74,537 1% 224,627 206,115 9% Commission income 1,121 23 NM 3,608 2,748 31% Investment Income 6,881 4,634 48% 19,408 13,847 40% Net realized capital gains 271 349 -23% 588 1,235 -52% Other income (127) 139 NM 267 728 -63% ------------------ ------------------ Total revenues 83,283 79,682 5% 248,498 224,673 11% ------------------ ------------------ Operating expenses: Net losses and loss adjustment expenses incurred 49,247 48,526 1% 138,391 135,857 2% Commission expense 8,773 9,194 -5% 29,840 28,698 4% Other operating expenses 16,014 13,539 18% 44,066 37,734 17% Interest expense - 68 -100% - 251 -100% ------------------ ------------------ Total operating expenses 74,034 71,327 4% 212,297 202,540 5% ------------------ ------------------ Income before income taxes 9,249 8,355 11% 36,201 22,133 64% ------------------ ------------------ Income tax expense: Current 4,225 4,195 1% 14,184 8,765 62% Deferred (1,256) (2,148) -42% (2,213) (3,807) -42% ------------------ ------------------ Income tax expense 2,969 2,047 45% 11,971 4,958 141% ------------------ ------------------ Net income $6,280 $6,308 0% $24,230 $17,175 41% ================== ================== Per Share Data - -------------- Net income per common share: Basic $0.50 $0.74 -33% $1.93 $2.02 -5% Diluted $0.50 $0.73 -32% $1.91 $1.99 -4% Average shares outstanding: Basic 12,612 8,535 12,584 8,515 Diluted 12,679 8,691 12,688 8,640 Underwriting Ratios - ------------------- Loss Ratio 65.5% 65.1% 61.6% 65.9% Expense Ratio 27.9% 27.8% 28.8% 29.1% ------------------ ------------------ Combined Ratio 93.4% 92.9% 90.4% 95.0% Balance Sheet Data - ------------------ Sept. 30, Dec. 31, 2004 2003 ------------------ Stockholders' equity $316,598 $290,028 9% Book value per share $25.08 $23.14 8% Certain amounts for the prior period have been reclassified to conform to the presentation in the current period. THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ($'s in thousands) Sept. 30, Dec. 31, 2004 2003 ----------- ----------- ASSETS Investments and cash: Fixed maturities, available-for-sale, at fair value (amortized cost: 2004, $688,993: 2003, $577,904) $699,828 $588,545 Equity securities, available-for-sale, at fair value (cost: 2004, $17,708: 2003, $11,977) 19,198 13,446 Short-term investments, at cost which approximates fair value 104,794 83,202 Cash 16,029 8,399 ----------- ----------- Total investments and cash 839,849 693,592 ----------- ----------- Premiums in course of collection 155,209 128,676 Commissions receivable 2,829 3,970 Prepaid reinsurance premiums 138,957 102,141 Reinsurance receivable on paid losses 17,787 26,270 Reinsurance receivable on unpaid losses and loss adjustment expense 469,428 350,441 Federal income tax recoverable - 8,747 Net deferred income tax benefit 17,292 15,195 Deferred policy acquisition costs 28,540 24,720 Accrued investment income 6,906 5,546 Goodwill 5,128 5,093 Other assets 10,578 15,067 ----------- ----------- Total assets $1,692,503 $1,379,458 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Reserves for losses and loss adjustment expenses $909,507 $724,612 Unearned premium 287,450 238,803 Reinsurance balances payable 139,518 97,583 Federal income tax payable 1,821 - Payable for securities purchased 12,737 12,857 Accounts payable and other liabilities 24,872 15,575 ----------- ----------- Total liabilities 1,375,905 1,089,430 ----------- ----------- 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 2004 and 2003; issued and outstanding: 12,625,706 for 2004 and 12,535,360 for 2003 1,263 1,254 Additional paid-in capital 153,881 151,765 Accumulated other comprehensive income 8,752 8,537 Retained earnings 152,702 128,472 ----------- ----------- Total stockholders' equity 316,598 290,028 ----------- ----------- Total liabilities and stockholders' equity $1,692,503 $1,379,458 =========== =========== THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Comparative Premium Data ($'s in thousands) Gross Written Premium: Third Quarter Nine Months ------------------ ------------------ Insurance Companies: 2004 2003 Change 2004 2003 Change --------- ------- ------ -------- -------- ------ Marine $48,413 $45,716 6% $159,412 $149,080 7% Specialty 39,025 33,861 15% 110,739 97,475 14% Professional Liability 18,723 12,428 51% 51,982 37,987 37% Assumed from Lloyd's 1,056 7,746 -86% 4,398 26,164 -83% Other (includes run- off) 101 346 NM 224 618 NM ------------------ ------------------ 107,318 100,097 7% 326,755 311,324 5% Lloyd's Operations: Marine 39,807 39,243 1% 168,564 145,708 16% Other 5,197 7,762 -33% 17,907 23,772 -25% ------------------ ------------------ 45,004 47,005 -4% 186,471 169,480 10% Intercompany elimination (1,144) (7,470) NM (4,470) (25,278) NM ------------------ ------------------ Total $151,178 $139,632 8% $508,756 $455,526 12% ================== ================== Net Written Premium: Third Quarter Nine Months ------------------ ------------------ Insurance Companies: 2004 2003 Change 2004 2003 Change -------- -------- ------ -------- -------- ------ Marine $15,576 $28,691 -46% $61,219 $73,227 -16% Specialty 20,677 14,933 38% 60,229 51,558 17% Professional Liability 6,703 3,182 111% 19,080 9,454 102% Assumed from Lloyd's 1,056 7,733 -86% 4,191 26,151 -84% Other (includes run- off) 892 292 NM 895 (101) NM ------------------ ------------------ 44,904 54,831 -18% 145,614 160,289 -9% Lloyd's Operations: Marine 18,941 12,945 46% 81,979 54,260 51% Other 2,147 2,855 -25% 8,023 8,746 -8% ------------------ ------------------ 21,088 15,800 33% 90,002 63,006 43% ------------------ ------------------ Total $65,992 $70,631 -7% $235,616 $223,295 6% ================== ================== Net Earned Premium: Third Quarter Nine Months ------------------ ------------------ Insurance Companies: 2004 2003 Change 2004 2003 Change -------- -------- ------ -------- -------- ------ Marine $17,862 $27,322 -35% $59,124 $70,572 -16% Specialty 22,824 19,900 15% 65,728 62,311 5% Professional Liability 5,692 2,680 112% 14,199 6,186 130% Assumed from Lloyd's Operations 4,271 7,320 -42% 16,554 15,500 7% Other (includes run- off) 892 307 NM 901 (32) NM ------------------ ------------------ 51,541 57,529 -10% 156,506 154,537 1% Lloyd's Operations: Marine 22,075 14,806 49% 64,918 47,912 35% Other 1,521 2,202 -31% 3,203 3,666 -13% ------------------ ------------------ 23,596 17,008 39% 68,121 51,578 32% ------------------ ------------------ Total $75,137 $74,537 1% $224,627 $206,115 9% ================== ================== THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Segment Information Quarter Ended September 30, 2004 ($'s in thousands) Insurance Lloyd's Navigators Parent & Companies Operations Agencies Other(1) Total -------------------------------------------------- Gross premium written $107,318 $45,004 $(1,144) $151,178 Net premium written 44,904 21,088 65,992 Revenues: Net earned premium 51,541 23,596 75,137 Commission income - 300 $ 7,797 (6,976) 1,121 Investment Income 6,225 649 2 5 6,881 Net realized capital gains / (losses) 326 (55) - - 271 Other income (expense) (7) (378) 258 - (127) -------------------------------------------------- Total revenues 58,085 24,112 8,057 (6,971) 83,283 -------------------------------------------------- Operating expenses: Net losses and loss adjustment expenses 35,401 13,846 - - 49,247 Commission expense 11,682 4,067 - (6,976) 8,773 Other operating expenses 1,780 3,425 9,616 1,193 16,014 Interest expense -------------------------------------------------- Total operating expenses 48,863 21,338 9,616 (5,783) 74,034 -------------------------------------------------- Income (loss) before income tax expense (benefit) 9,222 2,774 (1,559) (1,188) 9,249 Income tax expense (benefit) 2,871 971 (460) (413) 2,969 -------------------------------------------------- Net Income (loss) $ 6,351 $ 1,803 $(1,099) $ (775) $ 6,280 ================================================== Loss and loss expenses ratio 68.7% 58.7% 65.5% Commission expense ratio 22.7% 17.2% 21.0% Other operating expense ratio 3.4% 14.5% 6.9% ------------------- -------- Combined ratio 94.8% 90.4% 93.4% =================== ======== Notes: (1) Includes inter-segment eliminations. THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Segment Information Quarter Ended September 30, 2003 ($'s in thousands) Insurance Lloyd's Navigators Parent & Companies Operations Agencies Other (1) Total -------------------------------------------------- Gross premium written $100,097 $47,005 $(7,470) $139,632 Net premium written 54,831 15,800 70,631 Revenues: Net earned premium 57,529 17,008 74,537 Commission income - 136 $7,990 (8,103) 23 Investment Income 4,207 422 (2) 7 4,634 Net realized capital gains 217 132 - - 349 Other income (expense) (82) (98) 443 (124) 139 -------------------------------------------------- Total revenues 61,871 17,600 8,431 (8,220) 79,682 -------------------------------------------------- Operating expenses: Net losses and loss adjustment expenses 37,732 10,794 - - 48,526 Commission expense 14,189 3,108 - (8,103) 9,194 Other operating expenses 1,461 2,049 8,610 1,419 13,539 Interest expense - - - 68 68 -------------------------------------------------- Total operating expenses 53,382 15,951 8,610 (6,616) 71,327 -------------------------------------------------- Income (loss) before income tax expense (benefit) 8,489 1,649 (179) (1,604) 8,355 Income tax expense (benefit) 2,726 - (146) (533) 2,047 -------------------------------------------------- Net Income (loss) $ 5,763 $ 1,649 $ (33) $(1,071) $ 6,308 ================================================== Loss and loss expenses ratio 65.6% 63.5% 65.1% Commission expense ratio 24.7% 18.3% 23.2% Other operating expense ratio 2.5% 12.0% 4.6% ------------------- -------- Combined ratio 92.8% 93.8% 92.9% =================== ======== Notes: (1) Includes inter- segment eliminations. THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Segment Information Nine Months Ended September 30, 2004 ($'s in thousands) Insurance Lloyd's Navigators Parent & Companies Operations Agencies Other(1) Total --------------------------------------------------- Gross premium written $326,755 $186,471 $ (4,470) $508,756 Net premium written 145,614 90,002 235,616 Revenues: Net earned premium 156,506 68,121 224,627 Commission income - 863 $23,884 (21,139) 3,608 Investment Income 17,538 1,844 6 20 19,408 Net realized capital gains / (losses) 707 (119) - - 588 Other income (expense) 6 (368) 629 - 267 --------------------------------------------------- Total revenues 174,757 70,341 24,519 (21,119) 248,498 --------------------------------------------------- Operating expenses: Net losses and loss adjustment expenses 100,669 37,722 - - 138,391 Commission expense 39,069 11,910 - (21,139) 29,840 Other operating expenses 3,967 9,654 27,314 3,131 44,066 Interest expense --------------------------------------------------- Total operating expenses 143,705 59,286 27,314 (18,008) 212,297 --------------------------------------------------- Income (loss) before income tax 31,052 11,055 (2,795) (3,111) 36,201 expense (benefit) Income tax expense (benefit) 9,892 3,869 (852) (938) 11,971 --------------------------------------------------- Net Income (loss) $ 21,160 $ 7,186 $(1,943) $ (2,173) $ 24,230 =================================================== Loss and loss expenses ratio 64.3% 55.4% 61.6% Commission expense ratio 25.0% 17.5% 22.7% Other operating expense ratio 2.5% 14.2% 6.1% ------------------- -------- Combined ratio 91.8% 87.1% 90.4% =================== ======== Notes: (1) Includes inter- segment eliminations. THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Segment Information Nine Months Ended September 30, 2003 ($'s in thousands) Insurance Lloyd's Navigators Parent & Companies Operations Agencies Other (1) Total --------------------------------------------------- Gross premium written $311,324 $169,480 $(25,278) $455,526 Net premium written 160,289 63,006 223,295 Revenues: Net earned premium 154,537 51,578 206,115 Commission income - 480 $23,713 (21,445) 2,748 Investment Income 12,406 1,413 20 8 13,847 Net realized capital gains 642 593 - - 1,235 Other income (expense) 6 116 980 (374) 728 --------------------------------------------------- Total revenues 167,591 54,180 24,713 (21,811) 224,673 --------------------------------------------------- Operating expenses: Net losses and loss adjustment expenses 102,602 33,255 - - 135,857 Commission expense 40,931 9,212 - (21,445) 28,698 Other operating expenses 3,964 5,895 23,813 4,062 37,734 Interest expense - - - 251 251 --------------------------------------------------- Total operating expenses 147,497 48,362 23,813 (17,132) 202,540 --------------------------------------------------- Income (loss) before income tax expense (benefit) 20,094 5,818 900 (4,679) 22,133 Income tax expense (benefit) 6,361 - 207 (1,610) 4,958 --------------------------------------------------- Net Income (loss) $ 13,733 $ 5,818 $ 693 $ (3,069) $ 17,175 =================================================== Loss and loss expenses ratio 66.4% 64.5% 65.9% Commission expense ratio 26.5% 17.9% 24.3% Other operating expense ratio 2.5% 11.4% 4.8% ------------------- -------- Combined ratio 95.4% 93.8% 95.0% =================== ======== Notes: (1) Includes inter-segment eliminations. THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Underwriting Results ($'s in thousands) Three Months Ended September 30, 2004 ---------------------------------------------------- Net Losses Combined Ratio Insurance Earned and LAE Underwriting --------------------- Companies: Premium Incurred Expenses Loss Expense Total ---------------------------------------------------- Marine $17,862 $13,222 $4,785 74.0% 26.8% 100.8% Specialty 22,824 15,749 6,516 69.0% 28.5% 97.5% Professional Liability 5,692 3,450 915 60.6% 16.1% 76.7% Assumed from Lloyd's 4,271 1,997 1,241 46.7% 29.1% 75.8% Other (includes run-off) 892 983 5 110.2% 0.6% 110.8% ---------------------------------------------------- 51,541 35,401 13,462 68.7% 26.1% 94.8% Lloyd's Operations 23,596 13,846 7,492 58.7% 31.7% 90.4% ---------------------------------------------------- Total $75,137 $49,247 $20,954 65.5% 27.9% 93.4% ==================================================== Effect of Hurricane Ivan on Three Months Ended September 30, 2004 ---------------------------------------------------- Net Losses Combined Ratio Earned and LAE Underwriting --------------------- Premium Incurred Expenses Loss Expense Total ---------------------------------------------------- Marine $(1,522) $1,598 $- 14.1% 2.1% 16.2% Lloyd's Operations (751) 1,276 - 7.1% 0.9% 8.0% ---------------------------------------------------- Consolidated $(2,273) $2,874 $- 5.6% 0.9% 6.5% ==================================================== Three Months Ended September 30, 2003 ---------------------------------------------------- Net Losses Combined Ratio Insurance Earned and LAE Underwriting --------------------- Companies: Premium Incurred Expenses Loss Expense Total ---------------------------------------------------- Marine $27,322 $17,251 $8,230 63.1% 30.1% 93.2% Specialty 19,900 14,486 5,053 72.8% 25.4% 98.2% Professional Liability 2,680 1,608 330 60.0% 12.3% 72.3% Assumed from Lloyd's 7,320 4,773 2,026 65.2% 27.7% 92.9% Other (includes run-off) 307 (386) 11 NM NM NM ---------------------------------------------------- 57,529 37,732 15,650 65.6% 27.2% 92.8% Lloyd's Operations 17,008 10,794 5,157 63.5% 30.3% 93.8% ---------------------------------------------------- Total $74,537 $48,526 $20,807 65.1% 27.8% 92.9% ==================================================== THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Underwriting Results ($'s in thousands) Nine Months Ended September 30, 2004 ------------------------------------------------------ Net Losses Combined Ratio Insurance Earned and LAE Underwriting --------------------- Companies: Premium Incurred Expenses Loss Expense Total ------------------------------------------------------ Marine $59,124 $37,691 $16,044 63.7% 27.2% 90.9% Specialty 65,728 44,551 19,361 67.8% 29.5% 97.3% Professional Liability 14,199 8,581 2,661 60.4% 18.7% 79.1% Assumed from Lloyd's 16,554 8,942 4,963 54.0% 30.0% 84.0% Other (includes run-off) 901 904 7 100.3% 0.8% 101.1% ------------------------------------------------------ 156,506 100,669 43,036 64.3% 27.5% 91.8% Lloyd's Operations 68,121 37,722 21,564 55.4% 31.7% 87.1% ------------------------------------------------------ Total $224,627 $138,391 $64,600 61.6% 28.8% 90.4% ====================================================== Effect of Hurricane Ivan on Nine Months Ended September 30, 2004 ------------------------------------------------------ Net Losses Combined Ratio Earned and LAE Underwriting --------------------- Premium Incurred Expenses Loss Expense Total ------------------------------------------------------ Marine $(1,522) $1,598 $- 4.2% 0.8% 5.0% Lloyd's Operations (751) 1,276 - 2.5% 0.3% 2.8% ------------------------------------------------------ Consolidated $(2,273) $2,874 $- 1.9% 0.3% 2.2% ====================================================== Nine Months Ended September 30, 2003 ------------------------------------------------------ Net Losses Combined Ratio Insurance Earned and LAE Underwriting --------------------- Companies: Premium Incurred Expenses Loss Expense Total ------------------------------------------------------ Marine $70,572 $42,503 $21,011 60.2% 29.8% 90.0% Specialty 62,311 43,791 17,980 70.3% 28.9% 99.2% Professional Liability 6,186 3,887 1,404 62.8% 22.7% 85.5% Assumed from Lloyd's 15,500 9,633 4,474 62.1% 28.9% 91.0% Other (includes run-off) (32) 2,788 26 NM NM NM ------------------------------------------------------ 154,537 102,602 44,895 66.4% 29.0% 95.4% Lloyd's Operations 51,578 33,255 15,107 64.5% 29.3% 93.8% ------------------------------------------------------ Total $206,115 $135,857 $60,002 65.9% 29.1% 95.0% ====================================================== THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Net Loss Reserves ($'s in thousands) 9/30/2004 12/31/2003 ---------- ----------- Insurance Companies: Marine $126,872 $110,698 Specialty 143,762 114,167 Professional Liability 15,369 7,059 Assumed from Lloyd's Operations 17,733 14,323 Other (primarily run-off business) 23,546 24,390 ---------- ----------- Total Insurance Companies 327,282 270,637 ---------- ----------- Lloyd's Operations: Marine 107,753 100,936 Other 5,044 2,598 ---------- ----------- Total Lloyd's Operations 112,797 103,534 ---------- ----------- Total net loss reserves $440,079 $374,171 ========== =========== Total net case loss reserves $177,384 $154,531 Total net IBNR loss reserves 262,695 219,640 ---------- ----------- Total net loss reserves $440,079 $374,171 ========== =========== Asbestos & Environmental Claim Data ($'s in thousands) Nine Months Ended September 30, 2004 Asbestos Environmental Total -------- ------------- -------- Gross of Reinsurance Beginning reserve $78,472 $6,800 $85,272 Incurred loss & LAE (18) 1,192 1,174 Calendar year payments 125 17 142 -------- ------------- -------- Ending reserves $78,329 $7,975 $86,304 ======== ============= ======== Net of Reinsurance Beginning reserve $32,083 $1,153 $33,236 Incurred loss & LAE (10) 734 724 Calendar year payments 81 (10) 71 -------- ------------- -------- Ending reserves $31,992 $1,897 $33,889 ======== ============= ======== Outstanding Claim Count 121 98 219 ======== ============= ======== CONTACT: The Navigators Group, Inc. Paul J. Malvasio, 914-933-6088 Executive Vice President and Chief Financial Officer pmalvasio@navg.com www.navg.com -----END PRIVACY-ENHANCED MESSAGE-----