EX-99.1 2 a5009846ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 Navigators Reports Third Quarter Results Business Editors/Insurance Writers NEW YORK--(BUSINESS WIRE)--Nov. 1, 2005--The Navigators Group, Inc. (NASDAQ:NAVG) reported a net loss of $12,725,000 or $0.99 per share for the 2005 third quarter compared to net income of $6,280,000 or $0.50 per share for the 2004 third quarter. Net income (loss) for the 2005 and 2004 third quarters includes net realized capital gains of $0.02 per share and $0.01 per share, respectively. The 2005 third quarter net loss includes $23,889,000 or $1.87 per share for after-tax net losses from Hurricanes Katrina and Rita. The 2004 third quarter net income was reduced by $3,346,000 or $0.26 per share for the after-tax net loss from Hurricane Ivan. The Company believes that the net loss from Hurricane Wilma, which occurred in October 2005, is not significant. Gross written premium and net written premium for the 2005 third quarter were $188,114,000 and $76,049,000, respectively, increases of 24% and 15% from the comparable 2004 period. Net written premium and net earned premium were each reduced by approximately $14,465,000 for the 2005 third quarter, and by approximately $2,273,000 for the 2004 third quarter, reflecting the cost of reinsurance reinstatement premiums related to recoveries for hurricane losses. The 2004 third quarter net written premium was reduced by approximately $7,400,000 of ceded reinsurance premium for a quota share reinsurance treaty not renewed on March 31, 2005. Net income for the nine month period ended September 30, 2005 was $8,254,000 or $0.64 per share compared to $24,230,000 or $1.91 per share for the nine month period ended September 30, 2004. Included in these results were net realized capital gains of $0.05 per share and $0.03 per share for the nine months ended September 30, 2005 and 2004, respectively. Gross written premium and net written premium for the nine month period ended September 30, 2005 were $595,243,000 and $286,396,000, respectively, increases of 17% and 22% from the comparable 2004 periods. The combined loss and expense ratios for the 2005 third quarter and nine month period were 136.7% and 105.6%, respectively, compared to 93.4% and 90.4% for the comparable 2004 periods. The combined loss and expense ratios for the 2005 third quarter and nine month period were increased by an aggregate 47.2 and 14.9 loss and expense ratio points, respectively, for the net losses from Hurricanes Katrina and Rita. 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. Such net losses are inclusive of reinsurance recoveries and related costs for reinsurance reinstatement premiums. Stan Galanski, Navigators' Chief Executive Officer, commented, "Our third quarter results were impacted by offshore energy losses from Hurricanes Katrina and Rita. The fallout from these hurricanes is changing the competitive landscape for marine insurance. Navigators is well positioned to respond to this opportunity through our seasoned and disciplined underwriting teams. Aside from these two hurricane losses, our global marine business continues to perform very well. "Navigators Pro and Navigators Specialty both enjoyed excellent quarters, generating profitable underwriting results. Both units generated significant double digit growth on both a gross and net basis, consistent with our diversification strategy. "We are pleased to have completed an equity offering in October, which provides additional capital for continued profitable growth while maintaining our strong financial position." Consolidated cash flow from operations for the 2005 third quarter and nine month period ended September 30, 2005 was $52,041,000 and $167,947,000, respectively, compared to $48,588,000 and $141,748,000 for the comparable 2004 periods. Cash and invested assets now exceed $1 billion. Net investment income for the 2005 third quarter and nine month period was $9,196,000 and $25,779,000, respectively, increases of 34% and 33% from the 2004 comparable periods. The pre-tax investment yields for both the 2005 third quarter and nine month period were 3.8%, compared to 3.5% for both comparable 2004 periods. Stockholders' equity was $332,915,000 or $26.02 per share at September 30, 2005 compared to $328,578,000 or $25.96 per share at December 31, 2004. Statutory surplus of Navigators Insurance Company was $239,269,000 at September 30, 2005. In October 2005, the Company completed a public equity offering which raised net proceeds of approximately $124 million from the sale of 3,795,000 shares of common stock, inclusive of the underwriters' over-allotment option. Approximately $120 million of the net proceeds was contributed to the capital of Navigators Insurance Company. The Company will hold a conference call on Wednesday, November 2, 2005 starting at 8:30 a.m. EST to discuss the third quarter's results. To access the call domestically, please dial 1-866-700-7441 using confirmation code 42927947. Internationally, the call may be accessed by dialing 617-213-8839 using the same confirmation code. To listen via live audio webcast, please visit the Company's website (www.navg.com) at least ten minutes prior to the start of the call and click on the November 2nd Live Audio Webcast link. The webcast will also be available as a replay at the same location starting one hour after the call is finished. The Navigators Group, Inc. is an international insurance holding company with insurance company operations, underwriting management companies, and operations at Lloyd's of London. Headquartered in New York City, Navigators has offices in major insurance centers in the United States, the United Kingdom and Belgium. This press release may contain "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Whenever used in this release, the words "estimate", "expect", "believe" or similar expressions are intended to identify such forward-looking statements. We cannot assure that results which we anticipate will be achieved, since results may differ materially because of known and unknown risks and uncertainties which we face. Please refer to Navigators' most recent Forms 10-K and 10-Q and its other filings with the Securities and Exchange Commission for a description of the Company's business and the important factors which may affect that business. The Company undertakes no obligation to publicly update or revise any forward-looking statement. THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Financial Highlights ($'s in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, Financial ------------------- ------------------ Highlights 2005 2004 Change 2005 2004 Change ----------------- --------- --------- ------ -------- --------- ------ Gross written premium $188,114 $151,178 24% $595,243 $508,756 17% Net written premium 76,049 65,992 15% 286,396 235,616 22% Revenues: Net earned premium 74,734 75,137 -1% 238,104 224,627 6% Commission income 1,025 1,121 -9% 3,809 3,608 6% Investment Income 9,196 6,881 34% 25,779 19,408 33% Net realized capital gains 344 271 27% 927 588 58% Other income 459 (127) NM 1,826 267 NM ------------------- ------------------- Total revenues 85,758 83,283 3% 270,445 248,498 9% ------------------- ------------------- Operating expenses: Net losses and loss adjustment expenses incurred 76,836 49,247 56% 176,668 138,391 28% Commission expense 11,656 8,773 33% 30,502 29,840 2% Other operating expenses 17,482 16,014 9% 52,554 44,066 19% ------------------- ------------------- Total operating expenses 105,974 74,034 43% 259,724 212,297 22% ------------------- ------------------- Income before income taxes (20,216) 9,249 NM 10,721 36,201 -70% ------------------- ------------------- Income tax expense (benefit): Current (5,605) 4,225 NM 7,636 14,184 -46% Deferred (1,886) (1,256) NM (5,169) (2,213) NM ------------------- ------------------- Income tax expense (benefit) (7,491) 2,969 NM 2,467 11,971 -79% ------------------- ------------------- Net income (loss) $(12,725) $ 6,280 NM $ 8,254 $ 24,230 -66% =================== =================== Per Share Data -------------- Net income per common share: Basic $ (0.99) $ 0.50 NM $ 0.65 $ 1.93 -66% Diluted $ (0.99) $ 0.50 NM $ 0.64 $ 1.91 -66% Average shares outstanding: Basic 12,791 12,612 12,744 12,584 Diluted 12,791 12,679 12,849 12,688 Underwriting Ratios -------------------- Loss Ratio 102.8% 65.5% 74.2% 61.6% Expense Ratio 33.9% 27.9% 31.4% 28.8% ------------------- ------------------- Combined Ratio 136.7% 93.4% 105.6% 90.4% Balance Sheet Data Sept. 30, Dec. 31, ------------------ 2005 2004 ------------------- Stockholders' equity $332,915 $328,578 Book value per share $ 26.02 $ 25.96 THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ($'s in thousands) September 30, December 31, 2005 2004 -------------- -------------- ASSETS Investments and cash: Fixed maturities, available-for-sale, at fair value (amortized cost: 2005, $854,288; 2004, $713,049) $ 854,621 $ 722,434 Equity securities, available-for-sale, at fair value (cost: 2005, $19,081; 2004, $19,101) 20,917 21,170 Short-term investments, at cost which approximates fair value 136,520 96,653 Cash 11,806 14,676 -------------- -------------- Total investments and cash 1,023,864 854,933 -------------- -------------- Premiums in course of collection 163,156 176,720 Commissions receivable 3,663 3,062 Prepaid reinsurance premiums 146,422 130,761 Reinsurance receivable on paid losses 46,418 20,955 Reinsurance receivable on unpaid losses and loss adjustment expenses 979,107 502,329 Federal income tax recoverable 1,493 - Net deferred income tax benefit 26,164 17,348 Deferred policy acquisition costs 32,000 23,882 Accrued investment income 8,638 7,303 Goodwill 5,072 5,282 Other assets 15,059 14,103 -------------- -------------- Total assets $ 2,451,056 $ 1,756,678 ============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Reserves for losses and loss adjustment expenses $ 1,526,027 $ 966,117 Unearned premium 333,359 270,970 Reinsurance balances payable 180,574 143,427 Federal income tax payable - 5,614 Payable for securities purchased 27,094 3,027 Accounts payable and other liabilities 51,087 38,945 -------------- -------------- Total liabilities 2,118,141 1,428,100 -------------- -------------- 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 2005 and 2004; issued and outstanding: 12,792,257 for 2005 and 12,657,160 for 2004 1,279 1,266 Additional paid-in capital 157,617 154,670 Retained earnings 171,591 163,337 Accumulated other comprehensive income 2,428 9,305 -------------- -------------- Total stockholders' equity 332,915 328,578 -------------- -------------- Total liabilities and stockholders' equity $ 2,451,056 $ 1,756,678 ============== ============== THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Comparative Premium Data ($'s in thousands) Gross Written Premium: Third Quarter Nine Months ------------------- ------------------ Insurance 2005 2004 Change 2005 2004 Change Companies: -------------------------- ------------------------- Marine $ 53,084 $ 48,413 10% $181,500 $159,412 14% Specialty 59,307 39,025 52% 152,454 110,739 38% Professional Liability 21,528 18,723 15% 60,708 51,982 17% Assumed from Lloyd's (261) 1,056 NM (1,066) 4,398 NM Other (includes run-off) 60 101 NM 90 224 NM -------------------------- ------------------------- 133,718 107,318 25% 393,686 326,755 20% Lloyd's Operations: Marine before Hurr. reinstatements 42,838 39,807 8% 163,958 168,564 -3% Hurricane reinstatements 4,500 - NM 4,500 - NM -------------------------- ------------------------- Marine 47,338 39,807 19% 168,458 168,564 0% Professional Liability 3,131 - NM 4,718 - NM Other 3,673 5,197 -29% 27,343 17,907 53% -------------------------- ------------------------- 54,142 45,004 20% 200,519 186,471 8% Intercompany elimination 254 (1,144) NM 1,038 (4,470) NM -------------------------- ------------------------- Total $188,114 $151,178 24% $595,243 $508,756 17% ========================== ========================= Net Written Premium: Third Quarter Nine Months ------------------- ------------------ Insurance 2005 2004 Change 2005 2004 Change Companies: -------------------------- ------------------------- Marine before Hurr. reinstatements $ 20,525 $ 17,098 20% $ 77,336 $ 62,741 23% Hurricane reinstatements (9,147) (1,522) NM (9,147) (1,522) NM -------- -------- -------- -------- Marine 11,378 15,576 -27% 68,189 61,219 11% Specialty 38,313 20,677 85% 107,991 60,229 79% Professional Liability 9,823 6,703 47% 24,333 19,080 28% Assumed from Lloyd's (413) 1,056 NM (1,209) 4,191 NM Other (includes run-off) (8) 892 NM 45 895 NM -------------------------- ------------------------- 59,093 44,904 32% 199,349 145,614 37% Lloyd's Operations: Marine before Hurr. reinstatements 19,920 19,692 1% 82,710 82,730 0% Hurricane reinstatements (5,318) (751) NM (5,318) (751) NM -------------------------- ------------------------- Marine 14,602 18,941 -23% 77,392 81,979 -6% Professional Liability 1,231 - NM 1,855 - NM Other 1,123 2,147 -48% 7,800 8,023 -3% -------------------------- ------------------------- 16,956 21,088 -20% 87,047 90,002 -3% -------------------------- ------------------------- Total $ 76,049 $ 65,992 15% $286,396 $235,616 22% ========================== ========================= Net Earned Premium: Third Quarter Nine Months ------------------- ------------------- Insurance 2005 2004 Change 2005 2004 Change Companies: -------------------------- ------------------------- Marine before Hurr. reinstatements $ 23,538 $ 19,384 21% $ 66,747 $ 60,646 10% Hurricane reinstatements (9,147) (1,522) NM (9,147) (1,522) NM -------------------------- ------------------------- Marine 14,391 17,862 -19% 57,600 59,124 -3% Specialty 31,965 22,824 40% 81,429 65,728 24% Professional Liability 7,786 5,692 37% 21,493 14,199 51% Assumed from Lloyd's (356) 4,271 NM (320) 16,554 NM Other (includes run-off) (8) 892 NM 46 901 NM -------------------------- ------------------------- 53,778 51,541 4% 160,248 156,506 2% Lloyd's Operations: Marine before Hurr. reinstatements 24,771 22,826 9% 79,961 65,669 22% Hurricane reinstatements (5,318) (751) NM (5,318) (751) NM -------------------------- ------------------------- Marine 19,453 22,075 -12% 74,643 64,918 15% Professional Liability 545 - NM 711 - NM Other 958 1,521 -37% 2,502 3,203 -22% -------------------------- ------------------------- 20,956 23,596 -11% 77,856 68,121 14% -------------------------- ------------------------- Total $ 74,734 $ 75,137 -1% $238,104 $224,627 6% ========================== ========================= THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Segment Information Quarter Ended September 30, 2005 ($'s in thousands) Insurance Lloyd's Navigators Parent & Companies Operations Agencies Other(1) Total -------------------------------------------------- Gross premium written $133,718 $ 54,142 $ 254 $188,114 Net premium written 59,093 16,956 - 76,049 Revenues: Net earned premium 53,778 20,956 - 74,734 Commission income - 534 $ 7,858 (7,367) 1,025 Investment Income 7,692 1,439 2 63 9,196 Net realized capital gains / (losses) 401 (57) - - 344 Other income 31 246 182 - 459 -------------------------------------------------- Total revenues 61,902 23,118 8,042 (7,304) 85,758 -------------------------------------------------- Operating expenses: Net losses and loss adjustment expenses 47,332 29,504 - - 76,836 Commission expense 13,068 5,191 - (6,603) 11,656 Other operating expenses 2,449 4,670 9,787 576 17,482 -------------------------------------------------- Total operating expenses 62,849 39,365 9,787 (6,027) 105,974 -------------------------------------------------- Income (loss) (947) (16,247) (1,745) (1,277) (20,216) before income tax expense (benefit) Income tax expense (benefit) (894) (5,687) (464) (446) (7,491) -------------------------------------------------- Net Income (loss) $ (53) $ (10,560) $ (1,281) $ (831) $(12,725) ================================================== Loss and loss expenses ratio 88.0% 140.8% 102.8% Commission expense ratio 24.3% 24.8% 24.4% Other operating expense ratio 4.6% 22.3% 9.5% --------------------- --------- Combined ratio 116.9% 187.9% 136.7% ===================== ========= Notes: (1) Includes inter-segment eliminations. THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Segment Information Quarter Ended September 30, 2004 ($'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 (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 -------------------------------------------------- Total operating expenses 48,863 21,338 9,616 (5,783) 74,034 -------------------------------------------------- Income (loss) 9,222 2,774 (1,559) (1,188) 9,249 before income tax expense (benefit) 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 Nine Months Ended September 30, 2005 ($'s in thousands) Insurance Lloyd's Navigators Parent & Companies Operations Agencies Other (1) Total ------------------------------------------------------ Gross premium written $393,686 $200,519 $ 1,038 $595,243 Net premium written 199,349 87,047 - 286,396 Revenues: Net earned premium 160,248 77,856 - 238,104 Commission income - 1,161 $29,039 (26,391) 3,809 Investment Income 22,032 3,642 5 100 25,779 Net realized capital gains / (losses) 1,348 (421) - - 927 Other income 238 875 713 - 1,826 ------------------------------------------------------ Total revenues 183,866 83,113 29,757 (26,291) 270,445 ------------------------------------------------------ Operating expenses: Net losses and loss adjustment expenses 114,856 61,812 - - 176,668 Commission expense 39,522 14,905 - (23,925) 30,502 Other operating expenses 6,570 13,741 31,946 297 52,554 ------------------------------------------------------ Total operating expenses 160,948 90,458 31,946 (23,628) 259,724 ------------------------------------------------------ Income (loss) before income tax expense (benefit) 22,918 (7,345) (2,189) (2,663) 10,721 Income tax expense (benefit) 6,550 (2,571) (581) (931) 2,467 ------------------------------------------------------ Net Income (loss) $ 16,368 $ (4,774) $(1,608) $(1,732) $ 8,254 ====================================================== Loss and loss expenses ratio 71.7% 79.4% 74.2% Commission expense ratio 24.7% 19.1% 22.9% Other operating expense ratio 4.0% 17.7% 8.5% -------------------- ---------- Combined ratio 100.4% 116.2% 105.6% ==================== ========== 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 707 (119) - - 588 Other income 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 ------------------------------------------------------- Total operating expenses 143,705 59,286 27,314 (18,008) 212,297 ------------------------------------------------------- Income (loss) before income tax expense (benefit) 31,052 11,055 (2,795) (3,111) 36,201 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 Underwriting Results ($'s in thousands) Three Months Ended September 30, 2005 ---------------------------------------------------- Net Losses Combined Ratio Insurance Earned and LAE Underwriting --------------------- Companies: Premium Incurred Expenses Loss Expense Total ----------------------------------------------------- Marine $ 14,391 $23,850 $3,914 165.7% 27.1% 192.8% Specialty 31,965 19,184 8,985 60.0% 28.1% 88.1% Professional Liability 7,786 5,205 2,451 66.9% 31.5% 98.4% Assumed from Lloyd's (356) (575) 170 NM NM NM Other (includes run-off) (8) (332) (3) NM NM NM ----------------------------------------------------- 53,778 47,332 15,517 88.0% 28.9% 116.9% Lloyd's Operations 20,956 29,504 9,861 140.8% 47.0% 187.8% ----------------------------------------------------- Total $ 74,734 $76,836 $25,378 102.8% 33.9% 136.7% ===================================================== Effect of Hurrs. Katrina and Rita on the Three Months Ended Sept. 30, 2005 ----------------------------------------------------- Marine $ (9,147) $ 7,430 $ - 96.0% 10.6% 106.5% Lloyd's Operations (5,318) 14,858 - 85.0% 9.5% 94.6% ----------------------------------------------------- Total $(14,465) $22,288 $ - 41.7% 5.5% 47.2% ===================================================== 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 the Three Months Ended Sept. 30, 2004 ------------------------------------------------------ Marine $ (1,522) $ 1,598 $ - 14.1% 2.1% 16.2% Lloyd's Operations (751) 1,276 - 7.1% 0.9% 8.0% ------------------------------------------------------ Total $ (2,273) $ 2,874 $ - 5.6% 0.9% 6.5% ====================================================== THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Underwriting Results ($'s in thousands) Nine Months Ended September 30, 2005 ----------------------------------------------------- Net Losses Combined Ratio Insurance Earned and LAE Underwriting --------------------- Companies: Premium Incurred Expenses Loss Expense Total ----------------------------------------------------- Marine $ 57,600 $ 52,461 $15,026 91.1% 26.1% 117.2% Specialty 81,429 49,639 24,736 61.0% 30.3% 91.3% Professional Liability 21,493 14,676 6,378 68.3% 29.7% 98.0% Assumed from Lloyd's (320) (890) 476 NM NM NM Other (includes run-off) 46 (1,030) (524) NM NM NM ----------------------------------------------------- 160,248 114,856 46,092 71.7% 28.7% 100.4% Lloyd's Operations 77,856 61,812 28,646 79.4% 36.8% 116.2% ----------------------------------------------------- Total $238,104 $176,668 $74,738 74.2% 31.4% 105.6% ===================================================== Effect of Hurrs. Katrina and Rita on the Nine Months Ended Sept. 30, 2005 ----------------------------------------------------- Marine $ (9,147) $ 7,430 $ - 23.6% 3.7% 27.2% Lloyd's Operations (5,318) 14,858 - 22.9% 2.4% 25.3% ----------------------------------------------------- Total $(14,465) $22,288 $ - 13.1% 1.8% 14.9% ===================================================== 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 the Nine Months Ended Sept. 30, 2004 ----------------------------------------------------- Marine $ (1,522) $ 1,598 $ - 4.2% 0.8% 5.0% Lloyd's Operations (751) 1,276 - 2.5% 0.3% 2.8% ----------------------------------------------------- Total $ (2,273) $ 2,874 $ - 1.9% 0.3% 2.2% ===================================================== THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Net Loss Reserves ($'s in thousands) 9/30/2005 12/31/2004 ------------- ----------- Insurance Companies: Marine $154,800 $130,439 Specialty 179,443 150,347 Professional Liability 30,926 19,001 Assumed from Lloyd's Operations 28,578 37,790 Other (primarily run-off business) 19,330 22,512 ------------- ----------- Total Insurance Companies 413,077 360,089 ------------- ----------- Lloyd's Operations: Marine 123,642 99,565 Other 10,201 4,134 ------------- ----------- Total Lloyd's Operations 133,843 103,699 ------------- ----------- Total net loss reserves $546,920 $463,788 ============= =========== Total net case loss reserves $205,161 $189,746 Total net IBNR loss reserves 341,759 274,042 ------------- ----------- Total net loss reserves $546,920 $463,788 ============= =========== Asbestos & Environmental Claim Data ($'s in thousands) Nine Months Ended September 30, 2005 Asbestos Environmental Total --------- ------------- ----------- Gross of Reinsurance Beginning reserve $78,421 $7,513 $85,934 Incurred loss & LAE 479 3,787 4,266 Calendar year payments 4,101 2,779 6,880 -------- ------------- ----------- Ending reserves $74,799 $8,521 $83,320 ======== ============= =========== Net of Reinsurance Beginning reserve $31,394 $1,494 $32,888 Incurred loss & LAE 356 1,206 1,562 Calendar year payments 1,529 1,228 2,757 -------- ------------- ----------- Ending reserves $30,221 $1,472 $31,693 ======== ============= =========== Outstanding Claim Count 146 119 265 ======== ============= =========== CONTACT: The Navigators Group, Inc. Paul J. Malvasio, 914-933-6088 Executive Vice President and Chief Financial Officer pmalvasio@navg.com www.navg.com