-----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, GxfuC3R4+eGWXfGa6eUP/AWSdgMHhy9RkvPkkmgF3HfNRIGhVijLrgWlQhmkLynT lny0AyRajJ+SJehPcpgIMw== 0001157523-06-001645.txt : 20060216 0001157523-06-001645.hdr.sgml : 20060216 20060215185547 ACCESSION NUMBER: 0001157523-06-001645 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060215 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20060216 DATE AS OF CHANGE: 20060215 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: 06623305 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 a5081980.txt THE NAVIGATORS GROUP, INC. 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or15 (d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest reported event): February 15, 2006 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: (914) 933-6027 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 February 15, 2006, The Navigators Group, Inc. issued a press release announcing its earnings for the fourth quarter of 2005. 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/ Elliot S. Orol -------------------------------- Name: Elliot S. Orol Title: Senior Vice President and General Counsel Date: February 15, 2006 INDEX TO EXHIBITS Number Description - ------ ----------- 99.1 Fourth Quarter Earnings Release dated February 15, 2006. EX-99.1 2 a5081980ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 Navigators Reports Record Fourth Quarter Earnings NEW YORK--(BUSINESS WIRE)--Feb. 15, 2006--The Navigators Group, Inc. (NASDAQ:NAVG) reported net income of $15,310,000 or $0.96 per share for the 2005 fourth quarter based on 16,012,000 diluted shares compared to net income of $10,635,000 or $0.84 per share for the 2004 fourth quarter based on 12,710,000 diluted shares. The 2005 and 2004 fourth quarter results include net realized capital gains of $0.01 per share and $0.02 per share, respectively. Net income for the year ended December 31, 2005 was $23,564,000 or $1.73 per share, compared to $34,865,000 or $2.74 per share for the year ended December 31, 2004. Included in these results were net realized capital gains of $0.06 per share and $0.05 per share for the years ended December 31, 2005 and 2004, respectively. Gross written premium for the 2005 fourth quarter and year was $184,336,000 and $779,579,000, respectively, compared to $187,390,000 and $696,146,000 for the comparable 2004 year periods. Included in the 2004 fourth quarter gross written premium is approximately $38,129,000 of "reinsurance to close" ("RITC") premium recorded by Lloyd's Syndicate 1221 representing the transfer of assets and liabilities from the participants of the 2002 underwriting year to the 2003 underwriting year in which Navigators had increased its participation to 97.4% from 68.1%. The RITC transaction is recorded as additional gross written and earned premium, losses incurred, loss reserves and receivables all in the same amount, net of applicable ceded reinsurance amounts. There are no gains or losses recorded on the RITC transaction. The comparable 2005 fourth quarter RITC transaction amount was $7,000. Gross written premium for the 2005 fourth quarter and year increased 23% and 18%, respectively, from the comparable 2004 year periods, excluding RITC gross written premiums. Net written premium for the 2005 fourth quarter and year was $94,263,000 and $380,659,000, respectively, an increase of 22% from both the 2004 fourth quarter and full year period. Net written premium for the 2005 fourth quarter increased 27% excluding RITC net written premium of $2,500,000 and $12,756,000 recorded in the 2005 and 2004 fourth quarters, respectively, and the reduction of the 2004 fourth quarter net written premium by approximately $7,500,000 for ceded reinsurance premium for a specialty quota share treaty not renewed on March 31, 2005. The combined loss and expense ratios for the 2005 fourth quarter and year were 90.0% and 100.9%, respectively, compared to 89.4% and 90.1% for the comparable 2004 periods. The combined loss and expense ratios for the 2005 year and 2004 year were reduced by 1.1 loss ratio points and 1.2 loss ratio points, respectively, resulting from the release of a net loss reserve redundancy of $3.8 million in each of 2005 and 2004, respectively, relating to prior years. During the 2005 fourth quarter, the Company settled the two large remaining claims where excess policy limits were exposed to class action suits involved in the manufacturing or distribution of asbestos products. The Company has also withdrawn its demand for arbitration against Equitas after reaching a settlement pursuant to which Equitas, as the Company's excess of loss reinsurer, agreed to reimburse the Company for past and future loss payments in connection with a 2004 settlement of a large asbestos claim. Equitas is a lead reinsurer participating in excess of loss reinsurance agreements for all three settled claims. No significant net gain or loss was recorded as a result of such settlements. Navigators' Chief Executive Officer Stan Galanski commented, "Our 2005 earnings were the second highest in our Company's history despite the impact of two of the largest offshore energy catastrophe losses ever to hit the marine insurance industry. We are proud of the performance of our underwriting and claims teams. Absent Hurricanes Katrina and Rita, our results were stellar. We are pleased that our original loss estimates for these two storms continue to appear adequate and to be contained well within our reinsurance program. While we have always emphasized the importance of making an underwriting profit, our increased asset base, coupled with strong cash flow, resulted in 38% growth in our investment income in 2005. "Market conditions continue to support profitable growth for all of our business units and we anticipate premium growth for our product lines in 2006. We remain focused on expanding our niche underwriting operations by targeting additional products and seasoned underwriting professionals to help expand our business in the United States and United Kingdom." Consolidated cash flow from operations for the 2005 fourth quarter and year ended December 31, 2005 was $70,879,000 and $238,826,000, respectively, compared to $20,743,000 and $162,491,000 for the comparable 2004 periods. Net investment income for the 2005 fourth quarter and year was $11,290,000 and $37,069,000, respectively, increases of 53% and 38% from the 2004 comparable periods. The 2005 fourth quarter increase in net investment income reflects the strong cash flow from operations generated throughout 2005 coupled with the investment of $124 million in net proceeds received in October from the sale of 3,795,000 shares of common stock. The pre-tax investment yields for the 2005 fourth quarter and year were 4.2% and 3.8%, respectively, compared to 3.6% and 3.5% for the comparable 2004 periods. Stockholders' equity was $470,238,000 or $28.30 per share at December 31, 2005 compared to $328,578,000 or $25.96 per share at December 31, 2004. Statutory surplus of Navigators Insurance Company was $356,484,000 at December 31, 2005. The Company will hold a conference call on Thursday, February 16, 2006 starting at 8:30 a.m. EST to discuss the fourth quarter's results. To access the call, please dial 1-800-591-6930, using confirmation code 16111044. Internationally, the call may be accessed by dialing 617-614-4908 using the same confirmation code. To listen via live audio webcast, please visit the Company's website (www.navg.com) at least ten minutes prior to the start of the call and click on the February 16th Live Audio Webcast link. The webcast will also be available as a replay at the same location starting one hour after the call is finished. The Navigators Group, Inc. is an international insurance holding company with insurance company operations, underwriting management companies, and operations at Lloyd's of London. Headquartered in New York City, Navigators has offices in major insurance centers in the United States, the United Kingdom and Belgium. This press release may contain "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Whenever used in this release, the words "estimate", "expect", "believe" or similar expressions are intended to identify such forward-looking statements. We cannot assure that results which we anticipate will be achieved, since results may differ materially because of known and unknown risks and uncertainties which we face. Please refer to Navigators' most recent Forms 10-K and 10-Q and its other filings with the Securities and Exchange Commission for a description of Navigators' business and the important factors which may affect that business. Navigators undertakes no obligation to publicly update or revise any forward-looking statement. THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Financial Highlights ($'s in thousands, except per share data) Three Months Ended Twelve Months Ended December 31, December 31, ------------------ ---------------- Financial Highlights 2005 2004 Change 2005 2004 Change - -------------------- ------- ------ ------- -------- ------ ------ Gross written premium $184,336 $187,390 -2% $779,579 $696,146 12% Net written premium 94,263 77,114 22% 380,659 312,730 22% Revenues: Net earned premium 100,447 86,368 16% 338,551 310,995 9% Commission income 1,877 1,146 64% 5,686 4,754 20% Investment Income 11,290 7,387 53% 37,069 26,795 38% Net realized capital gains 311 334 -7% 1,238 922 34% Other income (expense) 849 (704) NM 2,675 (437) NM ------------------ ------------------ Total revenues 114,774 94,531 21% 385,219 343,029 12% ------------------ ------------------ Operating expenses: Net losses and loss adjustment expenses incurred 58,987 49,623 19% 235,655 188,014 25% Commission expense 12,168 9,300 31% 42,671 39,140 9% Other operating expenses 20,586 19,717 4% 73,139 63,783 15% ------------------ ------------------ Total operating expenses 91,741 78,640 17% 351,465 290,937 21% ------------------ ------------------ Income before income taxes 23,033 15,891 45% 33,754 52,092 -35% ------------------ ------------------ Income tax expense (benefit): Current 8,190 5,610 46% 15,826 19,794 -20% Deferred (467) (354) NM (5,636) (2,567) NM ------------------ ------------------ Income tax expense 7,723 5,256 47% 10,190 17,227 -41% ------------------ ------------------ Net income $ 15,310 $ 10,635 44% $ 23,564 $ 34,865 -32% ================== ================== Per Share Data - -------------- Net income per common share: Basic $ 0.97 $ 0.84 15% $ 1.74 $ 2.77 -37% Diluted $ 0.96 $ 0.84 14% $ 1.73 $ 2.74 -37% Average shares outstanding: Basic 15,856 12,639 13,528 12,598 Diluted 16,012 12,710 13,657 12,715 Underwriting Ratios - ------------------- Loss Ratio 58.7% 57.5% 69.6% 60.5% Expense Ratio 31.3% 31.9% 31.3% 29.6% ------------------ ------------------ Combined Ratio 90.0% 89.4% 100.9% 90.1% Balance Sheet Data Dec. 31, Dec. 31, - ------------------ 2005 2004 ------------------ Stockholders' equity $470,238 $328,578 43% Book value per share $28.30 $25.96 9% THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ($'s in thousands) December 31, December 31, 2005 2004 ------------ ------------ ASSETS Investments and cash: Fixed maturities, available-for-sale, at fair value (amortized cost: 2005, $986,726; 2004, $713,049) $ 984,113 $ 722,434 Equity securities, available-for-sale, at fair value (cost: 2005, $19,667; 2004, $19,101) 20,911 21,170 Short-term investments, at cost which approximates fair value 164,047 96,653 Cash 13,165 14,676 ----------- ----------- Total investments and cash 1,182,236 854,933 ----------- ----------- Premiums in course of collection 155,977 176,720 Commissions receivable 3,467 3,062 Prepaid reinsurance premiums 136,341 130,761 Reinsurance receivable on paid losses 37,055 20,955 Reinsurance receivable on unpaid losses and loss adjustment expenses 979,015 502,329 Net deferred income tax benefit 28,317 17,348 Deferred policy acquisition costs 29,697 23,882 Accrued investment income 10,297 7,303 Goodwill and other intangible assets 7,341 5,282 Other assets 13,506 14,103 ----------- ----------- Total assets $2,583,249 $1,756,678 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Reserves for losses and loss adjustment expenses $1,557,991 $ 966,117 Unearned premium 316,516 270,970 Reinsurance balances payable 180,059 143,427 Federal income tax payable 1,274 5,614 Payable for securities purchased 823 3,027 Accounts payable and other liabilities 56,348 38,945 ----------- ----------- Total liabilities 2,113,011 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: 16,616,781 for 2005 and 12,657,160 for 2004 1,662 1,266 Additional paid-in capital 282,463 154,670 Retained earnings 186,901 163,337 Accumulated other comprehensive income (788) 9,305 ----------- ----------- Total stockholders' equity 470,238 328,578 ----------- ----------- Total liabilities and stockholders' equity $2,583,249 $1,756,678 =========== =========== THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Comparative Premium Data ($'s in thousands) Gross Written Premium: Fourth Quarter Twelve Months ------------------ ----------------- Insurance Companies: 2005 2004 Change 2005 2004 Change ------------------------ ------------------------ Marine $ 52,188 $ 50,914 3% $233,688 $210,326 11% Specialty 58,029 39,329 48% 210,483 150,068 40% Professional Liability 26,221 18,973 38% 86,929 70,955 23% Assumed from Lloyd's (489) 21,616 NM (1,555) 26,014 NM Other (includes run- off) 46 30 NM 136 254 NM ------------------ ------------------ 135,995 130,862 4% 529,681 457,617 16% Lloyd's Operations: Marine 38,712 62,261 -38% 207,170 230,825 -10% Professional Liability 1,928 - NM 6,646 - NM Other 7,224 15,135 -52% 34,567 33,042 5% ------------------ ------------------ 47,864 77,396 -38% 248,383 263,867 -6% Intercompany elimination 477 (20,868) NM 1,515 (25,338) NM ------------------ ------------------ Total $184,336 $187,390 -2% $779,579 $696,146 12% ================== ================== Net Written Premium: Fourth Quarter Twelve Months ------------------ ----------------- Insurance Companies: 2005 2004 Change 2005 2004 Change ------------------------ ------------------------ Marine $ 20,402 $ 18,059 13% $ 88,591 $ 79,278 12% Specialty 37,208 19,715 89% 145,199 79,944 82% Professional Liability 11,293 7,545 50% 35,626 26,625 34% Assumed from Lloyd's (490) 21,608 NM (1,699) 25,799 NM Other (includes run- off) (17) 209 NM 28 1,104 NM ------------------ ------------------ 68,396 67,136 2% 267,745 212,750 26% Lloyd's Operations: Marine 22,405 11,266 99% 99,797 93,245 7% Professional Liability 758 - NM 2,613 - NM Other 2,704 (1,288) NM 10,504 6,735 56% ------------------ ------------------ 25,867 9,978 159% 112,914 99,980 13% ------------------ ------------------ Total $94,263 $77,114 22% $380,659 $312,730 22% ================== ================== Net Earned Premium: Fourth Quarter Twelve Months ------------------ ----------------- Insurance Companies: 2005 2004 Change 2005 2004 Change ------------------------ ------------------------ Marine $25,899 $21,351 21% $83,499 $80,476 4% Specialty 35,779 20,710 73% 117,208 86,437 36% Professional Liability 8,625 6,822 26% 30,118 21,021 43% Assumed from Lloyd's (489) 23,160 NM (809) 39,714 NM Other (includes run- off) (16) 210 NM 30 1,111 NM ------------------ ------------------ 69,798 72,253 -3% 230,046 228,759 1% Lloyd's Operations: Marine 27,989 14,990 87% 102,632 79,908 28% Professional Liability 529 - NM 1,240 - NM Other 2,131 (875) NM 4,633 2,328 99% ------------------ ------------------ 30,649 14,115 117% 108,505 82,236 32% ------------------ ------------------ Total $100,447 $ 86,368 16% $338,551 $310,995 9% ================== ================== THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Segment Information Quarter Ended December 31, 2005 ($'s in thousands) Parent Insurance Lloyd's Navigators & Companies Operations Agencies Other(1) Total --------- ---------- ---------- ------- --------- Gross premium written $135,995 $47,864 $ 477 $184,336 Net premium written 68,396 25,867 94,263 Net earned premium 69,798 30,649 100,447 Net losses and loss adjustment expenses (40,437) (18,550) (58,987) Commission expense (18,294) (4,781) (23,075) Other operating expenses (2,189) (6,026) (8,215) -------------------------------------------------- Underwriting profit 8,878 1,292 10,170 Commission income - 741 $12,508 (11,372) 1,877 Investment Income 9,714 1,419 13 144 11,290 Net realized capital gains / (losses) 357 (46) - - 311 Other income (13) 872 330 (340) 849 Commission expense - 10,907 10,907 Other operating expenses (11,732) (639) (12,371) -------------------------------------------------- Income (loss) before income tax expense (benefit) 18,936 4,278 1,119 (1,300) 23,033 Income tax expense (benefit) 6,035 1,497 646 (455) 7,723 -------------------------------------------------- Net Income (loss) $ 12,901 $ 2,781 $ 473 $(845) $15,310 ================================================== Loss and loss expenses ratio 57.9% 60.5% 58.7% Commission expense ratio 26.2% 15.6% 23.0% Other operating expense ratio 3.2% 19.7% 8.3% ------------------- -------- Combined ratio 87.3% 95.8% 90.0% =================== ======== Notes: (1) Includes inter-segment eliminations. THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Segment Information Quarter Ended December 31, 2004 ($'s in thousands) Parent Insurance Lloyd's Navigators & Companies Operations Agencies Other(1) Total --------- ---------- ---------- ------- --------- Gross premium written $130,862 $77,396 $(20,868)$187,390 Net premium written 67,136 9,978 77,114 Net earned premium 72,253 14,115 86,368 Net losses and loss adjustment expenses (48,404) (1,219) (49,623) Commission expense (16,051) (3,678) (19,729) Other operating expenses (3,041) (4,779) (7,820) ------------------------------------------------- Underwriting profit 4,757 4,439 9,196 Commission income - 394 $11,181 (10,429) 1,146 Investment Income 6,581 801 2 3 7,387 Net realized capital gains / (losses) 458 (124) - - 334 Other income (23) (949) 255 13 (704) Commission expense - 10,429 10,429 Other operating expenses (11,967) 70 (11,897) ------------------------------------------------- Income (loss) before income tax expense (benefit) 11,773 4,561 (529) 86 15,891 Income tax expense (benefit) 3,734 1,596 40 (114) 5,256 ------------------------------------------------- Net Income (loss) $ 8,039 $ 2,965 $ (569) $ 200 $10,635 ================================================= Loss and loss expenses ratio 67.0% 8.6% 57.5% Commission expense ratio 22.2% 26.1% 22.8% Other operating expense ratio 4.2% 33.9% 9.1% ------------------- -------- Combined ratio 93.4% 68.6% 89.4% =================== ======== Notes: (1) Includes inter-segment eliminations. THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Segment Information Twelve Months Ended December 31, 2005 ($'s in thousands) Parent Insurance Lloyd's Navigators & Companies Operations Agencies Other(1) Total --------- ---------- ---------- ------- --------- Gross premium written $529,681 $248,383 $ 1,515 $779,579 Net premium written 267,745 112,914 380,659 Net earned premium 230,046 108,505 338,551 Net losses and loss adjustment expenses (155,293) (80,362) (235,655) Commission expense (57,816) (19,687) (77,503) Other operating expenses (8,759) (19,766) (28,525) -------------------------------------------------- Underwriting profit / (loss) 8,178 (11,310) (3,132) Commission income - 1,902 $41,547 (37,763) 5,686 Investment Income 31,746 5,061 18 244 37,069 Net realized capital gains / (losses) 1,705 (467) - - 1,238 Other income 225 1,747 1,043 (340) 2,675 Commission expense - 34,832 34,832 Other operating expenses (43,678) (936) (44,614) ------------------------------------------------- Income (loss) before income tax expense (benefit) 41,854 (3,067) (1,070) (3,963) 33,754 Income tax expense (benefit) 12,585 (1,074) 65 (1,386) 10,190 ------------------------------------------------- Net Income (loss) $ 29,269 $ (1,993) $(1,135) $(2,577) $23,564 ================================================= Loss and loss expenses ratio 67.5% 74.1% 69.6% Commission expense ratio 25.1% 18.1% 22.9% Other operating expense ratio 3.8% 18.2% 8.4% ------------------- ------- Combined ratio 96.4% 110.4% 100.9% =================== ======= Notes: (1) Includes inter-segment eliminations. THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Segment Information Twelve Months Ended December 31, 2004 ($'s in thousands) Parent Insurance Lloyd's Navigators & Companies Operations Agencies Other(1) Total --------- ---------- ---------- ------- --------- Gross premium written $457,617 $263,867 $(25,338)$696,146 Net premium written 212,750 99,980 312,730 Net earned premium 228,759 82,236 310,995 Net losses and loss adjustment expenses (149,073) (38,941) (188,014) Commission expense (55,120) (15,588) (70,708) Other operating expenses (7,007) (14,433) (21,440) ------------------------------------------------- Underwriting profit 17,559 13,274 30,833 Commission income - 1,257 $35,065 $(31,568) 4,754 Investment Income 24,118 2,645 8 24 26,795 Net realized capital gains 1,164 (242) - - 922 Other income (17) (1,317) 884 13 (437) Commission expense - 31,568 31,568 Other operating expenses (39,281) (3,062) (42,343) ------------------------------------------------- Income (loss) before income tax expense (benefit) 42,824 15,617 (3,324) (3,025) 52,092 Income tax expense (benefit) 13,625 5,466 (812) (1,052) 17,227 ------------------------------------------------- Net Income (loss) $ 29,199 $ 10,151 $(2,512) $ (1,973) $34,865 ================================================= Loss and loss expenses ratio 65.2% 47.4% 60.5% Commission expense ratio 24.1% 19.0% 22.7% Other operating expense ratio 3.1% 17.6% 6.9% ------------------- ------- Combined ratio 92.4% 84.0% 90.1% =================== ======= Notes: (1) Includes inter-segment eliminations. THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Underwriting Results ($'s in thousands) Three Months Ended December 31, 2005 ---------------------------------------------------------- Net Losses Combined Ratio Earned and LAE Underwriting --------------------- Insurance Premium Incurred Expenses Loss Expense Total Companies: ----------------------------------------------------------- Marine $ 25,899 $15,723 $ 7,276 60.7% 28.1% 88.8% Specialty 35,779 21,500 10,350 60.1% 28.9% 89.0% Professional Liability 8,625 3,616 2,747 41.9% 31.8% 73.7% Assumed from Lloyd's (489) (661) 114 NM NM NM Other (includes run-off) (16) 259 (4) NM NM NM ---------------------------------------------------------- 69,798 40,437 20,483 57.9% 29.4% 87.3% Lloyd's Operations 30,649 18,550 10,807 60.5% 35.3% 95.8% ---------------------------------------------------------- Total $100,447 $58,987 $31,290 58.7% 31.3% 90.0% ========================================================== Three Months Ended December 31, 2004 ---------------------------------------------------------- Net Losses Combined Ratio Earned and LAE Underwriting --------------------- Insurance Premium Incurred Expenses Loss Expense Total Companies: ----------------------------------------------------------- Marine $21,351 $10,471 $ 8,000 49.0% 37.5% 86.5% Specialty 20,710 12,441 7,876 60.1% 38.0% 98.1% Professional Liability 6,822 4,046 2,927 59.3% 42.9% 102.2% Assumed from Lloyd's 23,160 21,662 364 93.5% 1.6% 95.1% Other (includes run-off) 210 (216) (75) NM NM NM ---------------------------------------------------------- 72,253 48,404 19,092 67.0% 26.4% 93.4% Lloyd's Operations 14,115 1,219 8,457 8.6% 60.0% 68.6% ---------------------------------------------------------- Total $86,368 $49,623 $27,549 57.5% 31.9% 89.4% ========================================================== THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Underwriting Results ($'s in thousands) Twelve Months Ended December 31, 2005 ---------------------------------------------------------- Net Losses Combined Ratio Earned and LAE Underwriting --------------------- Insurance Premium Incurred Expenses Loss Expense Total Companies: ----------------------------------------------------------- Marine $ 83,499 $ 68,184 $ 22,302 81.7% 26.8% 108.5% Specialty 117,208 71,139 35,086 60.7% 29.9% 90.6% Professional Liability 30,118 18,292 9,125 60.7% 30.3% 91.0% Assumed from Lloyd's (809) (1,552) 589 191.9% -72.9% 119.0% Other (includes run-off) 30 (770) (527) NM NM NM ---------------------------------------------------------- 230,046 155,293 66,575 67.5% 28.9% 96.4% Lloyd's Operations 108,505 80,362 39,453 74.1% 36.3% 110.4% ---------------------------------------------------------- Total $338,551 $235,655 $106,028 69.6% 31.3% 100.9% ========================================================== Effect of Hurrs. Katrina and Rita on the Twelve Months Ended Dec. 31, 2005 ----------------------------------------------------------- Marine $ (9,147) $ 7,430 $ - 16.1% 2.7% 18.8% Lloyd's Operations (5,318) 14,858 - 16.6% 1.7% 18.3% ----------------------------------------------------------- Total $(14,465) $ 22,288 $ - 9.2% 1.3% 10.5% =========================================================== Twelve Months Ended December 31, 2004 ---------------------------------------------------------- Net Losses Combined Ratio Earned and LAE Underwriting --------------------- Insurance Premium Incurred Expenses Loss Expense Total Companies: ----------------------------------------------------------- Marine $ 80,476 $ 48,163 $24,044 59.8% 29.9% 89.7% Specialty 86,437 56,992 27,236 65.9% 31.5% 97.4% Professional Liability 21,021 12,627 5,588 60.1% 26.6% 86.7% Assumed from Lloyd's 39,714 30,604 5,327 77.1% 13.4% 90.5% Other (includes run-off) 1,111 687 (68) 61.8% -6.1% 55.7% ----------------------------------------------------------- 228,759 149,073 62,127 65.2% 27.2% 92.4% Lloyd's Operations 82,236 38,941 30,021 47.4% 36.6% 84.0% ----------------------------------------------------------- Total $310,995 $188,014 $92,148 60.5% 29.6% 90.1% =========================================================== THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Net Loss Reserves ($'s in thousands) 12/31/2005 12/31/2004 ----------- ----------- Insurance Companies: Marine $162,644 $130,439 Specialty 193,755 150,347 Professional Liability 33,133 19,001 Assumed from Lloyd's Operations 1,218 37,790 Other (primarily run-off business) 19,613 22,512 ----------- ----------- Total Insurance Companies 410,363 360,089 ----------- ----------- Lloyd's Operations: Marine 161,262 99,565 Other 7,351 4,134 ----------- ----------- Total Lloyd's Operations 168,613 103,699 ----------- ----------- Total net loss reserves $578,976 $463,788 =========== =========== Total net case loss reserves $228,423 $189,746 Total net IBNR loss reserves 350,553 274,042 ----------- ----------- Total net loss reserves $578,976 $463,788 =========== =========== Asbestos Claim Data ($'s in thousands) Quarter Year Year Ended Ended Ended Gross of Reinsurance 12/31/2005 12/31/2005 12/31/2004 ----------- ----------- ----------- Beginning reserve $74,799 $78,421 $78,472 Incurred loss & LAE (17,888) (17,409) 1,183 Calendar year payments 73 4,174 1,234 ----------- ----------- ----------- Ending gross reserves $56,838 $56,838 $78,421 =========== =========== =========== Gross case loss reserves $48,958 $26,276 Gross IBNR loss reserves 7,880 52,145 ----------- ----------- Ending gross reserves $56,838 $78,421 =========== =========== Net of Reinsurance Beginning reserve $30,221 $31,394 $32,083 Incurred loss & LAE 173 529 405 Calendar year payments 22 1,551 1,094 ----------- ----------- ----------- Ending net reserves $30,372 $30,372 $31,394 =========== =========== =========== Net case loss reserves $22,669 $9,904 Net IBNR loss reserves 7,703 21,490 ----------- ----------- Ending net reserves $30,372 $31,394 =========== =========== 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-----