EX-99.1 2 a5390112ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 Navigators Reports First Quarter Earnings Navigators' Earnings up 26% NEW YORK--(BUSINESS WIRE)--April 30, 2007--The Navigators Group, Inc. (NASDAQ:NAVG) reported net income of $19,672,000 or $1.17 per share for the 2007 first quarter compared to net income of $15,525,000 or $0.93 per share for the 2006 first quarter. The 2007 first quarter results include a net realized capital gain of $0.01 per share and the 2006 first quarter results include a net realized capital loss of $0.02 per share. Gross written premium and net written premium for the 2007 first quarter were $300,861,000 and $173,019,000, respectively, increases of 14% and 21% from the comparable 2006 period. The combined loss and expense ratio was 89.4% for both the 2007 and 2006 first quarters. The 2007 and 2006 first quarters' combined ratios were reduced by 4.9 and 3.7 loss ratio points, respectively, for net loss reserve redundancies relating to prior years. The 2007 first quarter net paid loss ratio was 31.3% compared to 37.5% for the comparable 2006 period. Navigators' Chief Executive Officer Stan Galanski commented, "We achieved excellent first quarter results. We continue to experience favorable loss development from prior years while adding approximately $38 million to our net loss reserves from year end. Our overall premium growth was strong, particularly in our Specialty and Professional Liability divisions, in line with our expectations. Our growth reflects the success of several new products launched over the past two years and increased net retentions of our business." Net investment income for the 2007 first quarter was $16,216,000, an increase of 29% compared to $12,550,000 for the comparable 2006 period. The pre-tax investment yield for the 2007 first quarter was 4.4% compared to 4.3% for the comparable 2006 period. Consolidated cash flow from operations for the 2007 first quarter was $20,078,000 compared to $28,637,000 for the 2006 comparable period. The 2007 and 2006 cash flow from operations was reduced by approximately $21,500,000 and $4,400,000, respectively, reflecting 2005 hurricane loss reinsurance recoveries to be collected from reinsurers in subsequent accounting periods. Stockholders' equity was $574,367,000 or $34.23 per share at March 31, 2007 compared to $551,343,000 or $32.94 per share at December 31, 2006. Statutory surplus of Navigators Insurance Company was $535,539,000 at March 31, 2007. The Company will hold a conference call on Tuesday, May 1, 2007 starting at 8:30 a.m. ET to discuss the first quarter's results. To access the call, please dial 1-800-435-1261, using confirmation code 56685910. Internationally, the call may be accessed by dialing 617-614-4076 using the same confirmation code. To listen via live audio webcast, please visit the Company's website (www.navg.com) at least ten minutes prior to the start of the call and click on the May 1st Live Audio Webcast link. The webcast will also be available as a replay at the same location starting one hour after the call is finished. The Navigators Group, Inc. is an international insurance holding company with insurance company operations, underwriting management companies, and operations at Lloyd's of London. Headquartered in New York, Navigators has offices in major insurance centers in the United States, the United Kingdom and Belgium. This press release may contain "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Whenever used in this release, the words "estimate", "expect", "believe" or similar expressions are intended to identify such forward-looking statements. We cannot assure that results that we anticipate will be achieved, since results may differ materially because of known and unknown risks and uncertainties that we face. Please refer to Navigators' most recent Form 10-K and its other filings with the Securities and Exchange Commission for a description of Navigators' business and the important factors that may affect that business. Navigators undertakes no obligation to publicly update or revise any forward-looking statement. THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Financial Highlights ($'s in thousands, except per share data) Three Months Ended March 31, ------------------- Financial Highlights 2007 2006 Change ------------------------------------------- --------- --------- ------ Gross written premium $300,861 $263,784 14% Net written premium 173,019 143,426 21% Revenues: Net earned premium 139,046 103,722 34% Commission income 408 1,286 -68% Investment Income 16,216 12,550 29% Net realized capital gains (losses) 201 (424) NM Other income (expense) (71) 186 NM ------------------- Total revenues 155,800 117,320 33% ------------------- Operating expenses: Net losses and loss adjustment expenses incurred 81,192 62,117 31% Commission expense 17,099 13,705 25% Other operating expenses 26,289 18,408 43% Interest expense 2,215 - NM ------------------- Total operating expenses 126,795 94,230 35% ------------------- Income before income taxes 29,005 23,090 26% ------------------- Income tax expense (benefit): Current 9,276 9,332 -1% Deferred 57 (1,767) NM ------------------- Income tax expense (benefit) 9,333 7,565 23% ------------------- Net income $ 19,672 $ 15,525 27% =================== Per Share Data ------------------------------------------- Net income per common share: Basic $ 1.17 $ 0.93 26% Diluted $ 1.17 $ 0.93 26% Average shares outstanding: Basic 16,756 16,639 Diluted 16,884 16,757 Underwriting Ratios ------------------------------------------- Loss Ratio 58.4% 59.9% Expense Ratio 31.0% 29.5% ------------------- Combined Ratio 89.4% 89.4% Balance Sheet Data ------------------------------------------- Mar. 31, Dec. 31, 2007 2006 --------- --------- Stockholders' equity $574,367 $551,343 4% Book value per share $ 34.23 $ 32.94 4% THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ($'s in thousands) March 31, December 2007 31, 2006 ----------- ----------- ASSETS Investments and cash: Fixed maturities, available-for-sale, at fair value (amortized cost: 2007, $1,331,069; 2006, $1,263,284) $1,328,824 $1,258,717 Equity securities, available-for-sale, at fair value (cost: 2007, $39,484; 2006, $31,879) 45,380 37,828 Short-term investments, at cost which approximates fair value 130,202 176,961 Cash 1,628 2,404 ----------- ----------- Total investments and cash 1,506,034 1,475,910 ----------- ----------- Premiums in course of collection 225,797 163,309 Commissions receivable 3,351 3,647 Prepaid reinsurance premiums 199,544 179,493 Reinsurance receivable on paid losses 131,336 108,878 Reinsurance receivable on unpaid losses and loss adjustment expenses 872,436 911,439 Net deferred income tax benefit 29,502 30,422 Deferred policy acquisition costs 53,733 41,700 Accrued investment income 13,348 13,052 Goodwill and other intangible assets 8,040 8,012 Other assets 22,740 20,824 ----------- ----------- Total assets $3,065,861 $2,956,686 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Reserves for losses and loss adjustment expenses $1,606,283 $1,607,555 Unearned premium 469,269 415,096 Reinsurance balances payable 203,185 194,266 Senior notes 123,587 123,560 Federal income tax payable 11,394 3,934 Payable for securities purchased 9,089 166 Accounts payable and other liabilities 68,687 60,766 ----------- ----------- Total liabilities 2,491,494 2,405,343 ----------- ----------- Stockholders' equity: Preferred stock, $.10 par value, authorized 1,000,000 shares, none issued - - Common stock, $.10 par value, 50,000,000 shares authorized for 2007 and 50,000,000 for 2006; issued and outstanding: 16,781,583 for 2007 and 16,735,898 for 2006 1,678 1,674 Additional paid-in capital 288,479 286,732 Retained earnings 279,136 259,464 Accumulated other comprehensive income 5,074 3,473 ----------- ----------- Total stockholders' equity 574,367 551,343 ----------- ----------- Total liabilities and stockholders' equity $3,065,861 $2,956,686 =========== =========== THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Comparative Premium Data ($'s in thousands) Gross Written Premium: First Quarter ----------------------- Insurance Companies: 2007 2006 Change -------------------------------- Marine $ 84,369 $ 81,794 3% Specialty 95,720 62,131 54% Professional Liability 20,482 18,134 13% Other (includes run-off) 8,303 188 NM ----------------------- 208,874 162,247 29% Lloyd's Operations: Marine 77,679 90,855 -15% Professional Liability 5,478 2,020 171% Other 8,830 8,873 0% ----------------------- 91,987 101,748 -10% Intercompany elimination - (211) NM ----------------------- Total $ 300,861 $ 263,784 14% ======================= Net Written Premium: First Quarter ----------------------- Insurance Companies: 2007 2006 Change -------------------------------- Marine $ 44,927 $ 41,515 8% Specialty 58,554 40,519 45% Professional Liability 12,192 7,626 60% Other (includes run-off) 6,375 (16) NM ----------------------- 122,048 89,644 36% Lloyd's Operations: Marine 45,488 51,403 -12% Professional Liability 3,383 829 308% Other 2,100 1,550 35% ----------------------- 50,971 53,782 -5% ----------------------- Total $ 173,019 $ 143,426 21% ======================= Net Earned Premium: First Quarter ----------------------- Insurance Companies: 2007 2006 Change -------------------------------- Marine $ 33,318 $ 22,501 48% Specialty 53,612 36,134 48% Professional Liability 13,037 8,732 49% Other (includes run-off) 1,845 (15) NM ----------------------- 101,812 67,352 51% Lloyd's Operations: Marine 32,341 35,716 -9% Professional Liability 2,957 241 NM Other 1,936 413 369% ----------------------- 37,234 36,370 2% ----------------------- Total $ 139,046 $ 103,722 34% ======================= THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Segment Information Three Months Ended March 31, 2007 ($'s in thousands) Insurance Lloyd's Companies Operations Corporate Total --------- ---------- --------- --------- Gross premium written $208,874 $ 91,987 $300,861 Net premium written 122,048 50,971 173,019 Net earned premium 101,812 37,234 139,046 Net losses and loss adjustment expenses (61,340) (19,852) (81,192) Commission expense (11,083) (6,016) (17,099) Other operating expenses (18,769) (7,520) (26,289) Commission and other income / (expense) 489 (152) 337 --------- ---------- --------- Underwriting profit / (loss) 11,109 3,694 14,803 Investment income 13,654 2,151 $ 411 16,216 Net realized capital gains / (losses) 243 (42) - 201 Interest expense - - (2,215) (2,215) --------- ---------- --------- --------- Income (loss) before income tax expense (benefit) 25,006 5,803 (1,804) 29,005 Income tax expense (benefit) 7,911 2,054 (632) 9,333 --------- ---------- --------- --------- Net Income (loss) $ 17,095 $ 3,749 $ (1,172) $ 19,672 ========= ========== ========= ========= Loss and loss expenses ratio 60.2% 53.3% 58.4% Commission expense ratio 10.9% 16.2% 12.3% Other operating expense ratio (1) 18.0% 20.6% 18.7% --------- ---------- --------- Combined ratio 89.1% 90.1% 89.4% ========= ========== ========= (1) The other operating expense ratio is adjusted to include commission and other income/(expense). THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Segment Information Three Months Ended March 31, 2006 ($'s in thousands) Insurance Lloyd's Companies Operations Corporate Total --------- ---------- --------- --------- Gross premium written (1) $162,247 $ 101,748 $263,784 Net premium written 89,644 53,782 143,426 Net earned premium 67,352 36,370 103,722 Net losses and loss adjustment expenses (39,954) (22,163) (62,117) Commission expense (7,124) (6,581) (13,705) Other operating expenses (13,433) (4,975) (18,408) Commission and other income / (expense) 1,206 266 1,472 --------- ---------- --------- Underwriting profit 8,047 2,917 10,964 Investment income 10,410 2,007 $ 133 12,550 Net realized capital gains / (losses) (75) (349) - (424) --------- ---------- --------- --------- Income before income tax expense 18,382 4,575 133 23,090 Income tax expense 5,916 1,601 48 7,565 --------- ---------- --------- --------- Net Income $ 12,466 $ 2,974 $ 85 $ 15,525 ========= ========== ========= ========= Loss and loss expenses ratio 59.3% 60.9% 59.9% Commission expense ratio 10.6% 18.1% 13.2% Other operating expense ratio (2) 18.2% 13.0% 16.3% --------- ---------- --------- Combined ratio 88.1% 92.0% 89.4% ========= ========== ========= (1) Includes inter-segment transactions causing the row not to crossfoot. (2) The other operating expense ratio is adjusted to include commission and other income/(expense). THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Underwriting Results ($'s in thousands) Three Months Ended March 31, 2007 ---------------------------------------------------- Combined Ratio Net Losses ------------------- Insurance Earned and LAE Underwriting Loss Expense Total Companies: Premium Incurred Expenses --------- --------- ------------ ----- ------- ----- Marine $ 33,318 $ 20,171 $ 7,113 60.5% 21.4% 81.9% Specialty 53,612 31,766 16,492 59.3% 30.7% 90.0% Professional Liability 13,037 8,484 4,323 65.1% 33.1% 98.2% Other (includes run-off) 1,845 919 1,435 NM NM NM --------- --------- ------------ ----- ------- ----- 101,812 61,340 29,363 60.2% 28.9% 89.1% Lloyd's Operations 37,234 19,852 13,688 53.3% 36.8% 90.1% --------- --------- ------------ ----- ------- ----- Total $139,046 $ 81,192 $ 43,051 58.4% 31.0% 89.4% ========= ========= ============ ===== ======= ===== Three Months Ended March 31, 2006 ---------------------------------------------------- Combined Ratio Net Losses ------------------- Insurance Earned and LAE Underwriting Loss Expense Total Companies: Premium Incurred Expenses ---------------------------------------------------- Marine $ 22,501 $ 13,500 $ 6,046 60.0% 26.9% 86.9% Specialty 36,134 21,157 10,524 58.6% 29.1% 87.7% Professional Liability 8,732 5,309 2,711 60.8% 31.0% 91.8% Other (includes run-off) (15) (12) 70 NM NM NM ---------------------------------------------------- 67,352 39,954 19,351 59.3% 28.8% 88.1% Lloyd's Operations 36,370 22,163 11,290 60.9% 31.1% 92.0% ---------------------------------------------------- Total $103,722 $ 62,117 $ 30,641 59.9% 29.5% 89.4% ==================================================== Amounts Loss Ratio ------------------------------------ March March Net Incurred Loss Activity March 31, March 31, 31, 31, For the Three Months Ended: 2007 2006 2007 2006 ------------------------------------ Insurance Companies: Loss and LAE payments $ 29,343 $ 20,170 28.8% 29.9% Change in reserves 31,997 19,784 31.4% 29.4% ------------------------------------ Net incurred loss and LAE 61,340 39,954 60.2% 59.3% ------------------------------------ Lloyd's Operations: Loss and LAE payments 14,117 18,693 37.9% 51.4% Change in reserves 5,735 3,470 15.4% 9.5% ------------------------------------ Net incurred loss and LAE 19,852 22,163 53.3% 60.9% ------------------------------------ Total Loss and LAE payments 43,460 38,863 31.3% 37.5% Change in reserves 37,732 23,254 27.1% 22.4% ------------------------------------ Net incurred loss and LAE $ 81,192 $ 62,117 58.4% 59.9% ==================================== THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Net Loss Data ($'s in thousands) Net Loss Reserves: 3/31/2007 12/31/2006 ---------- ----------- Insurance Companies: Marine $182,769 $179,393 Specialty 283,011 260,844 Professional Liability 57,545 51,571 Other 19,778 19,299 ---------- ----------- Total Insurance Companies 543,103 511,107 ---------- ----------- Lloyd's Operations: Marine 174,178 173,497 Other 16,566 11,512 ---------- ----------- Total Lloyd's Operations 190,744 185,009 ---------- ----------- Total net loss reserves $733,847 $696,116 ========== =========== Total net case loss reserves $258,753 $243,183 Total net IBNR loss reserves 475,094 452,933 ---------- ----------- Total net loss reserves $733,847 $696,116 ========== =========== CONTACT: The Navigators Group, Inc. Paul J. Malvasio, 914-933-6088 Executive Vice President and Chief Financial Officer pmalvasio@navg.com www.navg.com