SUPPLEMENTARY INSURANCE INFORMATION

12 Months Ended

Dec. 31, 2011

SCHEDULE III

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

SUPPLEMENTARY INSURANCE INFORMATION

		September 30,		September 30,		September 30,		September 30,		September 30,		September 30,		September 30,		September 30,		September 30,		September 30,
In thousands	Deferred policy acquisition costs		Reserve for losses and loss adjustment expenses		Unearned premiums		Other policy claims and benefits payable		Net earned premiums		Net investment income ⁽¹⁾		Losses and loss adjustment expenses incurred		Amortization of deferred policy acquisition costs ⁽²⁾		Other operating expenses ⁽¹⁾		Net written premiums
Year ended December 31, 2011
Insurance Companies	$	47,298	$	1,517,331	$	384,596	$	—	$	472,463	$	54,164	$	341,625	$	64,165	$	101,517	$	542,391
Lloyd's Operations		16,686		565,348	$	148,032		—		219,182		8,955		135,372		48,341		36,512		211,407

	$	63,984	$	2,082,679	$	532,628	$	—	$	691,645	$	63,119	$	476,997	$	112,506	$	138,029	$	753,798

Year ended December 31, 2010
Insurance Companies	$	33,273	$	1,433,556	$	318,119	$	—	$	438,851	$	62,792	$	280,120	$	59,122	$	106,631	$	429,355
Lloyd's Operations		21,928		552,282		145,396		—		221,080	$	8,286	$	141,035	$	49,991	$	33,112	$	224,583

	$	55,201	$	1,985,838	$	463,515	$	—	$	659,931	$	71,078	$	421,155	$	109,113	$	139,743	$	653,938

Year ended December 31, 2009
Insurance Companies	$	34,872	$	1,395,876	$	334,798	$	—	$	479,121	$	65,717	$	304,672	$	61,949	$	104,801	$	477,673
Lloyd's Operations		21,703		524,410		140,373		—		204,242		9,229		131,326		37,727		27,896		223,582

	$	56,575	$	1,920,286	$	475,171	$	—	$	683,363	$	74,946	$	435,998	$	99,676	$	132,697	$	701,255

(1)	— Net investment income and Other operating expenses reflect only such amounts attributable to the Company’s insurance operations.

(2)	— Amortization of deferred policy acquisition costs reflects only such amounts attributable to the Company’s insurance operations.

Lloyd's Operations

SUPPLEMENTARY INSURANCE INFORMATION

Note 10. Lloyd’s Syndicate 1221

The Company’s Lloyd’s Operations included in the consolidated financial statements represents its participation in Syndicate 1221. Syndicate 1221’s stamp capacity is £175 million ($271 million) for the 2011 underwriting year compared to £168 million ($264 million) for the 2010 underwriting year. Stamp capacity is a measure of the amount of premiums a Lloyd’s syndicate is authorized to write based on a business plan approved by the Council of Lloyd’s. Syndicate 1221’s stamp capacity is expressed net of commission (as is standard at Lloyd’s). The Syndicate 1221 premiums recorded in the Company’s financial statements are gross of commission. The Company controlled 100% of Syndicate 1221’s stamp capacity for the 2011, 2010 and 2009 underwriting years through its wholly-owned Lloyd’s corporate member.

The Company provides letters of credit and posts cash to Lloyd’s to support its participation in Syndicate 1221’s stamp capacity. As of December 31, 2011, the Company had provided letters of credit of $149.6 million and did not have any cash collateral posted. If Syndicate 1221 increases its stamp capacity and the Company participates in the additional stamp capacity, or if Lloyd’s changes the capital requirements, the Company may be required to supply additional collateral acceptable to Lloyd’s. If the Company is unwilling or unable to provide additional acceptable collateral, the Company will be required to reduce its participation in the stamp capacity of Syndicate 1221. The letters of credit are provided through a credit facility with a consortium of banks which provides the Company with the ability to have letters of credit issued to support Syndicate 1221’s stamp capacity at Lloyd’s for the 2011 and 2012 underwriting years. The ability to issue new letters of credit expires on December 31, 2011. If any letters of credit remain outstanding under the facility after December 31, 2012, we would be required to post additional collateral to secure the remaining letters of credit. If the credit facility is not renewed prior to December 31, 2012, the Company will need to find internal and/or external sources to provide either letters of credit or other collateral in order to continue to participate in Syndicate 1221. The credit facility is collateralized by all of the common stock of Navigators Insurance Company. Refer to Note 8, Credit Facility, for additional information.

- Definition

The entire disclosure for required supplementary insurance information giving segment detail in support of various balance sheet and income statement captions. The balance sheet information generally is presented as of the date of each audited balance sheet filed, and the income statement information generally is presented for each period for which an audited income statement is required to be filed. Supplementary insurance information table includes segment name; deferred policy acquisition costs; future policy benefits, losses, claims and loss expenses; unearned premiums; other policy claims and benefits payable; premium revenue; net investment income; benefits, claims, losses and settlement expenses; amortization of deferred policy acquisition costs; other operating expenses; and premiums written.

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