CONDENSED FINANCIAL INFORMATION OF REGISTRANT

12 Months Ended

Dec. 31, 2011

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

SCHEDULE II

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

THE NAVIGATORS GROUP, INC.

BALANCE SHEETS

(Parent Company)

(In thousands, except share data)

		September 30,			September 30,
	December 31,
	2011			2010
ASSETS
Cash and investments	$	8,315		$	53,217
Investments in subsidiaries		895,047			877,999
Goodwill and other intangible assets		2,534			2,534
Other assets		13,806			12,028
Total assets	$	919,702		$	945,778
LIABILITIES AND STOCKHOLDERS’ EQUITY
Senior Notes	$	114,276		$	114,138
Accounts payable and other liabilities		649			946
Accrued interest payable		1,342			1,340
Total liabilities		116,267			116,424
Preferred stock, $.10 par value, authorized 1,000,000 shares, none issued		—			—
Common stock, $.10 par value, authorized 50,000,000 shares, issued 17,467,615 shares for 2011 and 17,274,440 shares for 2010		1,746			1,728
Additional paid-in capital		322,133			312,588
Treasury stock, at cost (3,511,380 shares for 2011 and 1,532,273 shares for 2010)		(155,801	)		(64,935	)
Retained earnings		565,109			539,512
Accumulated other comprehensive income:
Net unrealized gains (losses) on securities available-for-sale, net of tax		60,860			31,474
Foreign currency translation adjustment, net of tax		9,388			8,987
Total stockholders’ equity		803,435			829,354
Total liabilities and stockholders' equity	$	919,702		$	945,778

SCHEDULE II

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued)

THE NAVIGATORS GROUP, INC.

STATEMENTS OF INCOME

(Parent Company)

(In thousands)

		September 30,			September 30,			September 30,
	Year Ended December 31,
	2011			2010			2009
Revenues:
Net investment income	$	595		$	630		$	583
Dividends received from wholly-owned subsidiaries		45,000			40,000			25,000
Total revenues		45,595			40,630			25,583
Expenses:
Interest expense		8,188			8,178			8,455
Other (income) expense		2,969			634			(1,482	)
Total expenses		11,157			8,812			6,973
Income before income tax benefit		34,438			31,818			18,610
Income tax expense (benefit)		(3,635	)		(2,846	)		(2,174	)
Income before equity in undistributed net income of wholly owned subsidiaries		38,073			34,664			20,784
Equity in undistributed net income of wholly-owned subsidiaries		(12,476	)		34,914			42,374
Net income	$	25,597		$	69,578		$	63,158

SCHEDULE II

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued)

THE NAVIGATORS GROUP, INC.

STATEMENTS OF CASH FLOWS

(Parent Company)

(In thousands)

		September 30,			September 30,			September 30,
	Year Ended December 31,
	2011			2010			2009
Operating activities:
Net income	$	25,597		$	69,578		$	63,158
Adjustments to reconcile net income to net cash provided by (used in) operations:
Equity in undistributed net income of wholly-owned subsidiaries		(32,524	)		(74,914	)		(67,374	)
Dividends received from subsidiaries		45,000			40,000			25,000
Other		5,831			4,543			4,682
Net cash provided by (used in) operating activities		43,904			39,207			25,466
Investing activities:
Fixed maturities, available-for-sale
Sales		45,716			26,313			9,103
Purchases		(9,253	)		(28,213	)		(34,932	)
Equity securities
Sales		—			2,995			—
Purchases		—			(2,367	)		—
Net increase in short-term investments		10,064			5,122			13,863
Net cash provided by (used in) investing activities		46,527			3,850			(11,966	)
Financing activities:
Capital contribution		—			—			(2,000	)
Purchase of treasury stock		(90,866	)		(51,980	)		(6,756	)
Purchase of Senior Notes		—			—			(7,000	)
Proceeds of stock issued from employee stock purchase plan		945			868			727
Proceeds of stock issued from exercise of stock options		1,169			611			944
Net cash provided by (used in) financing activities		(88,752	)		(50,501	)		(14,085	)
Increase (decrease) in cash		1,679			(7,444	)		(585	)
Cash at beginning of year		1,646			9,090			9,675
Cash at end of year	$	3,325		$	1,646		$	9,090