Condensed Financial Information of Registrant

12 Months Ended

Dec. 31, 2012

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 amounts)

	December 31,
	2012			2011
ASSETS
Cash and investments	$	15,026		$	8,315
Investments in subsidiaries		955,024			895,047
Goodwill and other intangible assets		2,534			2,534
Other assets		23,219			13,806
Total assets	$	995,803		$	919,702
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Senior Notes	$	114,424		$	114,276
Accounts payable and other liabilities		552			649
Accrued interest payable		1,342			1,342
Total liabilities		116,318			116,267
Stockholders’ Equity:
Preferred stock, $.10 par value, authorized 1,000,000 shares, none issued		—			—
Common stock, $.10 par value, authorized 50,000,000 shares, issued 17,558,046 shares for 2012 and 17,467,615 shares for 2011		1,755			1,746
Additional paid-in capital		329,452			322,133
Treasury stock, at cost (3,511,380 shares for 2012 and 2011)		(155,801	)		(155,801	)
Retained earnings		628,871			565,109
Accumulated other comprehensive income:
Net unrealized gains (losses) on securities available-for-sale, net of tax		67,161			60,860
Foreign currency translation adjustment, net of tax		8,047			9,388
Total stockholders’ equity		879,485			803,435
Total liabilities and stockholders’ equity	$	995,803		$	919,702

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)

	Year Ended December 31,
	2012			2011			2010
Revenues:
Net investment income	$	341		$	595		$	630
Dividends received from wholly-owned subsidiaries		15,000			45,000			40,000
Total revenues		15,341			45,595			40,630
Expenses:
Interest expense		8,198			8,188			8,178
Other (income) expense		1,749			2,969			634
Total expenses		9,947			11,157			8,812
Income before income tax benefit		5,394			34,438			31,818
Income tax expense (benefit)		(3,332	)		(3,635	)		(2,846	)
Income before equity in undistributed net income of wholly owned subsidiaries		8,726			38,073			34,664
Equity in undistributed net income of wholly-owned subsidiaries		55,036			(12,476	)		34,914
Net income	$	63,762		$	25,597		$	69,578

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)

	Year Ended December 31,
	2012			2011			2010
Operating activities:
Net income	$	63,762		$	25,597		$	69,578
Adjustments to reconcile net income to net cash provided by (used in) operations:
Equity in undistributed net income of wholly-owned subsidiaries		(70,036	)		(32,524	)		(74,914	)
Dividends received from subsidiaries		15,000			45,000			40,000
Other		(3,265	)		5,831			4,543
Net cash provided by (used in) operating activities		5,461			43,904			39,207
Investing activities:
Fixed maturities, available-for-sale
Sales		7,986			45,716			26,313
Purchases		(14,700	)		(9,253	)		(28,213	)
Equity securities
Sales		—			—			2,995
Purchases		—			—			(2,367	)
Net increase in short-term investments		(167	)		10,064			5,122
Net cash provided by (used in) investing activities		(6,881	)		46,527			3,850
Financing activities:
Capital contribution		—			—			—
Purchase of treasury stock		—			(90,866	)		(51,980	)
Proceeds of stock issued from employee stock purchase plan		672			945			868
Proceeds of stock issued from exercise of stock options		404			1,169			611
Net cash provided by (used in) financing activities		1,076			(88,752	)		(50,501	)
Increase (decrease) in cash		(344	)		1,679			(7,444	)
Cash at beginning of year		3,325			1,646			9,090
Cash at end of year	$	2,981		$	3,325		$	1,646