0001193125-13-198671.txt : 20130503 0001193125-13-198671.hdr.sgml : 20130503 20130503140022 ACCESSION NUMBER: 0001193125-13-198671 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20130502 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20130503 DATE AS OF CHANGE: 20130503 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: 13811831 BUSINESS ADDRESS: STREET 1: 6 INTERNATIONAL DR STREET 2: SUITE 100 CITY: RYE BROOK STATE: NY ZIP: 10573 BUSINESS PHONE: 9149348999 MAIL ADDRESS: STREET 1: 6 INTERNATIONAL DR STREET 2: SUITE 100 CITY: RYE BROOK STATE: NY ZIP: 10573 8-K 1 d531617d8k.htm FORM 8-K Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of report (Date of earliest event reported) May 2, 2013

 

 

The Navigators Group, Inc.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware   0-15886   13-3138397

(State or Other Jurisdiction

of Incorporation)

  

(Commission

File Number)

   (IRS Employer
Identification No.)

 

6 International Drive, Rye Brook, New York   10573
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code (914) 934-8999

 

 

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:

 

  ¨ 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 May 2, 2013, The Navigators Group, Inc. issued a press release announcing its earnings for the first quarter of 2013. This press release is attached hereto as exhibit 99.1.

 

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

 

99.1    First Quarter Earnings Press Release dated May 2, 2013.

 

2

SIGNATURES

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.

By:

  

/s/ Bruce J. Byrnes

 

Name:

  

Bruce J. Byrnes

 

Title:

   Senior Vice President and General Counsel

Date: May 3, 2013

EXHIBIT INDEX

 

Exhibit No.

   

Exhibit

99.1    First Quarter Earnings Press Release dated May 2, 2013.
 EX-99.1 2 d531617dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO    The Navigators Group, Inc.   
   CORPORATE NEWS   

Navigators Reports First Quarter Earnings

New York – May 2, 2013 — The Navigators Group, Inc. (NASDAQ:NAVG) reported net income of $13.9 million, or $0.97 per diluted share, for the three months ended March 31, 2013 compared to $7.9 million, or $0.56 per diluted share, for the comparable period in 2012. Operating earnings were $10.8 million, or $0.75 per diluted share, for the first quarter of 2013 compared to operating earnings of $6.8 million, or $0.48 per diluted share, for the comparable period in 2012.

Gross written premiums and net written premiums for the three months ended March 31, 2013 were $393.2 million and $269.5 million, respectively, an increase of 14.6% and 10.9% from the comparable period in 2012.

The combined loss and expense ratio for the three months ended March 31, 2013 was 97.9% compared to 99.8% for the comparable period in 2012.

Stan Galanski, President and Chief Executive Officer, commented, “We are pleased to report profitable underwriting results for the quarter, with improved profitability in our U.S. insurance business. We are experiencing positive rate movement across most of our product lines and are benefitting from the investments made in expanding our underwriting team over the past few years.”

Stockholders’ equity was $896.8 million, or $63.46 per share, as of March 31, 2013 compared to $879.5 million, or $62.61 per share, as of December 31, 2012.

Net investment income for the three months ended March 31, 2013 was $13.7 million, an increase of 21.3% from the comparable period in 2012. Net investment income for the three months ended March 31, 2012 was reduced by $4.5 million as a result of the settlement of our dispute with Equitas over foregone interest on amounts that were due on certain reinsurance contracts. The annualized pre-tax investment yield, excluding net realized gains and losses, net other-than-temporary impairment losses recognized in earnings, and for 2012 the $4.5 million in interest expense for the settlement of our dispute with Equitas, was 2.3% and 2.8% for the three months ended March 31, 2013 and 2012, respectively. The effective tax rate on net investment income was 28.5% for the three months ended March 31, 2013, compared to 25.2% for the comparable period in 2012.

The Company’s investment portfolio mainly consists of fixed income securities with an average quality rating of “AA/Aa” as defined by Standard & Poor’s and Moody’s, respectively, and an average effective duration of 4.0 years as of March 31, 2013. As of March 31, 2013, net unrealized gains within our investment portfolio were $100.6 million, a decrease of $2.8 million compared to December 31, 2012. There were $4.8 million of net realized gains including other-than-temporary impairment losses recognized in earnings for the three months ended March 31, 2013, compared to $1.7 million for the same period in 2012.

 

 

6 International Drive

TEL (914) 933-6000

   

Rye Brook, NY 10573

FAX (914) 934-2355

News Release

May 2, 2013

Page 2

Consolidated net cash flow from operations for the three months ended March 31, 2013 was $4.3 million, compared to $16.4 million for the comparable period in 2012.

The Company will hold a conference call on Friday, May 3, 2013 starting at 8:30 a.m. ET to discuss the 2013 first quarter results. The call will be available via live webcast on Navigators’ website (www.navg.com).

To participate by telephone, the domestic dial-in number is (800) 850-2903 and the international dial-in is (224) 357-2399. Participants may connect to the webcast at:

http://investor.shareholder.com/navg/eventdetail.cfm?eventid=127890

Operating earnings, or net income excluding after-tax net realized gains (losses) and net other-than-temporary impairment losses recognized in earnings, is a non-GAAP financial measure that is a common performance measurement for insurance companies. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business.

The Navigators Group, Inc. is an international specialty 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 Continental Europe.

The Navigators Group, Inc. logo is available at http://www.globenewswire.com/newsroom/prs /?pkgid=7778

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. Forward-looking statements are derived from information that we currently have and assumptions that we make. 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 reports on 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 that may affect that business. Navigators’ undertakes no obligation to publicly update or revise any forward-looking statement.

 

Contact:   

Ciro M. DeFalco

Senior Vice President and Chief Financial Officer

(914) 933-6043

cdefalco@navg.com

www.navg.com

News Release

Page 3

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Financial Highlights

($ in thousands, except share and per share data)

(unaudited)

 

     Three Months Ended
March 31,		        
     2013     2012     Change  

Results of Operations

       

Gross written premiums

    $ 393,222      $ 343,149        14.6 % 

Net written premiums

      269,452        243,045        10.9 % 

Revenues:

       

Net earned premiums

      202,328        183,119        10.5 % 

Net investment income

      13,657        11,258        21.3 % 

Total other-than-temporary impairment losses

      (42 )      (198 )      -78.8 % 

Portion of loss recognized in other comprehensive income (before tax)

      —           44        NM   
  

 

 

    

 

 

    

Net other-than-temporary impairment losses recognized in earnings

      (42 )      (154 )      -72.7 % 

Net realized gains (losses)

      4,814        1,842        NM   

Other income

      618        911        -32.1 % 
  

 

 

    

 

 

    

Total revenues

      221,375        196,976        12.4 % 
  

 

 

    

 

 

    

Expenses:

       

Net losses and loss adjustment expenses

      131,342        117,985        11.3 % 

Commission expenses

      26,555        29,450        -9.8 % 

Other operating expenses

      40,874        36,307        12.6 % 

Interest expense

      2,051        2,049        0.1 % 
  

 

 

    

 

 

    

Total expenses

      200,822        185,791        8.1 % 
  

 

 

    

 

 

    

Income before income taxes

      20,553        11,185        83.8 % 

Income tax expense (benefit)

      6,643        3,281        102.5 % 
  

 

 

    

 

 

    

Net income (loss)

    $ 13,910      $ 7,904        76.0 % 
  

 

 

    

 

 

    

Per Share Data

       

Net income per common share:

       

Basic

    $ 0.99      $ 0.57        74.7 % 

Diluted

    $ 0.97      $ 0.56        73.5 % 

Average common shares outstanding:

       

Basic

      14,085,821        13,979,442     

Diluted

      14,374,957        14,174,875     

Underwriting Ratios

       

Loss Ratio

      64.9 %      64.4 %   

Expense Ratio

      33.0 %      35.4 %   
  

 

 

    

 

 

    

Combined Ratio

      97.9 %      99.8 %   
     March 31,
2013		     Dec. 31,
2012		        

Balance Sheet Data

       

Stockholders’ equity

    $ 896,758      $ 879,485        2.0 % 

Book value per share

    $ 63.46      $ 62.61        1.4 % 

News Release

Page 4

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

($ in thousands, except share data)

 

     March 31,
2013		     December 31,
2012		  
     (unaudited)        
ASSETS     

Investments and cash:

     

Fixed maturities, available-for-sale, at fair value (amortized cost: 2013, $2,001,865; 2012, $2,034,765)

    $ 2,078,003      $ 2,121,833   

Equity securities, available-for-sale, at fair value (cost: 2013, $92,017; 2012, $85,004)

      116,482        101,297   

Short-term investments, at cost which approximates fair value

      129,475        153,788   

Cash

      58,576        45,336   
  

 

 

    

 

 

  

Total investments and cash

      2,382,536        2,422,254   
  

 

 

    

 

 

  

Premiums receivable

      400,397        320,182   

Prepaid reinsurance premiums

      232,776        221,015   

Reinsurance recoverable on paid losses

      51,955        49,282   

Reinsurance recoverable on unpaid losses and loss adjustment expenses

      872,290        880,139   

Deferred policy acquisition costs

      69,349        61,005   

Accrued investment income

      13,640        12,587   

Goodwill and other intangible assets

      6,785        7,093   

Deferred income tax, net

      4,049        3,216   

Receivable for investments sold

      9,334        4,310   

Other assets

      27,934        26,587   
  

 

 

    

 

 

  

Total assets

    $ 4,071,045      $ 4,007,670   
  

 

 

    

 

 

  
LIABILITIES AND STOCKHOLDERS’ EQUITY     

Liabilities:

     

Reserves for losses and loss adjustment expenses

    $ 2,104,386      $ 2,097,048   

Unearned premiums

      719,383        642,407   

Reinsurance balances payable

      165,113        165,813   

Senior notes

      114,462        114,424   

Current income tax payable, net

      7,078        2,133   

Payable for investments purchased

      20,905        58,345   

Accounts payable and other liabilities

      42,960        48,015   
  

 

 

    

 

 

  

Total liabilities

      3,174,287        3,128,185   
  

 

 

    

 

 

  

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 17,641,357 shares for 2013 and 17,558,046 shares for 2012

      1,763        1,755   

Additional paid-in capital

      331,932        329,452   

Treasury stock, at cost (3,511,380 shares for 2013 and 2012)

      (155,801 )      (155,801 ) 

Retained earnings

      642,781        628,871   

Accumulated other comprehensive income

      76,083        75,208   
  

 

 

    

 

 

  

Total stockholders’ equity

      896,758        879,485   
  

 

 

    

 

 

  

Total liabilities and stockholders’ equity

    $ 4,071,045      $ 4,007,670   
  

 

 

    

 

 

  

News Release

Page 5

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Comparative Premium Data

($ in thousands)

 

      Three Months         
     2013      2012      Change  

Gross Written Premiums:

         

Insurance Companies:

         

Marine

    $ 50,847       $ 61,865         -17.8 % 

Property Casualty

      218,964         155,919         40.4 % 

Professional Liability

      31,817         30,554         4.1 % 
  

 

 

     

 

 

     
     301,628         248,338         21.5 % 

Lloyd’s Operations:

         

Marine

      53,644         61,775         -13.2 % 

Property Casualty

      25,058         24,296         3.1 % 

Professional Liability

      12,892         8,740         47.5 % 
  

 

 

     

 

 

     
     91,594         94,811         -3.4 % 
  

 

 

     

 

 

     

Total

    $ 393,222       $ 343,149         14.6 % 
  

 

 

     

 

 

     
     Three Months         
     2013      2012      Change  

Net Written Premiums:

         

Insurance Companies:

         

Marine

    $ 41,141       $ 42,865         -4.0 % 

Property Casualty

      149,951         114,532         30.9 % 

Professional Liability

      25,227         23,853         5.8 % 
  

 

 

     

 

 

     
     216,319         181,250         19.3 % 

Lloyd’s Operations:

         

Marine

      39,558         48,058         -17.7 % 

Property Casualty

      7,312         9,355         -21.8 % 

Professional Liability

      6,263         4,382         42.9 % 
  

 

 

     

 

 

     
     53,133         61,795         -14.0 % 
  

 

 

     

 

 

     

Total

    $ 269,452       $ 243,045         10.9 % 
  

 

 

     

 

 

     
     Three Months         
     2013      2012      Change  

Net Earned Premiums:

         

Insurance Companies:

         

Marine

    $ 36,725       $ 35,275         4.1 % 

Property Casualty

      92,718         74,368         24.7 % 

Professional Liability

      24,888         21,905         13.6 % 
  

 

 

     

 

 

     
     154,331         131,548         17.3 % 

Lloyd’s Operations:

         

Marine

      34,045         33,264         2.3 % 

Property Casualty

      7,879         14,502         -45.7 % 

Professional Liability

      6,073         3,805         59.6 % 
  

 

 

     

 

 

     
     47,997         51,571         -6.9 % 
  

 

 

     

 

 

     

Total

    $ 202,328       $ 183,119         10.5 % 
  

 

 

     

 

 

     

 

 

  

News Release

Page 6

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

Three Months Ended

March 31, 2013

($ in thousands)

 

     Insurance
Companies		     Lloyd’s
Operations		     Corporate  (1)     Total  

Gross written premiums

    $ 301,628      $ 91,594      $ —        $ 393,222   

Net written premiums

      216,319        53,133        —          269,452   

Net earned premiums

      154,331        47,997        —          202,328   

Net losses and loss adjustment expenses

      (106,985 )      (24,357 )      —          (131,342 ) 

Commission expenses

      (18,517 )      (8,621 )      583        (26,555 ) 

Other operating expenses

      (29,343 )      (11,531 )      —          (40,874 ) 

Other income (expense)

      659        542        (583 )      618   
  

 

 

    

 

 

    

 

 

    

 

 

  

Underwriting profit (loss)

      145        4,030        —          4,175   

Net investment income

      11,951        1,702        4        13,657   

Net realized gains (losses)

      4,792        (20 )      0        4,772   

Interest expense

      —          —          (2,051 )      (2,051 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Income (loss) before income taxes

      16,888        5,712        (2,047 )      20,553   

Income tax expense (benefit)

      5,404        2,046        (807 )      6,643   
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income (loss)

    $ 11,484      $ 3,666      $ (1,240 )    $ 13,910   
  

 

 

    

 

 

    

 

 

    

 

 

  

Losses and loss adjustment expenses ratio

      69.3 %      50.7 %        64.9 % 

Commission expense ratio

      12.0 %      18.0 %        13.1 % 

Other operating expense ratio (2)

      18.6 %      22.9 %        19.9 % 
  

 

 

    

 

 

      

 

 

  

Combined ratio

      99.9 %      91.6 %        97.9 % 
  

 

 

    

 

 

      

 

 

  

 

(1) The Corporate segment includes intercompany eliminations.
(2) The Other operating expense ratio includes Other income (expense).

News Release

Page 7

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

Three Months Ended

March 31, 2012

($ in thousands)

 

     Insurance
Companies		     Lloyd’s
Operations		     Corporate  (1)     Total  

Gross written premiums

    $ 248,338      $ 94,811      $ —        $ 343,149   

Net written premiums

      181,250        61,795        —          243,045   

Net earned premiums

      131,548        51,571        —          183,119   

Net losses and loss adjustment expenses

      (91,177 )      (26,808 )      —          (117,985 ) 

Commission expenses

      (19,301 )      (10,886 )      737        (29,450 ) 

Other operating expenses

      (25,345 )      (10,962 )      —          (36,307 ) 

Other income (expense)

      1,642        6        (737 )      911   
  

 

 

    

 

 

    

 

 

    

 

 

  

Underwriting profit (loss)

      (2,633 )      2,921        —          288   

Net investment income

      8,935        2,283        40        11,258   

Net realized gains (losses)

      1,875        (187 )      —          1,688   

Interest expense

      —          —          (2,049 )      (2,049 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Income (loss) before income taxes

      8,177        5,017        (2,009 )      11,185   

Income tax expense (benefit)

      2,258        1,726        (703 )      3,281   
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income (loss)

    $ 5,919      $ 3,291      $ (1,306 )    $ 7,904   
  

 

 

    

 

 

    

 

 

    

 

 

  

Losses and loss adjustment expenses ratio

      69.3 %      52.0 %        64.4 % 

Commission expense ratio

      14.7 %      21.1 %        16.1 % 

Other operating expense ratio (2)

      18.0 %      21.2 %        19.3 % 
  

 

 

    

 

 

      

 

 

  

Combined ratio

      102.0 %      94.3 %        99.8 % 
  

 

 

    

 

 

      

 

 

  

 

(1) The Corporate segment includes intercompany eliminations.
(2) The Other operating expense ratio includes Other income (expense).

News Release

Page 8

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Underwriting Results

($ in thousands)

 

    Three Months Ended March 31, 2013  
    Net     Losses                                
    Earned     and LAE     Underwriting     Underwriting     Loss     Expense     Combined  
    Premiums     Incurred     Expenses     Profit (Loss)     Ratio     Ratio     Ratio  

Insurance Companies:

              

Marine

   $ 36,725      $ 23,385      $ 12,828      $ 512        63.7 %      34.9 %      98.6 % 

Property Casualty

     92,718        61,238        26,642        4,838        66.0 %      28.8 %      94.8 % 

Professional Liability

     24,888        22,362        7,731        (5,205 )      89.9 %      31.0 %      120.9 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Insurance Companies

     154,331        106,985        47,201        145        69.3 %      30.6 %      99.9 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Lloyd’s Operations:

              

Marine

     34,045        18,837        13,270        1,938        55.3 %      39.0 %      94.3 % 

Property Casualty

     7,879        751        4,320        2,808        9.5 %      54.9 %      64.4 % 

Professional Liability

     6,073        4,769        2,020        (716 )      78.5 %      33.3 %      111.8 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Lloyd’s

     47,997        24,357        19,610        4,030        50.7 %      40.9 %      91.6 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total All

   $ 202,328      $ 131,342      $ 66,811      $ 4,175        64.9 %      33.0 %      97.9 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
    Three Months Ended March 31, 2012  
    Net     Losses                                
    Earned     and LAE     Underwriting     Underwriting     Loss     Expense     Combined  
    Premiums     Incurred     Expenses     Profit (Loss)     Ratio     Ratio     Ratio  

Insurance Companies:

              

Marine

   $ 35,275      $ 27,770      $ 12,655      $ (5,150 )      78.7 %      35.9 %      114.6 % 

Property Casualty

     74,368        48,148        22,854        3,366        64.7 %      30.8 %      95.5 % 

Professional Liability

     21,905        15,259        7,495        (849 )      69.7 %      34.2 %      103.9 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Insurance Companies

     131,548        91,177        43,004        (2,633 )      69.3 %      32.7 %      102.0 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Lloyd’s Operations:

              

Marine

     33,264        21,558        14,682        (2,976 )      64.8 %      44.1 %      108.9 % 

Property Casualty

     14,502        4,048        5,059        5,395        27.9 %      34.9 %      62.8 % 

Professional Liability

     3,805        1,202        2,101        502        31.6 %      55.2 %      86.8 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Lloyd’s

     51,571        26,808        21,842        2,921        52.0 %      42.3 %      94.3 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total All

   $ 183,119      $ 117,985      $ 64,846      $ 288        64.4 %      35.4 %      99.8 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

     Amounts     Loss Ratio  
Net Incurred Loss Activity    Mar. 31,     Mar. 31,     Mar. 31,     Mar. 31,  
For the Three Months Ended:    2013     2012     2013     2012  

Insurance Companies:

         

Loss and LAE payments

    $ 79,904      $ 93,652        51.8 %      71.2 % 

Change in reserves

      27,081        (2,475 )      17.5 %      -1.9 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net incurred loss and LAE

      106,985        91,177        69.3 %      69.3 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Lloyd’s Operations:

         

Loss and LAE payments

      30,462        24,644        63.4 %      47.8 % 

Change in reserves

      (6,105 )      2,164        -12.7 %      4.2 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net incurred loss and LAE

      24,357        26,808        50.7 %      52.0 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total

         

Loss and LAE payments

      110,366        118,296        54.5 %      64.6 % 

Change in reserves

      20,976        (311 )      10.4 %      -0.2 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net incurred loss and LAE

    $ 131,342      $ 117,985        64.9 %      64.4 % 
  

 

 

    

 

 

    

 

 

    

 

 

  
Impact of Prior Years Reserves    Amounts     Loss Ratio Impact  
Favorable / (Unfavorable) Development    Mar. 31,     Mar. 31,     Mar. 31,     Mar. 31,  
For the Three Months Ended:    2013     2012     2013     2012  

Insurance Companies

    $ (7,730 )    $ 2,716        -3.8 %      1.5 % 

Lloyd’s Operations

      3,647        4,150        1.8 %      2.2 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total

    $ (4,083 )    $ 6,866        -2.0 %      3.7 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

News Release

Page 9

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Net Loss Data

($ in thousands)

 

     Case      IBNR         
Net Loss Reserves, March 31, 2013:    Reserves      Reserves      Total  

Insurance Companies:

         

Marine

    $ 134,550       $ 120,674       $ 255,224   

Property Casualty

      216,211         294,205         510,416   

Professional Liability

      65,272         82,367         147,639   
  

 

 

     

 

 

     

 

 

  

Total Insurance Companies

      416,033         497,246         913,279   
  

 

 

     

 

 

     

 

 

  

Lloyd’s Operations:

         

Marine

      124,780         92,504         217,284   

Property Casualty

      26,307         22,895         49,202   

Professional Liability

      12,764         39,567         52,331   
  

 

 

     

 

 

     

 

 

  

Total Lloyd’s Operations

      163,851         154,966         318,817   
  

 

 

     

 

 

     

 

 

  

Total Net Loss Reserves

    $ 579,884       $ 652,212       $ 1,232,096   
  

 

 

     

 

 

     

 

 

  
     Case      IBNR         
Net Loss Reserves, December 31, 2012    Reserves      Reserves      Total  

Insurance Companies:

         

Marine

    $ 137,934       $ 114,236       $ 252,170   

Property Casualty

      204,988         290,455         495,443   

Professional Liability

      54,092         84,493         138,585   
  

 

 

     

 

 

     

 

 

  

Total Insurance Companies

      397,014         489,184         886,198   
  

 

 

     

 

 

     

 

 

  

Lloyd’s Operations:

         

Marine

      125,884         95,122         221,006   

Property Casualty

      27,903         28,463         56,366   

Professional Liability

      14,694         38,645         53,339   
  

 

 

     

 

 

     

 

 

  

Total Lloyd’s Operations

      168,481         162,230         330,711   
  

 

 

     

 

 

     

 

 

  

Total Net Loss Reserves

    $ 565,495       $ 651,414       $ 1,216,909   
  

 

 

     

 

 

     

 

 

  

News Release

Page 10

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Investment Data

March 31, 2013

As of March 31, 2013, the average quality of the investment portfolio as rated by S&P and Moody’s was AA/Aa with an average duration of 4.0 years. The Company does not own any collateralized debt obligations (CDO’s), collateralized loan obligations (CLO’s) or asset backed commercial paper.

As of March 31, 2013, the Company owned two asset-backed securities approximating $0.7 million with subprime mortgage exposures. The securities have an effective maturity of 3.0 years. In addition, the Company owned a total of seven collateralized mortgage obligations and asset-backed securities approximating $2.1 million classified as Alt-A which is a credit category between prime and subprime. They have an effective maturity of 6.1 years. Such subprime and Alt-A categories are as defined by S&P. The Company is receiving principal and/or interest payments on all these securities and believes such amounts are fully collectible.

The following table sets forth our cash and investments as of March 31, 2013:

 

            Gross      Gross     Cost or  
     Fair      Unrealized      Unrealized     Amortized  

March 31, 2013

    Value      Gains      (Losses)     Cost  
     ($ in thousands)  

Fixed maturities:

           

U.S.Treasury bonds, agency bonds and foreign government bonds

    $ 531,463       $ 7,988       $ (31 )    $ 523,506   

States, municipalities and political subdivisions

      449,387         17,619         (1,744 )      433,512   

Mortgage- and asset-backed securities:

           

Agency mortgage-backed securities

      346,829         11,842         (640 )      335,627   

Residential mortgage obligations

      38,350         1,223         (187 )      37,314   

Asset-backed securities

      47,092         1,110         (29 )      46,011   

Commercial mortgage-backed securities

      180,939         13,170         (29 )      167,798   
  

 

 

     

 

 

     

 

 

    

 

 

  

Subtotal

      613,210         27,345         (885 )      586,750   

Corporate bonds

      483,943         25,970         (124 )      458,097   
  

 

 

     

 

 

     

 

 

    

 

 

  

Total fixed maturities

      2,078,003         78,922         (2,784 )      2,001,865   
  

 

 

     

 

 

     

 

 

    

 

 

  

Equity securities—common stocks

      116,482         24,712         (247 )      92,017   

Short-term investments

      129,475         —           —          129,475   

Cash

      58,576         —           —          58,576   
  

 

 

     

 

 

     

 

 

    

 

 

  

Total

    $ 2,382,536       $ 103,634       $ (3,031 )    $ 2,281,933   
  

 

 

     

 

 

     

 

 

    

 

 

  

News Release

Page 11

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Investment Data

March 31, 2013

($ in thousands)

The following tables set forth our agency mortgage-backed securities and residential mortgage obligations, categorized by those issued by GNMA, FNMA and FHLMC and the quality category (prime, Alt-A and subprime) for all other such investments at March 31, 2013:

 

            Gross      Gross     Cost or  
     Fair      Unrealized      Unrealized     Amortized  
Agency mortgage-backed securities:    Value      Gains      (Losses)     Cost  

GNMA

    $ 126,391       $ 4,074       $ (556 )    $ 122,873   

FNMA

      169,045         6,294         (62 )      162,813   

FHLMC

      51,393         1,474         (22 )      49,941   
  

 

 

     

 

 

     

 

 

    

 

 

  

Total

    $ 346,829       $ 11,842       $ (640 )    $ 335,627   
  

 

 

     

 

 

     

 

 

    

 

 

  
            Gross      Gross     Cost or  
     Fair      Unrealized      Unrealized     Amortized  
Residential mortgage obligations:    Value      Gains      (Losses)     Cost  

Prime

    $ 12,507       $ 417       $ (141 )    $ 12,231   

Alt-A

      2,139         81         (46 )      2,104   

Subprime

      668         28         —          640   

Non-US RMBS

      23,036         697         —          22,339   
  

 

 

     

 

 

     

 

 

    

 

 

  

Total

    $ 38,350       $ 1,223       $ (187 )    $ 37,314   
  

 

 

     

 

 

     

 

 

    

 

 

  
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