10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2013

or

¨ Transitional Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                      to                     

Commission file number 0-15886

The Navigators Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware	13-3138397
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
6 International Drive, Rye Brook, New York	10573
(Address of principal executive offices)	(Zip Code)

(914) 934-8999

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report.)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of common shares outstanding as of April 24, 2013 was 14,129,977.

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

INDEX

	Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets March 31, 2013 (Unaudited) and December 31, 2012		3
Consolidated Statements of Income (Unaudited) Three Months Ended March 31, 2013 and 2012		4
Consolidated Statements of Comprehensive Income (Unaudited) Three Months Ended March 31, 2013 and 2012		5
Consolidated Statements of Stockholders’ Equity (Unaudited) Three Months Ended March 31, 2013		6
Consolidated Statements of Cash Flows (Unaudited) Three Months Ended March 31, 2013 and 2012		7
Notes to Interim Consolidated Financial Statements (Unaudited)		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		27
Item 3. Quantitative and Qualitative Disclosures About Market Risk		58
Item 4. Controls and Procedures		58
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		59
Item 1A. Risk Factors		60
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		60
Item 3. Defaults Upon Senior Securities		60
Item 4. Mine Safety Disclosures		60
Item 5. Other Information		60
Item 6. Exhibits		61
Signatures		62
Index to Exhibits		63

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

	March 31,			December 31,
	2013			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

The accompanying Notes to Interim Consolidated Financial Statements are an integral part of these financial statements.

3

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(In thousands, except share and per share amounts)

	Three Months Ended March 31,
	2013			2012
Gross written premiums	$	393,222		$	343,149
Revenues:
Net written premiums	$	269,452		$	243,045
Change in unearned premiums		(67,124	)		(59,926	)
Net earned premiums		202,328			183,119
Net investment income		13,657			11,258
Total other-than-temporary impairment losses		(42	)		(198	)
Portion of loss recognized in other comprehensive income (before tax)		—			44
Net other-than-temporary impairment losses recognized in earnings		(42	)		(154	)
Net realized gains (losses)		4,814			1,842
Other income (expense)		618			911
Total revenues	$	221,375		$	196,976
Expenses:
Net losses and loss adjustment expenses	$	131,342		$	117,985
Commission expenses		26,555			29,450
Other operating expenses		40,874			36,307
Interest expense		2,051			2,049
Total expenses		200,822			185,791
Income (loss) before income taxes		20,553			11,185
Income tax expense (benefit)		6,643			3,281
Net income (loss)	$	13,910		$	7,904
Net income per common share:
Basic	$	0.99		$	0.57
Diluted	$	0.97		$	0.56
Average common shares outstanding:
Basic		14,085,821			13,979,442
Diluted		14,374,957			14,174,875

The accompanying Notes to Interim Consolidated Financial Statements are an integral part of these financial statements.

4

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(In thousands)

	Three Months Ended March 31,
	2013			2012
Net income (loss)	$	13,910		$	7,904
Other comprehensive income (loss):
Change in net unrealized gains (losses) on investments:
Unrealized gains (losses) on investments arising during the period, net of deferred tax of $617 and $4,937 in 2013 and 2012, respectively	$	1,145		$	9,168
Reclassification adjustment for net realized (gains) losses included in net income net of deferred tax of $1,770 and $344 in 2013 and 2012, respectively		(3,179	)		(638	)
Change in net unrealized gains (losses) on investments	$	(2,034	)	$	8,530
Change in other-than-temporary impairments:
Non-credit other-than-temporary impairments arising during the period, net of deferred tax of $150 and $241 in 2013 and 2012, respectively	$	279		$	448
Reclassification adjustment for non-credit other-than-temporary impairment losses recognized in net income net of deferred tax of $16 in 2012		—			(29	)
Change in other-than-temporary impairments	$	279		$	419
Change in foreign currency translation gains (losses), net of deferred tax of $1,543 and $1,399 in 2012 and 2011, respectively		2,630			(2,972	)
Other comprehensive income (loss)	$	875		$	5,977
Comprehensive income (loss)	$	14,785		$	13,881

The accompanying Notes to Interim Consolidated Financial Statements are an integral part of these financial statements.

5

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

(In thousands, except share amounts)

					Additional									Accumulated Other			Total
	Common Stock				Paid-in		Treasury Stock					Retained		Comprehensive			Stockholders’
	Shares		Amount		Capital		Shares		Amount			Earnings		Income (Loss)			Equity
Balance, December 31, 2012		17,558,046	$	1,755	$	329,452		3,511,380	$	(155,801	)	$	628,871	$	75,208		$	879,485
Net income													13,910		—			13,910
Changes in other comprehensive income:
Change in net unrealized gain (loss) on investments		—		—		—		—		—			—		(2,034	)		(2,034	)
Change in net non-credit other-than-temporary impairment losses		—		—		—		—		—			—		279			279
Change in foreign currency translation gain (loss)		—		—		—		—		—			—		2,630			2,630
Total other comprehensive income		—		—		—		—		—			—		875			875
Shares issued under stock plan		83,311		8		1,122		—		—			—		—			1,130
Share-based compensation		—		—		1,358		—		—			—		—			1,358
Balance, March 31, 2013		17,641,357	$	1,763	$	331,932		3,511,380	$	(155,801	)	$	642,781	$	76,083		$	896,758

The accompanying Notes to Interim Consolidated Financial Statements are an integral part of these financial statements.

6

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)

	Three Months Ended March 31,
	2013			2012
Operating activities:
Net income (loss)	$	13,910		$	7,904
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation & amortization		1,025			1,054
Deferred income taxes		(1,370	)		(6,217	)
Net realized (gains) losses		(4,814	)		(1,842	)
Net other-than-temporary losses recognized in earnings		42			154
Changes in assets and liabilities:
Reinsurance recoverable on paid and unpaid losses and loss adjustment expenses		5,176			(16,397	)
Reserves for losses and loss adjustment expenses		7,338			30,326
Prepaid reinsurance premiums		(11,761	)		(8,054	)
Unearned premiums		76,976			68,705
Premiums receivable		(80,215	)		(90,071	)
Deferred policy acquisition costs		(8,344	)		(6,017	)
Accrued investment income		(1,053	)		(36	)
Reinsurance balances payable		(700	)		21,965
Current income tax payable, net		4,945			7,154
Other		3,157			7,743
Net cash provided by (used in) operating activities	$	4,312		$	16,371
Investing activities:
Fixed maturities
Redemptions and maturities	$	28,469		$	47,523
Sales		362,090			273,529
Purchases		(358,829	)		(371,071	)
Equity securities
Sales		4,787			—
Purchases		(9,926	)		(2,055	)
Change in payable for securities		(42,464	)		35,881
Net change in short-term investments		24,234			(80,757	)
Purchase of property and equipment		(919	)		(1,586	)
Net cash provided by (used in) investing activities	$	7,442		$	(98,536	)
Financing activities:
Proceeds of stock issued from employee stock purchase plan	$	374		$	313
Proceeds of stock issued from exercise of stock options		1,112			—
Net cash provided by (used in) financing activities	$	1,486		$	313
Increase (decrease) in cash	$	13,240		$	(81,852	)
Cash at beginning of year		45,336			127,360
Cash at end of period	$	58,576		$	45,508
Supplemental cash information:
Income taxes paid, net	$	1,198		$	1,519
Interest paid	$	—		$	—
Issuance of stock to directors	$	400		$	242

The accompanying Notes to Interim Consolidated Financial Statements are an integral part of these financial statements.

7

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements

(Unaudited)

Note 1. Accounting Policies

The accompanying interim consolidated financial statements are unaudited and reflect all adjustments which, in the opinion of management, are necessary to fairly present the results of The Navigators Group, Inc. and its subsidiaries for the interim periods presented on the basis of United States generally accepted accounting principles (“GAAP” or “U.S. GAAP”). All such adjustments are of a normal recurring nature. All significant intercompany transactions and balances have been eliminated. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting periods. The results of operations for any interim period are not necessarily indicative of results for the full year. The term “the Company” as used herein is used to mean The Navigators Group, Inc. and its subsidiaries, unless the context otherwise requires. The terms “Parent” or “Parent Company” are used to mean The Navigators Group, Inc. without its subsidiaries. These financial statements should be read in conjunction with the consolidated financial statements and notes contained in the Company’s 2012 Annual Report on Form 10-K.

Note 2. Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013 -02 amending Codification topic 220 – Comprehensive Income. The amendments do not change the current requirements for reporting net income or other comprehensive income in the financial statements. The guidance requires an entity to present information about significant items reclassified out of Accumulated Other Comprehensive Income (“AOCI”) by component and for items reclassified out of AOCI and into net income, the entity must disclose the effect of such items on the affected net income line item. The Company adopted this standard effective January 1, 2013, and presents this information on the consolidated statements of comprehensive income. Adoption of this standard did not have any impact on the Company’s consolidated balance sheets, results of operations or cash flows.

In July 2012, the FASB issued ASU 2012-02 amending Codification topic 350 – Intangibles – Goodwill and Other. The amendment is intended to reduce cost and complexity, in addition to enhancing consistency of impairment testing guidance among long-lived asset categories by permitting entities to assess qualitative factors to determine whether it is necessary to calculate an asset’s fair value when testing an indefinite-lived asset for impairment. The amendment is effective for fiscal years beginning after September 15, 2012. The Company adopted this standard effective January 1, 2013. Adoption of this standard did not have any impact on the Company’s consolidated financial position, results of operating or cash flows.

Note 3. Segment Information

The Company classifies its business into two underwriting segments consisting of the Insurance Companies segment (“Insurance Companies”) and the Lloyd’s Operations segment (“Lloyd’s Operations”), which are separately managed, and a Corporate segment (“Corporate”). Segment data for each of the two underwriting segments include allocations of the operating expenses of the wholly-owned underwriting management companies and the Parent Company’s operating expenses and related income tax amounts. The Corporate segment consists of the Parent Company’s investment income, interest expense and the related tax effect.

8

The Company evaluates the performance of each underwriting segment based on its underwriting and GAAP results. The Insurance Companies and the Lloyd’s Operations results are measured by taking into account net earned premiums, net losses and loss adjustment expenses (“LAE”), commission expenses, other operating expenses and other income (expense). Each segment maintains its own investments on which it earns income and realizes capital gains or losses. The Company’s underwriting performance is evaluated separately from the performance of its investment portfolios.

The Insurance Companies segment consists of Navigators Insurance Company, which includes a United Kingdom Branch (the “U.K. Branch”), and Navigators Specialty Insurance Company, which underwrites specialty and professional liability insurance on an excess and surplus lines basis. All of the insurance business written by Navigators Specialty Insurance Company is fully reinsured by Navigators Insurance Company pursuant to a 100% quota share reinsurance agreement. The insurance and reinsurance business written by our Insurance Companies is underwritten through our wholly-owned underwriting management Companies, Navigators Management Company, Inc. (“NMC”) and Navigators Management (UK) Ltd. (“NMUK”).

Our Lloyd’s Operations segment includes Navigators Underwriting Agency Ltd. (“NUAL”), a Lloyd’s of London (“Lloyd’s”) underwriting agency which manages Lloyd’s Syndicate 1221 (“Syndicate 1221”). Our Lloyd’s Operations primarily underwrite marine and related lines of business along with offshore energy, construction coverages for onshore energy business and professional liability insurance at Lloyd’s through Syndicate 1221. We control 100% of Syndicate 1221’s stamp capacity through our wholly-owned subsidiary, Navigators Corporate Underwriters Ltd., (“NCUL”) which is referred to as a corporate name in the Lloyd’s market.

The Insurance Companies and the Lloyd’s Operations underwriting results are measured based on underwriting profit or loss and the related combined ratio, which are both non-GAAP measures of underwriting profitability. Underwriting profit or loss is calculated from net earned premiums, less the sum of net losses and LAE, commission expenses, other operating expenses and other income (expense). The combined ratio is derived by dividing the sum of net losses and LAE, commission expenses, other operating expenses and other income (expense) by net earned premiums. A combined ratio of less than 100% indicates an underwriting profit and greater than 100% indicates an underwriting loss.

9

Financial data by segment for the three months ended March 31, 2013 and 2012 were as follows:

	Three Month 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	)		—			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
Identifiable assets	$	3,087,308		$	936,471		$	47,266		$	4,071,045
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) — Includes Corporate segment intercompany eliminations.

(2) — Includes Other operating expenses and Other income.

10

	Three Month 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
Identifiable assets	$	2,899,369		$	907,760		$	40,398		$	3,847,527
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) — Includes Corporate segment intercompany eliminations.

(2) — Includes Other operating expenses and Other income.

11

The following tables provide additional financial data by segment for the three months ended March 31, 2013 and 2012:

	Three Months Ended March 31, 2013
In thousands	Insurance Companies		Lloyd’s Operations		Total
Gross written premiums:
Marine	$	50,847	$	53,644	$	104,491
Property casualty		218,964		25,058		244,022
Professional liability		31,817		12,892		44,709
Total	$	301,628	$	91,594	$	393,222
Net written premiums:
Marine	$	41,141	$	39,558	$	80,699
Property casualty		149,951		7,312		157,263
Professional liability		25,227		6,263		31,490
Total	$	216,319	$	53,133	$	269,452
Net earned premiums:
Marine	$	36,725	$	34,045	$	70,770
Property casualty		92,718		7,879		100,597
Professional liability		24,888		6,073		30,961
Total	$	154,331	$	47,997	$	202,328
	Three Months Ended March 31, 2012
In thousands	Insurance Companies		Lloyd’s Operations		Total
Gross written premiums:
Marine	$	61,865	$	61,775	$	123,640
Property casualty		155,919		24,296		180,215
Professional liability		30,554		8,740		39,294
Total	$	248,338	$	94,811	$	343,149
Net written premiums:
Marine	$	42,865	$	48,058	$	90,923
Property casualty		114,532		9,355		123,887
Professional liability		23,853		4,382		28,235
Total	$	181,250	$	61,795	$	243,045
Net earned premiums:
Marine	$	35,275	$	33,264	$	68,539
Property casualty		74,368		14,502		88,870
Professional liability		21,905		3,805		25,710
Total	$	131,548	$	51,571	$	183,119

The Insurance Companies net earned premiums include $10.1 million and $21.0 million of net earned premiums from the U.K. Branch for the three months ended March 31, 2013 and 2012, respectively.

12

Note 4. Reinsurance Ceded

The Company’s ceded earned premiums were $110.9 million and $91.7 million for the three months ended March 31, 2013 and 2012, respectively. The increase in ceded earned premiums from 2012 to 2013 is primarily due to growth and change in mix of business, partially offset by a reduction in reinsurance reinstatement premiums in 2013 as compared to 2012 related to specific losses for each year.

The Company’s ceded incurred losses were $53.6 million and $70.7 million for the three months ended March 31, 2013 and 2012, respectively.

The following table lists the Company’s 20 largest reinsurers measured by the amount of reinsurance recoverable for ceded losses and LAE and ceded unearned premium (constituting 72.7% of the total recoverable), together with the reinsurance recoverable and collateral as of March 31, 2013, and the reinsurers’ ratings from A.M. Best Company (“A.M. Best”) or Standard & Poor’s (“S&P”):

	Reinsurance Recoverables
In thousands	Unearned Premium		Paid/Unpaid Losses		Total (1)		Collateral Held (2)		AMB		S&P
National Indemnity Company	$	48,252	$	61,076	$	109,328	$	32,952		A++		AA+
Swiss Reinsurance America Corporation		5,551		87,274		92,825		6,070		A+		AA-
Transatlantic Reinsurance Company		19,321		71,906		91,227		9,739		A		A+
Everest Reinsurance Company		20,648		70,431		91,079		9,102		A+		A+
Munich Reinsurance America Inc.		9,613		78,428		88,041		3,329		A+		AA-
Lloyd’s Syndicate #2003		8,859		38,850		47,709		10,251		A		A+
Partner Reinsurance Europe		8,787		34,121		42,908		17,457		A+		A+
Allied World Reinsurance		11,812		26,486		38,298		4,682		A		A
Scor Global P&C SE		10,065		21,576		31,641		6,829		A		A+
Tower Insurance Company		11,993		17,045		29,038		8,227		A-		NR
General Reinsurance Corporation		268		26,144		26,412		731		A++		AA+
Validus Reinsurance Ltd.		2,739		22,892		25,631		13,041		A		A
Berkley Insurance Company		1,556		19,144		20,700		241		A+		A+
Scor Holding (Switzerland) AG		790		16,810		17,600		8,214		A		A+
Atlantic Specialty Insurance		7,843		8,295		16,138		3,489		A		A-
Ace Property and Casualty Insurance Company		801		14,780		15,581		—		A+		AA-
AXIS Re Europe		2,995		11,782		14,777		2,867		A		A+
Platinum Underwriters Re		354		14,280		14,634		1,851		A		A-
Lloyd’s Syndicate #4000		1,403		12,168		13,571		882		A		A+
Star Insurance Company		5,296		8,159		13,455		1,348		A-		BBB
Top 20 Reinsurers	$	178,946	$	661,647	$	840,593	$	141,302
Others		53,830		262,598		316,428		84,603
Total	$	232,776	$	924,245	$	1,157,021	$	225,905

(1) — Net of reserve for uncollectible reinsurance of approximately $11.5 million.

(2) — Collateral of $225.9 million consists of $165.1 million in ceded balances payable, $57.2 million in letters of credit, and $3.6 million of other balances held by the Company’s Insurance Companies and Lloyd’s Operations.

13

Note 5. Stock-Based Compensation

Stock-based compensation granted under the Company’s stock plans is expensed in tranches over the vesting period. Options and non-performance based grants generally vest equally over a three or four year period and the options have a maximum term of ten years. Certain non-performance based grants vest over five years with one-third vesting in each of the third, fourth and fifth years. The Company’s performance based share grants generally consist of two types of awards. The restricted stock units issued in 2011 and after will cliff vest on the third anniversary of the date of grant, with 50% vesting in full, and 50% dependent on the rate of compound annual growth in book value per share for the three years immediately prior to the vesting date, with actual shares that vest ranging between 150% to 0% of that portion of the original award. Those performance based restricted stock units issued prior to 2011 generally vest over five years with one-third vesting in each of the third, fourth and fifth years, dependent on the rolling three-year average return on equity based on the three years prior to the year in which the vesting occurs, with actual shares that vest ranging between 150% to 0% of the original award.

The amounts charged to expense for stock-based compensation for the three months ended March 31, 2013 and 2012 are presented in the following table:

	Three Months Ended March 31,
In thousands	2013		2012
Restricted stock units	$	1,358	$	1,212
Directors restricted stock grants(1)		100		60
Employee stock purchase plan		9		(26	)
Total stock based compensation	$	1,467	$	1,246

(1) — Relates to non-employee directors serving on the Parent Company’s Board of Directors, all of whom have been elected by the Company’s stockholders, as well as non-employee directors serving on NUAL’s Board of Directors.

14

Note 6. 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 £195 million ($296 million) for the 2013 underwriting year compared to £184 million ($300 million) for the 2012 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 2013 and 2012 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 March 31, 2013, the Company had provided letters of credit of $145.9 million and has $0.8 million of 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 2013 and 2014 underwriting years, as well as open prior years. If any letters of credit remain outstanding under the facility after December 31, 2014, 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, 2014, 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 11, Credit Facility, for additional information.

Note 7. Income Taxes

The Company is subject to the tax laws and regulations of the United States (“U.S.”) and the foreign countries in which it operates. The Company files a consolidated U.S. Federal tax return, which includes all domestic subsidiaries and the U.K. Branch. The income from the foreign operations is designated as either U.S. connected income or non-U.S. connected income. Lloyd’s is required to pay U.S. income tax on U.S. connected income written by Lloyd’s syndicates. Lloyd’s and the Internal Revenue Service (“IRS”) have entered into an agreement whereby the amount of tax due on U.S. connected income is calculated by Lloyd’s and remitted directly to the IRS. These amounts are then charged to the corporate member in proportion to its participation in the relevant syndicates. The Company’s corporate member is subject to this agreement and will receive U.K. tax credits in the United Kingdom (“U.K.”) for any U.S. income tax incurred up to the U.K. income tax charged on the U.S. connected income. The non-U.S. connected insurance income would generally constitute taxable income under the Subpart F income section of the U.S. Internal Revenue Code (“Subpart F”) since less than 50% of Syndicate 1221’s premiums are derived within the U.K. and would therefore be subject to U.S. taxation when the Lloyd’s year of account closes. Taxes are accrued at a 35% rate on the Company’s foreign source insurance income and foreign tax credits, where available, are utilized to offset U.S. tax as permitted. The Company’s effective tax rate for Syndicate 1221 taxable income could substantially exceed 35% to the extent the Company is unable to offset U.S. taxes paid under Subpart F tax regulations with U.K. tax credits on future underwriting year distributions. U.S. taxes are not accrued on the earnings of the Company’s foreign agencies as these earnings are not includable as Subpart F income in the current year. These earnings were subject to taxes under U.K. tax regulations at a 26% rate through March 31, 2012. A finance bill was enacted in the U.K. that reduced the U.K. corporate tax rate from 26% to 24% effective April 2012 and from 24% to 23% effective April 2013. The effect of such tax rate change was not material.

The Company has not provided for U.S. income taxes on approximately $18.0 million of undistributed earnings of its non-U.S. subsidiaries since it is intended that those earnings will be reinvested indefinitely in those subsidiaries. If a future determination is made that those earnings no longer are intended to be reinvested indefinitely in those subsidiaries, U.S. income taxes of approximately $1.9 million, assuming all foreign tax credits are realized, would be included in the tax provision at that time and would be payable if those earnings were distributed to the Company.

15

Unrecognized tax benefits are differences between tax positions taken in the tax returns and benefits recognized in the financial statements. The Company has no unrecognized tax benefits as of March 31, 2013 and 2012. The Company did not incur any interest or penalties related to unrecognized tax benefits for the three months ended March 31, 2013 and 2012. The Company currently is under examination by the Internal Revenue Service for taxable years 2010 and 2011, and generally is subject to U.S. Federal, state or local, or foreign tax examinations by tax authorities for 2009 and subsequent years.

The Company recorded income tax expense of $6.6 million for the three months ended March 31, 2013 compared to $3.3 million for the same period in 2012, resulting in an effective tax rate of 32.3% for the three months ended March 31, 2013 and 29.3% for the comparable period in 2012.

The Company had state and local deferred tax assets amounting to potential future tax benefits of $0.4 million and $0.5 million as of March 31, 2013 and December 31, 2012, respectively. Included in the deferred tax assets are state and local net operating loss carry-forwards of $0.2 million for both March 31, 2013 and December 31, 2012. A valuation allowance was established for the full amount of these potential future tax benefits due to the uncertainty associated with their realization. The Company’s state and local tax carry-forwards as of March 31, 2013 expire from 2023 to 2031.

Note 8. Senior Notes due May 1, 2016

On April 17, 2006, we completed a public debt offering of $125 million principal amount of 7% senior unsecured notes (the “Senior Notes”) and received net proceeds of $123.5 million. The principal amount of the Senior Notes is payable in a single installment on May 1, 2016. In April 2009, the Company repurchased $10.0 million aggregate principal amount of the Senior Notes from an unaffiliated note holder on the open market for $7.0 million, which generated a $3.0 million pre-tax gain that was reflected in Other income. The Senior Notes liability as of March 31, 2013 was $114.5 million. The unamortized discount at March 31, 2013 was $0.5 million. The aggregate principal amount of the Senior Notes that will be repaid on May 1, 2016, as a result of these transactions, is $115.0 million.

The fair value of the Senior Notes was $122.6 million and $123.2 million as of March 31, 2013 and December 31, 2012, respectively. The fair value was determined using quoted prices for similar instruments in active markets and is classified as Level 2 within the fair value hierarchy as defined by the accounting guidance for fair value measurements.

Interest is payable on the Senior Notes each May 1 and November 1. The effective interest rate related to the Senior Notes, based on the proceeds net of discount and all issuance costs, approximates 7.17%. Interest expense on the Senior Notes for both the three months ended March 31, 2013 and 2012 was approximately $2 million.

The Senior Notes, the Company’s only senior unsecured obligation, will rank equally with any future senior unsecured indebtedness. The Company may redeem the Senior Notes at any time and from time to time, in whole or in part, at a “make-whole” redemption price. The terms of the Senior Notes contain various restrictive business and financial covenants typical for debt obligations of this type, including limitations on mergers, liens and dispositions of the common stock of certain subsidiaries. As of March 31, 2013, the Company was in compliance with all such covenants.

16

Note 9. Commitments and Contingencies

In the ordinary course of conducting business, the Company’s subsidiaries are involved in various legal proceedings, either indirectly as insurers for parties or directly as defendants. Most of these proceedings consist of claims litigation involving the Company’s subsidiaries as either (a) liability insurers defending or providing indemnity for third party claims brought against insureds or (b) insurers defending first party coverage claims brought against them. The Company accounts for such activity through the establishment of unpaid loss and loss adjustment reserves. The Company’s management believes that the ultimate liability, if any, with respect to such ordinary-course claims litigation, after consideration of provisions made for potential losses and cost of defense, will not be material to the Company’s consolidated financial condition, results of operations, or cash flows.

The Company’s subsidiaries are also from time to time involved with other legal actions, some of which assert claims for substantial amounts. These actions include claims asserting extra contractual obligations, such as claims involving allegations of bad faith in the handling of claims or the underwriting of policies. In general, the Company believes it has valid defenses to these cases. The Company’s management expects that the ultimate liability, if any, with respect to future extra-contractual matters will not be material to its consolidated financial position. Nonetheless, given the large or indeterminate amounts sought in certain of these matters, and the inherent unpredictability of litigation, an adverse outcome in such matters could, from time to time, have a material adverse outcome on the Company’s consolidated results of operations or cash flows in a particular fiscal quarter or year.

Note 10. Investments

The following tables set forth the Company’s cash and investments as of March 31, 2013 and December 31, 2012. The table below includes other-than-temporarily impaired (“OTTI”) securities recognized within other comprehensive income (“OCI”).

	March 31, 2013
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
In thousands	Value		Gains		(Losses)			Cost
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-backed 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

17

	December 31, 2012
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
In thousands	Value		Gains		(Losses)			Cost
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	649,692	$	8,654	$	(36	)	$	641,074
States, municipalities and political subdivisions		322,947		18,712		(380	)		304,615
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		384,445		13,652		(204	)		370,997
Residential mortgage obligations		38,692		1,053		(549	)		38,188
Asset-backed securities		50,382		1,133		(49	)		49,298
Commercial mortgage-backed securities		204,821		17,996		(18	)		186,843
Subtotal	$	678,340	$	33,834	$	(820	)	$	645,326
Corporate bonds		470,854		27,129		(25	)		443,750
Total fixed maturities	$	2,121,833	$	88,329	$	(1,261	)	$	2,034,765
Equity securities—common stocks		101,297		16,919		(626	)		85,004
Short-term investments		153,788		—		—			153,788
Cash		45,336		—		—			45,336
Total	$	2,422,254	$	105,248	$	(1,887	)	$	2,318,893

As of March 31, 2013 and December 31, 2012, debt securities for which non-credit OTTI was previously recognized and included in other comprehensive income, are now in an unrealized gains position of $0.4 million and $20 thousand, respectively.

The fair value of the Company’s investment portfolio may fluctuate significantly in response to various factors such as changes in interest rates, investment quality ratings, equity prices, foreign exchange rates and credit spreads. The Company does not have the intent to sell nor is it more likely than not that it will have to sell debt securities in unrealized loss positions that are not other-than-temporarily impaired before recovery. For structured securities, default probability and severity assumptions differ based on property type, vintage and the stress of the collateral. We do not intend to sell any of these securities and it is more likely than not that we will not be required to sell these securities before the recovery of the amortized cost basis. For equity securities, the Company also considers its intent to hold securities as part of the process of evaluating whether a decline in fair value represents an other-than-temporary decline in value. The Company may realize investment losses to the extent its liquidity needs require the disposition of fixed maturity securities in unfavorable interest rate, liquidity or credit spread environments. Significant changes in the factors the Company considers when evaluating investments for impairment losses could result in a significant change in impairment losses reported in the consolidated financial statements.

The contractual maturity dates for fixed maturity securities categorized by the number of years until maturity as of March 31, 2013 are shown in the following table:

	March 31, 2013
In thousands	Fair Value		Amortized Cost
Due in one year or less	$	109,496	$	108,751
Due after one year through five years		636,433		616,510
Due after five years through ten years		480,898		459,528
Due after ten years		237,966		230,326
Mortgage- and asset-backed securities		613,210		586,750
Total	$	2,078,003	$	2,001,865

Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Due to the periodic repayment of principal, the mortgage-backed and asset-backed securities are estimated to have an effective maturity of approximately 4.3 years.

18

The following table shows the amount and percentage of the Company’s fixed maturities as of March 31, 2013 by S&P credit rating or, if an S&P rating is not available, the equivalent Moody’s Investor Services (“Moody’s”) rating. The table includes fixed maturities at fair value, and the total rating is the weighted average quality rating.

	March 31, 2013
In thousands	Rating	Fair Value		Percent of Total
Rating description:
Extremely strong	AAA	$	293,623		14	%
Very strong	AA		1,157,811		56	%
Strong	A		445,757		21	%
Adequate	BBB		159,109		8	%
Speculative	BB & Below		17,967		1	%
Not rated	NR		3,736		0	%
Total	AA	$	2,078,003		100	%

19

The following table summarizes all securities in a gross unrealized loss position as of March 31, 2013 and December 31, 2012, showing the aggregate fair value and gross unrealized loss by the length of time those securities had continuously been in a gross unrealized loss position as well as the relevant number of securities.

	March 31, 2013						December 31, 2012
In thousands, except # of securities	Number of Securities		Fair Value		Gross Unrealized Loss		Number of Securities		Fair Value		Gross Unrealized Loss
Fixed maturities:
U.S. Treasury bonds, agency bonds, and foreign government bonds
0-6 months		8	$	40,455	$	31		8	$	23,760	$	22
7-12 months		—		—		—		3		14,118		11
> 12 months		—		—		—		1		4,652		3
Subtotal		8	$	40,455	$	31		12	$	42,530	$	36
States, municipalities and political subdivisions
0-6 months		58	$	129,906	$	1,682		10	$	21,299	$	325
7-12 months		—		—		—		—		—		—
> 12 months		4		2,852		62		4		2,908		55
Subtotal		62	$	132,758	$	1,744		14	$	24,207	$	380
Agency mortgage-backed securities
0-6 months		22	$	46,654	$	512		10	$	62,516	$	174
7-12 months		3		7,921		128		2		1,671		30
> 12 months		—		—		—		—		—		—
Subtotal		25	$	54,575	$	640		12	$	64,187	$	204
Residential mortgage obligations
0-6 months		5	$	1,673	$	2		6	$	1,825	$	22
7-12 months		—		—		—		—		—		—
> 12 months		24		4,653		185		35		7,252		527
Subtotal		29	$	6,326	$	187		41	$	9,077	$	549
Asset-backed securities
0-6 months		1	$	631	$	2		—	$	—	$	—
7-12 months		—		—		—		—		—		—
> 12 months		1		1,743		27		2		2,369		49
Subtotal		2	$	2,374	$	29		2	$	2,369	$	49
Commercial mortgage-backed securities
0-6 months		1	$	1,149	$	5		7	$	2,639	$	7
7-12 months		2		802		11		—		—		—
> 12 months		4		717		13		5		845		11
Subtotal		7	$	2,668	$	29		12	$	3,484	$	18
Corporate bonds
0-6 months		10	$	15,648	$	121		2	$	3,528	$	6
7-12 months		—		—		—		—		—		—
> 12 months		1		1,497		3		4		6,689		19
Subtotal		11	$	17,145	$	124		6	$	10,217	$	25
Total fixed maturities		144	$	256,301	$	2,784		99	$	156,071	$	1,261
Equity securities—common stocks
0-6 months		4	$	8,011	$	247		13	$	23,345	$	522
7-12 months		—		—		—		1		1,943		104
> 12 months		—		—		—		—		—		—
Total equity securities		4	$	8,011	$	247		14	$	25,288	$	626

20

As of March 31, 2013 and December 31, 2012, the largest single unrealized loss by a non-government backed issuer in the investment portfolio was $0.3 million and $0.2 million, respectively.

The Company analyzes the unrealized losses quarterly to determine if any are other-than-temporary. The above unrealized losses have been determined to be temporary based on our policies.

For debt securities, when assessing whether the amortized cost basis of the security will be recovered, the Company compares the present value of cash flows expected to be collected in relation to the current book value. Any shortfalls of the present value of the cash flows expected to be collected to the amortized cost basis is considered the credit loss portion of OTTI losses and is recognized in earnings. All non-credit losses are recognized as changes in OTTI losses within OCI.

To determine whether the unrealized loss on structured securities is other-than-temporary, the Company analyzes the projections provided by its investment managers with respect to an expected principal loss under a range of scenarios and utilizes the most likely outcomes. The analysis relies on actual collateral performance measures such as default rate, prepayment rate and loss severity. These assumptions are applied throughout the remaining term of the deal, incorporating the transaction structure and priority of payments, to generate loss adjusted cash flows. Results of the analysis will indicate whether the security is expected ultimately to incur a loss or whether there is a material impact on yield due to either a projected loss or a change in cash flow timing. A break even default rate is also calculated. A comparison of the break even default rate to the actual default rate provides an indication of the level of cushion or coverage to the first dollar principal loss. The analysis applies the stated assumptions throughout the remaining term of the transaction to forecast cash flows, which are then applied through the transaction structure to determine whether there is a loss to the security. For securities in which a tranche loss is present, and the net present value of loss adjusted cash flows is less than book value, impairment is recognized. The output data also includes a number of additional metrics such as average life remaining, original and current credit support, over 60 day delinquency and security rating.

The significant inputs used to measure the amount of credit loss recognized in earnings were actual delinquency rates, default probability assumptions, severity assumptions and prepayment assumptions. Projected losses are a function of both loss severity and probability of default. Default probability and severity assumptions differ based on property type, vintage and the stress of the collateral. The Company does not intend to sell any of these securities and it is more likely than not that it will not be required to sell these securities before the recovery of the amortized cost basis.

For equity securities, in general, the Company focuses its attention on those securities with a fair value less than 80% of their cost for six or more consecutive months. If warranted as the result of conditions relating to a particular security, the Company will focus on a significant decline in fair value regardless of the time period involved. Factors considered in evaluating potential impairment include, but are not limited to, the current fair value as compared to cost of the security, the length of time the investment has been below cost and by how much the investment is below cost. If an equity security is deemed to be other-than-temporarily impaired, the cost is written down to fair value with the loss recognized in earnings.

For equity securities, the Company also considers its intent to hold securities as part of the process of evaluating whether a decline in fair value represents an other-than-temporary decline in value. For fixed maturity securities, the Company considers its intent to sell a security and whether it is more likely than not that the Company will be required to sell a security before the anticipated recovery as part of the process of evaluating whether a security’s unrealized loss represents an other-than-temporary decline. The Company’s ability to hold such securities is supported by sufficient cash flow from its operations and from maturities within its investment portfolio in order to meet its claims payment and other disbursement obligations arising from its underwriting operations without selling such investments. With respect to securities where the decline in value is determined to be temporary and the security’s value is not written down, a subsequent decision may be made to sell that security and realize a loss. Subsequent decisions on security sales are made within the context of overall risk monitoring, changing information and market conditions.

As of March 31, 2013, there were no investments that had a gross unrealized loss that was less than 80% of amortized cost.

21

The table below summarizes the Company’s activity related to OTTI losses for the periods indicated:

	Three Months Ended March 31,
	2013				2012
In thousands, except # of securities	Number of Securities		Amount		Number of Securities		Amount
Total OTTI losses:
Corporate and other bonds		—	$	—		—	$	—
Commercial mortgage-backed securities		—		—		—		—
Residential mortgage-backed securities		—		—		1		55
Asset-backed securities		—		—		—		—
Equities		2		42		2		143
Total		2	$	42		3	$	198
Less: Portion of loss in accumulated other comprehensive income (loss):
Corporate and other bonds			$	—			$	—
Commercial mortgage-backed securities				—				—
Residential mortgage-backed securities				—				44
Asset-backed securities				—				—
Equities				—				—
Total			$	—			$	44
Impairment losses recognized in earnings:
Corporate and other bonds			$	—			$	—
Commercial mortgage-backed securities				—				—
Residential mortgage-backed securities				—				11
Asset-backed securities				—				—
Equities				42				143
Total			$	42			$	154

The following table summarizes the cumulative amounts related to the Company’s credit loss portion of the OTTI losses on debt securities for the three months ended March 31, 2013 and 2012. The Company does not intend to sell and it is more likely than not that it will not be required to sell the securities prior to recovery of the amortized cost basis and for which the non-credit loss portion is included in OCI:

	Three Months Ended March 31,
In thousands	2013		2012
Beginning balance	$	3,332	$	3,321
Additions for credit loss impairments recognized in the current period on securities not previously impaired		—		—
Additions for credit loss impairments recognized in the current period on securities previously impaired		—		11
Reductions for credit loss impairments previously recognized on securities sold during the period		—		—
Ending balance	$	3,332	$	3,332

22

The contractual maturity dates for fixed maturity securities categorized by the number of years until maturity, with a gross unrealized loss as of March 31, 2013 is presented in the following table:

	March 31, 2013
	Gross Unrealized Losses					Fair Value
In thousands	Amount		Percent of Total			Amount		Percent of Total
Due in one year or less	$	3		0	%	$	1,505		0	%
Due after one year through five years		63		2	%		26,313		10	%
Due after five years through ten years		446		16	%		76,159		30	%
Due after ten years		1,387		50	%		86,381		34	%
Mortgage- and asset-backed securities		885		32	%		65,943		26	%
Total	$	2,784		100	%	$	256,301		100	%

The Company’s net investment income was derived from the following sources:

	Three Months Ended March 31,
In thousands	2013			2012
Fixed maturities	$	13,167		$	15,411
Equity securities		1,030			947
Short-term investments		189			312
Total investment income	$	14,386		$	16,670
Investment expenses		(729	)		(5,412	)
Net investment income	$	13,657		$	11,258

Interest expense for the three months ended March 31, 2012 included $4.5 million of interest expense related to a total $9.2 million settlement of a dispute with Equitas over foregone interest on amounts that were due on certain reinsurance contracts.

The portfolio duration was 4.0 years and 3.7 years for the three months ended March 31, 2013 and 2012, respectively.

The change in net unrealized gains and losses, inclusive of the change in the non credit portion of other-than-temporary impairment losses, consisted of:

	Three Months Ended March 31,
In thousands	2013			2012
Fixed maturities	$	(10,930	)	$	9,128
Equity securities		8,172			4,639
Gross unrealized gains (losses)	$	(2,758	)	$	13,767
Deferred income tax		(1,003	)		4,818
Change in net unrealized gains (losses), net	$	(1,755	)	$	8,949

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Realized gains and losses, excluding net OTTI losses recognized in earnings, for the periods indicated were as follows:

	Three Months Ended March 31,
In thousands	2013			2012
Fixed maturities:
Gains	$	3,206		$	3,142
Losses		(310	)		(1,300	)
Fixed maturities, net	$	2,896		$	1,842
Equity securities:
Gains	$	1,918		$	—
Losses		—			—
Equity securities, net	$	1,918		$	—
Net realized gains (losses)	$	4,814		$	1,842

Net realized gains and losses are generated as part of the normal ongoing management of our investment portfolio. Net realized gains of $4.8 million for the three months ended March 31, 2013 are primarily due to the sale of commercial mortgage backed securities and equity securities. Net realized gains of $1.8 million for the three months ended March 31, 2012 was due to the sale of municipal bonds and corporate bonds.

The following tables present, for each of the fair value hierarchy levels as defined by the accounting guidance for fair value measurements, the Company’s fixed maturities and equity securities by asset class that are measured at fair value on a recurring basis as of March 31, 2013 and December 31, 2012:

	March 31, 2013
In thousands	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	313,253	$	218,210	$	—	$	531,463
States, municipalities and political subdivisions		—		449,387		—		449,387
Mortgage-backed and asset-backed securities:								—
Agency mortgage-backed securities		—		346,829		—		346,829
Residential mortgage obligations		—		38,350		—		38,350
Asset-backed securities		—		47,092		—		47,092
Commercial mortgage-backed securities		—		180,939		—		180,939
Subtotal	$	—	$	613,210	$	—	$	613,210
Corporate bonds		—		483,943		—		483,943
Total fixed maturities	$	313,253	$	1,764,750	$	—	$	2,078,003
Equity securities—common stocks		116,482		—		—		116,482
Total	$	429,735	$	1,764,750	$	—	$	2,194,485

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	December 31, 2012
In thousands	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	414,502	$	235,190	$	—	$	649,692
States, municipalities and political subdivisions		—		322,947		—		322,947
Mortgage-backed and asset-backed securities:								—
Agency mortgage-backed securities		—		384,445		—		384,445
Residential mortgage obligations		—		38,692		—		38,692
Asset-backed securities		—		50,382		—		50,382
Commercial mortgage-backed securities		—		204,821		—		204,821
Subtotal	$	—	$	678,340	$	—	$	678,340
Corporate bonds		—		470,854		—		470,854
Total fixed maturities	$	414,502	$	1,707,331	$	—	$	2,121,833
Equity securities—common stocks		101,297		—		—		101,297
Total	$	515,799	$	1,707,331	$	—	$	2,223,130

The fair value of financial instruments is determined based on the following fair value hierarchy:

Level 1 – Quoted prices for identical instruments in active markets. Examples are listed equity and fixed income securities traded on an exchange. U.S. Treasury securities are reported as level 1 and are valued based on unadjusted quoted prices for identical assets in active markets that the Company can access.

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Examples are asset-backed and mortgage-backed securities that are similar to other asset-backed or mortgage-backed securities observed in the market. U.S. government agency securities are reported as level 2 and are valued using yields and spreads that are observable in active markets.

Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. An example would be a private placement with minimal liquidity.

The Company did not have any significant transfers between Level 1 and 2 as of March 31, 2013 and December 31, 2012.

As of March 31, 2013 and 2012, the Company did not have any Level 3 assets.

As of March 31, 2013 and December 31, 2012, the Company did not have a concentration of greater than 5% of invested assets in a single non-U.S. government-backed issuer.

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Note 11. Credit Facility

On November 22, 2012, we entered into a $165 million credit facility agreement with ING Bank N.V., London Branch, individually and as Administrative Agent, and a syndicate of lenders. The new credit facility amended and restated a $165 million letter of credit facility entered into by the parties on March 28, 2011. The credit facility, which is denominated in U.S. dollars, is utilized to fund our participation in Syndicate 1221 through letters of credit for the 2013 and 2014 underwriting years, as well as open prior years. The letters of credit issued under the facility are denominated in British pounds and their aggregate face amount will fluctuate based on exchange rates. If any letters of credit remain outstanding under the facility after December 31, 2014, we would be required to post additional collateral to secure the remaining letters of credit. As of March 31, 2013, letters of credit with an aggregate face amount of $145.9 million were outstanding under the credit facility and we have $0.8 million of cash collateral posted.

This credit facility contains customary covenants for facilities of this type, including restrictions on indebtedness and liens, limitations on mergers, dividends and the sale of assets, and requirements as to maintaining certain consolidated tangible net worth, statutory surplus and other financial ratios. The credit facility also provides for customary events of default, including failure to pay principal, interest or fees when due, failure to comply with covenants, any representation or warranty made by the Company being false in any material respect, default under certain other indebtedness, certain insolvency or receivership events affecting the Company and its subsidiaries, the occurrence of certain material judgments, or a change in control of the Company. The letter of credit facility is secured by a pledge of the stock of certain insurance subsidiaries of the Company. To the extent the aggregate face amount issued under the credit facility exceeds the commitment amount, the Company is required to post collateral with the lead bank of the consortium. The Company was in compliance with all covenants under the credit facility as of March 31, 2013.

The applicable margin and applicable fee rate payable under the credit facility are based on a tiered schedule that is based on the Company’s then-current ratings issued by S&P and Moody’s with respect to the Company’s Senior Notes without third-party credit enhancement, and the amount of the Company’s own collateral utilized to fund its participation in Syndicate 1221.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

NOTE ON FORWARD-LOOKING STATEMENTS

Some of the statements in this Quarterly Report on Form 10-Q for The Navigators Group, Inc. and its subsidiaries (“the Company”, “we”, “us”, and “our”) are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in or incorporated by reference in this Quarterly Report are forward-looking statements. Whenever used in this report, the words “estimate,” “expect,” “believe” or similar expressions or their negative 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 anticipated results will be achieved, since actual results may differ materially because of both known and unknown risks and uncertainties which we face. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Factors that could cause actual results to differ materially from our forward-looking statements include, but are not limited to, the factors discussed in the “Risk Factors” section of our 2012 Annual Report on Form 10-K as well as:

• continued volatility in the financial markets and the current recession;

• risks arising from the concentration of our business in marine and energy, general liability and professional liability insurance, including the risk that market conditions for these lines could change adversely or that we could experience large losses in these lines;

• cyclicality in the property and casualty insurance business generally, and the marine insurance business specifically;

• risks that we face in entering new markets and diversifying the products and services that we offer, including risks arising from the development of our new specialty lines or our ability to manage effectively the rapid growth in our lines of business;

• changing legal, social and economic trends and inherent uncertainties in the loss estimation process, which could adversely impact the adequacy of loss reserves and the allowance for reinsurance recoverables;

• risks inherent in the preparation of our financial statements, which require us to make many estimates and judgments;

• our ability to continue to obtain reinsurance covering our exposures at appropriate prices and/or in sufficient amounts;

• the counterparty credit risk of our reinsurers, including risks associated with the collection of reinsurance recoverable amounts from our reinsurers, who may not pay losses in a timely fashion, or at all;

• the effects of competition from other insurers;

• unexpected turnover of our professional staff and our ability to attract and retain qualified employees;

• increases in interest rates during periods in which we must sell fixed-income securities to satisfy liquidity needs may result in realized investment losses;

• our investment portfolio is exposed to market-wide risks and fluctuations, as well as to risks inherent in particular types of securities;

• exposure to significant capital market risks related to changes in interest rates, credit spreads, equity prices and foreign exchange rates which may adversely affect our results of operations, financial condition or cash flows;

• capital may not be available in the future, or may not be available on favorable terms;

• our ability to maintain or improve our insurance company ratings, as downgrades could significantly adversely affect us, including reducing our competitive position in the industry, or causing clients to choose an insurer with a certain rating level to use higher-rated insurers;

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• risks associated with continued or increased premium levies by Lloyd’s of London (“Lloyd’s) for the Lloyd’s Central Fund and cash calls for trust fund deposits, or a significant downgrade of Lloyd’s rating by the A.M. Best Company (“A.M. Best”);

• changes in the laws, rules and regulations that apply to our insurance companies;

• the effect of the European Union Directive on Solvency II on how we manage our business, capital requirements and costs associated with conducting business, including the impact of the delay in the implementation of Solvency II;

• the inability of our subsidiaries to pay dividends to us in sufficient amounts, which would harm our ability to meet our obligations;

• weather-related events and other catastrophes (including man-made catastrophes) impacting our insureds and/or reinsurers;

• volatility in the market price of our common stock;

• exposure to recent uncertainties with regard to European sovereign debt holdings;

• the determination of the impairments taken on our investments is subjective and could materially impact our financial position or results of operations;

• if we experience difficulties with our information technology and telecommunications systems and/or data security, our ability to conduct our business might be adversely affected;

• compliance by our Marine business with the legal and regulatory requirements to which they are subject is evolving and unpredictable. In addition, compliance with new sanctions and embargo laws could have a material adverse effect on our business; and

• other risks that we identify in current and future filings with the Securities and Exchange Commission (“SEC”).

In light of these risks, uncertainties and assumptions, any forward-looking events discussed in this Form 10-Q may not occur. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of their respective dates.

OVERVIEW

The discussion and analysis of our financial condition and results of operations contained herein should be read in conjunction with our consolidated financial statements and accompanying notes which appear elsewhere in this Form 10-Q. It contains forward-looking statements that involve risks and uncertainties. Please refer to “Note on Forward-Looking Statements” for more information. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Form 10-Q.

We are an international insurance company focusing on specialty products within the overall property and casualty insurance market. Our largest product line and most long-standing area of specialization is ocean marine insurance. We have also developed other specialty insurance lines such as commercial primary and excess liability as well as specialty niches in professional liability, and have expanded our specialty reinsurance business since launching Navigators Re in the fourth quarter of 2010.

We conduct operations through our Insurance Companies and our Lloyd’s Operations segments. The Insurance Companies segment consists of Navigators Insurance Company, which includes a United Kingdom Branch (the “U.K. Branch”), and Navigators Specialty Insurance Company, which underwrites specialty and professional liability insurance on an excess and surplus lines basis. All of the insurance business written by Navigators Specialty Insurance Company is fully reinsured by Navigators Insurance Company pursuant to a 100% quota share reinsurance agreement. The insurance and reinsurance business written by our Insurance Companies is underwritten through our wholly-owned underwriting management Companies, Navigators Management Company, Inc. (“NMC”) and Navigators Management (UK) Ltd. (“NMUK”).

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Our Lloyd’s Operations segment includes Navigators Underwriting Agency Ltd. (“NUAL”), a Lloyd’s of London (“Lloyd’s”) underwriting agency which manages Lloyd’s Syndicate 1221 (“Syndicate 1221”). Our Lloyd’s Operations primarily underwrite marine and related lines of business along with offshore energy, professional liability insurance and construction coverages for onshore energy business at Lloyd’s through Syndicate 1221. We controlled 100% of Syndicate 1221’s stamp capacity for the 2013 and 2012 underwriting years through our wholly-owned subsidiary, Navigators Corporate Underwriters Ltd. (“NCUL”), which is referred to as a corporate name in the Lloyd’s market. We have also established underwriting agencies in Antwerp, Belgium, Stockholm, Sweden, and Copenhagen, Denmark, which underwrite risks pursuant to binding authorities with NUAL into Syndicate 1221. We have also established a presence in Brazil and China through contractual arrangements with local affiliates of Lloyd’s.

Catastrophe Risk Management

We have exposure to losses caused by hurricanes, earthquakes, and other natural and man-made catastrophic events. The frequency and severity of catastrophic events is unpredictable.

Our Insurance Companies and Lloyd’s Operations have exposure to losses caused by natural and man-made catastrophic events. The frequency and severity of catastrophes are unpredictable. The extent of losses from a catastrophe is a function of both the total amount of insured exposure in an area affected by the event and the severity of the event. We continually assess our concentration of underwriting exposures in catastrophe exposed areas globally and manage this exposure through individual risk selection and through the purchase of reinsurance. We also use modeling and concentration management tools that allow us to better monitor and control our accumulations of potential losses from catastrophe events. Despite these efforts, there remains uncertainty about the characteristics, timing and extent of insured losses given the unpredictable nature of catastrophes. The occurrence of one or more catastrophic events could have a material adverse effect on our results of operations, financial condition and/or liquidity.

We have significant natural catastrophe exposures throughout the world. We estimate that our largest exposure to loss from a single natural catastrophe event comes from an earthquake on the west coast of the United States. As of March 31, 2013, we estimate that our probable maximum pre-tax gross and net loss exposure from such an earthquake event would be approximately $159 million and $36 million, respectively, including the cost of reinsurance reinstatement premiums (“RRPs”).

Like all catastrophe exposure estimates, the foregoing estimate of our probable maximum loss is inherently uncertain. This estimate is highly dependent upon numerous assumptions and subjective underwriting judgments. Examples of significant assumptions and judgments related to such an estimate include the intensity, depth and location of the earthquake, the various types of the insured risks exposed to the event at the time the event occurs and the estimated costs or damages incurred for each insured risk. The composition of our portfolio also makes such estimates challenging due to the non-static nature of the exposures covered under our policies in lines of business such as cargo and hull. There can be no assurances that the gross and net loss amounts that we could incur in such an event or in any natural catastrophe event would not be materially higher than the estimates discussed above given the significant uncertainties with respect to such an estimate. Moreover, our portfolio of insured risks changes dynamically over time and there can be no assurance that our probable maximum loss will not change materially over time.

The occurrence of large loss events could reduce the reinsurance coverage that is available to us and could weaken the financial condition of our reinsurers, which could have a material adverse effect on our results of operations. Although the reinsurance agreements make the reinsurers liable to us to the extent the risk is transferred or ceded to the reinsurer, ceded reinsurance arrangements do not eliminate our obligation to pay claims to our policyholders as we are required to pay the losses if a reinsurer fails to meet its obligations under the reinsurance agreement. Accordingly, we bear credit risk with respect to our reinsurers. Specifically, our reinsurers may not pay claims made by us on a timely basis, or they may not pay some or all of these claims. Either of these events would increase our costs and could have a material adverse effect on our business.

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CRITICAL ACCOUNTING ESTIMATES

The Company’s Annual Report on Form 10-K for the year ended December 31, 2012 discloses our critical accounting estimates (refer to Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates). Certain of these estimates are critical to the portrayal of our financial condition and results since they require management to establish estimates based on complex and subjective judgments, including those related to our estimates for losses and loss adjustment expenses (“LAE”) (including losses that have occurred but were not reported to us by the financial reporting date), reinsurance recoverables, written and unearned premium, the recoverability of deferred tax assets, the impairment of investment securities and accounting for Lloyd’s results. For additional information regarding our critical accounting estimates, refer to our Annual Report on Form 10-K for the year ended December 31, 2012.

RECENT ACCOUNTING PRONOUNCEMENTS

Refer to Note 2, Recent Accounting Pronouncements, in the Notes to Interim Consolidated Financial Statements included herein for a discussion about accounting standards recently adopted by the Company, as well as recent accounting developments relating to standards not yet adopted by the Company.

RESULTS OF OPERATIONS

The following is a discussion and analysis of our consolidated and segment results of operations for the three months ended March 31, 2013 and 2012. Our financial results are presented on the basis of U.S. GAAP. However, in presenting our financial results, we discuss our performance with reference to operating earnings, book value per share, underwriting profit or loss, and the combined ratio, all of which are non-GAAP financial measures of performance and/or underwriting profitability. Operating earnings is calculated as net income less after-tax net realized gains (losses) and net other-than-temporary impairment (“OTTI”) losses recognized in earnings. Book value per share is calculated by dividing stockholders’ equity by the number of outstanding shares at any period end. Underwriting profit or loss is calculated from net earned premiums, less the sum of net losses and LAE, commission expenses, other operating expenses and other income (expense). The combined ratio is derived by dividing the sum of net losses and LAE, commission expenses, other operating expenses and other income (expense) by net earned premiums. A combined ratio of less than 100% indicates an underwriting profit and greater than 100% indicates an underwriting loss. We consider such measures, which may be defined differently by other companies, to be important in the understanding of our overall results of operations by highlighting the underlying profitability of our insurance business.

Summary of Consolidated Results

The following table presents a summary of our consolidated financial results for the three months ended March 31, 2013 and 2012:

					Percentage
	Three Months Ended March 31,				Change
In thousands, except for per share amounts	2013		2012		2013 vs. 2012
Gross written premiums	$	393,222	$	343,149		14.6	%
Net written premiums		269,452		243,045		10.9	%
Total revenues		221,375		196,976		12.4	%
Total expenses		200,822		185,791		8.1	%
Pre-tax income (loss)	$	20,553	$	11,185		83.8	%
Provision (benefit) for income taxes		6,643		3,281		102.5	%
Net income (loss)	$	13,910	$	7,904		76.0	%
Net income (loss) per common share:
Basic	$	0.99	$	0.57
Diluted	$	0.97	$	0.56

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Net income for the three months ended March 31, 2013 was $13.9 million or $0.97 per diluted share compared to $7.9 million or $0.56 per diluted share for the three months ended March 31, 2012. Operating earnings for the three months ended March 31, 2013 were $10.8 million or $0.75 per diluted share compared to $6.8 million or $0.48 per diluted share for the comparable period in 2012. In comparison to net income, operating earnings excludes after-tax net realized gains of $3.1 million and after-tax other-than-temporary impairment losses of $0.03 million for the three months ended March 31, 2013. For the three months ended March 31, 2012, operating earnings excluded $1.2 million of net realized gains and after-tax other-than-temporary impairment losses of $0.1 million. The increase in our operating earnings was largely attributable an increase in net investment income and stronger underwriting results.

Our book value per share as of March 31, 2013 was $63.46, increasing from $62.61 as of December 31, 2012. The increase in book value per share primarily resulted from our results of operations. Our consolidated stockholders’ equity increased 2.0% to $896.8 million as of March 31, 2013 compared to $879.5 million as of December 31, 2012.

Cash flow provided by operations was $4.3 million for the three months ended March 31, 2013 compared to $16.4 million for the comparable period in 2012. The decrease in cash flow from operations was due to the timing of payments to our reinsurers in connection with the increased use of proportional reinsurance to support our offshore energy business in 2013.

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The following table presents our consolidated underwriting results and provides a reconciliation of our underwriting profit or loss to GAAP net income or net loss for the three months ended March 31, 2013 and 2012:

							Percentage
	Three Months Ended March 31,						Change
In thousands	2013			2012			2013 vs. 2012
Gross written premiums	$	393,222		$	343,149			14.6	%
Net written premiums		269,452			243,045			10.9	%
Net earned premiums		202,328			183,119			10.5	%
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	%
Other income (expenses) (1)		618			911			-32.1	%
Underwriting profit (loss)	$	4,175		$	288			NM
Net investment income		13,657			11,258			21.3	%
Net other-than-temporary impairment losses recognized in earnings		(42	)		(154	)		-72.7	%
Net realized gains (losses)		4,814			1,842			NM
Interest expense		(2,051	)		(2,049	)		0.1	%
Income (loss) 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	%
Losses and loss adjustment expenses ratio		64.9	%		64.4	%
Commission expense ratio		13.1	%		16.1	%
Other operating expense ratio (2)		19.9	%		19.3	%
Combined ratio		97.9	%		99.8	%

(1) — Reported within “Other income (expense)” on the Consolidated Statements of Income

(2) — Includes Other operating expenses & Other income (expense)

NM — Percentage change not meaningful

The combined ratio for the three months ended March 31, 2013 was 97.9% compared to 99.8% for the same period in 2012. Our pre-tax underwriting profit increased $3.9 million to $4.2 million for the three months ended March 31, 2013 compared to a $0.3 million for the same period in 2012.

Our pre-tax underwriting results for the three months ended March 31, 2013 include $4.4 million of underwriting profit from our Excess Casualty and Primary Casualty businesses due in part to strong production attributable to the expansion of those underwriting teams and the continued dislocation of certain competitors, as well as $4.0 million of underwriting profit from our Lloyd’s Operations due to continued favorable loss emergence for underwriting years 2011 and prior. We also recorded net prior period reserve deficiencies of $6.7 million from our Insurance Companies Professional Liability business.

Our underwriting profit for the three months ended March 31, 2012 reflects a net loss of $6.5 million related to the grounding of the cruise ship, Costa Concordia. This loss was offset by net prior period reserve redundancies of $6.9 million primarily related to our Property Casualty business.

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Revenues

Gross Written Premiums

The following tables set forth our gross written premiums, net written premiums and net earned premiums by segment and line of business for the three months ended March 31, 2013 and 2012:

	Three Months Ended March 31,
	2013									2012
In thousands	Gross Written Premiums		%			Net Written Premiums		Net Earned Premiums		Gross Written Premiums		%			Net Written Premiums		Net Earned Premiums
Insurance Companies:
Marine	$	50,847		13	%	$	41,141	$	36,725	$	61,865		18	%	$	42,865	$	35,275
Property Casualty		218,964		56	%		149,951		92,718		155,919		45	%		114,532		74,368
Professional Liability		31,817		8	%		25,227		24,888		30,554		9	%		23,853		21,905
Insurance Companies Total	$	301,628		77	%	$	216,319	$	154,331	$	248,338		72	%	$	181,250	$	131,548
Lloyd’s Operations:
Marine	$	53,644		14	%	$	39,558	$	34,045	$	61,775		18	%	$	48,058	$	33,264
Property Casualty		25,058		6	%		7,312		7,879		24,296		7	%		9,355		14,502
Professional Liability		12,892		3	%		6,263		6,073		8,740		3	%		4,382		3,805
Lloyd’s Operations Total	$	91,594		23	%	$	53,133	$	47,997	$	94,811		28	%	$	61,795	$	51,571
Total	$	393,222		100	%	$	269,452	$	202,328	$	343,149		100	%	$	243,045	$	183,119

Gross written premiums increased $50.1 million, or 14.6%, to $393.2 million for the three months ended March 31, 2013 compared to $343.1 million for the same period in 2012. The increases in gross written premiums are primarily attributed to growth within our Property Casualty business, specifically our Excess Casualty division as a result of strong production attributable to an expansion of our underwriting teams and continued dislocation among certain competitors, as well as our Assumed Reinsurance division, as our Navigators Reinsurance (“NavRe”) business continues to achieve successful growth since its establishment in late 2010.

Average renewal premium rates for our Insurance Companies segment increased for the three months ended March 31, 2013 as compared to the same period in 2012 across substantially all of our businesses within each segment. Our Insurance Companies Marine business has realized a 4.0% and 3.0% increase in rates for the Marine Liability and Inland Marine divisions, respectively. Within our Insurance Companies Property Casualty business we have realized a 1.8% increase in rates for the Excess Casualty division, a 1.4% increase in the Primary Casualty division, and a slight 0.3% decrease from our Energy & Engineering division. Our Insurance Companies Professional Liability business has experienced an overall increase in its renewal rates of 6.1%, consisting of 13.2% and 3.8% for the Management Liability (“D&O”) and Errors & Omissions (“E&O”) divisions, respectively. For the three months ended March 31, 2013, average renewal premium rates for our Lloyd’s Operations segment include increases for Lloyd’s Marine and Lloyd’s Energy & Engineering of approximately 5.0% and 1.6%, respectively. Our Lloyd’s Professional Liability business experienced an average decrease of 4.5%.

The average premium rate increases or decreases as noted above for the Marine, Property Casualty and Professional Liability businesses are calculated primarily by comparing premium amounts on policies that have renewed. The premiums are adjusted for changes in exposures and sometimes represent an aggregation of several lines of business. The rate change calculations provide an indicated pricing trend and are not meant to be a precise analysis of the numerous factors that affect premium rates or the adequacy of such rates to cover all underwriting costs and generate an underwriting profit. The calculation can also be affected quarter by quarter depending on the particular policies and the number of policies that renew during that period. Due to market conditions, these rate changes may or may not apply to new business that generally would be more competitively priced compared to renewal business. The calculation does not reflect the rate on business that we are unwilling or unable to renew due to loss experience or competition.

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Ceded Written Premiums

In the ordinary course of business, we reinsure certain insurance risks with unaffiliated insurance companies for the purpose of limiting our maximum loss exposure, protecting against catastrophic losses and maintaining desired ratios of net premiums written to statutory surplus. The relationship of ceded to gross written premium varies based upon the types of business written and whether the business is written by the Insurance Companies or the Lloyd’s Operations.

Our reinsurance program includes contracts for proportional reinsurance, per risk and whole account excess-of-loss reinsurance for both property and casualty risks and property catastrophe excess-of-loss reinsurance. In recent years we have increased our utilization of excess-of-loss reinsurance for marine, property and certain casualty risks. Our excess-of-loss reinsurance contracts generally provide for a specific amount of coverage in excess of an attachment point and sometimes provides for reinstatement of the coverage to the extent the limit has been exhausted for payment of additional reinsurance premium (referred to as RRPs). The number of reinsurance reinstatements available varies by contract.

We record an estimate of the expected RRPs for losses ceded to excess-of-loss agreements where this feature applies.

For the three months ended March 31, 2013, we incurred approximately $0.7 million in RRPs primarily driven by a large energy loss from our Lloyd’s NavTech business. In comparison to the same period in 2012, we incurred approximately $12 million in RRPs, $6.5 million of which were attributable to losses related to the grounding of the cruise ship, Costa Concordia.

The following table sets forth our ceded written premiums by segment and major line of business for the three months ended March 31, 2013 and 2012:

	Three Months Ended March 31,
	2013					2012
In thousands	Ceded Written Premiums		% of Gross Written Premiums			Ceded Written Premiums		% of Gross Written Premiums
Insurance Companies:
Marine	$	9,706		19	%	$	19,000		31	%
Property Casualty		69,013		32	%		41,387		27	%
Professional Liability		6,590		21	%		6,701		22	%
Total Insurance Companies	$	85,309		28	%	$	67,088		27	%
Lloyd’s Operations:
Marine	$	14,086		26	%	$	13,717		22	%
Property Casualty		17,746		71	%		14,941		61	%
Professional Liability		6,629		51	%		4,358		50	%
Total Lloyd’s Operations	$	38,461		42	%	$	33,016		35	%
Total	$	123,770		31	%	$	100,104		29	%

Overall, the increase in the percentage of total ceded written premiums to total gross written premiums for the three months ended March 31, 2013 compared to the same period in 2012 was primarily due to changes in the mix of our Property Casualty business, partially offset by approximately $12 million of RRPs in 2012 primarily from our Marine business, which include those related to losses from Costa Concordia, as described above. The increase in the Property Casualty business for the Insurance Companies is primarily driven by the significant growth from our Excess Casualty division, where our retention is lower, and is partially offset by the continued growth of our Assumed Reinsurance business where our retention is higher. The increase in the Property Casualty business for the Lloyd’s Operations is driven by increased use of proportional reinsurance to support our offshore energy business for 2013.

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Net Written Premiums

Net written premiums increased 10.9% for the three months ended March 31, 2013 compared to the same period in 2012. The increase is due to the mix of our Property Casualty business and is specifically driven by the continued growth in our Assumed Reinsurance business written by NavRe. In addition, the increase is also attributable to the approximate $12 million of RRPs that were incurred in 2012, as described above, offset by higher proportional reinsurance premium cessions on our offshore energy business written by NavTech.

Net Earned Premiums

Net earned premiums increased 10.5% for the three months ended March 31, 2013 compared to the same period in 2012 driven by growth of our Assumed Reinsurance business, which includes the Accident & Health (“A&H”) lines that are recognized in earnings over a longer exposure period than our other lines of business, as well as earnings from the continued growth of our Excess Casualty and Primary Casualty businesses, as described above. In addition, the increase is also attributable to the RRPs recorded in 2012, as described above.

Net Investment Income

Our net investment income was derived from the following sources:

							Percentage
	Three Months Ended March 31,						Change
In thousands	2013			2012			2013 vs. 2012
Fixed maturities	$	13,167		$	15,411			-14.6	%
Equity securities		1,030			947			8.8	%
Short-term investments		189			312			-39.4	%
Total investment income	$	14,386		$	16,670			-13.7	%
Investment expenses		(729	)		(5,412	)		-86.5	%
Net investment income	$	13,657		$	11,258			21.3	%

The decrease in total investment income before investment expenses was 13.7% for the three months ended March 31, 2013 compared to 2012, primarily due to lower investment yields. The annualized pre-tax investment yield, excluding net realized gains and losses and net other-than-temporary impairment (“OTTI”) losses recognized in earnings, was 2.3% and 2.0% for the three months ended March 31, 2013 and 2012, respectively.

The 2.0% average yield for the three months ended March 31, 2012 included $4.5 million of interest expense related to a total $9.2 million settlement of a dispute with Equitas over foregone interest on amounts that were due on certain reinsurance contracts. In the dispute Equitas alleged that we failed to make timely payments to them under certain reinsurance agreements in connection with subrogation recoveries received by us with respect to several catastrophe losses that occurred in the in the late 1980’s and early 1990’s. Excluding the impact of the aforementioned accrued interest expense, the average yield for the three months ended March 31, 2012 would have been 2.8%.

The portfolio duration was 4.0 years and 3.7 years for the three months ended March 31, 2013 and 2012, respectively.

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Net Other-Than-Temporary Impairment Losses Recognized In Earnings

Our net OTTI losses recognized in earnings for the periods indicated were as follows:

							Percentage
	Three Months Ended March 31,						Change
In thousands	2013			2012			2013 vs. 2012
Fixed maturities	$	—		$	(11	)		NM
Equity securities		(42	)		(143	)		-70.6	%
OTTI recognized in earnings	$	(42	)	$	(154	)		-72.7	%

Net OTTI losses for the three months ended March 31, 2013 primarily consist of $0.04 million for equity securities previously impaired. Net OTTI losses for the three months ended March 31, 2012 consisted of one non-agency mortgage backed security and one equity security.

Net Realized Gains and Losses

Our realized gains and losses for the periods indicated were as follows:

							Percentage
	Three Months Ended March 31,						Change
In thousands	2013			2012			2013 vs. 2012
Fixed maturities:
Gains	$	3,206		$	3,142			2.0	%
Losses		(310	)		(1,300	)		-76.2	%
Fixed maturities, net	$	2,896		$	1,842			57.2	%
Equity securities:
Gains	$	1,918		$	—			NM
Losses		—			—			NM
Equity securities, net	$	1,918		$	—			NM
Net realized gains (losses)	$	4,814		$	1,842			NM

NM — Percentage change not meaningful

Net realized gains and losses are generated as part of the normal ongoing management of our investment portfolio. Net realized gains of $4.8 million for the three months ended March 31, 2013 are due to the sale of commercial mortgage backed securities and equity securities. Net realized gains of $1.8 million for the three months ended March 31, 2012 are due to the sale of corporate bonds and municipal bonds.

Other Income/Expense

Total other income for the three months ended March 31, 2013 and 2012 was $0.6 million and $0.9 million, respectively, and consists of foreign exchange gains and losses from our Lloyd’s Operations, commission income and inspection fees related to our specialty insurance business.

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Expenses

Net Losses and Loss Adjustment Expenses

The ratio of net losses and LAE to net earned premiums (“loss ratios”) for the three months ended March 31, 2013 and 2012 is presented in the following table:

	Three Months Ended March 31,
Net Loss and LAE Ratio	2013			2012
Net Loss and LAE Payments		54.5	%		64.6	%
Change in reserves		8.4	%		3.5	%
Subtotal—current year loss ratio		62.9	%		68.1	%
Prior year deficiencies (redundancies)		2.0	%		-3.7	%
Net loss and LAE ratio		64.9	%		64.4	%

The net loss and LAE ratio for the three months ended March 31, 2013 increased 0.5 percentage points to 64.9% from 64.4% for the three months ended March 31, 2012. The increase in the loss ratio reflects the net prior period reserve deficiencies driven by adverse development from our Professional Liability business. The 64.4% loss ratio for the three months ended March 31, 2012 includes our net loss related to the grounding of the cruise ship Costa Concordia off the coast of Italy, which was offset by net reserve redundancies from our Energy & Engineering business written by NavTech.

The segment and line of business breakdown of the net loss and LAE ratios for the three months ended March 31, 2013 and 2012 are as follows:

	Three Months Ended March 31,
In thousands	2013			2012
Insurance Companies:
Marine		63.7	%		78.7	%
Property Casualty		66.0	%		64.7	%
Professional Liability		89.9	%		69.7	%
Insurance Companies		69.3	%		69.3	%
Lloyd’s Operations
Marine		55.3	%		64.8	%
Property Casualty		9.5	%		27.9	%
Professional Liability		78.5	%		31.6	%
Lloyd’s Operations		50.7	%		52.0	%
Net loss and LAE ratio		64.9	%		64.4	%

The changes in the net loss and LAE ratios by segment and line of business, as noted above, are primarily related to prior year reserve deficiencies and or redundancies, as described below.

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Prior Year Reserve Deficiencies/Redundancies

The relevant factors that may have a significant impact on the establishment and adjustment of losses and LAE reserves can vary by line of business and from period to period. As part of our regular review of prior reserves, management, in consultation with our actuaries, may determine, based on their judgment that certain assumptions made in the reserving process in prior year periods may need to be revised to reflect various factors, likely including the availability of additional information. Based on their reserve analyses, management may make corresponding reserve adjustments.

The segment and line of business breakdowns of prior period net reserve deficiencies (redundancies) for the three months ended March 31, 2013 and 2012 is as follows:

	Three Months Ended March 31,
In thousands	2013			2012
Insurance Companies:
Marine	$	1,193		$	(495	)
Property Casualty		(156	)		(3,296	)
Professional Liability		6,693			1,075
Insurance Companies	$	7,730		$	(2,716	)
Lloyd’s Operations:
Marine		(1,627	)		55
Property Casualty		(2,030	)		(2,738	)
Professional Liability		10			(1,467	)
Lloyd’s Operations	$	(3,647	)	$	(4,150	)
Total deficiencies (redundancies)	$	4,083		$	(6,866	)

The following is a discussion of relevant factors related to the $4.1 million prior period net reserve deficiencies recorded in the first quarter of the 2013:

The Insurance Companies recorded $7.7 million of net prior period reserve deficiencies, of which $6.7 million was related to the Professional Liability business. Within the Professional Liability business, we reported prior period reserve deficiencies of $3.7 million from the Management Liability division related to specific large claims from our public and private sector directors and officers liability lines for underwriting years (“UY”) 2010 and prior. In addition, we reported prior period reserve deficiencies of $3.0 million from the E&O division related to specific large claims from our insurance agents and miscellaneous professional liability lines from UY 2011 and prior. The $1.1 million of net prior period reserve deficiencies from our Marine business is due to adverse development related to one claim from our Inland Marine division for UY 2012.

Our Lloyd’s Operations recorded $3.6 million of net prior period reserve redundancies. Within the Lloyd’s Operations Property Casualty business, we reported prior period reserve redundancies of $2.0 million from the Energy & Engineering division related to the favorable settlement of two claims from our onshore lines for UY 2011. The $1.6 million of prior period reserve redundancies from our Lloyd’s Marine business is related to the favorable settlement of specific claims from our marine liability lines for UYs 2007 and 2004.

The following is a discussion of relevant factors related to the $6.9 million prior period net reserve redundancies recorded in the first quarter of 2012:

The Insurance Companies recorded $2.7 million of net prior period reserve redundancies driven by net favorable development from our Property Casualty business. The Property Casualty business reported net favorable development of $2.4 million and $2.2 million from the NavTech and Primary Casualty divisions, respectively, across multiple lines and underwriting years, partially offset by $1.6 million of net prior period reserve deficiencies from our Assumed Reinsurance business.

Our Lloyd’s Operations recorded $4.2 million of net prior period reserve redundancies driven by the Property Casualty business, namely Lloyd’s NavTech, and the Professional Liability business, across all classes of business for UYs 2009 and prior.

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Commission Expenses

Commission expenses paid to brokers and agents are generally based on a percentage of gross written premiums and are partially offset by ceding commissions we may receive on ceded written premiums. Commissions are generally deferred and recorded as deferred policy acquisition costs to the extent that they relate to unearned premium. The percentage of commission expenses to net earned premiums (“commission expense ratio”) for the three months ended March 31, 2013, and 2012 were 13.1% and 16.1%, respectively. The decrease in the commission expense ratio for the three months ended March 31, 2013 when compared to the same period in 2012 is attributed to changes in the mix of business, mostly driven by an increase in the ceding commission on the new quota share program for our offshore energy business, and to a lesser extent RRPs recorded in 2012 in connection with loss events from our Marine business.

Other Operating Expenses

Other operating expenses were $40.9 million for the three months ended March 31, 2013 compared to $36.3 million for the same period in 2012. The increase in operating expenses is primarily due to an increase in incentive compensation as well as increase in overall headcount due to continued investments in new underwriting teams and related support staff, closely aligned with business growth.

Interest Expense

Interest expense relates to our Senior Notes due May 1, 2016. Interest on these Senior Notes is due each May 1 and November 1 and the effective interest rate, based on the proceeds net of discount and all issuance costs, is approximately 7.17%. Interest expense for both the three months ended March 31, 2013 and 2012 was approximately $2 million.

Income Taxes

We recorded income tax expense of $6.6 million for the three months ended March 31, 2013 compared to $3.3 million for the comparable period in 2012, resulting in effective tax rates of 32.3% and 29.3%, respectively. The effective tax rate on net investment income was 28.5% and 25.2% for the three months ended March 31, 2013 and 2012, respectively.

As of March 31, 2013, the net deferred federal, foreign, state and local tax assets were $4.0 million compared to $3.2 million as of December 31, 2012 with the change primarily due to the increase in the deferred tax asset for unearned premium reserve, in line with the growth of our business.

We had net state and local deferred tax assets amounting to potential future tax benefits of $0.4 million and $0.5 million as of March 31, 2013 and December 31, 2012, respectively. Included in the deferred tax assets are state and local net operating loss carry-forwards of $0.2 million for both March 31, 2013 and December 31, 2012. A valuation allowance was established for the full amount of these potential future tax benefits due to uncertainty associated with their realization. Our state and local tax carry-forwards as of March 31, 2013 expire from 2023 to 2031.

The Company has not provided for U.S. income taxes on approximately $18.0 million of undistributed earnings of its non-U.S. subsidiaries since it is intended that those earnings will be reinvested indefinitely in those subsidiaries. If a future determination is made that those earnings no longer are intended to be reinvested indefinitely in those subsidiaries, U.S. income taxes of approximately $1.9 million, assuming all foreign tax credits are realized, would be included in the tax provision at that time and would be payable if those earnings were distributed to the Company.

Segment Information

We classify our business into two underwriting segments consisting of the Insurance Companies and the Lloyd’s Operations, which are separately managed, and a Corporate segment. Segment data for each of the two underwriting segments include allocations of the operating expenses of the wholly-owned underwriting management companies and The Navigators Group, Inc.’s (the “Parent Company’s”) operating expenses and related income tax amounts. The Corporate segment consists of the Parent Company’s investment income, interest expense and the related tax effect.

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We evaluate the performance of each segment based on its underwriting and GAAP results. The underwriting results of the Insurance Companies and the Lloyd’s Operations are measured by taking into account net earned premium, net loss and LAE, commission expenses, other operating expenses and other income (expense). Each segment also maintains its own investments, on which it earns income and realizes capital gains or losses. Our underwriting performance is evaluated separately from the performance of our investment portfolios.

Following are the financial results of our two underwriting segments.

Insurance Companies

The Insurance Companies consist of Navigators Insurance Company, including its U.K. Branch, and its wholly-owned subsidiary, Navigators Specialty. They are primarily engaged in underwriting marine insurance and related lines of business, specialty insurance lines of business, including contractors general liability insurance, commercial umbrella and primary and excess casualty businesses, specialty assumed reinsurance business, and professional liability insurance. Navigators Specialty underwrites specialty and professional liability insurance on an excess and surplus lines basis. Navigators Specialty is 100% reinsured by Navigators Insurance Company.

The following table sets forth the results of operations for the Insurance Companies for the three months ended March 31, 2013 and 2012:

	Three Months Ended March 31,						Percentage Change
In thousands	2013			2012			2013 vs. 2012
Gross written premiums	$	301,628		$	248,338			21.5	%
Net written premiums		216,319			181,250			19.3	%
Net earned premiums		154,331			131,548			17.3	%
Net losses and loss adjustment expenses		(106,985	)		(91,177	)		17.3	%
Commission expenses		(18,517	)		(19,301	)		-4.1	%
Other operating expenses		(29,343	)		(25,345	)		15.8	%
Other income (expense)		659			1,642			-59.9	%
Underwriting profit (loss)	$	145		$	(2,633	)		NM
Net investment income		11,951			8,935			33.8	%
Net realized gains (losses)		4,792			1,875			NM
Income (loss) before income taxes	$	16,888		$	8,177			106.5	%
Income tax expense (benefit)		5,404			2,258			139.3	%
Net income (loss)	$	11,484		$	5,919			94.0	%
Losses and loss adjustment expenses ratio		69.3	%		69.3	%
Commission expense ratio		12.0	%		14.7	%
Other operating expense ratio (1)		18.6	%		18.0	%
Combined ratio		99.9	%		102.0	%

(1) — Includes Other operating expenses & Other income (expense)

NM — Percentage change not meaningful

Our Insurance Companies reported net income of $11.5 million for the three months ended March 31, 2013 compared to $5.9 million for the same period in 2012. The increase in net income for the three months ended March 31, 2013 as compared to the same period in 2012 was largely related to an increase in net realized gains, net investment income on our investment portfolio and an improvement in underwriting results.

Our Insurance Companies combined ratio for the three months ended March 31, 2013 was 99.9% compared to 102.0% for the same period in 2012. Our Insurance Companies pre-tax underwriting results increased by $2.7 million to a $0.1 million pre-tax underwriting profit for the three months ended March 31, 2013 compared to an underwriting loss of $2.6 million for the same period in 2012.

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The Insurance Companies pre-tax underwriting results for the three months ended March 31, 2013 includes $4.4 million of underwriting profit from our Excess Casualty and Primary Casualty businesses due in part to strong production attributable to the expansion of those underwriting teams and the continued dislocation of certain competitors, as well as $6.7 million of net prior period reserve deficiencies from our Professional Liability business.

Our underwriting results for the three months ended March 31, 2012 reflects a net loss of $5.5 million related to the grounding of the cruise ship, Costa Concordia. This loss was partially offset by net prior period reserve redundancies of $3.3 million primarily related to our Property Casualty business.

Insurance Companies Gross Written Premiums

Marine Premiums. The gross written premiums for our Marine business for the three months ended March 31, 2013 and 2012 consisted of the following:

	Three Months Ended March 31,				Percentage Change
In thousands	2013		2012		2013 vs. 2012
Marine Liability	$	14,805	$	18,241		-18.8	%
Craft/Fishing Vessels		10,779		8,244		30.8	%
Cargo		8,420		8,458		-0.5	%
Protection & Indemnity		6,150		6,616		-7.0	%
Inland Marine		4,882		11,838		-58.8	%
Bluewater Hull		2,600		3,559		-26.9	%
Other Marine		3,211		4,909		-34.6	%
Total Marine	$	50,847	$	61,865		-17.8	%

The Insurance Companies Marine gross written premiums for the three months ended March 31, 2013 decreased 17.8% to $50.8 million compared to the same period during 2012 primarily due to the re-underwriting of our Inland Marine business, as well as reduction in our marine liability lines is due to the non-renewal of certain policies.

The Insurance Companies Marine business achieved a 4.0% increase on renewal rates for the three months ended March 31, 2013.

Property Casualty Premiums. The gross written premiums for our Property Casualty business for the three months ended March 31, 2013 and 2012 consisted of the following:

	Three Months Ended March 31,				Percentage Change
In thousands	2013		2012		2013 vs. 2012
Assumed Reinsurance	$	92,136	$	73,422		25.5	%
Excess Casualty		70,281		37,654		86.6	%
Primary Casualty		26,436		23,925		10.5	%
Energy & Engineering		20,064		13,201		52.0	%
Environmental Liability		5,536		5,210		6.3	%
Other Property & Casualty		4,511		2,507		79.9	%
Total Property Casualty	$	218,964	$	155,919		40.4	%

The Insurance Companies Property Casualty gross written premiums for the three months ended March 31, 2013 increased 40.4% to $219.0 million compared to the same period in 2012, driven by growth from our Excess Casualty division as a result of strong production attributable to an expansion of our underwriting teams and continued dislocation among certain competitors, as well as the continued growth from our Assumed Reinsurance division.

Within our Insurance Companies Property Casualty business we have realized a 1.8% increase in rates for the Excess Casualty division, a 1.4% increase in the Primary Casualty division, and a slight 0.3% decrease from our Energy & Engineering division.

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Professional Liability Premiums. The gross written premiums for the Professional Liability business for the three months ended March 31, 2013 and 2012 consisted of the following:

	Three Months Ended March 31,				Percentage Change
In thousands	2013		2012		2013 vs. 2012
Errors & Omissions	$	22,653	$	21,932		3.3	%
Management Liability		9,164		8,622		6.3	%
Total Professional Liability	$	31,817	$	30,554		4.1	%

Our Insurance Companies Professional Liability business has experienced an overall increase in its renewal rates of 6.1%, consisting of 13.2% and 3.8% for the Management Liability and E&O divisions, respectively.

Insurance Companies Commission Expenses

The commission expenses ratios for the three months ended March 31, 2013, and 2012 was 12.0% and 14.7%, respectively. The decrease in the commission expense ratio is attributable to changes in the mix of business, mostly driven by an increase in the ceding commission received on the new quota share program for our offshore energy business, and to a lesser extent $9.7 million in RRPs recorded in 2012 in connection with loss events from our Marine business.

Insurance Companies Other Operating Expenses

Insurance Companies other operating expenses were $29.3 million for the three months ended March 31, 2013 compared to $25.3 million for the same period in 2012. The increase in operating expenses is due to an increase in incentive compensation as well as an increase in overall headcount due to continued investments in new underwriting teams and related support staff, closely aligned with business growth.

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Lloyd’s Operations

Our Lloyd’s Operations primarily underwrite marine and related lines of business along with offshore energy, construction coverages for onshore energy business and professional liability insurance at Lloyd’s through Syndicate 1221. Our Lloyd’s Operations segment includes NUAL, a Lloyd’s underwriting agency which manages Syndicate 1221.

The following table sets forth the results of operations for the Lloyd’s Operations for the three months ended March 31, 2013 and 2012:

	Three Months Ended March 31,						Percentage Change
In thousands	2013			2012			2013 vs. 2012
Gross written premiums	$	91,594		$	94,811			-3.4	%
Net written premiums		53,133			61,795			-14.0	%
Net earned premiums		47,997			51,571			-6.9	%
Net losses and loss adjustment expenses		(24,357	)		(26,808	)		-9.1	%
Commission expenses		(8,621	)		(10,886	)		-20.8	%
Other operating expenses		(11,531	)		(10,962	)		5.2	%
Other income (expense)		542			6			NM
Underwriting profit (loss)	$	4,030		$	2,921			38.0	%
Net investment income		1,702			2,283			-25.4	%
Net realized gains (losses)		(20	)		(187	)		-89.3	%
Income (loss) before income taxes	$	5,712		$	5,017			13.9	%
Income tax expense (benefit)		2,046			1,726			18.5	%
Net income (loss)	$	3,666		$	3,291			11.4	%
Losses and loss adjustment expenses ratio		50.7	%		52.0	%
Commission expense ratio		18.0	%		21.1	%
Other operating expense ratio (1)		22.9	%		21.2	%
Combined ratio		91.6	%		94.3	%

(1) — Includes Other operating expenses & Other income (expense)

NM — Percentage change not meaningful.

Our Lloyd’s Operations reported net income of $3.7 million for the three months ended March 31, 2013 compared to $3.3 million for the same period in 2012. The increase in net income for the three months ended March 31, 2013 as compared to the same period in 2012 was largely attributable to stronger underwriting results, partially offset by a decrease in net investment income due to lower investment yields. The annualized pre-tax investment yield, excluding net realized gains and losses and net OTTI losses recognized in earnings, was 1.5% and 2.1% for the three months ended March 31, 2013 and 2012, respectively.

Our Lloyd’s Operations combined ratio for the three months ended March 31, 2013 was 91.6% compared to 94.3% for the same period in 2012. Our Lloyd’s Operations pre-tax underwriting profit increased $1.1 million to a $4.0 million for the three months ended March 31, 2013 compared to $2.9 million for the same period in 2012, and is largely due to continued favorable loss emergence for UYs 2011 and prior.

Our Lloyd’s Operations underwriting results for the first quarter of 2012 reflected a net loss of $1.0 million related to the grounding of the cruise ship, Costa Concordia. This loss was partially offset by net prior period reserve redundancies of $4.2 million related to our Property Casualty and Professional Liability businesses.

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Lloyd’s Operations Gross Written Premiums

We have controlled 100% of Syndicate 1221’s stamp capacity since 2006. Stamp capacity is a measure of the amount of premium 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 £195 million ($296 million) in 2013 compared to £184 million ($300 million) in 2012.

Marine Premiums. The gross written premiums for our Marine business for the three months ended March 31, 2013 and 2012 consisted of the following:

	Three Months Ended March 31,				Percentage Change
In thousands	2013		2012		2013 vs. 2012
Marine Liability	$	17,815	$	18,944		-6.0	%
Cargo		10,004		13,678		-26.9	%
Specie		6,455		6,296		2.5	%
Energy Liability		5,856		6,102		-4.0	%
Marine Excess-of-Loss Reinsurance		5,738		7,073		-18.9	%
Transport		3,891		3,888		0.1	%
War		2,482		3,286		-24.5	%
Bluewater Hull		1,403		2,508		-44.1	%
Total Marine	$	53,644	$	61,775		-13.2	%

The Lloyd’s Operations Marine gross written premiums decreased 13.2% for the three months ended March 31, 2013 compared to the same period in 2012. The decrease is driven by reduction on retention in renewed business partially offset by an increase in renewal rates of 5.0%.

Property Casualty Premiums. The gross written premiums for our Property Casualty business for the three months ended March 31, 2013 and 2012 consisted of the following:

	Three Months Ended March 31,					Percentage Change
In thousands	2013			2012		2013 vs. 2012
Energy & Engineering:
Offshore Energy	$	13,268		$	11,319		17.2	%
Onshore Energy		5,269			4,226		24.7	%
Engineering and Construction		5,008			8,196		-38.9	%
U.S. Direct and Facultative Property		1,528			—		NM
Energy & Engineering	$	25,073		$	23,741		5.6	%
Other Property Casualty		(15	)		555		NM
Total Property Casualty	$	25,058		$	24,296		3.1	%

NM — Percentage change not meaningful

The Lloyd’s Operations Property Casualty gross written premiums increased 3.1% for the three months ended March 31, 2013 compared to the same period in 2012. The increase is primarily due to new business growth within the offshore energy lines as well as $1.5 million in new business from our U.S. direct and facultative property lines that we began writing this quarter, partially offset by a reduction from our engineering and construction lines.

The Lloyd’s Operations Property Casualty business achieved a 1.6% increase on renewal rates for the three months ended March 31, 2013.

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Professional Liability Premiums. The gross written premiums for the Professional Liability business for the three months ended March 31, 2013 and 2012 consisted of the following:

	Three Months Ended March 31,				Percentage Change
In thousands	2013		2012		2013 vs. 2012
Management Liability	$	10,242	$	6,430		59.3	%
Errors & Omissions		2,650		2,310		14.7	%
Total Professional Liability	$	12,892	$	8,740		47.5	%

The Lloyd’s Operations Professional Liability gross written premiums increased 47.5%, or $4.2 million, for the three months ended March 31, 2013 compared to the same period in 2012, as a result of new business, partially offset by a 4.5% decrease in rate on renewed business.

Lloyd’s Operations Commission Expenses

The commission expenses ratios for the three months ended March 31, 2013, and 2012 was 18.0% and 21.1%, respectively. The decrease in the commission expense ratio for the three months ended March 31, 2013 when compared to the same period in 2012 is attributed to changes in the mix of business, mostly driven by the increase in the ceding commission received on the new quota share program for our offshore energy business.

Lloyd’s Other Operating Expenses

Lloyd’s Operations other operating expenses were $11.5 million for the three months ended March 31, 2013 compared to $11.0 million for the same period in 2012. The increase in operating expenses is primarily due to an increase in incentive compensation.

Capital Resources

We monitor our capital adequacy to support our business on a regular basis. The future requirements of our business will depend on many factors, including our ability to write new business successfully and to establish premium rates and reserves at levels sufficient to cover losses. Our ability to underwrite is largely dependent upon the quality of our claims paying and financial strength ratings as evaluated by independent rating agencies. In particular, we require (1) sufficient capital to maintain our financial strength ratings, as issued by various ratings agencies, at a level considered necessary by management to enable our Insurance Companies to compete, (2) sufficient capital to enable our Insurance Companies to meet the capital adequacy tests performed by statutory agencies in the United States and the United Kingdom and (3) letters of credit and other forms of collateral that are necessary to support the business plan of our Lloyd’s Operations.

Our capital resources consist of funds deployed or available to be deployed to support our business operations. As of March 31, 2013 and December 31, 2012, our capital resources were as follows:

	March 31,			December 31,
In thousands	2013			2012
Senior Notes	$	114,462		$	114,424
Stockholders’ equity		896,758			879,485
Total capitalization	$	1,011,220		$	993,909
Ratio of debt to total capitalization		11.3	%		11.5	%

45

As part of our capital management program, we may seek to raise additional capital or may seek to return capital to our stockholders through share repurchases, cash dividends or other methods (or a combination of such methods). Any such determination will be at the discretion of the Parent Company’s Board of Directors and will be dependent upon our profits, financial requirements and other factors, including legal restrictions, rating agency requirements, credit facility limitations and such other factors as our Board of Directors deems relevant.

In July 2012, we filed a universal shelf registration statement with the SEC. This registration statement, which expires in July 2015, allows for the future possible offer and sale by the Company of up to $500 million in the aggregate of various types of securities including common stock, preferred stock, debt securities, depositary shares, warrants, units or stock purchase contracts and stock purchase units. The shelf registration statement enables us to efficiently access the public equity or debt markets in order to meet future capital needs, if necessary. This report is not an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state.

We primarily rely upon dividends from our subsidiaries to meet our Parent Company’s obligations. Since the issuance of the senior debt in April 2006, the Parent Company’s cash obligations primarily consist of semi-annual interest payments on the senior debt, which are currently $4.0 million. Going forward, the interest payments may be made from funds currently at the Parent Company or dividends from its subsidiaries.

Navigators Insurance Company may pay dividends to the Parent Company out of its statutory earned surplus pursuant to statutory restrictions imposed under the New York insurance law. As of March 31, 2013, the maximum amount available for the payment of dividends by Navigators Insurance Company in 2013 without prior regulatory approval is $69.4 million. During the preceding 12 month period Navigators Insurance Company declared and paid $5.0 million in dividends to the Parent Company, none of which were declared and paid in the first quarter of 2013.

Navigators Corporate Underwriters Ltd. (“NCUL”) may pay dividends to the Parent Company up to the extent of available profits that have been distributed from Syndicate 1221 and as of March 31, 2013 that amount was $8.0 million (£5.3 million).

Condensed Parent Company balance sheets as of March 31, 2013 (unaudited) and December 31, 2012 are shown in the table below:

In thousands	March 31, 2013		December 31, 2012
Cash and investments	$	16,976	$	15,026
Investments in subsidiaries		971,680		955,024
Goodwill and other intangible assets		2,534		2,534
Other assets		24,328		23,219
Total assets	$	1,015,518	$	995,803
Senior Notes	$	114,462	$	114,424
Accounts payable and other liabilities		944		552
Accrued interest payable		3,354		1,342
Total liabilities	$	118,760	$	116,318
Stockholders’ equity	$	896,758	$	879,485
Total liabilities and stockholders’ equity	$	1,015,518	$	995,803

46

On November 22, 2012, we entered into a $165 million credit facility agreement with ING Bank N.V., London Branch, individually and as Administrative Agent, and a syndicate of lenders. The new credit facility amended and restated a $165 million letter of credit facility entered into by the parties on March 28, 2011. The credit facility, which is denominated in U.S. dollars, is utilized to fund our participation in Syndicate 1221 through letters of credit for the 2013 and 2014 underwriting years, as well as open prior years. The letters of credit issued under the facility are denominated in British pounds and their aggregate face amount will fluctuate based on exchange rates. If any letters of credit remain outstanding under the facility after December 31, 2014, we would be required to post additional collateral to secure the remaining letters of credit. As of March 31, 2013, letters of credit with an aggregate face amount of $145.9 million were outstanding under the credit facility and we have $0.8 million of cash collateral posted.

This credit facility contains customary covenants for facilities of this type, including restrictions on indebtedness and liens, limitations on mergers, dividends and the sale of assets, and requirements as to maintaining certain consolidated tangible net worth, statutory surplus and other financial ratios. The credit facility also provides for customary events of default, including failure to pay principal, interest or fees when due, failure to comply with covenants, any representation or warranty made by the Company being false in any material respect, default under certain other indebtedness, certain insolvency or receivership events affecting the Company and its subsidiaries, the occurrence of certain material judgments, or a change in control of the Company. The letter of credit facility is secured by a pledge of the stock of certain insurance subsidiaries of the Company. To the extent the aggregate face amount issued under the credit facility exceeds the commitment amount, we are required to post collateral with the lead bank of the consortium. We were in compliance with all covenants under the credit facility as of March 31, 2013.

The applicable margin and applicable fee rate payable under the credit facility are based on a tiered schedule that is based on the Company’s then-current ratings issued by S&P and Moody’s with respect to the Company’s Senior Notes without third-party credit enhancement, and the amount of the Company’s own collateral utilized to fund its participation in Syndicate 1221.

Time lags do occur in the normal course of business between the time gross loss reserves are paid by the Company and the time such gross paid losses are billed and collected from reinsurers. Reinsurance recoverable amounts related to gross loss reserves as of March 31, 2013 are anticipated to be billed and collected over the next several years as the gross loss reserves are paid by the Company.

Generally, for pro rata or quota share reinsurers, we issue quarterly settlement statements for premiums less commissions and paid loss activity, which are expected to be settled within 30-45 days. We have the ability to issue “cash calls” requiring such reinsurers to pay losses whenever paid loss activity for a claim ceded to a particular reinsurance treaty exceeds a predetermined amount (generally $0.5 million to $1.0 million) as set forth in the pro rata treaty. For the Insurance Companies, cash calls must generally be paid within 30 calendar days. There is generally no specific settlement period for the Lloyd’s Operations cash call provisions, but such billings have historically on average been paid within 45 calendar days.

Generally, for excess-of-loss reinsurers we pay quarterly deposit premiums based on the estimated subject premiums over the contract period (usually one year) that are subsequently adjusted based on actual premiums determined after the expiration of the applicable reinsurance treaty. Paid losses subject to excess-of-loss recoveries are generally billed as they occur and are usually settled by reinsurers within 30 calendar days for the Insurance Companies and 30 business days for the Lloyd’s Operations.

We sometimes withhold funds from reinsurers and may apply ceded loss billings against such funds in accordance with the applicable reinsurance agreements.

47

Liquidity

Consolidated Cash Flows

Cash flow provided by operations was $4.3 million for the three months ended March 31, 2013 compared to $16.4 million for the comparable period in 2012. The decrease in cash flow from operations was due to the timing of payments to our reinsurers in connection with the increased use of proportional reinsurance to support our offshore energy business in 2013.

Net cash provided by investing activities was $7.4 million for the three months ended March 31, 2013 compared to net cash used in investing activities of $98.5 million for the same period in 2012. The increase in cash provided by investing activities is driven by the on-going management of our investment portfolio.

Net cash provided by financing activities was $1.5 million for the three months ended March 31, 2013 compared to $0.3 million for the comparable period in 2012. The increase in cash provided by financing activities relates to the exercise of employee stock options.

We believe that the cash flow generated by the operating activities of our subsidiaries will provide sufficient funds for us to meet our liquidity needs over the next twelve months. Beyond the next twelve months, cash flow available to us may be influenced by a variety of factors, including general economic conditions and conditions in the insurance and reinsurance markets, as well as fluctuations from year to year in claims experience.

We believe that we have adequately managed our cash flow requirements related to reinsurance recoveries from their positive cash flows and the use of available short-term funds when applicable. However, there can be no assurances that we will be able to continue to adequately manage such recoveries in the future or that collection disputes or reinsurer insolvencies will not arise that could materially increase the collection time lags or result in recoverable write-offs causing additional incurred losses and liquidity constraints to the Company. The payment of gross claims and related collections from reinsurers with respect to large losses could significantly impact our liquidity needs. However, we expect to collect our paid reinsurance recoverables generally under the terms described above.

48

Investments

As of March 31, 2013, the weighted average rating of our fixed maturity investments was “AA” by S&P and “Aa” by Moody’s. The entire fixed maturity investment portfolio, except for investments with a fair value of $21.7 million, consists of investment grade bonds. As of March 31, 2013, our portfolio had a duration of 4.0 years. Management periodically projects cash flow of the investment portfolio and other sources in order to maintain the appropriate levels of liquidity in an effort to ensure our ability to satisfy claims. As of March 31, 2013 and December 31, 2012, all fixed maturity securities and equity securities held by us were classified as available-for-sale.

The following tables set forth the Company’s cash and investments as of March 31, 2013 and December 31, 2012. The tables below include OTTI securities recognized within OCI.

	March 31, 2013
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
In thousands	Value		Gains		(Losses)			Cost
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-backed 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

	December 31, 2012
In thousands	Fair Value		Gross Unrealized Gains		Gross Unrealized (Losses)			Cost or Amortized Cost
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	649,692	$	8,654	$	(36	)	$	641,074
States, municipalities and political subdivisions		322,947		18,712		(380	)		304,615
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		384,445		13,652		(204	)		370,997
Residential mortgage obligations		38,692		1,053		(549	)		38,188
Asset-backed securities		50,382		1,133		(49	)		49,298
Commercial mortgage-backed securities		204,821		17,996		(18	)		186,843
Subtotal	$	678,340	$	33,834	$	(820	)	$	645,326
Corporate bonds		470,854		27,129		(25	)		443,750
Total fixed maturities	$	2,121,833	$	88,329	$	(1,261	)	$	2,034,765
Equity securities—common stocks		101,297		16,919		(626	)		85,004
Short-term investments		153,788		—		—			153,788
Cash		45,336		—		—			45,336
Total	$	2,422,254	$	105,248	$	(1,887	)	$	2,318,893

As of March 31, 2013 and December 31, 2012, debt securities for which non-credit OTTI was previously recognized and included in other comprehensive income, are now in an unrealized gains position of $0.4 million and $20 thousand, respectively.

49

The fair value of our investment portfolio may fluctuate significantly in response to various factors such as changes in interest rates, investment quality ratings, equity prices, foreign exchange rates and credit spreads. We do not have the intent to sell nor is it more likely than not that we will have to sell debt securities in unrealized loss positions that are not other-than-temporarily impaired before recovery. For structured securities, default probability and severity assumptions differ based on property type, vintage and the stress of the collateral. We do not intend to sell any of these securities and it is more likely than not that we will not be required to sell these securities before the recovery of the amortized cost basis. For equity securities, the Company also considers its intent to hold securities as part of the process of evaluating whether a decline in fair value represents an other-than-temporary decline in value. We may realize investment losses to the extent our liquidity needs require the disposition of fixed maturity securities in unfavorable interest rate, liquidity or credit spread environments. Significant changes in the factors we consider when evaluating investments for impairment losses could result in a significant change in impairment losses reported in the consolidated financial statements.

Invested assets increased from the prior comparable period in 2012 primarily due to unrealized gains and cash flow from operations. The annualized pre-tax investment yield, excluding net realized gains and losses and net OTTI losses recognized in earnings, was 2.3% and 2.0% for the three months ended March 31, 2013 and 2012, respectively.

The tax equivalent yields for the three months ended March 31, 2013 and 2012 on a consolidated basis were 2.5% and 3.4%, respectively. The portfolio duration was 4.0 years and 3.7 years for the three months ended March 31, 2013 and 2012, respectively. Since the beginning of 2013, the tax-exempt portion of our investment portfolio has increased by $111.1 million to approximately 19% of the fixed maturities investment portfolio at March 31, 2013 compared to approximately 13.2% at December 31, 2012.

We are a specialty insurance company and periods of moderate economic recession or inflation tend not to have a significant direct effect on our underwriting operations. They do, however, impact our investment portfolio. A decrease in interest rates will tend to decrease our yield and have a positive effect on the fair value of our invested assets. An increase in interest rates will tend to increase our yield and have a negative effect on the fair value of our invested assets.

The contractual maturity dates for fixed maturity securities categorized by the number of years until maturity as of March 31, 2013 are shown in the following table:

	March 31, 2013
In thousands	Fair Value		Amortized Cost
Due in one year or less	$	109,496	$	108,751
Due after one year through five years		636,433		616,510
Due after five years through ten years		480,898		459,528
Due after ten years		237,966		230,326
Mortgage- and asset-backed securities		613,210		586,750
Total	$	2,078,003	$	2,001,865

Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Due to the periodic repayment of principal, the aggregate amount of mortgage-backed and asset-backed securities is estimated to have an effective maturity of approximately 4.3 years.

50

The following table sets forth the amount and percentage of our fixed maturities as of March 31, 2013 by S&P credit rating or, if an S&P rating is not available, the equivalent Moody’s rating. The table includes fixed maturities at fair value, and the total rating is the weighted average quality rating.

	March 31, 2013
In thousands	Rating	Fair Value		Percent of Total
Rating description:
Extremely strong	AAA	$	293,623		14	%
Very strong	AA		1,157,811		56	%
Strong	A		445,757		21	%
Adequate	BBB		159,109		8	%
Speculative	BB & Below		17,967		1	%
Not rated	NR		3,736		0	%
Total	AA	$	2,078,003		100	%

The following table sets forth our U.S. Treasury bonds, agency bonds, and foreign government bonds as of March 31, 2013 and December 31, 2012:

	March 31, 2013
In thousands	Fair Value		Gross Unrealized Gains		Gross Unrealized (Losses)			Amortized Cost
U.S. Treasury bonds	$	470,037	$	5,540	$	(30	)	$	464,527
Agency bonds		53,617		2,195		(1	)		51,423
Foreign government bonds		7,809		253		—			7,556
Total	$	531,463	$	7,988	$	(31	)	$	523,506
	December 31, 2012
In thousands	Fair Value		Gross Unrealized Gains		Gross Unrealized (Losses)			Amortized Cost
U.S. Treasury bonds	$	414,503	$	4,441	$	(10	)	$	410,072
Agency bonds		155,465		3,331		(11	)		152,145
Foreign government bonds		79,724		882		(15	)		78,857
Total	$	649,692	$	8,654	$	(36	)	$	641,074

The following table sets forth the composition of the investments categorized as states, municipalities and political subdivisions in our portfolio by generally equivalent S&P and Moody’s ratings (not all securities in our portfolio are rated by both S&P and Moody’s) as of March 31, 2013. The securities that are not rated in the table below are primarily state bonds.

		March 31, 2013
In thousands Equivalent S&P Rating	Equivalent Moody’s Rating	Fair Value		Amortized Cost		Net Unrealized Gain (Loss)
AAA/AA/A	Aaa/Aa/A	$	423,751	$	408,604	$	15,147
BBB	Baa		19,654		19,267		387
BB	Ba		2,246		2,013		233
B	B		—		—		—
CCC or lower	Caa or lower		—		—		—
NR	NR		3,736		3,628		108
Total		$	449,387	$	433,512	$	15,875

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The following table sets forth the municipal bond holdings by sectors as of March 31, 2013 and December 31, 2012:

	March 31, 2013					December 31, 2012
In thousands	Fair Value		Percent of Total			Fair Value		Percent of Total
Municipal Sector:
General obligation	$	114,926		26	%	$	73,642		23	%
Prerefunded		23,555		5	%		22,692		7	%
Revenue		252,037		56	%		183,096		57	%
Taxable		58,869		13	%		43,517		13	%
Total	$	449,387		100	%	$	322,947		100	%

We own $113.2 million of municipal securities which are credit enhanced by various financial guarantors. As of March 31, 2013, the average underlying credit rating for these securities is A+. There has been no material adverse impact to our investment portfolio or results of operations as a result of downgrades of the credit ratings for several of the financial guarantors.

We analyze our mortgage-backed and asset-backed securities by credit quality of the underlying collateral distinguishing between the securities issued by the Federal National Mortgage Association (“FNMA”), the Federal Home Loan Mortgage Corporation (“FHLMC”) and the Government National Mortgage Association (“GNMA”) which are Federal government sponsored entities, and the non-FNMA and non-FHLMC securities broken out by prime, Alternative A-paper (“Alt-A”) and subprime collateral. The securities issued by FNMA and FHLMC are the obligations of each respective entity. Legislation has provided for guarantees by the U.S. Government of up to $100 billion each for FNMA and FHLMC.

Prime collateral consists of mortgages or other collateral from the most creditworthy borrowers. Alt-A collateral consists of mortgages or other collateral from borrowers which have a risk potential that is greater than prime but less than subprime. The subprime collateral consists of mortgages or other collateral from borrowers with low credit ratings. Such subprime and Alt-A categories are as defined by S&P.

The following table sets forth our agency mortgage-backed securities and residential mortgage-backed securities (“RMBS”) by those issued by GNMA, FNMA, and FHLMC, and the quality category (prime, Alt-A and subprime) for all other such investments as of March 31, 2013:

	March 31, 2013
In thousands	Fair Value		Gross Unrealized Gains		Gross Unrealized Losses			Amortized Cost
Agency mortgage-backed securities:
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 agency mortgage-backed securities	$	346,829	$	11,842	$	(640	)	$	335,627
Residential mortgage-backed securities:
Prime	$	12,507	$	417	$	(141	)	$	12,231
Alt-A		2,139		81		(46	)		2,104
Subprime		668		28		—			640
Non-U.S. RMBS		23,036		697		—			22,339
Total residential mortgage-backed securities	$	38,350	$	1,223	$	(187	)	$	37,314

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The following table sets forth the composition of the investments categorized as RMBS in our portfolio by generally equivalent S&P and Moody’s ratings (not all securities in our portfolio are rated by both S&P and Moody’s) as of March 31, 2013:

		March 31, 2013
In thousands Equivalent S&P Rating	Equivalent Moody’s Rating	Fair Value		Amortized Cost		Net Unrealized Gain (Loss)
AAA/AA/A	Aaa/Aa/A	$	23,983	$	23,252	$	731
BBB	Baa		2,203		2,220		(17	)
BB	Ba		1,438		1,467		(29	)
B	B		2,768		2,742		26
CCC or lower	Caa or lower		7,958		7,633		325
NR	NR		—		—		—
Total		$	38,350	$	37,314	$	1,036

Details of the collateral of our asset-backed securities portfolio as of March 31, 2013 are presented below:

In thousands	AAA		AA		A		BBB		BB		CCC		Fair Value		Amortized Cost		Unrealized Gain (Loss)
Auto loans	$	4,705	$	3,536	$	—	$	—	$	—	$	—	$	8,241	$	8,056	$	185
Credit cards		13,930		—		—		—		—		—		13,930		13,485		445
Time Share		—		—		16,035		—		—		—		16,035		15,640		395
Student Loans		5,255		3,253		—		—		—		—		8,508		8,461		47
Miscellaneous		378		—		—		—		—		—		378		369		9
Total	$	24,268	$	6,789	$	16,035	$	—	$	—	$	—	$	47,092	$	46,011	$	1,081

The following table sets forth the composition of the investments categorized as commercial mortgage-backed securities in our portfolio by generally equivalent S&P and Moody’s ratings (not all securities in our portfolio are rated by both S&P and Moody’s) as of March 31, 2013:

		March 31, 2013
In thousands Equivalent S&P Rating	Equivalent Moody’s Rating	Fair Value		Amortized Cost		Net Unrealized Gain (Loss)
AAA/AA/A	Aaa/Aa/A	$	180,939	$	167,798	$	13,141
BBB	Baa		—		—		—
BB	Ba		—		—		—
B	B		—		—		—
CCC or lower	Caa or lower		—		—		—
NR	NR		—		—		—
Total		$	180,939	$	167,798	$	13,141

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The following table sets forth the composition of the investments categorized as corporate bonds in our portfolio by generally equivalent S&P and Moody’s ratings (not all securities in our portfolio are rated by both S&P and Moody’s) as of March 31, 2013:

		March 31, 2013
In thousands Equivalent S&P Rating	Equivalent Moody’s Rating	Fair Value		Amortized Cost		Net Unrealized Gain (Loss)
AAA/AA/A	Aaa/Aa/A	$	343,134	$	324,330	$	18,804
BBB	Baa		137,252		130,367		6,885
BB	Ba		3,557		3,400		157
B	B		—		—		—
CCC or lower	Caa or lower		—		—		—
NR	NR		—		—		—
Total		$	483,943	$	458,097	$	25,846

The company holds non-sovereign European securities of $78.1 million at fair value and $76.0 million at amortized cost, primarily in the investment portfolio. This represents 3.6% of our total fixed income and equity portfolio. Our largest exposure is in France with a total of $32.6 million followed by the Netherlands with a total of $30.7 million. We have no direct material exposure to Greece, Portugal, Italy or Spain as of March 31, 2013.

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The following table summarizes all securities in a gross unrealized loss position as of March 31, 2013 and December 31, 2012, showing the aggregate fair value and gross unrealized loss by the length of time those securities had continuously been in a gross unrealized loss position as well as the number of securities:

	March 31, 2013						December 31, 2012
In thousands, except # of securities	Number of Securities		Fair Value		Gross Unrealized Loss		Number of Securities		Fair Value		Gross Unrealized Loss
Fixed maturities:
U.S. Treasury bonds, agency bonds, and foreign government bonds
0-6 months		8	$	40,455	$	31		8	$	23,760	$	22
7-12 months		—		—		—		3		14,118		11
> 12 months		—		—		—		1		4,652		3
Subtotal		8	$	40,455	$	31		12	$	42,530	$	36
States, municipalities and political subdivisions
0-6 months		58	$	129,906	$	1,682		10	$	21,299	$	325
7-12 months		—		—		—		—		—		—
> 12 months		4		2,852		62		4		2,908		55
Subtotal		62	$	132,758	$	1,744		14	$	24,207	$	380
Agency mortgage-backed securities
0-6 months		22	$	46,654	$	512		10	$	62,516	$	174
7-12 months		3		7,921		128		2		1,671		30
> 12 months		—		—		—		—		—		—
Subtotal		25	$	54,575	$	640		12	$	64,187	$	204
Residential mortgage obligations
0-6 months		5	$	1,673	$	2		6	$	1,825	$	22
7-12 months		—		—		—		—		—		—
> 12 months		24		4,653		185		35		7,252		527
Subtotal		29	$	6,326	$	187		41	$	9,077	$	549
Asset-backed securities
0-6 months		1	$	631	$	2		—	$	—	$	—
7-12 months		—		—		—		—		—		—
> 12 months		1		1,743		27		2		2,369		49
Subtotal		2	$	2,374	$	29		2	$	2,369	$	49
Commercial mortgage-backed securities
0-6 months		1	$	1,149	$	5		7	$	2,639	$	7
7-12 months		2		802		11		—		—		—
> 12 months		4		717		13		5		845		11
Subtotal		7	$	2,668	$	29		12	$	3,484	$	18
Corporate bonds
0-6 months		10	$	15,648	$	121		2	$	3,528	$	6
7-12 months		—		—		—		—		—		—
> 12 months		1		1,497		3		4		6,689		19
Subtotal		11	$	17,145	$	124		6	$	10,217	$	25
Total fixed maturities		144	$	256,301	$	2,784		99	$	156,071	$	1,261
Equity securities—common stocks
0-6 months		4	$	8,011	$	247		13	$	23,345	$	522
7-12 months		—		—		—		1		1,943		104
> 12 months		—		—		—		—		—		—
Total equity securities		4	$	8,011	$	247		14	$	25,288	$	626

55

We analyze the unrealized losses quarterly to determine if any are other-than-temporary. The above unrealized losses have been determined to be temporary based on our policies.

In the above table the gross unrealized loss for the greater than 12 months category consists primarily of residential mortgage-backed securities. Residential mortgage-backed securities are a type of fixed income security in which residential mortgage loans are sold into a trust or special purpose vehicle, thereby securitizing the cash flows of the mortgage loans.

To determine whether the unrealized loss on structured securities is other-than-temporary, we analyze the projections provided by our investment managers with respect to an expected principal loss under a range of scenarios and utilize the most likely outcomes. The analysis relies on actual collateral performance measures such as default rate, prepayment rate and loss severity. These assumptions are applied throughout the remaining term of the deal, incorporating the transaction structure and priority of payments, to generate loss adjusted cash flows. Results of the analysis will indicate whether the security is expected ultimately to incur a loss or whether there is a material impact on yield due to either a projected loss or a change in cash flow timing. A break even default rate is also calculated. A comparison of the break even default rate to the actual default rate provides an indication of the level of cushion or coverage to the first dollar principal loss. The analysis applies the stated assumptions throughout the remaining term of the transaction to forecast cash flows, which are then applied through the transaction structure to determine whether there is a loss to the security. For securities in which a tranche loss is present, and the net present value of loss adjusted cash flows is less than book value, an impairment is recognized. The output data also includes a number of additional metrics such as average life remaining, original and current credit support, over 60 day delinquency and security rating.

Prepayment assumptions associated with the mortgage-backed and asset-backed securities are reviewed on a periodic basis. When changes in prepayment assumptions are deemed necessary as the result of actual prepayments differing from anticipated prepayments, securities are revalued based upon the new prepayment assumptions utilizing the retrospective accounting method.

As of March 31, 2013 and December 31, 2012, the largest single unrealized loss by issuer in the investment portfolio was $0.3 million and $0.2 million.

The following table sets forth the composition of the investments categorized as fixed maturity securities in our investment portfolio with gross unrealized losses by generally equivalent S&P and Moody’s ratings (not all of the securities are rated by S&P and Moody’s) as of March 31, 2013:

		March 31, 2013
	Equivalent	Gross Unrealized Loss					Fair Value
In thousands Equivalent S&P Rating	Moody’s Rating	Amount		Percent of Total			Amount		Percent of Total
AAA/AA/A	Aaa/Aa/A	$	2,379		85	%	$	236,052		92	%
BBB	Baa		247		9	%		15,563		6	%
BB	Ba		47		2	%		577		0	%
B	B		49		2	%		1,619		1	%
CCC or lower	Caa or lower		62		2	%		2,490		1	%
NR	NR		—		0	%		—		0	%
Total		$	2,784		100	%	$	256,301		100	%

As of March 31, 2013, the gross unrealized losses in the table above were related to fixed maturity securities that are rated investment grade, which is defined as a security having an S&P rating of “BBB–” or higher, or a Moody’s rating of “Baa3” or higher, except for $0.2 million which is rated below investment grade or not rated. Unrealized losses on investment grade securities principally relate to changes in interest rates or changes in sector-related credit spreads since the securities were acquired.

56

The contractual maturity for fixed maturity securities categorized by the number of years until maturity, with a gross unrealized loss as of March 31, 2013 is presented in the following table:

	March 31, 2013
	Gross Unrealized Losses					Fair Value
In thousands	Amount		Percent of Total			Amount		Percent of Total
Due in one year or less	$	3		0	%	$	1,505		0	%
Due after one year through five years		63		2	%		26,313		10	%
Due after five years through ten years		446		16	%		76,159		30	%
Due after ten years		1,387		50	%		86,381		34	%
Mortgage- and asset-backed securities		885		32	%		65,943		26	%
Total	$	2,784		100	%	$	256,301		100	%

As of March 31, 2013, there were no investments that had a gross unrealized loss that was less than 80% of amortized cost.

The table below summarizes our activity related to OTTI losses for the periods indicated:

	Three Months Ended March 31,
	2013				2012
In thousands, except # of securities	Number of Securities		Amount		Number of Securities		Amount
Total OTTI losses:
Corporate and other bonds		—	$	—		—	$	—
Commercial mortgage-backed securities		—		—		—		—
Residential mortgage-backed securities		—		—		1		55
Asset-backed securities		—		—		—		—
Equities		2		42		2		143
Total		2	$	42		3	$	198
Less: Portion of loss in accumulated other comprehensive income (loss):
Corporate and other bonds			$	—			$	—
Commercial mortgage-backed securities				—				—
Residential mortgage-backed securities				—				44
Asset-backed securities				—				—
Equities				—				—
Total			$	—			$	44
Impairment losses recognized in earnings:
Corporate and other bonds			$	—			$	—
Commercial mortgage-backed securities				—				—
Residential mortgage-backed securities				—				11
Asset-backed securities				—				—
Equities				42				143
Total			$	42			$	154

During the three months ended March 31 2013, we recognized OTTI losses of $0.04 million related to two equity securities. During the comparable period in 2012, we recognized OTTI losses of $0.2 million related to one non-agency mortgage-backed security and two equity securities.

57

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The following updates our disclosure regarding foreign currency exchange rate risk as previously stated in the Company’s 2012 Annual Report on Form 10-K.

Foreign Currency Exchange Rate Risk

Our Lloyd’s Operations are exposed to foreign currency exchange rate risk primarily related to foreign-denominated cash, cash equivalents and marketable securities (“foreign funds”), premiums receivable, reinsurance recoverables on paid and unpaid losses and loss adjustment expenses as well as reserves for losses and loss adjustment expenses. The principal currencies creating foreign currency exchange risk for the Lloyd’s Operations are the British pound, the Euro and the Canadian dollar. The Lloyd’s Operations manages its foreign currency exchange rate risk primarily through asset-liability matching.

Based on the primary foreign-denominated balances within the Lloyd’s Operations as of March 31, 2013, an assumed 5%, 10% and 15% negative currency movement would result in changes as follows:

	March 31, 2013
			Negative Currency Movement of
In millions	USD Equivalent		5%			10%			15%
Cash, cash equivalents and marketable securities at fair value	$	97.4	$	(4.9	)	$	(9.7	)	$	(14.6	)
Premiums receivable	$	27.9	$	(1.4	)	$	(2.8	)	$	(4.2	)
Reinsurance recoverables on paid, unpaid losses and LAE	$	45.7	$	(2.3	)	$	(4.6	)	$	(6.9	)
Reserves for losses and loss adjustment expenses	$	127.6	$	6.4		$	12.8		$	19.1

Item 4. Controls and Procedures

(a) The Chief Executive Officer and Chief Financial Officer of the Company have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this quarterly report. Based on such evaluation, such officers have concluded that as of the end of such period the Company’s disclosure controls and procedures are effective in identifying, on a timely basis, material information required to be disclosed in our reports filed or submitted under the Exchange Act.

(b) There have been no changes during our first fiscal quarter in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

58

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

In the ordinary course of conducting business, our subsidiaries are involved in various legal proceedings, either indirectly as insurers for parties or directly as defendants. Most of the these proceedings consist of claims litigation involving our subsidiaries as either (a) liability insurers defending or providing indemnity for third party claims brought against insureds or (b) insurers defending first party coverage claims brought against them. We account for such activity through the establishment of unpaid loss and loss adjustment reserves. Our management believes that the ultimate liability, if any, with respect to such ordinary-course claims litigation, after consideration of provisions made for potential losses and cost of defense, will not be material to our consolidated financial condition, results of operations, or cash flows.

Our subsidiaries are also from time to time involved with other legal actions, some of which assert claims for substantial amounts. These actions include claims asserting extra contractual obligations, such as claims involving allegations of bad faith in the handling of claims or the underwriting of policies. In general, we believe we have valid defenses to these cases. Our management expects that the ultimate liability, if any, with respect to such extra-contractual matters will not be material to our consolidated financial position. Nonetheless, given the large or indeterminate amounts sought in certain of these matters, and the inherent unpredictability of litigation, an adverse outcome in such matters could, from time to time, have a material adverse outcome on our consolidated results of operations or cash flows in a particular fiscal quarter or year.

59

Item 1A. Risk Factors

There have been no material changes from the risk factors as previously disclosed in the Company’s 2012 Annual Report on

Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

None

60

Item 6. Exhibits

Exhibit No.	Description of Exhibit
11-1	Computation of Per Share Earnings	*
31-1	Certification of CEO per Section 302 of the Sarbanes-Oxley Act	*
31-2	Certification of CFO per Section 302 of the Sarbanes-Oxley Act	*
32-1	Certification of CEO per Section 906 of the Sarbanes-Oxley Act (This exhibit is intended to be furnished in accordance with Regulation S-K item 601(b)(32)(ii) and shall not be deemed to be filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference).	*
32-2	Certification of CFO per Section 906 of the Sarbanes-Oxley Act (This exhibit is intended to be furnished in accordance with Regulation S-K item 601(b)(32)(ii) and shall not be deemed to be filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference).	*
101.INS	XBRL Instance Document	*
101.SCH	XBRL Taxonomy Extension Scheme	*
101.CAL	XBRL Taxonomy Extension Calculation Database	*
101.LAB	XBRL Taxonomy Extension Label Linkbase	*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase	*
101.DEF	XBRL Taxonomy Extension Definition Linkbase	*

* Included herein

61

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 thereunto duly authorized.

	The Navigators Group, Inc.
	(Registrant)
Date: May 3, 2013	/s/ Ciro M. DeFalco
	Ciro M. DeFalco
	Senior Vice President and Chief Financial Officer

62

INDEX TO EXHIBITS

Exhibit No.	Description of Exhibit
11-1	Computation of Per Share Earnings	*
31-1	Certification of CEO per Section 302 of the Sarbanes-Oxley Act	*
31-2	Certification of CFO per Section 302 of the Sarbanes-Oxley Act	*
32-1	Certification of CEO per Section 906 of the Sarbanes-Oxley Act (This exhibit is intended to be furnished in accordance with Regulation S-K item 601(b)(32)(ii) and shall not be deemed to be filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference).	*
32-2	Certification of CFO per Section 906 of the Sarbanes-Oxley Act (This exhibit is intended to be furnished in accordance with Regulation S-K item 601(b)(32)(ii) and shall not be deemed to be filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference).	*
101.INS	XBRL Instance Document	*
101.SCH	XBRL Taxonomy Extension Scheme	*
101.CAL	XBRL Taxonomy Extension Calculation Database	*
101.LAB	XBRL Taxonomy Extension Label Linkbase	*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase	*
101.DEF	XBRL Taxonomy Extension Definition Linkbase	*

* Included herein

63

EX-11.1

Exhibit 11-1

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Computation of Per Share Earnings

The following table presents the computation of basic and diluted earnings per share for the three months ended March 31, 2013 and 2012:

	Three Months Ended March 31,
In thousands, except share and per share amounts	2013		2012
Net income (loss)	$	13,910	$	7,904
Basic weighted average shares		14,085,821		13,979,442
Effect of common stock equivalents:
Assumed exercise of stock options and vesting of stock grants		289,136		195,433
Diluted weighted average shares		14,374,957		14,174,875
Net income (loss) per common share:
Basic	$	0.99	$	0.57
Diluted	$	0.97	$	0.56

EX-31.1

Exhibit 31-1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PER

SECTION 302 OF THE SARBANES-OXLEY ACT

I, Stanley A. Galanski, certify that:

1. I have reviewed this report on Form 10-Q of The Navigators Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I, are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 3, 2013	/s/ Stanley A. Galanski
	Name:	Stanley A. Galanski
	Title:	President and Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31-2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PER

SECTION 302 OF THE SARBANES-OXLEY ACT

I, Ciro M. DeFalco, certify that:

1. I have reviewed this report on Form 10-Q of The Navigators Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 3, 2013	/s/ Ciro M. DeFalco
	Name:	Ciro M. DeFalco
	Title:	Senior Vice President and Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32-1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Navigators Group, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stanley A. Galanski, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Stanley A. Galanski

Stanley A. Galanski

President and Chief Executive Officer

May 3, 2013

A signed original of this written statement required by Section 906 has been provided to The Navigators Group, Inc. and will be retained by The Navigators Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32-2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Navigators Group, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ciro M. DeFalco, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Ciro M. DeFalco

Ciro M. DeFalco

Senior Vice President and Chief Financial Officer

May 3, 2013

A signed original of this written statement required by Section 906 has been provided to The Navigators Group, Inc. and will be retained by The Navigators Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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Summary of Aggregate Fair Value and Gross Unrealized Loss by Length of Time Securities had Continuously been in Gross Unrealized Loss Position as Well as Number of Securities (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013 Investment	Dec. 31, 2012 Investment
Fixed maturities
Gain (Loss) on Investments [Line Items]
Number of Securities	144	99
Fair Value	$ 256,301	$ 156,071
Gross Unrealized Loss	2,784	1,261
Fixed maturities | U.S. Treasury bonds, agency bonds, and foreign
Gain (Loss) on Investments [Line Items]
Number of Securities	8	12
Fair Value	40,455	42,530
Gross Unrealized Loss	31	36
Fixed maturities | U.S. Treasury bonds, agency bonds, and foreign | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	8	8
Fair Value	40,455	23,760
Gross Unrealized Loss	31	22
Fixed maturities | U.S. Treasury bonds, agency bonds, and foreign | 7-12 months
Gain (Loss) on Investments [Line Items]
Number of Securities		3
Fair Value		14,118
Gross Unrealized Loss		11
Fixed maturities | U.S. Treasury bonds, agency bonds, and foreign | > 12 months
Gain (Loss) on Investments [Line Items]
Number of Securities		1
Fair Value		4,652
Gross Unrealized Loss		3
Fixed maturities | States, municipalities and political subdivisions
Gain (Loss) on Investments [Line Items]
Number of Securities	62	14
Fair Value	132,758	24,207
Gross Unrealized Loss	1,744	380
Fixed maturities | States, municipalities and political subdivisions | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	58	10
Fair Value	129,906	21,299
Gross Unrealized Loss	1,682	325
Fixed maturities | States, municipalities and political subdivisions | > 12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	4	4
Fair Value	2,852	2,908
Gross Unrealized Loss	62	55
Fixed maturities | Agency mortgage-backed securities
Gain (Loss) on Investments [Line Items]
Number of Securities	25	12
Fair Value	54,575	64,187
Gross Unrealized Loss	640	204
Fixed maturities | Agency mortgage-backed securities | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	22	10
Fair Value	46,654	62,516
Gross Unrealized Loss	512	174
Fixed maturities | Agency mortgage-backed securities | 7-12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	3	2
Fair Value	7,921	1,671
Gross Unrealized Loss	128	30
Fixed maturities | Residential Mortgage Backed Securities
Gain (Loss) on Investments [Line Items]
Number of Securities	29	41
Fair Value	6,326	9,077
Gross Unrealized Loss	187	549
Fixed maturities | Residential Mortgage Backed Securities | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	5	6
Fair Value	1,673	1,825
Gross Unrealized Loss	2	22
Fixed maturities | Residential Mortgage Backed Securities | > 12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	24	35
Fair Value	4,653	7,252
Gross Unrealized Loss	185	527
Fixed maturities | Asset-backed securities
Gain (Loss) on Investments [Line Items]
Number of Securities	2	2
Fair Value	2,374	2,369
Gross Unrealized Loss	29	49
Fixed maturities | Asset-backed securities | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	1
Fair Value	631
Gross Unrealized Loss	2
Fixed maturities | Asset-backed securities | > 12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	1	2
Fair Value	1,743	2,369
Gross Unrealized Loss	27	49
Fixed maturities | Commercial mortgage-backed securities
Gain (Loss) on Investments [Line Items]
Number of Securities	7	12
Fair Value	2,668	3,484
Gross Unrealized Loss	29	18
Fixed maturities | Commercial mortgage-backed securities | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	1	7
Fair Value	1,149	2,639
Gross Unrealized Loss	5	7
Fixed maturities | Commercial mortgage-backed securities | 7-12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	2
Fair Value	802
Gross Unrealized Loss	11
Fixed maturities | Commercial mortgage-backed securities | > 12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	4	5
Fair Value	717	845
Gross Unrealized Loss	13	11
Fixed maturities | Corporate bonds
Gain (Loss) on Investments [Line Items]
Number of Securities	11	6
Fair Value	17,145	10,217
Gross Unrealized Loss	124	25
Fixed maturities | Corporate bonds | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	10	2
Fair Value	15,648	3,528
Gross Unrealized Loss	121	6
Fixed maturities | Corporate bonds | > 12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	1	4
Fair Value	1,497	6,689
Gross Unrealized Loss	3	19
Common Stock
Gain (Loss) on Investments [Line Items]
Number of Securities	4	14
Fair Value	8,011	25,288
Gross Unrealized Loss	247	626
Common Stock | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	4	13
Fair Value	8,011	23,345
Gross Unrealized Loss	247	522
Common Stock | 7-12 months
Gain (Loss) on Investments [Line Items]
Number of Securities		1
Fair Value		1,943
Gross Unrealized Loss		$ 104

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Fixed Maturities And Equity Securities By Asset Class That Are Measured At Fair Value (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Mar. 31, 2012
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	$ 2,194,485	$ 2,223,130
Fixed maturities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	2,078,003	2,121,833
Fixed maturities | U.S. Treasury bonds, agency bonds, and foreign
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	531,463	649,692
Fixed maturities | States, municipalities and political subdivisions
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	449,387	322,947
Fixed maturities | Agency mortgage-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	346,829	384,445
Fixed maturities | Residential Mortgage Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	38,350	38,692
Fixed maturities | Asset-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	47,092	50,382
Fixed maturities | Commercial mortgage-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	180,939	204,821
Fixed maturities | Mortgage-backed and asset-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	613,210	678,340
Fixed maturities | Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	483,943	470,854
Equity Securities | Common Stock
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	116,482	101,297
Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	429,735	515,799
Level 1 | Fixed maturities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	313,253	414,502
Level 1 | Fixed maturities | U.S. Treasury bonds, agency bonds, and foreign
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	313,253	414,502
Level 1 | Equity Securities | Common Stock
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	116,482	101,297
Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	1,764,750	1,707,331
Level 2 | Fixed maturities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	1,764,750	1,707,331
Level 2 | Fixed maturities | U.S. Treasury bonds, agency bonds, and foreign
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	218,210	235,190
Level 2 | Fixed maturities | States, municipalities and political subdivisions
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	449,387	322,947
Level 2 | Fixed maturities | Agency mortgage-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	346,829	384,445
Level 2 | Fixed maturities | Residential Mortgage Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	38,350	38,692
Level 2 | Fixed maturities | Asset-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	47,092	50,382
Level 2 | Fixed maturities | Commercial mortgage-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	180,939	204,821
Level 2 | Fixed maturities | Mortgage-backed and asset-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	613,210	678,340
Level 2 | Fixed maturities | Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	$ 483,943	$ 470,854

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Income Taxes - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Income Taxes [Line Items]
Undistributed earnings of non-U.S. subsidiaries	$ 18,000,000
Taxes payable on undistributed earnings	1,900,000
Income tax (benefit) expense	6,643,000	3,281,000
Effective income tax rate	32.30%	29.30%
Deferred Tax Assets: State and Local	400,000		500,000
State and local net operating loss carry-forwards	$ 200,000		$ 200,000
United Kingdom
Income Taxes [Line Items]
Foreign effective income tax rate	35.00%
Corporate tax rate	24.00%	26.00%
United Kingdom | Syndicate 1221 | Maximum
Income Taxes [Line Items]
Percentage of premiums	50.00%
United Kingdom | Syndicate 1221 | Minimum
Income Taxes [Line Items]
Foreign effective income tax rate	35.00%
United Kingdom | Expected Future Tax Rate
Income Taxes [Line Items]
Corporate tax rate	23.00%
State and Local Jurisdiction | Maximum
Income Taxes [Line Items]
State and local tax carry-forwards expiration year	2031
State and Local Jurisdiction | Minimum
Income Taxes [Line Items]
State and local tax carry-forwards expiration year	2023

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Financial Data by Segment (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012		Dec. 31, 2012
Segment Reporting Information [Line Items]
Gross written premiums	$ 393,222		$ 343,149
Net written premiums	269,452		243,045
Net earned premiums	202,328		183,119
Net losses and loss adjustment expenses	(131,342)		(117,985)
Commission expenses	(26,555)		(29,450)
Other operating expenses	(40,874)		(36,307)
Other income (expense)	618		911
Underwriting profit (loss)	4,175		288
Net investment income	13,657		11,258
Net realized gains (losses)	4,772		1,688
Interest expense	(2,051)		(2,049)
Income (loss) before income taxes	20,553		11,185
Income tax expense (benefit)	6,643		3,281
Net income (loss)	13,910		7,904
Identifiable assets	4,071,045		3,847,527		4,007,670
Losses and loss adjustment expenses ratio	64.90%		64.40%
Commission expense ratio	13.10%		16.10%
Other operating expense ratio	19.90%	[1]	19.30%	[1]
Combined ratio	97.90%		99.80%
Insurance
Segment Reporting Information [Line Items]
Gross written premiums	301,628		248,338
Net written premiums	216,319		181,250
Net earned premiums	154,331		131,548
Net losses and loss adjustment expenses	(106,985)		(91,177)
Commission expenses	(18,517)		(19,301)
Other operating expenses	(29,343)		(25,345)
Other income (expense)	659		1,642
Underwriting profit (loss)	145		(2,633)
Net investment income	11,951		8,935
Net realized gains (losses)	4,792		1,875
Income (loss) before income taxes	16,888		8,177
Income tax expense (benefit)	5,404		2,258
Net income (loss)	11,484		5,919
Identifiable assets	3,087,308		2,899,369
Losses and loss adjustment expenses ratio	69.30%		69.30%
Commission expense ratio	12.00%		14.70%
Other operating expense ratio	18.60%	[1]	18.00%	[1]
Combined ratio	99.90%		102.00%
Lloyd's
Segment Reporting Information [Line Items]
Gross written premiums	91,594		94,811
Net written premiums	53,133		61,795
Net earned premiums	47,997		51,571
Net losses and loss adjustment expenses	(24,357)		(26,808)
Commission expenses	(8,621)		(10,886)
Other operating expenses	(11,531)		(10,962)
Other income (expense)	542		6
Underwriting profit (loss)	4,030		2,921
Net investment income	1,702		2,283
Net realized gains (losses)	(20)		(187)
Income (loss) before income taxes	5,712		5,017
Income tax expense (benefit)	2,046		1,726
Net income (loss)	3,666		3,291
Identifiable assets	936,471		907,760
Losses and loss adjustment expenses ratio	50.70%		52.00%
Commission expense ratio	18.00%		21.10%
Other operating expense ratio	22.90%	[1]	21.20%	[1]
Combined ratio	91.60%		94.30%
Corporate
Segment Reporting Information [Line Items]
Commission expenses	583	[2]	737	[2]
Other income (expense)	(583)	[2]	(737)	[2]
Net investment income	4	[2]	40	[2]
Interest expense	(2,051)	[2]	(2,049)	[2]
Income (loss) before income taxes	(2,047)	[2]	(2,009)	[2]
Income tax expense (benefit)	(807)	[2]	(703)	[2]
Net income (loss)	(1,240)	[2]	(1,306)	[2]
Identifiable assets	$ 47,266	[2]	$ 40,398	[2]

[1] Includes Other operating expenses and Other income.

[2] Includes Corporate segment intercompany eliminations.

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Contractual Maturity by Number of Years Until Maturity for Fixed Maturity Securities with Gross Unrealized Loss (Detail) (Fixed maturities, USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Loss Amount	$ 2,784	$ 1,261
Percent of Total Gross Unrealized Loss	100.00%
Fair Value Amount	256,301	156,071
Percent of Total Fair Value	100.00%
Due in one year or less
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Loss Amount	3
Percent of Total Gross Unrealized Loss	0.00%
Fair Value Amount	1,505
Percent of Total Fair Value	0.00%
Due After One Year Through Five Years
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Loss Amount	63
Percent of Total Gross Unrealized Loss	2.00%
Fair Value Amount	26,313
Percent of Total Fair Value	10.00%
Due After Five Years Through Ten Years
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Loss Amount	446
Percent of Total Gross Unrealized Loss	16.00%
Fair Value Amount	76,159
Percent of Total Fair Value	30.00%
Due After Ten Years
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Loss Amount	1,387
Percent of Total Gross Unrealized Loss	50.00%
Fair Value Amount	86,381
Percent of Total Fair Value	34.00%
Mortgage- and asset-backed securities
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Loss Amount	885
Percent of Total Gross Unrealized Loss	32.00%
Fair Value Amount	$ 65,943
Percent of Total Fair Value	26.00%

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Scheduled Maturity Dates for Fixed Maturity Securities by Number of Years Until Maturity (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Fair Value
Due in one year or less	$ 109,496
Due after one year through five years	636,433
Due after five years through ten years	480,898
Due after ten years	237,966
Mortgage- and asset-backed securities	613,210
Total	2,078,003	2,121,833
Amortized Cost
Due in one year or less	108,751
Due after one year through five years	616,510
Due after five years through ten years	459,528
Due after ten years	230,326
Mortgage- and asset-backed securities	586,750
Total	$ 2,001,865	$ 2,034,765

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Credit Facility - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended			1 Months Ended
	Mar. 31, 2013	Mar. 28, 2011	Mar. 31, 2013 Lloyd's Syndicate 1221	Nov. 22, 2012 Amended and Restated Credit Agreement
Line of Credit Facility [Line Items]
Line of credit facility		$ 165		$ 165
Issuance of new letters of credit, expiry date				Dec. 31, 2014
Aggregate face amount of letters of credit outstanding			145.9
Cash collateral posted			$ 0.8
Line of credit facility, covenant terms	This credit facility contains customary covenants for facilities of this type, including restrictions on indebtedness and liens, limitations on mergers, dividends and the sale of assets, and requirements as to maintaining certain consolidated tangible net worth, statutory surplus and other financial ratios. The credit facility also provides for customary events of default, including failure to pay principal, interest or fees when due, failure to comply with covenants, any representation or warranty made by the Company being false in any material respect, default under certain other indebtedness, certain insolvency or receivership events affecting the Company and its subsidiaries, the occurrence of certain material judgments, or a change in control of the Company.
Line of credit facility, covenant compliance	The Company was in compliance with all covenants under the credit facility as of March 31, 2013.

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Accounting Policies

3 Months Ended

Mar. 31, 2013

Accounting Policies

Note 1. Accounting Policies

The accompanying interim consolidated financial statements are unaudited and reflect all adjustments which, in the opinion of management, are necessary to fairly present the results of The Navigators Group, Inc. and its subsidiaries for the interim periods presented on the basis of United States generally accepted accounting principles (“GAAP” or “U.S. GAAP”). All such adjustments are of a normal recurring nature. All significant intercompany transactions and balances have been eliminated. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting periods. The results of operations for any interim period are not necessarily indicative of results for the full year. The term “the Company” as used herein is used to mean The Navigators Group, Inc. and its subsidiaries, unless the context otherwise requires. The terms “Parent” or “Parent Company” are used to mean The Navigators Group, Inc. without its subsidiaries. These financial statements should be read in conjunction with the consolidated financial statements and notes contained in the Company’s 2012 Annual Report on Form 10-K.

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Net Investment Income (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Investment Income	$ 14,386	$ 16,670
Investment expenses	(729)	(5,412)
Net investment income	13,657	11,258
Fixed maturities
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Investment Income	13,167	15,411
Equity Securities
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Investment Income	1,030	947
Short-term investments
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Investment Income	$ 189	$ 312

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Lists of 20 Largest Reinsurers Measured by Reinsurance Recoverable (Parenthetical) (Detail) (USD $)	Mar. 31, 2013
Ceded Credit Risk [Line Items]
Reserve for uncollectible reinsurance amount	$ 11,500,000
Collateral Held	225,905,000	[1]
Ceded Balances Payable
Ceded Credit Risk [Line Items]
Collateral Held	165,100,000
Letter of Credit
Ceded Credit Risk [Line Items]
Collateral Held	57,200,000
All Other
Ceded Credit Risk [Line Items]
Collateral Held	$ 3,600,000

[1] Collateral of $225.9 million consists of $165.1 million in ceded balances payable, $57.2 million in letters of credit, and $3.6 million of other balances held by the Company's Insurance Companies and Lloyd's Operations.

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Lists of 20 Largest Reinsurers Measured by Reinsurance Recoverable (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Dec. 31, 2012
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	$ 232,776		$ 221,015
Reinsurance Recoverables Paid/Unpaid Losses	924,245
Reinsurance Recoverables Total	1,157,021	[1]
Collateral Held	225,905	[2]
Rating	AA
National Indemnity Company
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	48,252
Reinsurance Recoverables Paid/Unpaid Losses	61,076
Reinsurance Recoverables Total	109,328	[1]
Collateral Held	32,952	[2]
National Indemnity Company | AMB
Ceded Credit Risk [Line Items]
Rating	A++
National Indemnity Company | S&P
Ceded Credit Risk [Line Items]
Rating	AA+
Swiss Reinsurance America Corporation
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	5,551
Reinsurance Recoverables Paid/Unpaid Losses	87,274
Reinsurance Recoverables Total	92,825	[1]
Collateral Held	6,070	[2]
Swiss Reinsurance America Corporation | AMB
Ceded Credit Risk [Line Items]
Rating	A+
Swiss Reinsurance America Corporation | S&P
Ceded Credit Risk [Line Items]
Rating	AA-
Transatlantic Reinsurance Company
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	19,321
Reinsurance Recoverables Paid/Unpaid Losses	71,906
Reinsurance Recoverables Total	91,227	[1]
Collateral Held	9,739	[2]
Transatlantic Reinsurance Company | AMB
Ceded Credit Risk [Line Items]
Rating	A
Transatlantic Reinsurance Company | S&P
Ceded Credit Risk [Line Items]
Rating	A+
Everest Reinsurance Company
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	20,648
Reinsurance Recoverables Paid/Unpaid Losses	70,431
Reinsurance Recoverables Total	91,079	[1]
Collateral Held	9,102	[2]
Everest Reinsurance Company | AMB
Ceded Credit Risk [Line Items]
Rating	A+
Everest Reinsurance Company | S&P
Ceded Credit Risk [Line Items]
Rating	A+
Munich Reinsurance America Inc.
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	9,613
Reinsurance Recoverables Paid/Unpaid Losses	78,428
Reinsurance Recoverables Total	88,041	[1]
Collateral Held	3,329	[2]
Munich Reinsurance America Inc. | AMB
Ceded Credit Risk [Line Items]
Rating	A+
Munich Reinsurance America Inc. | S&P
Ceded Credit Risk [Line Items]
Rating	AA-
Lloyd Syndicate #2003
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	8,859
Reinsurance Recoverables Paid/Unpaid Losses	38,850
Reinsurance Recoverables Total	47,709	[1]
Collateral Held	10,251	[2]
Lloyd Syndicate #2003 | AMB
Ceded Credit Risk [Line Items]
Rating	A
Lloyd Syndicate #2003 | S&P
Ceded Credit Risk [Line Items]
Rating	A+
Partner Reinsurance Europe
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	8,787
Reinsurance Recoverables Paid/Unpaid Losses	34,121
Reinsurance Recoverables Total	42,908	[1]
Collateral Held	17,457	[2]
Partner Reinsurance Europe | AMB
Ceded Credit Risk [Line Items]
Rating	A+
Partner Reinsurance Europe | S&P
Ceded Credit Risk [Line Items]
Rating	A+
Allied World Reinsurance
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	11,812
Reinsurance Recoverables Paid/Unpaid Losses	26,486
Reinsurance Recoverables Total	38,298	[1]
Collateral Held	4,682	[2]
Allied World Reinsurance | AMB
Ceded Credit Risk [Line Items]
Rating	A
Allied World Reinsurance | S&P
Ceded Credit Risk [Line Items]
Rating	A
Scor Global P&C SE
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	10,065
Reinsurance Recoverables Paid/Unpaid Losses	21,576
Reinsurance Recoverables Total	31,641	[1]
Collateral Held	6,829	[2]
Scor Global P&C SE | AMB
Ceded Credit Risk [Line Items]
Rating	A
Scor Global P&C SE | S&P
Ceded Credit Risk [Line Items]
Rating	A+
Tower Insurance Company
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	11,993
Reinsurance Recoverables Paid/Unpaid Losses	17,045
Reinsurance Recoverables Total	29,038	[1]
Collateral Held	8,227	[2]
Tower Insurance Company | AMB
Ceded Credit Risk [Line Items]
Rating	A-
Tower Insurance Company | S&P
Ceded Credit Risk [Line Items]
Rating	NR
General Reinsurance Corporation
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	268
Reinsurance Recoverables Paid/Unpaid Losses	26,144
Reinsurance Recoverables Total	26,412	[1]
Collateral Held	731	[2]
General Reinsurance Corporation | AMB
Ceded Credit Risk [Line Items]
Rating	A++
General Reinsurance Corporation | S&P
Ceded Credit Risk [Line Items]
Rating	AA+
Validus Reinsurance Ltd
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	2,739
Reinsurance Recoverables Paid/Unpaid Losses	22,892
Reinsurance Recoverables Total	25,631	[1]
Collateral Held	13,041	[2]
Validus Reinsurance Ltd | AMB
Ceded Credit Risk [Line Items]
Rating	A
Validus Reinsurance Ltd | S&P
Ceded Credit Risk [Line Items]
Rating	A
Berkley Insurance Company
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	1,556
Reinsurance Recoverables Paid/Unpaid Losses	19,144
Reinsurance Recoverables Total	20,700	[1]
Collateral Held	241	[2]
Berkley Insurance Company | AMB
Ceded Credit Risk [Line Items]
Rating	A+
Berkley Insurance Company | S&P
Ceded Credit Risk [Line Items]
Rating	A+
Scor Holding (Switzerland) AG
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	790
Reinsurance Recoverables Paid/Unpaid Losses	16,810
Reinsurance Recoverables Total	17,600	[1]
Collateral Held	8,214	[2]
Scor Holding (Switzerland) AG | AMB
Ceded Credit Risk [Line Items]
Rating	A
Scor Holding (Switzerland) AG | S&P
Ceded Credit Risk [Line Items]
Rating	A+
Atlantic Specialty Insurance
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	7,843
Reinsurance Recoverables Paid/Unpaid Losses	8,295
Reinsurance Recoverables Total	16,138	[1]
Collateral Held	3,489	[2]
Atlantic Specialty Insurance | AMB
Ceded Credit Risk [Line Items]
Rating	A
Atlantic Specialty Insurance | S&P
Ceded Credit Risk [Line Items]
Rating	A-
Ace Property and Casualty Insurance Company
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	801
Reinsurance Recoverables Paid/Unpaid Losses	14,780
Reinsurance Recoverables Total	15,581	[1]
Ace Property and Casualty Insurance Company | AMB
Ceded Credit Risk [Line Items]
Rating	A+
Ace Property and Casualty Insurance Company | S&P
Ceded Credit Risk [Line Items]
Rating	AA-
AXIS Re Europe
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	2,995
Reinsurance Recoverables Paid/Unpaid Losses	11,782
Reinsurance Recoverables Total	14,777	[1]
Collateral Held	2,867	[2]
AXIS Re Europe | AMB
Ceded Credit Risk [Line Items]
Rating	A
AXIS Re Europe | S&P
Ceded Credit Risk [Line Items]
Rating	A+
Platinum Underwriters Re
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	354
Reinsurance Recoverables Paid/Unpaid Losses	14,280
Reinsurance Recoverables Total	14,634	[1]
Collateral Held	1,851	[2]
Platinum Underwriters Re | AMB
Ceded Credit Risk [Line Items]
Rating	A
Platinum Underwriters Re | S&P
Ceded Credit Risk [Line Items]
Rating	A-
Lloyd Syndicate #4000
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	1,403
Reinsurance Recoverables Paid/Unpaid Losses	12,168
Reinsurance Recoverables Total	13,571	[1]
Collateral Held	882	[2]
Lloyd Syndicate #4000 | AMB
Ceded Credit Risk [Line Items]
Rating	A
Lloyd Syndicate #4000 | S&P
Ceded Credit Risk [Line Items]
Rating	A+
Star Insurance Company
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	5,296
Reinsurance Recoverables Paid/Unpaid Losses	8,159
Reinsurance Recoverables Total	13,455	[1]
Collateral Held	1,348	[2]
Star Insurance Company | AMB
Ceded Credit Risk [Line Items]
Rating	A-
Star Insurance Company | S&P
Ceded Credit Risk [Line Items]
Rating	BBB
Insurance
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	178,946
Reinsurance Recoverables Paid/Unpaid Losses	661,647
Reinsurance Recoverables Total	840,593	[1]
Collateral Held	141,302	[2]
All Other
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	53,830
Reinsurance Recoverables Paid/Unpaid Losses	262,598
Reinsurance Recoverables Total	316,428	[1]
Collateral Held	$ 84,603	[2]

[1] Net of reserve for uncollectible reinsurance of approximately $11.5 million.

[2] Collateral of $225.9 million consists of $165.1 million in ceded balances payable, $57.2 million in letters of credit, and $3.6 million of other balances held by the Company's Insurance Companies and Lloyd's Operations.

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Change In Net Unrealized Gains And Losses (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Gross unrealized gains (losses)	$ (2,758)	$ 13,767
Deferred income tax	(1,003)	4,818
Change in net unrealized gains (losses), net	(1,755)	8,949
Fixed maturities
Gross unrealized gains (losses)	(10,930)	9,128
Equity Securities
Gross unrealized gains (losses)	$ 8,172	$ 4,639

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Stock-Based Compensation - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2013
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options expiration term (in years)	10 years
Options and Non Performance Based Grants | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based payment award, award vesting period	3 years
Options and Non Performance Based Grants | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based payment award, award vesting period	4 years
Non Performance Based Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based payment award, award vesting period	5 years
Vesting Percentage of share in year three	33.33%
Vesting Percentage of share in year four	33.33%
Vesting Percentage of share in year five	33.33%
Performance Based Shares Issued in 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based payment award, award vesting period	3 years
Percentage of shares vesting over the period	50.00%
Percentage of remaining shares vesting over the period dependent on compound annual growth book value per share immediately prior to vesting date	50.00%
Performance Based Shares Issued in 2011 | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vesting range	0.00%
Performance Based Shares Issued in 2011 | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vesting range	150.00%
Performance Based Shares Issued Prior to 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based payment award, award vesting period	5 years
Vesting Percentage of share in year three	33.33%
Vesting Percentage of share in year four	33.33%
Vesting Percentage of share in year five	33.33%
Performance Based Shares Issued Prior to 2011 | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vesting range	0.00%
Performance Based Shares Issued Prior to 2011 | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vesting range	150.00%

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Amounts Charged to Expense for Stock-based Compensation (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	$ 1,467		$ 1,246
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	1,358		1,212
Directors restricted stock grants
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	100	[1]	60	[1]
Employee stock purchase plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	$ 9		$ (26)

[1] Relates to non-employee directors serving on the Parent Company's Board of Directors, all of whom have been elected by the Company's stockholders, as well as non-employee directors serving on NUAL's Board of Directors.

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Operating activities:
Net income (loss)	$ 13,910	$ 7,904
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation & amortization	1,025	1,054
Deferred income taxes	(1,370)	(6,217)
Net realized (gains) losses	(4,814)	(1,842)
Net other-than-temporary losses recognized in earnings	42	154
Changes in assets and liabilities:
Reinsurance recoverable on paid and unpaid losses and loss adjustment expenses	5,176	(16,397)
Reserves for losses and loss adjustment expenses	7,338	30,326
Prepaid reinsurance premiums	(11,761)	(8,054)
Unearned premiums	76,976	68,705
Premiums receivable	(80,215)	(90,071)
Deferred policy acquisition costs	(8,344)	(6,017)
Accrued investment income	(1,053)	(36)
Reinsurance balances payable	(700)	21,965
Current income tax payable, net	4,945	7,154
Other	3,157	7,743
Net cash provided by (used in) operating activities	4,312	16,371
Fixed maturities
Redemptions and maturities	28,469	47,523
Sales	362,090	273,529
Purchases	(358,829)	(371,071)
Equity securities
Sales	4,787
Purchases	(9,926)	(2,055)
Change in payable for securities	(42,464)	35,881
Net change in short-term investments	24,234	(80,757)
Purchase of property and equipment	(919)	(1,586)
Net cash provided by (used in) investing activities	7,442	(98,536)
Financing activities:
Proceeds of stock issued from employee stock purchase plan	374	313
Proceeds of stock issued from exercise of stock options	1,112
Net cash provided by (used in) financing activities	1,486	313
Increase (decrease) in cash	13,240	(81,852)
Cash at beginning of year	45,336	127,360
Cash at end of period	58,576	45,508
Supplemental cash information:
Income taxes paid, net	1,198	1,519
Interest paid
Issuance of stock to directors	$ 400	$ 242

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Lloyd's Syndicate 1221 - Additional Information (Detail) (Lloyd's, Syndicate 1221) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013 USD ($)	Mar. 31, 2013 GBP (£)	Mar. 31, 2012 USD ($)	Mar. 31, 2012 GBP (£)
Supplementary Insurance Information, by Segment [Line Items]
Syndicate 1221's stamp capacity	$ 296	£ 195	$ 300	£ 184
Percentage control of stamp capacity	100.00%	100.00%	100.00%	100.00%
Letters of credit	145.9
Cash collateral posted	$ 0.8

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Summary of Activity Related to Other-Than-Temporary Impairment Losses (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013 Investment	Mar. 31, 2012 Investment
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Number of Securities	2	3
Total other-than-temporary impairment losses	$ 42	$ 198
Portion of loss recognized in other comprehensive income (before tax)		44
Net other-than-temporary impairment losses recognized in earnings	42	154
Residential Mortgage Backed Securities
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Number of Securities		1
Total other-than-temporary impairment losses		55
Portion of loss recognized in other comprehensive income (before tax)		44
Net other-than-temporary impairment losses recognized in earnings		11
Equity Securities
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Number of Securities	2	2
Total other-than-temporary impairment losses	42	143
Net other-than-temporary impairment losses recognized in earnings	$ 42	$ 143

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
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:
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

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Realized Gains And Losses Excluding Net Other-Than-Temporary Impairment Losses Recognized in Earnings (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Gain (Loss) on Investments [Line Items]
Net realized gains (losses)	$ 4,814	$ 1,842
Fixed maturities
Gain (Loss) on Investments [Line Items]
Gains	3,206	3,142
Losses	(310)	(1,300)
Net realized gains (losses)	2,896	1,842
Equity Securities
Gain (Loss) on Investments [Line Items]
Gains	1,918
Net realized gains (losses)	$ 1,918

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Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Unrealized gains (losses) on investments arising during the period, deferred tax	$ 617	$ 4,937
Reclassification adjustment for net realized (gains) losses included in net income, deferred tax	1,770	344
Non credit other-than-temporary impairments arising during the period, deferred tax	150	241
Reclassification adjustment for non-credit other-than-temporary impairment losses recognized in net income, deferred tax		16
Change in foreign currency translation gains (losses), deferred tax	$ 1,543	$ 1,399

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Cash and Investments Including Other-Than-Temporarily Impaired Securities Recognized within Other Comprehensive Income (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Gain (Loss) on Investments [Line Items]
Total investments and cash	$ 2,382,536	$ 2,422,254
Gross Unrealized Gains	103,634	105,248
Gross Unrealized Losses	(3,031)	(1,887)
Amortized Cost	2,281,933	2,318,893
Fixed maturities
Gain (Loss) on Investments [Line Items]
Total investments and cash	2,078,003	2,121,833
Gross Unrealized Gains	78,922	88,329
Gross Unrealized Losses	(2,784)	(1,261)
Amortized Cost	2,001,865	2,034,765
Fixed maturities | U.S. Treasury bonds, agency bonds, and foreign
Gain (Loss) on Investments [Line Items]
Total investments and cash	531,463	649,692
Gross Unrealized Gains	7,988	8,654
Gross Unrealized Losses	(31)	(36)
Amortized Cost	523,506	641,074
Fixed maturities | States, municipalities and political subdivisions
Gain (Loss) on Investments [Line Items]
Total investments and cash	449,387	322,947
Gross Unrealized Gains	17,619	18,712
Gross Unrealized Losses	(1,744)	(380)
Amortized Cost	433,512	304,615
Fixed maturities | Agency mortgage-backed securities
Gain (Loss) on Investments [Line Items]
Total investments and cash	346,829	384,445
Gross Unrealized Gains	11,842	13,652
Gross Unrealized Losses	(640)	(204)
Amortized Cost	335,627	370,997
Fixed maturities | Residential Mortgage Backed Securities
Gain (Loss) on Investments [Line Items]
Total investments and cash	38,350	38,692
Gross Unrealized Gains	1,223	1,053
Gross Unrealized Losses	(187)	(549)
Amortized Cost	37,314	38,188
Fixed maturities | Asset-backed securities
Gain (Loss) on Investments [Line Items]
Total investments and cash	47,092	50,382
Gross Unrealized Gains	1,110	1,133
Gross Unrealized Losses	(29)	(49)
Amortized Cost	46,011	49,298
Fixed maturities | Commercial mortgage-backed securities
Gain (Loss) on Investments [Line Items]
Total investments and cash	180,939	204,821
Gross Unrealized Gains	13,170	17,996
Gross Unrealized Losses	(29)	(18)
Amortized Cost	167,798	186,843
Fixed maturities | Mortgage-backed and asset-backed securities
Gain (Loss) on Investments [Line Items]
Total investments and cash	613,210	678,340
Gross Unrealized Gains	27,345	33,834
Gross Unrealized Losses	(885)	(820)
Amortized Cost	586,750	645,326
Fixed maturities | Corporate bonds
Gain (Loss) on Investments [Line Items]
Total investments and cash	483,943	470,854
Gross Unrealized Gains	25,970	27,129
Gross Unrealized Losses	(124)	(25)
Amortized Cost	458,097	443,750
Equity Securities | Common Stock
Gain (Loss) on Investments [Line Items]
Total investments and cash	116,482	101,297
Gross Unrealized Gains	24,712	16,919
Gross Unrealized Losses	(247)	(626)
Amortized Cost	92,017	85,004
Short-term investments
Gain (Loss) on Investments [Line Items]
Total investments and cash	129,475	153,788
Amortized Cost	129,475	153,788
Cash
Gain (Loss) on Investments [Line Items]
Total investments and cash	58,576	45,336
Amortized Cost	$ 58,576	$ 45,336

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Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2013

Amounts Charged to Expense for Stock-based Compensation

The amounts charged to expense for stock-based compensation for the three months ended March 31, 2013 and 2012 are presented in the following table:

	Three Months Ended March 31,
In thousands	2013		2012
Restricted stock units	$	1,358	$	1,212
Directors restricted stock grants(1)		100		60
Employee stock purchase plan		9		(26	)
Total stock based compensation	$	1,467	$	1,246

(1) — Relates to non-employee directors serving on the Parent Company’s Board of Directors, all of whom have been elected by the Company’s stockholders, as well as non-employee directors serving on NUAL’s Board of Directors.

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Investments - Additional Information (Detail) (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Schedule of Investments [Line Items]
Non-credit OTTI on debt securities in an unrealized gain position	$ 400,000		$ 20,000
Investment Expenses	729,000	5,412,000
Portfolio duration of investments	4 years	3 years 8 months 12 days
Net realized gains from sale of investments	4,814,000	1,842,000
Settlement Agreement
Schedule of Investments [Line Items]
Investment Expenses	9,200,000	4,500,000
Mortgage-backed and asset-backed securities
Schedule of Investments [Line Items]
Securities, effective maturities	4.3
Non-government backed securities | Maximum
Schedule of Investments [Line Items]
Percentage of investment	5.00%		5.00%
Non-government backed securities | Investments
Schedule of Investments [Line Items]
Gross Unrealized Loss	$ 300,000		$ 200,000
Equity Securities | Maximum
Schedule of Investments [Line Items]
Percentage of fair value over cost	80.00%

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Segment Information - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013 Segment	Mar. 31, 2012
Segment Reporting Information [Line Items]
Number of business segments	2
Maximum combined ratio indicating underwriting profit	100.00%
Minimum combined ratio indicating underwriting loss	100.00%
Net earned premiums	$ 202,328	$ 183,119
Navigators Insurance Company
Segment Reporting Information [Line Items]
Percentage of Navigators Specialty Insurance Company reinsured by Navigators Insurance Company	100.00%
Insurance
Segment Reporting Information [Line Items]
Net earned premiums	154,331	131,548
Insurance | UK Branch
Segment Reporting Information [Line Items]
Net earned premiums	10,100	21,000
Lloyd's
Segment Reporting Information [Line Items]
Net earned premiums	$ 47,997	$ 51,571
Lloyd's | Syndicate 1221
Segment Reporting Information [Line Items]
Percentage control of stamp capacity	100.00%	100.00%

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Consolidated Statements of Stockholders' Equity (USD $) In Thousands, except Share data, unless otherwise specified	Total	Common Stock	Additional Paid-in Capital	Treasury Stock	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning Balance at Dec. 31, 2012	$ 879,485	$ 1,755	$ 329,452	$ (155,801)	$ 628,871	$ 75,208
Beginning Balance (in shares) at Dec. 31, 2012		17,558,046		3,511,380
Net income	13,910				13,910
Changes in other comprehensive income:
Change in net unrealized gain (loss) on investments	(2,034)					(2,034)
Change in net non-credit other-than-temporary impairment losses	279					279
Change in foreign currency translation gain (loss)	2,630					2,630
Other comprehensive income (loss)	875					875
Shares issued under stock plan (in shares)		83,311
Shares issued under stock plan	1,130	8	1,122
Share-based compensation	1,358		1,358
Ending Balance at Mar. 31, 2013	$ 896,758	$ 1,763	$ 331,932	$ (155,801)	$ 642,781	$ 76,083
Ending Balance (in shares) at Mar. 31, 2013		17,641,357		3,511,380

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Fixed maturities, available-for-sale, amortized cost	$ 2,001,865	$ 2,034,765
Equity securities, available-for-sale, cost	$ 92,017	$ 85,004
Preferred stock, par value	$ 0.10	$ 0.10
Preferred stock, authorized shares	1,000,000	1,000,000
Preferred stock, issued shares
Common stock, par value	$ 0.10	$ 0.10
Common stock, authorized shares	50,000,000	50,000,000
Common stock, issued shares	17,641,357	17,558,046
Treasury stock, shares	3,511,380	3,511,380

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies

Note 9. Commitments and Contingencies

In the ordinary course of conducting business, the Company’s subsidiaries are involved in various legal proceedings, either indirectly as insurers for parties or directly as defendants. Most of these proceedings consist of claims litigation involving the Company’s subsidiaries as either (a) liability insurers defending or providing indemnity for third party claims brought against insureds or (b) insurers defending first party coverage claims brought against them. The Company accounts for such activity through the establishment of unpaid loss and loss adjustment reserves. The Company’s management believes that the ultimate liability, if any, with respect to such ordinary-course claims litigation, after consideration of provisions made for potential losses and cost of defense, will not be material to the Company’s consolidated financial condition, results of operations, or cash flows.

The Company’s subsidiaries are also from time to time involved with other legal actions, some of which assert claims for substantial amounts. These actions include claims asserting extra contractual obligations, such as claims involving allegations of bad faith in the handling of claims or the underwriting of policies. In general, the Company believes it has valid defenses to these cases. The Company’s management expects that the ultimate liability, if any, with respect to future extra-contractual matters will not be material to its consolidated financial position. Nonetheless, given the large or indeterminate amounts sought in certain of these matters, and the inherent unpredictability of litigation, an adverse outcome in such matters could, from time to time, have a material adverse outcome on the Company’s consolidated results of operations or cash flows in a particular fiscal quarter or year.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2013	Apr. 24, 2013
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Trading Symbol	NAVG
Entity Registrant Name	Navigators Group Inc
Entity Central Index Key	0000793547
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		14,129,977

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Investments

3 Months Ended

Mar. 31, 2013

Investments

Note 10. Investments

The following tables set forth the Company’s cash and investments as of March 31, 2013 and December 31, 2012. The table below includes other-than-temporarily impaired (“OTTI”) securities recognized within other comprehensive income (“OCI”).

	March 31, 2013
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
In thousands	Value		Gains		(Losses)			Cost
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-backed 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

	December 31, 2012
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
In thousands	Value		Gains		(Losses)			Cost
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	649,692	$	8,654	$	(36	)	$	641,074
States, municipalities and political subdivisions		322,947		18,712		(380	)		304,615
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		384,445		13,652		(204	)		370,997
Residential mortgage obligations		38,692		1,053		(549	)		38,188
Asset-backed securities		50,382		1,133		(49	)		49,298
Commercial mortgage-backed securities		204,821		17,996		(18	)		186,843
Subtotal	$	678,340	$	33,834	$	(820	)	$	645,326
Corporate bonds		470,854		27,129		(25	)		443,750
Total fixed maturities	$	2,121,833	$	88,329	$	(1,261	)	$	2,034,765
Equity securities—common stocks		101,297		16,919		(626	)		85,004
Short-term investments		153,788		—		—			153,788
Cash		45,336		—		—			45,336
Total	$	2,422,254	$	105,248	$	(1,887	)	$	2,318,893

As of March 31, 2013 and December 31, 2012, debt securities for which non-credit OTTI was previously recognized and included in other comprehensive income, are now in an unrealized gains position of $0.4 million and $20 thousand, respectively.

The fair value of the Company’s investment portfolio may fluctuate significantly in response to various factors such as changes in interest rates, investment quality ratings, equity prices, foreign exchange rates and credit spreads. The Company does not have the intent to sell nor is it more likely than not that it will have to sell debt securities in unrealized loss positions that are not other-than-temporarily impaired before recovery. For structured securities, default probability and severity assumptions differ based on property type, vintage and the stress of the collateral. We do not intend to sell any of these securities and it is more likely than not that we will not be required to sell these securities before the recovery of the amortized cost basis. For equity securities, the Company also considers its intent to hold securities as part of the process of evaluating whether a decline in fair value represents an other-than-temporary decline in value. The Company may realize investment losses to the extent its liquidity needs require the disposition of fixed maturity securities in unfavorable interest rate, liquidity or credit spread environments. Significant changes in the factors the Company considers when evaluating investments for impairment losses could result in a significant change in impairment losses reported in the consolidated financial statements.

The contractual maturity dates for fixed maturity securities categorized by the number of years until maturity as of March 31, 2013 are shown in the following table:

	March 31, 2013
In thousands	Fair Value		Amortized Cost
Due in one year or less	$	109,496	$	108,751
Due after one year through five years		636,433		616,510
Due after five years through ten years		480,898		459,528
Due after ten years		237,966		230,326
Mortgage- and asset-backed securities		613,210		586,750
Total	$	2,078,003	$	2,001,865

Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Due to the periodic repayment of principal, the mortgage-backed and asset-backed securities are estimated to have an effective maturity of approximately 4.3 years.

The following table shows the amount and percentage of the Company’s fixed maturities as of March 31, 2013 by S&P credit rating or, if an S&P rating is not available, the equivalent Moody’s Investor Services (“Moody’s”) rating. The table includes fixed maturities at fair value, and the total rating is the weighted average quality rating.

	March 31, 2013
In thousands	Rating	Fair Value		Percent of Total
Rating description:
Extremely strong	AAA	$	293,623		14	%
Very strong	AA		1,157,811		56	%
Strong	A		445,757		21	%
Adequate	BBB		159,109		8	%
Speculative	BB & Below		17,967		1	%
Not rated	NR		3,736		0	%
Total	AA	$	2,078,003		100	%

The following table summarizes all securities in a gross unrealized loss position as of March 31, 2013 and December 31, 2012, showing the aggregate fair value and gross unrealized loss by the length of time those securities had continuously been in a gross unrealized loss position as well as the relevant number of securities.

	March 31, 2013						December 31, 2012
In thousands, except # of securities	Number of Securities		Fair Value		Gross Unrealized Loss		Number of Securities		Fair Value		Gross Unrealized Loss
Fixed maturities:
U.S. Treasury bonds, agency bonds, and foreign government bonds
0-6 months		8	$	40,455	$	31		8	$	23,760	$	22
7-12 months		—		—		—		3		14,118		11
> 12 months		—		—		—		1		4,652		3
Subtotal		8	$	40,455	$	31		12	$	42,530	$	36
States, municipalities and political subdivisions
0-6 months		58	$	129,906	$	1,682		10	$	21,299	$	325
7-12 months		—		—		—		—		—		—
> 12 months		4		2,852		62		4		2,908		55
Subtotal		62	$	132,758	$	1,744		14	$	24,207	$	380
Agency mortgage-backed securities
0-6 months		22	$	46,654	$	512		10	$	62,516	$	174
7-12 months		3		7,921		128		2		1,671		30
> 12 months		—		—		—		—		—		—
Subtotal		25	$	54,575	$	640		12	$	64,187	$	204
Residential mortgage obligations
0-6 months		5	$	1,673	$	2		6	$	1,825	$	22
7-12 months		—		—		—		—		—		—
> 12 months		24		4,653		185		35		7,252		527
Subtotal		29	$	6,326	$	187		41	$	9,077	$	549
Asset-backed securities
0-6 months		1	$	631	$	2		—	$	—	$	—
7-12 months		—		—		—		—		—		—
> 12 months		1		1,743		27		2		2,369		49
Subtotal		2	$	2,374	$	29		2	$	2,369	$	49
Commercial mortgage-backed securities
0-6 months		1	$	1,149	$	5		7	$	2,639	$	7
7-12 months		2		802		11		—		—		—
> 12 months		4		717		13		5		845		11
Subtotal		7	$	2,668	$	29		12	$	3,484	$	18
Corporate bonds
0-6 months		10	$	15,648	$	121		2	$	3,528	$	6
7-12 months		—		—		—		—		—		—
> 12 months		1		1,497		3		4		6,689		19
Subtotal		11	$	17,145	$	124		6	$	10,217	$	25
Total fixed maturities		144	$	256,301	$	2,784		99	$	156,071	$	1,261
Equity securities—common stocks
0-6 months		4	$	8,011	$	247		13	$	23,345	$	522
7-12 months		—		—		—		1		1,943		104
> 12 months		—		—		—		—		—		—
Total equity securities		4	$	8,011	$	247		14	$	25,288	$	626

As of March 31, 2013 and December 31, 2012, the largest single unrealized loss by a non-government backed issuer in the investment portfolio was $0.3 million and $0.2 million, respectively.

The Company analyzes the unrealized losses quarterly to determine if any are other-than-temporary. The above unrealized losses have been determined to be temporary based on our policies.

For debt securities, when assessing whether the amortized cost basis of the security will be recovered, the Company compares the present value of cash flows expected to be collected in relation to the current book value. Any shortfalls of the present value of the cash flows expected to be collected to the amortized cost basis is considered the credit loss portion of OTTI losses and is recognized in earnings. All non-credit losses are recognized as changes in OTTI losses within OCI.

To determine whether the unrealized loss on structured securities is other-than-temporary, the Company analyzes the projections provided by its investment managers with respect to an expected principal loss under a range of scenarios and utilizes the most likely outcomes. The analysis relies on actual collateral performance measures such as default rate, prepayment rate and loss severity. These assumptions are applied throughout the remaining term of the deal, incorporating the transaction structure and priority of payments, to generate loss adjusted cash flows. Results of the analysis will indicate whether the security is expected ultimately to incur a loss or whether there is a material impact on yield due to either a projected loss or a change in cash flow timing. A break even default rate is also calculated. A comparison of the break even default rate to the actual default rate provides an indication of the level of cushion or coverage to the first dollar principal loss. The analysis applies the stated assumptions throughout the remaining term of the transaction to forecast cash flows, which are then applied through the transaction structure to determine whether there is a loss to the security. For securities in which a tranche loss is present, and the net present value of loss adjusted cash flows is less than book value, impairment is recognized. The output data also includes a number of additional metrics such as average life remaining, original and current credit support, over 60 day delinquency and security rating.

The significant inputs used to measure the amount of credit loss recognized in earnings were actual delinquency rates, default probability assumptions, severity assumptions and prepayment assumptions. Projected losses are a function of both loss severity and probability of default. Default probability and severity assumptions differ based on property type, vintage and the stress of the collateral. The Company does not intend to sell any of these securities and it is more likely than not that it will not be required to sell these securities before the recovery of the amortized cost basis.

For equity securities, in general, the Company focuses its attention on those securities with a fair value less than 80% of their cost for six or more consecutive months. If warranted as the result of conditions relating to a particular security, the Company will focus on a significant decline in fair value regardless of the time period involved. Factors considered in evaluating potential impairment include, but are not limited to, the current fair value as compared to cost of the security, the length of time the investment has been below cost and by how much the investment is below cost. If an equity security is deemed to be other-than-temporarily impaired, the cost is written down to fair value with the loss recognized in earnings.

For equity securities, the Company also considers its intent to hold securities as part of the process of evaluating whether a decline in fair value represents an other-than-temporary decline in value. For fixed maturity securities, the Company considers its intent to sell a security and whether it is more likely than not that the Company will be required to sell a security before the anticipated recovery as part of the process of evaluating whether a security’s unrealized loss represents an other-than-temporary decline. The Company’s ability to hold such securities is supported by sufficient cash flow from its operations and from maturities within its investment portfolio in order to meet its claims payment and other disbursement obligations arising from its underwriting operations without selling such investments. With respect to securities where the decline in value is determined to be temporary and the security’s value is not written down, a subsequent decision may be made to sell that security and realize a loss. Subsequent decisions on security sales are made within the context of overall risk monitoring, changing information and market conditions.

As of March 31, 2013, there were no investments that had a gross unrealized loss that was less than 80% of amortized cost.

The table below summarizes the Company’s activity related to OTTI losses for the periods indicated:

	Three Months Ended March 31,
	2013				2012
In thousands, except # of securities	Number of Securities		Amount		Number of Securities		Amount
Total OTTI losses:
Corporate and other bonds		—	$	—		—	$	—
Commercial mortgage-backed securities		—		—		—		—
Residential mortgage-backed securities		—		—		1		55
Asset-backed securities		—		—		—		—
Equities		2		42		2		143
Total		2	$	42		3	$	198
Less: Portion of loss in accumulated other comprehensive income (loss):
Corporate and other bonds			$	—			$	—
Commercial mortgage-backed securities				—				—
Residential mortgage-backed securities				—				44
Asset-backed securities				—				—
Equities				—				—
Total			$	—			$	44
Impairment losses recognized in earnings:
Corporate and other bonds			$	—			$	—
Commercial mortgage-backed securities				—				—
Residential mortgage-backed securities				—				11
Asset-backed securities				—				—
Equities				42				143
Total			$	42			$	154

The following table summarizes the cumulative amounts related to the Company’s credit loss portion of the OTTI losses on debt securities for the three months ended March 31, 2013 and 2012. The Company does not intend to sell and it is more likely than not that it will not be required to sell the securities prior to recovery of the amortized cost basis and for which the non-credit loss portion is included in OCI:

	Three Months Ended March 31,
In thousands	2013		2012
Beginning balance	$	3,332	$	3,321
Additions for credit loss impairments recognized in the current period on securities not previously impaired		—		—
Additions for credit loss impairments recognized in the current period on securities previously impaired		—		11
Reductions for credit loss impairments previously recognized on securities sold during the period		—		—
Ending balance	$	3,332	$	3,332

The contractual maturity dates for fixed maturity securities categorized by the number of years until maturity, with a gross unrealized loss as of March 31, 2013 is presented in the following table:

	March 31, 2013
	Gross Unrealized Losses					Fair Value
In thousands	Amount		Percent of Total			Amount		Percent of Total
Due in one year or less	$	3		0	%	$	1,505		0	%
Due after one year through five years		63		2	%		26,313		10	%
Due after five years through ten years		446		16	%		76,159		30	%
Due after ten years		1,387		50	%		86,381		34	%
Mortgage- and asset-backed securities		885		32	%		65,943		26	%
Total	$	2,784		100	%	$	256,301		100	%

The Company’s net investment income was derived from the following sources:

	Three Months Ended March 31,
In thousands	2013			2012
Fixed maturities	$	13,167		$	15,411
Equity securities		1,030			947
Short-term investments		189			312
Total investment income	$	14,386		$	16,670
Investment expenses		(729	)		(5,412	)
Net investment income	$	13,657		$	11,258

Interest expense for the three months ended March 31, 2012 included $4.5 million of interest expense related to a total $9.2 million settlement of a dispute with Equitas over foregone interest on amounts that were due on certain reinsurance contracts.

The portfolio duration was 4.0 years and 3.7 years for the three months ended March 31, 2013 and 2012, respectively.

The change in net unrealized gains and losses, inclusive of the change in the non credit portion of other-than-temporary impairment losses, consisted of:

	Three Months Ended March 31,
In thousands	2013			2012
Fixed maturities	$	(10,930	)	$	9,128
Equity securities		8,172			4,639
Gross unrealized gains (losses)	$	(2,758	)	$	13,767
Deferred income tax		(1,003	)		4,818
Change in net unrealized gains (losses), net	$	(1,755	)	$	8,949

Realized gains and losses, excluding net OTTI losses recognized in earnings, for the periods indicated were as follows:

	Three Months Ended March 31,
In thousands	2013			2012
Fixed maturities:
Gains	$	3,206		$	3,142
Losses		(310	)		(1,300	)
Fixed maturities, net	$	2,896		$	1,842
Equity securities:
Gains	$	1,918		$	—
Losses		—			—
Equity securities, net	$	1,918		$	—
Net realized gains (losses)	$	4,814		$	1,842

Net realized gains and losses are generated as part of the normal ongoing management of our investment portfolio. Net realized gains of $4.8 million for the three months ended March 31, 2013 are primarily due to the sale of commercial mortgage backed securities and equity securities. Net realized gains of $1.8 million for the three months ended March 31, 2012 was due to the sale of municipal bonds and corporate bonds.

The following tables present, for each of the fair value hierarchy levels as defined by the accounting guidance for fair value measurements, the Company’s fixed maturities and equity securities by asset class that are measured at fair value on a recurring basis as of March 31, 2013 and December 31, 2012:

	March 31, 2013
In thousands	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	313,253	$	218,210	$	—	$	531,463
States, municipalities and political subdivisions		—		449,387		—		449,387
Mortgage-backed and asset-backed securities:								—
Agency mortgage-backed securities		—		346,829		—		346,829
Residential mortgage obligations		—		38,350		—		38,350
Asset-backed securities		—		47,092		—		47,092
Commercial mortgage-backed securities		—		180,939		—		180,939
Subtotal	$	—	$	613,210	$	—	$	613,210
Corporate bonds		—		483,943		—		483,943
Total fixed maturities	$	313,253	$	1,764,750	$	—	$	2,078,003
Equity securities—common stocks		116,482		—		—		116,482
Total	$	429,735	$	1,764,750	$	—	$	2,194,485

	December 31, 2012
In thousands	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	414,502	$	235,190	$	—	$	649,692
States, municipalities and political subdivisions		—		322,947		—		322,947
Mortgage-backed and asset-backed securities:								—
Agency mortgage-backed securities		—		384,445		—		384,445
Residential mortgage obligations		—		38,692		—		38,692
Asset-backed securities		—		50,382		—		50,382
Commercial mortgage-backed securities		—		204,821		—		204,821
Subtotal	$	—	$	678,340	$	—	$	678,340
Corporate bonds		—		470,854		—		470,854
Total fixed maturities	$	414,502	$	1,707,331	$	—	$	2,121,833
Equity securities—common stocks		101,297		—		—		101,297
Total	$	515,799	$	1,707,331	$	—	$	2,223,130

The fair value of financial instruments is determined based on the following fair value hierarchy:

Level 1 – Quoted prices for identical instruments in active markets. Examples are listed equity and fixed income securities traded on an exchange. U.S. Treasury securities are reported as level 1 and are valued based on unadjusted quoted prices for identical assets in active markets that the Company can access.

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Examples are asset-backed and mortgage-backed securities that are similar to other asset-backed or mortgage-backed securities observed in the market. U.S. government agency securities are reported as level 2 and are valued using yields and spreads that are observable in active markets.

Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. An example would be a private placement with minimal liquidity.

The Company did not have any significant transfers between Level 1 and 2 as of March 31, 2013 and December 31, 2012.

As of March 31, 2013 and 2012, the Company did not have any Level 3 assets.

As of March 31, 2013 and December 31, 2012, the Company did not have a concentration of greater than 5% of invested assets in a single non-U.S. government-backed issuer.

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Consolidated Statements of Income (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Gross written premiums	$ 393,222	$ 343,149
Revenues:
Net written premiums	269,452	243,045
Change in unearned premiums	(67,124)	(59,926)
Net earned premiums	202,328	183,119
Net investment income	13,657	11,258
Total other-than-temporary impairment losses	(42)	(198)
Portion of loss recognized in other comprehensive income (before tax)		44
Net other-than-temporary impairment losses recognized in earnings	(42)	(154)
Net realized gains (losses)	4,814	1,842
Other income (expense)	618	911
Total revenues	221,375	196,976
Expenses:
Net losses and loss adjustment expenses	131,342	117,985
Commission expenses	26,555	29,450
Other operating expenses	40,874	36,307
Interest expense	2,051	2,049
Total expenses	200,822	185,791
Income (loss) before income taxes	20,553	11,185
Income tax expense (benefit)	6,643	3,281
Net income (loss)	$ 13,910	$ 7,904
Net income per common share:
Basic	$ 0.99	$ 0.57
Diluted	$ 0.97	$ 0.56
Average common shares outstanding:
Basic	14,085,821	13,979,442
Diluted	14,374,957	14,174,875

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Reinsurance Ceded

3 Months Ended

Mar. 31, 2013

Reinsurance Ceded

Note 4. Reinsurance Ceded

The Company’s ceded earned premiums were $110.9 million and $91.7 million for the three months ended March 31, 2013 and 2012, respectively. The increase in ceded earned premiums from 2012 to 2013 is primarily due to growth and change in mix of business, partially offset by a reduction in reinsurance reinstatement premiums in 2013 as compared to 2012 related to specific losses for each year.

The Company’s ceded incurred losses were $53.6 million and $70.7 million for the three months ended March 31, 2013 and 2012, respectively.

The following table lists the Company’s 20 largest reinsurers measured by the amount of reinsurance recoverable for ceded losses and LAE and ceded unearned premium (constituting 72.7% of the total recoverable), together with the reinsurance recoverable and collateral as of March 31, 2013, and the reinsurers’ ratings from A.M. Best Company (“A.M. Best”) or Standard & Poor’s (“S&P”):

	Reinsurance Recoverables
In thousands	Unearned Premium		Paid/Unpaid Losses		Total (1)		Collateral Held (2)		AMB		S&P
National Indemnity Company	$	48,252	$	61,076	$	109,328	$	32,952		A++		AA+
Swiss Reinsurance America Corporation		5,551		87,274		92,825		6,070		A+		AA-
Transatlantic Reinsurance Company		19,321		71,906		91,227		9,739		A		A+
Everest Reinsurance Company		20,648		70,431		91,079		9,102		A+		A+
Munich Reinsurance America Inc.		9,613		78,428		88,041		3,329		A+		AA-
Lloyd’s Syndicate #2003		8,859		38,850		47,709		10,251		A		A+
Partner Reinsurance Europe		8,787		34,121		42,908		17,457		A+		A+
Allied World Reinsurance		11,812		26,486		38,298		4,682		A		A
Scor Global P&C SE		10,065		21,576		31,641		6,829		A		A+
Tower Insurance Company		11,993		17,045		29,038		8,227		A-		NR
General Reinsurance Corporation		268		26,144		26,412		731		A++		AA+
Validus Reinsurance Ltd.		2,739		22,892		25,631		13,041		A		A
Berkley Insurance Company		1,556		19,144		20,700		241		A+		A+
Scor Holding (Switzerland) AG		790		16,810		17,600		8,214		A		A+
Atlantic Specialty Insurance		7,843		8,295		16,138		3,489		A		A-
Ace Property and Casualty Insurance Company		801		14,780		15,581		—		A+		AA-
AXIS Re Europe		2,995		11,782		14,777		2,867		A		A+
Platinum Underwriters Re		354		14,280		14,634		1,851		A		A-
Lloyd’s Syndicate #4000		1,403		12,168		13,571		882		A		A+
Star Insurance Company		5,296		8,159		13,455		1,348		A-		BBB
Top 20 Reinsurers	$	178,946	$	661,647	$	840,593	$	141,302
Others		53,830		262,598		316,428		84,603
Total	$	232,776	$	924,245	$	1,157,021	$	225,905

(1) — Net of reserve for uncollectible reinsurance of approximately $11.5 million.

(2) — Collateral of $225.9 million consists of $165.1 million in ceded balances payable, $57.2 million in letters of credit, and $3.6 million of other balances held by the Company’s Insurance Companies and Lloyd’s Operations.

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Segment Information

3 Months Ended

Mar. 31, 2013

Segment Information

Note 3. Segment Information

The Company classifies its business into two underwriting segments consisting of the Insurance Companies segment (“Insurance Companies”) and the Lloyd’s Operations segment (“Lloyd’s Operations”), which are separately managed, and a Corporate segment (“Corporate”). Segment data for each of the two underwriting segments include allocations of the operating expenses of the wholly-owned underwriting management companies and the Parent Company’s operating expenses and related income tax amounts. The Corporate segment consists of the Parent Company’s investment income, interest expense and the related tax effect.

The Company evaluates the performance of each underwriting segment based on its underwriting and GAAP results. The Insurance Companies and the Lloyd’s Operations results are measured by taking into account net earned premiums, net losses and loss adjustment expenses (“LAE”), commission expenses, other operating expenses and other income (expense). Each segment maintains its own investments on which it earns income and realizes capital gains or losses. The Company’s underwriting performance is evaluated separately from the performance of its investment portfolios.

The Insurance Companies segment consists of Navigators Insurance Company, which includes a United Kingdom Branch (the “U.K. Branch”), and Navigators Specialty Insurance Company, which underwrites specialty and professional liability insurance on an excess and surplus lines basis. All of the insurance business written by Navigators Specialty Insurance Company is fully reinsured by Navigators Insurance Company pursuant to a 100% quota share reinsurance agreement. The insurance and reinsurance business written by our Insurance Companies is underwritten through our wholly-owned underwriting management Companies, Navigators Management Company, Inc. (“NMC”) and Navigators Management (UK) Ltd. (“NMUK”).

Our Lloyd’s Operations segment includes Navigators Underwriting Agency Ltd. (“NUAL”), a Lloyd’s of London (“Lloyd’s”) underwriting agency which manages Lloyd’s Syndicate 1221 (“Syndicate 1221”). Our Lloyd’s Operations primarily underwrite marine and related lines of business along with offshore energy, construction coverages for onshore energy business and professional liability insurance at Lloyd’s through Syndicate 1221. We control 100% of Syndicate 1221’s stamp capacity through our wholly-owned subsidiary, Navigators Corporate Underwriters Ltd., (“NCUL”) which is referred to as a corporate name in the Lloyd’s market.

The Insurance Companies and the Lloyd’s Operations underwriting results are measured based on underwriting profit or loss and the related combined ratio, which are both non-GAAP measures of underwriting profitability. Underwriting profit or loss is calculated from net earned premiums, less the sum of net losses and LAE, commission expenses, other operating expenses and other income (expense). The combined ratio is derived by dividing the sum of net losses and LAE, commission expenses, other operating expenses and other income (expense) by net earned premiums. A combined ratio of less than 100% indicates an underwriting profit and greater than 100% indicates an underwriting loss.

Financial data by segment for the three months ended March 31, 2013 and 2012 were as follows:

	Three Month 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	)		—			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
Identifiable assets	$	3,087,308		$	936,471		$	47,266		$	4,071,045
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) — Includes Corporate segment intercompany eliminations.

(2) — Includes Other operating expenses and Other income.

	Three Month 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
Identifiable assets	$	2,899,369		$	907,760		$	40,398		$	3,847,527
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) — Includes Corporate segment intercompany eliminations.

(2) — Includes Other operating expenses and Other income.

The following tables provide additional financial data by segment for the three months ended March 31, 2013 and 2012:

	Three Months Ended March 31, 2013
In thousands	Insurance Companies		Lloyd’s Operations		Total
Gross written premiums:
Marine	$	50,847	$	53,644	$	104,491
Property casualty		218,964		25,058		244,022
Professional liability		31,817		12,892		44,709
Total	$	301,628	$	91,594	$	393,222
Net written premiums:
Marine	$	41,141	$	39,558	$	80,699
Property casualty		149,951		7,312		157,263
Professional liability		25,227		6,263		31,490
Total	$	216,319	$	53,133	$	269,452
Net earned premiums:
Marine	$	36,725	$	34,045	$	70,770
Property casualty		92,718		7,879		100,597
Professional liability		24,888		6,073		30,961
Total	$	154,331	$	47,997	$	202,328
	Three Months Ended March 31, 2012
In thousands	Insurance Companies		Lloyd’s Operations		Total
Gross written premiums:
Marine	$	61,865	$	61,775	$	123,640
Property casualty		155,919		24,296		180,215
Professional liability		30,554		8,740		39,294
Total	$	248,338	$	94,811	$	343,149
Net written premiums:
Marine	$	42,865	$	48,058	$	90,923
Property casualty		114,532		9,355		123,887
Professional liability		23,853		4,382		28,235
Total	$	181,250	$	61,795	$	243,045
Net earned premiums:
Marine	$	35,275	$	33,264	$	68,539
Property casualty		74,368		14,502		88,870
Professional liability		21,905		3,805		25,710
Total	$	131,548	$	51,571	$	183,119

The Insurance Companies net earned premiums include $10.1 million and $21.0 million of net earned premiums from the U.K. Branch for the three months ended March 31, 2013 and 2012, respectively.

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Investments (Tables)

3 Months Ended

Mar. 31, 2013

Cash and Investments Including Other-Than-Temporarily Impaired Securities Recognized within Other Comprehensive Income

The following tables set forth the Company’s cash and investments as of March 31, 2013 and December 31, 2012. The table below includes other-than-temporarily impaired (“OTTI”) securities recognized within other comprehensive income (“OCI”).

	March 31, 2013
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
In thousands	Value		Gains		(Losses)			Cost
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-backed 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

	December 31, 2012
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
In thousands	Value		Gains		(Losses)			Cost
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	649,692	$	8,654	$	(36	)	$	641,074
States, municipalities and political subdivisions		322,947		18,712		(380	)		304,615
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		384,445		13,652		(204	)		370,997
Residential mortgage obligations		38,692		1,053		(549	)		38,188
Asset-backed securities		50,382		1,133		(49	)		49,298
Commercial mortgage-backed securities		204,821		17,996		(18	)		186,843
Subtotal	$	678,340	$	33,834	$	(820	)	$	645,326
Corporate bonds		470,854		27,129		(25	)		443,750
Total fixed maturities	$	2,121,833	$	88,329	$	(1,261	)	$	2,034,765
Equity securities—common stocks		101,297		16,919		(626	)		85,004
Short-term investments		153,788		—		—			153,788
Cash		45,336		—		—			45,336
Total	$	2,422,254	$	105,248	$	(1,887	)	$	2,318,893

Scheduled Maturity Dates for Fixed Maturity Securities by Number of Years Until Maturity

The contractual maturity dates for fixed maturity securities categorized by the number of years until maturity as of March 31, 2013 are shown in the following table:

	March 31, 2013
In thousands	Fair Value		Amortized Cost
Due in one year or less	$	109,496	$	108,751
Due after one year through five years		636,433		616,510
Due after five years through ten years		480,898		459,528
Due after ten years		237,966		230,326
Mortgage- and asset-backed securities		613,210		586,750
Total	$	2,078,003	$	2,001,865

Amount and Percentage of Fixed Maturities by Rating

The following table shows the amount and percentage of the Company’s fixed maturities as of March 31, 2013 by S&P credit rating or, if an S&P rating is not available, the equivalent Moody’s Investor Services (“Moody’s”) rating. The table includes fixed maturities at fair value, and the total rating is the weighted average quality rating.

	March 31, 2013
In thousands	Rating	Fair Value		Percent of Total
Rating description:
Extremely strong	AAA	$	293,623		14	%
Very strong	AA		1,157,811		56	%
Strong	A		445,757		21	%
Adequate	BBB		159,109		8	%
Speculative	BB & Below		17,967		1	%
Not rated	NR		3,736		0	%
Total	AA	$	2,078,003		100	%

Summary of Aggregate Fair Value and Gross Unrealized Loss by Length of Time Securities had Continuously been in Gross Unrealized Loss Position as Well as Number of Securities

The following table summarizes all securities in a gross unrealized loss position as of March 31, 2013 and December 31, 2012, showing the aggregate fair value and gross unrealized loss by the length of time those securities had continuously been in a gross unrealized loss position as well as the relevant number of securities.

	March 31, 2013						December 31, 2012
In thousands, except # of securities	Number of Securities		Fair Value		Gross Unrealized Loss		Number of Securities		Fair Value		Gross Unrealized Loss
Fixed maturities:
U.S. Treasury bonds, agency bonds, and foreign government bonds
0-6 months		8	$	40,455	$	31		8	$	23,760	$	22
7-12 months		—		—		—		3		14,118		11
> 12 months		—		—		—		1		4,652		3
Subtotal		8	$	40,455	$	31		12	$	42,530	$	36
States, municipalities and political subdivisions
0-6 months		58	$	129,906	$	1,682		10	$	21,299	$	325
7-12 months		—		—		—		—		—		—
> 12 months		4		2,852		62		4		2,908		55
Subtotal		62	$	132,758	$	1,744		14	$	24,207	$	380
Agency mortgage-backed securities
0-6 months		22	$	46,654	$	512		10	$	62,516	$	174
7-12 months		3		7,921		128		2		1,671		30
> 12 months		—		—		—		—		—		—
Subtotal		25	$	54,575	$	640		12	$	64,187	$	204
Residential mortgage obligations
0-6 months		5	$	1,673	$	2		6	$	1,825	$	22
7-12 months		—		—		—		—		—		—
> 12 months		24		4,653		185		35		7,252		527
Subtotal		29	$	6,326	$	187		41	$	9,077	$	549
Asset-backed securities
0-6 months		1	$	631	$	2		—	$	—	$	—
7-12 months		—		—		—		—		—		—
> 12 months		1		1,743		27		2		2,369		49
Subtotal		2	$	2,374	$	29		2	$	2,369	$	49
Commercial mortgage-backed securities
0-6 months		1	$	1,149	$	5		7	$	2,639	$	7
7-12 months		2		802		11		—		—		—
> 12 months		4		717		13		5		845		11
Subtotal		7	$	2,668	$	29		12	$	3,484	$	18
Corporate bonds
0-6 months		10	$	15,648	$	121		2	$	3,528	$	6
7-12 months		—		—		—		—		—		—
> 12 months		1		1,497		3		4		6,689		19
Subtotal		11	$	17,145	$	124		6	$	10,217	$	25
Total fixed maturities		144	$	256,301	$	2,784		99	$	156,071	$	1,261
Equity securities—common stocks
0-6 months		4	$	8,011	$	247		13	$	23,345	$	522
7-12 months		—		—		—		1		1,943		104
> 12 months		—		—		—		—		—		—
Total equity securities		4	$	8,011	$	247		14	$	25,288	$	626

Summary of Activity Related to Other-Than-Temporary Impairment Losses

The table below summarizes the Company’s activity related to OTTI losses for the periods indicated:

	Three Months Ended March 31,
	2013				2012
In thousands, except # of securities	Number of Securities		Amount		Number of Securities		Amount
Total OTTI losses:
Corporate and other bonds		—	$	—		—	$	—
Commercial mortgage-backed securities		—		—		—		—
Residential mortgage-backed securities		—		—		1		55
Asset-backed securities		—		—		—		—
Equities		2		42		2		143
Total		2	$	42		3	$	198
Less: Portion of loss in accumulated other comprehensive income (loss):
Corporate and other bonds			$	—			$	—
Commercial mortgage-backed securities				—				—
Residential mortgage-backed securities				—				44
Asset-backed securities				—				—
Equities				—				—
Total			$	—			$	44
Impairment losses recognized in earnings:
Corporate and other bonds			$	—			$	—
Commercial mortgage-backed securities				—				—
Residential mortgage-backed securities				—				11
Asset-backed securities				—				—
Equities				42				143
Total			$	42			$	154

Summary of Cumulative Amounts Related to Credit Loss Portion of Other-Than-Temporary Impairment Losses on Debt Securities

The following table summarizes the cumulative amounts related to the Company’s credit loss portion of the OTTI losses on debt securities for the three months ended March 31, 2013 and 2012. The Company does not intend to sell and it is more likely than not that it will not be required to sell the securities prior to recovery of the amortized cost basis and for which the non-credit loss portion is included in OCI:

	Three Months Ended March 31,
In thousands	2013		2012
Beginning balance	$	3,332	$	3,321
Additions for credit loss impairments recognized in the current period on securities not previously impaired		—		—
Additions for credit loss impairments recognized in the current period on securities previously impaired		—		11
Reductions for credit loss impairments previously recognized on securities sold during the period		—		—
Ending balance	$	3,332	$	3,332

Contractual Maturity by Number of Years Until Maturity for Fixed Maturity Securities with a Gross Unrealized Loss

The contractual maturity dates for fixed maturity securities categorized by the number of years until maturity, with a gross unrealized loss as of March 31, 2013 is presented in the following table:

	March 31, 2013
	Gross Unrealized Losses					Fair Value
In thousands	Amount		Percent of Total			Amount		Percent of Total
Due in one year or less	$	3		0	%	$	1,505		0	%
Due after one year through five years		63		2	%		26,313		10	%
Due after five years through ten years		446		16	%		76,159		30	%
Due after ten years		1,387		50	%		86,381		34	%
Mortgage- and asset-backed securities		885		32	%		65,943		26	%
Total	$	2,784		100	%	$	256,301		100	%

Net Investment Income

The Company’s net investment income was derived from the following sources:

	Three Months Ended March 31,
In thousands	2013			2012
Fixed maturities	$	13,167		$	15,411
Equity securities		1,030			947
Short-term investments		189			312
Total investment income	$	14,386		$	16,670
Investment expenses		(729	)		(5,412	)
Net investment income	$	13,657		$	11,258

Change in Net Unrealized Gains/(Losses)

The change in net unrealized gains and losses, inclusive of the change in the non credit portion of other-than-temporary impairment losses, consisted of:

	Three Months Ended March 31,
In thousands	2013			2012
Fixed maturities	$	(10,930	)	$	9,128
Equity securities		8,172			4,639
Gross unrealized gains (losses)	$	(2,758	)	$	13,767
Deferred income tax		(1,003	)		4,818
Change in net unrealized gains (losses), net	$	(1,755	)	$	8,949

Realized Gains and Losses Excluding Net Other-Than-Temporary Impairment Losses Recognized in Earnings

Realized gains and losses, excluding net OTTI losses recognized in earnings, for the periods indicated were as follows:

	Three Months Ended March 31,
In thousands	2013			2012
Fixed maturities:
Gains	$	3,206		$	3,142
Losses		(310	)		(1,300	)
Fixed maturities, net	$	2,896		$	1,842
Equity securities:
Gains	$	1,918		$	—
Losses		—			—
Equity securities, net	$	1,918		$	—
Net realized gains (losses)	$	4,814		$	1,842

Fixed Maturities and Equity Securities by Asset Class that are Measured at Fair Value

The following tables present, for each of the fair value hierarchy levels as defined by the accounting guidance for fair value measurements, the Company’s fixed maturities and equity securities by asset class that are measured at fair value on a recurring basis as of March 31, 2013 and December 31, 2012:

	March 31, 2013
In thousands	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	313,253	$	218,210	$	—	$	531,463
States, municipalities and political subdivisions		—		449,387		—		449,387
Mortgage-backed and asset-backed securities:								—
Agency mortgage-backed securities		—		346,829		—		346,829
Residential mortgage obligations		—		38,350		—		38,350
Asset-backed securities		—		47,092		—		47,092
Commercial mortgage-backed securities		—		180,939		—		180,939
Subtotal	$	—	$	613,210	$	—	$	613,210
Corporate bonds		—		483,943		—		483,943
Total fixed maturities	$	313,253	$	1,764,750	$	—	$	2,078,003
Equity securities—common stocks		116,482		—		—		116,482
Total	$	429,735	$	1,764,750	$	—	$	2,194,485

	December 31, 2012
In thousands	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	414,502	$	235,190	$	—	$	649,692
States, municipalities and political subdivisions		—		322,947		—		322,947
Mortgage-backed and asset-backed securities:								—
Agency mortgage-backed securities		—		384,445		—		384,445
Residential mortgage obligations		—		38,692		—		38,692
Asset-backed securities		—		50,382		—		50,382
Commercial mortgage-backed securities		—		204,821		—		204,821
Subtotal	$	—	$	678,340	$	—	$	678,340
Corporate bonds		—		470,854		—		470,854
Total fixed maturities	$	414,502	$	1,707,331	$	—	$	2,121,833
Equity securities—common stocks		101,297		—		—		101,297
Total	$	515,799	$	1,707,331	$	—	$	2,223,130

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Credit Facility

3 Months Ended

Mar. 31, 2013

Credit Facility

Note 11. Credit Facility

On November 22, 2012, we entered into a $165 million credit facility agreement with ING Bank N.V., London Branch, individually and as Administrative Agent, and a syndicate of lenders. The new credit facility amended and restated a $165 million letter of credit facility entered into by the parties on March 28, 2011. The credit facility, which is denominated in U.S. dollars, is utilized to fund our participation in Syndicate 1221 through letters of credit for the 2013 and 2014 underwriting years, as well as open prior years. The letters of credit issued under the facility are denominated in British pounds and their aggregate face amount will fluctuate based on exchange rates. If any letters of credit remain outstanding under the facility after December 31, 2014, we would be required to post additional collateral to secure the remaining letters of credit. As of March 31, 2013, letters of credit with an aggregate face amount of $145.9 million were outstanding under the credit facility and we have $0.8 million of cash collateral posted.

This credit facility contains customary covenants for facilities of this type, including restrictions on indebtedness and liens, limitations on mergers, dividends and the sale of assets, and requirements as to maintaining certain consolidated tangible net worth, statutory surplus and other financial ratios. The credit facility also provides for customary events of default, including failure to pay principal, interest or fees when due, failure to comply with covenants, any representation or warranty made by the Company being false in any material respect, default under certain other indebtedness, certain insolvency or receivership events affecting the Company and its subsidiaries, the occurrence of certain material judgments, or a change in control of the Company. The letter of credit facility is secured by a pledge of the stock of certain insurance subsidiaries of the Company. To the extent the aggregate face amount issued under the credit facility exceeds the commitment amount, the Company is required to post collateral with the lead bank of the consortium. The Company was in compliance with all covenants under the credit facility as of March 31, 2013.

The applicable margin and applicable fee rate payable under the credit facility are based on a tiered schedule that is based on the Company’s then-current ratings issued by S&P and Moody’s with respect to the Company’s Senior Notes without third-party credit enhancement, and the amount of the Company’s own collateral utilized to fund its participation in Syndicate 1221.

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Income Taxes

3 Months Ended

Mar. 31, 2013

Income Taxes

Note 7. Income Taxes

The Company is subject to the tax laws and regulations of the United States (“U.S.”) and the foreign countries in which it operates. The Company files a consolidated U.S. Federal tax return, which includes all domestic subsidiaries and the U.K. Branch. The income from the foreign operations is designated as either U.S. connected income or non-U.S. connected income. Lloyd’s is required to pay U.S. income tax on U.S. connected income written by Lloyd’s syndicates. Lloyd’s and the Internal Revenue Service (“IRS”) have entered into an agreement whereby the amount of tax due on U.S. connected income is calculated by Lloyd’s and remitted directly to the IRS. These amounts are then charged to the corporate member in proportion to its participation in the relevant syndicates. The Company’s corporate member is subject to this agreement and will receive U.K. tax credits in the United Kingdom (“U.K.”) for any U.S. income tax incurred up to the U.K. income tax charged on the U.S. connected income. The non-U.S. connected insurance income would generally constitute taxable income under the Subpart F income section of the U.S. Internal Revenue Code (“Subpart F”) since less than 50% of Syndicate 1221’s premiums are derived within the U.K. and would therefore be subject to U.S. taxation when the Lloyd’s year of account closes. Taxes are accrued at a 35% rate on the Company’s foreign source insurance income and foreign tax credits, where available, are utilized to offset U.S. tax as permitted. The Company’s effective tax rate for Syndicate 1221 taxable income could substantially exceed 35% to the extent the Company is unable to offset U.S. taxes paid under Subpart F tax regulations with U.K. tax credits on future underwriting year distributions. U.S. taxes are not accrued on the earnings of the Company’s foreign agencies as these earnings are not includable as Subpart F income in the current year. These earnings were subject to taxes under U.K. tax regulations at a 26% rate through March 31, 2012. A finance bill was enacted in the U.K. that reduced the U.K. corporate tax rate from 26% to 24% effective April 2012 and from 24% to 23% effective April 2013. The effect of such tax rate change was not material.

The Company has not provided for U.S. income taxes on approximately $18.0 million of undistributed earnings of its non-U.S. subsidiaries since it is intended that those earnings will be reinvested indefinitely in those subsidiaries. If a future determination is made that those earnings no longer are intended to be reinvested indefinitely in those subsidiaries, U.S. income taxes of approximately $1.9 million, assuming all foreign tax credits are realized, would be included in the tax provision at that time and would be payable if those earnings were distributed to the Company.

Unrecognized tax benefits are differences between tax positions taken in the tax returns and benefits recognized in the financial statements. The Company has no unrecognized tax benefits as of March 31, 2013 and 2012. The Company did not incur any interest or penalties related to unrecognized tax benefits for the three months ended March 31, 2013 and 2012. The Company currently is under examination by the Internal Revenue Service for taxable years 2010 and 2011, and generally is subject to U.S. Federal, state or local, or foreign tax examinations by tax authorities for 2009 and subsequent years.

The Company recorded income tax expense of $6.6 million for the three months ended March 31, 2013 compared to $3.3 million for the same period in 2012, resulting in an effective tax rate of 32.3% for the three months ended March 31, 2013 and 29.3% for the comparable period in 2012.

The Company had state and local deferred tax assets amounting to potential future tax benefits of $0.4 million and $0.5 million as of March 31, 2013 and December 31, 2012, respectively. Included in the deferred tax assets are state and local net operating loss carry-forwards of $0.2 million for both March 31, 2013 and December 31, 2012. A valuation allowance was established for the full amount of these potential future tax benefits due to the uncertainty associated with their realization. The Company’s state and local tax carry-forwards as of March 31, 2013 expire from 2023 to 2031.

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2013

Stock-Based Compensation

Note 5. Stock-Based Compensation

Stock-based compensation granted under the Company’s stock plans is expensed in tranches over the vesting period. Options and non-performance based grants generally vest equally over a three or four year period and the options have a maximum term of ten years. Certain non-performance based grants vest over five years with one-third vesting in each of the third, fourth and fifth years. The Company’s performance based share grants generally consist of two types of awards. The restricted stock units issued in 2011 and after will cliff vest on the third anniversary of the date of grant, with 50% vesting in full, and 50% dependent on the rate of compound annual growth in book value per share for the three years immediately prior to the vesting date, with actual shares that vest ranging between 150% to 0% of that portion of the original award. Those performance based restricted stock units issued prior to 2011 generally vest over five years with one-third vesting in each of the third, fourth and fifth years, dependent on the rolling three-year average return on equity based on the three years prior to the year in which the vesting occurs, with actual shares that vest ranging between 150% to 0% of the original award.

The amounts charged to expense for stock-based compensation for the three months ended March 31, 2013 and 2012 are presented in the following table:

	Three Months Ended March 31,
In thousands	2013		2012
Restricted stock units	$	1,358	$	1,212
Directors restricted stock grants(1)		100		60
Employee stock purchase plan		9		(26	)
Total stock based compensation	$	1,467	$	1,246

(1) — Relates to non-employee directors serving on the Parent Company’s Board of Directors, all of whom have been elected by the Company’s stockholders, as well as non-employee directors serving on NUAL’s Board of Directors.

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Lloyd's Syndicate 1221

3 Months Ended

Mar. 31, 2013

Lloyd's Syndicate 1221

Note 6. 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 £195 million ($296 million) for the 2013 underwriting year compared to £184 million ($300 million) for the 2012 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 2013 and 2012 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 March 31, 2013, the Company had provided letters of credit of $145.9 million and has $0.8 million of 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 2013 and 2014 underwriting years, as well as open prior years. If any letters of credit remain outstanding under the facility after December 31, 2014, 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, 2014, 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 11, Credit Facility, for additional information.

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Senior Notes due May 1, 2016

3 Months Ended

Mar. 31, 2013

Senior Notes due May 1, 2016

Note 8. Senior Notes due May 1, 2016

On April 17, 2006, we completed a public debt offering of $125 million principal amount of 7% senior unsecured notes (the “Senior Notes”) and received net proceeds of $123.5 million. The principal amount of the Senior Notes is payable in a single installment on May 1, 2016. In April 2009, the Company repurchased $10.0 million aggregate principal amount of the Senior Notes from an unaffiliated note holder on the open market for $7.0 million, which generated a $3.0 million pre-tax gain that was reflected in Other income. The Senior Notes liability as of March 31, 2013 was $114.5 million. The unamortized discount at March 31, 2013 was $0.5 million. The aggregate principal amount of the Senior Notes that will be repaid on May 1, 2016, as a result of these transactions, is $115.0 million.

The fair value of the Senior Notes was $122.6 million and $123.2 million as of March 31, 2013 and December 31, 2012, respectively. The fair value was determined using quoted prices for similar instruments in active markets and is classified as Level 2 within the fair value hierarchy as defined by the accounting guidance for fair value measurements.

Interest is payable on the Senior Notes each May 1 and November 1. The effective interest rate related to the Senior Notes, based on the proceeds net of discount and all issuance costs, approximates 7.17%. Interest expense on the Senior Notes for both the three months ended March 31, 2013 and 2012 was approximately $2 million.

The Senior Notes, the Company’s only senior unsecured obligation, will rank equally with any future senior unsecured indebtedness. The Company may redeem the Senior Notes at any time and from time to time, in whole or in part, at a “make-whole” redemption price. The terms of the Senior Notes contain various restrictive business and financial covenants typical for debt obligations of this type, including limitations on mergers, liens and dispositions of the common stock of certain subsidiaries. As of March 31, 2013, the Company was in compliance with all such covenants.

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Senior Note Due May 1, 2016 - Additional Information (Detail) (USD $)	1 Months Ended		3 Months Ended
	Apr. 30, 2009	Apr. 17, 2006	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Debt Instrument [Line Items]
Senior Notes			$ 114,462,000		$ 114,424,000
Senior Notes due May 1, 2016
Debt Instrument [Line Items]
Principal amount of senior notes		125,000,000
Interest rate stated on senior notes		7.00%
Senior notes due date		May 01, 2016
Net proceeds from issuance of senior notes		123,500,000
Aggregate principal amount of senior notes repurchased from unaffiliated note holder	10,000,000
Repurchased senior notes	7,000,000
Pretax gain from repurchase of senior notes	3,000,000
Outstanding principal amount of senior notes			114,500,000
Unamortized discount			500,000
Senior Notes			115,000,000
Fair value of senior notes			122,600,000		123,200,000
Interest expense on senior notes			$ 2,000,000	$ 2,000,000
Effective interest rate related to senior notes			7.17%
Debt instrument, covenant compliance			As of March 31, 2013, the Company was in compliance with all such covenants.
Senior Notes due May 1, 2016 | Semi Annual Payment, First Payment
Debt Instrument [Line Items]
Interest payment date on senior notes			--05-01
Senior Notes due May 1, 2016 | Semi Annual Payment, Second Payment
Debt Instrument [Line Items]
Interest payment date on senior notes			--11-01

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Reinsurance Ceded (Tables)

3 Months Ended

Mar. 31, 2013

Lists of 20 Largest Reinsurers Measured by Reinsurance Recoverable

The following table lists the Company’s 20 largest reinsurers measured by the amount of reinsurance recoverable for ceded losses and LAE and ceded unearned premium (constituting 72.7% of the total recoverable), together with the reinsurance recoverable and collateral as of March 31, 2013, and the reinsurers’ ratings from A.M. Best Company (“A.M. Best”) or Standard & Poor’s (“S&P”):

	Reinsurance Recoverables
In thousands	Unearned Premium		Paid/Unpaid Losses		Total (1)		Collateral Held (2)		AMB		S&P
National Indemnity Company	$	48,252	$	61,076	$	109,328	$	32,952		A++		AA+
Swiss Reinsurance America Corporation		5,551		87,274		92,825		6,070		A+		AA-
Transatlantic Reinsurance Company		19,321		71,906		91,227		9,739		A		A+
Everest Reinsurance Company		20,648		70,431		91,079		9,102		A+		A+
Munich Reinsurance America Inc.		9,613		78,428		88,041		3,329		A+		AA-
Lloyd’s Syndicate #2003		8,859		38,850		47,709		10,251		A		A+
Partner Reinsurance Europe		8,787		34,121		42,908		17,457		A+		A+
Allied World Reinsurance		11,812		26,486		38,298		4,682		A		A
Scor Global P&C SE		10,065		21,576		31,641		6,829		A		A+
Tower Insurance Company		11,993		17,045		29,038		8,227		A-		NR
General Reinsurance Corporation		268		26,144		26,412		731		A++		AA+
Validus Reinsurance Ltd.		2,739		22,892		25,631		13,041		A		A
Berkley Insurance Company		1,556		19,144		20,700		241		A+		A+
Scor Holding (Switzerland) AG		790		16,810		17,600		8,214		A		A+
Atlantic Specialty Insurance		7,843		8,295		16,138		3,489		A		A-
Ace Property and Casualty Insurance Company		801		14,780		15,581		—		A+		AA-
AXIS Re Europe		2,995		11,782		14,777		2,867		A		A+
Platinum Underwriters Re		354		14,280		14,634		1,851		A		A-
Lloyd’s Syndicate #4000		1,403		12,168		13,571		882		A		A+
Star Insurance Company		5,296		8,159		13,455		1,348		A-		BBB
Top 20 Reinsurers	$	178,946	$	661,647	$	840,593	$	141,302
Others		53,830		262,598		316,428		84,603
Total	$	232,776	$	924,245	$	1,157,021	$	225,905

(1) — Net of reserve for uncollectible reinsurance of approximately $11.5 million.

(2) — Collateral of $225.9 million consists of $165.1 million in ceded balances payable, $57.2 million in letters of credit, and $3.6 million of other balances held by the Company’s Insurance Companies and Lloyd’s Operations.

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Additional Financial Data by Segment (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Segment Reporting Information [Line Items]
Gross written premiums	$ 393,222	$ 343,149
Net written premiums	269,452	243,045
Net earned premiums	202,328	183,119
Marine
Segment Reporting Information [Line Items]
Gross written premiums	104,491	123,640
Net written premiums	80,699	90,923
Net earned premiums	70,770	68,539
Property Casualty
Segment Reporting Information [Line Items]
Gross written premiums	244,022	180,215
Net written premiums	157,263	123,887
Net earned premiums	100,597	88,870
Professional Liability
Segment Reporting Information [Line Items]
Gross written premiums	44,709	39,294
Net written premiums	31,490	28,235
Net earned premiums	30,961	25,710
Insurance
Segment Reporting Information [Line Items]
Gross written premiums	301,628	248,338
Net written premiums	216,319	181,250
Net earned premiums	154,331	131,548
Insurance | Marine
Segment Reporting Information [Line Items]
Gross written premiums	50,847	61,865
Net written premiums	41,141	42,865
Net earned premiums	36,725	35,275
Insurance | Property Casualty
Segment Reporting Information [Line Items]
Gross written premiums	218,964	155,919
Net written premiums	149,951	114,532
Net earned premiums	92,718	74,368
Insurance | Professional Liability
Segment Reporting Information [Line Items]
Gross written premiums	31,817	30,554
Net written premiums	25,227	23,853
Net earned premiums	24,888	21,905
Lloyd's
Segment Reporting Information [Line Items]
Gross written premiums	91,594	94,811
Net written premiums	53,133	61,795
Net earned premiums	47,997	51,571
Lloyd's | Marine
Segment Reporting Information [Line Items]
Gross written premiums	53,644	61,775
Net written premiums	39,558	48,058
Net earned premiums	34,045	33,264
Lloyd's | Property Casualty
Segment Reporting Information [Line Items]
Gross written premiums	25,058	24,296
Net written premiums	7,312	9,355
Net earned premiums	7,879	14,502
Lloyd's | Professional Liability
Segment Reporting Information [Line Items]
Gross written premiums	12,892	8,740
Net written premiums	6,263	4,382
Net earned premiums	$ 6,073	$ 3,805

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Summary of Cumulative Amounts Related to Credit Loss Portion of Other-Than-Temporary Impairment Losses on Debt Securities (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Beginning balance	$ 3,332	$ 3,321
Additions for credit loss impairments recognized in the current period on securities not previously impaired
Additions for credit loss impairments recognized in the current period on securities previously impaired		11
Reductions for credit loss impairments previously recognized on securities sold during the period
Ending balance	$ 3,332	$ 3,332

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Net income (loss)	$ 13,910	$ 7,904
Change in net unrealized gains (losses) on investments:
Unrealized gains (losses) on investments arising during the period, net of deferred tax of $617 and $4,937 in 2013 and 2012, respectively	1,145	9,168
Reclassification adjustment for net realized (gains) losses included in net income net of deferred tax of $1,770 and $344 in 2013 and 2012, respectively	(3,179)	(638)
Change in net unrealized gains (losses) on investments	(2,034)	8,530
Change in other-than-temporary impairments:
Non-credit other-than-temporary impairments arising during the period, net of deferred tax of $150 and $241 in 2013 and 2012, respectively	279	448
Reclassification adjustment for non-credit other-than-temporary impairment losses recognized in net income net of deferred tax of $16 in 2012		(29)
Change in other-than-temporary impairments	279	419
Change in foreign currency translation gains (losses), net of deferred tax of $1,543 and $1,399 in 2012 and 2011, respectively	2,630	(2,972)
Other comprehensive income (loss)	875	5,977
Comprehensive income (loss)	$ 14,785	$ 13,881

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Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2013

Recent Accounting Pronouncements

Note 2. Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013 -02 amending Codification topic 220 – Comprehensive Income. The amendments do not change the current requirements for reporting net income or other comprehensive income in the financial statements. The guidance requires an entity to present information about significant items reclassified out of Accumulated Other Comprehensive Income (“AOCI”) by component and for items reclassified out of AOCI and into net income, the entity must disclose the effect of such items on the affected net income line item. The Company adopted this standard effective January 1, 2013, and presents this information on the consolidated statements of comprehensive income. Adoption of this standard did not have any impact on the Company’s consolidated balance sheets, results of operations or cash flows.

In July 2012, the FASB issued ASU 2012-02 amending Codification topic 350 – Intangibles – Goodwill and Other. The amendment is intended to reduce cost and complexity, in addition to enhancing consistency of impairment testing guidance among long-lived asset categories by permitting entities to assess qualitative factors to determine whether it is necessary to calculate an asset’s fair value when testing an indefinite-lived asset for impairment. The amendment is effective for fiscal years beginning after September 15, 2012. The Company adopted this standard effective January 1, 2013. Adoption of this standard did not have any impact on the Company’s consolidated financial position, results of operating or cash flows.

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Reinsurance Ceded - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013 Entity	Mar. 31, 2012
Reinsurance Recoverable for Insurance Companies by Product Segment [Line Items]
Ceded premiums earned	$ 110.9	$ 91.7
Ceded losses incurred	$ 53.6	$ 70.7
Percentage of reinsurance recoverable of 20 largest reinsurers	72.70%
Number of largest reinsurers	20

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Amount and Percentage of Fixed Maturities by Rating (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Investment Securities [Line Items]
Rating	AA
Fair Value	$ 2,078,003	$ 2,121,833
Percent of Total	100.00%
Extremely strong
Investment Securities [Line Items]
Rating	AAA
Fair Value	293,623
Percent of Total	14.00%
Very strong
Investment Securities [Line Items]
Rating	AA
Fair Value	1,157,811
Percent of Total	56.00%
Strong
Investment Securities [Line Items]
Rating	A
Fair Value	445,757
Percent of Total	21.00%
Adequate
Investment Securities [Line Items]
Rating	BBB
Fair Value	159,109
Percent of Total	8.00%
Speculative
Investment Securities [Line Items]
Rating	BB & Below
Fair Value	17,967
Percent of Total	1.00%
Not rated
Investment Securities [Line Items]
Rating	NR
Fair Value	$ 3,736
Percent of Total	0.00%

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2013

Financial Data by Segment

Financial data by segment for the three months ended March 31, 2013 and 2012 were as follows:

	Three Month 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	)		—			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
Identifiable assets	$	3,087,308		$	936,471		$	47,266		$	4,071,045
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) — Includes Corporate segment intercompany eliminations.

(2) — Includes Other operating expenses and Other income.

	Three Month 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
Identifiable assets	$	2,899,369		$	907,760		$	40,398		$	3,847,527
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) — Includes Corporate segment intercompany eliminations.

(2) — Includes Other operating expenses and Other income.

Additional Financial Data by Segment

The following tables provide additional financial data by segment for the three months ended March 31, 2013 and 2012:

	Three Months Ended March 31, 2013
In thousands	Insurance Companies		Lloyd’s Operations		Total
Gross written premiums:
Marine	$	50,847	$	53,644	$	104,491
Property casualty		218,964		25,058		244,022
Professional liability		31,817		12,892		44,709
Total	$	301,628	$	91,594	$	393,222
Net written premiums:
Marine	$	41,141	$	39,558	$	80,699
Property casualty		149,951		7,312		157,263
Professional liability		25,227		6,263		31,490
Total	$	216,319	$	53,133	$	269,452
Net earned premiums:
Marine	$	36,725	$	34,045	$	70,770
Property casualty		92,718		7,879		100,597
Professional liability		24,888		6,073		30,961
Total	$	154,331	$	47,997	$	202,328
	Three Months Ended March 31, 2012
In thousands	Insurance Companies		Lloyd’s Operations		Total
Gross written premiums:
Marine	$	61,865	$	61,775	$	123,640
Property casualty		155,919		24,296		180,215
Professional liability		30,554		8,740		39,294
Total	$	248,338	$	94,811	$	343,149
Net written premiums:
Marine	$	42,865	$	48,058	$	90,923
Property casualty		114,532		9,355		123,887
Professional liability		23,853		4,382		28,235
Total	$	181,250	$	61,795	$	243,045
Net earned premiums:
Marine	$	35,275	$	33,264	$	68,539
Property casualty		74,368		14,502		88,870
Professional liability		21,905		3,805		25,710
Total	$	131,548	$	51,571	$	183,119