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 September 30, 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.)
400 Atlantic Street, Stamford, Connecticut	06901
(Address of principal executive offices)	(Zip Code)

(203) 905-6090

(Registrant’s telephone number, including area code)

6 International Drive, Rye Brook,

NY, 10573

(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 October 25, 2013 was 14,147,820.

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

INDEX

		Page Number
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets September 30, 2013 (Unaudited) and December 31, 2012		3
	Consolidated Statements of Income (Unaudited) Three and Nine Months Ended September 30, 2013 and 2012		4
	Consolidated Statements of Comprehensive Income (Unaudited) Three and Nine Months Ended September 30, 2013 and 2012		5
	Consolidated Statements of Stockholders’ Equity (Unaudited) Nine Months Ended September 30, 2013		6
	Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30, 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		29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		63
Item 4.	Controls and Procedures		63
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		64
Item 1A.	Risk Factors		64
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		64
Item 3.	Defaults Upon Senior Securities		64
Item 4.	Mine Safety Disclosures		64
Item 5.	Other Information		64
Item 6.	Exhibits		65
Signatures			66
Index to Exhibits			67

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

	September 30,			December 31,
	2013			2012
	(Unaudited)
ASSETS
Investments and cash:
Fixed maturities, available-for-sale, at fair value (amortized cost: 2013, $1,958,434; 2012, $2,034,765)	$	1,981,731		$	2,121,833
Equity securities, available-for-sale, at fair value (cost: 2013, $131,046; 2012, $85,004)		158,890			101,297
Short-term investments, at cost which approximates fair value		152,987			153,788
Cash		130,513			45,336
Total investments and cash	$	2,424,121		$	2,422,254
Premiums receivable		355,578			320,182
Prepaid reinsurance premiums		253,435			221,015
Reinsurance recoverable on paid losses		44,955			49,282
Reinsurance recoverable on unpaid losses and loss adjustment expenses		796,289			880,139
Deferred policy acquisition costs		63,171			61,005
Accrued investment income		13,746			12,587
Goodwill and other intangible assets		7,065			7,093
Deferred income tax, net		22,639			3,216
Receivable for investments sold		59,453			4,310
Other assets		34,124			26,587
Total assets	$	4,074,576		$	4,007,670
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Reserves for losses and loss adjustment expenses	$	2,050,720		$	2,097,048
Unearned premiums		716,236			642,407
Reinsurance balances payable		180,563			165,813
Senior Notes		114,542			114,424
Current income tax payable, net		5,449			2,133
Payable for investments purchased		48,855			58,345
Accounts payable and other liabilities		58,329			48,015
Total liabilities	$	3,174,694		$	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 17,658,292 shares for 2013 and 17,558,046 shares for 2012		1,765			1,755
Additional paid-in capital		334,421			329,452
Treasury stock, at cost (3,511,380 shares for 2013 and 2012)		(155,801	)		(155,801	)
Retained earnings		678,004			628,871
Accumulated other comprehensive income		41,493			75,208
Total stockholders’ equity	$	899,882		$	879,485
Total liabilities and stockholders’ equity	$	4,074,576		$	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 September 30,					Nine Months Ended September 30,
	2013			2012		2013			2012
Gross written premiums	$	312,076		$	298,742	$	1,037,426		$	964,878
Revenues:
Net written premiums	$	196,556		$	188,046	$	664,477		$	621,343
Change in unearned premiums		17,339			13,216		(42,440	)		(40,945	)
Net earned premiums		213,895			201,262		622,037			580,398
Net investment income		14,094			13,597		41,997			40,632
Total other-than-temporary impairment losses		(1,821	)		—		(1,863	)		(693	)
Portion of loss recognized in other comprehensive income (before tax)		—			—		—			43
Net other-than-temporary impairment losses recognized in earnings		(1,821	)		—		(1,863	)		(650	)
Net realized gains (losses)		(988	)		4,761		7,171			10,820
Other income (expense)		(210	)		789		(507	)		2,087
Total revenues	$	224,970		$	220,409	$	668,835		$	633,287
Expenses:
Net losses and loss adjustment expenses	$	125,086		$	128,850	$	387,576		$	370,242
Commission expenses		27,685			31,258		82,631			90,211
Other operating expenses		39,056			40,112		120,608			116,238
Interest expense		2,053			2,049		6,156			6,147
Total expenses		193,880			202,269		596,971			582,838
Income (loss) before income taxes		31,090			18,140		71,864			50,449
Income tax expense (benefit)		9,804			5,225		22,731			14,731
Net income (loss)	$	21,286		$	12,915	$	49,133		$	35,718
Net income per common share:
Basic	$	1.50		$	0.92	$	3.48		$	2.55
Diluted	$	1.48		$	0.90	$	3.42		$	2.51
Average common shares outstanding:
Basic		14,144,478			14,026,855		14,120,788			14,004,302
Diluted		14,408,413			14,272,477		14,379,943			14,255,301

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 September 30,
	2013			2012
Net income (loss)	$	21,286		$	12,915
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 $2,676 and $8,845 in 2013 and 2012, respectively	$	5,003		$	16,471
Reclassification adjustment for net realized (gains) losses included in net income net of deferred tax of $322 and $1,152 in 2013 and 2012, respectively		598			(2,139	)
Change in net unrealized gains (losses) on investments	$	5,601		$	14,332
Change in other-than-temporary impairments:
Non credit other-than-temporary impairments arising during the period, net of deferred tax of $30 and $213 in 2013 and 2012, respectively	$	(55	)	$	395
Reclassification adjustment for non credit other-than-temporary impairment losses recognized in net income net of deferred tax of $0 in 2013 and 2012, respectively		—			—
Change in other-than-temporary impairments	$	(55	)	$	395
Change in foreign currency translation gains (losses), net of deferred tax of $867 and $1,679 in 2013 and 2012, respectively		(1,370	)		3,118
Other comprehensive income (loss)	$	4,176		$	17,845
Comprehensive income (loss)	$	25,462		$	30,760
	Nine Months Ended September 30,
	2013			2012
Net income (loss)	$	49,133		$	35,718
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 $14,988 and $16,564 in 2013 and 2012, respectively	$	(27,780	)	$	32,881
Reclassification adjustment for net realized (gains) losses included in net income net of deferred tax of $3,442 and $1,353 in 2013 and 2012, respectively		(6,392	)		(2,513	)
Change in net unrealized gains (losses) on investments	$	(34,172	)	$	30,368
Change in other-than-temporary impairments:
Non credit other-than-temporary impairments arising during the period, net of deferred tax of $134 and $476 in 2013 and 2012, respectively	$	248		$	884
Reclassification adjustment for non credit other-than-temporary impairment losses recognized in net income net of deferred tax of $15 in 2012		—			28
Change in other-than-temporary impairments	$	248		$	912
Change in foreign currency translation gains (losses), net of deferred tax of $108 and $172 in 2013 and 2012, respectively		209			(694	)
Other comprehensive income (loss)	$	(33,715	)	$	30,586
Comprehensive income (loss)	$	15,418		$	66,304

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													49,133		—			49,133
Changes in other comprehensive income:
Change in net unrealized gain (loss) on investments		—		—		—		—		—			—		(34,172	)		(34,172	)
Change in net non-credit other-than-temporary impairment losses		—		—		—		—		—			—		248			248
Change in foreign currency translation gain (loss)		—		—		—		—		—			—		209			209
Total other comprehensive income		—		—		—		—		—			—		(33,715	)		(33,715	)
Shares issued under stock plan		100,246		10		1,478		—		—			—		—			1,488
Share-based compensation		—		—		3,491		—		—			—		—			3,491
Balance, September 30, 2013		17,658,292	$	1,765	$	334,421		3,511,380	$	(155,801	)	$	678,004	$	41,493		$	899,882

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)

	Nine Months Ended September 30,
	2013			2012
Operating activities:
Net income (loss)	$	49,133		$	35,718
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation & amortization		3,076			3,635
Deferred income taxes		(1,256	)		(9,313	)
Net realized (gains) losses		(7,171	)		(10,820	)
Net other-than-temporary losses recognized in earnings		1,863			650
Changes in assets and liabilities:
Reinsurance recoverable on paid and unpaid losses and loss adjustment expenses		88,177			12,813
Reserves for losses and loss adjustment expenses		(46,328	)		(2,723	)
Prepaid reinsurance premiums		(32,420	)		(60,689	)
Unearned premiums		73,829			102,613
Premiums receivable		(35,396	)		(95,335	)
Deferred policy acquisition costs		(2,166	)		2,703
Accrued investment income		(1,159	)		317
Reinsurance balances payable		14,750			60,841
Current income tax payable, net		3,316			5,066
Other		21,748			23,647
Net cash provided by (used in) operating activities	$	129,996		$	69,123
Investing activities:
Fixed maturities
Redemptions and maturities	$	143,591		$	134,050
Sales		637,176			905,450
Purchases		(713,450	)		(1,196,729	)
Equity securities
Sales		11,439			4,346
Purchases		(53,919	)		(5,553	)
Change in payable for securities		(64,633	)		65,299
Net change in short-term investments		801			(65,225	)
Purchase of property and equipment		(7,771	)		(2,872	)
Net cash provided by (used in) investing activities	$	(46,766	)	$	(161,234	)
Financing activities:
Proceeds of stock issued from employee stock purchase plan	$	821		$	672
Proceeds of stock issued from exercise of stock options		1,126			331
Net cash provided by (used in) financing activities	$	1,947		$	1,003
Increase (decrease) in cash	$	85,177		$	(91,108	)
Cash at beginning of year		45,336			127,360
Cash at end of period	$	130,513		$	36,252
Supplemental cash information:
Income taxes paid, net	$	20,425		$	16,734
Interest paid	$	4,025		$	4,025
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.

8

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.

9

Financial data by segment for the three and nine months ended September 30, 2013 and 2012 were as follows:

	Three Month Ended September 30, 2013
	Insurance			Lloyd’s
In thousands	Companies			Operations			Corporate(1)			Total
Gross written premiums	$	227,609		$	84,467		$	—		$	312,076
Net written premiums		149,290			47,266			—			196,556
Net earned premiums		162,962			50,933			—			213,895
Net losses and loss adjustment expenses		(95,315	)		(29,771	)		—			(125,086	)
Commission expenses		(20,039	)		(8,289	)		643			(27,685	)
Other operating expenses		(28,510	)		(10,546	)		—			(39,056	)
Other income (expense)		955			(522	)		(643	)		(210	)
Underwriting profit (loss)	$	20,053		$	1,805		$	—		$	21,858
Net investment income		12,285			1,807			2			14,094
Net realized gains (losses)		(1,890	)		(919	)		—			(2,809	)
Interest expense		—			—			(2,053	)		(2,053	)
Income (loss) before income taxes	$	30,448		$	2,693		$	(2,051	)	$	31,090
Income tax expense (benefit)		9,355			878			(429	)		9,804
Net income (loss)	$	21,093		$	1,815		$	(1,622	)	$	21,286
Identifiable assets	$	3,018,100		$	983,382		$	73,094		$	4,074,576
Losses and loss adjustment expenses ratio		58.5	%		58.5	%					58.5	%
Commission expense ratio		12.3	%		16.3	%					12.9	%
Other operating expense ratio (2)		16.9	%		21.7	%					18.4	%
Combined ratio		87.7	%		96.5	%					89.8	%

(1) -  Includes Corporate segment intercompany eliminations.

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

10

	Three Month Ended September 30, 2012
	Insurance			Lloyd’s
In thousands	Companies			Operations			Corporate(1)			Total
Gross written premiums	$	218,361		$	80,381		$	—		$	298,742
Net written premiums		142,148			45,898			—			188,046
Net earned premiums		149,090			52,172			—			201,262
Net losses and loss adjustment expenses		(113,303	)		(15,547	)		—			(128,850	)
Commission expenses		(20,827	)		(10,911	)		480			(31,258	)
Other operating expenses		(29,387	)		(10,725	)		—			(40,112	)
Other income (expense)		1,229			40			(480	)		789
Underwriting profit (loss)	$	(13,198	)	$	15,029		$	—		$	1,831
Net investment income		12,004			1,552			41			13,597
Net realized gains (losses)		2,609			2,152			—			4,761
Interest expense		—			—			(2,049	)		(2,049	)
Income (loss) before income taxes	$	1,415		$	18,733		$	(2,008	)	$	18,140
Income tax expense (benefit)		(377	)		6,525			(923	)		5,225
Net income (loss)	$	1,792		$	12,208		$	(1,085	)	$	12,915
Identifiable assets	$	2,995,530		$	958,238		$	40,929		$	3,994,697
Losses and loss adjustment expenses ratio		76.0	%		29.8	%					64.0	%
Commission expense ratio		14.0	%		20.9	%					15.5	%
Other operating expense ratio (2)		18.9	%		20.5	%					19.6	%
Combined ratio		108.9	%		71.2	%					99.1	%

(1) -  Includes Corporate segment intercompany eliminations.

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

11

	Nine Month Ended September 30, 2013
	Insurance			Lloyd’s
In thousands	Companies			Operations			Corporate(1)			Total
Gross written premiums	$	757,802		$	279,624		$	—		$	1,037,426
Net written premiums		508,989			155,488			—			664,477
Net earned premiums		473,840			148,197			—			622,037
Net losses and loss adjustment expenses		(308,968	)		(78,608	)		—			(387,576	)
Commission expenses		(59,129	)		(25,245	)		1,743			(82,631	)
Other operating expenses		(87,682	)		(32,926	)		—			(120,608	)
Other income (expense)		2,303			(1,067	)		(1,743	)		(507	)
Underwriting profit (loss)	$	20,364		$	10,351		$	—		$	30,715
Net investment income		36,751			5,237			9			41,997
Net realized gains (losses)		6,001			(697	)		4			5,308
Interest expense		—			—			(6,156	)		(6,156	)
Income (loss) before income taxes	$	63,116		$	14,891		$	(6,143	)	$	71,864
Income tax expense (benefit)		19,554			5,120			(1,943	)		22,731
Net income (loss)	$	43,562		$	9,771		$	(4,200	)	$	49,133
Identifiable assets	$	3,018,100		$	983,382		$	73,094		$	4,074,576
Losses and loss adjustment expenses ratio		65.2	%		53.0	%					62.3	%
Commission expense ratio		12.5	%		17.0	%					13.3	%
Other operating expense ratio (2)		18.0	%		23.0	%					19.5	%
Combined ratio		95.7	%		93.0	%					95.1	%

(1) -  Includes Corporate segment intercompany eliminations.

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

12

	Nine Month Ended September 30, 2012
	Insurance			Lloyd’s
In thousands	Companies			Operations			Corporate(1)			Total
Gross written premiums	$	680,763		$	284,115		$	—		$	964,878
Net written premiums		457,463			163,880			—			621,343
Net earned premiums		422,215			158,183			—			580,398
Net losses and loss adjustment expenses		(304,483	)		(65,759	)		—			(370,242	)
Commission expenses		(61,245	)		(30,735	)		1,769			(90,211	)
Other operating expenses		(83,646	)		(32,592	)		—			(116,238	)
Other income (expense)		3,750			106			(1,769	)		2,087
Underwriting profit (loss)	$	(23,409	)	$	29,203		$	—		$	5,794
Net investment income		34,225			6,289			118			40,632
Net realized gains (losses)		6,809			3,361			—			10,170
Interest expense		—			—			(6,147	)		(6,147	)
Income (loss) before income taxes	$	17,625		$	38,853		$	(6,029	)	$	50,449
Income tax expense (benefit)		3,603			13,458			(2,330	)		14,731
Net income (loss)	$	14,022		$	25,395		$	(3,699	)	$	35,718
Identifiable assets	$	2,995,530		$	958,238		$	40,929		$	3,994,697
Losses and loss adjustment expenses ratio		72.1	%		41.6	%					63.8	%
Commission expense ratio		14.5	%		19.4	%					15.5	%
Other operating expense ratio (2)		18.9	%		20.5	%					19.7	%
Combined ratio		105.5	%		81.5	%					99.0	%

(1) -  Includes Corporate segment intercompany eliminations.

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

13

The following tables provide additional financial data by segment for the three and nine months ended September 30, 2013 and 2012:

	Three Months Ended September 30, 2013
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	38,912	$	36,009	$	74,921
Property casualty		156,228		35,869		192,097
Professional liability		32,469		12,589		45,058
Total	$	227,609	$	84,467	$	312,076
Net written premiums:
Marine	$	26,437	$	26,795	$	53,232
Property casualty		97,553		13,761		111,314
Professional liability		25,300		6,710		32,010
Total	$	149,290	$	47,266	$	196,556
Net earned premiums:
Marine	$	31,490	$	34,264	$	65,754
Property casualty		105,759		10,472		116,231
Professional liability		25,713		6,197		31,910
Total	$	162,962	$	50,933	$	213,895
	Three Months Ended September 30, 2012
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	44,879	$	37,716	$	82,595
Property casualty		139,948		32,789		172,737
Professional liability		33,534		9,876		43,410
Total	$	218,361	$	80,381	$	298,742
Net written premiums:
Marine	$	32,615	$	27,939	$	60,554
Property casualty		83,449		11,633		95,082
Professional liability		26,084		6,326		32,410
Total	$	142,148	$	45,898	$	188,046
Net earned premiums:
Marine	$	40,592	$	34,002	$	74,594
Property casualty		83,993		11,870		95,863
Professional liability		24,505		6,300		30,805
Total	$	149,090	$	52,172	$	201,262

14

	Nine Months Ended September 30, 2013
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	132,836	$	135,546	$	268,382
Property casualty		527,287		102,144		629,431
Professional liability		97,679		41,934		139,613
Total	$	757,802	$	279,624	$	1,037,426
Net written premiums:
Marine	$	94,944	$	100,413	$	195,357
Property casualty		338,215		33,254		371,469
Professional liability		75,830		21,821		97,651
Total	$	508,989	$	155,488	$	664,477
Net earned premiums:
Marine	$	100,013	$	102,932	$	202,945
Property casualty		297,954		26,913		324,867
Professional liability		75,873		18,352		94,225
Total	$	473,840	$	148,197	$	622,037
	Nine Months Ended September 30, 2012
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	156,640	$	146,528	$	303,168
Property casualty		426,494		106,063		532,557
Professional liability		97,629		31,524		129,153
Total	$	680,763	$	284,115	$	964,878
Net written premiums:
Marine	$	107,266	$	109,489	$	216,755
Property casualty		274,823		36,693		311,516
Professional liability		75,374		17,698		93,072
Total	$	457,463	$	163,880	$	621,343
Net earned premiums:
Marine	$	111,402	$	101,538	$	212,940
Property casualty		240,536		41,644		282,180
Professional liability		70,277		15,001		85,278
Total	$	422,215	$	158,183	$	580,398

The Insurance Companies net earned premiums include $13.9 million and $16.9 million of net earned premiums from the U.K. Branch for the three months ended September 30, 2013 and 2012, respectively, and $36.7 million and $56.0 million of net earned premiums from the U.K. Branch for the nine months ended September 30, 2013 and 2012, respectively.

15

Note 4. Reinsurance Ceded

The Company’s ceded earned premiums were $114.2 million and $97.4 million for the three months ended September 30, 2013 and 2012 and $340.5 million and $283.4 million for the nine months ended September 30, 2013 and 2012, respectively.

The Company’s ceded incurred losses were $(37.0) million and $31.2 million, respectively, for the three months ended September 30, 2013 and 2012, and were $94.1 million and $154.4 million for the nine months ended September 30, 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 loss adjustment expenses (“LAE”) and ceded unearned premium (constituting 76.3% of the total recoverable), together with the reinsurance recoverable and collateral as of September 30, 2013, and the reinsurers’ ratings from A.M. Best Company (“A.M. Best”) and Standard & Poor’s (“S&P”):

	Reinsurance Recoverables
In thousands	Unearned Premium		Paid/Unpaid Losses		Total (1)		Collateral Held (2)		A.M. Best		S&P
National Indemnity Company	$	56,161	$	73,815	$	129,976	$	37,385		A++		AA+
Transatlantic Reinsurance Company		21,964		70,838		92,802		10,052		A		A+
Everest Reinsurance Company		22,082		64,313		86,395		9,115		A+		A+
Swiss Reinsurance America Corporation		6,094		76,895		82,989		8,638		A+		AA-
Munich Reinsurance America Inc.		6,307		70,676		76,983		4,440		A+		AA-
Partner Reinsurance Europe		11,141		40,623		51,764		18,715		A+		A+
Lloyd’s Syndicate #2003		8,493		37,427		45,920		10,568		A		A+
Allied World Reinsurance		14,006		28,718		42,724		4,724		A		A
Scor Global P&C SE		12,212		25,127		37,339		11,826		A		A+
Tower Insurance Company		13,271		16,002		29,273		8,305		B++		NR
Validus Reinsurance Ltd.		2,576		21,140		23,716		12,756		A		A
Employers Mutual Casualty Company		11,257		6,746		18,003		11,050		A		NR
Atlantic Specialty Insurance		8,626		8,406		17,032		2,560		A		A-
QBE Reinsurance Corp		6,959		9,559		16,518		2,416		A		A+
Scor Holding (Switzerland) AG		675		14,050		14,725		4,927		A		A+
Berkley Insurance Company		1,787		12,797		14,584		519		A+		A+
Lloyd’s Syndicate #4000		345		13,930		14,275		305		A		A+
AXIS Re Europe		4,750		9,511		14,261		4,486		A+		A+
Lloyd’s Syndicate #1955		2,459		10,931		13,390		2,397		A		A+
Platinum Underwriters Re		259		12,700		12,959		1,692		A		A-
Top 20 Reinsurers	$	211,424	$	624,204	$	835,628	$	166,876
Others		42,011		217,040		259,051		73,700
Total	$	253,435	$	841,244	$	1,094,679	$	240,576

(1)  - Net of reserve for uncollectible reinsurance of approximately $11.3 million.

(2)  - Collateral of $240.6 million consists of $180.6 million in ceded balances payable, $57.2 million in letters of credit, and $2.8 million of other balances held by the Company’s Insurance Companies and Lloyd’s Operations.

16

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 and nine months ended September 30, 2013 and 2012 are presented in the following table:

	Three Months Ended September 30,				Nine Months Ended September 30,
In thousands	2013		2012		2013		2012
Restricted stock units	$	17	$	1,818	$	3,491	$	5,004
Directors restricted stock grants(1)		103		170		309		290
Employee stock purchase plan		55		27		102		42
Total stock based compensation	$	175	$	2,015	$	3,902	$	5,336

(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.

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 ($316 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 September 30, 2013, the Company had provided letters of credit of $143.0 million and has $1.0 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.

17

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 U.S. 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 United Kingdom (“U.K.”) tax credits in the 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 $18.9 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 $2.0 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 September 30, 2013 and 2012. The Company did not incur any interest or penalties related to unrecognized tax benefits for the three and nine months ended September 30, 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 $9.8 million and $22.7 million for the three and nine months ended September 30, 2013 compared to $5.2 million and $14.7 million for the same period in 2012, resulting in an effective tax rate of 31.5% and 31.6% for the three and nine months ended September 30, 2013 and 28.8% and 29.2% for the comparable periods in 2012.

The Company had state and local deferred tax assets amounting to potential future tax benefits of $0.5 million as of both September 30, 2013 and December 31, 2012, respectively. Included in the deferred tax assets are state and local net operating loss carry-forwards of $0.1 million and $0.2 million for September 30, 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 September 30, 2013 expire from 2023 to 2031.

18

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 September 30, 2013 was $114.5 million. The unamortized discount at September 30, 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 $125.2 million and $123.2 million as of September 30, 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 the three and nine months ended each of September 30, 2013 and 2012 was approximately $2.1 million and $6.1 million, respectively.

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 September 30, 2013, the Company was in compliance with all such covenants.

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.

19

Note 10. Investments

The following tables set forth the Company’s cash and investments as of September 30, 2013 and December 31, 2012. The table below includes other-than-temporarily impaired (“OTTI”) securities recognized within other comprehensive income (“OCI”).

	September 30, 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	$	445,969	$	3,683	$	(5,694	)	$	447,980
States, municipalities and political subdivisions		445,281		9,752		(12,240	)		447,769
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		300,347		7,966		(3,925	)		296,306
Residential mortgage obligations		35,277		1,107		(224	)		34,394
Asset-backed securities		88,714		795		(190	)		88,109
Commercial mortgage-backed securities		173,069		8,386		(365	)		165,048
Subtotal	$	597,407	$	18,254	$	(4,704	)	$	583,857
Corporate bonds		493,074		17,104		(2,858	)		478,828
Total fixed maturities	$	1,981,731	$	48,793	$	(25,496	)	$	1,958,434
Equity securities—common stocks		158,890		29,548		(1,704	)		131,046
Short-term investments		152,987		—		—			152,987
Cash		130,513		—		—			130,513
Total	$	2,424,121	$	78,341	$	(27,200	)	$	2,372,980

	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 September 30, 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.

20

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 September 30, 2013 are shown in the following table:

	September 30, 2013
	Fair		Amortized
In thousands	Value		Cost
Due in one year or less	$	79,192	$	78,621
Due after one year through five years		616,576		603,165
Due after five years through ten years		458,136		455,826
Due after ten years		230,420		236,965
Mortgage- and asset-backed securities		597,407		583,857
Total	$	1,981,731	$	1,958,434

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 4.6 years.

The following table shows the amount and percentage of the Company’s fixed maturities as of September 30, 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.

	September 30, 2013
		Fair		Percent
In thousands	Rating	Value		of Total
Rating description:
Extremely strong	AAA	$	305,979		15	%
Very strong	AA		1,051,156		54	%
Strong	A		440,063		22	%
Adequate	BBB		163,614		8	%
Speculative	BB & Below		11,722		1	%
Not rated	NR		9,197		0	%
Total	AA	$	1,981,731		100	%

21

The following table summarizes all securities in a gross unrealized loss position as of September 30, 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.

	September 30, 2013						December 31, 2012
					Gross						Gross
	Number of		Fair		Unrealized		Number of		Fair		Unrealized
In thousands, except # of securities	Securities		Value		Loss		Securities		Value		Loss
Fixed maturities:
U.S. Treasury bonds, agency bonds, and foreign government bonds
0-6 months		42	$	196,851	$	5,688		8	$	23,760	$	22
7-12 months		1		928		6		3		14,118		11
> 12 months		—		—		—		1		4,652		3
Subtotal		43	$	197,779	$	5,694		12	$	42,530	$	36
States, municipalities and political subdivisions
0-6 months		100	$	196,987	$	9,485		10	$	21,299	$	325
7-12 months		17		37,989		2,755		—		—		—
> 12 months		1		303		—		4		2,908		55
Subtotal		118	$	235,279	$	12,240		14	$	24,207	$	380
Agency mortgage-backed securities
0-6 months		71	$	90,215	$	2,472		10	$	62,516	$	174
7-12 months		9		18,667		1,354		2		1,671		30
> 12 months		2		5,130		99		—		—		—
Subtotal		82	$	114,012	$	3,925		12	$	64,187	$	204
Residential mortgage obligations
0-6 months		12	$	2,016	$	43		6	$	1,825	$	22
7-12 months		—		—		—		—		—		—
> 12 months		17		2,955		181		35		7,252		527
Subtotal		29	$	4,971	$	224		41	$	9,077	$	549
Asset-backed securities
0-6 months		3	$	32,019	$	189		—	$	—	$	—
7-12 months		1		339		1		—		—		—
> 12 months		—		—		—		2		2,369		49
Subtotal		4	$	32,358	$	190		2	$	2,369	$	49
Commercial mortgage-backed securities
0-6 months		6	$	19,891	$	341		7	$	2,639	$	7
7-12 months		—		—		—		—		—		—
> 12 months		5		889		24		5		845		11
Subtotal		11	$	20,780	$	365		12	$	3,484	$	18
Corporate bonds
0-6 months		37	$	123,673	$	2,856		2	$	3,528	$	6
7-12 months		2		2,315		2		—		—		—
> 12 months		—		—		—		4		6,689		19
Subtotal		39	$	125,988	$	2,858		6	$	10,217	$	25
Total fixed maturities		326	$	731,167	$	25,496		99	$	156,071	$	1,261
Equity securities—common stocks
0-6 months		13	$	33,429	$	1,340		13	$	23,345	$	522
7-12 months		1		1,904		364		1		1,943		104
> 12 months		—		—		—		—		—		—
Total equity securities		14	$	35,333	$	1,704		14	$	25,288	$	626

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As of September 30, 2013 and December 31, 2012, the largest single unrealized loss by a non-government backed issuer in the investment portfolio was $1.0 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 September 30, 2013, there were no investments with a fair value that was less than 80% of amortized cost.

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

	Three Months Ended September 30,								Nine Months Ended September 30,
	2013				2012				2013				2012
	Number of				Number of				Number of				Number of
In thousands, except # of securities	Securities		Amount		Securities		Amount		Securities		Amount		Securities		Amount
Total OTTI losses:
Corporate and other bonds		1	$	1,821		—	$	—		1	$	1,821		—	$	—
Commercial mortgage-backed securities		—		—		—		—		—		—		—		—
Residential mortgage-backed securities		—		—		—		—		—		—		1		54
Asset-backed securities		—		—		—		—		—		—		—		—
Equities		—		—		—		—		2		42		3		639
Total		1	$	1,821		—	$	—		3	$	1,863		4	$	693
Less: Portion of loss in accumulated other comprehensive income (loss):
Corporate and other bonds			$	—			$	—			$	—			$	—
Commercial mortgage-backed securities				—				—				—				—
Residential mortgage-backed securities				—				—				—				43
Asset-backed securities				—				—				—				—
Equities				—				—				—				—
Total			$	—			$	—			$	—			$	43
Impairment losses recognized in earnings:
Corporate and other bonds			$	1,821			$	—			$	1,821			$	—
Commercial mortgage-backed securities				—				—				—				—
Residential mortgage-backed securities				—				—				—				11
Asset-backed securities				—				—				—				—
Equities				—				—				42				639
Total			$	1,821			$	—			$	1,863			$	650

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 and nine months ended September 30, 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 September 30,				Nine Months Ended September 30,
In thousands	2013		2012		2013		2012
Beginning balance	$	3,332	$	3,322	$	3,332	$	3,321
Additions for credit loss impairments recognized in the current period on securities not previously impaired		1,821		—		1,821		—
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	$	5,153	$	3,332	$	5,153	$	3,332

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The contractual maturity dates for fixed maturity securities categorized by the number of years until maturity, with a gross unrealized loss as of September 30, 2013 is presented in the following table:

	September 30, 2013
	Gross Unrealized Losses					Fair Value
			Percent					Percent
In thousands	Amount		of Total			Amount		of Total
Due in one year or less	$	1		0	%	$	1,716		0	%
Due after one year through five years		1,119		4	%		144,849		20	%
Due after five years through ten years		9,803		38	%		250,290		34	%
Due after ten years		9,869		40	%		162,191		22	%
Mortgage- and asset-backed securities		4,704		18	%		172,121		24	%
Total	$	25,496		100	%	$	731,167		100	%

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

	Three Months Ended September 30,						Nine Months Ended September 30,
In thousands	2013			2012			2013			2012
Fixed maturities	$	13,399		$	14,364		$	40,142		$	44,779
Equity securities		1,315			989			3,603			2,930
Short-term investments		187			437			575			1,452
Total investment income	$	14,901		$	15,790		$	44,320		$	49,161
Investment expenses		(807	)		(2,193	)		(2,323	)		(8,529	)
Net investment income	$	14,094		$	13,597		$	41,997		$	40,632

Investment expense for the nine months ended September 30, 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 3.9 years and 3.8 years for the nine months ended September 30, 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:

	Nine Months Ended September 30,
In thousands	2013			2012
Fixed maturities	$	(63,771	)	$	38,165
Equity securities		11,551			8,817
Gross unrealized gains (losses)	$	(52,220	)	$	46,982
Deferred income tax		(18,296	)		15,702
Change in net unrealized gains (losses), net	$	(33,924	)	$	31,280

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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 September 30,						Nine Months Ended September 30,
In thousands	2013			2012			2013			2012
Fixed maturities:
Gains	$	1,099		$	4,011		$	6,035		$	11,868
Losses		(2,087	)		(216	)		(2,470	)		(1,746	)
Fixed maturities, net	$	(988	)	$	3,795		$	3,565		$	10,122
Equity securities:
Gains	$	—		$	966		$	3,733		$	1,171
Losses		—			—			(127	)		(473	)
Equity securities, net	$	—		$	966		$	3,606		$	698
Net realized gains (losses)	$	(988	)	$	4,761		$	7,171		$	10,820

Net realized gains and losses are generated as part of the normal ongoing management of our investment portfolio. Net realized losses of $1.0 million and net realized gains of $7.2 million for the three and nine months ended September 30, 2013 are primarily due to the sale of Treasury bonds, commercial mortgage-backed securities, municipal bonds and equity securities. Net realized gains of $4.8 million and $10.8 million for the three and nine months ended September 30, 2012 were due to the sale of corporate bonds and Treasury 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 September 30, 2013 and December 31, 2012:

	September 30, 2013
In thousands	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	256,500	$	189,469	$	—	$	445,969
States, municipalities and political subdivisions		—		445,281		—		445,281
Mortgage-backed and asset-backed securities:								—
Agency mortgage-backed securities		—		300,347		—		300,347
Residential mortgage obligations		—		35,277		—		35,277
Asset-backed securities		—		88,714		—		88,714
Commercial mortgage-backed securities		—		173,069		—		173,069
Subtotal	$	—	$	597,407	$	—	$	597,407
Corporate bonds		—		488,512		4,562		493,074
Total fixed maturities	$	256,500	$	1,720,669	$	4,562	$	1,981,731
Equity securities—common stocks		158,890		—		—		158,890
Total	$	415,390	$	1,720,669	$	4,562	$	2,140,621

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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 for the three and nine months ended September 30, 2013.

The following tables present a reconciliation of the beginning and ending balances of all investments measured at fair value using Level 3 inputs during the three and nine months ended September 30, 2013.

	Three Months Ended September 30, 2013
In thousands	Beginning Balance		Realized Gains (Losses)		Unrealized Gains (Losses)			Purchases		Sales			Settlements		Transfers into Level 3		Transfers out of Level 3		Ending Balance
Assets:
Corporate Bonds	$	—	$	—	$	(15	)	$	4,661	$	(84	)	$	—	$	—	$	—	$	4,562
Total assets	$	—	$	—	$	(15	)	$	4,661	$	(84	)	$	—	$	—	$	—	$	4,562

	Nine Months Ended September 30, 2013
In thousands	Beginning Balance		Realized Gains (Losses)		Unrealized Gains (Losses)			Purchases		Sales			Settlements		Transfers into Level 3		Transfers out of Level 3		Ending Balance
Assets:
Corporate Bonds	$	—	$	—	$	(15	)	$	4,661	$	(84	)	$	—	$	—	$	—	$	4,562
Total assets	$	—	$	—	$	(15	)	$	4,661	$	(84	)	$	—	$	—	$	—	$	4,562

The Level 3 security is valued using unobservable inputs based on a proxy of a security of similar duration in which market quotations are available. As of September 30, 2012, the Company did not have any Level 3 assets, and there were no changes in Level 3 assets for the three and nine months ended September 30, 2012.

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As of September 30, 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.

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 September 30, 2013, letters of credit with an aggregate face amount of $143.0 million were outstanding under the credit facility and we have $1.0 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 September 30, 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.

Note 12. Subsequent Events

On October 4, 2013, the Company completed a public debt offering of $265 million principal amount of 5.75% Senior Notes due October 15, 2023 (“5.75% Senior Notes”) and received net proceeds of $263 million. The Company used a portion of the proceeds of the 5.75% Senior Notes for the purpose of redeeming the $115 million aggregate principal amount of our 7% Senior Notes due May 1, 2016. The Company incurred a charge of $17.9 million for the payment of call premium in connection with the redemption of the 7.0% Senior Notes due 2016. The effective interest rate related to the net proceeds received from the 5.75% Senior Notes is approximately 5.84%. Interest will be paid on the 5.75% Senior Notes each April 15 and October 15 with the first payment due on April 15, 2014.

The Company may redeem the 5.75% Senior Notes in whole at any time or in part from time to time at a make-whole redemption price. The 5.75% Senior Notes are the Company’s only senior unsecured obligation and will rank equally with future senior unsecured indebtedness.

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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;

• 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”);

29

• 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

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 covered 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 a potential earthquake on the west coast of the United States. As of September 30, 2013, we estimate that our probable maximum pre-tax gross and net loss exposure from such an earthquake event would be approximately $90.3 million and $36.7 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 and nine months ended September 30, 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 and nine months ended September 30, 2013 and 2012:

	Three Months Ended September 30,				Nine Months Ended September 30,				Percentage Change
In thousands, except for per share amounts	2013		2012		2013		2012		QTD			YTD
Gross written premiums	$	312,076	$	298,742	$	1,037,426	$	964,878		4.5	%		7.5	%
Net written premiums		196,556		188,046		664,477		621,343		4.5	%		6.9	%
Total revenues		224,970		220,409		668,835		633,287		2.1	%		5.6	%
Total expenses		193,880		202,269		596,971		582,838		-4.1	%		2.4	%
Pre-tax income (loss)	$	31,090	$	18,140	$	71,864	$	50,449		71.4	%		42.4	%
Provision (benefit) for income taxes		9,804		5,225		22,731		14,731		87.6	%		54.3	%
Net income (loss)	$	21,286	$	12,915	$	49,133	$	35,718		64.8	%		37.6	%
Net income (loss) per common share:
Basic	$	1.50	$	0.92	$	3.48	$	2.55
Diluted	$	1.48	$	0.90	$	3.42	$	2.51

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Net income for the three months ended September 30, 2013 was $21.3 million or $1.48 per diluted share compared to $12.9 million or $0.90 per diluted share for the three months ended September 30, 2012. Operating earnings for the three months ended September 30, 2013 were $23.1 million or $1.60 per diluted share compared to $9.8 million or $0.69 per diluted share for the comparable period in 2012. In comparison to net income, operating earnings excluded after-tax net realized losses of $0.6 million and after-tax other-than-temporary impairment losses of $1.2 million for the three months ended September 30, 2013. For the three months ended September 30, 2012, operating earnings excluded $3.1 million of after-tax net realized gains. The increase in our operating earnings was largely attributable to stronger underwriting results.

Net income for the nine months ended September 30, 2013 was $49.1 million or $3.42 per diluted share compared to $35.7 million or $2.51 per diluted share for the nine months ended September 30, 2012. Operating earnings for the nine months ended September 30, 2013 were $45.7 million or $3.18 per diluted share compared to $29.1 million or $2.04 per diluted share for the comparable period in 2012. In comparison to net income, operating earnings excluded after-tax net realized gains of $4.6 million and after-tax other-than-temporary impairment losses of $1.2 million for the nine months ended September 30, 2013. For the nine months ended September 30, 2012, operating earnings excluded $7.0 million of after-tax net realized gains and after-tax other-than-temporary impairment losses of $0.4 million. The increase in our operating earnings was largely attributable to stronger underwriting results.

Our book value per share as of September 30, 2013 was $63.61, increasing from $62.61 as of December 31, 2012. The increase in book value per share primarily resulted from stronger underwriting results offset by a decrease in our unrealized gains on our investment portfolio across all fixed income classes due to an increase in interest rates. Our consolidated stockholders’ equity increased 2.3% to $899.9 million as of September 30, 2013 compared to $879.5 million as of December 31, 2012.

Cash flow provided by operations was $130.0 million for the nine months ended September 30, 2013 compared to $69.1 million for the comparable period in 2012. The increase in cash flow from operations was due to improved collection on premium receivables as well as a reduction in losses paid in connection with lower loss activity.

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The following table presents our consolidated underwriting results and provides a reconciliation of our underwriting profit to GAAP net income for the three and nine months ended September 30, 2013 and 2012:

	Three Months Ended September 30,						Nine Months Ended September 30,						Percentage Change
In thousands	2013			2012			2013			2012			QTD			YTD
Gross written premiums	$	312,076		$	298,742		$	1,037,426		$	964,878			4.5	%		7.5	%
Net written premiums		196,556			188,046			664,477			621,343			4.5	%		6.9	%
Net earned premiums		213,895			201,262			622,037			580,398			6.3	%		7.2	%
Net losses and loss adjustment expenses		(125,086	)		(128,850	)		(387,576	)		(370,242	)		-2.9	%		4.7	%
Commission expenses		(27,685	)		(31,258	)		(82,631	)		(90,211	)		-11.4	%		-8.4	%
Other operating expenses		(39,056	)		(40,112	)		(120,608	)		(116,238	)		-2.6	%		3.8	%
Other income (expenses)		(210	)		789			(507	)		2,087			NM			NM
Underwriting profit (loss)	$	21,858		$	1,831		$	30,715		$	5,794			NM			NM
Net investment income		14,094			13,597			41,997			40,632			3.7	%		3.4	%
Net other-than-temporary impairment losses recognized in earnings		(1,821	)		—			(1,863	)		(650	)		NM			NM
Net realized gains (losses)		(988	)		4,761			7,171			10,820			NM			-33.7	%
Interest expense		(2,053	)		(2,049	)		(6,156	)		(6,147	)		0.2	%		0.1	%
Income (loss) before income taxes	$	31,090		$	18,140		$	71,864		$	50,449			71.4	%		42.4	%
Income tax expense (benefit)		9,804			5,225			22,731			14,731			87.6	%		54.3	%
Net income (loss)	$	21,286		$	12,915		$	49,133		$	35,718			64.8	%		37.6	%
Losses and loss adjustment expenses ratio		58.5	%		64.0	%		62.3	%		63.8	%
Commission expense ratio		12.9	%		15.5	%		13.3	%		15.5	%
Other operating expense ratio (1)		18.4	%		19.6	%		19.5	%		19.7	%
Combined ratio		89.8	%		99.1	%		95.1	%		99.0	%

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

NM - Percentage change not meaningful

The combined ratio for the three months ended September 30, 2013 was 89.8% compared to 99.1% for the same period in 2012. Our pre-tax underwriting profit increased $20.1 million to $21.9 million for the three months ended September 30, 2013 compared to $1.8 million for the same period in 2012.

Our pre-tax underwriting results for the three months ended September 30, 2013 was mostly driven by $20.1 million of underwriting profit from our Insurance Companies in connection with favorable underwriting performance from all of our businesses. Specifically, our Insurance Companies Energy & Engineering and Marine businesses produced a net underwriting profit of $7.4 million and $5.8 million, respectively, mostly driven by favorable loss emergence for underwriting years (“UYs”) 2011 and prior. In addition, our Primary Casualty business produced an underwriting profit of $4.4 million due in part to the continued strong production attributable to the expansion of those underwriting teams and the dislocation of certain competitors.

Our underwriting results for the three months ended September 30, 2012 included $11.0 million of current year accident loss emergence from our Agriculture reinsurance business that was driven by significant drought related crop losses across the U.S. We also had net prior year reserve redundancies of $9.1 million from our Lloyd’s Operations.

The combined ratio for the nine months ended September 30, 2013 was 95.1% compared to 99.0% for the same period in 2012. Our pre-tax underwriting profit increased $24.9 million to $30.7 million for the nine months ended September 30, 2013 compared to $5.8 million for the same period in 2012.

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Our pre-tax underwriting results for the nine months ended September 30, 2013 included an underwriting profit of $20.4 million from our Insurance Companies, inclusive of $10.8 million and $7.6 million of underwriting profit from our Energy & Engineering and Marine businesses, respectively, in connection with favorable loss emergence for UY’s 2011 and prior. In addition, our Primary Casualty and Excess Casualty businesses recorded an underwriting profit of $7.5 million and $3.4 million, respectively, due in part to the continued strong production attributable to the expansion of those underwriting teams and the dislocation of certain competitors, partially offset by an underwriting loss of $5.8 million from our D&O business driven by net prior period reserve deficiencies from UYs 2010 and prior. Our pre-tax underwriting results also included $10.4 million of underwriting profit from our Lloyd’s Operations due to continued favorable loss emergence from UYs 2011 and prior, partially offset by large current accident year losses from our Lloyd’s Marine and Lloyd’s Energy & Engineering businesses.

Our underwriting results for the nine months ended September 30, 2012 reflected net losses of $12.9 million, inclusive of $10.8 million of reinsurance reinstatement premiums, related to several large losses from our Marine business including the grounding of the cruise ship Costa Concordia off the coast of Italy. The results also included $11.0 million of current year accident loss emergence from our Agriculture reinsurance business as well as net prior period reserve redundancies of $19.2 million from our Lloyd’s Operations.

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 and nine months ended September 30, 2013 and 2012:

	Three Months Ended September 30,
	2013									2012
	Gross					Net		Net		Gross					Net		Net
	Written					Written		Earned		Written					Written		Earned
In thousands	Premiums		%			Premiums		Premiums		Premiums		%			Premiums		Premiums
Insurance Companies:
Marine	$	38,912		12	%	$	26,437	$	31,490	$	44,879		15	%	$	32,615	$	40,592
Property Casualty		156,228		51	%		97,553		105,759		139,948		47	%		83,449		83,993
Professional Liability		32,469		10	%		25,300		25,713		33,534		11	%		26,084		24,505
Insurance Companies Total	$	227,609		73	%	$	149,290	$	162,962	$	218,361		73	%	$	142,148	$	149,090
Lloyd’s Operations:
Marine	$	36,009		12	%	$	26,795	$	34,264	$	37,716		13	%	$	27,939	$	34,002
Property Casualty		35,869		11	%		13,761		10,472		32,789		11	%		11,633		11,870
Professional Liability		12,589		4	%		6,710		6,197		9,876		3	%		6,326		6,300
Lloyd’s Operations Total	$	84,467		27	%	$	47,266	$	50,933	$	80,381		27	%	$	45,898	$	52,172
Total	$	312,076		100	%	$	196,556	$	213,895	$	298,742		100	%	$	188,046	$	201,262

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	Nine Months Ended September 30,
	2013									2012
	Gross					Net		Net		Gross					Net		Net
	Written					Written		Earned		Written					Written		Earned
In thousands	Premiums		%			Premiums		Premiums		Premiums		%			Premiums		Premiums
Insurance Companies:
Marine	$	132,836		13	%	$	94,944	$	100,013	$	156,640		17	%	$	107,266	$	111,402
Property Casualty		527,287		51	%		338,215		297,954		426,494		44	%		274,823		240,536
Professional Liability		97,679		9	%		75,830		75,873		97,629		10	%		75,374		70,277
Insurance Companies Total	$	757,802		73	%	$	508,989	$	473,840	$	680,763		71	%	$	457,463	$	422,215
Lloyd’s Operations:
Marine	$	135,546		13	%	$	100,413	$	102,932	$	146,528		15	%	$	109,489	$	101,538
Property Casualty		102,144		10	%		33,254		26,913		106,063		11	%		36,693		41,644
Professional Liability		41,934		4	%		21,821		18,352		31,524		3	%		17,698		15,001
Lloyd’s Operations Total	$	279,624		27	%	$	155,488	$	148,197	$	284,115		29	%	$	163,880	$	158,183
Total	$	1,037,426		100	%	$	664,477	$	622,037	$	964,878		100	%	$	621,343	$	580,398

Gross written premiums increased $13.4 million, or 4.5%, to $312.1 million for the three months ended September 30, 2013 compared to $298.7 million for the same period in 2012. The increase in gross written premiums is primarily attributed to growth within our Insurance Companies Property Casualty business, specifically from our Excess Casualty and Primary Casualty divisions as a result of strong production attributable to an expansion of our underwriting teams and continued dislocation among certain competitors, partially offset by a decrease in our Assumed Reinsurance division attributable to the non-renewal of certain policies from our Accident and Health (“A&H”) business. In addition, our Lloyd’s Property Casualty business included growth from new business that we began writing this year, such as the U.S. Direct and Facultative Property business written by our Energy & Engineering division, as well as our Latin America & Caribbean business written by our Assumed Reinsurance division.

Gross written premiums increased $72.5 million, or 7.5%, to $1.04 billion for the nine months ended September 30, 2013 compared to $964.9 million for the same period in 2012. The increase in gross written premiums is primarily attributed to growth within our Insurance Companies Property Casualty business, specifically from our Excess Casualty and Primary Casualty divisions as a result of strong production attributable to an expansion of our underwriting teams and continued dislocation among certain competitors, as well as from continued growth of our offshore energy product lines written through our Energy & Engineering business. The aforementioned increases were partially offset by a decrease in our Insurance Companies Marine business in connection with the re-underwriting of our Inland Marine division, as well as a decrease in our Lloyd’s Marine business due to non-renewals from our Cargo and Transport product lines.

Average renewal premium rates for our Insurance Companies segment for the three months ended September 30, 2013 increased 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 3.4%, 9.7% and 7.6% increase in rates for the Marine Liability, Inland Marine and Craft divisions, respectively. Within our Insurance Companies Property Casualty business we have realized a 3.9% increase in rates for the Excess Casualty division and a 3.0% increase in the Primary Casualty division, partially offset by a 3.5% decrease from our Energy & Engineering division. Our Insurance Companies Professional Liability business has experienced an overall increase in its renewal rates of 2.6%, consisting of 4.5% and 1.9% for the D&O and E&O divisions, respectively. For the three months ended September 30, 2013, average renewal premium rates for our Lloyd’s Operations segment include increases for Lloyd’s Marine and Lloyd’s Property Casualty of 1.3% and 2.1%, partially offset by a decrease for Lloyd’s Professional Liability of 0.8%.

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Average renewal premium rates for our Insurance Companies segment for the nine months ended September 30, 2013 increased 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 5.4%, 8.3% and 8.1% increase in rates for the Marine Liability, Inland Marine and Craft divisions, respectively. Within our Insurance Companies Property Casualty business we have realized a 3.8% increase in rates for the Excess Casualty division and a 2.8% increase in the Primary Casualty division, partially offset by a 2.4% decrease from our Energy & Engineering division. Our Insurance Companies Professional Liability business has experienced an overall increase in its renewal rates of 3.8%, consisting of 6.1% and 2.9% for the D&O and E&O divisions, respectively. For the nine months ended September 30, 2013, average renewal premium rates for our Lloyd’s Operations segment include increases for Lloyd’s Marine and Lloyd’s Property Casualty of approximately 3.9% and 2.0%, respectively. Our Lloyd’s Professional Liability business experienced an average decrease of 1.6%.

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.

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. 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 September 30, 2013 we incurred $1.3 million in RRPs from our Marine business as a result of large loss activity that were offset by a $1.3 million reversal of estimated RRPs in connection with favorable loss development on specific large losses from our Energy & Engineering business. For the nine months ended September 30, 2013 we incurred net RRPs of $5.0 million primarily driven by large losses from our Marine business. For the three and nine months ended September 30, 2012, we incurred $0.6 million and $16.9 million in RRPs, respectively, primarily attributable to large losses from our Marine business, including the grounding of the cruise ship Costa Concordia off the coast of Italy.

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The following table sets forth our ceded written premiums by segment and major line of business for the three and nine months ended September 30, 2013 and 2012:

	Three Months Ended September 30,										Nine Months Ended September 30,
	2013					2012					2013					2012
	Ceded		% of Gross			Ceded		% of Gross			Ceded		% of Gross			Ceded		% of Gross
	Written		Written			Written		Written			Written		Written			Written		Written
In thousands	Premiums		Premiums			Premiums		Premiums			Premiums		Premiums			Premiums		Premiums
Insurance Companies:
Marine	$	12,475		32	%	$	12,264		27	%	$	37,892		29	%	$	49,374		32	%
Property Casualty		58,675		38	%		56,499		40	%		189,072		36	%		151,671		36	%
Professional Liability		7,169		22	%		7,450		22	%		21,849		22	%		22,255		23	%
Total Insurance Companies	$	78,319		34	%	$	76,213		35	%	$	248,813		33	%	$	223,300		33	%
Lloyd’s Operations:
Marine	$	9,214		26	%	$	9,777		26	%	$	35,133		26	%	$	37,039		25	%
Property Casualty		22,108		62	%		21,156		65	%		68,890		67	%		69,370		65	%
Professional Liability		5,879		47	%		3,550		36	%		20,113		48	%		13,826		44	%
Total Lloyd’s Operations	$	37,201		44	%	$	34,483		43	%	$	124,136		44	%	$	120,235		42	%
Total	$	115,520		37	%	$	110,696		37	%	$	372,949		36	%	$	343,535		36	%

Overall, the percentage of total ceded written premiums to total gross written premiums for the three months ended September 30, 2013 and 2012 has remained constant at 37%. The decrease in percentage for both the Insurance Companies and Lloyd’s Operations Property Casualty business is primarily driven by an increase in the retained share of the proportional reinsurance supporting our offshore energy product lines for 2013. The decrease in the percentage for the Insurance Companies is partially offset by the $1.3 million reversal of estimated RRPs in connection with favorable loss development on specific large losses from our Property Casualty business, as well as an increase in percentage from our Marine businesses in connection with premium adjustments for Minimum and Deposit (“M&D”) contracts, as well as an increase in RRPs from large loss activity, as described above.

Overall, the percentage of total ceded written premiums to total gross written premiums for the nine months ended September 30, 2013 and 2012 has remained constant at 36%. The decrease in percentage for Insurance Companies Marine is driven by a reduction in RRPs in connection with lower large loss activity, as described above, partially offset by M&D premium adjustments in the third quarter 2013. The increase in the percentage for the Lloyd’s Operations Property Casualty business is driven by an increased use of proportional reinsurance to support our offshore energy business for 2013.

Net Written Premiums

Net written premiums increased 4.5% for the three months ended September 30, 2013 compared to the same period in 2012. The increase is due to the mix of our Insurance Companies Property Casualty business and is specifically driven by the continued growth of our Excess Casualty and Primary Casualty businesses, as well as a reduction to the use of proportional reinsurance supporting our offshore energy business. The aforementioned increases are partially offset by a decrease in our Assumed Reinsurance business due to the non renewal of specific A&H policies.

Net written premiums increased 6.9% for the nine months ended September 30, 2013 compared to the same period in 2012. The increase is due to the mix of our Insurance Companies Property Casualty business and is specifically driven by the growth of our Excess Casualty and Primary Casualty businesses and more RRPs recorded in 2012 in connection with several losses from our Marine businesses. The aforementioned increases are partially offset by a decrease in our Marine business in connection with the re-underwriting of our Inland Marine division.

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Net Earned Premiums

Net earned premiums increased 6.3% for the three months ended September 30, 2013 compared to the same period in 2012, driven by earnings from the continued growth of our Insurance Companies Excess Casualty and Primary Casualty businesses, partially offset by a decrease from the re-underwriting of our Inland Marine business, as described above.

Net earned premiums increased 7.2% for the nine months ended September 30, 2013 compared to the same period in 2012, driven by earnings from the continued growth of our Insurance Companies Excess Casualty, Primary Casualty, and our Assumed Reinsurance business, which includes the A&H lines that are recognized in earnings over a longer exposure period than our other lines of business. In addition, the increases are also attributable to the RRPs recorded in 2012, and are partially offset by a decrease from our Inland Marine business, as described above.

Net Investment Income

Our net investment income was derived from the following sources:

	Three Months Ended September 30,						Nine Months Ended September 30,						Percentage Change
In thousands	2013			2012			2013			2012			QTD			YTD
Fixed maturities	$	13,399		$	14,364		$	40,142		$	44,779			-6.7	%		-10.4	%
Equity securities		1,315			989			3,603			2,930			33.0	%		23.0	%
Short-term investments		187			437			575			1,452			-57.2	%		-60.4	%
Total investment income	$	14,901		$	15,790		$	44,320		$	49,161			-5.6	%		-9.8	%
Investment expenses		(807	)		(2,193	)		(2,323	)		(8,529	)		-63.2	%		-72.8	%
Net investment income	$	14,094		$	13,597		$	41,997		$	40,632			3.7	%		3.4	%

The decrease in total investment income before investment expenses was 5.6% and 9.8% for the three and nine months ended September 30, 2013 compared to the same periods in 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 2.4% for the three and nine months ended September 30, 2013 compared to 2.4% for the same periods in 2012.

The 2.4% average yield for the three months ended September 30, 2012 included investment expenses of $1.6 million related to an investment performance fee. Excluding the impact of this investment performance fee, the average yield for the three months ended September 30, 2012 would have been 2.6%.

The 2.4% average yield for the nine months ended September 30, 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. In addition, investment expenses for the nine months ended September 30, 2012 includes a $1.9 million investment performance fee. Excluding the impact of the aforementioned accrued interest expense, as well as the investment performance fee, the average yield for the nine months ended September 30, 2012 would have been 2.8%.

The portfolio duration was 3.9 years and 3.8 years for the nine months ended September 30, 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:

	Three Months Ended September 30,				Nine Months Ended September 30,				Percentage Change
In thousands	2013		2012		2013		2012		QTD		YTD
Fixed maturities	$	1,821	$	—	$	1,821	$	11		NM		NM
Equity securities		—		—		42		639		NM		-93.4	%
OTTI recognized in earnings	$	1,821	$	—	$	1,863	$	650		NM		NM

NM  -  Percentage change not meaningful

Net OTTI losses of $1.8 million for the three months ended September 30, 2013 consisted of one municipal bond. Net OTTI losses of $1.9 million for the nine months ended September 30, 2013 consisted of one municipal bond and two equity securities. Net OTTI losses of $0.7 million for the nine months ended September 30, 2012 consisted of one mortgage backed security bond and three equity securities.

Net Realized Gains and Losses

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

	Three Months Ended September 30,						Nine Months Ended September 30,						Percentage Change
In thousands	2013			2012			2013			2012			QTD			YTD
Fixed maturities:
Gains	$	1,099		$	4,011		$	6,035		$	11,868			-72.6	%		-49.1	%
Losses		(2,087	)		(216	)		(2,470	)		(1,746	)		NM			41.5	%
Fixed maturities, net	$	(988	)	$	3,795		$	3,565		$	10,122			NM			-64.8	%
Equity securities:
Gains	$	—		$	966		$	3,733		$	1,171			NM			NM
Losses		—			—			(127	)		(473	)		NM			-73.2	%
Equity securities, net	$	—		$	966		$	3,606		$	698			NM			NM
Net realized gains (losses)	$	(988	)	$	4,761		$	7,171		$	10,820			NM			-33.7	%

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 losses of $1.0 million and net realized gains of $7.2 million for the three and nine months ended September 30, 2013 are due to the sale of Treasury bonds, municipal bonds, commercial mortgage-backed securities and equity securities. Net realized gains of $4.8 million and $10.8 million for the three and nine months ended September 30, 2012 were due to the sale of corporate bonds and Treasury bonds.

Other Income/Expense

Total other expense for the three and nine months ended September 30, 2013 was $0.2 million and $0.5 million compared to other income of $0.8 million and $2.1 million for the three and nine months ended September 30, 2012, respectively. Other income 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 and nine months ended September 30, 2013 and 2012 is presented in the following table:

	Three Months Ended September 30,						Nine Months Ended September 30,
Net Loss and LAE Ratio	2013			2012			2013			2012
Net Loss and LAE Payments		51.5	%		61.0	%		56.1	%		62.4	%
Change in reserves		10.5	%		5.7	%		6.5	%		4.5	%
Subtotal—current year loss ratio		62.0	%		66.7	%		62.6	%		66.9	%
Prior year deficiencies (redundancies)		-3.5	%		-2.7	%		-0.3	%		-3.1	%
Net loss and LAE ratio		58.5	%		64.0	%		62.3	%		63.8	%

The changes in current accident year loss ratios, as noted above, are driven by mix of business and loss trends.

The Company’s ceded incurred losses were $(37.0) million and $31.2 million, respectively, for the three months ended September 30, 2013 and 2012, and were $94.1 million and $154.4 million for the nine months ended September 30, 2013 and 2012, respectively. The Company’s ceded incurred losses for the three months ended September 30, 2013 reflect a $69.1 million reduction of ceded incurred losses due to a refinement in loss factors, resulting in a reduction in both gross and ceded IBNR, caused by a continuing pattern of lower large loss activity.

The segment and line of business breakdown of the net loss and LAE ratios for the three and nine months ended September 30, 2013 and 2012 are as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
In thousands	2013			2012			2013			2012
Insurance Companies:
Marine		46.8	%		71.9	%		55.4	%		78.3	%
Property Casualty		60.7	%		80.3	%		65.8	%		68.7	%
Professional Liability		63.8	%		67.9	%		75.6	%		73.8	%
Insurance Companies		58.5	%		76.0	%		65.2	%		72.1	%
Lloyd’s Operations:
Marine		64.6	%		32.2	%		57.5	%		44.5	%
Property Casualty		35.0	%		45.8	%		41.6	%		41.3	%
Professional Liability		64.3	%		-13.2	%		44.8	%		22.1	%
Lloyd’s Operations		58.5	%		29.8	%		53.0	%		41.6	%
Net loss and LAE ratio		58.5	%		64.0	%		62.3	%		63.8	%

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. In addition, the Lloyd’s Operations net loss and LAE ratio includes $7.4 million of current accident year losses from our Lloyd’s Marine and Lloyd’s Energy & Engineering businesses.

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 judgments that certain assumptions made in the reserving process in prior year periods may need to be revised to reflect various factors, typically including the availability of additional information. Based on their reserve analyses, management may make corresponding reserve adjustments.

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The segment and line of business breakdowns of prior period net reserve deficiencies (redundancies) for the three and nine months ended September 30, 2013 and 2012 is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
In thousands	2013			2012			2013			2012
Insurance Companies:
Marine	$	(3,573	)	$	(947	)	$	(4,851	)	$	(1,535	)
Property Casualty		135			4,132			7,290			(2,148	)
Professional Liability		344			422			9,944			5,200
Insurance Companies	$	(3,094	)	$	3,607		$	12,383		$	1,517
Lloyd’s Operations:
Marine	$	(1,389	)	$	(4,741	)	$	(4,369	)	$	(8,712	)
Property Casualty		(3,389	)		988			(5,057	)		(3,022	)
Professional Liability		187			(5,331	)		(4,646	)		(7,498	)
Lloyd’s Operations	$	(4,591	)	$	(9,084	)	$	(14,072	)	$	(19,232	)
Total deficiencies (redundancies)	$	(7,685	)	$	(5,477	)	$	(1,689	)	$	(17,715	)

The following is a discussion of relevant factors related to the $7.7 million prior period net reserve redundancies recorded for the three months ended September 30, 2013:

The Insurance Companies recorded $3.1 million of net prior period reserve redundancies primarily driven by $3.6 million of favorable emergence from all product lines within our Marine business for UYs 2012 and prior. Included within the $0.1 million of net prior period deficiencies from our Property Casualty business is $3.1 million of reserve strengthening from our A&H excess-of-loss product lines from UYs 2012 and prior, partially offset by net prior period reserve redundancies from favorable emergence from our Energy & Engineering and Primary Casualty businesses.

Our Lloyd’s Operations recorded $4.6 million of net prior period reserve redundancies primarily driven by our Lloyd’s Property Casualty and Marine businesses. Within our Lloyd’s Property Casualty business we reported prior period reserve redundancies of $3.4 million in connection with continued favorable emergence from our Lloyd’s Energy & Engineering business. In addition, our Lloyd’s Marine business reported prior period reserve redundancies of $1.4 million related to the favorable settlement of specific claims from marine liability lines for UYs 2012 and prior, offset by deficiencies in our Specie line from UY 2010.

The following is a discussion of relevant factors related to the $5.5 million prior period net reserve redundancies recorded for the three months ended September 30, 2012:

The Insurance Companies recorded $3.6 million of net prior period reserve deficiencies driven by $4.1 million of adverse development from our Property Casualty businesses, including $3.7 million from our A&H reinsurance division related to underwriting year 2011, partially offset by net reserve redundancies across multiple products within our Marine business.

Our Lloyd’s Operations recorded $9.1 million of net prior period reserve redundancies driven by the Professional Liability and Marine Businesses, partially offset by unfavorable development in our Lloyd’s Energy & Engineering business.

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The following is a discussion of relevant factors related to the $1.7 million prior period net reserve redundancies for the nine months ended September 30, 2013:

The Insurance Companies recorded $12.4 million of net prior period reserve deficiencies, primarily driven by our Professional Liability and Property Casualty business. Within the Professional Liability business, we reported net prior period reserve deficiencies of $5.6 million from the D&O division related to specific large claims from our public and private sectors directors and officers liability lines for UYs 2010 and prior. In addition, we reported net prior period reserve deficiencies of $4.0 million from the E&O division related to specific large claims from our insurance agents, miscellaneous professional liability, and small lawyer lines from UYs 2011 and prior. Within the Property Casualty business we reported net prior period reserve deficiencies of $7.3 million, which included $10.5 million of prior period reserve deficiencies from our A&H business in connection with excess-of-loss reinsurance for UYs 2012 and prior, partially offset by net prior period reserve redundancies from favorable emergence from our Energy & Engineering and Primary Casualty businesses.

Our Lloyd’s Operations recorded $14.1 million of net prior period reserve redundancies across all businesses. Within our Lloyd’s Property Casualty business we reported net prior period reserve redundancies of $5.1 million primarily from our Energy & Engineering division due to the favorable settlement of two claims from our onshore lines from UY 2011 as well as favorable development on our Offshore Energy line from UYs 2011 and prior. Within our Lloyd’s Professional Liability business we reported prior period reserve redundancies of $5.1 million in connection with continued favorable emergence from our Lloyd’s D&O business, partially offset by $0.5 million strengthening in our Lloyd’s E&O business. In addition, we reported $4.4 million of prior period reserve redundancies from our Lloyd’s Marine business related to the favorable settlement of specific claims from our Ocean Marine Liability lines from UYs 2012 and prior.

The following is a discussion of relevant factors related to the $17.7 million prior period net reserve redundancies recorded for the nine months ended September 30, 2012:

The Insurance Companies recorded $1.5 million of net prior period reserve deficiencies driven by adverse development from our Professional Liability business across multiple products within Management Liability and E&O divisions, partially offset by net redundancies from our Property Casualty and Marine business. The net redundancies in our Property Casualty business include favorable development related to our Energy & Engineering, Marine and Primary Casualty divisions, partially offset by adverse development from our A&H reinsurance division.

Our Lloyd’s Operations recorded $19.2 million of net prior period reserve redundancies across all businesses and divisions.

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 and nine months ended September 30, 2013 were 12.9% and 13.3%, respectively, compared to 15.5% for the comparable periods during 2012. The decrease in the commission expense ratio for the three and nine months ended September 30, 2013 when compared to the same periods in 2012 is attributed to changes in the mix of business, mostly driven by an increase in the ceding commission on the 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 $39.1 million and $120.6 million for the three and nine months ended September 30, 2013 compared to $40.1 million and $116.2 million for the same periods in 2012. The decrease in operating expenses for the three months ended September 30, 2013 compared to the same period in 2012 is due to decreases in the expected payout percentages of stock-based compensation driven by projections of book value per share. The increase in operating expenses for the nine months ended September 30, 2013 compared to the same period in 2012 is primarily due to 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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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 and nine months ended September 30, 2013 and 2012 was approximately $2.1 million and $6.1 million.

Income Taxes

We recorded income tax expense of $9.8 million and $22.7 million for the three and nine months ended September 30, 2013 compared to $5.2 million and $14.7 million for the comparable periods in 2012, resulting in effective tax rates of 31.5% and 31.6% for the three and nine months ended September 30, 2013 compared to 28.8% and 29.2% for the same periods in 2012. The effective tax rate on net investment income was 27.5% and 27.9% for the three and nine months ended September 30, 2013 compared to 26.6% and 26.8% for the same periods during 2012.

As of September 30, 2013, the net deferred federal, foreign, state and local tax assets were $22.6 million compared to $3.2 million as of December 31, 2012 with the change primarily due to the increase in unrealized losses on investments and 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 $0.5 million as of both September 30, 2013 and December 31, 2012, respectively. Included in the deferred tax assets are state and local net operating loss carry-forwards of $0.1 million and $0.2 million as of September 30, 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 September 30, 2013 expire from 2023 to 2031.

The Company has not provided for U.S. income taxes on approximately $18.9 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 $2.0 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.

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.

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The following table sets forth the results of operations for the Insurance Companies for the three and nine months ended September 30, 2013 and 2012:

	Three Months Ended September 30,						Nine Months Ended September 30,						Percentage Change
In thousands	2013			2012			2013			2012			QTD			YTD
Gross written premiums	$	227,609		$	218,361		$	757,802		$	680,763			4.2	%		11.3	%
Net written premiums		149,290			142,148			508,989			457,463			5.0	%		11.3	%
Net earned premiums		162,962			149,090			473,840			422,215			9.3	%		12.2	%
Net losses and loss adjustment expenses		(95,315	)		(113,303	)		(308,968	)		(304,483	)		-15.9	%		1.5	%
Commission expenses		(20,039	)		(20,827	)		(59,129	)		(61,245	)		-3.8	%		-3.5	%
Other operating expenses		(28,510	)		(29,387	)		(87,682	)		(83,646	)		-3.0	%		4.8	%
Other income (expense)		955			1,229			2,303			3,750			-22.3	%		-38.6	%
Underwriting profit (loss)	$	20,053		$	(13,198	)	$	20,364		$	(23,409	)		NM			NM
Net investment income		12,285			12,004			36,751			34,225			2.3	%		7.4	%
Net realized gains (losses)		(1,890	)		2,609			6,001			6,809			NM			-11.9	%
Income (loss) before income taxes	$	30,448		$	1,415		$	63,116		$	17,625			NM			NM
Income tax expense (benefit)		9,355			(377	)		19,554			3,603			NM			NM
Net income (loss)	$	21,093		$	1,792		$	43,562		$	14,022			NM			NM
Losses and loss adjustment expenses ratio		58.5	%		76.0	%		65.2	%		72.1	%
Commission expense ratio		12.3	%		14.0	%		12.5	%		14.5	%
Other operating expense ratio (1)		16.9	%		18.9	%		18.0	%		18.9	%
Combined ratio		87.7	%		108.9	%		95.7	%		105.5	%

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

NM - Percentage change not meaningful

Our Insurance Companies reported net income of $21.1 million for the three months ended September 30, 2013 compared to $1.8 million for the same period in 2012. The increase in net income for the three months ended September 30, 2013 as compared to the same period in 2012 was largely related to an improvement in underwriting results.

Our Insurance Companies combined ratio for the three months ended September 30, 2013 was 87.7% compared to 108.9% for the same period in 2012. Our Insurance Companies pre-tax underwriting results increased by $33.3 million to a $20.1 million pre-tax underwriting profit for the three months ended September 30, 2013 compared to an underwriting loss of $13.2 million for the same period in 2012.

Our Insurance Companies pre-tax underwriting profit of $20.1 million for the three months ended September 30, 2013 was due to favorable underwriting performance from all of our businesses. Specifically, our Insurance Companies Energy & Engineering and Marine businesses produced a net underwriting profit of $7.4 million and $5.8 million, respectively, mostly driven by favorable loss emergence for underwriting years (“UYs”) 2011 and prior. In addition, our Primary Casualty business produced an underwriting profit of $4.4 million due in part to the continued strong production attributable to the expansion of those underwriting teams and the dislocation of certain competitors.

Our Insurance Companies underwriting results for the three months ended September 30, 2012 included $11.0 million of current accident year emergence from our Agriculture reinsurance business that was driven by significant drought related crop losses across the U.S. We also had $3.6 million of net reserve deficiencies mostly driven by adverse development in our A&H reinsurance division related to underwriting year 2011, partially offset by net reserve redundancies from multiple products within our Marine business.

Our Insurance Companies reported net income of $43.6 million for the nine months ended September 30, 2013 compared to $14.0 million for the same period in 2012. The increase in net income for the nine months ended September 30, 2013 as compared to the same period in 2012 was largely related to an improvement in underwriting results.

Our Insurance Companies combined ratio for the nine months ended September 30, 2013 was 95.7% compared to 105.5% for the same period in 2012. Our Insurance Companies pre-tax underwriting results increased by $43.8 million to a $20.4 million pre-tax underwriting profit for the nine months ended September 30, 2013 compared to an underwriting loss of $23.4 million for the same period in 2012.

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Our Insurance Companies pre-tax underwriting profit of $20.4 million for the nine months ended September 30, 2013 included $10.8 million and $7.7 million of underwriting profit from our Energy & Engineering and Marine businesses, respectively, in connection with favorable loss emergency for UY’s 2011 and prior. In addition, our Primary Casualty and Excess Casualty businesses recorded an underwriting profit of $7.5 million and $3.4 million, respectively, due in part to the continued strong production attributable to the expansion of those underwriting teams and the dislocation of certain competitors, partially offset by an underwriting loss of $5.8 million from our D&O business driven by net prior period reserve deficiencies from UYs 2010 and prior.

Our Insurance Companies underwriting results for the nine months ended September 30, 2012 reflect $11.0 million of current accident year loss emergence from our Agriculture reinsurance business as well as net losses of $10.0 million related to several large losses from our Marine business, including the grounding of the cruise ship Costa Concordia off the coast of Italy.

Insurance Companies Gross Written Premiums

Marine Premiums. The gross written premiums for our Marine business for the three and nine months ended September 30, 2013 and 2012 consisted of the following:

	Three Months Ended September 30,				Nine Months Ended September 30,				Percentage Change
In thousands	2013		2012		2013		2012		QTD			YTD
Marine Liability	$	14,153	$	13,092	$	45,909	$	47,896		8.1	%		-4.1	%
Craft/Fishing Vessels		7,506		5,751		25,462		19,995		30.5	%		27.3	%
Cargo		5,030		7,200		17,003		20,646		-30.1	%		-17.6	%
Protection & Indemnity		2,542		3,535		12,790		13,990		-28.1	%		-8.6	%
Inland Marine		2,602		6,893		11,986		28,135		-62.3	%		-57.4	%
Bluewater Hull		3,544		4,730		9,299		12,991		-25.1	%		-28.4	%
Other Marine		3,535		3,678		10,387		12,987		-3.9	%		-20.0	%
Total Marine	$	38,912	$	44,879	$	132,836	$	156,640		-13.3	%		-15.2	%

The Insurance Companies Marine gross written premiums for the three and nine months ended September 30, 2013 decreased 13.3% and 15.2% compared to the same periods during 2012 primarily due to the re-underwriting of our Inland Marine business, as well as a reduction in the Bluewater Hull business due to lower than anticipated new business production resulting from a stricter underwriting approach on certain accounts and vessel types. In addition, the decrease in Cargo was related to non renewed business that did not meet the current underwriting criteria.

The Insurance Companies Marine business experienced 5.1% and 4.9% increase on renewal rates for the three and nine months ended September 30, 2013, respectively. The increase in renewal rates on Inland Marine business was 9.7% and 8.3% for the three and nine months ended September 30, 2013.

Property Casualty Premiums. The gross written premiums for our Property Casualty business for the three and nine months ended September 30, 2013 and 2012 consisted of the following:

	Three Months Ended September 30,				Nine Months Ended September 30,				Percentage Change
In thousands	2013		2012		2013		2012		QTD			YTD
Excess Casualty	$	67,814	$	53,951	$	202,402	$	143,030		25.7	%		41.5	%
Assumed Reinsurance		19,653		34,879		127,225		128,675		-43.7	%		-1.1	%
Primary Casualty		36,190		25,775		97,659		76,250		40.4	%		28.1	%
Energy & Engineering		17,906		16,246		59,798		49,639		10.2	%		20.5	%
Environmental Liability		7,896		6,362		20,971		17,882		24.1	%		17.3	%
Other Property & Casualty		6,769		2,735		19,232		11,018		147.5	%		74.6	%
Total Property Casualty	$	156,228	$	139,948	$	527,287	$	426,494		11.6	%		23.6	%

The Insurance Companies Property Casualty gross written premiums for the three months ended September 30, 2013 increased 11.6% compared to the same period in 2012, driven by growth from our Excess Casualty and Primary Casualty divisions as a result of strong production attributable to an expansion of our underwriting teams and continued dislocation among certain competitors, partially offset by a decrease in our Assumed Reinsurance business attributable to the non-renewal of certain policies from our A&H business, respectively.

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The Insurance Companies Property Casualty gross written premiums for the nine months ended September 30, 2013 increased 23.6% compared to the same period in 2012, driven by growth from our Excess Casualty and Primary Casualty divisions as a result of strong production attributable to an expansion of our underwriting teams and continued dislocation among certain competitors.

For the three months ended September 30, 2013, our Insurance Companies Property Casualty business realized a 3.9% increase in rates for the Excess Casualty division and a 3.0% increase in the Primary Casualty division, partially offset by a 3.5% decrease from our Energy & Engineering division.

For the nine months ended September 30, 2013, our Insurance Companies Property Casualty business realized a 3.8% increase in rates for the Excess Casualty division and a 2.8% increase in the Primary Casualty division, partially offset by a 2.4% decrease from our Energy & Engineering division.

Professional Liability Premiums. The gross written premiums for the Professional Liability business for the three and nine months ended September 30, 2013 and 2012 consisted of the following:

	Three Months Ended September 30,				Nine Months Ended September 30,				Percentage Change
In thousands	2013		2012		2013		2012		QTD			YTD
Errors & Omissions	$	21,790	$	22,991	$	65,917	$	67,153		-5.2	%		-1.8	%
Management Liability		10,679		10,543		31,762		30,476		1.3	%		4.2	%
Total Professional Liability	$	32,469	$	33,534	$	97,679	$	97,629		-3.2	%		0.1	%

For the three months ended September 30, 2013, our Insurance Companies Professional Liability business has experienced an overall increase in its renewal rates of 2.6%, consisting of 4.5% and 1.9% for the D&O and E&O divisions, respectively.

For the nine months ended September 30, 2013, our Insurance Companies Professional Liability business has experienced an overall increase in its renewal rates of 3.8%, consisting of 6.1% and 2.9% for the D&O and E&O divisions, respectively.

Insurance Companies Commission Expenses

The commission expense ratios for the three and nine months ended September 30, 2013, were 12.3% and 12.5%, respectively, compared to 14.0% and 14.5% for the same periods in 2012. 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. The decrease for the nine months ended September 30, 2013 in comparison to 2012 is further attributable to more RRPs recorded in 2012 in connection with several losses from our Marine business.

Insurance Companies Other Operating Expenses

Insurance Companies other operating expenses were $28.5 million and $87.7 million for the three and nine months ended September 30, 2013 compared to $29.4 million and $83.6 million for the same periods in 2012. The decrease in operating expenses for the three months ended September 30, 2013 compared to the same period in 2012 is due to decreases in the expected payout percentages of stock-based compensation driven by projections of book value per share. The increase in operating expenses is due to an increase in overall headcount due to continued investments in new underwriting teams and related support staff, closely aligned with business growth.

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.

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The following table sets forth the results of operations for the Lloyd’s Operations for the three and nine months ended September 30, 2013 and 2012:

	Three Months Ended September 30,						Nine Months Ended September 30,						Percentage Change
In thousands	2013			2012			2013			2012			QTD			YTD
Gross written premiums	$	84,467		$	80,381		$	279,624		$	284,115			5.1	%		-1.6	%
Net written premiums		47,266			45,898			155,488			163,880			3.0	%		-5.1	%
Net earned premiums		50,933			52,172			148,197			158,183			-2.4	%		-6.3	%
Net losses and loss adjustment expenses		(29,771	)		(15,547	)		(78,608	)		(65,759	)		91.5	%		19.5	%
Commission expenses		(8,289	)		(10,911	)		(25,245	)		(30,735	)		-24.0	%		-17.9	%
Other operating expenses		(10,546	)		(10,725	)		(32,926	)		(32,592	)		-1.7	%		1.0	%
Other income (expense)		(522	)		40			(1,067	)		106			NM			NM
Underwriting profit (loss)	$	1,805		$	15,029		$	10,351		$	29,203			-88.0	%		-64.6	%
Net investment income		1,807			1,552			5,237			6,289			16.4	%		-16.7	%
Net realized gains (losses)		(919	)		2,152			(697	)		3,361			NM			NM
Income (loss) before income taxes	$	2,693		$	18,733		$	14,891		$	38,853			-85.6	%		-61.7	%
Income tax expense (benefit)		878			6,525			5,120			13,458			-86.5	%		-62.0	%
Net income (loss)	$	1,815		$	12,208		$	9,771		$	25,395			-85.1	%		-61.5	%
Losses and loss adjustment expenses ratio		58.5	%		29.8	%		53.0	%		41.6	%
Commission expense ratio		16.3	%		20.9	%		17.0	%		19.4	%
Other operating expense ratio (1)		21.7	%		20.5	%		23.0	%		20.5	%
Combined ratio		96.5	%		71.2	%		93.0	%		81.5	%

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

NM - Percentage change not meaningful.

Our Lloyd’s Operations reported net income of $1.8 million for the three months ended September 30, 2013 compared to $12.2 million for the same period in 2012. The decrease in net income for the three months ended September 30, 2013 as compared to the same period in 2012 was largely attributable to a reduction in underwriting profit.

Our Lloyd’s Operations combined ratio for the three months ended September 30, 2013 was 96.5% compared to 71.2% for the same period in 2012. Our Lloyd’s Operations pre-tax underwriting profit decreased $13.2 million to $1.8 million for the three months ended September 30, 2013 compared to $15.0 million for the same period in 2012.

Our Lloyd’s Operations pre-tax underwriting profit for the three months ended September 30, 2013 included $4.6 million of net prior period reserve redundancies in connection with continued favorable emergence from our Lloyd’s Property Casualty business and to a lesser extent the favorable settlement of specific claims from our Lloyd’s Marine business, partially offset by large current accident year losses from our Lloyd’s Marine and Energy & Engineering businesses, as well as a $0.5 million foreign exchange loss on the remeasurement of certain deposits required by Lloyd’s.

Our Lloyd’s Operations pre-tax underwriting profit for the three months ended September 30, 2012 included $9.1 million of net prior period reserve redundancies mostly driven by the Professional Liability and Marine businesses.

Our Lloyd’s Operations reported net income of $9.8 million for the nine months ended September 30, 2013 compared to $25.4 million for the same period in 2012. The decreases in net income for the nine months ended September 30, 2013 as compared to the same period in 2012 was largely attributable to a reduction in underwriting profit, and to a lesser extent, a reduction in net investment income due to lower investment yields.

Our Lloyd’s Operations combined ratio for the nine months ended September 30, 2013 was 93.0% compared to 81.5% for the same period in 2012. Our Lloyd’s Operations pre-tax underwriting profit decreased $18.8 million to $10.4 million for the nine months ended September 30, 2013 compared to $29.2 million for the same period in 2012.

Our Lloyd’s Operations pre-tax underwriting profit for the nine months ended September 30, 2013 included $14.1 million of net prior period reserve redundancies in connection with continued favorable emergence from our Lloyd’s D&O, Energy & Engineering and Marine businesses, partially offset by large current accident year losses from our Lloyd’s Marine and Energy & Engineering businesses, as well as a $1.1 million foreign exchange loss on the remeasurement of certain deposits required by Lloyd’s.

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Our Lloyd’s Operations pre-tax underwriting profit for the nine months ended September 30, 2012 included $19.2 million of net prior period reserve redundancies across all businesses.

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 ($316 million) in 2013 compared to £184 million ($300 million) in 2012.

Marine Premiums. The gross written premiums for our Marine business for the three and nine months ended September 30, 2013 and 2012 consisted of the following:

	Three Months Ended September 30,				Nine Months Ended September 30,				Percentage Change
In thousands	2013		2012		2013		2012		QTD			YTD
Cargo	$	10,491	$	12,338	$	34,215	$	37,757		-15.0	%		-9.4	%
Marine Liability		6,072		3,454		32,729		32,273		75.8	%		1.4	%
Specie		6,252		6,151		17,583		17,712		1.6	%		-0.7	%
Transport		6,260		8,078		16,239		18,012		-22.5	%		-9.8	%
Energy Liability		3,129		3,226		13,286		15,153		-3.0	%		-12.3	%
Marine Excess-of-Loss Reinsurance		1,074		1,340		11,638		12,479		-19.9	%		-6.7	%
War		1,539		2,140		5,503		8,113		-28.1	%		-32.2	%
Bluewater Hull		1,192		989		4,353		5,029		20.5	%		-13.4	%
Total Marine	$	36,009	$	37,716	$	135,546	$	146,528		-4.5	%		-7.5	%

The Lloyd’s Operations Marine gross written premiums decreased 4.5% and 7.5% for the three and nine months ended September 30, 2013 compared to the same periods in 2012. The decrease is driven by reduction in renewals on Cargo and Transport, partially offset by an increase in renewals on Marine Liability. The Lloyd’s Operation Marine business experienced average renewal rates of 1.3% and 3.9% for the three and nine months ended September 30, 2013.

Property Casualty Premiums. The gross written premiums for our Property Casualty business for the three and nine months ended September 30, 2013 and 2012 consisted of the following:

	Three Months Ended September 30,				Nine Months Ended September 30,				Percentage Change
In thousands	2013		2012		2013		2012		QTD			YTD
Energy & Engineering:
Offshore Energy	$	14,168	$	14,428	$	42,703	$	46,159		-1.8	%		-7.5	%
Onshore Energy		7,844		6,240		24,598		25,160		25.7	%		-2.2	%
Engineering and Construction		9,343		8,674		24,015		29,271		7.7	%		-18.0	%
U.S. Direct and Facultative Property		2,347		—		7,716		—		NM			NM
Energy & Engineering	$	33,702	$	29,342	$	99,032	$	100,590		14.9	%		-1.5	%
Assumed Reinsurance		2,011		—		2,011		—		NM			NM
Other Property Casualty		156		3,447		1,101		5,473		-95.5	%		-79.9	%
Total Property Casualty	$	35,869	$	32,789	$	102,144	$	106,063		9.4	%		-3.7	%

NM - Percentage change not meaningful

The Lloyd’s Operations Property Casualty gross written premiums increased 9.4% and decreased 3.7% for the three and nine months ended September 30, 2013 compared to the same periods in 2012. The increase in gross written premiums for the three months ended September 30, 2013 is primarily due to new business growth from our U.S. direct and facultative property lines. The decrease in gross written premiums for the nine months ended September 30, 2013 is primarily due to reductions in new business growth across all lines, partially offset by new business from our U.S. direct and facultative property lines that we began writing in 2013.

The Lloyd’s Operations Property Casualty business achieved increases of 2.1% and 2.0% on renewal rates for the three and nine months ended September 30, 2013.

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Professional Liability Premiums. The gross written premiums for the Professional Liability business for the three and nine months ended September 30, 2013 and 2012 consisted of the following:

	Three Months Ended September 30,				Nine Months Ended September 30,				Percentage Change
In thousands	2013		2012		2013		2012		QTD			YTD
Management Liability	$	8,891	$	7,201	$	30,389	$	22,940		23.5	%		32.5	%
Errors & Omissions		3,698		2,675		11,545		8,584		38.3	%		34.5	%
Total Professional Liability	$	12,589	$	9,876	$	41,934	$	31,524		27.5	%		33.0	%

The Lloyd’s Operations Professional Liability gross written premiums increased 27.5% and 33.0% for the three and nine months ended September 30, 2013 compared to the same periods in 2012, as a result of new business growth, partially offset by decreases in renewal rates of 0.8% and 1.6% for the three and nine months ended, respectively.

Lloyd’s Operations Commission Expenses

The commission expense ratios for the three and nine months ended September 30, 2013 were 16.3% and 17.0%, respectively, compared to 20.9% and 19.4% for the same periods in 2012. The decrease in the commission expense ratio is driven by an increase in the ceding commission on the new quota share program for our offshore energy business.

Lloyd’s Operations Other Operating Expenses

Other operating expenses were $10.5 million and $32.9 million for the three and nine months ended September 30, 2013 compared to $10.7 million and $32.6 million for the same periods in 2012. The decrease in operating expenses for the three months ended September 30, 2013 compared to the same period in 2012 is due to a reduction in Lloyd’s LOC fees from the new LOC facility. The operating expense ratio increased for the three months from 20.5% to 21.7% despite operating expenses falling, due to a reduction in net earned premiums as a result of the offshore energy quota share program. The increase in operating expenses for the nine months ended September 30, 2013 is primarily due to an increase in employee expenses related to salaries due to an increase in headcount offset by a reduction in Lloyd’s LOC fees as a result of the new credit facility. The operating expense ratio increased in the nine months from 20.5% to 23.0% due to a reduction in net earned premium as a result of the offshore energy quota share program.

Capital Resources

We monitor our capital adequacy to support our business on a regular basis. The future capital 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 September 30, 2013 and December 31, 2012, our capital resources were as follows:

	September 30,			December 31,
In thousands	2013			2012
Senior Notes	$	114,542		$	114,424
Stockholders’ equity		899,882			879,485
Total capitalization	$	1,014,424		$	993,909
Ratio of debt to total capitalization		11.3	%		11.5	%

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On October 4, 2013, we completed a public debt offering of $265 million principal amount of 5.75% Senior Notes due October 15, 2023 (“5.75% Senior Notes”) and received net proceeds of $263 million. We used a portion of the proceeds of the 5.75% Senior Notes for the purpose of redeeming the $115 million aggregate principal amount of our 7% Senior Notes due May 1, 2016 and intend to use the remaining proceeds for general corporate purposes. We incurred a charge of $17.9 million for the payment of call premium in connection with the redemption of the 7.0% Senior Notes due 2016. The effective interest rate related to the net proceeds received from the 5.75% Senior Notes is approximately 5.84%. Interest will be paid on the 5.75% Senior Notes each April 15 and October 15 with the first payment due on April 15, 2014.

We may redeem the 5.75% Senior Notes in whole at any time or in part from time to time at a make-whole redemption price. The 5.75% Senior Notes is our only senior unsecured obligation and will rank equally with future senior unsecured indebtedness.

A proforma of our capital resources that would be available to be deployed to support our business operations as of September 30, 2013, assuming the redemption of the $115 million aggregate principal amount of our 7% Senior Notes and the recently completed public debt offering of the 5.75% Senior Notes, is as follows:

	Proforma
	September 30,
In thousands	2013
5.75% Senior Notes	$	263,278
Stockholders’ equity (1)		887,952
Total capitalization	$	1,151,230
Ratio of debt to total capitalization		22.9	%

(1) Reflects a net of tax charge to retained earnings of $0.3 million of deferred debt costs and assumes a net of tax charge of $11.6 million for the payment of call premium in connection with the redemption of our 7.0% Senior Notes due 2016.

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 September 30, 2013, the maximum amount available for the payment of dividends by Navigators Insurance Company in 2013 without prior regulatory approval is $72.9 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 third 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 September 30, 2013 that amount was $8.6 million (£5.3 million).

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Condensed Parent Company balance sheets as of September 30, 2013 (unaudited) and December 31, 2012 are shown in the table below:

	September 30,		December 31,
In thousands	2013		2012
Cash and investments	$	19,688	$	15,026
Investments in subsidiaries		974,642		955,024
Goodwill and other intangible assets		2,534		2,534
Other assets		21,541		23,219
Total assets	$	1,018,405	$	995,803
Senior Notes	$	114,542	$	114,424
Accounts payable and other liabilities		627		552
Accrued interest payable		3,354		1,342
Total liabilities	$	118,523	$	116,318
Stockholders’ equity	$	899,882	$	879,485
Total liabilities and stockholders’ equity	$	1,018,405	$	995,803

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 September 30, 2013, letters of credit with an aggregate face amount of $143.0 million were outstanding under the credit facility and we have $1.0 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 September 30, 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 September 30, 2013 are anticipated to be billed and collected over the next several years as the gross loss reserves are paid by the Company.

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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.

Liquidity

Consolidated Cash Flows

Cash flow provided by operations was $130.0 million for the nine months ended September 30, 2013 compared to $69.1 million for the comparable period in 2012. The increase in cash flow from operations was due to improved collection on premium receivables as well as a reduction in losses paid in connection with lower loss activity.

Net cash used in investing activities was $46.8 million for the nine months ended September 30, 2013 compared to $161.2 million for the same period in 2012. The decrease in cash used in investing activities is driven by the on-going management of our investment portfolio.

Net cash provided by financing activities was $1.9 million for the nine months ended September 30, 2013 compared to $1.0 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.

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Investments

As of September 30, 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 $20.9 million, consists of investment grade bonds. As of September 30, 2013, our portfolio had a duration of 3.9 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 September 30, 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 September 30, 2013 and December 31, 2012. The tables below include OTTI securities recognized within OCI.

	September 30, 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	$	445,969	$	3,683	$	(5,694	)	$	447,980
States, municipalities and political subdivisions		445,281		9,752		(12,240	)		447,769
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		300,347		7,966		(3,925	)		296,306
Residential mortgage obligations		35,277		1,107		(224	)		34,394
Asset-backed securities		88,714		795		(190	)		88,109
Commercial mortgage-backed securities		173,069		8,386		(365	)		165,048
Subtotal	$	597,407	$	18,254	$	(4,704	)	$	583,857
Corporate bonds		493,074		17,104		(2,858	)		478,828
Total fixed maturities	$	1,981,731	$	48,793	$	(25,496	)	$	1,958,434
Equity securities—common stocks		158,890		29,548		(1,704	)		131,046
Short-term investments		152,987		—		—			152,987
Cash		130,513		—		—			130,513
Total	$	2,424,121	$	78,341	$	(27,200	)	$	2,372,980

	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

54

As of September 30, 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 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 periods in 2012 primarily due to cash flow from operations. The annualized pre-tax investment yields, excluding net realized gains and losses and net OTTI losses recognized in earnings, were 2.4% for the three and nine months ended September 30, 2013 compared to 2.4% for the three and nine months ended September 30, 2012.

The tax equivalent yields for the three and nine months ended September 30, 2013 on a consolidated basis were 2.6%, compared to 2.6% for the same periods during 2012. The portfolio duration was 3.9 years and 3.8 years for the nine months ended September 30, 2013 and 2012, respectively. Since the beginning of 2013, the tax-exempt portion of our investment portfolio has increased by $116.4 million to approximately 20% of the fixed maturities investment portfolio as of September 30, 2013 compared to approximately 13.2% as of 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 September 30, 2013 are shown in the following table:

	September 30, 2013
	Fair		Amortized
In thousands	Value		Cost
Due in one year or less	$	79,192	$	78,621
Due after one year through five years		616,576		603,165
Due after five years through ten years		458,136		455,826
Due after ten years		230,420		236,965
Mortgage- and asset-backed securities		597,407		583,857
Total	$	1,981,731	$	1,958,434

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 4.6 years.

55

The following table sets forth the amount and percentage of our fixed maturities as of September 30, 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.

	September 30, 2013
		Fair		Percent
In thousands	Rating	Value		of Total
Rating description:
Extremely strong	AAA	$	305,979		15	%
Very strong	AA		1,051,156		54	%
Strong	A		440,063		22	%
Adequate	BBB		163,614		8	%
Speculative	BB & Below		11,722		1	%
Not rated	NR		9,197		0	%
Total	AA	$	1,981,731		100	%

The following table sets forth our U.S. Treasury bonds, agency bonds, and foreign government bonds as of September 30, 2013 and December 31, 2012:

	September 30, 2013
			Gross		Gross
	Fair		Unrealized		Unrealized			Amortized
In thousands	Value		Gains		(Losses)			Cost
U.S. Treasury bonds	$	401,125	$	2,658	$	(5,558	)	$	404,025
Agency bonds		41,146		954		(106	)		40,298
Foreign government bonds		3,698		71		(30	)		3,657
Total	$	445,969	$	3,683	$	(5,694	)	$	447,980
	December 31, 2012
			Gross		Gross
	Fair		Unrealized		Unrealized			Amortized
In thousands	Value		Gains		(Losses)			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 September 30, 2013. The securities that are not rated in the table below are primarily state bonds.

In thousands		September 30, 2013
Equivalent	Equivalent					Net
S&P	Moody’s	Fair		Amortized		Unrealized
Rating	Rating	Value		Cost		Gain (Loss)
AAA/AA/A	Aaa/Aa/A	$	423,025	$	425,873	$	(2,848	)
BBB	Baa		18,639		18,342		297
BB	Ba		—		—		—
B	B		—		—		—
CCC or lower	Caa or lower		—		—		—
NR	NR		3,617		3,554		63
Total		$	445,281	$	447,769	$	(2,488	)

56

The following table sets forth the municipal bond holdings by sectors as of September 30, 2013 and December 31, 2012:

	September 30, 2013					December 31, 2012
	Fair		Percent			Fair		Percent
In thousands	Value		of Total			Value		of Total
Municipal Sector:
General obligation	$	120,094		27	%	$	73,642		23	%
Prerefunded		25,799		6	%		22,692		7	%
Revenue		250,013		56	%		183,096		57	%
Taxable		49,375		11	%		43,517		13	%
Total	$	445,281		100	%	$	322,947		100	%

We own $106.3 million of municipal securities which are credit enhanced by various financial guarantors. As of September 30, 2013, the average underlying credit rating for these securities is AA-. 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 September 30, 2013:

	September 30, 2013
			Gross		Gross
	Fair		Unrealized		Unrealized			Amortized
In thousands	Value		Gains		Losses			Cost
Agency mortgage-backed securities:
GNMA	$	128,321	$	3,086	$	(2,653	)	$	127,888
FNMA		139,022		3,979		(1,207	)		136,250
FHLMC		33,004		901		(65	)		32,168
Total agency mortgage-backed securities	$	300,347	$	7,966	$	(3,925	)	$	296,306
Residential mortgage-backed securities:
Prime	$	11,174	$	371	$	(181	)	$	10,984
Alt-A		1,968		70		(43	)		1,941
Subprime		583		18		—			565
Non-U.S. RMBS		21,552		648		—			20,904
Total residential mortgage-backed securities	$	35,277	$	1,107	$	(224	)	$	34,394

57

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 September 30, 2013:

In thousands		September 30, 2013
Equivalent S&P Rating	Equivalent Moody’s Rating	Fair Value		Amortized Cost		Net Unrealized Gain (Loss)
AAA/AA/A	Aaa/Aa/A	$	22,371	$	21,695	$	676
BBB	Baa		2,039		2,087		(48	)
BB	Ba		1,472		1,534		(62	)
B	B		2,174		2,165		9
CCC or lower	Caa or lower		7,221		6,913		308
NR	NR		—		—		—
Total		$	35,277	$	34,394	$	883

Details of the collateral of our asset-backed securities portfolio as of September 30, 2013 are presented below:

													Fair		Amortized		Unrealized
In thousands	AAA		AA		A		BBB		BB		CCC		Value		Cost		Gain (Loss)
Auto loans	$	9,734	$	2,777	$	8,174	$	—	$	—	$	—	$	20,685	$	20,520	$	165
Credit cards		13,777		—		—		—		—		—		13,777		13,444		333
Collateralized Loan Obligations		31,753		—		—		—		—		—		31,753		31,942		(189	)
Time Share		—		—		11,840		—		—		—		11,840		11,632		208
Student Loans		2,892		2,760		—		—		—		—		5,652		5,571		81
Miscellaneous		5,007		—		—		—		—		—		5,007		5,000		7
Total	$	63,163	$	5,537	$	20,014	$	—	$	—	$	—	$	88,714	$	88,109	$	605

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 September 30, 2013:

In thousands		September 30, 2013
Equivalent S&P Rating	Equivalent Moody’s Rating	Fair Value		Amortized Cost		Net Unrealized Gain (Loss)
AAA/AA/A	Aaa/Aa/A	$	173,069	$	165,048	$	8,021
BBB	Baa		—		—		—
BB	Ba		—		—		—
B	B		—		—		—
CCC or lower	Caa or lower		—		—		—
NR	NR		—		—		—
Total		$	173,069	$	165,048	$	8,021

58

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 September 30, 2013:

In thousands		September 30, 2013
Equivalent S&P Rating	Equivalent Moody’s Rating	Fair Value		Amortized Cost		Net Unrealized Gain (Loss)
AAA/AA/A	Aaa/Aa/A	$	349,286	$	339,488	$	9,798
BBB	Baa		142,933		138,490		4,443
BB	Ba		855		850		5
B	B		—		—		—
CCC or lower	Caa or lower		—		—		—
NR	NR		—		—		—
Total		$	493,074	$	478,828	$	14,246

The company holds non-sovereign European securities of $67.5 million at fair value and $67.0 million at amortized cost, primarily in the investment portfolio. This represents 3.2% of our total fixed income and equity portfolio. Our largest exposure is in France with a total of $30.6 million followed by the Netherlands with a total of $23.0 million. We have no direct material exposure to Greece, Portugal, Italy or Spain as of September 30, 2013.

59

The following table summarizes all securities in a gross unrealized loss position as of September 30, 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:

	September 30, 2013						December 31, 2012
					Gross						Gross
	Number of		Fair		Unrealized		Number of		Fair		Unrealized
In thousands, except # of securities	Securities		Value		Loss		Securities		Value		Loss
Fixed maturities:
U.S. Treasury bonds, agency bonds, and foreign government bonds
0-6 months		42	$	196,851	$	5,688		8	$	23,760	$	22
7-12 months		1		928		6		3		14,118		11
> 12 months		—		—		—		1		4,652		3
Subtotal		43	$	197,779	$	5,694		12	$	42,530	$	36
States, municipalities and political subdivisions
0-6 months		100	$	196,987	$	9,485		10	$	21,299	$	325
7-12 months		17		37,989		2,755		—		—		—
> 12 months		1		303		—		4		2,908		55
Subtotal		118	$	235,279	$	12,240		14	$	24,207	$	380
Agency mortgage-backed securities
0-6 months		71	$	90,215	$	2,472		10	$	62,516	$	174
7-12 months		9		18,667		1,354		2		1,671		30
> 12 months		2		5,130		99		—		—		—
Subtotal		82	$	114,012	$	3,925		12	$	64,187	$	204
Residential mortgage obligations
0-6 months		12	$	2,016	$	43		6	$	1,825	$	22
7-12 months		—		—		—		—		—		—
> 12 months		17		2,955		181		35		7,252		527
Subtotal		29	$	4,971	$	224		41	$	9,077	$	549
Asset-backed securities
0-6 months		3	$	32,019	$	189		—	$	—	$	—
7-12 months		1		339		1		—		—		—
> 12 months		—		—		—		2		2,369		49
Subtotal		4	$	32,358	$	190		2	$	2,369	$	49
Commercial mortgage-backed securities
0-6 months		6	$	19,891	$	341		7	$	2,639	$	7
7-12 months		—		—		—		—		—		—
> 12 months		5		889		24		5		845		11
Subtotal		11	$	20,780	$	365		12	$	3,484	$	18
Corporate bonds
0-6 months		37	$	123,673	$	2,856		2	$	3,528	$	6
7-12 months		2		2,315		2		—		—		—
> 12 months		—		—		—		4		6,689		19
Subtotal		39	$	125,988	$	2,858		6	$	10,217	$	25
Total fixed maturities		326	$	731,167	$	25,496		99	$	156,071	$	1,261
Equity securities—common stocks
0-6 months		13	$	33,429	$	1,340		13	$	23,345	$	522
7-12 months		1		1,904		364		1		1,943		104
> 12 months		—		—		—		—		—		—
Total equity securities		14	$	35,333	$	1,704		14	$	25,288	$	626

60

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 September 30, 2013 and December 31, 2012, the largest single unrealized loss by issuer in the investment portfolio was $1.0 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 September 30, 2013:

		September 30, 2013
In thousands		Gross Unrealized Loss					Fair Value
Equivalent S&P Rating	Equivalent Moody’s Rating	Amount		Percent of Total			Amount		Percent of Total
AAA/AA/A	Aaa/Aa/A	$	24,437		95	%	$	687,685		94	%
BBB	Baa		895		5	%		39,997		6	%
BB	Ba		69		0	%		852		0	%
B	B		37		0	%		1,458		0	%
CCC or lower	Caa or lower		58		0	%		1,175		0	%
NR	NR		—		0	%		—		0	%
Total		$	25,496		100	%	$	731,167		100	%

As of September 30, 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.

61

The contractual maturity for fixed maturity securities categorized by the number of years until maturity, with a gross unrealized loss as of September 30, 2013 is presented in the following table:

	September 30, 2013
	Gross Unrealized Losses					Fair Value
			Percent					Percent
In thousands	Amount		of Total			Amount		of Total
Due in one year or less	$	1		0	%	$	1,716		0	%
Due after one year through five years		1,119		4	%		144,849		20	%
Due after five years through ten years		9,803		38	%		250,290		34	%
Due after ten years		9,869		40	%		162,191		22	%
Mortgage- and asset-backed securities		4,704		18	%		172,121		24	%
Total	$	25,496		100	%	$	731,167		100	%

As of September 30, 2013, there were no investments with a fair value 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 September 30,								Nine Months Ended September 30,
	2013				2012				2013				2012
Number of In thousands, except # of securities	Number  of Securities		Amount		Number of Securities		Amount		Number of Securities		Amount		Number of Securities		Amount
Total OTTI losses:
Corporate and other bonds		1	$	1,821		—	$	—		1	$	1,821		—	$	—
Commercial mortgage-backed securities		—		—		—		—		—		—		—		—
Residential mortgage-backed securities		—		—		—		—		—		—		1		54
Asset-backed securities		—		—		—		—		—		—		—		—
Equities		—		—		—		—		2		42		3		639
Total		1	$	1,821		—	$	—		3	$	1,863		4	$	693
Less: Portion of loss in accumulated other comprehensive income (loss):
Corporate and other bonds			$	—			$	—			$	—			$	—
Commercial mortgage-backed securities				—				—				—				—
Residential mortgage-backed securities				—				—				—				43
Asset-backed securities				—				—				—				—
Equities				—				—				—				—
Total			$	—			$	—			$	—			$	43
Impairment losses recognized in earnings:
Corporate and other bonds			$	1,821			$	—			$	1,821			$	—
Commercial mortgage-backed securities				—				—				—				—
Residential mortgage-backed securities				—				—				—				11
Asset-backed securities				—				—				—				—
Equities				—				—				42				639
Total			$	1,821			$	—			$	1,863			$	650

Net OTTI losses of $1.8 million for the three months ended September 30, 2013 consisted of one municipal bond. Net OTTI losses of $1.9 million for the nine months ended September 30, 2013 consisted of one municipal bond and two equity securities. During the nine months ended September 30, 2012, we recognized OTTI losses of $0.7 million related to one non-agency mortgage-backed security and three equity securities.

62

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 September 30, 2013, an assumed 5%, 10% and 15% negative currency movement would result in changes as follows:

	September 30, 2013
			Negative Currency Movement of
In millions	USD Equivalent		5%			10%			15%
Cash, cash equivalents and marketable securities at fair value	$	102.6	$	(5.1	)	$	(10.3	)	$	(15.4	)
Premiums receivable	$	31.6	$	(1.6	)	$	(3.2	)	$	(4.7	)
Reinsurance recoverables on paid, unpaid losses and LAE	$	41.2	$	(2.1	)	$	(4.1	)	$	(6.2	)
Reserves for losses and loss adjustment expenses	$	123.7	$	6.2		$	12.4		$	18.6

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 third 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.

63

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.

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

64

Item 6. Exhibits

Exhibit No.	Description of Exhibit
10-1	First Amendment to Amended and Restated Funds at Lloyd’s Letter of Credit Agreement	*
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

65

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: November 8, 2013	/s/ Ciro M. DeFalco
	Ciro M. DeFalco
	Senior Vice President and Chief Financial Officer

66

INDEX TO EXHIBITS

Exhibit No.	Description of Exhibit
10-1	First Amendment to Amended and Restated Funds at Lloyd’s Letter of Credit Agreement	*
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

67

EX-10.1

Exhibit 10.1

FIRST AMENDMENT TO AMENDED AND RESTATED FUNDS AT LLOYD’S LETTER OF CREDIT AGREEMENT

THIS FIRST AMENDMENT TO AMENDED AND RESTATED FUNDS AT LLOYD’S LETTER OF CREDIT AGREEMENT, dated as of September 23, 2013 (this “Amendment”), amends the Amended and Restated Funds At Lloyd’s Letter of Credit Agreement, dated as of November 21, 2012 (the “Credit Agreement”), among The Navigators Group, Inc. ( the “Borrower”), the Lenders party thereto and ING Bank, N.V., London Branch, as administrative agent (the “Administrative Agent”). Terms defined in the Credit Agreement are, unless otherwise defined herein or the context otherwise requires, used herein as defined therein.

WHEREAS, the parties hereto have entered into the Credit Agreement, which provides for the Lenders to extend certain credit facilities to the Company from time to time;

WHEREAS, the parties hereto desire to amend the Credit Agreement in certain respects as hereinafter set forth; and

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree as follows:

1. AMENDMENTS. Upon satisfaction of the conditions set forth in Section 2, the Credit Agreement shall be amended as follows:

1.1 Amendment to Section 1.01. Section 1.01 is amended by adding the following new definition in proper alphabetical order:

“Defeased Indebtedness” means Indebtedness which has been defeased or for which an amount has been deposited in a sinking fund, a redemption fund or an escrow account for the sole purpose of repaying such Indebtedness on or before the due date thereof.

1.2 Amendment to Section 6.11. Section 6.11(b) is amended by in its entirety to read as follows:

(b) Indebtedness of the Borrower in connection with senior unsecured notes in an aggregate amount not at any time exceeding $300,000,000. For purposes of calculating Indebtedness under this clause (b), the principal amount of any such Indebtedness which constitutes Defeased Indebtedness shall not be included.

1.3 Amendment to Section 6.23. Section 6.23(c) is amended by inserting the following at the end thereof:

For purposes of calculating the Leverage Ratio, Defeased Indebtedness shall not be included.

2. CONDITIONS PRECEDENT. This Amendment shall become effective when each of the conditions precedent set forth in this Section 2 shall have been satisfied, and notice thereof shall have been given by the Administrative Agent to the Company and the Lenders.

2.1 Receipt of Documents. The Administrative Agent shall have received this Amendment duly executed by the Borrower, the Administrative Agent and the Required Lenders.

2.2 Compliance with Warranties, No Default, etc. After giving effect to this Amendment, the following statements by the Borrower shall be true and correct (and the Borrower, by its execution of this Amendment, hereby represents and warrants to the Administrative Agent and each Lender that such statements are true and correct as at such times):

(a) the representations and warranties set forth in Article V of the Credit Agreement are true and correct with the same effect as if then made (unless stated to relate solely to an earlier date, in which case such representations and warranties are true and correct as of such earlier date); and

(b) no Default or Event of Default has occurred and is continuing.

3. MISCELLANEOUS.

3.1 Continuing Effectiveness, etc. This Amendment shall be deemed to be an amendment to the Credit Agreement, and the Credit Agreement, as amended hereby, shall remain in full force and effect and is hereby ratified, approved and confirmed in each and every respect. After the effectiveness of this Amendment in accordance with its terms, all references to the Credit Agreement in the Facility Documents or in any other document, instrument, agreement or writing shall be deemed to refer to the Credit Agreement as amended hereby. Each other Facility Document is hereby ratified, approved and confirmed in each and every respect. This Amendment is a Facility Document.

3.2 Headings. The various headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or any provisions hereof.

3.3 Execution in Counterparts. This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Amendment by telecopy or other electronic imaging means (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Amendment.

[Signature Pages Follow]

2

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

THE NAVIGATORS GROUP, INC.
By:	/s/ Ciro M. DeFalco
Name:	Ciro M. DeFalco
Title:	Senior Vice President and Chief Financial Officer

S-1

ING BANK N.V., LONDON BRANCH,
individually, as Administrative Agent and Letter of Credit Agent
By:	/s/ N J Marchant
Name:	N J Marchant
Title:	Director
By:	/s/ M E R Sharman
Name:	M E R Sharman
Title:	Managing Director

S-2

JPMORGAN CHASE BANK, N.A.,
By:	/s/ Hector J. Varona
Name:	Hector J. Varona
Title:	Vice President

S-3

BARCLAYS BANK PLC
By:	/s/ Dan Broome
Name:	Dan Broome
Title:	Director

S-4

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 and nine months ended September 30, 2013 and 2012:

	Three Months Ended September 30,				Nine Months Ended September 30,
In thousands, except share and per share amounts	2013		2012		2013		2012
Net income (loss)	$	21,286	$	12,915	$	49,133	$	35,718
Basic weighted average shares		14,144,478		14,026,855		14,120,788		14,004,302
Effect of common stock equivalents:
Assumed exercise of stock options and vesting of stock grants		263,935		245,622		259,155		250,999
Diluted weighted average shares		14,408,413		14,272,477		14,379,943		14,255,301
Net income (loss) per common share:
Basic	$	1.50	$	0.92	$	3.48	$	2.55
Diluted	$	1.48	$	0.90	$	3.42	$	2.51

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: November 8, 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: November 8, 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 September 30, 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

November 8, 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 September 30, 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

November 8, 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.

XML

Commitments and Contingencies

9 Months Ended

Sep. 30, 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.

XML

Consolidated Statements of Income (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Gross written premiums	$ 312,076	$ 298,742	$ 1,037,426	$ 964,878
Revenues:
Net written premiums	196,556	188,046	664,477	621,343
Change in unearned premiums	17,339	13,216	(42,440)	(40,945)
Net earned premiums	213,895	201,262	622,037	580,398
Net investment income	14,094	13,597	41,997	40,632
Total other-than-temporary impairment losses	(1,821)		(1,863)	(693)
Portion of loss recognized in other comprehensive income (before tax)				43
Net other-than-temporary impairment losses recognized in earnings	(1,821)		(1,863)	(650)
Net realized gains (losses)	(988)	4,761	7,171	10,820
Other income (expense)	(210)	789	(507)	2,087
Total revenues	224,970	220,409	668,835	633,287
Expenses:
Net losses and loss adjustment expenses	125,086	128,850	387,576	370,242
Commission expenses	27,685	31,258	82,631	90,211
Other operating expenses	39,056	40,112	120,608	116,238
Interest expense	2,053	2,049	6,156	6,147
Total expenses	193,880	202,269	596,971	582,838
Income (loss) before income taxes	31,090	18,140	71,864	50,449
Income tax expense (benefit)	9,804	5,225	22,731	14,731
Net income (loss)	$ 21,286	$ 12,915	$ 49,133	$ 35,718
Net income per common share:
Basic	$ 1.50	$ 0.92	$ 3.48	$ 2.55
Diluted	$ 1.48	$ 0.90	$ 3.42	$ 2.51
Average common shares outstanding:
Basic	14,144,478	14,026,855	14,120,788	14,004,302
Diluted	14,408,413	14,272,477	14,379,943	14,255,301

XML

Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 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.

XML

Investments (Tables)

9 Months Ended

Sep. 30, 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 September 30, 2013 and December 31, 2012. The table below includes other-than-temporarily impaired (“OTTI”) securities recognized within other comprehensive income (“OCI”).

	September 30, 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	$	445,969	$	3,683	$	(5,694	)	$	447,980
States, municipalities and political subdivisions		445,281		9,752		(12,240	)		447,769
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		300,347		7,966		(3,925	)		296,306
Residential mortgage obligations		35,277		1,107		(224	)		34,394
Asset-backed securities		88,714		795		(190	)		88,109
Commercial mortgage-backed securities		173,069		8,386		(365	)		165,048
Subtotal	$	597,407	$	18,254	$	(4,704	)	$	583,857
Corporate bonds		493,074		17,104		(2,858	)		478,828
Total fixed maturities	$	1,981,731	$	48,793	$	(25,496	)	$	1,958,434
Equity securities—common stocks		158,890		29,548		(1,704	)		131,046
Short-term investments		152,987		—		—			152,987
Cash		130,513		—		—			130,513
Total	$	2,424,121	$	78,341	$	(27,200	)	$	2,372,980

	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 September 30, 2013 are shown in the following table:

	September 30, 2013
	Fair		Amortized
In thousands	Value		Cost
Due in one year or less	$	79,192	$	78,621
Due after one year through five years		616,576		603,165
Due after five years through ten years		458,136		455,826
Due after ten years		230,420		236,965
Mortgage- and asset-backed securities		597,407		583,857
Total	$	1,981,731	$	1,958,434

Amount and Percentage of Fixed Maturities by Rating

The following table shows the amount and percentage of the Company’s fixed maturities as of September 30, 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.

	September 30, 2013
		Fair		Percent
In thousands	Rating	Value		of Total
Rating description:
Extremely strong	AAA	$	305,979		15	%
Very strong	AA		1,051,156		54	%
Strong	A		440,063		22	%
Adequate	BBB		163,614		8	%
Speculative	BB & Below		11,722		1	%
Not rated	NR		9,197		0	%
Total	AA	$	1,981,731		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 September 30, 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.

	September 30, 2013						December 31, 2012
					Gross						Gross
	Number of		Fair		Unrealized		Number of		Fair		Unrealized
In thousands, except # of securities	Securities		Value		Loss		Securities		Value		Loss
Fixed maturities:
U.S. Treasury bonds, agency bonds, and foreign government bonds
0-6 months		42	$	196,851	$	5,688		8	$	23,760	$	22
7-12 months		1		928		6		3		14,118		11
> 12 months		—		—		—		1		4,652		3
Subtotal		43	$	197,779	$	5,694		12	$	42,530	$	36
States, municipalities and political subdivisions
0-6 months		100	$	196,987	$	9,485		10	$	21,299	$	325
7-12 months		17		37,989		2,755		—		—		—
> 12 months		1		303		—		4		2,908		55
Subtotal		118	$	235,279	$	12,240		14	$	24,207	$	380
Agency mortgage-backed securities
0-6 months		71	$	90,215	$	2,472		10	$	62,516	$	174
7-12 months		9		18,667		1,354		2		1,671		30
> 12 months		2		5,130		99		—		—		—
Subtotal		82	$	114,012	$	3,925		12	$	64,187	$	204
Residential mortgage obligations
0-6 months		12	$	2,016	$	43		6	$	1,825	$	22
7-12 months		—		—		—		—		—		—
> 12 months		17		2,955		181		35		7,252		527
Subtotal		29	$	4,971	$	224		41	$	9,077	$	549
Asset-backed securities
0-6 months		3	$	32,019	$	189		—	$	—	$	—
7-12 months		1		339		1		—		—		—
> 12 months		—		—		—		2		2,369		49
Subtotal		4	$	32,358	$	190		2	$	2,369	$	49
Commercial mortgage-backed securities
0-6 months		6	$	19,891	$	341		7	$	2,639	$	7
7-12 months		—		—		—		—		—		—
> 12 months		5		889		24		5		845		11
Subtotal		11	$	20,780	$	365		12	$	3,484	$	18
Corporate bonds
0-6 months		37	$	123,673	$	2,856		2	$	3,528	$	6
7-12 months		2		2,315		2		—		—		—
> 12 months		—		—		—		4		6,689		19
Subtotal		39	$	125,988	$	2,858		6	$	10,217	$	25
Total fixed maturities		326	$	731,167	$	25,496		99	$	156,071	$	1,261
Equity securities—common stocks
0-6 months		13	$	33,429	$	1,340		13	$	23,345	$	522
7-12 months		1		1,904		364		1		1,943		104
> 12 months		—		—		—		—		—		—
Total equity securities		14	$	35,333	$	1,704		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 September 30,								Nine Months Ended September 30,
	2013				2012				2013				2012
	Number of				Number of				Number of				Number of
In thousands, except # of securities	Securities		Amount		Securities		Amount		Securities		Amount		Securities		Amount
Total OTTI losses:
Corporate and other bonds		1	$	1,821		—	$	—		1	$	1,821		—	$	—
Commercial mortgage-backed securities		—		—		—		—		—		—		—		—
Residential mortgage-backed securities		—		—		—		—		—		—		1		54
Asset-backed securities		—		—		—		—		—		—		—		—
Equities		—		—		—		—		2		42		3		639
Total		1	$	1,821		—	$	—		3	$	1,863		4	$	693
Less: Portion of loss in accumulated other comprehensive income (loss):
Corporate and other bonds			$	—			$	—			$	—			$	—
Commercial mortgage-backed securities				—				—				—				—
Residential mortgage-backed securities				—				—				—				43
Asset-backed securities				—				—				—				—
Equities				—				—				—				—
Total			$	—			$	—			$	—			$	43
Impairment losses recognized in earnings:
Corporate and other bonds			$	1,821			$	—			$	1,821			$	—
Commercial mortgage-backed securities				—				—				—				—
Residential mortgage-backed securities				—				—				—				11
Asset-backed securities				—				—				—				—
Equities				—				—				42				639
Total			$	1,821			$	—			$	1,863			$	650

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 and nine months ended September 30, 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 September 30,				Nine Months Ended September 30,
In thousands	2013		2012		2013		2012
Beginning balance	$	3,332	$	3,322	$	3,332	$	3,321
Additions for credit loss impairments recognized in the current period on securities not previously impaired		1,821		—		1,821		—
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	$	5,153	$	3,332	$	5,153	$	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 September 30, 2013 is presented in the following table:

	September 30, 2013
	Gross Unrealized Losses					Fair Value
			Percent					Percent
In thousands	Amount		of Total			Amount		of Total
Due in one year or less	$	1		0	%	$	1,716		0	%
Due after one year through five years		1,119		4	%		144,849		20	%
Due after five years through ten years		9,803		38	%		250,290		34	%
Due after ten years		9,869		40	%		162,191		22	%
Mortgage- and asset-backed securities		4,704		18	%		172,121		24	%
Total	$	25,496		100	%	$	731,167		100	%

Net Investment Income

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

	Three Months Ended September 30,						Nine Months Ended September 30,
In thousands	2013			2012			2013			2012
Fixed maturities	$	13,399		$	14,364		$	40,142		$	44,779
Equity securities		1,315			989			3,603			2,930
Short-term investments		187			437			575			1,452
Total investment income	$	14,901		$	15,790		$	44,320		$	49,161
Investment expenses		(807	)		(2,193	)		(2,323	)		(8,529	)
Net investment income	$	14,094		$	13,597		$	41,997		$	40,632

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:

	Nine Months Ended September 30,
In thousands	2013			2012
Fixed maturities	$	(63,771	)	$	38,165
Equity securities		11,551			8,817
Gross unrealized gains (losses)	$	(52,220	)	$	46,982
Deferred income tax		(18,296	)		15,702
Change in net unrealized gains (losses), net	$	(33,924	)	$	31,280

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 September 30,						Nine Months Ended September 30,
In thousands	2013			2012			2013			2012
Fixed maturities:
Gains	$	1,099		$	4,011		$	6,035		$	11,868
Losses		(2,087	)		(216	)		(2,470	)		(1,746	)
Fixed maturities, net	$	(988	)	$	3,795		$	3,565		$	10,122
Equity securities:
Gains	$	—		$	966		$	3,733		$	1,171
Losses		—			—			(127	)		(473	)
Equity securities, net	$	—		$	966		$	3,606		$	698
Net realized gains (losses)	$	(988	)	$	4,761		$	7,171		$	10,820

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 September 30, 2013 and December 31, 2012:

	September 30, 2013
In thousands	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	256,500	$	189,469	$	—	$	445,969
States, municipalities and political subdivisions		—		445,281		—		445,281
Mortgage-backed and asset-backed securities:								—
Agency mortgage-backed securities		—		300,347		—		300,347
Residential mortgage obligations		—		35,277		—		35,277
Asset-backed securities		—		88,714		—		88,714
Commercial mortgage-backed securities		—		173,069		—		173,069
Subtotal	$	—	$	597,407	$	—	$	597,407
Corporate bonds		—		488,512		4,562		493,074
Total fixed maturities	$	256,500	$	1,720,669	$	4,562	$	1,981,731
Equity securities—common stocks		158,890		—		—		158,890
Total	$	415,390	$	1,720,669	$	4,562	$	2,140,621

	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

Reconciliation of Beginning and Ending Balances for All Investments Measured at Fair Value Using Level 3 Inputs

The following tables present a reconciliation of the beginning and ending balances of all investments measured at fair value using Level 3 inputs during the three and nine months ended September 30, 2013.

	Three Months Ended September 30, 2013
In thousands	Beginning Balance		Realized Gains (Losses)		Unrealized Gains (Losses)			Purchases		Sales			Settlements		Transfers into Level 3		Transfers out of Level 3		Ending Balance
Assets:
Corporate Bonds	$	—	$	—	$	(15	)	$	4,661	$	(84	)	$	—	$	—	$	—	$	4,562
Total assets	$	—	$	—	$	(15	)	$	4,661	$	(84	)	$	—	$	—	$	—	$	4,562

	Nine Months Ended September 30, 2013
In thousands	Beginning Balance		Realized Gains (Losses)		Unrealized Gains (Losses)			Purchases		Sales			Settlements		Transfers into Level 3		Transfers out of Level 3		Ending Balance
Assets:
Corporate Bonds	$	—	$	—	$	(15	)	$	4,661	$	(84	)	$	—	$	—	$	—	$	4,562
Total assets	$	—	$	—	$	(15	)	$	4,661	$	(84	)	$	—	$	—	$	—	$	4,562

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Investments

9 Months Ended

Sep. 30, 2013

Investments

Note 10. Investments

The following tables set forth the Company’s cash and investments as of September 30, 2013 and December 31, 2012. The table below includes other-than-temporarily impaired (“OTTI”) securities recognized within other comprehensive income (“OCI”).

	September 30, 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	$	445,969	$	3,683	$	(5,694	)	$	447,980
States, municipalities and political subdivisions		445,281		9,752		(12,240	)		447,769
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		300,347		7,966		(3,925	)		296,306
Residential mortgage obligations		35,277		1,107		(224	)		34,394
Asset-backed securities		88,714		795		(190	)		88,109
Commercial mortgage-backed securities		173,069		8,386		(365	)		165,048
Subtotal	$	597,407	$	18,254	$	(4,704	)	$	583,857
Corporate bonds		493,074		17,104		(2,858	)		478,828
Total fixed maturities	$	1,981,731	$	48,793	$	(25,496	)	$	1,958,434
Equity securities—common stocks		158,890		29,548		(1,704	)		131,046
Short-term investments		152,987		—		—			152,987
Cash		130,513		—		—			130,513
Total	$	2,424,121	$	78,341	$	(27,200	)	$	2,372,980

	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 September 30, 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 September 30, 2013 are shown in the following table:

	September 30, 2013
	Fair		Amortized
In thousands	Value		Cost
Due in one year or less	$	79,192	$	78,621
Due after one year through five years		616,576		603,165
Due after five years through ten years		458,136		455,826
Due after ten years		230,420		236,965
Mortgage- and asset-backed securities		597,407		583,857
Total	$	1,981,731	$	1,958,434

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 4.6 years.

The following table shows the amount and percentage of the Company’s fixed maturities as of September 30, 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.

	September 30, 2013
		Fair		Percent
In thousands	Rating	Value		of Total
Rating description:
Extremely strong	AAA	$	305,979		15	%
Very strong	AA		1,051,156		54	%
Strong	A		440,063		22	%
Adequate	BBB		163,614		8	%
Speculative	BB & Below		11,722		1	%
Not rated	NR		9,197		0	%
Total	AA	$	1,981,731		100	%

The following table summarizes all securities in a gross unrealized loss position as of September 30, 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.

	September 30, 2013						December 31, 2012
					Gross						Gross
	Number of		Fair		Unrealized		Number of		Fair		Unrealized
In thousands, except # of securities	Securities		Value		Loss		Securities		Value		Loss
Fixed maturities:
U.S. Treasury bonds, agency bonds, and foreign government bonds
0-6 months		42	$	196,851	$	5,688		8	$	23,760	$	22
7-12 months		1		928		6		3		14,118		11
> 12 months		—		—		—		1		4,652		3
Subtotal		43	$	197,779	$	5,694		12	$	42,530	$	36
States, municipalities and political subdivisions
0-6 months		100	$	196,987	$	9,485		10	$	21,299	$	325
7-12 months		17		37,989		2,755		—		—		—
> 12 months		1		303		—		4		2,908		55
Subtotal		118	$	235,279	$	12,240		14	$	24,207	$	380
Agency mortgage-backed securities
0-6 months		71	$	90,215	$	2,472		10	$	62,516	$	174
7-12 months		9		18,667		1,354		2		1,671		30
> 12 months		2		5,130		99		—		—		—
Subtotal		82	$	114,012	$	3,925		12	$	64,187	$	204
Residential mortgage obligations
0-6 months		12	$	2,016	$	43		6	$	1,825	$	22
7-12 months		—		—		—		—		—		—
> 12 months		17		2,955		181		35		7,252		527
Subtotal		29	$	4,971	$	224		41	$	9,077	$	549
Asset-backed securities
0-6 months		3	$	32,019	$	189		—	$	—	$	—
7-12 months		1		339		1		—		—		—
> 12 months		—		—		—		2		2,369		49
Subtotal		4	$	32,358	$	190		2	$	2,369	$	49
Commercial mortgage-backed securities
0-6 months		6	$	19,891	$	341		7	$	2,639	$	7
7-12 months		—		—		—		—		—		—
> 12 months		5		889		24		5		845		11
Subtotal		11	$	20,780	$	365		12	$	3,484	$	18
Corporate bonds
0-6 months		37	$	123,673	$	2,856		2	$	3,528	$	6
7-12 months		2		2,315		2		—		—		—
> 12 months		—		—		—		4		6,689		19
Subtotal		39	$	125,988	$	2,858		6	$	10,217	$	25
Total fixed maturities		326	$	731,167	$	25,496		99	$	156,071	$	1,261
Equity securities—common stocks
0-6 months		13	$	33,429	$	1,340		13	$	23,345	$	522
7-12 months		1		1,904		364		1		1,943		104
> 12 months		—		—		—		—		—		—
Total equity securities		14	$	35,333	$	1,704		14	$	25,288	$	626

As of September 30, 2013 and December 31, 2012, the largest single unrealized loss by a non-government backed issuer in the investment portfolio was $1.0 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 September 30, 2013, there were no investments with a fair value 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 September 30,								Nine Months Ended September 30,
	2013				2012				2013				2012
	Number of				Number of				Number of				Number of
In thousands, except # of securities	Securities		Amount		Securities		Amount		Securities		Amount		Securities		Amount
Total OTTI losses:
Corporate and other bonds		1	$	1,821		—	$	—		1	$	1,821		—	$	—
Commercial mortgage-backed securities		—		—		—		—		—		—		—		—
Residential mortgage-backed securities		—		—		—		—		—		—		1		54
Asset-backed securities		—		—		—		—		—		—		—		—
Equities		—		—		—		—		2		42		3		639
Total		1	$	1,821		—	$	—		3	$	1,863		4	$	693
Less: Portion of loss in accumulated other comprehensive income (loss):
Corporate and other bonds			$	—			$	—			$	—			$	—
Commercial mortgage-backed securities				—				—				—				—
Residential mortgage-backed securities				—				—				—				43
Asset-backed securities				—				—				—				—
Equities				—				—				—				—
Total			$	—			$	—			$	—			$	43
Impairment losses recognized in earnings:
Corporate and other bonds			$	1,821			$	—			$	1,821			$	—
Commercial mortgage-backed securities				—				—				—				—
Residential mortgage-backed securities				—				—				—				11
Asset-backed securities				—				—				—				—
Equities				—				—				42				639
Total			$	1,821			$	—			$	1,863			$	650

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 and nine months ended September 30, 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 September 30,				Nine Months Ended September 30,
In thousands	2013		2012		2013		2012
Beginning balance	$	3,332	$	3,322	$	3,332	$	3,321
Additions for credit loss impairments recognized in the current period on securities not previously impaired		1,821		—		1,821		—
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	$	5,153	$	3,332	$	5,153	$	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 September 30, 2013 is presented in the following table:

	September 30, 2013
	Gross Unrealized Losses					Fair Value
			Percent					Percent
In thousands	Amount		of Total			Amount		of Total
Due in one year or less	$	1		0	%	$	1,716		0	%
Due after one year through five years		1,119		4	%		144,849		20	%
Due after five years through ten years		9,803		38	%		250,290		34	%
Due after ten years		9,869		40	%		162,191		22	%
Mortgage- and asset-backed securities		4,704		18	%		172,121		24	%
Total	$	25,496		100	%	$	731,167		100	%

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

	Three Months Ended September 30,						Nine Months Ended September 30,
In thousands	2013			2012			2013			2012
Fixed maturities	$	13,399		$	14,364		$	40,142		$	44,779
Equity securities		1,315			989			3,603			2,930
Short-term investments		187			437			575			1,452
Total investment income	$	14,901		$	15,790		$	44,320		$	49,161
Investment expenses		(807	)		(2,193	)		(2,323	)		(8,529	)
Net investment income	$	14,094		$	13,597		$	41,997		$	40,632

Investment expense for the nine months ended September 30, 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 3.9 years and 3.8 years for the nine months ended September 30, 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:

	Nine Months Ended September 30,
In thousands	2013			2012
Fixed maturities	$	(63,771	)	$	38,165
Equity securities		11,551			8,817
Gross unrealized gains (losses)	$	(52,220	)	$	46,982
Deferred income tax		(18,296	)		15,702
Change in net unrealized gains (losses), net	$	(33,924	)	$	31,280

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

	Three Months Ended September 30,						Nine Months Ended September 30,
In thousands	2013			2012			2013			2012
Fixed maturities:
Gains	$	1,099		$	4,011		$	6,035		$	11,868
Losses		(2,087	)		(216	)		(2,470	)		(1,746	)
Fixed maturities, net	$	(988	)	$	3,795		$	3,565		$	10,122
Equity securities:
Gains	$	—		$	966		$	3,733		$	1,171
Losses		—			—			(127	)		(473	)
Equity securities, net	$	—		$	966		$	3,606		$	698
Net realized gains (losses)	$	(988	)	$	4,761		$	7,171		$	10,820

Net realized gains and losses are generated as part of the normal ongoing management of our investment portfolio. Net realized losses of $1.0 million and net realized gains of $7.2 million for the three and nine months ended September 30, 2013 are primarily due to the sale of Treasury bonds, commercial mortgage-backed securities, municipal bonds and equity securities. Net realized gains of $4.8 million and $10.8 million for the three and nine months ended September 30, 2012 were due to the sale of corporate bonds and Treasury 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 September 30, 2013 and December 31, 2012:

	September 30, 2013
In thousands	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	256,500	$	189,469	$	—	$	445,969
States, municipalities and political subdivisions		—		445,281		—		445,281
Mortgage-backed and asset-backed securities:								—
Agency mortgage-backed securities		—		300,347		—		300,347
Residential mortgage obligations		—		35,277		—		35,277
Asset-backed securities		—		88,714		—		88,714
Commercial mortgage-backed securities		—		173,069		—		173,069
Subtotal	$	—	$	597,407	$	—	$	597,407
Corporate bonds		—		488,512		4,562		493,074
Total fixed maturities	$	256,500	$	1,720,669	$	4,562	$	1,981,731
Equity securities—common stocks		158,890		—		—		158,890
Total	$	415,390	$	1,720,669	$	4,562	$	2,140,621

	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 for the three and nine months ended September 30, 2013.

The following tables present a reconciliation of the beginning and ending balances of all investments measured at fair value using Level 3 inputs during the three and nine months ended September 30, 2013.

	Three Months Ended September 30, 2013
In thousands	Beginning Balance		Realized Gains (Losses)		Unrealized Gains (Losses)			Purchases		Sales			Settlements		Transfers into Level 3		Transfers out of Level 3		Ending Balance
Assets:
Corporate Bonds	$	—	$	—	$	(15	)	$	4,661	$	(84	)	$	—	$	—	$	—	$	4,562
Total assets	$	—	$	—	$	(15	)	$	4,661	$	(84	)	$	—	$	—	$	—	$	4,562

	Nine Months Ended September 30, 2013
In thousands	Beginning Balance		Realized Gains (Losses)		Unrealized Gains (Losses)			Purchases		Sales			Settlements		Transfers into Level 3		Transfers out of Level 3		Ending Balance
Assets:
Corporate Bonds	$	—	$	—	$	(15	)	$	4,661	$	(84	)	$	—	$	—	$	—	$	4,562
Total assets	$	—	$	—	$	(15	)	$	4,661	$	(84	)	$	—	$	—	$	—	$	4,562

The Level 3 security is valued using unobservable inputs based on a proxy of a security of similar duration in which market quotations are available. As of September 30, 2012, the Company did not have any Level 3 assets, and there were no changes in Level 3 assets for the three and nine months ended September 30, 2012.

As of September 30, 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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Reconciliation of Beginning and Ending Balances for all Investments Measured at Fair Value Using Level 3 Inputs (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Realized Gains (Losses)
Unrealized Gains (Losses)	(15)	(15)
Purchases	4,661	4,661
Sales	(84)	(84)
Settlements
Transfers into Level 3
Transfers out of Level 3
Ending Balance	4,562	4,562
Corporate bonds
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Realized Gains (Losses)
Unrealized Gains (Losses)	(15)	(15)
Purchases	4,661	4,661
Sales	(84)	(84)
Settlements
Transfers into Level 3
Transfers out of Level 3
Ending Balance	$ 4,562	$ 4,562

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Scheduled Maturity Dates for Fixed Maturity Securities by Number of Years Until Maturity (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Fair Value
Due in one year or less	$ 79,192
Due after one year through five years	616,576
Due after five years through ten years	458,136
Due after ten years	230,420
Mortgage- and asset-backed securities	597,407
Total	1,981,731	2,121,833
Amortized Cost
Due in one year or less	78,621
Due after one year through five years	603,165
Due after five years through ten years	455,826
Due after ten years	236,965
Mortgage- and asset-backed securities	583,857
Total	$ 1,958,434	$ 2,034,765

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Additional Financial Data by Segment (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Segment Reporting Information [Line Items]
Gross written premiums	$ 312,076	$ 298,742	$ 1,037,426	$ 964,878
Net written premiums	196,556	188,046	664,477	621,343
Net earned premiums	213,895	201,262	622,037	580,398
Marine
Segment Reporting Information [Line Items]
Gross written premiums	74,921	82,595	268,382	303,168
Net written premiums	53,232	60,554	195,357	216,755
Net earned premiums	65,754	74,594	202,945	212,940
Property Casualty
Segment Reporting Information [Line Items]
Gross written premiums	192,097	172,737	629,431	532,557
Net written premiums	111,314	95,082	371,469	311,516
Net earned premiums	116,231	95,863	324,867	282,180
Professional Liability
Segment Reporting Information [Line Items]
Gross written premiums	45,058	43,410	139,613	129,153
Net written premiums	32,010	32,410	97,651	93,072
Net earned premiums	31,910	30,805	94,225	85,278
Insurance
Segment Reporting Information [Line Items]
Gross written premiums	227,609	218,361	757,802	680,763
Net written premiums	149,290	142,148	508,989	457,463
Net earned premiums	162,962	149,090	473,840	422,215
Insurance | Marine
Segment Reporting Information [Line Items]
Gross written premiums	38,912	44,879	132,836	156,640
Net written premiums	26,437	32,615	94,944	107,266
Net earned premiums	31,490	40,592	100,013	111,402
Insurance | Property Casualty
Segment Reporting Information [Line Items]
Gross written premiums	156,228	139,948	527,287	426,494
Net written premiums	97,553	83,449	338,215	274,823
Net earned premiums	105,759	83,993	297,954	240,536
Insurance | Professional Liability
Segment Reporting Information [Line Items]
Gross written premiums	32,469	33,534	97,679	97,629
Net written premiums	25,300	26,084	75,830	75,374
Net earned premiums	25,713	24,505	75,873	70,277
Lloyd's
Segment Reporting Information [Line Items]
Gross written premiums	84,467	80,381	279,624	284,115
Net written premiums	47,266	45,898	155,488	163,880
Net earned premiums	50,933	52,172	148,197	158,183
Lloyd's | Marine
Segment Reporting Information [Line Items]
Gross written premiums	36,009	37,716	135,546	146,528
Net written premiums	26,795	27,939	100,413	109,489
Net earned premiums	34,264	34,002	102,932	101,538
Lloyd's | Property Casualty
Segment Reporting Information [Line Items]
Gross written premiums	35,869	32,789	102,144	106,063
Net written premiums	13,761	11,633	33,254	36,693
Net earned premiums	10,472	11,870	26,913	41,644
Lloyd's | Professional Liability
Segment Reporting Information [Line Items]
Gross written premiums	12,589	9,876	41,934	31,524
Net written premiums	6,710	6,326	21,821	17,698
Net earned premiums	$ 6,197	$ 6,300	$ 18,352	$ 15,001

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Financial Data by Segment (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2013		Sep. 30, 2012		Sep. 30, 2013		Sep. 30, 2012		Dec. 31, 2012
Segment Reporting Information [Line Items]
Gross written premiums	$ 312,076		$ 298,742		$ 1,037,426		$ 964,878
Net written premiums	196,556		188,046		664,477		621,343
Net earned premiums	213,895		201,262		622,037		580,398
Net losses and loss adjustment expenses	(125,086)		(128,850)		(387,576)		(370,242)
Commission expenses	(27,685)		(31,258)		(82,631)		(90,211)
Other operating expenses	(39,056)		(40,112)		(120,608)		(116,238)
Other income (expense)	(210)		789		(507)		2,087
Underwriting profit (loss)	21,858		1,831		30,715		5,794
Net investment income	14,094		13,597		41,997		40,632
Net realized gains (losses)	(2,809)		4,761		5,308		10,170
Interest expense	(2,053)		(2,049)		(6,156)		(6,147)
Income (loss) before income taxes	31,090		18,140		71,864		50,449
Income tax expense (benefit)	9,804		5,225		22,731		14,731
Net income (loss)	21,286		12,915		49,133		35,718
Identifiable assets	4,074,576		3,994,697		4,074,576		3,994,697		4,007,670
Losses and loss adjustment expenses ratio	58.50%		64.00%		62.30%		63.80%
Commission expense ratio	12.90%		15.50%		13.30%		15.50%
Other operating expense ratio	18.40%	[1]	19.60%	[1]	19.50%	[1]	19.70%	[1]
Combined ratio	89.80%		99.10%		95.10%		99.00%
Insurance
Segment Reporting Information [Line Items]
Gross written premiums	227,609		218,361		757,802		680,763
Net written premiums	149,290		142,148		508,989		457,463
Net earned premiums	162,962		149,090		473,840		422,215
Net losses and loss adjustment expenses	(95,315)		(113,303)		(308,968)		(304,483)
Commission expenses	(20,039)		(20,827)		(59,129)		(61,245)
Other operating expenses	(28,510)		(29,387)		(87,682)		(83,646)
Other income (expense)	955		1,229		2,303		3,750
Underwriting profit (loss)	20,053		(13,198)		20,364		(23,409)
Net investment income	12,285		12,004		36,751		34,225
Net realized gains (losses)	(1,890)		2,609		6,001		6,809
Income (loss) before income taxes	30,448		1,415		63,116		17,625
Income tax expense (benefit)	9,355		(377)		19,554		3,603
Net income (loss)	21,093		1,792		43,562		14,022
Identifiable assets	3,018,100		2,995,530		3,018,100		2,995,530
Losses and loss adjustment expenses ratio	58.50%		76.00%		65.20%		72.10%
Commission expense ratio	12.30%		14.00%		12.50%		14.50%
Other operating expense ratio	16.90%	[1]	18.90%	[1]	18.00%	[1]	18.90%	[1]
Combined ratio	87.70%		108.90%		95.70%		105.50%
Lloyd's
Segment Reporting Information [Line Items]
Gross written premiums	84,467		80,381		279,624		284,115
Net written premiums	47,266		45,898		155,488		163,880
Net earned premiums	50,933		52,172		148,197		158,183
Net losses and loss adjustment expenses	(29,771)		(15,547)		(78,608)		(65,759)
Commission expenses	(8,289)		(10,911)		(25,245)		(30,735)
Other operating expenses	(10,546)		(10,725)		(32,926)		(32,592)
Other income (expense)	(522)		40		(1,067)		106
Underwriting profit (loss)	1,805		15,029		10,351		29,203
Net investment income	1,807		1,552		5,237		6,289
Net realized gains (losses)	(919)		2,152		(697)		3,361
Income (loss) before income taxes	2,693		18,733		14,891		38,853
Income tax expense (benefit)	878		6,525		5,120		13,458
Net income (loss)	1,815		12,208		9,771		25,395
Identifiable assets	983,382		958,238		983,382		958,238
Losses and loss adjustment expenses ratio	58.50%		29.80%		53.00%		41.60%
Commission expense ratio	16.30%		20.90%		17.00%		19.40%
Other operating expense ratio	21.70%	[1]	20.50%	[1]	23.00%	[1]	20.50%	[1]
Combined ratio	96.50%		71.20%		93.00%		81.50%
Corporate
Segment Reporting Information [Line Items]
Commission expenses	643	[2]	480	[2]	1,743	[2]	1,769	[2]
Other income (expense)	(643)	[2]	(480)	[2]	(1,743)	[2]	(1,769)	[2]
Net investment income	2	[2]	41	[2]	9	[2]	118	[2]
Net realized gains (losses)					4	[2]
Interest expense	(2,053)	[2]	(2,049)	[2]	(6,156)	[2]	(6,147)	[2]
Income (loss) before income taxes	(2,051)	[2]	(2,008)	[2]	(6,143)	[2]	(6,029)	[2]
Income tax expense (benefit)	(429)	[2]	(923)	[2]	(1,943)	[2]	(2,330)	[2]
Net income (loss)	(1,622)	[2]	(1,085)	[2]	(4,200)	[2]	(3,699)	[2]
Identifiable assets	$ 73,094	[2]	$ 40,929	[2]	$ 73,094	[2]	$ 40,929	[2]

[1] Includes Other operating expenses and Other income.

[2] Includes Corporate segment intercompany eliminations.

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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		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Gain (Loss) on Investments [Line Items]
Net realized gains (losses)	$ (988)	$ 4,761	$ 7,171	$ 10,820
Fixed maturities
Gain (Loss) on Investments [Line Items]
Gains	1,099	4,011	6,035	11,868
Losses	(2,087)	(216)	(2,470)	(1,746)
Net realized gains (losses)	(988)	3,795	3,565	10,122
Equity Securities
Gain (Loss) on Investments [Line Items]
Gains		966	3,733	1,171
Losses			(127)	(473)
Net realized gains (losses)		$ 966	$ 3,606	$ 698

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Income Taxes - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended			1 Months Ended		3 Months Ended	9 Months Ended			9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Apr. 30, 2013 United Kingdom	Apr. 30, 2012 United Kingdom	Mar. 31, 2012 United Kingdom	Sep. 30, 2013 United Kingdom	Sep. 30, 2013 United Kingdom Syndicate 1221 Minimum	Sep. 30, 2013 United Kingdom Syndicate 1221 Maximum	Sep. 30, 2013 State and Local Jurisdiction Minimum	Sep. 30, 2013 State and Local Jurisdiction Maximum
Income Taxes [Line Items]
Foreign effective income tax rate									35.00%	35.00%
Percentage of premiums											50.00%
Corporate tax rate						23.00%	24.00%	26.00%
Undistributed earnings of non-U.S. subsidiaries	$ 18,900,000		$ 18,900,000
Taxes payable on undistributed earnings	2,000,000		2,000,000
Income tax (benefit) expense	9,804,000	5,225,000	22,731,000	14,731,000
Effective income tax rate	31.50%	28.80%	31.60%	29.20%
Deferred Tax Assets: State and Local	500,000		500,000		500,000
State and local net operating loss carry-forwards	$ 100,000		$ 100,000		$ 200,000
State and local tax carry-forwards expiration year												2023	2031

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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	Sep. 30, 2013 Investment	Dec. 31, 2012 Investment
Fixed maturities
Gain (Loss) on Investments [Line Items]
Number of Securities	326	99
Fair Value	$ 731,167	$ 156,071
Gross Unrealized Loss	25,496	1,261
Fixed maturities | U.S. Treasury bonds, agency bonds, and foreign
Gain (Loss) on Investments [Line Items]
Number of Securities	43	12
Fair Value	197,779	42,530
Gross Unrealized Loss	5,694	36
Fixed maturities | U.S. Treasury bonds, agency bonds, and foreign | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	42	8
Fair Value	196,851	23,760
Gross Unrealized Loss	5,688	22
Fixed maturities | U.S. Treasury bonds, agency bonds, and foreign | 7-12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	1	3
Fair Value	928	14,118
Gross Unrealized Loss	6	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	118	14
Fair Value	235,279	24,207
Gross Unrealized Loss	12,240	380
Fixed maturities | States, municipalities and political subdivisions | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	100	10
Fair Value	196,987	21,299
Gross Unrealized Loss	9,485	325
Fixed maturities | States, municipalities and political subdivisions | 7-12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	17
Fair Value	37,989
Gross Unrealized Loss	2,755
Fixed maturities | States, municipalities and political subdivisions | > 12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	1	4
Fair Value	303	2,908
Gross Unrealized Loss		55
Fixed maturities | Agency mortgage-backed securities
Gain (Loss) on Investments [Line Items]
Number of Securities	82	12
Fair Value	114,012	64,187
Gross Unrealized Loss	3,925	204
Fixed maturities | Agency mortgage-backed securities | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	71	10
Fair Value	90,215	62,516
Gross Unrealized Loss	2,472	174
Fixed maturities | Agency mortgage-backed securities | 7-12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	9	2
Fair Value	18,667	1,671
Gross Unrealized Loss	1,354	30
Fixed maturities | Agency mortgage-backed securities | > 12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	2
Fair Value	5,130
Gross Unrealized Loss	99
Fixed maturities | Residential Mortgage Backed Securities
Gain (Loss) on Investments [Line Items]
Number of Securities	29	41
Fair Value	4,971	9,077
Gross Unrealized Loss	224	549
Fixed maturities | Residential Mortgage Backed Securities | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	12	6
Fair Value	2,016	1,825
Gross Unrealized Loss	43	22
Fixed maturities | Residential Mortgage Backed Securities | > 12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	17	35
Fair Value	2,955	7,252
Gross Unrealized Loss	181	527
Fixed maturities | Asset-backed securities
Gain (Loss) on Investments [Line Items]
Number of Securities	4	2
Fair Value	32,358	2,369
Gross Unrealized Loss	190	49
Fixed maturities | Asset-backed securities | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	3
Fair Value	32,019
Gross Unrealized Loss	189
Fixed maturities | Asset-backed securities | 7-12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	1
Fair Value	339
Gross Unrealized Loss	1
Fixed maturities | Asset-backed securities | > 12 months
Gain (Loss) on Investments [Line Items]
Number of Securities		2
Fair Value		2,369
Gross Unrealized Loss		49
Fixed maturities | Commercial mortgage-backed securities
Gain (Loss) on Investments [Line Items]
Number of Securities	11	12
Fair Value	20,780	3,484
Gross Unrealized Loss	365	18
Fixed maturities | Commercial mortgage-backed securities | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	6	7
Fair Value	19,891	2,639
Gross Unrealized Loss	341	7
Fixed maturities | Commercial mortgage-backed securities | > 12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	5	5
Fair Value	889	845
Gross Unrealized Loss	24	11
Fixed maturities | Corporate bonds
Gain (Loss) on Investments [Line Items]
Number of Securities	39	6
Fair Value	125,988	10,217
Gross Unrealized Loss	2,858	25
Fixed maturities | Corporate bonds | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	37	2
Fair Value	123,673	3,528
Gross Unrealized Loss	2,856	6
Fixed maturities | Corporate bonds | 7-12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	2
Fair Value	2,315
Gross Unrealized Loss	2
Fixed maturities | Corporate bonds | > 12 months
Gain (Loss) on Investments [Line Items]
Number of Securities		4
Fair Value		6,689
Gross Unrealized Loss		19
Common Stock
Gain (Loss) on Investments [Line Items]
Number of Securities	14	14
Fair Value	35,333	25,288
Gross Unrealized Loss	1,704	626
Common Stock | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	13	13
Fair Value	33,429	23,345
Gross Unrealized Loss	1,340	522
Common Stock | 7-12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	1	1
Fair Value	1,904	1,943
Gross Unrealized Loss	$ 364	$ 104

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Credit Facility - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended			1 Months Ended
	Sep. 30, 2013	Mar. 28, 2011	Sep. 30, 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			143.0
Cash collateral posted			$ 1.0
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 September 30, 2013.

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Stock-Based Compensation - Additional Information (Detail)	9 Months Ended
	Sep. 30, 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
Non Performance Based Shares | Year Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vesting over the period	33.33%
Non Performance Based Shares | Year Four
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vesting over the period	33.33%
Non Performance Based Shares | Year Five
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vesting over the period	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%
Restricted stock units | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vesting over the period	0.00%
Restricted stock units | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vesting over the period	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
Performance Based Shares Issued Prior to 2011 | Year Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vesting over the period	33.33%
Performance Based Shares Issued Prior to 2011 | Year Four
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vesting over the period	33.33%
Performance Based Shares Issued Prior to 2011 | Year Five
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vesting over the period	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 over the period	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 over the period	150.00%

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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	Sep. 30, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Loss Amount	$ 25,496	$ 1,261
Percent of Total Gross Unrealized Loss	100.00%
Fair Value Amount	731,167	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	1
Percent of Total Gross Unrealized Loss	0.00%
Fair Value Amount	1,716
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	1,119
Percent of Total Gross Unrealized Loss	4.00%
Fair Value Amount	144,849
Percent of Total Fair Value	20.00%
Due After Five Years Through Ten Years
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Loss Amount	9,803
Percent of Total Gross Unrealized Loss	38.00%
Fair Value Amount	250,290
Percent of Total Fair Value	34.00%
Due After Ten Years
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Loss Amount	9,869
Percent of Total Gross Unrealized Loss	40.00%
Fair Value Amount	162,191
Percent of Total Fair Value	22.00%
Mortgage- and asset-backed securities
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Loss Amount	4,704
Percent of Total Gross Unrealized Loss	18.00%
Fair Value Amount	$ 172,121
Percent of Total Fair Value	24.00%

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Segment Information - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013 Segment	Sep. 30, 2012
Segment Reporting Information [Line Items]
Number of business segments			2
Combined ratio indicating underwriting profit			100.00%
Combined ratio indicating underwriting loss			100.00%
Net earned premiums	$ 213,895	$ 201,262	$ 622,037	$ 580,398
Navigators Insurance Company
Segment Reporting Information [Line Items]
Percentage of Navigators Specialty Insurance Company reinsured by Navigators Insurance Company	100.00%		100.00%
Lloyd's
Segment Reporting Information [Line Items]
Net earned premiums	50,933	52,172	148,197	158,183
Lloyd's | Syndicate 1221
Segment Reporting Information [Line Items]
Percentage control of stamp capacity	100.00%	100.00%	100.00%	100.00%
Insurance
Segment Reporting Information [Line Items]
Net earned premiums	162,962	149,090	473,840	422,215
Insurance | UK Branch
Segment Reporting Information [Line Items]
Net earned premiums	$ 13,900	$ 16,900	$ 36,700	$ 56,000

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Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Unrealized gains (losses) on investments arising during the period, deferred tax	$ 2,676	$ 8,845	$ 14,988	$ 16,564
Reclassification adjustment for net realized (gains) losses included in net income, deferred tax	322	1,152	3,442	1,353
Non credit other-than-temporary impairments arising during the period, deferred tax	30	213	134	476
Reclassification adjustment for non credit other-than-temporary impairment losses recognized in net income, deferred tax	0	0		15
Change in foreign currency translation gains (losses), deferred tax	$ 867	$ 1,679	$ 108	$ 172

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Operating activities:
Net income (loss)	$ 49,133	$ 35,718
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation & amortization	3,076	3,635
Deferred income taxes	(1,256)	(9,313)
Net realized (gains) losses	(7,171)	(10,820)
Net other-than-temporary losses recognized in earnings	1,863	650
Changes in assets and liabilities:
Reinsurance recoverable on paid and unpaid losses and loss adjustment expenses	88,177	12,813
Reserves for losses and loss adjustment expenses	(46,328)	(2,723)
Prepaid reinsurance premiums	(32,420)	(60,689)
Unearned premiums	73,829	102,613
Premiums receivable	(35,396)	(95,335)
Deferred policy acquisition costs	(2,166)	2,703
Accrued investment income	(1,159)	317
Reinsurance balances payable	14,750	60,841
Current income tax payable, net	3,316	5,066
Other	21,748	23,647
Net cash provided by (used in) operating activities	129,996	69,123
Fixed maturities
Redemptions and maturities	143,591	134,050
Sales	637,176	905,450
Purchases	(713,450)	(1,196,729)
Equity securities
Sales	11,439	4,346
Purchases	(53,919)	(5,553)
Change in payable for securities	(64,633)	65,299
Net change in short-term investments	801	(65,225)
Purchase of property and equipment	(7,771)	(2,872)
Net cash provided by (used in) investing activities	(46,766)	(161,234)
Financing activities:
Proceeds of stock issued from employee stock purchase plan	821	672
Proceeds of stock issued from exercise of stock options	1,126	331
Net cash provided by (used in) financing activities	1,947	1,003
Increase (decrease) in cash	85,177	(91,108)
Cash at beginning of year	45,336	127,360
Cash at end of period	130,513	36,252
Supplemental cash information:
Income taxes paid, net	20,425	16,734
Interest paid	4,025	4,025
Issuance of stock to directors	$ 400	$ 242

XML

Segment Information

9 Months Ended

Sep. 30, 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 and nine months ended September 30, 2013 and 2012 were as follows:

	Three Month Ended September 30, 2013
	Insurance			Lloyd’s
In thousands	Companies			Operations			Corporate(1)			Total
Gross written premiums	$	227,609		$	84,467		$	—		$	312,076
Net written premiums		149,290			47,266			—			196,556
Net earned premiums		162,962			50,933			—			213,895
Net losses and loss adjustment expenses		(95,315	)		(29,771	)		—			(125,086	)
Commission expenses		(20,039	)		(8,289	)		643			(27,685	)
Other operating expenses		(28,510	)		(10,546	)		—			(39,056	)
Other income (expense)		955			(522	)		(643	)		(210	)
Underwriting profit (loss)	$	20,053		$	1,805		$	—		$	21,858
Net investment income		12,285			1,807			2			14,094
Net realized gains (losses)		(1,890	)		(919	)		—			(2,809	)
Interest expense		—			—			(2,053	)		(2,053	)
Income (loss) before income taxes	$	30,448		$	2,693		$	(2,051	)	$	31,090
Income tax expense (benefit)		9,355			878			(429	)		9,804
Net income (loss)	$	21,093		$	1,815		$	(1,622	)	$	21,286
Identifiable assets	$	3,018,100		$	983,382		$	73,094		$	4,074,576
Losses and loss adjustment expenses ratio		58.5	%		58.5	%					58.5	%
Commission expense ratio		12.3	%		16.3	%					12.9	%
Other operating expense ratio (2)		16.9	%		21.7	%					18.4	%
Combined ratio		87.7	%		96.5	%					89.8	%

(1) -  Includes Corporate segment intercompany eliminations.

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

	Three Month Ended September 30, 2012
	Insurance			Lloyd’s
In thousands	Companies			Operations			Corporate(1)			Total
Gross written premiums	$	218,361		$	80,381		$	—		$	298,742
Net written premiums		142,148			45,898			—			188,046
Net earned premiums		149,090			52,172			—			201,262
Net losses and loss adjustment expenses		(113,303	)		(15,547	)		—			(128,850	)
Commission expenses		(20,827	)		(10,911	)		480			(31,258	)
Other operating expenses		(29,387	)		(10,725	)		—			(40,112	)
Other income (expense)		1,229			40			(480	)		789
Underwriting profit (loss)	$	(13,198	)	$	15,029		$	—		$	1,831
Net investment income		12,004			1,552			41			13,597
Net realized gains (losses)		2,609			2,152			—			4,761
Interest expense		—			—			(2,049	)		(2,049	)
Income (loss) before income taxes	$	1,415		$	18,733		$	(2,008	)	$	18,140
Income tax expense (benefit)		(377	)		6,525			(923	)		5,225
Net income (loss)	$	1,792		$	12,208		$	(1,085	)	$	12,915
Identifiable assets	$	2,995,530		$	958,238		$	40,929		$	3,994,697
Losses and loss adjustment expenses ratio		76.0	%		29.8	%					64.0	%
Commission expense ratio		14.0	%		20.9	%					15.5	%
Other operating expense ratio (2)		18.9	%		20.5	%					19.6	%
Combined ratio		108.9	%		71.2	%					99.1	%

(1) -  Includes Corporate segment intercompany eliminations.

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

	Nine Month Ended September 30, 2013
	Insurance			Lloyd’s
In thousands	Companies			Operations			Corporate(1)			Total
Gross written premiums	$	757,802		$	279,624		$	—		$	1,037,426
Net written premiums		508,989			155,488			—			664,477
Net earned premiums		473,840			148,197			—			622,037
Net losses and loss adjustment expenses		(308,968	)		(78,608	)		—			(387,576	)
Commission expenses		(59,129	)		(25,245	)		1,743			(82,631	)
Other operating expenses		(87,682	)		(32,926	)		—			(120,608	)
Other income (expense)		2,303			(1,067	)		(1,743	)		(507	)
Underwriting profit (loss)	$	20,364		$	10,351		$	—		$	30,715
Net investment income		36,751			5,237			9			41,997
Net realized gains (losses)		6,001			(697	)		4			5,308
Interest expense		—			—			(6,156	)		(6,156	)
Income (loss) before income taxes	$	63,116		$	14,891		$	(6,143	)	$	71,864
Income tax expense (benefit)		19,554			5,120			(1,943	)		22,731
Net income (loss)	$	43,562		$	9,771		$	(4,200	)	$	49,133
Identifiable assets	$	3,018,100		$	983,382		$	73,094		$	4,074,576
Losses and loss adjustment expenses ratio		65.2	%		53.0	%					62.3	%
Commission expense ratio		12.5	%		17.0	%					13.3	%
Other operating expense ratio (2)		18.0	%		23.0	%					19.5	%
Combined ratio		95.7	%		93.0	%					95.1	%

(1) -  Includes Corporate segment intercompany eliminations.

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

	Nine Month Ended September 30, 2012
	Insurance			Lloyd’s
In thousands	Companies			Operations			Corporate(1)			Total
Gross written premiums	$	680,763		$	284,115		$	—		$	964,878
Net written premiums		457,463			163,880			—			621,343
Net earned premiums		422,215			158,183			—			580,398
Net losses and loss adjustment expenses		(304,483	)		(65,759	)		—			(370,242	)
Commission expenses		(61,245	)		(30,735	)		1,769			(90,211	)
Other operating expenses		(83,646	)		(32,592	)		—			(116,238	)
Other income (expense)		3,750			106			(1,769	)		2,087
Underwriting profit (loss)	$	(23,409	)	$	29,203		$	—		$	5,794
Net investment income		34,225			6,289			118			40,632
Net realized gains (losses)		6,809			3,361			—			10,170
Interest expense		—			—			(6,147	)		(6,147	)
Income (loss) before income taxes	$	17,625		$	38,853		$	(6,029	)	$	50,449
Income tax expense (benefit)		3,603			13,458			(2,330	)		14,731
Net income (loss)	$	14,022		$	25,395		$	(3,699	)	$	35,718
Identifiable assets	$	2,995,530		$	958,238		$	40,929		$	3,994,697
Losses and loss adjustment expenses ratio		72.1	%		41.6	%					63.8	%
Commission expense ratio		14.5	%		19.4	%					15.5	%
Other operating expense ratio (2)		18.9	%		20.5	%					19.7	%
Combined ratio		105.5	%		81.5	%					99.0	%

(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 and nine months ended September 30, 2013 and 2012:

	Three Months Ended September 30, 2013
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	38,912	$	36,009	$	74,921
Property casualty		156,228		35,869		192,097
Professional liability		32,469		12,589		45,058
Total	$	227,609	$	84,467	$	312,076
Net written premiums:
Marine	$	26,437	$	26,795	$	53,232
Property casualty		97,553		13,761		111,314
Professional liability		25,300		6,710		32,010
Total	$	149,290	$	47,266	$	196,556
Net earned premiums:
Marine	$	31,490	$	34,264	$	65,754
Property casualty		105,759		10,472		116,231
Professional liability		25,713		6,197		31,910
Total	$	162,962	$	50,933	$	213,895
	Three Months Ended September 30, 2012
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	44,879	$	37,716	$	82,595
Property casualty		139,948		32,789		172,737
Professional liability		33,534		9,876		43,410
Total	$	218,361	$	80,381	$	298,742
Net written premiums:
Marine	$	32,615	$	27,939	$	60,554
Property casualty		83,449		11,633		95,082
Professional liability		26,084		6,326		32,410
Total	$	142,148	$	45,898	$	188,046
Net earned premiums:
Marine	$	40,592	$	34,002	$	74,594
Property casualty		83,993		11,870		95,863
Professional liability		24,505		6,300		30,805
Total	$	149,090	$	52,172	$	201,262

	Nine Months Ended September 30, 2013
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	132,836	$	135,546	$	268,382
Property casualty		527,287		102,144		629,431
Professional liability		97,679		41,934		139,613
Total	$	757,802	$	279,624	$	1,037,426
Net written premiums:
Marine	$	94,944	$	100,413	$	195,357
Property casualty		338,215		33,254		371,469
Professional liability		75,830		21,821		97,651
Total	$	508,989	$	155,488	$	664,477
Net earned premiums:
Marine	$	100,013	$	102,932	$	202,945
Property casualty		297,954		26,913		324,867
Professional liability		75,873		18,352		94,225
Total	$	473,840	$	148,197	$	622,037
	Nine Months Ended September 30, 2012
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	156,640	$	146,528	$	303,168
Property casualty		426,494		106,063		532,557
Professional liability		97,629		31,524		129,153
Total	$	680,763	$	284,115	$	964,878
Net written premiums:
Marine	$	107,266	$	109,489	$	216,755
Property casualty		274,823		36,693		311,516
Professional liability		75,374		17,698		93,072
Total	$	457,463	$	163,880	$	621,343
Net earned premiums:
Marine	$	111,402	$	101,538	$	212,940
Property casualty		240,536		41,644		282,180
Professional liability		70,277		15,001		85,278
Total	$	422,215	$	158,183	$	580,398

The Insurance Companies net earned premiums include $13.9 million and $16.9 million of net earned premiums from the U.K. Branch for the three months ended September 30, 2013 and 2012, respectively, and $36.7 million and $56.0 million of net earned premiums from the U.K. Branch for the nine months ended September 30, 2013 and 2012, respectively.

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Accounting Policies

9 Months Ended

Sep. 30, 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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Summary of Activity Related to Other-Than-Temporary Impairment Losses (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2013 Investment	Sep. 30, 2013 Investment	Sep. 30, 2012 Investment
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Number of Securities	1	3	4
Total other-than-temporary impairment losses	$ 1,821	$ 1,863	$ 693
Portion of loss recognized in other comprehensive income			43
Net other-than-temporary impairment losses recognized in earnings	1,821	1,863	650
Corporate And Other Bonds
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Number of Securities	1	1
Total other-than-temporary impairment losses	1,821	1,821
Net other-than-temporary impairment losses recognized in earnings	1,821	1,821
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			54
Portion of loss recognized in other comprehensive income			43
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	3
Total other-than-temporary impairment losses		42	639
Net other-than-temporary impairment losses recognized in earnings		$ 42	$ 639

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Reinsurance Ceded - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013 Entity	Sep. 30, 2012	Sep. 30, 2013 Entity	Sep. 30, 2012
Effects of Reinsurance [Line Items]
Ceded premiums earned	$ 114.2	$ 97.4	$ 340.5	$ 283.4
Ceded losses incurred	$ (37.0)	$ 31.2	$ 94.1	$ 154.4
Percentage of reinsurance recoverable of 20 largest reinsurers			76.30%
Number of largest reinsurers	20		20

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Amounts Charged to Expense for Stock-based Compensation (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2013		Sep. 30, 2012		Sep. 30, 2013		Sep. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	$ 175		$ 2,015		$ 3,902		$ 5,336
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	17		1,818		3,491		5,004
Directors restricted stock grants
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	103	[1]	170	[1]	309	[1]	290	[1]
Employee stock purchase plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	$ 55		$ 27		$ 102		$ 42

[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		9 Months Ended		12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 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	807,000	2,193,000	2,323,000	8,529,000
Portfolio duration of investments			3 years 10 months 24 days	3 years 9 months 18 days
Net realized gains(losses) from sale of investments	(988,000)	4,761,000	7,171,000	10,820,000
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	4.6		4.6
Non-government backed securities | Maximum
Schedule of Investments [Line Items]
Percentage of investment	5.00%		5.00%		5.00%
Non-government backed securities | Investments
Schedule of Investments [Line Items]
Gross Unrealized Loss			$ 1,000,000		$ 200,000
Equity Securities | Maximum
Schedule of Investments [Line Items]
Percentage of fair value over cost	80.00%		80.00%

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Subsequent Events - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	1 Months Ended					1 Months Ended			1 Months Ended
	Apr. 30, 2009 Senior Notes due May 1, 2016	Apr. 17, 2006 Senior Notes due May 1, 2016	Sep. 30, 2013 Senior Notes due May 1, 2016	Sep. 30, 2013 Senior Notes due May 1, 2016 Semi Annual Payment, First Payment	Sep. 30, 2013 Senior Notes due May 1, 2016 Semi Annual Payment, Second Payment	Oct. 04, 2013 Subsequent Event 5.75% Senior Notes	Oct. 04, 2013 Subsequent Event 5.75% Senior Notes Semi Annual Payment, First Payment	Oct. 04, 2013 Subsequent Event 5.75% Senior Notes Semi Annual Payment, Second Payment	Oct. 04, 2013 Subsequent Event Senior Notes due May 1, 2016
Subsequent Event [Line Items]
Principal amount of senior notes		$ 125				$ 265
Interest rate stated on senior notes		7.00%				5.75%			7.00%
Senior notes due date		May 01, 2016				Oct. 15, 2023			May 01, 2016
Net proceeds from issuance of senior notes		123.5				263.0
Redemption of senior notes	7.0								115.0
Incurred charge for payment of call premium									$ 17.9
Effective interest rate			7.17%			5.84%
Interest payment date on senior notes				--05-01	--11-01		--04-15	--10-15
First Interest payment date						Apr. 15, 2014

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Change in Net Unrealized Gains and Losses (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Gross unrealized gains (losses)	$ (52,220)	$ 46,982
Deferred income tax	(18,296)	15,702
Change in net unrealized gains (losses), net	(33,924)	31,280
Fixed maturities
Gross unrealized gains (losses)	(63,771)	38,165
Equity Securities
Gross unrealized gains (losses)	$ 11,551	$ 8,817

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Fixed maturities, available-for-sale, amortized cost	$ 1,958,434	$ 2,034,765
Equity securities, available-for-sale, cost	$ 131,046	$ 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	17,658,292	17,558,046
Treasury stock, shares	3,511,380	3,511,380

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Lloyd's Syndicate 1221

9 Months Ended

Sep. 30, 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 ($316 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 September 30, 2013, the Company had provided letters of credit of $143.0 million and has $1.0 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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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Net income (loss)	$ 21,286	$ 12,915	$ 49,133	$ 35,718
Change in net unrealized gains (losses) on investments:
Unrealized gains (losses) on investments arising during the period, net of deferred tax of $2,676 and $8,845 for 3 months ended September 30, 2013 and September 30, 2012 and $14,988 and $16,564 for 9 months ended September 30, 2013 and September 30, 2012, respectively	5,003	16,471	(27,780)	32,881
Reclassification adjustment for net realized (gains) losses included in net income net of deferred tax of $322 and $1,152 for 3 months ended September 30, 2013 and September 30, 2012, $3,442 and $1,353 for 9 months ended September 30, 2013 and September 30, 2012, respectively	598	(2,139)	(6,392)	(2,513)
Change in net unrealized gains (losses) on investments	5,601	14,332	(34,172)	30,368
Change in other-than-temporary impairments:
Non credit other-than-temporary impairments arising during the period, net of deferred tax of $30 and $213 for 3 months ended September 30, 2013 and September 30, 2012 and $134 and $476 for 9 months ended September 30, 2013 and September 30, 2012, respectively	(55)	395	248	884
Reclassification adjustment for non credit other-than-temporary impairment losses recognized in net income net of deferred tax of $0 for 3 months ended September 30, 2013 and September 30, 2012,and $15 for 9 months ended September 30, 2012, respectively				28
Change in other-than-temporary impairments	(55)	395	248	912
Change in foreign currency translation gains (losses), net of deferred tax of $867 and $1,679 for 3 months ended September 30, 2013 and September 30, 2012,and $108 and $172 for 9 months ended September 30, 2013 and September 30, 2012, respectively	(1,370)	3,118	209	(694)
Other comprehensive income (loss)	4,176	17,845	(33,715)	30,586
Comprehensive income (loss)	$ 25,462	$ 30,760	$ 15,418	$ 66,304

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Investments and cash:
Fixed maturities, available-for-sale, at fair value (amortized cost: 2013, $1,958,434; 2012, $2,034,765)	$ 1,981,731	$ 2,121,833
Equity securities, available-for-sale, at fair value (cost: 2013, $131,046; 2012, $85,004)	158,890	101,297
Short-term investments, at cost which approximates fair value	152,987	153,788
Cash	130,513	45,336
Total investments and cash	2,424,121	2,422,254
Premiums receivable	355,578	320,182
Prepaid reinsurance premiums	253,435	221,015
Reinsurance recoverable on paid losses	44,955	49,282
Reinsurance recoverable on unpaid losses and loss adjustment expenses	796,289	880,139
Deferred policy acquisition costs	63,171	61,005
Accrued investment income	13,746	12,587
Goodwill and other intangible assets	7,065	7,093
Deferred income tax, net	22,639	3,216
Receivable for investments sold	59,453	4,310
Other assets	34,124	26,587
Total assets	4,074,576	4,007,670
Liabilities:
Reserves for losses and loss adjustment expenses	2,050,720	2,097,048
Unearned premiums	716,236	642,407
Reinsurance balances payable	180,563	165,813
Senior Notes	114,542	114,424
Current income tax payable, net	5,449	2,133
Payable for investments purchased	48,855	58,345
Accounts payable and other liabilities	58,329	48,015
Total liabilities	3,174,694	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 17,658,292 shares for 2013 and 17,558,046 shares for 2012	1,765	1,755
Additional paid-in capital	334,421	329,452
Treasury stock, at cost (3,511,380 shares for 2013 and 2012)	(155,801)	(155,801)
Retained earnings	678,004	628,871
Accumulated other comprehensive income	41,493	75,208
Total stockholders' equity	899,882	879,485
Total liabilities and stockholders' equity	$ 4,074,576	$ 4,007,670

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Lists of 20 Largest Reinsurers Measured by Reinsurance Recoverable (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013		Dec. 31, 2012
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	$ 253,435		$ 221,015
Reinsurance Recoverables Paid/Unpaid Losses	841,244
Reinsurance Recoverables Total	1,094,679	[1]
Collateral Held	240,576	[2]
Rating	AA
National Indemnity Company | AM Best, A++ Rating | Standard & Poor's, AA+ Rating
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	56,161
Reinsurance Recoverables Paid/Unpaid Losses	73,815
Reinsurance Recoverables Total	129,976	[1]
Collateral Held	37,385	[2]
National Indemnity Company | AM Best | AM Best, A++ Rating | Standard & Poor's, AA+ Rating
Ceded Credit Risk [Line Items]
Rating	A++
National Indemnity Company | Standard & Poor's | AM Best, A++ Rating | Standard & Poor's, AA+ Rating
Ceded Credit Risk [Line Items]
Rating	AA+
Transatlantic Reinsurance Company | AM Best, A Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	21,964
Reinsurance Recoverables Paid/Unpaid Losses	70,838
Reinsurance Recoverables Total	92,802	[1]
Collateral Held	10,052	[2]
Transatlantic Reinsurance Company | AM Best | AM Best, A Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Rating	A
Transatlantic Reinsurance Company | Standard & Poor's | AM Best, A Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Rating	A+
Everest Reinsurance Company | AM Best, A+ Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	22,082
Reinsurance Recoverables Paid/Unpaid Losses	64,313
Reinsurance Recoverables Total	86,395	[1]
Collateral Held	9,115	[2]
Everest Reinsurance Company | AM Best | AM Best, A+ Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Rating	A+
Everest Reinsurance Company | Standard & Poor's | AM Best, A+ Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Rating	A+
Swiss Reinsurance America Corporation | AM Best, A+ Rating | Standard & Poor's, AA- Rating
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	6,094
Reinsurance Recoverables Paid/Unpaid Losses	76,895
Reinsurance Recoverables Total	82,989	[1]
Collateral Held	8,638	[2]
Swiss Reinsurance America Corporation | AM Best | AM Best, A+ Rating | Standard & Poor's, AA- Rating
Ceded Credit Risk [Line Items]
Rating	A+
Swiss Reinsurance America Corporation | Standard & Poor's | AM Best, A+ Rating | Standard & Poor's, AA- Rating
Ceded Credit Risk [Line Items]
Rating	AA-
Munich Reinsurance America Inc. | AM Best, A+ Rating | Standard & Poor's, AA- Rating
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	6,307
Reinsurance Recoverables Paid/Unpaid Losses	70,676
Reinsurance Recoverables Total	76,983	[1]
Collateral Held	4,440	[2]
Munich Reinsurance America Inc. | AM Best | AM Best, A+ Rating | Standard & Poor's, AA- Rating
Ceded Credit Risk [Line Items]
Rating	A+
Munich Reinsurance America Inc. | Standard & Poor's | AM Best, A+ Rating | Standard & Poor's, AA- Rating
Ceded Credit Risk [Line Items]
Rating	AA-
Partner Reinsurance Europe | AM Best, A+ Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	11,141
Reinsurance Recoverables Paid/Unpaid Losses	40,623
Reinsurance Recoverables Total	51,764	[1]
Collateral Held	18,715	[2]
Partner Reinsurance Europe | AM Best | AM Best, A+ Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Rating	A+
Partner Reinsurance Europe | Standard & Poor's | AM Best, A+ Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Rating	A+
Lloyd Syndicate #2003 | AM Best, A Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	8,493
Reinsurance Recoverables Paid/Unpaid Losses	37,427
Reinsurance Recoverables Total	45,920	[1]
Collateral Held	10,568	[2]
Lloyd Syndicate #2003 | AM Best | AM Best, A Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Rating	A
Lloyd Syndicate #2003 | Standard & Poor's | AM Best, A Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Rating	A+
Allied World Reinsurance | AM Best, A Rating | Standard & Poor's, A Rating
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	14,006
Reinsurance Recoverables Paid/Unpaid Losses	28,718
Reinsurance Recoverables Total	42,724	[1]
Collateral Held	4,724	[2]
Allied World Reinsurance | AM Best | AM Best, A Rating | Standard & Poor's, A Rating
Ceded Credit Risk [Line Items]
Rating	A
Allied World Reinsurance | Standard & Poor's | AM Best, A Rating | Standard & Poor's, A Rating
Ceded Credit Risk [Line Items]
Rating	A
Scor Global P&C SE | AM Best, A Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	12,212
Reinsurance Recoverables Paid/Unpaid Losses	25,127
Reinsurance Recoverables Total	37,339	[1]
Collateral Held	11,826	[2]
Scor Global P&C SE | AM Best | AM Best, A Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Rating	A
Scor Global P&C SE | Standard & Poor's | AM Best, A Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Rating	A+
Tower Insurance Company | AM Best, B++ Rating | Standard & Poor's, Not Rated
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	13,271
Reinsurance Recoverables Paid/Unpaid Losses	16,002
Reinsurance Recoverables Total	29,273	[1]
Collateral Held	8,305	[2]
Tower Insurance Company | AM Best | AM Best, B++ Rating | Standard & Poor's, Not Rated
Ceded Credit Risk [Line Items]
Rating	B++
Tower Insurance Company | Standard & Poor's | AM Best, B++ Rating | Standard & Poor's, Not Rated
Ceded Credit Risk [Line Items]
Rating	NR
Validus Reinsurance Ltd | AM Best, A Rating | Standard & Poor's, A Rating
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	2,576
Reinsurance Recoverables Paid/Unpaid Losses	21,140
Reinsurance Recoverables Total	23,716	[1]
Collateral Held	12,756	[2]
Validus Reinsurance Ltd | AM Best | AM Best, A Rating | Standard & Poor's, A Rating
Ceded Credit Risk [Line Items]
Rating	A
Validus Reinsurance Ltd | Standard & Poor's | AM Best, A Rating | Standard & Poor's, A Rating
Ceded Credit Risk [Line Items]
Rating	A
Employers Mutual Casualty Company | AM Best, A Rating | Standard & Poor's, Not Rated
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	11,257
Reinsurance Recoverables Paid/Unpaid Losses	6,746
Reinsurance Recoverables Total	18,003	[1]
Collateral Held	11,050	[2]
Employers Mutual Casualty Company | AM Best | AM Best, A Rating | Standard & Poor's, Not Rated
Ceded Credit Risk [Line Items]
Rating	A
Employers Mutual Casualty Company | Standard & Poor's | AM Best, A Rating | Standard & Poor's, Not Rated
Ceded Credit Risk [Line Items]
Rating	NR
Atlantic Specialty Insurance | AM Best, A Rating | Standard & Poor's, A- Rating
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	8,626
Reinsurance Recoverables Paid/Unpaid Losses	8,406
Reinsurance Recoverables Total	17,032	[1]
Collateral Held	2,560	[2]
Atlantic Specialty Insurance | AM Best | AM Best, A Rating | Standard & Poor's, A- Rating
Ceded Credit Risk [Line Items]
Rating	A
Atlantic Specialty Insurance | Standard & Poor's | AM Best, A Rating | Standard & Poor's, A- Rating
Ceded Credit Risk [Line Items]
Rating	A-
QBE Reinsurance Corp | AM Best, A Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	6,959
Reinsurance Recoverables Paid/Unpaid Losses	9,559
Reinsurance Recoverables Total	16,518	[1]
Collateral Held	2,416	[2]
QBE Reinsurance Corp | AM Best | AM Best, A Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Rating	A
QBE Reinsurance Corp | Standard & Poor's | AM Best, A Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Rating	A+
Scor Holding (Switzerland) AG | AM Best, A Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	675
Reinsurance Recoverables Paid/Unpaid Losses	14,050
Reinsurance Recoverables Total	14,725	[1]
Collateral Held	4,927	[2]
Scor Holding (Switzerland) AG | AM Best | AM Best, A Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Rating	A
Scor Holding (Switzerland) AG | Standard & Poor's | AM Best, A Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Rating	A+
Berkley Insurance Company | AM Best, A+ Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	1,787
Reinsurance Recoverables Paid/Unpaid Losses	12,797
Reinsurance Recoverables Total	14,584	[1]
Collateral Held	519	[2]
Berkley Insurance Company | AM Best | AM Best, A+ Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Rating	A+
Berkley Insurance Company | Standard & Poor's | AM Best, A+ Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Rating	A+
Lloyd Syndicate #4000 | AM Best, A Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	345
Reinsurance Recoverables Paid/Unpaid Losses	13,930
Reinsurance Recoverables Total	14,275	[1]
Collateral Held	305	[2]
Lloyd Syndicate #4000 | AM Best | AM Best, A Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Rating	A
Lloyd Syndicate #4000 | Standard & Poor's | AM Best, A Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Rating	A+
AXIS Re Europe | AM Best, A+ Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	4,750
Reinsurance Recoverables Paid/Unpaid Losses	9,511
Reinsurance Recoverables Total	14,261	[1]
Collateral Held	4,486	[2]
AXIS Re Europe | AM Best | AM Best, A+ Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Rating	A+
AXIS Re Europe | Standard & Poor's | AM Best, A+ Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Rating	A+
Lloyd's Syndicate #1955 | AM Best, A Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	2,459
Reinsurance Recoverables Paid/Unpaid Losses	10,931
Reinsurance Recoverables Total	13,390	[1]
Collateral Held	2,397	[2]
Lloyd's Syndicate #1955 | AM Best | AM Best, A Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Rating	A
Lloyd's Syndicate #1955 | Standard & Poor's | AM Best, A Rating | Standard & Poor's, A+ Rating
Ceded Credit Risk [Line Items]
Rating	A+
Platinum Underwriters Re | AM Best, A Rating | Standard & Poor's, A- Rating
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	259
Reinsurance Recoverables Paid/Unpaid Losses	12,700
Reinsurance Recoverables Total	12,959	[1]
Collateral Held	1,692	[2]
Platinum Underwriters Re | AM Best | AM Best, A Rating | Standard & Poor's, A- Rating
Ceded Credit Risk [Line Items]
Rating	A
Platinum Underwriters Re | Standard & Poor's | AM Best, A Rating | Standard & Poor's, A- Rating
Ceded Credit Risk [Line Items]
Rating	A-
Insurance
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	211,424
Reinsurance Recoverables Paid/Unpaid Losses	624,204
Reinsurance Recoverables Total	835,628	[1]
Collateral Held	166,876	[2]
All Other
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	42,011
Reinsurance Recoverables Paid/Unpaid Losses	217,040
Reinsurance Recoverables Total	259,051	[1]
Collateral Held	$ 73,700	[2]

[1] Net of reserve for uncollectible reinsurance of approximately $11.3 million.

[2] Collateral of $240.6 million consists of $180.6 million in ceded balances payable, $57.2 million in letters of credit, and $2.8 million of other balances held by the Company's Insurance Companies and Lloyd's Operations.

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2013

Amounts Charged to Expense for Stock-based Compensation

The amounts charged to expense for stock-based compensation for the three and nine months ended September 30, 2013 and 2012 are presented in the following table:

	Three Months Ended September 30,				Nine Months Ended September 30,
In thousands	2013		2012		2013		2012
Restricted stock units	$	17	$	1,818	$	3,491	$	5,004
Directors restricted stock grants(1)		103		170		309		290
Employee stock purchase plan		55		27		102		42
Total stock based compensation	$	175	$	2,015	$	3,902	$	5,336

(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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Net Investment Income (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Net Investment Income [Line Items]
Investment Income	$ 14,901	$ 15,790	$ 44,320	$ 49,161
Investment expenses	(807)	(2,193)	(2,323)	(8,529)
Net investment income	14,094	13,597	41,997	40,632
Fixed maturities
Net Investment Income [Line Items]
Investment Income	13,399	14,364	40,142	44,779
Equity Securities
Net Investment Income [Line Items]
Investment Income	1,315	989	3,603	2,930
Short-term investments
Net Investment Income [Line Items]
Investment Income	$ 187	$ 437	$ 575	$ 1,452

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Amount and Percentage of Fixed Maturities by Rating (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Investment Securities [Line Items]
Rating	AA
Fair Value	$ 1,981,731	$ 2,121,833
Percent of Total	100.00%
Extremely strong
Investment Securities [Line Items]
Rating	AAA
Fair Value	305,979
Percent of Total	15.00%
Very strong
Investment Securities [Line Items]
Rating	AA
Fair Value	1,051,156
Percent of Total	54.00%
Strong
Investment Securities [Line Items]
Rating	A
Fair Value	440,063
Percent of Total	22.00%
Adequate
Investment Securities [Line Items]
Rating	BBB
Fair Value	163,614
Percent of Total	8.00%
Speculative
Investment Securities [Line Items]
Rating	BB & Below
Fair Value	11,722
Percent of Total	1.00%
Not rated
Investment Securities [Line Items]
Rating	NR
Fair Value	$ 9,197
Percent of Total	0.00%

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Senior Note Due May 1, 2016 - Additional Information (Detail) (USD $)	1 Months Ended		3 Months Ended		9 Months Ended
	Apr. 30, 2009	Apr. 17, 2006	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Debt Instrument [Line Items]
Senior Notes			$ 114,542,000		$ 114,542,000		$ 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		114,500,000
Unamortized discount			500,000		500,000
Senior Notes			115,000,000		115,000,000
Fair value of senior notes			125,200,000		125,200,000		123,200,000
Interest expense on senior notes			$ 2,100,000	$ 2,100,000	$ 6,100,000	$ 6,100,000
Effective interest rate related to senior notes			7.17%		7.17%
Debt instrument, covenant compliance					As of September 30, 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		--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		--11-01

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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	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Gain (Loss) on Investments [Line Items]
Total investments and cash	$ 2,140,621	$ 2,223,130
Total investments and cash	2,424,121	2,422,254
Gross Unrealized Gains	78,341	105,248
Gross Unrealized Losses	(27,200)	(1,887)
Amortized Cost	2,372,980	2,318,893
Fixed maturities
Gain (Loss) on Investments [Line Items]
Total investments and cash	1,981,731	2,121,833
Gross Unrealized Gains	48,793	88,329
Gross Unrealized Losses	(25,496)	(1,261)
Amortized Cost	1,958,434	2,034,765
Fixed maturities | U.S. Treasury bonds, agency bonds, and foreign
Gain (Loss) on Investments [Line Items]
Total investments and cash	445,969	649,692
Gross Unrealized Gains	3,683	8,654
Gross Unrealized Losses	(5,694)	(36)
Amortized Cost	447,980	641,074
Fixed maturities | States, municipalities and political subdivisions
Gain (Loss) on Investments [Line Items]
Total investments and cash	445,281	322,947
Gross Unrealized Gains	9,752	18,712
Gross Unrealized Losses	(12,240)	(380)
Amortized Cost	447,769	304,615
Fixed maturities | Agency mortgage-backed securities
Gain (Loss) on Investments [Line Items]
Total investments and cash	300,347	384,445
Gross Unrealized Gains	7,966	13,652
Gross Unrealized Losses	(3,925)	(204)
Amortized Cost	296,306	370,997
Fixed maturities | Residential Mortgage Backed Securities
Gain (Loss) on Investments [Line Items]
Total investments and cash	35,277	38,692
Gross Unrealized Gains	1,107	1,053
Gross Unrealized Losses	(224)	(549)
Amortized Cost	34,394	38,188
Fixed maturities | Asset-backed securities
Gain (Loss) on Investments [Line Items]
Total investments and cash	88,714	50,382
Gross Unrealized Gains	795	1,133
Gross Unrealized Losses	(190)	(49)
Amortized Cost	88,109	49,298
Fixed maturities | Commercial mortgage-backed securities
Gain (Loss) on Investments [Line Items]
Total investments and cash	173,069	204,821
Gross Unrealized Gains	8,386	17,996
Gross Unrealized Losses	(365)	(18)
Amortized Cost	165,048	186,843
Fixed maturities | Mortgage-backed and asset-backed securities
Gain (Loss) on Investments [Line Items]
Total investments and cash	597,407	678,340
Gross Unrealized Gains	18,254	33,834
Gross Unrealized Losses	(4,704)	(820)
Amortized Cost	583,857	645,326
Fixed maturities | Corporate bonds
Gain (Loss) on Investments [Line Items]
Total investments and cash	493,074	470,854
Gross Unrealized Gains	17,104	27,129
Gross Unrealized Losses	(2,858)	(25)
Amortized Cost	478,828	443,750
Equity Securities | Common Stock
Gain (Loss) on Investments [Line Items]
Total investments and cash	158,890	101,297
Gross Unrealized Gains	29,548	16,919
Gross Unrealized Losses	(1,704)	(626)
Amortized Cost	131,046	85,004
Short-term investments
Gain (Loss) on Investments [Line Items]
Total investments and cash	152,987	153,788
Amortized Cost	152,987	153,788
Cash
Gain (Loss) on Investments [Line Items]
Total investments and cash	130,513	45,336
Amortized Cost	$ 130,513	$ 45,336

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Stock-Based Compensation

9 Months Ended

Sep. 30, 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 and nine months ended September 30, 2013 and 2012 are presented in the following table:

	Three Months Ended September 30,				Nine Months Ended September 30,
In thousands	2013		2012		2013		2012
Restricted stock units	$	17	$	1,818	$	3,491	$	5,004
Directors restricted stock grants(1)		103		170		309		290
Employee stock purchase plan		55		27		102		42
Total stock based compensation	$	175	$	2,015	$	3,902	$	5,336

(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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Lists of 20 Largest Reinsurers Measured by Reinsurance Recoverable (Parenthetical) (Detail) (USD $)	Sep. 30, 2013
Ceded Credit Risk [Line Items]
Reserve for uncollectible reinsurance amount	$ 11,300,000
Collateral Held	240,576,000	[1]
Ceded Balances Payable
Ceded Credit Risk [Line Items]
Collateral Held	180,600,000
Letter of Credit
Ceded Credit Risk [Line Items]
Collateral Held	57,200,000
All Other
Ceded Credit Risk [Line Items]
Collateral Held	$ 2,800,000

[1] Collateral of $240.6 million consists of $180.6 million in ceded balances payable, $57.2 million in letters of credit, and $2.8 million of other balances held by the Company's Insurance Companies and Lloyd's Operations.

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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		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Beginning balance	$ 3,332	$ 3,322	$ 3,332	$ 3,321
Additions for credit loss impairments recognized in the current period on securities not previously impaired	1,821		1,821
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	$ 5,153	$ 3,332	$ 5,153	$ 3,332

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Senior Notes due May 1, 2016

9 Months Ended

Sep. 30, 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 September 30, 2013 was $114.5 million. The unamortized discount at September 30, 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 $125.2 million and $123.2 million as of September 30, 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 the three and nine months ended each of September 30, 2013 and 2012 was approximately $2.1 million and $6.1 million, respectively.

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 September 30, 2013, the Company was in compliance with all such covenants.

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Reinsurance Ceded

9 Months Ended

Sep. 30, 2013

Reinsurance Ceded

Note 4. Reinsurance Ceded

The Company’s ceded earned premiums were $114.2 million and $97.4 million for the three months ended September 30, 2013 and 2012 and $340.5 million and $283.4 million for the nine months ended September 30, 2013 and 2012, respectively.

The Company’s ceded incurred losses were $(37.0) million and $31.2 million, respectively, for the three months ended September 30, 2013 and 2012, and were $94.1 million and $154.4 million for the nine months ended September 30, 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 loss adjustment expenses (“LAE”) and ceded unearned premium (constituting 76.3% of the total recoverable), together with the reinsurance recoverable and collateral as of September 30, 2013, and the reinsurers’ ratings from A.M. Best Company (“A.M. Best”) and Standard & Poor’s (“S&P”):

	Reinsurance Recoverables
In thousands	Unearned Premium		Paid/Unpaid Losses		Total (1)		Collateral Held (2)		A.M. Best		S&P
National Indemnity Company	$	56,161	$	73,815	$	129,976	$	37,385		A++		AA+
Transatlantic Reinsurance Company		21,964		70,838		92,802		10,052		A		A+
Everest Reinsurance Company		22,082		64,313		86,395		9,115		A+		A+
Swiss Reinsurance America Corporation		6,094		76,895		82,989		8,638		A+		AA-
Munich Reinsurance America Inc.		6,307		70,676		76,983		4,440		A+		AA-
Partner Reinsurance Europe		11,141		40,623		51,764		18,715		A+		A+
Lloyd’s Syndicate #2003		8,493		37,427		45,920		10,568		A		A+
Allied World Reinsurance		14,006		28,718		42,724		4,724		A		A
Scor Global P&C SE		12,212		25,127		37,339		11,826		A		A+
Tower Insurance Company		13,271		16,002		29,273		8,305		B++		NR
Validus Reinsurance Ltd.		2,576		21,140		23,716		12,756		A		A
Employers Mutual Casualty Company		11,257		6,746		18,003		11,050		A		NR
Atlantic Specialty Insurance		8,626		8,406		17,032		2,560		A		A-
QBE Reinsurance Corp		6,959		9,559		16,518		2,416		A		A+
Scor Holding (Switzerland) AG		675		14,050		14,725		4,927		A		A+
Berkley Insurance Company		1,787		12,797		14,584		519		A+		A+
Lloyd’s Syndicate #4000		345		13,930		14,275		305		A		A+
AXIS Re Europe		4,750		9,511		14,261		4,486		A+		A+
Lloyd’s Syndicate #1955		2,459		10,931		13,390		2,397		A		A+
Platinum Underwriters Re		259		12,700		12,959		1,692		A		A-
Top 20 Reinsurers	$	211,424	$	624,204	$	835,628	$	166,876
Others		42,011		217,040		259,051		73,700
Total	$	253,435	$	841,244	$	1,094,679	$	240,576

(1) - Net of reserve for uncollectible reinsurance of approximately $11.3 million.

(2) - Collateral of $240.6 million consists of $180.6 million in ceded balances payable, $57.2 million in letters of credit, and $2.8 million of other balances held by the Company’s Insurance Companies and Lloyd’s Operations.

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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)
Balance at Dec. 31, 2012	$ 879,485	$ 1,755	$ 329,452	$ (155,801)	$ 628,871	$ 75,208
Balance (in shares) at Dec. 31, 2012		17,558,046		3,511,380
Net income	49,133				49,133
Changes in other comprehensive income:
Change in net unrealized gain (loss) on investments	(34,172)					(34,172)
Change in net non-credit other-than-temporary impairment losses	248					248
Change in foreign currency translation gain (loss)	209					209
Other comprehensive income (loss)	(33,715)					(33,715)
Shares issued under stock plan (in shares)		100,246
Shares issued under stock plan	1,488	10	1,478
Share-based compensation	3,491		3,491
Balance at Sep. 30, 2013	$ 899,882	$ 1,765	$ 334,421	$ (155,801)	$ 678,004	$ 41,493
Balance (in shares) at Sep. 30, 2013		17,658,292		3,511,380

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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	Sep. 30, 2013	Dec. 31, 2012
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	$ 2,140,621	$ 2,223,130
Fixed maturities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	1,981,731	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	445,969	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	445,281	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	300,347	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	35,277	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	88,714	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	173,069	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	597,407	678,340
Fixed maturities | Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	493,074	470,854
Equity Securities | Common Stock
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	158,890	101,297
Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	415,390	515,799
Level 1 | Fixed maturities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	256,500	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	256,500	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	158,890	101,297
Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	1,720,669	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	1,720,669	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	189,469	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	445,281	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	300,347	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	35,277	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	88,714	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	173,069	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	597,407	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	488,512	470,854
Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	4,562
Level 3 | Fixed maturities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	4,562
Level 3 | Fixed maturities | Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	$ 4,562

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Lloyd's Syndicate 1221 - Additional Information (Detail) (Lloyd's, Syndicate 1221) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2013 USD ($)	Sep. 30, 2013 GBP (£)	Sep. 30, 2012 USD ($)	Sep. 30, 2012 GBP (£)
Supplementary Insurance Information, by Segment [Line Items]
Syndicate 1221's stamp capacity	$ 316	£ 195	$ 300	£ 184
Percentage control of stamp capacity	100.00%	100.00%	100.00%	100.00%
Letters of credit	143.0
Cash collateral posted	$ 1.0

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Credit Facility

9 Months Ended

Sep. 30, 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 September 30, 2013, letters of credit with an aggregate face amount of $143.0 million were outstanding under the credit facility and we have $1.0 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 September 30, 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

9 Months Ended

Sep. 30, 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 U.S. 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 United Kingdom (“U.K.”) tax credits in the 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 $18.9 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 $2.0 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 September 30, 2013 and 2012. The Company did not incur any interest or penalties related to unrecognized tax benefits for the three and nine months ended September 30, 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 $9.8 million and $22.7 million for the three and nine months ended September 30, 2013 compared to $5.2 million and $14.7 million for the same period in 2012, resulting in an effective tax rate of 31.5% and 31.6% for the three and nine months ended September 30, 2013 and 28.8% and 29.2% for the comparable periods in 2012.

The Company had state and local deferred tax assets amounting to potential future tax benefits of $0.5 million as of both September 30, 2013 and December 31, 2012, respectively. Included in the deferred tax assets are state and local net operating loss carry-forwards of $0.1 million and $0.2 million for September 30, 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 September 30, 2013 expire from 2023 to 2031.

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Reinsurance Ceded (Tables)

9 Months Ended

Sep. 30, 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 loss adjustment expenses (“LAE”) and ceded unearned premium (constituting 76.3% of the total recoverable), together with the reinsurance recoverable and collateral as of September 30, 2013, and the reinsurers’ ratings from A.M. Best Company (“A.M. Best”) and Standard & Poor’s (“S&P”):

	Reinsurance Recoverables
In thousands	Unearned Premium		Paid/Unpaid Losses		Total (1)		Collateral Held (2)		A.M. Best		S&P
National Indemnity Company	$	56,161	$	73,815	$	129,976	$	37,385		A++		AA+
Transatlantic Reinsurance Company		21,964		70,838		92,802		10,052		A		A+
Everest Reinsurance Company		22,082		64,313		86,395		9,115		A+		A+
Swiss Reinsurance America Corporation		6,094		76,895		82,989		8,638		A+		AA-
Munich Reinsurance America Inc.		6,307		70,676		76,983		4,440		A+		AA-
Partner Reinsurance Europe		11,141		40,623		51,764		18,715		A+		A+
Lloyd’s Syndicate #2003		8,493		37,427		45,920		10,568		A		A+
Allied World Reinsurance		14,006		28,718		42,724		4,724		A		A
Scor Global P&C SE		12,212		25,127		37,339		11,826		A		A+
Tower Insurance Company		13,271		16,002		29,273		8,305		B++		NR
Validus Reinsurance Ltd.		2,576		21,140		23,716		12,756		A		A
Employers Mutual Casualty Company		11,257		6,746		18,003		11,050		A		NR
Atlantic Specialty Insurance		8,626		8,406		17,032		2,560		A		A-
QBE Reinsurance Corp		6,959		9,559		16,518		2,416		A		A+
Scor Holding (Switzerland) AG		675		14,050		14,725		4,927		A		A+
Berkley Insurance Company		1,787		12,797		14,584		519		A+		A+
Lloyd’s Syndicate #4000		345		13,930		14,275		305		A		A+
AXIS Re Europe		4,750		9,511		14,261		4,486		A+		A+
Lloyd’s Syndicate #1955		2,459		10,931		13,390		2,397		A		A+
Platinum Underwriters Re		259		12,700		12,959		1,692		A		A-
Top 20 Reinsurers	$	211,424	$	624,204	$	835,628	$	166,876
Others		42,011		217,040		259,051		73,700
Total	$	253,435	$	841,244	$	1,094,679	$	240,576

(1)  - Net of reserve for uncollectible reinsurance of approximately $11.3 million.

(2)  - Collateral of $240.6 million consists of $180.6 million in ceded balances payable, $57.2 million in letters of credit, and $2.8 million of other balances held by the Company’s Insurance Companies and Lloyd’s Operations.

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Subsequent Events

9 Months Ended

Sep. 30, 2013

Subsequent Events

Note 12. Subsequent Events

On October 4, 2013, the Company completed a public debt offering of $265 million principal amount of 5.75% Senior Notes due October 15, 2023 (“5.75% Senior Notes”) and received net proceeds of $263 million. The Company used a portion of the proceeds of the 5.75% Senior Notes for the purpose of redeeming the $115 million aggregate principal amount of our 7% Senior Notes due May 1, 2016. The Company incurred a charge of $17.9 million for the payment of call premium in connection with the redemption of the 7.0% Senior Notes due 2016. The effective interest rate related to the net proceeds received from the 5.75% Senior Notes is approximately 5.84%. Interest will be paid on the 5.75% Senior Notes each April 15 and October 15 with the first payment due on April 15, 2014.

The Company may redeem the 5.75% Senior Notes in whole at any time or in part from time to time at a make-whole redemption price. The 5.75% Senior Notes are the Company’s only senior unsecured obligation and will rank equally with future senior unsecured indebtedness.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Oct. 25, 2013
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3
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		14,147,820

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2013

Financial Data by Segment

Financial data by segment for the three and nine months ended September 30, 2013 and 2012 were as follows:

	Three Month Ended September 30, 2013
	Insurance			Lloyd’s
In thousands	Companies			Operations			Corporate(1)			Total
Gross written premiums	$	227,609		$	84,467		$	—		$	312,076
Net written premiums		149,290			47,266			—			196,556
Net earned premiums		162,962			50,933			—			213,895
Net losses and loss adjustment expenses		(95,315	)		(29,771	)		—			(125,086	)
Commission expenses		(20,039	)		(8,289	)		643			(27,685	)
Other operating expenses		(28,510	)		(10,546	)		—			(39,056	)
Other income (expense)		955			(522	)		(643	)		(210	)
Underwriting profit (loss)	$	20,053		$	1,805		$	—		$	21,858
Net investment income		12,285			1,807			2			14,094
Net realized gains (losses)		(1,890	)		(919	)		—			(2,809	)
Interest expense		—			—			(2,053	)		(2,053	)
Income (loss) before income taxes	$	30,448		$	2,693		$	(2,051	)	$	31,090
Income tax expense (benefit)		9,355			878			(429	)		9,804
Net income (loss)	$	21,093		$	1,815		$	(1,622	)	$	21,286
Identifiable assets	$	3,018,100		$	983,382		$	73,094		$	4,074,576
Losses and loss adjustment expenses ratio		58.5	%		58.5	%					58.5	%
Commission expense ratio		12.3	%		16.3	%					12.9	%
Other operating expense ratio (2)		16.9	%		21.7	%					18.4	%
Combined ratio		87.7	%		96.5	%					89.8	%

(1) -  Includes Corporate segment intercompany eliminations.

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

	Three Month Ended September 30, 2012
	Insurance			Lloyd’s
In thousands	Companies			Operations			Corporate(1)			Total
Gross written premiums	$	218,361		$	80,381		$	—		$	298,742
Net written premiums		142,148			45,898			—			188,046
Net earned premiums		149,090			52,172			—			201,262
Net losses and loss adjustment expenses		(113,303	)		(15,547	)		—			(128,850	)
Commission expenses		(20,827	)		(10,911	)		480			(31,258	)
Other operating expenses		(29,387	)		(10,725	)		—			(40,112	)
Other income (expense)		1,229			40			(480	)		789
Underwriting profit (loss)	$	(13,198	)	$	15,029		$	—		$	1,831
Net investment income		12,004			1,552			41			13,597
Net realized gains (losses)		2,609			2,152			—			4,761
Interest expense		—			—			(2,049	)		(2,049	)
Income (loss) before income taxes	$	1,415		$	18,733		$	(2,008	)	$	18,140
Income tax expense (benefit)		(377	)		6,525			(923	)		5,225
Net income (loss)	$	1,792		$	12,208		$	(1,085	)	$	12,915
Identifiable assets	$	2,995,530		$	958,238		$	40,929		$	3,994,697
Losses and loss adjustment expenses ratio		76.0	%		29.8	%					64.0	%
Commission expense ratio		14.0	%		20.9	%					15.5	%
Other operating expense ratio (2)		18.9	%		20.5	%					19.6	%
Combined ratio		108.9	%		71.2	%					99.1	%

(1) -  Includes Corporate segment intercompany eliminations.

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

	Nine Month Ended September 30, 2013
	Insurance			Lloyd’s
In thousands	Companies			Operations			Corporate(1)			Total
Gross written premiums	$	757,802		$	279,624		$	—		$	1,037,426
Net written premiums		508,989			155,488			—			664,477
Net earned premiums		473,840			148,197			—			622,037
Net losses and loss adjustment expenses		(308,968	)		(78,608	)		—			(387,576	)
Commission expenses		(59,129	)		(25,245	)		1,743			(82,631	)
Other operating expenses		(87,682	)		(32,926	)		—			(120,608	)
Other income (expense)		2,303			(1,067	)		(1,743	)		(507	)
Underwriting profit (loss)	$	20,364		$	10,351		$	—		$	30,715
Net investment income		36,751			5,237			9			41,997
Net realized gains (losses)		6,001			(697	)		4			5,308
Interest expense		—			—			(6,156	)		(6,156	)
Income (loss) before income taxes	$	63,116		$	14,891		$	(6,143	)	$	71,864
Income tax expense (benefit)		19,554			5,120			(1,943	)		22,731
Net income (loss)	$	43,562		$	9,771		$	(4,200	)	$	49,133
Identifiable assets	$	3,018,100		$	983,382		$	73,094		$	4,074,576
Losses and loss adjustment expenses ratio		65.2	%		53.0	%					62.3	%
Commission expense ratio		12.5	%		17.0	%					13.3	%
Other operating expense ratio (2)		18.0	%		23.0	%					19.5	%
Combined ratio		95.7	%		93.0	%					95.1	%

(1) -  Includes Corporate segment intercompany eliminations.

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

	Nine Month Ended September 30, 2012
	Insurance			Lloyd’s
In thousands	Companies			Operations			Corporate(1)			Total
Gross written premiums	$	680,763		$	284,115		$	—		$	964,878
Net written premiums		457,463			163,880			—			621,343
Net earned premiums		422,215			158,183			—			580,398
Net losses and loss adjustment expenses		(304,483	)		(65,759	)		—			(370,242	)
Commission expenses		(61,245	)		(30,735	)		1,769			(90,211	)
Other operating expenses		(83,646	)		(32,592	)		—			(116,238	)
Other income (expense)		3,750			106			(1,769	)		2,087
Underwriting profit (loss)	$	(23,409	)	$	29,203		$	—		$	5,794
Net investment income		34,225			6,289			118			40,632
Net realized gains (losses)		6,809			3,361			—			10,170
Interest expense		—			—			(6,147	)		(6,147	)
Income (loss) before income taxes	$	17,625		$	38,853		$	(6,029	)	$	50,449
Income tax expense (benefit)		3,603			13,458			(2,330	)		14,731
Net income (loss)	$	14,022		$	25,395		$	(3,699	)	$	35,718
Identifiable assets	$	2,995,530		$	958,238		$	40,929		$	3,994,697
Losses and loss adjustment expenses ratio		72.1	%		41.6	%					63.8	%
Commission expense ratio		14.5	%		19.4	%					15.5	%
Other operating expense ratio (2)		18.9	%		20.5	%					19.7	%
Combined ratio		105.5	%		81.5	%					99.0	%

(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 and nine months ended September 30, 2013 and 2012:

	Three Months Ended September 30, 2013
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	38,912	$	36,009	$	74,921
Property casualty		156,228		35,869		192,097
Professional liability		32,469		12,589		45,058
Total	$	227,609	$	84,467	$	312,076
Net written premiums:
Marine	$	26,437	$	26,795	$	53,232
Property casualty		97,553		13,761		111,314
Professional liability		25,300		6,710		32,010
Total	$	149,290	$	47,266	$	196,556
Net earned premiums:
Marine	$	31,490	$	34,264	$	65,754
Property casualty		105,759		10,472		116,231
Professional liability		25,713		6,197		31,910
Total	$	162,962	$	50,933	$	213,895
	Three Months Ended September 30, 2012
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	44,879	$	37,716	$	82,595
Property casualty		139,948		32,789		172,737
Professional liability		33,534		9,876		43,410
Total	$	218,361	$	80,381	$	298,742
Net written premiums:
Marine	$	32,615	$	27,939	$	60,554
Property casualty		83,449		11,633		95,082
Professional liability		26,084		6,326		32,410
Total	$	142,148	$	45,898	$	188,046
Net earned premiums:
Marine	$	40,592	$	34,002	$	74,594
Property casualty		83,993		11,870		95,863
Professional liability		24,505		6,300		30,805
Total	$	149,090	$	52,172	$	201,262

	Nine Months Ended September 30, 2013
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	132,836	$	135,546	$	268,382
Property casualty		527,287		102,144		629,431
Professional liability		97,679		41,934		139,613
Total	$	757,802	$	279,624	$	1,037,426
Net written premiums:
Marine	$	94,944	$	100,413	$	195,357
Property casualty		338,215		33,254		371,469
Professional liability		75,830		21,821		97,651
Total	$	508,989	$	155,488	$	664,477
Net earned premiums:
Marine	$	100,013	$	102,932	$	202,945
Property casualty		297,954		26,913		324,867
Professional liability		75,873		18,352		94,225
Total	$	473,840	$	148,197	$	622,037
	Nine Months Ended September 30, 2012
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	156,640	$	146,528	$	303,168
Property casualty		426,494		106,063		532,557
Professional liability		97,629		31,524		129,153
Total	$	680,763	$	284,115	$	964,878
Net written premiums:
Marine	$	107,266	$	109,489	$	216,755
Property casualty		274,823		36,693		311,516
Professional liability		75,374		17,698		93,072
Total	$	457,463	$	163,880	$	621,343
Net earned premiums:
Marine	$	111,402	$	101,538	$	212,940
Property casualty		240,536		41,644		282,180
Professional liability		70,277		15,001		85,278
Total	$	422,215	$	158,183	$	580,398