SCHEDULE II

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Condensed Financial Information of Registrant

The Navigators Group, Inc.

Balance Sheets

(Parent Company)

(In thousands, except share amounts)


	December 31,
	2013			2012
ASSETS
Cash and investments	$	100,676		$	15,026
Investments in subsidiaries		1,040,214			955,024
Goodwill and other intangible assets		2,534			2,534
Other assets		26,538			23,219

Total assets	$	1,169,962		$	995,803

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Senior Notes	$	263,308		$	114,424
Accounts payable and other liabilities		802			552
Accrued interest payable		3,640			1,342

Total liabilities	$	267,750		$	116,318

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 17,709,876 shares for 2013 and 17,558,046 shares for 2012		1,770			1,755
Additional paid-in capital		335,546			329,452
Treasury stock, at cost (3,511,380 shares for 2013 and 2012)		(155,801	)		(155,801	)
Retained earnings		692,337			628,871
Accumulated other comprehensive income:
Net unrealized gains (losses) on securities available-for-sale, net of tax		23,387			67,161
Foreign currency translation adjustment, net of tax		4,973			8,047

Total stockholders’ equity	$	902,212		$	879,485

Total liabilities and stockholders’ equity	$	1,169,962		$	995,803

SCHEDULE II

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Condensed Financial Information of Registrant (Continued)

The Navigators Group, Inc.

Statements of Income

(Parent Company)

(In thousands)


	Year Ended December 31,
	2013			2012			2011
Revenues:
Net investment income	$	13		$	341		$	595
Dividends received from wholly-owned subsidiaries		—			15,000			45,000

Total revenues	$	13		$	15,341		$	45,595

Expenses:
Call premium on Senior Notes	$	17,895		$	—		$	—
Interest expense		10,507			8,198			8,188
Other (income) expense		2			1,749			2,969

Total expenses	$	28,404		$	9,947		$	11,157

Income (loss) before income tax benefit	$	(28,391	)	$	5,394		$	34,438
Income tax benefit		(9,886	)		(3,332	)		(3,635	)

Income (loss) before equity in undistributed net income of wholly owned subsidiaries	$	(18,505	)	$	8,726		$	38,073
Equity in undistributed net income of wholly-owned subsidiaries		81,971			55,036			(12,476	)

Net income	$	63,466		$	63,762		$	25,597

SCHEDULE II

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Condensed Financial Information of Registrant (Continued)

The Navigators Group, Inc.

Statements of Cash Flows

(Parent Company)

(In thousands)


	Year Ended December 31,
	2013			2012			2011
Operating activities:
Net income	$	63,466		$	63,762		$	25,597
Adjustments to reconcile net income to net cash provided by (used in) operations:
Equity in undistributed net income of wholly-owned subsidiaries		(81,971	)		(70,036	)		(32,524	)
Dividends received from subsidiaries		—			15,000			45,000
Call premium on redemption of Senior Notes		17,895			—			—
Other		2,098			(3,265	)		5,831

Net cash provided by (used in) operating activities	$	1,488		$	5,461		$	43,904

Investing activities:
Fixed maturities, available-for-sale
Sales	$	8,754		$	7,986		$	45,716
Purchases		(1,249	)		(14,700	)		(9,253	)
Equity securities
Sales		—			—			—
Purchases		—			—			—
Net increase in short-term investments		(89,988	)		(167	)		10,064

Net cash provided by (used in) investing activities	$	(82,483	)	$	(6,881	)	$	46,527

Financing activities:
Capital contribution to subsidiary	$	(50,000	)	$	—		$	—
Net Proceeds from Debt Offering		263,278			—			—
Redemption of 7.0% Senior Notes Due May 1, 2016		(132,437	)		—			—
Purchase of treasury stock		—			—			(90,866	)
Proceeds of stock issued from employee stock purchase plan		821			672			945
Proceeds of stock issued from exercise of stock options		2,495			404			1,169

Net cash provided by (used in) financing activities	$	84,157		$	1,076		$	(88,752	)

Increase (decrease) in cash	$	3,162		$	(344	)	$	1,679
Cash at beginning of year		2,981			3,325			1,646

Cash at end of year	$	6,143		$	2,981		$	3,325