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Navigators Reports Fourth Quarter and Full Year 2014 Earnings, Record Earnings Per Share

STAMFORD, Conn., Feb. 11, 2015 (GLOBE NEWSWIRE) -- The Navigators Group, Inc. (Nasdaq:NAVG) reported net income of $19.3 million, or $1.31 per diluted share, for the three months ended December 31, 2014 compared to $14.3 million, or $1.00 per diluted share, for the comparable period in 2013. Net operating earnings were $18.4 million, or $1.25 per diluted share, for the fourth quarter of 2014 compared to $16.1 million, or $1.13 per diluted share, for the comparable period in 2013.

For the twelve months ended December 31, 2014, the Company reported net income of $95.3 million, or $6.51 per diluted share compared to $63.5 million, or $4.42 per diluted share, for the comparable period in 2013. Net operating earnings were $80.5 million, or $5.49 per diluted share, for the twelve months ended December 31, 2014 compared to $61.7 million, or $4.30 per diluted share, for the comparable period in 2013.

Gross written premiums and net written premiums for the three months ended December 31, 2014 were $333.3 million and $228.0 million, respectively, an increase of 0.1% and 2.0% from the comparable period in 2013.

Gross written premiums and net written premiums for the twelve months ended December 31, 2014 were $1.4 billion and $1.0 billion, respectively, an increase of 4.5% and 12.6% from the comparable period in 2013.

The combined loss and expense ratio for the three and twelve months ended December 31, 2014 was 93.8% and 92.6%, respectively, compared to 94.0% and 94.8% for the comparable periods in 2013.

"Our profitable fourth quarter results capped an excellent year for Navigators, as we achieved our eighth consecutive quarter of underwriting profit," said Stan Galanski, President and Chief Executive Officer. "We are pleased with our 2014 financial performance in which book value per share increased by 13.2%, the combined ratio improved to 92.6% and diluted earnings per share increased by 47.1% to a record $6.51."

Stockholders' equity was $1.0 billion, or $71.93 per share, as of December 31, 2014 compared to $902.2 million, or $63.54 per share, as of December 31, 2013.

Net investment income for the three and twelve months ended December 31, 2014 was $16.1 million and $64.2 million, respectively, an increase of 12.7% and 14.1% from the comparable periods in 2013. The annualized pre-tax investment yield, excluding net realized gains and losses, was 2.3% for both the three and twelve months ended December 31, 2014, compared to 2.3% and 2.4% for each of the comparable periods in 2013. The effective tax rate on net investment income for the three and twelve months ended December 31, 2014 was 27.2% and 27.4%, respectively.

The Company's investment portfolio mainly consists of fixed income securities with an average quality rating of "AA/Aa" as defined by Standard & Poor's and Moody's, respectively, and an average effective duration of 3.8 years as of December 31, 2014. As of December 31, 2014, net unrealized gains within our investment portfolio were $71.4 million, an increase of $35.4 million compared to December 31, 2013.

There were $0.8 million and $12.8 million of net realized gains, including other-than-temporary impairment losses recognized in earnings, for the three and twelve months ended December 31, 2014, respectively, compared to $15.2 million and $20.5 million for the same periods in 2013.

Other income for the twelve months ended December 31, 2014 includes a one-time foreign exchange gain of $10.0 million ($6.6 million after-tax) due to a change in the functional currency of our Lloyd's Operations, which is equally offset by a reversal within the Accumulated Other Comprehensive Income component of stockholders' equity.

Consolidated net cash flow from operations for the three and twelve months ended December 31, 2014 was $41.1 million and $222.5 million, respectively, compared to $6.9 million and $136.9 million for the comparable periods in 2013.

The Company will hold a conference call on Thursday, February 12, 2015 starting at 8:30 a.m. ET to discuss the 2014 fourth quarter results. The call will be available via live webcast on Navigators' website (www.navg.com).

To participate by telephone, the domestic dial-in number is (888) 428-9473 and the international dial-in is (719) 325-2495. Participants may connect to the webcast at:

http://edge.media-server.com/m/p/vprqdsnq

Net operating earnings, or net income excluding after-tax net realized gains (losses), after-tax net other-than-temporary impairment losses recognized in earnings, and after-tax foreign exchange gains and losses resulting from foreign currency transactions (transactions denominated in a currency other than the entity's functional currency) and translation adjustments (translation of foreign currency denominated assets and liabilities into the entity's functional currency), is a non-GAAP financial measure that is a common performance measurement for insurance companies. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business.

The Navigators Group, Inc. is an international specialty insurance holding company with insurance company operations, underwriting management companies and operations at Lloyd's. Navigators has offices in the United States, the United Kingdom and Continental Europe, as well as representative offices in China and Brazil.

The Navigators Group, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=28127

This press release may contain "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Whenever used in this release, the words "estimate," "expect," "believe" or similar expressions are intended to identify such forward-looking statements. Forward-looking statements are derived from information that we currently have and assumptions that we make. We cannot assure that results that we anticipate will be achieved, since results may differ materially because of known and unknown risks and uncertainties that we face. Please refer to Navigators' most recent reports on Forms 10-K and 10-Q and its other filings with the Securities and Exchange Commission for a description of Navigators' business and the important factors that may affect that business. Navigators' undertakes no obligation to publicly update or revise any forward-looking statement.

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Financial Highlights
($ in thousands, except share and per share data)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
Results of Operations 2014 2013 Change 2014 2013 Change
Gross written premiums $ 333,299 $ 333,091 0.1% $ 1,432,353 $ 1,370,517 4.5%
Net written premiums 228,007 223,445 2.0% 1,000,138 887,922 12.6%
Revenues:
Net earned premiums 234,172 219,902 6.5% 935,895 841,939 11.2%
Net investment income 16,071 14,254 12.7% 64,168 56,251 14.1%
Total other-than-temporary impairment losses (21) (530) -96.0% 137 (2,393) NM
Portion of loss recognized in other comprehensive income (before tax) 21 -- NM (137) -- NM
Net other-than-temporary impairment losses recognized in earnings -- (530) NM -- (2,393) NM
Net realized gains (losses) 788 15,768 -95.0% 12,812 22,939 -44.1%
Other income 586 (665) NM 10,656 (1,172) NM
Total revenues 251,617 248,729 1.2% 1,023,531 917,564 11.5%
Expenses:
Net losses and loss adjustment expenses 134,658 131,385 2.5% 545,229 518,961 5.1%
Commission expenses 33,708 30,863 9.2% 125,528 113,494 10.6%
Other operating expenses 51,299 43,826 17.1% 196,825 164,434 19.7%
Call premium on Senior Notes -- 17,895 NM -- 17,895 NM
Interest expense 3,854 4,351 -11.4% 15,413 10,507 46.7%
Total expenses 223,519 228,320 -2.1% 882,995 825,291 7.0%
Income before income taxes 28,098 20,409 37.7% 140,536 92,273 52.3%
Income tax expense (benefit) 8,823 6,076 45.2% 45,207 28,807 56.9%
Net income (loss) $ 19,275 $ 14,333 34.5% $ 95,329 $ 63,466 50.2%
Per Share Data
Net income per common share:
Basic $ 1.35 $ 1.01 33.5% $ 6.69 $ 4.49 48.9%
Diluted $ 1.31 $ 1.00 30.6% $ 6.51 $ 4.42 47.1%
Average common shares outstanding:
Basic 14,280,045 14,172,908 14,259,768 14,133,925
Diluted 14,715,265 14,434,137 14,646,369 14,345,553
Underwriting Ratios
Loss Ratio 57.5% 59.7% 58.3% 61.6%
Expense Ratio 36.3% 34.3% 34.3% 33.2%
Combined Ratio 93.8% 94.0% 92.6% 94.8%
Balance Sheet Data Dec. 31, Sep. 30, Dec. 31, Dec. 31,
2014 2014 2014 2013
Stockholders' equity $ 1,027,224 $ 996,593 3.1% $ 1,027,224 $ 902,212 13.9%
Book value per share $ 71.93 $ 69.85 3.0% $ 71.93 $ 63.54 13.2%
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands, except share data)
December 31, December 31,
2014 2013
(unaudited)
ASSETS
Investments and cash:
Fixed maturities, available-for-sale, at fair value (amortized cost: 2014, $2,323,959; 2013, $2,036,999) $ 2,365,934 $ 2,047,873
Equity securities, available-for-sale, at fair value (cost: 2014, $154,843; 2013, $118,804) 184,295 143,954
Short-term investments, at fair value (amortized cost: 2014: $179,527; 2013: $296,250) 179,506 296,250
Cash 90,751 86,509
Total investments and cash 2,820,486 2,574,586
Premiums receivable 342,479 325,025
Prepaid reinsurance premiums 237,851 247,822
Reinsurance recoverable on paid losses 51,347 38,384
Reinsurance recoverable on unpaid losses and loss adjustment expenses 851,498 822,438
Deferred policy acquisition costs 79,452 67,007
Accrued investment income 14,791 13,866
Goodwill and other intangible assets 7,013 7,177
Current income tax receivable, net 14,549 14,299
Deferred income tax, net -- 23,806
Receivable for investments sold 326 3
Other assets 44,384 35,039
Total assets $ 4,464,176 $ 4,169,452
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Reserves for losses and loss adjustment expenses $ 2,159,634 $ 2,045,071
Unearned premiums 766,167 714,606
Reinsurance balances payable 152,774 167,252
Senior notes 263,440 263,308
Deferred income tax, net 1,467 --
Payable for investments purchased 134 7,624
Accounts payable and other liabilities 93,336 69,379
Total liabilities 3,436,952 3,267,240
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 17,792,846 shares for 2014 and 17,709,876 shares for 2013 1,778 1,770
Additional paid-in capital 347,022 335,546
Treasury stock, at cost (3,511,380 shares for 2014 and 2013) (155,801) (155,801)
Retained earnings 787,666 692,337
Accumulated other comprehensive income 46,559 28,360
Total stockholders' equity 1,027,224 902,212
Total liabilities and stockholders' equity $ 4,464,176 $ 4,169,452
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Comparative Premium Data
($ in thousands)
Gross Written Premiums: Three Months Twelve Months
Insurance Companies: 2014 2013 Change 2014 2013 Change
Marine $ 38,285 $ 38,986 -1.8% $ 177,363 $ 171,822 3.2%
Property Casualty 182,238 172,800 5.5% 755,059 700,087 7.9%
Professional Liability 26,922 32,687 -17.6% 113,032 130,366 -13.3%
247,445 244,473 1.2% 1,045,454 1,002,275 4.3%
Lloyd's Operations:
Marine 40,577 45,500 -10.8% 188,107 181,046 3.9%
Property Casualty 24,603 27,378 -10.1% 126,016 129,522 -2.7%
Professional Liability 20,674 15,740 31.3% 72,776 57,674 26.2%
85,854 88,618 -3.1% 386,899 368,242 5.1%
Total $ 333,299 $ 333,091 0.1% $ 1,432,353 $ 1,370,517 4.5%
Net Written Premiums: Three Months Twelve Months
Insurance Companies: 2014 2013 Change 2014 2013 Change
Marine $ 22,970 $ 24,893 -7.7% $ 123,617 $ 119,837 3.2%
Property Casualty 136,185 124,727 9.2% 554,844 462,942 19.9%
Professional Liability 13,142 21,399 -38.6% 74,312 97,229 -23.6%
172,297 171,019 0.7% 752,773 680,008 10.7%
Lloyd's Operations:
Marine 30,389 34,214 -11.2% 144,327 134,627 7.2%
Property Casualty 11,233 9,080 23.7% 55,917 42,334 32.1%
Professional Liability 14,088 9,132 54.3% 47,121 30,953 52.2%
55,710 52,426 6.3% 247,365 207,914 19.0%
Total $ 228,007 $ 223,445 2.0% $ 1,000,138 $ 887,922 12.6%
Net Earned Premiums: Three Months Twelve Months
Insurance Companies: 2014 2013 Change 2014 2013 Change
Marine $ 27,568 $ 29,263 -5.8% $ 123,203 $ 129,276 -4.7%
Property Casualty 131,141 111,526 17.6% 496,209 409,480 21.2%
Professional Liability 19,518 24,709 -21.0% 85,162 100,582 -15.3%
178,227 165,498 7.7% 704,574 639,338 10.2%
Lloyd's Operations:
Marine 31,003 35,758 -13.3% 141,471 138,690 2.0%
Property Casualty 13,937 10,809 28.9% 51,338 37,722 36.1%
Professional Liability 11,005 7,837 40.4% 38,512 26,189 47.1%
55,945 54,404 2.8% 231,321 202,601 14.2%
Total $ 234,172 $ 219,902 6.5% $ 935,895 $ 841,939 11.2%
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Three Months Ended
December 31, 2014
($ in thousands)
Insurance Lloyd's
Companies Operations Corporate (1) Total
Gross written premiums $ 247,445 $ 85,854 $ -- $ 333,299
Net written premiums 172,297 55,710 -- 228,007
Net earned premiums 178,227 55,945 -- 234,172
Net losses and loss adjustment expenses (111,042) (23,616) -- (134,658)
Commission expenses (22,701) (11,569) 562 (33,708)
Other operating expenses (35,712) (15,587) -- (51,299)
Other underwriting income (expense) 645 15 (562) 98
Underwriting profit (loss) 9,417 5,188 -- 14,605
Net investment income 14,161 1,890 20 16,071
Net realized gains (losses) 347 441 -- 788
Call premium on Senior Notes -- -- -- --
Interest expense -- -- (3,854) (3,854)
Other income (expense) (1,063) 1,551 -- 488
Income (loss) before income taxes 22,862 9,070 (3,834) 28,098
Income tax expense (benefit) 6,959 3,132 (1,268) 8,823
Net income (loss) $ 15,903 $ 5,938 $ (2,566) $ 19,275
Losses and loss adjustment expenses ratio 62.3% 42.2% 57.5%
Commission expense ratio 12.7% 20.7% 14.4%
Other operating expense ratio (2) 19.7% 27.8% 21.9%
Combined ratio 94.7% 90.7% 93.8%
(1) The Corporate segment includes intercompany eliminations.
(2) The Other operating expense ratio includes Other underwriting income (expense).
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Three Months Ended
December 31, 2013
($ in thousands)
Insurance Lloyd's
Companies Operations Corporate (1) Total
Gross written premiums $ 244,473 $ 88,618 $ -- $ 333,091
Net written premiums 171,019 52,426 -- 223,445
Net earned premiums 165,498 54,404 -- 219,902
Net losses and loss adjustment expenses (106,445) (24,940) -- (131,385)
Commission expenses (22,003) (9,465) 605 (30,863)
Other operating expenses (32,238) (11,588) -- (43,826)
Other underwriting income (expense) 461 (521) (605) (665)
Underwriting profit (loss) 5,273 7,890 -- 13,163
Net investment income 12,332 1,923 (1) 14,254
Net realized gains (losses) 14,599 639 -- 15,238
Call premium on Senior Notes -- -- (17,895) (17,895)
Interest expense -- -- (4,351) (4,351)
Other income (expense) -- -- -- --
Income (loss) before income taxes 32,204 10,452 (22,247) 20,409
Income tax expense (benefit) 10,411 3,608 (7,943) 6,076
Net income (loss) $ 21,793 $ 6,844 $ (14,304) $ 14,333
Losses and loss adjustment expenses ratio 64.3% 45.8% 59.7%
Commission expense ratio 13.3% 17.4% 14.0%
Other operating expense ratio (2) 19.2% 22.3% 20.3%
Combined ratio 96.8% 85.5% 94.0%
(1) The Corporate segment includes intercompany eliminations.
(2) The Other operating expense ratio includes Other income (expense).
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Twelve Months Ended
December 31, 2014
($ in thousands)
Insurance Lloyd's
Companies Operations Corporate (1) Total
Gross written premiums $ 1,045,454 $ 386,899 $ -- $1,432,353
Net written premiums 752,773 247,365 -- 1,000,138
Net earned premiums 704,574 231,321 -- 935,895
Net losses and loss adjustment expenses (434,396) (110,833) -- (545,229)
Commission expenses (85,137) (42,558) 2,167 (125,528)
Other operating expenses (138,675) (58,150) -- (196,825)
Other underwriting income (expense) 2,727 35 (2,167) 595
Underwriting profit (loss) 49,093 19,815 -- 68,908
Net investment income 56,714 7,378 76 64,168
Net realized gains (losses) 12,715 97 -- 12,812
Call premium on Senior Notes -- -- -- --
Interest expense -- -- (15,413) (15,413)
Other income (expense) (2,182) 12,243 -- 10,061
Income (loss) before income taxes 116,340 39,533 (15,337) 140,536
Income tax expense (benefit) 36,609 13,885 (5,287) 45,207
Net income (loss) $ 79,731 25,648 $ (10,050) $ 95,329
Losses and loss adjustment expenses ratio 61.7% 47.9% 58.3%
Commission expense ratio 12.1% 18.4% 13.4%
Other operating expense ratio (2) 19.2% 25.1% 20.9%
Combined ratio 93.0% 91.4% 92.6%
(1) The Corporate segment includes intercompany eliminations.
(2) The Other operating expense ratio includes Other underwriting income (expense).
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Twelve Months Ended
December 31, 2013
($ in thousands)
Insurance Lloyd's
Companies Operations Corporate (1) Total
Gross written premiums $ 1,002,275 $ 368,242 $ -- $1,370,517
Net written premiums 680,008 207,914 -- 887,922
Net earned premiums 639,338 202,601 -- 841,939
Net losses and loss adjustment expenses (415,413) (103,548) -- (518,961)
Commission expenses (81,132) (34,710) 2,348 (113,494)
Other operating expenses (119,920) (44,514) -- (164,434)
Other underwriting income (expense) 2,764 (1,588) (2,348) (1,172)
Underwriting profit (loss) 25,637 18,241 -- 43,878
Net investment income 49,083 7,160 8 56,251
Net realized gains (losses) 20,600 (58) 4 20,546
Call premium on Senior Notes -- -- (17,895) (17,895)
Interest expense -- -- (10,507) (10,507)
Other income (expense) -- -- -- --
Income (loss) before income taxes 95,320 25,343 (28,390) 92,273
Income tax expense (benefit) 29,965 8,728 (9,886) 28,807
Net income (loss) $ 65,355 $ 16,615 $ (18,504) $ 63,466
Losses and loss adjustment expenses ratio 65.0% 51.1% 61.6%
Commission expense ratio 12.7% 17.1% 13.5%
Other operating expense ratio (2) 18.3% 22.8% 19.7%
Combined ratio 96.0% 91.0% 94.8%
(1) The Corporate segment includes intercompany eliminations.
(2) The Other operating expense ratio includes Other income (expense).
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results
($ in thousands)
Three Months Ended December 31, 2014
Net Losses
Earned and LAE Underwriting Underwriting Loss Expense Combined
Insurance Companies: Premiums Incurred Expenses Profit (Loss) Ratio Ratio Ratio
Marine $ 27,568 $ 4,515 $ 11,283 $ 11,770 16.4% 40.9% 57.3%
Property Casualty 131,141 93,759 38,107 (725) 71.5% 29.1% 100.6%
Professional Liability 19,518 12,768 8,378 (1,628) 65.4% 42.9% 108.3%
Total Insurance Companies 178,227 111,042 57,768 9,417 62.3% 32.4% 94.7%
Lloyd's Operations:
Marine 31,003 14,537 15,141 1,325 46.9% 48.8% 95.7%
Property Casualty 13,937 3,220 7,407 3,310 23.1% 53.2% 76.3%
Professional Liability 11,005 5,859 4,593 553 53.2% 41.8% 95.0%
Total Lloyd's 55,945 23,616 27,141 5,188 42.2% 48.5% 90.7%
Total All $ 234,172 $ 134,658 $ 84,909 $ 14,605 57.5% 36.3% 93.8%
Three Months Ended December 31, 2013
Net Losses
Earned and LAE Underwriting Underwriting Loss Expense Combined
Insurance Companies: Premiums Incurred Expenses Profit (Loss) Ratio Ratio Ratio
Marine $ 29,263 $ 7,192 $ 13,257 $ 8,814 24.6% 45.3% 69.9%
Property Casualty 111,526 84,379 31,816 (4,669) 75.7% 28.5% 104.2%
Professional Liability 24,709 14,874 8,707 1,128 60.2% 35.2% 95.4%
Total Insurance Companies 165,498 106,445 53,780 5,273 64.3% 32.5% 96.8%
Lloyd's Operations:
Marine 35,758 17,270 15,111 3,377 48.3% 42.3% 90.6%
Property Casualty 10,809 2,645 3,957 4,207 24.5% 36.6% 61.1%
Professional Liability 7,837 5,025 2,506 306 64.1% 32.0% 96.1%
Total Lloyd's 54,404 24,940 21,574 7,890 45.8% 39.7% 85.5%
Total All $ 219,902 $ 131,385 $ 75,354 $ 13,163 59.7% 34.3% 94.0%
Amounts Loss Ratio
Net Incurred Loss Activity Dec. 31, Dec. 31, Dec. 31, Dec. 31,
For the Three Months Ended: 2014 2013 2014 2013
Insurance Companies:
Loss and LAE payments $ 106,984 $ 135,161 60.0% 81.7%
Change in reserves 4,058 (28,716) 2.3% -17.4%
Net incurred loss and LAE 111,042 106,445 62.3% 64.3%
Lloyd's Operations:
Loss and LAE payments 34,984 29,424 62.5% 54.1%
Change in reserves (11,368) (4,484) -20.3% -8.3%
Net incurred loss and LAE 23,616 24,940 42.2% 45.8%
Total
Loss and LAE payments 141,968 164,585 60.6% 74.8%
Change in reserves (7,310) (33,200) -3.1% -15.1%
Net incurred loss and LAE $ 134,658 $ 131,385 57.5% 59.7%
Impact of Prior Years Reserves Amounts Loss Ratio Impact
Favorable / (Unfavorable) Development Dec. 31, Dec. 31, Dec. 31, Dec. 31,
For the Three Months Ended: 2014 2013 2014 2013
Insurance Companies $ 7,038 $ (1,047) 3.0% -0.5%
Lloyd's Operations 12,751 624 5.4% 0.3%
Total $ 19,789 $ (423) 8.4% -0.2%
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results
($ in thousands)
Twelve Months Ended December 31, 2014
Net Losses
Earned and LAE Underwriting Underwriting Loss Expense Combined
Insurance Companies: Premiums Incurred Expenses Profit (Loss) Ratio Ratio Ratio
Marine $ 123,203 $ 46,169 $ 46,226 $ 30,808 37.5% 37.5% 75.0%
Property Casualty 496,209 337,961 142,131 16,117 68.1% 28.7% 96.8%
Professional Liability 85,162 50,266 32,728 2,168 59.0% 38.5% 97.5%
Total Insurance Companies 704,574 434,396 221,085 49,093 61.7% 31.3% 93.0%
Lloyd's Operations:
Marine 141,471 74,569 60,633 6,269 52.7% 42.9% 95.6%
Property Casualty 51,338 17,235 24,517 9,586 33.6% 47.7% 81.3%
Professional Liability 38,512 19,029 15,523 3,960 49.4% 40.3% 89.7%
Total Lloyd's 231,321 110,833 100,673 19,815 47.9% 43.5% 91.4%
Total All $ 935,895 $ 545,229 $ 321,758 $ 68,908 58.3% 34.3% 92.6%
Twelve Months Ended December 31, 2013
Net Losses
Earned and LAE Underwriting Underwriting Loss Expense Combined
Insurance Companies: Premiums Incurred Expenses Profit (Loss) Ratio Ratio Ratio
Marine $ 129,276 $ 62,617 $ 50,206 $ 16,453 48.4% 38.9% 87.3%
Property Casualty 409,480 280,530 114,660 14,290 68.5% 28.0% 96.5%
Professional Liability 100,582 72,266 33,422 (5,106) 71.8% 33.3% 105.1%
Total Insurance Companies 639,338 415,413 198,288 25,637 65.0% 31.0% 96.0%
Lloyd's Operations:
Marine 138,690 76,454 56,377 5,859 55.1% 40.7% 95.8%
Property Casualty 37,722 13,852 16,066 7,804 36.7% 42.6% 79.3%
Professional Liability 26,189 13,242 8,369 4,578 50.6% 31.9% 82.5%
Total Lloyd's 202,601 103,548 80,812 18,241 51.1% 39.9% 91.0%
Total All $ 841,939 $ 518,961 $ 279,100 $ 43,878 61.6% 33.2% 94.8%
Amounts Loss Ratio
Net Incurred Loss Activity Dec. 31, Dec. 31, Dec. 31, Dec. 31,
For the Twelve Months Ended: 2014 2013 2014 2013
Insurance Companies:
Loss and LAE payments $ 344,093 $ 398,993 48.9% 62.4%
Change in reserves 90,303 16,420 12.8% 2.6%
Net incurred loss and LAE 434,396 415,413 61.7% 65.0%
Lloyd's Operations:
Loss and LAE payments 110,240 114,350 47.6% 56.4%
Change in reserves 593 (10,802) 0.3% -5.3%
Net incurred loss and LAE 110,833 103,548 47.9% 51.1%
Total
Loss and LAE payments 454,333 513,343 48.6% 61.0%
Change in reserves 90,896 5,618 9.7% 0.6%
Net incurred loss and LAE $ 545,229 $ 518,961 58.3% 61.6%
Impact of Prior Years Reserves Amounts Loss Ratio Impact
Favorable / (Unfavorable) Development Dec. 31, Dec. 31, Dec. 31, Dec. 31,
For the Twelve Months Ended: 2014 2013 2014 2013
Insurance Companies $ 30,312 $ (13,430) 3.2% -1.6%
Lloyd's Operations 25,500 14,696 2.7% 1.7%
Total $ 55,812 $ 1,266 5.9% 0.1%
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data
($ in thousands)
Case IBNR
Net Loss Reserves, December 31, 2014: Reserves Reserves Total
Insurance Companies:
Marine $ 116,652 $ 78,091 $ 194,743
Property Casualty 176,016 479,304 655,320
Professional Liability 56,594 86,264 142,858
Total Insurance Companies 349,262 643,659 992,921
Lloyd's Operations:
Marine 145,366 69,095 $ 214,461
Property Casualty 22,376 17,187 39,563
Professional Liability 12,374 48,817 61,191
Total Lloyd's Operations 180,116 135,099 315,215
Total Net Loss Reserves $ 529,378 $ 778,758 $ 1,308,136
Case IBNR
Net Loss Reserves, December 31, 2013 Reserves Reserves Total
Insurance Companies:
Marine $ 122,909 $ 101,077 $ 223,986
Property Casualty 150,477 377,173 527,650
Professional Liability 61,117 89,865 150,982
Total Insurance Companies 334,503 568,115 902,618
Lloyd's Operations:
Marine 133,060 85,685 218,745
Property Casualty 25,870 18,271 44,141
Professional Liability 14,013 43,116 57,129
Total Lloyd's Operations 172,943 147,072 320,015
Total Net Loss Reserves $ 507,446 $ 715,187 $ 1,222,633
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Investment Data
December 31, 2014
As of December 31, 2014, the average quality of the investment portfolio as rated by S&P and Moody's was AA/Aa with an average duration of 3.8 years. The Company does not own any collateralized debt obligations (CDO's) or asset backed commercial paper.
As of December 31, 2014, the Company owned two collateralized mortgage obligations approximating $0.4 million with subprime mortgage exposures. The securities have an effective maturity of 3.2 years. In addition, the Company owned a total of seven collateralized mortgage obligations and asset-backed securities approximating $1.7 million classified as Alt-A which is a credit category between prime and subprime. They have an effective maturity of 5.5 years. Such subprime and Alt-A categories are as defined by S&P. The Company is receiving principal and/or interest payments on all these securities and believes such amounts are fully collectible.
The following table sets forth our cash and investments as of December 31, 2014:
Gross Gross Cost or
Fair Unrealized Unrealized Amortized
December 31, 2014 Value Gains (Losses) Cost
($ in thousands)
Fixed maturities:
U.S.Treasury bonds, agency bonds and foreign government bonds $ 397,923 $ 3,431 $ (5,965) $ 400,457
States, municipalities and political subdivisions 541,007 19,204 (558) 522,361
Mortgage- and asset-backed securities:
Agency mortgage-backed securities 364,622 8,476 (998) 357,144
Residential mortgage obligations 34,087 1,153 (138) 33,072
Asset-backed securities 206,413 380 (964) 206,997
Commercial mortgage-backed securities 206,318 6,630 (98) 199,786
Subtotal 811,440 16,639 (2,198) 796,999
Corporate bonds 615,564 13,048 (1,626) 604,142
Total fixed maturities 2,365,934 52,322 (10,347) 2,323,959
Equity securities - common stocks 127,183 28,520 (1,254) 99,917
Equity securities - preferred stocks 57,112 2,236 (50) 54,926
Short-term investments 179,506 -- (21) 179,527
Cash 90,751 -- -- 90,751
Total $ 2,820,486 $ 83,078 $ (11,672) $ 2,749,080
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Investment Data
December 31, 2014
($ in thousands)
The following tables set forth our agency mortgage-backed securities and residential mortgage obligations, categorized by those issued by GNMA, FNMA, and FHLMC and the quality category (prime. Alt-A and subprime) for all other such investments at December 31, 2014:
Gross Gross Cost or
Fair Unrealized Unrealized Amortized
Agency mortgage-backed securities: Value Gains (Losses) Cost
GNMA $ 83,452 $ 2,865 $ (772) $ 81,359
FNMA 216,133 4,059 (162) 212,236
FHLMC 65,037 1,552 (64) 63,549
Total $ 364,622 $ 8,476 $ (998) $ 357,144
Gross Gross Cost or
Fair Unrealized Unrealized Amortized
Residential mortgage obligations: Value Gains (Losses) Cost
Prime $ 13,457 $ 548 $ (117) $ 13,026
Alt-A 1,738 116 (21) 1,643
Subprime 390 14 -- 376
Non-US RMBS 18,502 475 -- 18,027
Total $ 34,087 $ 1,153 $ (138) $ 33,072

CONTACT: Ciro M. DeFalco Senior Vice President and Chief Financial Officer (203) 905-6343 cdefalco@navg.com www.navg.com

Source:The Navigators Group, Inc.