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Navigators Second Quarter Operating Earnings up 31%

STAMFORD, Conn., Aug. 06, 2015 (GLOBE NEWSWIRE) -- The Navigators Group, Inc. (NASDAQ:NAVG) reported net income of $19.2 million, or $1.30 per diluted share, for the three months ended June 30, 2015 compared to $16.9 million, or $1.17 per diluted share, for the comparable period in 2014. Operating earnings were $19.7 million, or $1.34 per diluted share, for the three months ended June 30, 2015 compared to $15.0 million, or $1.04 per diluted share, for the comparable period in 2014.

For the six months ended June 30, 2015, the Company reported net income of $45.1 million, or $3.06 per diluted share compared to $44.8 million, or $3.11 per diluted share, for the comparable period in 2014. 2014 results included 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 Syndicate, which was equally offset by a reversal within the Accumulated Other Comprehensive Income component of stockholders’ equity. Excluding this gain, the six months ended June 30, 2014 net income per diluted share would have been $2.66. Operating earnings were $40.6 million, or $2.76 per diluted share, for the six months ended June 30, 2015 compared to $35.9 million, or $2.49 per diluted share, for the comparable period in 2014. The one-time foreign exchange gain discussed above had no impact on operating earnings.

Gross written premiums and net written premiums for the three months ended June 30, 2015 were $379.5 million and $258.2 million, respectively, an increase of 8.8% and 11.4% from the comparable period in 2014.

Gross written premiums and net written premiums for the six months ended June 30, 2015 were $775.9 million and $547.2 million, respectively, each an increase of 0.6% from the comparable period in 2014.

The combined ratio for the three and six months ended June 30, 2015 was 93.4% and 92.8%, respectively, compared to 95.3% and 93.8% for the comparable periods in 2014.

Stan Galanski, President and Chief Executive Officer commented, “We are pleased to report another quarter of solid performance. We generated profitable underwriting results in each of our three underwriting segments, specifically with strong profit contribution from our US and International Marine units and overall Global Re. Despite challenging competitive conditions in a number of specialty niches, mostly notably the first-party energy product lines, we achieved double digit net premium growth, led by strong growth in our U.S. Primary and Excess Casualty units.”

Stockholders’ equity was $1,053.6 million, or $73.18 per share, as of June 30, 2015 compared to $1,027.2 million, or $71.93 per share, as of December 31, 2014.

Net investment income for the three and six months ended June 30, 2015 was $16.6 million and $32.8 million, respectively, an increase of 6.1% and 1.8% from the comparable periods in 2014. The annualized pre-tax investment yield, excluding net realized gains and losses and other-than-temporary impairment losses recognized in earnings, was 2.4% for the three and six months ended June 30, 2015, compared to 2.5% and 2.6%, respectively for the comparable periods in 2014.

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 June 30, 2015. As of June 30, 2015, net unrealized gains within our investment portfolio were $38.0 million, a decrease of $33.4 million compared to December 31, 2014.

There were $3.9 million of net realized gains recognized in earnings for the three months ended June 30, 2015, compared to $4.5 million for the same period in 2014. For the six months ended June 30, there were $9.5 million of net realized gains, compared to $5.3 million for the same period in 2014.

Other income (loss) for the three months ended June 30, 2015 was ($4.4 million), compared to ($1.7 million) for the same period in 2014, each primarily consisting of a net foreign exchange loss. For the six months ended June 30, 2015 other income (loss) was ($2.1 million), primarily consisting of net foreign exchange, compared to $8.7 million in the same period in 2014; largely impacted by a one-time foreign exchange gain in the first quarter of 2014.

The Company will hold a conference call on Friday, August 7, 2015 starting at 8:30 a.m. ET to discuss the 2015 second 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 (888-240-9373) and the international dial-in is (913) 312-0956. Participants may connect to the webcast at:

http://edge.media-server.com/m/p/3h9rmgcb

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.

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 Six Months Ended
June 30, June 30,
Results of Operations 2015 2014 Change 2015 2014 Change
Gross written premiums $ 379,471 $ 348,795 8.8% $ 775,931 $ 771,585 0.6%
Net written premiums 258,244 231,864 11.4% 547,202 543,714 0.6%
Revenues:
Net earned premiums 242,328 231,084 4.9% 478,460 456,356 4.8%
Net investment income 16,595 15,648 6.1% 32,848 32,258 1.8%
Net realized gains (losses):
Total other-than-temporary impairment losses (423) - NM (423) - NM
Portion of loss recognized in other comprehensive
income (before tax) - - NM - - NM
Net other-than-temporary impairment losses
recognized in earnings (423) - NM (423) - NM
Other realized gains (losses) 4,339 4,473 -3.0% 9,935 5,306 87.2%
Net realized gains (losses) 3,916 4,473 -12.5% 9,512 5,306 79.3%
Other income (loss) (4,362) (1,665)NM (2,120) 8,734 -124.3%
Total revenues 258,477 249,540 3.6% 518,700 502,654 3.2%
Expenses:
Net losses and loss adjustment expenses 141,973 140,220 1.3% 272,171 275,287 -1.1%
Commission expenses 31,480 32,150 -2.1% 64,385 57,877 11.2%
Other operating expenses 52,789 47,992 10.0% 107,698 95,138 13.2%
Interest expense 3,856 4,319 -10.7% 7,711 8,171 -5.6%
Total expenses 230,098 224,681 2.4% 451,965 436,473 3.5%
Income before income taxes 28,379 24,859 14.2% 66,735 66,181 0.8%
Income tax expense (benefit) 9,195 7,998 15.0% 21,622 21,352 1.3%
Net income (loss) $ 19,184 $ 16,861 13.8% $ 45,113 $ 44,829 0.6%
Per Share Data
Net income per common share:
Basic $ 1.33 $ 1.18 12.7% $ 3.14 $ 3.15 -0.3%
Diluted $ 1.30 $ 1.17 11.1% $ 3.06 $ 3.11 -1.6%
Average common shares outstanding:
Basic 14,396,048 14,259,753 14,370,123 14,246,701
Diluted 14,763,002 14,377,476 14,726,282 14,401,740
Underwriting Ratios
Loss Ratio 58.6% 60.7% 56.9% 60.3%
Expense Ratio 34.8% 34.6% 35.9% 33.5%
Combined Ratio 93.4% 95.3% 92.8% 93.8%
Balance Sheet Data Jun. 30,Mar. 31, Jun. 30,Dec. 31,
2015 2015 2015 2014
Stockholders' equity $ 1,053,629 $ 1,053,603 0.0% $ 1,053,629 $ 1,027,224 2.6%
Book value per share $ 73.18 $ 73.21 0.0% $ 73.18 $ 71.93 1.7%


THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
($ in thousands, except share data)
June 30, December 31,
2015 2014
ASSETS
Investments and cash:
Fixed maturities, available-for-sale, at fair value
(amortized cost: 2015, $2,291,137; 2014, $2,323,959)$ 2,313,937 $ 2,365,934
Equity securities, available-for-sale, at fair value (cost: 2015, $179,917; 2014, $154,843) 195,078 184,295
Short-term investments, at fair value (amortized cost: 2015: $201,688; 2014: $179,527) 201,748 179,506
Cash 89,250 90,751
Total investments and cash 2,800,013 2,820,486
Premiums receivable 407,122 342,479
Prepaid reinsurance premiums 260,010 237,851
Reinsurance recoverable on paid losses 124,439 51,347
Reinsurance recoverable on unpaid losses and loss adjustment expenses 780,297 851,498
Deferred policy acquisition costs 84,905 79,452
Accrued investment income 14,573 14,791
Goodwill and other intangible assets 6,947 7,013
Current income tax receivable, net 16,109 14,549
Deferred income tax, net 7,658 -
Other assets 39,159 44,710
Total assets$ 4,541,232 $ 4,464,176
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Reserves for losses and loss adjustment expenses$ 2,131,157 $ 2,159,634
Unearned premiums 857,068 766,167
Reinsurance balances payable 155,423 152,774
Senior notes 263,509 263,440
Deferred income tax, net - 1,467
Accounts payable and other liabilities 80,446 93,470
Total liabilities 3,487,603 3,436,952
Stockholders' equity:
Preferred stock, $.10 par value, authorized 1,000,000 shares, none issued$ - $ -
Common stock, $.10 par value, authorized 50,000,000 shares, issued 17,908,734 shares
for 2015 and 17,792,846 shares for 2014 1,791 1,778
Additional paid-in capital 350,151 347,022
Treasury stock, at cost (3,511,380 shares for 2015 and 2014) (155,801) (155,801)
Retained earnings 832,779 787,666
Accumulated other comprehensive income 24,709 46,559
Total stockholders' equity 1,053,629 1,027,224
Total liabilities and stockholders' equity$ 4,541,232 $ 4,464,176


THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
($ in thousands)
Three Months Ended June 30, 2015
U.S. International Global
Insurance Insurance Reinsurance Corporate (1) Total
Gross written premiums $ 239,987 $ 108,790 $ 30,694 $ - $ 379,471
Ceded written premiums (78,882) (41,621) (724) - (121,227)
Net written premiums 161,105 67,169 29,970 - 258,244
Net earned premiums 137,304 63,186 41,838 - 242,328
Net losses and loss adjustment expenses (84,155) (32,363) (25,455) - (141,973)
Commission expenses (12,275) (11,298) (8,039) 132 (31,480)
Other operating expenses (31,374) (17,366) (4,049) - (52,789)
Other underwriting income (expenses) 121 - 36 (132) 25
Underwriting profit (loss) $ 9,621 $ 2,159 $ 4,331 $ - $ 16,111
Net investment income 16,595 16,595
Net realized gains (losses) 3,916 3,916
Interest expense (3,856) (3,856)
Other income (expense) (4,387) (4,387)
Income before income taxes $ 9,621 $ 2,159 $ 4,331 $ 12,268 $ 28,379
Income tax (expense) benefit (9,195) (9,195)
Net income (loss) $ 19,184
Losses and loss adjustment expenses ratio 61.3% 51.2% 60.8% 58.6%
Commission expense ratio 8.9% 17.9% 19.2% 13.0%
Other operating expense ratio (2) 22.8% 27.5% 9.6% 21.8%
Combined ratio 93.0% 96.6% 89.6% 93.4%
(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
($ in thousands)
Three Months Ended June 30, 2014
U.S. International Global
Insurance Insurance Reinsurance Corporate (1) Total
Gross written premiums $ 206,703 $ 120,732 $ 21,360 $ - $ 348,795
Ceded written premiums (60,004) (56,345) (582) - (116,931)
Net written premiums 146,699 64,387 20,778 - 231,864
Net earned premiums 125,254 59,661 46,169 - 231,084
Net losses and loss adjustment expenses (73,131) (35,293) (31,796) - (140,220)
Commission expenses (13,219) (11,009) (8,468) 546 (32,150)
Other operating expenses (28,840) (15,436) (3,716) - (47,992)
Other underwriting income (expenses) 736 11 34 (546) 235
Underwriting profit (loss) $ 10,800 $ (2,066) $ 2,223 $ - $ 10,957
Net investment income 15,648 15,648
Net realized gains (losses) 4,473 4,473
Interest expense (4,319) (4,319)
Other income (expense) (1,900) (1,900)
Income before income taxes $ 10,800 $ (2,066) $ 2,223 $ 13,902 $ 24,859
Income tax (expense) benefit (7,998) (7,998)
Net income (loss) $ 16,861
Losses and loss adjustment expenses ratio 58.4% 59.2% 68.9% 60.7%
Commission expense ratio 10.6% 18.5% 18.3% 13.9%
Other operating expense ratio (2) 22.4% 25.8% 8.0% 20.7%
Combined ratio 91.4% 103.5% 95.2% 95.3%
(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
($ in thousands)
Six Months Ended June 30, 2015
U.S. International Global
Insurance Insurance Reinsurance Corporate (1) Total
Gross written premiums $ 439,314 $ 231,217 $ 105,400 $ - $ 775,931
Ceded written premiums (147,612) (75,877) (5,240) - (228,729)
Net written premiums 291,702 155,340 100,160 - 547,202
Net earned premiums 268,395 128,711 81,354 - 478,460
Net losses and loss adjustment expenses (161,954) (62,054) (48,163) - (272,171)
Commission expenses (26,620) (22,711) (15,337) 283 (64,385)
Other operating expenses (65,062) (34,375) (8,261) - (107,698)
Other underwriting income (expenses) 317 - 46 (283) 80
Underwriting profit (loss) $ 15,076 $ 9,571 $ 9,639 $ - $ 34,286
Net investment income 32,848 32,848
Net realized gains (losses) 9,512 9,512
Interest expense (7,711) (7,711)
Other income (expense) (2,200) (2,200)
Income before income taxes $ 15,076 $ 9,571 $ 9,639 $ 32,449 $ 66,735
Income tax (expense) benefit (21,622) (21,622)
Net income (loss) $ 45,113
Losses and loss adjustment expenses ratio 60.3% 48.2% 59.2% 56.9%
Commission expense ratio 9.9% 17.6% 18.9% 13.5%
Other operating expense ratio (2) 24.2% 26.8% 10.1% 22.4%
Combined ratio 94.4% 92.6% 88.2% 92.8%
(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
($ in thousands)
Six Months Ended June 30, 2014
U.S. International Global
Insurance Insurance Reinsurance Corporate (1) Total
Gross written premiums $ 405,051 $ 239,924 $ 126,610 $ - $ 771,585
Ceded written premiums (125,070) (98,927) (3,874) - (227,871)
Net written premiums 279,981 140,997 122,736 - 543,714
Net earned premiums 240,444 121,715 94,197 - 456,356
Net losses and loss adjustment expenses (146,095) (66,513) (62,679) - (275,287)
Commission expenses (22,728) (19,864) (16,340) 1,055 (57,877)
Other operating expenses (56,833) (30,495) (7,810) - (95,138)
Other underwriting income (expenses) 1,249 17 179 (1,055) 390
Underwriting profit (loss) $ 16,037 $ 4,860 $ 7,547 $ - $ 28,444
Net investment income 32,258 32,258
Net realized gains (losses) 5,306 5,306
Interest expense (8,171) (8,171)
Other income (expense) 8,344 8,344
Income before income taxes $ 16,037 $ 4,860 $ 7,547 $ 37,737 $ 66,181
Income tax (expense) benefit (21,352) (21,352)
Net income (loss) $ 44,829
Losses and loss adjustment expenses ratio 60.8% 54.6% 66.5% 60.3%
Commission expense ratio 9.5% 16.3% 17.3% 12.7%
Other operating expense ratio (2) 23.0% 25.1% 8.2% 20.8%
Combined ratio 93.3% 96.0% 92.0% 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
Reportable Segment Results
($ in thousands)
U.S. Insurance
Three months ended June 30, 2015 Three months ended June 30, 2014 % Change
amounts in thousands MarineP&CProfessional
Liability
Total MarineP&CProfessional
Liability
Total Total
Gross written premiums $ 41,803 $ 170,216 $ 27,968 $ 239,987 $ 42,548 $ 137,137 $ 27,018 $ 206,703 16.1%
Ceded written premiums (15,026) (49,305) (14,551) (78,882) (11,587) (40,452) (7,965) (60,004) 31.5%
Net written premiums 26,777 120,911 13,417 161,105 30,961 96,685 19,053 146,699 9.8%
Net earned premiums 25,977 96,440 14,887 137,304 26,727 76,585 21,942 125,254 9.6%
Net losses and LAE (11,415) (67,809) (4,931) (84,155) (10,609) (52,619) (9,903) (73,131) 15.1%
Commission expenses (2,429) (8,751) (1,095) (12,275) (4,101) (6,095) (3,023) (13,219) -7.1%
Other operating expenses (6,402) (19,661) (5,311) (31,374) (5,944) (17,675) (5,221) (28,840) 8.8%
Other underwriting income (expenses) 24 97 - 121 320 374 42 736 -83.6%
Underwriting profit (loss) $ 5,755 $ 316 $ 3,550 $ 9,621 $ 6,393 $ 570 $ 3,837 $ 10,800 -10.9%
Losses and LAE ratio 43.9% 70.3% 33.1% 61.3% 39.7% 68.7% 45.1% 58.4%
Commission expense ratio 9.4% 9.1% 7.4% 8.9% 15.3% 8.0% 13.8% 10.6%
Other operating expense ratio (1) 24.5% 20.3% 35.7% 22.8% 21.1% 22.6% 23.6% 22.4%
Combined ratio 77.8% 99.7% 76.2% 93.0% 76.1% 99.3% 82.5% 91.4%
(1) The Other operating expense ratio includes Other income (expense).
Int'l Insurance
Three months ended June 30, 2015 Three months ended June 30, 2014 % Change
amounts in thousands Marine P&C Professional
Liability
Total MarineP&CProfessional
Liability
Total Total
Gross written premiums $ 41,432 $ 41,615 $ 25,743 $ 108,790 $ 47,532 $ 51,305 $ 21,895 $ 120,732 -9.9%
Ceded written premiums (9,126) (24,513) (7,982) (41,621) (17,033) (31,284) (8,028) (56,345) -26.1%
Net written premiums 32,306 17,102 17,761 67,169 30,499 20,021 13,867 64,387 4.3%
Net earned premiums 40,132 10,199 12,855 63,186 34,177 16,466 9,018 59,661 5.9%
Net losses and LAE (21,432) (4,084) (6,847) (32,363) (22,963) (9,937) (2,393) (35,293) -8.3%
Commission expenses (9,495) (155) (1,648) (11,298) (10,020) (996) 7 (11,009) 2.6%
Other operating expenses (6,749) (6,166) (4,451) (17,366) (6,468) (5,570) (3,398) (15,436) 12.5%
Other underwriting income (expenses) - - - - 3 5 3 11 NM
Underwriting profit (loss) $ 2,456 $ (206)$ (91)$ 2,159 $ (5,271)$ (32)$ 3,237 $ (2,066) NM
Losses and LAE ratio 53.4% 40.0% 53.3% 51.2% 67.2% 60.4% 26.5% 59.2%
Commission expense ratio 23.7% 1.5% 12.8% 17.9% 29.4% 6.0% -0.1% 18.5%
Other operating expense ratio (1) 16.8% 60.5% 34.6% 27.5% 18.9% 33.8% 37.8% 25.8%
Combined ratio 93.9% 102.0% 100.7% 96.6% 115.5% 100.2% 64.2% 103.5%
NM - Percentage change not meaningful
(1) The Other operating expense ratio includes Other income (expense).


THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
($ in thousands)
U.S. Insurance
Six months ended June 30, 2015 Six months ended June 30, 2014 % Change
amounts in thousands MarineP&CProfessional
Liability
Total MarineP&CProfessional
Liability
Total Total
Gross written premiums $ 82,638 $ 304,362 $ 52,314 $ 439,314 $ 85,573 $ 262,256 $ 57,222 $ 405,051 8.5%
Ceded written premiums (31,312) (88,863) (27,437) (147,612) (20,757) (86,608) (17,705) (125,070) 18.0%
Net written premiums 51,326 215,499 24,877 291,702 64,816 175,648 39,517 279,981 4.2%
Net earned premiums 49,901 187,175 31,319 268,395 54,713 141,516 44,215 240,444 11.6%
Net losses and LAE (21,603) (125,856) (14,495) (161,954) (25,292) (96,968) (23,835) (146,095) 10.9%
Commission expenses (6,461) (17,307) (2,852) (26,620) (6,648) (10,040) (6,040) (22,728) 17.1%
Other operating expenses (13,375) (40,720) (10,967) (65,062) (11,633) (34,988) (10,212) (56,833) 14.5%
Other underwriting income (expenses) 175 141 1 317 521 640 88 1,249 -74.6%
Underwriting profit (loss) $ 8,637 $ 3,433 $ 3,006 $ 15,076 $ 11,661 $ 160 $ 4,216 $ 16,037 -6.0%
Losses and LAE ratio 43.3% 67.2% 46.3% 60.3% 46.2% 68.5% 53.9% 60.8%
Commission expense ratio 12.9% 9.2% 9.1% 9.9% 12.2% 7.1% 13.7% 9.5%
Other operating expense ratio (1) 26.5% 21.8% 35.0% 24.2% 20.3% 24.3% 22.9% 23.0%
Combined ratio 82.7% 98.2% 90.4% 94.4% 78.7% 99.9% 90.5% 93.3%
(1) The Other operating expense ratio includes Other income (expense).
Int'l Insurance
Six months ended June 30, 2015 Six months ended June 30, 2014 % Change
amounts in thousands Marine P&C Professional
Liability
Total MarineP&CProfessional
Liability
Total Total
Gross written premiums $ 108,842 $ 74,565 $ 47,810 $ 231,217 $ 109,514 $ 93,555 $ 36,855 $ 239,924 -3.6%
Ceded written premiums (19,948) (40,642) (15,287) (75,877) (29,427) (55,748) (13,752) (98,927) -23.3%
Net written premiums 88,894 33,923 32,523 155,340 80,087 37,807 23,103 140,997 10.2%
Net earned premiums 77,924 26,233 24,554 128,711 72,221 32,907 16,587 121,715 5.7%
Net losses and LAE (40,943) (8,964) (12,147) (62,054) (42,660) (16,894) (6,959) (66,513) -6.7%
Commission expenses (18,685) (1,182) (2,844) (22,711) (20,007) 195 (52) (19,864) 14.3%
Other operating expenses (13,444) (12,150) (8,781) (34,375) (12,883) (10,850) (6,762) (30,495) 12.7%
Other underwriting income (expenses) - - - - 9 5 3 17 NM
Underwriting profit (loss) $ 4,852 $ 3,937 $ 782 $ 9,571 $ (3,320)$ 5,363 $ 2,817 $ 4,860 96.9%
Losses and LAE ratio 52.5% 34.2% 49.5% 48.2% 59.1% 51.3% 42.0% 54.6%
Commission expense ratio 24.0% 4.5% 11.6% 17.6% 27.7% -0.6% 0.3% 16.3%
Other operating expense ratio (1) 17.3% 46.3% 35.7% 26.8% 17.8% 33.0% 40.7% 25.1%
Combined ratio 93.8% 85.0% 96.8% 92.6% 104.6% 83.7% 83.0% 96.0%
NM - Percentage change not meaningful
(1) The Other operating expense ratio includes Other income (expense).


THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Incurred Loss Activity
($ in thousands)
For the Three Months Ended
Amounts Loss Ratio
June 30,June 30, June 30,June 30,
Net Incurred Loss Activity 2015 2014 2015 2014
US Insurance:
Loss and LAE payments $ 56,719 $ 49,772 41.3% 39.7%
Change in reserves 27,436 23,359 20.0% 18.6%
Net incurred loss and LAE 84,155 73,131 61.3% 58.3%
International Insurance:
Loss and LAE payments 33,891 31,548 53.6% 52.9%
Change in reserves (1,528) 3,745 -2.4% 6.3%
Net incurred loss and LAE 32,363 35,293 51.2% 59.2%
Global Reinsurance:
Loss and LAE payments 20,037 22,302 47.9% 48.3%
Change in reserves 5,418 9,494 12.9% 20.6%
Net incurred loss and LAE 25,455 31,796 60.8% 68.9%
Total
Loss and LAE payments 110,647 103,622 45.7% 44.9%
Change in reserves 31,326 36,598 12.9% 15.8%
Net incurred loss and LAE $ 141,973 $ 140,220 58.6% 60.7%
Amounts Loss Ratio Impact
Impact of Prior Years Reserves June 30,June 30, June 30,June 30,
Favorable / (Unfavorable) Development 2015 2014 2015 2014
US Insurance $ 7,829 $ 12,582 3.2% 5.4%
International Insurance (581) 10,373 -0.2% 4.5%
Global Reinsurance 7 (2,440) 0.0% -1.0%
Total $ 7,255 $ 20,515 3.0% 8.9%


THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Incurred Loss Activity
($ in thousands)
For the Six Months Ended
Amounts Loss Ratio
June 30,June 30, June 30,June 30,
Net Incurred Loss Activity 2015 2014 2015 2014
US Insurance:
Loss and LAE payments $ 119,453 $ 99,427 44.5% 41.4%
Change in reserves 42,501 46,668 15.8% 19.4%
Net incurred loss and LAE 161,954 146,095 60.3% 60.8%
International Insurance:
Loss and LAE payments 69,428 63,236 53.9% 52.0%
Change in reserves (7,374) 3,277 -5.7% 2.6%
Net incurred loss and LAE 62,054 66,513 48.2% 54.6%
Global Reinsurance:
Loss and LAE payments 41,249 41,622 50.7% 44.2%
Change in reserves 6,914 21,057 8.5% 22.3%
Net incurred loss and LAE 48,163 62,679 59.2% 66.5%
Total
Loss and LAE payments 230,130 204,285 48.1% 44.7%
Change in reserves 42,041 71,002 8.8% 15.6%
Net incurred loss and LAE $ 272,171 $ 275,287 56.9% 60.3%
Amounts Loss Ratio Impact
Impact of Prior Years Reserves June 30,June 30, June 30,June 30,
Favorable / (Unfavorable) Development 2015 2014 2015 2014
US Insurance $ 14,238 $ 12,134 3.0% 2.7%
International Insurance 5,610 10,957 1.2% 2.4%
Global Reinsurance 6 (2,538) 0.0% -0.6%
Total $ 19,854 $ 20,553 4.2% 4.5%


THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data
($ in thousands)
As of June 30, 2015
Case IBNR
Net Loss Reserves: Reserves Reserves Total
US Insurance:
Marine $ 70,582 $ 65,030 $ 135,612
Property Casualty 154,775 451,665 606,440
Professional Liability 45,573 71,814 117,387
Total US Insurance 270,930 588,509 859,439
International Insurance:
Marine 176,305 66,970 243,275
Property Casualty 36,429 16,507 52,936
Professional Liability 9,817 56,706 66,523
Total International Insurance 222,551 140,183 362,734
Global Reinsurance 26,964 101,723 128,687
Total Net Loss Reserves $ 520,445 $ 830,415 $ 1,350,860
As of December 31, 2014
Case IBNR
Net Loss Reserves: Reserves Reserves Total
US Insurance:
Marine $ 74,699 $ 64,390 $ 139,089
Property Casualty 144,334 391,643 535,977
Professional Liability 56,501 85,369 141,870
Total US Insurance 275,534 541,402 816,936
International Insurance:
Marine 168,575 75,673 244,248
Property Casualty 41,695 21,391 63,086
Professional Liability 12,466 49,712 62,178
Total International Insurance 222,736 146,776 369,512
Global Reinsurance 31,108 90,580 121,688
Total Net Loss Reserves $ 529,378 $ 778,758 $ 1,308,136


THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Investment Data
June 30, 2015
As of June 30, 2015, 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.
The following table sets forth our cash and investments as of June 30, 2015:
As of June 30, 2015
Gross Gross Cost or
Fair Unrealized Unrealized Amortized
Value Gains (Losses) Cost
($ in thousands)
Fixed maturities:
U.S.Treasury bonds, agency bonds
and foreign government bonds $ 295,687 $ 3,407 $ (6,173) $ 298,453
States, municipalities and political
subdivisions 565,188 12,511 (2,531) 555,208
Mortgage- and asset-backed securities:
Agency mortgage-backed securities 343,916 6,501 (2,100) 339,515
Residential mortgage obligations 32,396 1,010 (102) 31,488
Asset-backed securities 195,512 433 (488) 195,567
Commercial mortgage-backed securities 216,185 4,814 (1,481) 212,852
Subtotal 788,009 12,758 (4,171) 779,422
Corporate bonds 665,053 10,210 (3,211) 658,054
Total fixed maturities 2,313,937 38,886 (16,086) 2,291,137
Equity securities 195,078 18,733 (3,572) 179,917
Short-term investments 201,748 60 - 201,688
Total $ 2,710,763 $ 57,679 $ (19,658) $ 2,672,742

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.