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Navigators Reports Third Quarter Earnings

STAMFORD, Conn., Nov. 05, 2015 (GLOBE NEWSWIRE) -- The Navigators Group, Inc. (NASDAQ:NAVG) reported net income of $18.2 million, or $1.23 per diluted share, for the three months ended September 30, 2015 compared to $31.2 million, or $2.14 per diluted share, for the comparable period in 2014. Operating earnings were $20.3 million, or $1.37 per diluted share, for the three months ended September 30, 2015 compared to $26.1 million, or $1.79 per diluted share, for the comparable period in 2014.

For the nine months ended September 30, 2015, the Company reported net income of $63.3 million, or $4.29 per diluted share compared to $76.1 million, or $5.22 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 nine months ended September 30, 2014 net income per diluted share would have been $4.77. Operating earnings were $60.7 million, or $4.11 per diluted share, for the nine months ended September 30, 2015 compared to $62.0 million, or $4.25 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 September 30, 2015 were $354.1 million and $251.9 million, respectively, an increase of 8.1% and 10.3% from the comparable period in 2014.

Gross written premiums and net written premiums for the nine months ended September 30, 2015 were $1.1 billion and $799.1 million, respectively, an increase of 2.8% and 3.5% from the comparable period in 2014.

The combined ratio for the three and nine months ended September 30, 2015 was 93.4% and 93.0%, respectively, compared to 89.5% and 92.3% for the comparable periods in 2014.

Stan Galanski, President and Chief Executive Officer commented, “We are pleased to report profitable underwriting results and good premium growth for the third quarter and for the first nine months of 2015. The U.S. Insurance and GlobalRe segments generated excellent results for the quarter. We remain optimistic about targeted growth initiatives across all three of our operating segments. Net investment income increased 9.7% for the quarter, contributing to an increase in book value per share to $74.70.”

Stockholders’ equity was $1.1 billion, or $74.70 per share, as of September 30, 2015 compared to $1.0 billion, or $71.93 per share, as of December 31, 2014.

Net investment income for the three and nine months ended September 30, 2015 was $17.4 million and $50.2 million, respectively, an increase of 9.7% and 4.4% 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 2.5% and 2.4% for the three and nine months ended September 30, 2015, compared to 2.2% and 2.4%, 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-/Aa3” as defined by Standard & Poor’s and Moody’s, respectively, and an average effective duration of 3.8 years as of September 30, 2015. As of September 30, 2015, net unrealized gains within our investment portfolio were $39.0 million, a decrease of $32.4 million compared to December 31, 2014.

There were $0.8 million of net realized losses recognized in earnings for the three months ended September 30, 2015, compared to $6.7 million of net realized gains for the same period in 2014. For the nine months ended September 30, 2015, there were $8.8 million of net realized gains, compared to $12.0 million for the same period in 2014.

Other income (loss) for the three months ended September 30, 2015 was a $2.5 million loss, compared to $1.3 million of income for the same period in 2014. For the nine months ended September 30, 2015, Other income (loss) was a $4.6 million loss compared to $10.1 million of income for the same period in the prior year, largely impacted by a one-time foreign exchange gain in the first quarter of 2014. Other income (loss) primarily consists of realized and unrealized foreign exchange gains and losses.

The Company will hold a conference call on Friday, November 6, 2015 starting at 8:30 a.m. EST to discuss the 2015 third 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) 572-7033 and the international dial-in is (719) 325-2454. Participants may connect to the webcast at:

http://edge.media-server.com/m/p/rtf74zgm

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 Nine Months Ended
September 30, September 30,
Results of Operations 2015 2014 Change 2015 2014 Change
Gross written premiums $ 354,062 $ 327,469 8.1% $ 1,129,993 $ 1,099,054 2.8%
Net written premiums 251,939 228,417 10.3% 799,141 772,131 3.5%
Revenues:
Net earned premiums 254,082 245,367 3.6% 732,542 701,723 4.4%
Net investment income 17,371 15,839 9.7% 50,219 48,097 4.4%
Net realized gains (losses):
Total other-than-temporary impairment losses (1,298) (41) NM (1,747) 158 NM
Portion of loss recognized in other comprehensive
income (before tax) 23 41 -43.9% 49 (158) NM
Net other-than-temporary impairment losses
recognized in earnings (1,275) - NM (1,698) - NM
Other realized gains (losses) 518 6,718 -92.3% 10,453 12,024 -13.1%
Net realized gains (losses) (757) 6,718 NM 8,755 12,024 -27.2%
Other income (loss) (2,518) 1,336 NM (4,638) 10,070 NM
Total revenues 268,178 269,260 -0.4% 786,878 771,914 1.9%
Expenses:
Net losses and loss adjustment expenses 146,546 135,284 8.3% 418,717 410,571 2.0%
Commission expenses 34,253 33,943 0.9% 98,638 91,820 7.4%
Other operating expenses 56,599 50,388 12.3% 164,297 145,526 12.9%
Interest expense 3,856 3,388 13.8% 11,567 11,559 0.1%
Total expenses 241,254 223,003 8.2% 693,219 659,476 5.1%
Income before income taxes 26,924 46,257 -41.8% 93,659 112,438 -16.7%
Income tax expense (benefit) 8,723 15,032 -42.0% 30,345 36,384 -16.6%
Net income (loss) $ 18,201 $ 31,225 -41.7% $ 63,314 $ 76,054 -16.8%
Per Share Data
Net income per common share:
Basic $ 1.26 $ 2.19 -42.3% $ 4.40 $ 5.34 -17.5%
Diluted $ 1.23 $ 2.14 -42.5% $ 4.29 $ 5.22 -17.8%
Average common shares outstanding:
Basic 14,411,927 14,265,260 14,384,291 14,252,910
Diluted 14,811,095 14,613,744 14,767,949 14,577,297
Underwriting Ratios
Loss Ratio 57.7% 55.1% 57.2% 58.5%
Expense Ratio 35.7% 34.4% 35.8% 33.8%
Combined Ratio 93.4% 89.5% 93.0% 92.3%
Balance Sheet Data Sept. 30,June 30, Sept. 30,Dec. 31,
2015 2015 2015 2014
Stockholders' equity $ 1,076,855 $ 1,053,629 2.2% $ 1,076,855 $ 1,027,224 4.8%
Book value per share $ 74.70 $ 73.18 2.1% $ 74.70 $ 71.93 3.9%

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
amounts in thousands, except share and per share amounts
September 30, December 31,
2015 2014
ASSETS
Investments and cash:
Fixed maturities, available-for-sale, at fair value (amortized cost: 2015: $2,367,172; 2014: $2,323,959) $ 2,396,987 $ 2,365,934
Equity securities, available-for-sale, at fair value (cost: 2015: $265,760; 2014: $154,843) 274,928 184,295
Short-term investments, at fair value (amortized cost: 2015: $233,109; 2014: $179,527) 233,142 179,506
Cash 69,483 90,751
Total investments and cash $ 2,974,540 $2,820,486
Premiums receivable 343,214 $ 342,479
Prepaid reinsurance premiums 252,488 237,851
Reinsurance recoverable on paid losses 53,174 51,347
Reinsurance recoverable on unpaid losses and loss adjustment expenses 794,235 851,498
Deferred policy acquisition costs 88,959 79,452
Accrued investment income 16,130 14,791
Goodwill and other intangible assets 6,906 7,013
Current income tax receivable, net 14,011 14,549
Deferred income tax, net 9,955 -
Receivable for investments sold 2,727 326
Other assets 40,188 44,384
Total assets $ 4,596,527 $ 4,464,176
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Reserves for losses and loss adjustment expenses $ 2,175,317 $ 2,159,634
Unearned premiums 847,403 766,167
Reinsurance balances payable 133,542 152,774
Senior notes 263,544 263,440
Deferred income tax, net - 1,467
Payable for investments purchased 31,000 134
Accounts payable and other liabilities 68,866 93,336
Total liabilities $ 3,519,672 $ 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 17,926,323 shares for 2015
and 17,792,846 shares for 2014 1,792 1,778
Additional paid-in capital 354,527 347,022
Treasury stock, at cost (3,511,380 shares for 2015 and 2014) (155,801) (155,801)
Retained earnings 850,980 787,666
Accumulated other comprehensive income 25,357 46,559
Total stockholders' equity $ 1,076,855 $ 1,027,224
Total liabilities and stockholders' equity $ 4,596,527 $ 4,464,176

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Three Months Ended September 30, 2015
U.S. Int'l
amounts in thousands Insurance Insurance GlobalRe Corporate (1) Total
Gross written premiums $ 218,783 $ 98,788 $ 36,491 - $ 354,062
Ceded written premiums (63,753) (37,804) (566) - (102,123)
Net written premiums 155,030 60,984 35,925 - 251,939
Net earned premiums 142,409 68,533 43,140 - 254,082
Net losses and LAE (85,140) (39,182) (22,224) - (146,546)
Commission expenses (15,157) (12,780) (7,705) 1,389 (34,253)
Other operating expenses (32,948) (19,937) (3,714) - (56,599)
Other underwriting income (expense) 1,013 - 395 (1,389) 19
Underwriting profit (loss) $ 10,177 $ (3,366) $ 9,892 $ - $ 16,703
Net investment income 17,371 17,371
Net realized gains (losses) (757) (757)
Interest expense (3,856) (3,856)
Other income (loss) (2,537) (2,537)
Income before income taxes $ 10,177 $ (3,366) $ 9,892 $ 10,221 $ 26,924
Income tax (expense) benefit (8,723) (8,723)
Net income (loss) $ 18,201
Losses and LAE ratio 59.8% 57.2% 51.5% 57.7%
Commission expense ratio 10.6% 18.6% 17.9% 13.5%
Other operating expense ratio (2) 22.5% 29.1% 7.7% 22.2%
Combined ratio 92.9% 104.9% 77.1% 93.4%
(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other operating expenses and Other underwriting income (expense).
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Three Months Ended September 30, 2014
U.S. Int'l
amounts in thousands Insurance Insurance GlobalRe Corporate (1) Total
Gross written premiums $ 199,723 $ 94,161 $ 33,585 $ - $ 327,469
Ceded written premiums (61,654) (36,607) (791) - (99,052)
Net written premiums 138,069 57,554 32,794 - 228,417
Net earned premiums 130,420 66,278 48,669 - 245,367
Net losses and LAE (80,722) (24,910) (29,652) - (135,284)
Commission expenses (12,870) (12,792) (8,831) 550 (33,943)
Other operating expenses (29,160) (17,288) (3,940) - (50,388)
Other underwriting income (expense) 534 1 122 (550) 107
Underwriting profit (loss) $ 8,202 $ 11,289 $ 6,368 $ - $ 25,859
Net investment income 15,839 15,839
Net realized gains (losses) 6,718 6,718
Interest expense (3,388) (3,388)
Other income (loss) 1,229 1,229
Income before income taxes $ 8,202 $ 11,289 $ 6,368 $ 20,398 $ 46,257
Income tax (expense) benefit (15,032) (15,032)
Net income (loss) $ 31,225
Losses and LAE ratio 61.9% 37.6% 60.9% 55.1%
Commission expense ratio 9.9% 19.3% 18.1% 13.8%
Other operating expense ratio (2) 21.9% 26.1% 7.9% 20.6%
Combined ratio 93.7% 83.0% 86.9% 89.5%
_______________
(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other operating expenses and Other underwriting income (expense).
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Nine Months Ended September 30, 2015
U.S. Int'l
amounts in thousands Insurance Insurance GlobalRe Corporate (1) Total
Gross written premiums $ 658,097 $ 330,005 $ 141,891 - $ 1,129,993
Ceded written premiums (211,365) (113,681) (5,806) - (330,852)
Net written premiums 446,732 216,324 136,085 - 799,141
Net earned premiums 410,804 197,244 124,494 - 732,542
Net losses and LAE (247,094) (101,236) (70,387) - (418,717)
Commission expenses (41,777) (35,491) (23,042) 1,672 (98,638)
Other operating expenses (98,010) (54,312) (11,975) - (164,297)
Other underwriting income (expense) 1,330 - 441 (1,672) 99
Underwriting profit (loss) $ 25,253 $ 6,205 $ 19,531 $ - $ 50,989
Net investment income 50,219 50,219
Net realized gains (losses) 8,755 8,755
Interest expense (11,567) (11,567)
Other income (loss) (4,737) (4,737)
Income (loss) before income taxes $ 25,253 $ 6,205 $ 19,531 $ 42,670 $ 93,659
Income tax (expense) benefit (30,345) (30,345)
Net income (loss) $ 63,314
Losses and LAE ratio 60.1% 51.3% 56.5% 57.2%
Commission expense ratio 10.2% 18.0% 18.5% 13.5%
Other operating expense ratio (2) 23.6% 27.6% 9.3% 22.3%
Combined ratio 93.9% 96.9% 84.3% 93.0%
(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other operating expenses and Other underwriting income (expense).
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Nine Months Ended September 30, 2014
U.S. Int'l
amounts in thousands Insurance Insurance GlobalRe Corporate (1) Total
Gross written premiums $ 604,774 $ 334,085 $ 160,195 $ - $ 1,099,054
Ceded written premiums (186,724) (135,534) (4,665) - (326,923)
Net written premiums 418,050 198,551 155,530 - 772,131
Net earned premiums 370,864 187,993 142,866 - 701,723
Net losses and LAE (226,817) (91,423) (92,331) - (410,571)
Commission expenses (35,598) (32,656) (25,171) 1,605 (91,820)
Other operating expenses (85,993) (47,783) (11,750) - (145,526)
Other underwriting income (expense) 1,783 18 301 (1,605) 497
Underwriting profit (loss) $ 24,239 $ 16,149 $ 13,915 $ - $ 54,303
Net investment income 48,097 48,097
Net realized gains (losses) 12,024 12,024
Interest expense (11,559) (11,559)
Other income (loss) 9,573 9,573
Income (loss) before income taxes $ 24,239 $ 16,149 $ 13,915 $ 58,135 $ 112,438
Income tax (expense) benefit (36,384) (36,384)
Net income (loss) $ 76,054
Losses and LAE ratio 61.2% 48.6% 64.6% 58.5%
Commission expense ratio 9.6% 17.4% 17.6% 13.1%
Other operating expense ratio (2) 22.7% 25.4% 8.1% 20.7%
Combined ratio 93.5% 91.4% 90.3% 92.3%
(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other operating expenses and Other underwriting income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
U.S. Insurance
Three months ended September 30, 2015Three months ended September 30, 2014
Professional Professional % Change
amounts in thousands MarineP&CLiabilityTotalMarineP&CLiabilityTotalTotal
Gross written premiums $ 35,529 $ 154,009 $ 29,245 $ 218,783 $ 34,576 $ 138,181 $ 26,966 $ 199,723 9.5%
Ceded written premiums (13,865) (34,902) (14,986) (63,753) (13,338) (41,180) (7,136) (61,654) 3.4%
Net written premiums 21,664 119,107 14,259 155,030 21,238 97,001 19,830 138,069 12.3%
Net earned premiums 24,292 104,473 13,644 142,409 27,207 82,635 20,578 130,420 9.2%
Net losses and LAE (7,349) (69,054) (8,737) (85,140) (13,581) (53,955) (13,186) (80,722) 5.5%
Commission expenses (2,412) (11,711) (1,034) (15,157) (3,486) (6,697) (2,687) (12,870) 17.8%
Other operating expenses (6,754) (20,581) (5,613) (32,948) (6,086) (17,935) (5,139) (29,160) 13.0%
Other underwriting income (expense) 214 735 64 1,013 168 331 35 534 89.7%
Underwriting profit (loss) $ 7,991 $ 3,862 (1,676)$ 10,177 $ 4,222 $ 4,379 (399)$ 8,202 24.1%
Losses and LAE ratio 30.3% 66.1% 64.0% 59.8% 49.9% 65.3% 64.1% 61.9%
Commission expense ratio 9.9% 11.2% 7.6% 10.6% 12.8% 8.1% 13.1% 9.9%
Other operating expense ratio (1) 26.9% 19.0% 40.7% 22.5% 21.8% 21.3% 24.7% 21.9%
Combined ratio 67.1% 96.3% 112.3% 92.9% 84.5% 94.7% 101.9% 93.7%
(1) - Includes Other operating expenses and Other underwriting income (expense).
Int'l Insurance
Three months ended September 30, 2015Three months ended September 30, 2014
Professional Professional % Change
amounts in thousands Marine P&C Liability Total MarineP&CLiabilityTotalTotal
Gross written premiums $ 41,002 $ 37,449 $ 20,337 $ 98,788 $ 41,593 $ 35,399 $ 17,169 $ 94,161 4.9%
Ceded written premiums (10,985) (20,034) (6,785) (37,804) (6,924) (24,267) (5,416) (36,607) 3.3%
Net written premiums 30,017 17,415 13,552 60,984 34,669 11,132 11,753 57,554 6.0%
Net earned premiums 36,792 16,879 14,862 68,533 40,207 14,300 11,771 66,278 3.4%
Net losses and LAE (23,002) (8,051) (8,129) (39,182) (14,657) (3,565) (6,688) (24,910) 57.3%
Commission expenses (8,227) (2,779) (1,774) (12,780) (9,755) (2,565) (472) (12,792) -0.1%
Other operating expenses (8,233) (6,604) (5,100) (19,937) (7,573) (5,675) (4,040) (17,288) 15.3%
Other underwriting income (expense) - - - - 1 - - 1 NM
Underwriting profit (loss) (2,670) (555) (141) (3,366)$ 8,223 $ 2,495 $ 571 $ 11,289 NM
Losses and LAE ratio 62.5% 47.7% 54.7% 57.2% 36.5% 24.9% 56.8% 37.6%
Commission expense ratio 22.4% 16.5% 11.9% 18.6% 24.3% 17.9% 4.0% 19.3%
Other operating expense ratio (1) 22.4% 39.1% 34.4% 29.1% 18.7% 39.8% 34.4% 26.1%
Combined ratio 107.3% 103.3% 101.0% 104.9% 79.5% 82.6% 95.2% 83.0%
NM - Percentage change not meaningful
(1) - Includes Other operating expenses and Other underwriting income (expense).
U.S. Insurance
Nine months ended September 30, 2015Nine months ended September 30, 2014
Professional Professional % Change
amounts in thousands MarineP&CLiabilityTotalMarineP&CLiabilityTotalTotal
Gross written premiums $ 118,167 $ 458,371 $ 81,559 $ 658,097 $ 120,149 $ 400,437 $ 84,188 $ 604,774 8.8%
Ceded written premiums (45,177) (123,765) (42,423) (211,365) (34,095) (127,788) (24,841) (186,724) 13.2%
Net written premiums 72,990 334,606 39,136 446,732 86,054 272,649 59,347 418,050 6.9%
Net earned premiums 74,193 291,648 44,963 410,804 81,920 224,151 64,793 370,864 10.8%
Net losses and LAE (28,952) (194,910) (23,232) (247,094) (38,873) (150,924) (37,020) (226,817) 8.9%
Commission expenses (8,873) (29,018) (3,886) (41,777) (10,134) (16,737) (8,727) (35,598) 17.4%
Other operating expenses (20,129) (60,976) (16,905) (98,010) (17,720) (52,923) (15,350) (85,993) 14.0%
Other underwriting income (expense) 389 876 65 1,330 691 971 121 1,783 -25.4%
Underwriting profit (loss) $ 16,628 $ 7,620 $ 1,005 $ 25,253 $ 15,884 $ 4,538 $ 3,817 $ 24,239 4.2%
Losses and LAE ratio 39.0% 66.8% 51.7% 60.1% 47.5% 67.3% 57.1% 61.2%
Commission expense ratio 12.0% 9.9% 8.6% 10.2% 12.4% 7.5% 13.5% 9.6%
Other operating expense ratio (1) 26.6% 20.7% 37.5% 23.6% 20.7% 23.2% 23.5% 22.7%
Combined ratio 77.6% 97.4% 97.8% 93.9% 80.6% 98.0% 94.1% 93.5%
(1) - Includes Other operating expenses and Other underwriting income (expense).
Int'l Insurance
Nine months ended September 30, 2015Nine months ended September 30, 2014
Professional Professional % Change
amounts in thousands Marine P&C Liability Total MarineP&CLiabilityTotalTotal
Gross written premiums $ 149,844 $ 112,014 $ 68,147 $ 330,005 $ 151,107 $ 128,954 $ 54,024 $ 334,085 -1.2%
Ceded written premiums (30,933) (60,676) (22,072) (113,681) (36,351) (80,015) (19,168) (135,534) -16.1%
Net written premiums 118,911 51,338 46,075 216,324 114,756 48,939 34,856 198,551 9.0%
Net earned premiums 114,716 43,112 39,416 197,244 112,428 47,207 28,358 187,993 4.9%
Net losses and LAE (63,945) (17,015) (20,276) (101,236) (57,316) (20,460) (13,647) (91,423) 10.7%
Commission expenses (26,912) (3,961) (4,618) (35,491) (29,763) (2,370) (523) (32,656) 8.7%
Other operating expenses (21,677) (18,754) (13,881) (54,312) (20,454) (16,526) (10,803) (47,783) 13.7%
Other underwriting income (expense) - - - - 9 5 4 18 NM
Underwriting profit (loss) $ 2,182 $ 3,382 $ 641 $ 6,205 $ 4,904 $ 7,856 $ 3,389 $ 16,149 -61.6%
Losses and LAE ratio 55.7% 39.5% 51.4% 51.3% 51.0% 43.3% 48.1% 48.6%
Commission expense ratio 23.5% 9.2% 11.7% 18.0% 26.5% 5.0% 1.8% 17.4%
Other operating expense ratio (1) 18.9% 43.5% 35.3% 27.6% 18.1% 35.1% 38.2% 25.4%
Combined ratio 98.1% 92.2% 98.4% 96.9% 95.6% 83.4% 88.1% 91.4%
NM - Percentage change not meaningful
(1) - Includes Other operating expenses and Other underwriting income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Incurred Loss Activity
($ in thousands)
For the Three Months Ended September 30,
AmountsLoss Ratio
Net Incurred Loss Activity 2015 2014 2015 2014
US Insurance:
Loss and LAE payments $ 67,327 $ 64,436 47.3% 49.4%
Change in reserves 17,813 16,286 12.5% 12.5%
Net incurred loss and LAE 85,140 80,722 59.8% 61.9%
International Insurance:
Loss and LAE payments 29,306 27,018 42.8% 40.8%
Change in reserves 9,876 (2,108) 14.4% -3.2%
Net incurred loss and LAE 39,182 24,910 57.2% 37.6%
Global Reinsurance:
Loss and LAE payments 16,899 16,626 39.2% 34.1%
Change in reserves 5,325 13,026 12.3% 26.8%
Net incurred loss and LAE 22,224 29,652 51.5% 60.9%
Total
Loss and LAE payments 113,532 108,080 44.7% 44.0%
Change in reserves 33,014 27,204 13.0% 11.1%
Net incurred loss and LAE $ 146,546 $ 135,284 57.7% 55.1%
AmountsLoss Ratio Impact
Impact of Prior Years Reserves Sept. 30,Sept. 30,Sept. 30,Sept. 30,
Favorable / (Unfavorable) Development 2015 2014 2015 2014
US Insurance $ 7,057 $ 4,831 2.8% 2.0%
International Insurance 2,794 10,139 1.1% 4.1%
Global Reinsurance 4,264 500 1.7% 0.2%
Total $ 14,115 $ 15,470 5.6% 6.3%

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Incurred Loss Activity
($ in thousands)
For the Nine Months Ended September 30,
AmountsLoss Ratio
Net Incurred Loss Activity 2015 2014 2015 2014
US Insurance:
Loss and LAE payments $ 186,780 $ 163,863 45.4% 44.2%
Change in reserves 60,314 62,954 14.7% 17.0%
Net incurred loss and LAE 247,094 226,817 60.1% 61.2%
International Insurance:
Loss and LAE payments 98,734 90,254 50.0% 48.0%
Change in reserves 2,502 1,169 1.3% 0.6%
Net incurred loss and LAE 101,236 91,423 51.3% 48.6%
Global Reinsurance:
Loss and LAE payments 58,148 58,248 46.7% 40.8%
Change in reserves 12,239 34,083 9.8% 23.8%
Net incurred loss and LAE 70,387 92,331 56.5% 64.6%
Total
Loss and LAE payments 343,662 312,365 47.0% 44.5%
Change in reserves 75,055 98,206 10.2% 14.0%
Net incurred loss and LAE $ 418,717 $ 410,571 57.2% 58.5%
AmountsLoss Ratio Impact
Impact of Prior Years Reserves Sept. 30,Sept. 30,Sept. 30,Sept. 30,
Favorable / (Unfavorable) Development 2015 2014 2015 2014
US Insurance $ 21,295 $ 16,965 2.9% 2.4%
International Insurance 8,404 21,096 1.1% 3.0%
Global Reinsurance 4,270 (2,038) 0.6% -0.3%
Total $ 33,969 $ 36,023 4.6% 5.1%

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data
($ in thousands)
As of September 30, 2015
Case IBNR
Net Loss Reserves: Reserves Reserves Total
US Insurance:
Marine $ 69,067 $ 61,475 $ 130,542
Property Casualty 162,634 478,821 641,455
Professional Liability 38,642 66,637 105,279
Total US Insurance 270,343 606,933 877,276
International Insurance:
Marine 171,492 71,114 242,606
Property Casualty 37,906 17,793 55,699
Professional Liability 10,347 61,648 71,995
Total International Insurance 219,745 150,555 370,300
Global Reinsurance 27,907 105,601 133,508
Total Net Loss Reserves $ 517,995 $ 863,089 $ 1,381,084
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

As of September 30, 2015, the average quality of the investment portfolio as rated by S&P and Moody’s was AA-/Aa3 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 investments as of September 30, 2015:

As of September 30, 2015
Gross Gross Cost or
Fair Unrealized Unrealized Amortized
amounts in thousands Value Gains (Losses) Cost
Fixed maturities:
U.S. Treasury bonds, agency bonds and
foreign government bonds $ 301,915 $ 4,327 $ (8,812) $ 306,400
States, municipalities and political subdivisions 571,104 17,402 (927) 554,629
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities 360,198 7,200 (912) 353,910
Residential mortgage obligations 31,568 854 (104) 30,818
Asset-backed securities 197,934 591 (846) 198,189
Commercial mortgage-backed securities 204,876 5,335 (958) 200,499
Subtotal $ 794,576 $ 13,980 $ (2,820) $ 783,416
Corporate bonds 729,392 10,776 (4,111) 722,727
Total fixed maturities $ 2,396,987 $ 46,485 $ (16,670) $ 2,367,172
Equity securities 274,928 16,486 (7,318) 265,760
Short-term investments 233,142 33 233,109
Total investments $ 2,905,057 $ 63,004 $ (23,988) $ 2,866,041



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.