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Navigators Reports Fourth Quarter and Full Year Earnings

STAMFORD, Conn., Feb. 10, 2016 (GLOBE NEWSWIRE) -- The Navigators Group, Inc. (NASDAQ:NAVG) reported net income of $17.7 million, or $1.19 per diluted share, for the three months ended December 31, 2015 compared to $19.3 million, or $1.31 per diluted share, for the comparable period in 2014. Operating earnings were $16.4 million, or $1.10 per diluted share, for the three months ended December 31, 2015 compared to $18.4 million, or $1.25 per diluted share, for the comparable period in 2014.

For the twelve months ended December 31, 2015, the Company reported net income of $81.1 million, or $5.47 per diluted share compared to $95.3 million, or $6.51 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 twelve months ended December 31, 2014 net income per diluted share would have been $6.06. Operating earnings were $77.1 million, or $5.20 per diluted share, for the twelve months ended December 31, 2015 compared to $80.5 million, or $5.49 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 December 31, 2015 were $323.5 million and $244.7 million, respectively, a decrease of 2.9% and an increase of 7.3% from the comparable period in 2014.

Gross written premiums and net written premiums for the twelve months ended December 31, 2015 were $1.454 billion and $1.044 billion, respectively, an increase of 1.5% and 4.4% from the comparable period in 2014.

The combined ratio for the three and twelve months ended December 31, 2015 was 97.2% and 94.1%, respectively, compared to 93.8% and 92.6% for the comparable periods in 2014.

Stan Galanski, President and Chief Executive Officer commented, “We are pleased to report profitable underwriting results across all three of our reporting segments for 2015. Net income was $81 million, representing our third best year ever, and book value per share increased to $75.96. Market conditions were challenging, particularly in economically-sensitive products like Offshore Energy and Marine Liability, for which gross written premium decreased during the fourth quarter and year. Our U.S. P&C operating segment continued to perform well and we remain encouraged by the momentum of our newer initiatives, including our property insurance and reinsurance product lines.”

Stockholders’ equity was $1.096 billion, or $75.96 per share, as of December 31, 2015 compared to $1.027 billion, or $71.93 per share, as of December 31, 2014.

Net investment income for the three and twelve months ended December 31, 2015 was $18.5 million and $68.7 million, respectively, an increase of 15.1% and 7.1% 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 twelve months ended December 31, 2015, compared to 2.3% for both 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 December 31, 2015. As of December 31, 2015, net unrealized gains within our investment portfolio were $37.3 million, a decrease of $34.1 million compared to December 31, 2014.

There were $2.1 million of net realized losses recognized in earnings for the three months ended December 31, 2015, compared to $0.8 million of net realized gains for the same period in 2014. For the twelve months ended December 31, 2015, there were $6.7 million of net realized gains, compared to $12.8 million of net realized gains for the same period in 2014.

Other income (loss) for the three months ended December 31, 2015 was $4.1 million of income, compared to $0.6 million of income for the same period in 2014. For the twelve months ended December 31, 2015, Other income (loss) was a $0.5 million loss compared to $10.7 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 Thursday, February 11, 2016 starting at 8:30 a.m. (EST) to discuss the 2015 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 (800) 850-2903 and the international dial-in is (224) 357-2399. Participants may connect to the webcast at:

http://edge.media-server.com/m/p/i53d9p2k

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 Twelve Months Ended
December 31, December 31,
Results of Operations 2015 2014 Change 2015 2014 Change
Gross written premiums $ 323,509 $ 333,299 -2.9% $ 1,453,502 $ 1,432,353 1.5%
Net written premiums 244,719 228,007 7.3% 1,043,860 1,000,138 4.4%
Revenues:
Net earned premiums 251,545 234,172 7.4% 984,087 935,895 5.1%
Net investment income 18,499 16,071 15.1% 68,718 64,168 7.1%
Net realized gains (losses):
Total other-than-temporary impairment losses (123) (21) NM (1,870) 137 NM
Portion of loss recognized in other comprehensive
income (before tax) 123 21 NM 172 (137) NM
Net other-than-temporary impairment losses
recognized in earnings - - NM (1,698) - NM
Other realized gains (losses) (2,080) 788 NM 8,373 12,812 -34.6%
Net realized gains (losses) (2,080) 788 NM 6,675 12,812 -47.9%
Other income (loss) 4,147 586 NM (491) 10,656 NM
Total revenues 272,111 251,617 8.1% 1,058,989 1,023,531 3.5%
Expenses:
Net losses and loss adjustment expenses 153,881 134,658 14.3% 572,598 545,229 5.0%
Commission expenses 31,339 33,708 -7.0% 129,977 125,528 3.5%
Other operating expenses 59,219 51,299 15.4% 223,516 196,825 13.6%
Interest expense 3,857 3,854 0.1% 15,424 15,413 0.1%
Total expenses 248,296 223,519 11.1% 941,515 882,995 6.6%
Income before income taxes 23,815 28,098 -15.2% 117,474 140,536 -16.4%
Income tax expense (benefit) 6,072 8,823 -31.2% 36,417 45,207 -19.4%
Net income (loss) $ 17,743 $ 19,275 -7.9% $ 81,057 $ 95,329 -15.0%
Per Share Data
Net income per common share:
Basic $ 1.23 $ 1.35 -8.9% $ 5.63 $ 6.69 -15.8%
Diluted $ 1.19 $ 1.31 -9.2% $ 5.47 $ 6.51 -16.0%
Average common shares outstanding:
Basic 14,416,947 14,280,045 14,392,522 14,259,768
Diluted 14,917,646 14,715,265 14,825,745 14,646,369
Underwriting Ratios
Loss Ratio 61.2% 57.5% 58.2% 58.3%
Expense Ratio 36.0% 36.3% 35.9% 34.3%
Combined Ratio 97.2% 93.8% 94.1% 92.6%
Balance Sheet Data Dec. 31,Sept. 30, Dec. 31,Dec. 31,
2015 2015 2015 2014
Stockholders' equity $ 1,096,148 $ 1,076,855 1.8% $ 1,096,148 $ 1,027,224 6.7%
Book value per share $ 75.96 $ 74.70 1.7% $ 75.96 $ 71.93 5.6%

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
amounts in thousands, except share and per share amounts.
December 31, December 31,
2015 2014
ASSETS
Investments:
Fixed maturities, available-for-sale, at fair value (amortized cost: 2015: $2,400,245; 2014: $2,323,959) $2,414,210 $ 2,365,934
Equity securities, available-for-sale, at fair value (cost: 2015: $281,943; 2014: $154,843) 305,271 184,295
Short-term investments, at fair value (amortized cost: 2015: $217,743; 2014: $179,527) 217,745 179,506
Total investments $ 2,937,226 $ 2,729,735
Cash 69,901 90,751
Premiums receivable 276,616 342,479
Prepaid reinsurance premiums 232,588 237,851
Reinsurance recoverable on paid losses 49,506 51,347
Reinsurance recoverable on unpaid losses and loss adjustment expenses 809,518 851,498
Deferred policy acquisition costs 91,983 79,452
Accrued investment income 16,001 14,791
Goodwill and other intangible assets 6,807 7,013
Current income tax receivable, net. 22,323 14,549
Deferred income tax, net 3,900 -
Other assets
67,643 56,719
Total assets $ 4,584,012 $ 4,476,185
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Reserves for losses and loss adjustment expenses $ 2,202,644 $ 2,159,634
Unearned premiums 820,676 766,167
Reinsurance balances payable 107,411 152,774
Senior notes 263,580 263,440
Deferred income tax, net - 1,467
Payable for investments purchased 1,495 134
Accounts payable and other liabilities 92,058 105,345
Total liabilities $ 3,487,864 $ 3,448,961
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 17,942,269 shares for 2015
and 17,792,846 shares for 2014 1,793 1,778
Additional paid-in capital 357,829 347,022
Treasury stock, at cost (3,511,380 shares for 2015 and 2014) (155,801) (155,801)
Retained earnings 868,723 787,666
Accumulated other comprehensive income 23,604 46,559
Total stockholders' equity $ 1,096,148 $ 1,027,224
Total liabilities and stockholders' equity $ 4,584,012 $ 4,476,185

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Three Months Ended December 31, 2015
U.S. Int'l
amounts in thousands Insurance Insurance GlobalRe Corporate (1) Total
Gross written premiums $ 207,684 $ 81,942 $ 33,883 $- $ 323,509
Ceded written premiums (57,410) (20,324) (1,056) - (78,790)
Net written premiums 150,274 61,618 32,827 - 244,719
Net earned premiums 145,032 62,716 43,797 - 251,545
Net losses and LAE (96,403) (33,466) (24,012) - (153,881)
Commission expenses (14,542) (8,185) (9,198) 586 (31,339)
Other operating expenses (33,397) (21,555) (4,267) - (59,219)
Other underwriting income (expense) 360 - 249 (586) 23
Underwriting profit (loss) $ 1,050 $ (490) $ 6,569 $ - $ 7,129
Net investment income 18,499 18,499
Net realized gains (losses) (2,080) (2,080)
Interest expense (3,857) (3,857)
Other income (loss) 4,124 4,124
Income before income taxes $ 1,050 $ (490) $ 6,569 $ 16,686 $ 23,815
Income tax (expense) benefit (6,072) (6,072)
Net income (loss) $ 17,743
Losses and LAE ratio 66.5% 53.4% 54.8% 61.2%
Commission expense ratio 10.0% 13.1% 21.0% 12.5%
Other operating expense ratio (2) 22.8% 34.3% 9.2% 23.5%
Combined ratio 99.3% 100.8% 85.0% 97.2%
(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 December 31, 2014
U.S. Int'l
amounts in thousands Insurance Insurance GlobalRe Corporate (1) Total
Gross written premiums $ 202,334 $ 90,819 $ 40,146 $ - $ 333,299
Ceded written premiums (68,259) (36,387) (646) - (105,292)
Net written premiums 134,075 54,432 39,500 - 228,007
Net earned premiums 133,425 55,492 45,255 - 234,172
Net losses and LAE (85,022) (23,656) (25,980) - (134,658)
Commission expenses (14,242) (11,770) (8,258) 562 (33,708)
Other operating expenses (29,824) (17,492) (3,983) - (51,299)
Other underwriting income (expense) 458 14 188 (562) 98
Underwriting profit (loss) $ 4,795 $ 2,588 $ 7,222 $ - $ 14,605
Net investment income 16,071 16,071
Net realized gains (losses) 788 788
Interest expense (3,854) (3,854)
Other income (loss) 488 488
Income before income taxes $ 4,795 $ 2,588 $ 7,222 $ 13,493 $ 28,098
Income tax (expense) benefit (8,823) (8,823)
Net income (loss) $ 19,275
Losses and LAE ratio 63.7% 42.6% 57.4% 57.5%
Commission expense ratio 10.7% 21.2% 18.2% 14.4%
Other operating expense ratio (2) 22.0% 31.5% 8.4% 21.9%
Combined ratio 96.4% 95.3% 84.0% 93.8%
_______________
(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other operating expenses and Other underwriting income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Twelve Months Ended December 31, 2015
U.S. Int'l
amounts in thousands Insurance Insurance GlobalRe Corporate (1) Total
Gross written premiums $ 865,781 $ 411,947 $ 175,774 $- $ 1,453,502
Ceded written premiums (268,775) (134,005) (6,862) - (409,642)
Net written premiums 597,006 277,942 168,912 - 1,043,860
Net earned premiums 555,836 259,960 168,291 - 984,087
Net losses and LAE (343,497) (134,702) (94,399) - (572,598)
Commission expenses (56,319) (43,676) (32,240) 2,258 (129,977)
Other operating expenses (131,407) (75,867) (16,242) - (223,516)
Other underwriting income (expense) 1,690 - 690 (2,258) 122
Underwriting profit (loss) $ 26,303 $ 5,715 $ 26,100 $ - $ 58,118
Net investment income 68,718 68,718
Net realized gains (losses) 6,675 6,675
Interest expense (15,424) (15,424)
Other income (loss) (613) (613)
Income (loss) before income taxes $ 26,303 $ 5,715 $ 26,100 $ 59,356 $ 117,474
Income tax (expense) benefit (36,417) (36,417)
Net income (loss) $ 81,057
Losses and LAE ratio 61.8% 51.8% 56.1% 58.2%
Commission expense ratio 10.1% 16.8% 19.2% 13.2%
Other operating expense ratio (2) 23.4% 29.2% 9.2% 22.7%
Combined ratio 95.3% 97.8% 84.5% 94.1%
(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other operating expenses and Other underwriting income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Twelve Months Ended December 31, 2014
U.S. Int'l
amounts in thousands Insurance Insurance GlobalRe Corporate (1) Total
Gross written premiums $ 807,108 $ 424,904 $ 200,341 $ - $ 1,432,353
Ceded written premiums (254,983) (171,921) (5,311) - (432,215)
Net written premiums 552,125 252,983 195,030 - 1,000,138
Net earned premiums 504,289 243,485 188,121 - 935,895
Net losses and LAE (311,839) (115,079) (118,311) - (545,229)
Commission expenses (49,840) (44,426) (33,429) 2,167 (125,528)
Other operating expenses (115,817) (65,275) (15,733) - (196,825)
Other underwriting income (expense) 2,241 32 489 (2,167) 595
Underwriting profit (loss) $ 29,034 $ 18,737 $ 21,137 $ - $ 68,908
Net investment income 64,168 64,168
Net realized gains (losses) 12,812 12,812
Interest expense (15,413) (15,413)
Other income (loss) 10,061 10,061
Income (loss) before income taxes $ 29,034 $ 18,737 $ 21,137 $ 71,628 $ 140,536
Income tax (expense) benefit (45,207) (45,207)
Net income (loss) $ 95,329
Losses and LAE ratio 61.8% 47.3% 62.9% 58.3%
Commission expense ratio 9.9% 18.2% 17.8% 13.4%
Other operating expense ratio (2) 22.5% 26.8% 8.1% 20.9%
Combined ratio 94.2% 92.3% 88.8% 92.6%
(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 December 31, 2015 Three months ended December 31, 2014
amounts in thousands MarineP&CProfessional
Liability
Total MarineP&CProfessional
Liability
Total %
Change
Total
Gross written premiums $ 40,045 $ 138,214 $ 29,425 $ 207,684 $ 37,055 $ 139,637 $ 25,642 $ 202,334 2.6%
Ceded written premiums (16,747) (28,395) (12,268) (57,410) (13,320) (41,435) (13,504) (68,259) -15.9%
Net written premiums 23,298 109,819 17,157 150,274 23,735 98,202 12,138 134,075 12.1%
Net earned premiums 21,976 109,673 13,383 145,032 26,057 88,355 19,013 133,425 8.7%
Net losses and LAE (14,619) (71,878) (9,906) (96,403) (4,337) (68,187) (12,498) (85,022) 13.4%
Commission expenses (2,254) (11,392) (896) (14,542) (2,970) (8,681) (2,591) (14,242) 2.1%
Other operating expenses (6,953) (20,890) (5,554) (33,397) (6,486) (17,980) (5,358) (29,824) 12.0%
Other underwriting income (expense) 100 246 14 360 150 292 16 458 -21.2%
Underwriting profit (loss) $ (1,750)$ 5,759 $ (2,959)$ 1,050 $ 12,414 $ (6,201)$ (1,418)$ 4,795 -78.1%
Losses and LAE ratio 66.5% 65.5% 74.0% 66.5% 16.6% 77.2% 65.7% 63.7%
Commission expense ratio 10.3% 10.4% 6.7% 10.0% 11.4% 9.8% 13.6% 10.7%
Other operating expense ratio (1) 31.2% 18.8% 41.4% 22.8% 24.4% 20.0% 28.2% 22.0%
Combined ratio 108.0% 94.7% 122.1% 99.3% 52.4% 107.0% 107.5% 96.4%
(1) - Includes Other operating expenses and Other underwriting income (expense).
Int'l Insurance
Three months ended December 31, 2015 Three months ended December 31, 2014
amounts in thousands Marine P&C Professional
Liability
Total MarineP&CProfessional
Liability
Total %
Change
Total
Gross written premiums $ 33,863 $ 18,715 $ 29,364 $ 81,942 $ 39,680 $ 29,185 $ 21,954 $ 90,819 -9.8%
Ceded written premiums (5,582) (7,046) (7,696) (20,324) (11,454) (18,072) (6,861) (36,387) -44.1%
Net written premiums 28,281 11,669 21,668 61,618 28,226 11,113 15,093 54,432 13.2%
Net earned premiums 34,540 12,208 15,968 62,716 28,669 15,313 11,510 55,492 13.0%
Net losses and LAE (15,792) (3,463) (14,211) (33,466) (14,669) (2,858) (6,129) (23,656) 41.5%
Commission expenses (5,275) (1,038) (1,872) (8,185) (7,898) (2,925) (947) (11,770) -30.5%
Other operating expenses (8,742) (7,540) (5,273) (21,555) (7,766) (5,631) (4,095) (17,492) 23.2%
Other underwriting income (expense) - - - - 6 4 4 14 NM
Underwriting profit (loss) $ 4,731 $ 167 $ (5,388)$ (490) $ (1,658)$ 3,903 $ 343 $ 2,588 NM
Losses and LAE ratio 45.7% 28.4% 89.0% 53.4% 51.2% 18.7% 53.2% 42.6%
Commission expense ratio 15.3% 8.5% 11.7% 13.1% 27.6% 19.1% 8.2% 21.2%
Other operating expense ratio (1) 25.3% 61.7% 33.0% 34.3% 27.1% 36.7% 35.7% 31.5%
Combined ratio 86.3% 98.6% 133.7% 100.8% 105.9% 74.5% 97.1% 95.3%
NM - Percentage change not meaningful
(1) - Includes Other operating expenses and Other underwriting income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
U.S. Insurance
Twelve Months Ended December 31, 2015 Twelve Months Ended December 31, 2014
amounts in thousands MarineP&CProfessional
Liability
Total MarineP&CProfessional
Liability
Total %
Change
Total
Gross written premiums $ 158,124 $ 596,673 $ 110,984 $ 865,781 $ 154,233 $ 543,045 $ 109,830 $ 807,108 7.3%
Ceded written premiums (61,916) (152,168) (54,691) (268,775) (46,685) (169,953) (38,345) (254,983) 5.4%
Net written premiums 96,208 444,505 56,293 597,006 107,548 373,092 71,485 552,125 8.1%
Net earned premiums 96,082 401,408 58,346 555,836 105,650 314,833 83,806 504,289 10.2%
Net losses and LAE (43,553) (266,806) (33,138) (343,497) (42,057) (220,263) (49,519) (311,839) 10.2%
Commission expenses (11,606) (39,931) (4,782) (56,319) (13,025) (25,497) (11,318) (49,840) 13.0%
Other operating expenses (27,082) (81,866) (22,459) (131,407) (24,205) (70,903) (20,709) (115,817) 13.5%
Other underwriting income (expense) 489 1,122 79 1,690 839 1,263 139 2,241 -24.6%
Underwriting profit (loss) $ 14,330 $ 13,927 $ (1,954)$ 26,303 $ 27,202 $ (567)$ 2,399 $ 29,034 -9.4%
Losses and LAE ratio 45.3% 66.5% 56.8% 61.8% 39.8% 70.0% 59.1% 61.8%
Commission expense ratio 12.1% 9.9% 8.2% 10.1% 12.3% 8.1% 13.5% 9.9%
Other operating expense ratio (1) 27.7% 20.1% 38.3% 23.4% 22.2% 22.1% 24.5% 22.5%
Combined ratio 85.1% 96.5% 103.3% 95.3% 74.3% 100.2% 97.1% 94.2%
(1) - Includes Other operating expenses and Other underwriting income (expense).
Int'l Insurance
Twelve Months Ended December 31, 2015 Twelve Months Ended December 31, 2014
amounts in thousands Marine P&C Professional
Liability
Total MarineP&CProfessional
Liability
Total %
Change
Total
Gross written premiums $ 183,707 $ 130,729 $ 97,511 $ 411,947 $ 190,787 $ 158,139 $ 75,978 $ 424,904 -3.0%
Ceded written premiums (36,515) (67,722) (29,768) (134,005) (47,805) (98,087) (26,029) (171,921) -22.1%
Net written premiums 147,192 63,007 67,743 277,942 142,982 60,052 49,949 252,983 9.9%
Net earned premiums 149,256 55,320 55,384 259,960 141,097 62,520 39,868 243,485 6.8%
Net losses and LAE (79,737) (20,478) (34,487) (134,702) (71,986) (23,317) (19,776) (115,079) 17.1%
Commission expenses (32,187) (4,999) (6,490) (43,676) (37,660) (5,295) (1,471) (44,426) -1.7%
Other operating expenses (30,419) (26,294) (19,154) (75,867) (28,222) (22,156) (14,897) (65,275) 16.2%
Other underwriting income (expense) - - - - 16 9 7 32 NM
Underwriting profit (loss) $ 6,913 $ 3,549 $ (4,747)$ 5,715 $ 3,245 $ 11,761 $ 3,731 $ 18,737 -69.5%
Losses and LAE ratio 53.4% 37.0% 62.3% 51.8% 51.0% 37.3% 49.6% 47.3%
Commission expense ratio 21.6% 9.0% 11.7% 16.8% 26.8% 8.5% 3.7% 18.2%
Other operating expense ratio (1) 20.4% 47.6% 34.6% 29.2% 20.0% 35.4% 37.4% 26.8%
Combined ratio 95.4% 93.6% 108.6% 97.8% 97.8% 81.2% 90.7% 92.3%
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 December 31,
Amounts Loss Ratio
Net Incurred Loss Activity 2015 2014 2015 2014
US Insurance:
Loss and LAE payments $ 60,750 $ 58,374 41.9% 43.7%
Change in reserves 35,653 26,648 24.6% 20.0%
Net incurred loss and LAE 96,403 85,022 66.5% 63.7%
International Insurance:
Loss and LAE payments 27,933 38,198 44.6% 68.8%
Change in reserves 5,533 (14,542) 8.8% -26.2%
Net incurred loss and LAE 33,466 23,656 53.4% 42.6%
Global Reinsurance:
Loss and LAE payments 48,320 45,396 110.3% 100.4%
Change in reserves (24,308) (19,416) -55.5% -43.0%
Net incurred loss and LAE 24,012 25,980 54.8% 57.4%
Total
Loss and LAE payments 137,003 141,968 54.5% 60.6%
Change in reserves 16,878 (7,310) 6.7% -3.1%
Net incurred loss and LAE $ 153,881 $ 134,658 61.2% 57.5%
Amounts Loss Ratio Impact
Impact of Prior Years Reserves Dec. 31Dec. 31 Dec. 31Dec. 31
Favorable / (Unfavorable) Development 2015 2014 2015 2014
US Insurance $ 8,023 $ (1,545) 3.2% -0.7%
International Insurance 17,812 17,156 7.1% 7.3%
Global Reinsurance 4,865 4,178 1.9% 1.8%
Total $ 30,700 $ 19,789 12.2% 8.4%

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Incurred Loss Activity
($ in thousands)
For the Twelve Months Ended December 31,
Amounts Loss Ratio
Net Incurred Loss Activity 2015 2014 2015 2014
US Insurance:
Loss and LAE payments $ 247,530 $ 222,237 44.5% 44.0%
Change in reserves 95,967 89,602 17.3% 17.8%
Net incurred loss and LAE 343,497 311,839 61.8% 61.8%
International Insurance:
Loss and LAE payments 126,667 128,452 48.7% 52.8%
Change in reserves 8,035 (13,373) 3.1% -5.5%
Net incurred loss and LAE 134,702 115,079 51.8% 47.3%
Global Reinsurance:
Loss and LAE payments 106,468 103,644 63.3% 55.1%
Change in reserves (12,069) 14,667 -7.2% 7.8%
Net incurred loss and LAE 94,399 118,311 56.1% 62.9%
Total
Loss and LAE payments 480,665 454,333 48.9% 48.6%
Change in reserves 91,933 90,896 9.3% 9.7%
Net incurred loss and LAE $ 572,598 $ 545,229 58.2% 58.3%
Amounts Loss Ratio Impact
Impact of Prior Years Reserves Dec. 31Dec. 31 Dec. 31Dec. 31
Favorable / (Unfavorable) Development 2015 2014 2015 2014
US Insurance $ 29,319 $ 15,420 3.0% 1.6%
International Insurance 26,216 38,252 2.7% 4.1%
Global Reinsurance 9,134 2,140 0.9% 0.2%
Total $ 64,669 $ 55,812 6.6% 5.9%

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data
($ in thousands)
As of December 31, 2015
Case IBNR
Net Loss Reserves: Reserves Reserves Total
US Insurance:
Marine $ 68,677 $ 55,408 $ 124,085
Property Casualty 170,988 514,777 685,765
Professional Liability 42,546 60,528 103,074
Total US Insurance 282,211 630,713 912,924
International Insurance:
Marine 167,157 61,409 228,566
Property Casualty 40,313 19,735 60,048
Professional Liability 19,583 63,229 82,812
Total International Insurance 227,053 144,373 371,426
Global Reinsurance 32,160 76,616 108,776
Total Net Loss Reserves $ 541,424 $ 851,702 $ 1,393,126
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 December 31, 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 December 31, 2015:
As of December 31, 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 $ 252,880 $ 2,273 $ (9,214) $ 259,821
States, municipalities and political subdivisions 576,859 21,233 (781) 556,407
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities 379,270 5,573 (2,082) 375,779
Residential mortgage obligations 30,465 694 (82) 29,853
Asset-backed securities 225,012 85 (1,624) 226,551
Commercial mortgage-backed securities 189,714 3,119 (1,864) 188,459
Subtotal $ 824,461 $ 9,471 $ (5,652) $ 820,642
Corporate bonds 760,010 7,373 (10,738) 763,375
Total fixed maturities $ 2,414,210 $ 40,350 $ (26,385) $ 2,400,245
Equity securities 305,271 26,341 (3,013) 281,943
Short-term investments 217,745 2 - 217,743
Total investments $ 2,937,226 $ 66,693 $ (29,398) $ 2,899,931

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.