updated 2/17/2011 4:15:36 PM ET 2011-02-17T21:15:36

NEW YORK, Feb. 17, 2011 (GLOBE NEWSWIRE) -- The Navigators Group, Inc. (Nasdaq:NAVG) reported net income of $17.3 million, or $1.07 per diluted share, for the three months ended December 31, 2010 compared to net income of $6.1 million, or $0.35 per diluted share, for the comparable period in 2009. Operating earnings (1) were $4.7 million, or $0.29 per diluted share for the fourth quarter of 2010 compared to $5.3 million, or $0.30 per diluted share, for the comparable period in 2009. As previously announced on January 21, 2011, during the fourth quarter of 2010 Navigators recognized $9.2 million of after-tax reinsurance reinstatement costs related to the April 2010 Deepwater Horizon loss event in the Gulf of Mexico, which reduced net written and net earned premiums by $14.2 million.

For the twelve months ended December 31, 2010, the Company reported net income of $69.6 million, or $4.24 per diluted share, compared to $63.2 million, or $3.65 per diluted share, for the comparable period in 2009. Operating earnings were $43.4 million, or $2.65 per diluted share for the twelve months ended December 31, 2010 compared to $65.2 million, or $3.76 per diluted share, for the comparable period of 2009. For the twelve months ended December 31, 2010, Navigators recognized $12.4 million of after-tax reinstatement costs related to the Deepwater Horizon loss event, which reduced net written and net earned premiums by $19.0 million.

Gross written premiums and net written premiums for the three months ended December 31, 2010 were $229.9 million and $141.8 million, respectively, a decrease of 8.7% and 12.2% from the comparable 2009 periods.  Gross written premiums and net written premiums for the twelve months ended December 31, 2010 were $987.2 million and $653.9 million, respectively, a decrease of 5.5% and 6.7% from the comparable 2009 periods.

The combined loss and expense ratios for the three and twelve months ended December 31, 2010 were 106.3% and 100.7%, respectively, compared to 106.5% and 97.2% for the comparable 2009 periods. The combined loss and expense ratio for the three months ended December 31, 2010 was favorably impacted by 1.9 loss ratio points due to favorable development in prior period loss reserves. The combined loss and expense ratio for the twelve months ended December 31, 2010 was favorably impacted by 2.1 loss ratio points due to favorable development in prior period loss reserves.

Navigators' Chief Executive Officer Stan Galanski commented: "Although we see pockets of opportunity, such as the energy sector, most of the insurance markets in which we operate continued to be challenging during the fourth quarter due to intense industry competition and the continued fragile nature of the economic recovery.  Despite those factors, along with historically low investment yields and the Deepwater Horizon industry loss, Navigators maintained its strong capital position and grew book value per share 11% during 2010. The Navigators franchise has never been stronger as we improved our distribution capabilities, added new products and walked away from underperforming business.  We enter 2011 cautious, but poised to capitalize as opportunities arise to extend Navigators superior record of book value per share growth."

During the three and twelve months ended December 31, 2010, the Company repurchased 35,566 and 1,264,284 shares of its common stock for an aggregate purchase price of $1.7 million and $52.0 million, respectively, pursuant to its share repurchase program. The Company did not repurchase any additional shares of its common stock between January 1, 2011 and February 16, 2011 pursuant to its share repurchase program.  Approximately $41.3 million remains available under the Company's current share repurchase program that expires on December 31, 2011.

Net investment income for the three and twelve months ended December 31, 2010 was $18.0 million and $71.7 million, respectively, which were decreases of 5.3% and 5.1% from the comparable 2009 periods. The annualized pre-tax investment yield, excluding net realized gains and losses and net other-than-temporary impairment losses recognized in earnings, was 3.4% and 3.5% for the three and twelve months ended December 31, 2010, respectively, compared to 3.7% and 3.8% for the 2009 comparable periods. The effective tax rate on net investment income was 28.1% and 27.0% for the three and twelve months ended December 31, 2010, respectively, compared to 24.7% and 25.0% for the comparable 2009 periods.

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 4.4 years at December 31, 2010. At December 31, 2010, net unrealized gains within our investment portfolio were $49.1 million, a decrease of $4.8 million compared to December 31, 2009. There were $19.5 million and $40.2 million of net realized gains and other-than temporary impairment losses recognized in earnings for the three and twelve months ended December 31, 2010.

Consolidated cash flow from operations for the three and twelve months ended December 31, 2010 was $4.1 million and $118.2 million, respectively, compared to $(1.3) million and $103.9 million for the comparable 2009 periods.

Stockholders' equity was $829.4 million, or $52.68 per share, at December 31, 2010 compared to $801.5 million, or $47.58 per share, at December 31, 2009. The statutory surplus of Navigators Insurance Company was $686.9 million at December 31, 2010 compared to $645.8 million at December 31, 2009.

(1)   Operating earnings, or net income excluding after-tax net realized gains (losses) and net other-than-temporary impairment losses recognized in earnings, 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 Company will hold a conference call on Friday, February 18, 2011 starting at 8:30 a.m. ET to discuss the 2010 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://investor.shareholder.com/navg/eventdetail.cfm?eventid=91365

The Navigators Group, Inc. is an international specialty insurance holding company with insurance company operations, underwriting management companies, and operations at Lloyd's of London. Headquartered in New York, Navigators has offices in major insurance centers in the United States, the United Kingdom and Continental Europe.

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 per share data)
(unaudited)
             
  Three Months Ended

December 31,
  Twelve Months Ended

December 31,
 
Results of Operations 2010 2009 Change 2010 2009 Change
             
Gross written premiums  $ 229,850  $ 251,739 -9%  $ 987,201  $ 1,044,918 -6%
Net written premiums  141,809  161,595 -12%  653,938  701,255 -7%
             
Revenues:            
Net earned premiums  166,158  177,278 -6%  659,931  683,363 -3%
Investment income  17,998  19,003 -5%  71,662  75,512 -5%
 Total other-than-temporary impairment losses  (448)  (496) -10%  (2,222)  (29,265) -92%
 Portion of loss recognized in other comprehensive income (before tax)  273  335 -19%  1,142  17,388 -93%
Net other-than-temporary impairment losses recognized in earnings  (175)  (161) 9%  (1,080)  (11,877) -91%
Net realized gains  19,665  1,476 1232%  41,319  9,217 348%
Other income (expense)  2,205  (21) NM  5,143  6,665 -23%
Total revenues  205,851  197,575 4%  776,975  762,880 2%
             
Expenses:            
Net losses and loss adjustment expenses  110,022  127,432 -14%  421,155  435,998 -3%
Commission expenses  32,935  27,330 21%  109,113  98,908 10%
Other operating expenses  35,919  34,099 5%  139,700  132,671 5%
Interest expense  2,045  2,044 0%  8,178  8,455 -3%
Total expenses  180,921  190,905 -5%  678,146  676,032 0%
             
Income before income taxes  24,930  6,670 274%  98,829  86,848 14%
             
Income tax expense  7,592  594 1178%  29,251  23,690 23%
             
Net income  $ 17,338  $ 6,076 185%  $ 69,578  $ 63,158 10%
             
Per Share Data            
Net income per common share:            
Basic  $ 1.10  $ 0.36 206%  $ 4.33  $ 3.73 16%
Diluted  $ 1.07  $ 0.35 207%  $ 4.24  $ 3.65 16%
             
Average shares outstanding:            
Basic  15,751  16,955    16,065  16,935  
Diluted  16,159  17,355    16,415 17,322  
             
Underwriting Ratios            
Loss Ratio 66.2% 71.9%   63.8% 63.8%  
Expense Ratio 40.1% 34.6%   36.9% 33.4%  
Combined Ratio 106.3% 106.5%   100.7% 97.2%  
             
Balance Sheet Data Dec. 31,

2010
Sept. 30,

2010
  Dec. 31,

2010
Dec. 31,

2009
 
 Stockholders' equity  $ 829,354  $ 854,013 -3%  $ 829,354  $ 801,519 3%
 Book value per share  $ 52.68  $ 54.17 -3%  $ 52.68  $ 47.58 11%
 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands, except share data)
     
  December 31,

2010
December 31,

2009
  (unaudited)  
ASSETS    
Investments and cash:    
Fixed maturities, available-for-sale, at fair value (amortized cost: 2010,

$1,855,598; 2009, $1,777,983)
 $ 1,882,245  $ 1,816,669
Equity securities, available-for-sale, at fair value (cost: 2010, $64,793; 2009,

$47,376)
 87,258  62,610
Short-term investments, at cost which approximates fair value  153,057  176,799
Cash  31,768  509
Total investments and cash  2,154,328  2,056,587
     
Premiums receivable  188,368  193,460
Prepaid reinsurance premiums  156,869  162,344
Reinsurance recoverable on paid losses  56,658  76,505
Reinsurance recoverable on unpaid losses and loss adjustment expenses  843,296  807,352
Deferred policy acquisition costs  55,201  56,575
Accrued investment income  15,590  17,438
Goodwill and other intangible assets  6,925  7,057
Current income tax receivable, net  1,054  4,854
Deferred income tax, net  15,141  31,222
Other assets  38,029  40,600
     
Total assets  $ 3,531,459  $ 3,453,994
     
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Liabilities:    
Reserves for losses and loss adjustment expenses  $ 1,985,838  $ 1,920,286
Unearned premiums  463,515  475,171
Reinsurance balances payable  105,904  98,555
Senior notes  114,138  114,010
Accounts payable and other liabilities  32,710  44,453
Total liabilities  2,702,105  2,652,475
     
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

17,274,440 shares for 2010 and 17,212,814 shares for 2009
 1,728  1,721
Additional paid-in capital  312,588  304,505
Retained earnings  539,512  469,934
Treasury stock, at cost (1,532,273 shares for 2010 and 366,330 shares for

2009)
 (64,935)  (18,296)
Accumulated other comprehensive income  40,461  43,655
Total stockholders' equity  829,354  801,519
     
Total liabilities and stockholders' equity  $ 3,531,459  $ 3,453,994
 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Comparative Premium Data
($ in thousands)
             
Gross Written Premiums: Three Months   Twelve Months  
Insurance Companies: 2010 2009 Change 2010 2009 Change
Marine  $ 50,925  $ 53,986 -6%  $ 223,061  $ 241,438 -8%
Property Casualty  70,157  80,158 -12%  312,651  352,285 -11%
Professional Liability  32,601  35,264 -8%  129,793  137,053 -5%
   153,683  169,408 -9%  665,505  730,776 -9%
Lloyd's Operations:            
Marine  48,965  51,703 -5%  182,723  191,959 -5%
Property Casualty  18,031  19,093 -6%  94,799  78,151 21%
Professional Liability  9,171  11,535 -20%  44,174  44,032 0%
   76,167  82,331 -7%  321,696  314,142 2%
Total  $ 229,850  $ 251,739 -9%  $ 987,201  $ 1,044,918 -6%
             
Net Written Premiums: Three Months   Twelve Months  
Insurance Companies: 2010 2009 Change 2010 2009 Change
Marine  $ 27,357  $ 38,242 -28%  $ 151,059  $ 171,289 -12%
Property Casualty  41,171  43,987 -6%  197,845  227,234 -13%
Professional Liability  20,170  19,970 1%  80,451  79,150 2%
   88,698  102,199 -13%  429,355  477,673 -10%
Lloyd's Operations:            
Marine  38,135  42,286 -10%  149,340  156,153 -4%
Property Casualty  11,000  11,316 -3%  54,049  45,097 20%
Professional Liability  3,976  5,794 -31%  21,194  22,332 -5%
   53,111  59,396 -11%  224,583  223,582 0%
Total  $ 141,809  $ 161,595 -12%  $ 653,938  $ 701,255 -7%
             
Net Earned Premiums: Three Months   Twelve Months  
Insurance Companies: 2010 2009 Change 2010 2009 Change
Marine  $ 33,107  $ 43,075 -23%  $ 155,846  $ 157,534 -1%
Property Casualty  48,513  57,283 -15%  200,741  246,143 -18%
Professional Liability  23,397  19,446 20%  82,264  75,444 9%
   105,017  119,804 -12%  438,851  479,121 -8%
Lloyd's Operations:            
Marine  40,684  40,800 0%  149,225  142,958 4%
Property Casualty  14,972  11,080 35%  49,852  39,330 27%
Professional Liability  5,485  5,594 -2%  22,003  21,954 0%
   61,141  57,474 6%  221,080  204,242 8%
Total  $ 166,158  $ 177,278 -6%  $ 659,931  $ 683,363 -3%
 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Three Months Ended
December 31, 2010
($ in thousands)
         
  Insurance 

Companies
Lloyd's

Operations
Corporate (1) Total
Gross written premiums   $ 153,683  $ 76,167  $ --  $ 229,850
Net written premiums  88,698 53,111  -- 141,809
         
Net earned premiums 105,017 61,141  -- 166,158
Net losses and loss adjustment expenses (74,549) (35,473)  -- (110,022)
Commission expenses (15,771) (17,164)  -- (32,935)
Other operating expenses (26,973) (8,951)  -- (35,924)
Other income (expense) 1,409 801  -- 2,210
         
Underwriting profit (loss) (10,867) 354  -- (10,513)
         
Investment income 15,752 2,107 139 17,998
Net realized gains (losses) 15,917 2,945  628 19,490
Interest expense  --  --  (2,045) (2,045)
Income (loss) before income tax expense (benefit) 20,802 5,406 (1,278) 24,930
         
Income tax expense (benefit) 6,053 1,986 (447) 7,592
Net income (loss)  $ 14,749  $ 3,420  $ (831)  $ 17,338
         
Loss and loss expenses ratio 71.0% 58.0%   66.2%
Commission expense ratio 15.0% 28.1%   19.8%
Other operating expenses ratio (2) 24.3% 13.3%   20.3%
Combined ratio 110.3% 99.4%   106.3%
         
(1) The Corporate segment includes intercompany eliminations.      
(2) The Other operating expenses ratio includes Other income (expense).    
 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information 
Three Months Ended
December 31, 2009
($ in thousands)
         
  Insurance

Companies
Lloyd's

Operations
Corporate (1) Total 
Gross written premiums  $ 169,408  $ 82,331  $ --  $ 251,739
Net written premiums 102,199 59,396  -- 161,595
         
Net earned premiums 119,804 57,474  -- 177,278
Net losses and loss adjustment expenses (89,838) (37,594)  -- (127,432)
Commission expenses (16,575) (11,194)  439 (27,330)
Other operating expenses (26,141) (7,963)  -- (34,104)
Other income (expense) 341 82  (439) (16)
         
Underwriting profit (loss) (12,409) 805  -- (11,604)
         
Investment income 16,674 2,169 160 19,003
Net realized gains (losses) 1,520 (205)  -- 1,315
Interest expense  --  --  (2,044) (2,044)
Income (loss) before income tax expense (benefit) 5,785 2,769 (1,884) 6,670
         
Income tax expense (benefit) 142 1,112 (660) 594
Net income (loss)  $ 5,643  $ 1,657  $ (1,224)  $ 6,076
         
Loss and loss expenses ratio 75.0% 65.4%   71.9%
Commission expense ratio 13.8% 19.5%   15.4%
Other operating expenses ratio (2) 21.6% 13.7%   19.2%
Combined ratio 110.4% 98.6%   106.5%
         
(1) The Corporate segment includes intercompany eliminations.    
(2) The Other operating expenses ratio includes Other income (expense).  
 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Twelve Months Ended
December 31, 2010
($ in thousands)
         
  Insurance

Companies
Lloyd's

Operations
Corporate (1) Total
Gross written premiums  $ 665,505  $ 321,696  $ --  $ 987,201
Net written premiums  429,355 224,583  -- 653,938
         
Net earned premiums 438,851 221,080  -- 659,931
Net losses and loss adjustment expenses (280,120) (141,035)  -- (421,155)
Commission expenses (59,122) (49,991)  -- (109,113)
Other operating expenses (106,631) (33,112)  -- (139,743)
Other income (expense) 1,698 3,488  -- 5,186
         
Underwriting profit (loss) (5,324) 430  -- (4,894)
         
Investment income 62,792 8,286 584 71,662
Net realized gains (losses) 36,057 3,323 859 40,239
Interest expense  --  --  (8,178) (8,178)
         
Income (loss) before income tax expense (benefit) 93,525 12,039 (6,735) 98,829
         
Income tax expense (benefit) 27,219 4,389 (2,357) 29,251
Net income (loss)  $ 66,306  $ 7,650  $ (4,378)  $ 69,578
         
Loss and loss expenses ratio 63.8% 63.8%   63.8%
Commission expense ratio 13.5% 22.6%   16.5%
Other operating expenses ratio (2) 23.9% 13.4%   20.4%
Combined ratio 101.2% 99.8%   100.7%
         
(1) The Corporate segment includes intercompany eliminations.        
(2) The Other operating expenses ratio includes Other income (expense).        
 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information 
Twelve Months Ended
December 31, 2009
($ in thousands)
         
  Insurance

Companies
Lloyd's

Operations
Corporate (1) Total 
Gross written premiums  $ 730,776  $ 314,142  $ --  $1,044,918
Net written premiums 477,673 223,582  -- 701,255
         
Net earned premiums 479,121 204,242  -- 683,363
Net losses and loss adjustment expenses (304,672) (131,326)  -- (435,998)
Commission expenses (61,949) (37,727)  768 (98,908)
Other operating expenses (104,801) (27,896)  -- (132,697)
Other income (expense) 3,498 961  (768) 3,691
         
Underwriting profit 11,197 8,254  -- 19,451
         
Investment income 65,717 9,229 566 75,512
Net realized gains (losses) 533 (3,193)  -- (2,660)
Gain on debt repurchase  --  --  3,000 3,000
Interest expense  --  --  (8,455) (8,455)
         
Income (loss) before income tax expense (benefit) 77,447 14,290 (4,889) 86,848
         
Income tax expense (benefit) 19,819 5,582 (1,711) 23,690
Net income (loss)  $ 57,628  $ 8,708  $ (3,178)  $ 63,158
         
Loss and loss expenses ratio 63.6% 64.3%   63.8%
Commission expense ratio 12.9% 18.5%   14.5%
Other operating expenses ratio (2) 21.1% 13.2%   18.9%
Combined ratio 97.6% 96.0%   97.2%
         
(1) The Corporate segment includes intercompany eliminations.    
(2) The Other operating expenses ratio includes Other income (expense).  
 
 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results
($ in thousands)
               
  Three Months Ended December 31, 2010
          Combined Ratio
Insurance Companies: Net Earned

Premiums
Losses and

LAE Incurred
Underwriting

Expenses
Underwriting

Gain(Loss)
Loss Expense Total
Marine  $ 33,107  $ 22,668  $ 13,526  $ (3,087) 68.5% 40.8% 109.3%
Property Casualty  48,513  21,265  19,182  8,066 43.8% 39.6% 83.4%
Professional Liability  23,397  30,616  8,627  (15,846) 130.9% 36.8% 167.7%
   105,017  74,549  41,335  (10,867) 71.0% 39.3% 110.3%
Lloyd's Operations  61,141  35,473  25,314  354 58.0% 41.4% 99.4%
Total  $ 166,158  $ 110,022  $ 66,649  $ (10,513) 66.2% 40.1% 106.3%
               
  Three Months Ended December 31, 2009
          Combined Ratio
Insurance Companies: Net Earned

Premiums
Losses and

LAE Incurred
Underwriting

Expenses
Underwriting

Gain(Loss)
Loss Expense Total
Marine  $ 43,075  $ 26,677  $ 14,998  $ 1,400 61.9% 34.8% 96.7%
Property Casualty  57,283  43,444  20,474  (6,635) 75.8% 35.7% 111.5%
Professional Liability  19,446  19,717  6,903  (7,174) 101.4% 35.5% 136.9%
   119,804  89,838  42,375  (12,409) 75.0% 35.4% 110.4%
Lloyd's Operations  57,474  37,594  19,075  805 65.4% 33.2% 98.6%
Total  $ 177,278  $ 127,432  $ 61,450  $ (11,604) 71.9% 34.6% 106.5%
               
               
               
    Amounts   Loss Ratio  
Net Incurred Loss Activity   Dec. 31, Dec. 31,   Dec. 31, Dec. 31,  
For the Three Months Ended: 2010 2009   2010 2009  
Insurance Companies:              
Loss and LAE payments    $ 70,855  $ 75,175   67.5% 62.8%  
Change in reserves    3,694  14,663   3.5% 12.2%  
Net incurred loss and LAE    74,549  89,838   71.0% 75.0%  
               
Lloyd's Operations:              
Loss and LAE payments    33,147  24,130   54.2% 42.0%  
Change in reserves    2,326  13,464   3.8% 23.4%  
Net incurred loss and LAE    35,473  37,594   58.0% 65.4%  
               
Total              
Loss and LAE payments    104,002  99,305   62.6% 56.0%  
Change in reserves    6,020  28,127   3.6% 15.9%  
Net incurred loss and LAE  $ 110,022  $ 127,432   66.2% 71.9%  
               
               
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: 2010 2009   2010 2009  
Insurance Companies    $ (199)  $ (10,164)   -0.2% -8.5%  
Lloyd's Operations    3,346  9   5.5% 0.0%  
Total    $ 3,147  $ (10,155)   1.9% -5.7%  
 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results
($ in thousands)
               
  Twelve Months Ended December 31, 2010
          Combined Ratio
Insurance Companies: Net Earned

Premiums
Losses and

LAE Incurred
Underwriting

Expenses
Underwriting

Gain(Loss)
Loss Expense Total
Marine  $ 155,846  $ 100,579  $ 56,092  $ (825) 64.5% 36.0% 100.5%
Property Casualty  200,741  110,902  77,040  12,799 55.2% 38.4% 93.6%
Professional Liability  82,264  68,639  30,923  (17,298) 83.4% 37.6% 121.0%
   438,851  280,120  164,055  (5,324) 63.8% 37.4% 101.2%
Lloyd's Operations  221,080  141,035  79,615  430 63.8% 36.0% 99.8%
Total  $ 659,931  $ 421,155  $ 243,670  $ (4,894) 63.8% 36.9% 100.7%
               
  Twelve Months Ended December 31, 2009
          Combined Ratio
Insurance Companies: Net Earned

Premiums
Losses and

LAE Incurred
Underwriting

Expenses
Underwriting

Gain(Loss)
Loss Expense Total
Marine  $ 157,534  $ 109,916  $ 50,451  $ (2,833) 69.8% 32.0% 101.8%
Property Casualty  246,143  123,775  86,116  36,252 50.3% 35.0% 85.3%
Professional Liability  75,444  70,981  26,685  (22,222) 94.1% 35.4% 129.5%
   479,121  304,672  163,252  11,197 63.6% 34.0% 97.6%
Lloyd's Operations  204,242  131,326  64,662  8,254 64.3% 31.7% 96.0%
Total  $ 683,363  $ 435,998  $ 227,914  $ 19,451 63.8% 33.4% 97.2%
               
               
               
    Amounts   Loss Ratio  
Net Incurred Loss Activity   Dec. 31, Dec. 31,   Dec. 31, Dec. 31,  
For the Twelve Months Ended: 2010 2009   2010 2009  
Insurance Companies:              
Loss and LAE payments    $ 278,969  $ 246,457   63.5% 51.4%  
Change in reserves    1,151  58,215   0.3% 12.2%  
Net incurred loss and LAE    280,120  304,672   63.8% 63.6%  
               
Lloyd's Operations:              
Loss and LAE payments    112,578  76,478   50.9% 37.4%  
Change in reserves    28,457  54,848   12.9% 26.9%  
Net incurred loss and LAE    141,035  131,326   63.8% 64.3%  
               
Total              
Loss and LAE payments    391,547  322,935   59.3% 47.3%  
Change in reserves    29,608  113,063   4.5% 16.5%  
Net incurred loss and LAE  $ 421,155  $ 435,998   63.8% 63.8%  
               
               
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: 2010 2009   2010 2009  
Insurance Companies    $ 5,455  $ 3,079   1.2% 0.6%  
Lloyd's Operations    8,347  5,862   3.8% 2.9%  
Total    $ 13,802  $ 8,941   2.1% 1.3%  
 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data
($ in thousands)
       
Net Loss Reserves, December 31, 2010: Case

Reserves
IBNR

Reserves
Total
Insurance Companies:      
Marine  $ 107,147  $ 109,361  $ 216,508
Property Casualty  158,740  308,613  467,353
Professional Liability  46,096  78,469  124,565
Total Insurance Companies  311,983  496,443  808,426
Lloyd's Operations:      
Marine  111,914  112,708  224,622
Property Casualty  30,327  29,792  60,119
Professional Liability  9,904  39,471  49,375
Total Lloyd's Operations  152,145  181,971  334,116
       
Total Net Loss Reserves  $ 464,128  $ 678,414  $ 1,142,542
       
Net Loss Reserves, December 31, 2009: Case

Reserves
IBNR

Reserves
Total
Insurance Companies:      
Marine  $ 113,604  $ 100,042  $ 213,646
Property Casualty  134,427  351,985  486,412
Professional Liability  38,410  68,807  107,217
Total Insurance Companies  286,441  520,834  807,275
Lloyd's Operations:      
Marine  107,800  101,851  209,651
Property Casualty  27,148  25,175  52,323
Professional Liability  7,442  36,243  43,685
Total Lloyd's Operations  142,390  163,269  305,659
       
Total Net Loss Reserves  $ 428,831  $ 684,103  $ 1,112,934

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Investment Data
December 31, 2010
($ in thousands)

At December 31, 2010, the average quality of the investment portfolio as rated by S&P and Moody's was AA/Aa with an average duration of 4.4 years. The Company does not own any collateralized debt obligations (CDO's), collateralized loan obligations (CLO's) or asset backed commercial paper.

At December 31, 2010, the Company owned two asset-backed securities approximating $0.9 million with subprime mortgage exposures. The securities have an effective maturity of 5.4 years. In addition, the Company owned a total of seven collateralized mortgage obligations and asset-backed securities approximating $2.5 million classified as Alt-A which is a credit category between prime and subprime. They have an effective maturity of 6.0 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 at December 31, 2010:

December 31, 2010 Fair

Value
Gross

Unrealized

Gains
Gross

Unrealized

(Losses)
Cost or

Amortized

Cost
OTTI

Recognized

in OCI
  ($ in thousands)
Fixed maturities:          
U.S. Government Treasury bonds, agency bonds and foreign government bonds  $ 324,145  $ 5,229  $ (4,499)  $ 323,415  $ --
States, municipalities and political subdivisions  392,250  11,903  (3,805)  384,152  --
Mortgage- and asset-backed securities          
Agency mortgage-backed securities  382,628  10,127  (2,434)  374,935  --
Residential mortgage obligations  20,463  24  (2,393)  22,832  (1,646)
Asset-backed securities  46,093  247  (292)  46,138  --
Commercial mortgage-backed securities  190,015  4,804  (1,794)  187,005  --
Subtotal  639,199  15,202  (6,913)  630,910  (1,646)
Corporate bonds  526,651  15,075  (5,545)  517,121  --
           
Total fixed maturities   1,882,245  47,409  (20,762)  1,855,598  (1,646)
           
Equity securities - common stocks  87,258  22,475  (10)  64,793  --
           
Cash  31,768  --  --  31,768  --
           
Short-term investments  153,057  --  --  153,057  --
           
Total  $ 2,154,328  $ 69,884  $ (20,772)  $ 2,105,216  $ (1,646)

    THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Investment Data
December 31, 2010
($ in thousands)

The following tables set forth our agency mortgage-backed securities and residential mortgage obligations, 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, 2010:

Agency mortgage-backed securities: Fair 

Value 
Gross

Unrealized

Gains 
Gross

Unrealized

(Losses) 
Cost or 

Amortized 

Cost 
GNMA  $ 142,677  $ 3,478  $ (1,006)  $ 140,205
FNMA  191,682  5,386  (937)  187,233
FHLMC  48,269  1,263  (491)  47,497
Total  $ 382,628  $ 10,127  $ (2,434)  $ 374,935
         
Residential mortgage obligations: Fair 

Value 
Gross 

Unrealized 

Gains 
Gross 

Unrealized 

(Losses) 
 Cost or 

Amortized 

Cost 
Prime   $ 15,369  $ 24  $ (1,999)  $ 17,344
Alt-A  2,453  --  (379)  2,832
Subprime  --  --  --  --
Non-US RMBS  2,641  --  (15)  2,656
Total  $ 20,463  $ 24  $ (2,393)  $ 22,832
CONTACT: Francis W. McDonnell
         Senior Vice President and Chief Financial Officer
         (914) 933-6270
         fmcdonnell@navg.com
         www.navg.com

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