Navigators Reports Third Quarter 2016 Earnings

STAMFORD, Conn., Nov. 03, 2016 (GLOBE NEWSWIRE) -- The Navigators Group, Inc. (NASDAQ:NAVG) reported Net income of $22.0 million, or $1.46 per diluted share, for the three months ended September 30, 2016 compared to $18.2 million, or $1.23 per diluted share, for the comparable period in 2015. Operating earnings were $21.1 million, or $1.40 per diluted share, for the three months ended September 30, 2016 compared to $20.3 million, or $1.37 per diluted share, for the comparable period in 2015. 

For the nine months ended September 30, 2016, our Company reported Net income of $61.1 million, or $4.08 per diluted share, compared to $63.3 million, or $4.29 per diluted share, for the comparable period in 2015. Operating earnings were $53.5 million, or $3.57 per diluted share, for the nine months ended September 30, 2016 compared to $60.7 million, or $4.11 per diluted share, for the comparable period in 2015.

Gross written premiums and Net written premiums for the three months ended September 30, 2016 were $374.9 million and $277.0 million, respectively, increasing 5.9% and 9.9% from the comparable period in 2015.

Gross written premiums and Net written premiums for the nine months ended September 30, 2016 were $1.2 billion and $0.9 billion, respectively, increasing 6.3% and 13.0% from the comparable period in 2015.

The combined ratio for the three and nine months ended September 30, 2016 was 95.6% and 96.7%, respectively, compared to 93.4% and 93.0% for the comparable periods in 2015.

Stan Galanski, President and Chief Executive Officer, commented, "We are very pleased with our third quarter results. It is our 15th consecutive quarter of profitable underwriting results with net income up 20.9% from third quarter 2015 and a healthy combined ratio of 95.6%.  Our investment portfolio performed well, with net investment income up 14.4% over third quarter 2015. Premium growth remained strong, with net written premium up nearly 10% for the quarter. Encouragingly, non-commission operating expenses were about flat with the third quarter of 2015, reflecting our efforts to control operating costs. Book value per share increased to $82.71 and was up nearly 9% from year end."

Stockholders' equity was $1.2 billion, or $82.71 per share, as of September 30, 2016 compared to $1.1 billion, or $75.96 per share, as of  December 31, 2015.

On November 3, 2016, the Board of Directors declared a quarterly cash dividend of $0.09 per share of Common stock to be paid on December 29, 2016 to stockholders of record at the close of business on November 18, 2016.

Net investment income for the three and nine months ended September 30, 2016 was $19.9 million and $59.3 million, respectively, increases of 14.4% and 18.2% as compared to the same periods in 2015. 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 2.6% for the three and nine months ended September 30, 2016, compared to 2.5% and 2.4%, respectively, for the comparable periods in 2015.

Our Company's investment portfolio mainly consists of fixed income securities with an average quality rating of "AA-/Aa3" as defined by S&P and Moody's, respectively, with an average effective duration of 3.9 years as of September 30, 2016.  As of September 30, 2016, Net unrealized gains within our investment portfolio were $106.1 million, an increase of $68.8 million compared to December 31, 2015.

We recognized $1.6 million of Net realized gains (losses) for the three months ended September 30, 2016, compared to ($0.8) million of Net realized losses for the same period in 2015.  For the nine months ended September 30, 2016, we recognized $5.0 million of Net realized gains, compared to $8.8 million for the same period in 2015.

Other income (loss) for the three months ended September 30, 2016 was ($0.2) million of loss, compared to ($2.5) million of loss for the same period in 2015.  For the nine months ended September 30, 2016 Other income (loss) was $6.8 million of income, compared to ($4.6) million of loss for the same period in 2015.  Other income (loss) primarily consists of realized and unrealized foreign exchange gains and losses.

Our Company will hold a conference call on Friday, November 4, 2016 starting at 8:30 a.m. (EDT) to discuss the 2016 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 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/ok7hgnmv

Net operating earnings, comprised of  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   2016     2015     Change     2016     2015     Change  
                                                 
Gross written premiums   $ 374,930     $ 354,062       5.9 %   $ 1,201,372     $ 1,129,993       6.3 %
Net written premiums     277,001       251,939       9.9 %     903,356       799,141       13.0 %
                                                 
Revenues:                                                
Net earned premiums   $ 284,010     $ 254,082       11.8 %   $ 816,360     $ 732,542       11.4 %
Net investment income     19,875       17,371       14.4 %     59,344       50,219       18.2 %
Net realized gains (losses):                                                
  Total other-than-temporary impairment losses     23       (1,298 )   NM       (248 )     (1,747 )     (85.8 %)
  Portion of loss recognized in other comprehensive income (before tax)       (23 )     23     NM       98       49       100.2 %
Net other-than-temporary impairment losses recognized in earnings     -       (1,275 )   NM       (150 )     (1,698 )     (91.2 %)
Other realized gains (losses)     1,586       518     NM       5,143       10,453       (50.8 %)
Net realized gains (losses)     1,586       (757 )   NM       4,993       8,755       (43.0 %)
Other income (loss)     (183 )     (2,518 )     (92.7 %)     6,796       (4,638 )   NM  
Total revenues   $ 305,288     $ 268,178       13.8 %   $ 887,493     $ 786,878       12.8 %
                                                 
Expenses:                                                
Net losses and loss adjustment expenses     172,793       146,546       17.9 %     492,955       418,717       17.7 %
Commission expenses     42,611       34,253       24.4 %     120,891       98,638       22.6 %
Other operating expenses     56,137       56,599       (0.8 %)     176,020       164,297       7.1 %
Interest expense     3,859       3,856       0.1 %     11,575       11,567       0.1 %
Total expenses   $ 275,400     $ 241,254       14.2 %   $ 801,441     $ 693,219       15.6 %
                                                 
Income before income taxes     29,888       26,924       11.0 %     86,052       93,659       (8.1 %)
                                                 
Income tax expense (benefit)     7,875       8,723       (9.7 %)     24,917       30,345       (17.9 %)
                                                 
Net income (loss)   $ 22,013     $ 18,201       20.9 %   $ 61,135     $ 63,314       (3.4 %)
                                                 
                                                 
Per Share Data                                                
                                                 
Net income per common share:                                                
Basic   $ 1.51     $ 1.26       19.7 %   $ 4.21     $ 4.40       -4.4 %
Diluted   $ 1.46     $ 1.23       18.9 %   $ 4.08     $ 4.29       -4.9 %
                                                 
Average common shares outstanding:                                                
Basic     14,557,376       14,411,927               14,528,917       14,384,291          
Diluted     15,070,422       14,811,095               14,998,385       14,767,949          
                                                 
Underwriting Ratios                                                
Loss Ratio     60.8 %     57.7 %             60.4 %     57.2 %        
Expense Ratio     34.8 %     35.7 %             36.3 %     35.8 %        
Combined Ratio     95.6 %     93.4 %             96.7 %     93.0 %        
                                                 
Balance Sheet Data   September 30,     June 30,             September 30,     December 31,          
    2016     2016             2016     2015          
Stockholders' equity   $ 1,204,281     $ 1,181,558       1.9 %   $ 1,204,281     $ 1,096,148       9.9 %
Book value per share   $ 82.71     $ 81.24       1.8 %   $ 82.71     $ 75.96       8.9 %
                                                 
NM- Percentage change not meaningful
                                                 

 
THE NAVIGATORS GROUP, INC AND SUBSIDIARIES
NON-GAAP RECONCILIATION OF NET INCOME TO NET OPERATING EARNINGS
($ in thousands, except per share data)
 
    Three Months Ended September 30, 2016     Three Months Ended September 30, 2015     % Change  
    Pre-Tax     Tax     After Tax     Pre-Tax     Tax     After Tax     QTD  
Net income   $ 29,888     $ (7,875 )   $ 22,013     $ 26,924     $ (8,723 )   $ 18,201       20.9 %
Adjustments to Net income:                                                        
Realized losses (gains)     (1,586 )     555       (1,031 )     757       (265 )     492     NM  
FX losses (gains)     227       (80 )     147       2,451       (858 )     1,593       (90.8 %)
Net operating earnings   $ 28,529     $ (7,400 )   $ 21,129     $ 30,132     $ (9,846 )   $ 20,286       4.2 %
                                                         
Net operating earnings per common share:                                                          
Basic                   $ 1.45                     $ 1.41          
Diluted                   $ 1.40                     $ 1.37          
                                                         
                                                         
                                                         
    Nine Months Ended September 30, 2016     Nine Months Ended September 30, 2015     % Change  
    Pre-Tax     Tax     After Tax     Pre-Tax     Tax     After Tax     YTD  
Net income   $ 86,052     $ (24,917 )   $ 61,135     $ 93,659     $ (30,345 )   $ 63,314       (3.4 %)
Adjustments to Net income:                                                        
Realized losses (gains)     (4,993 )     1,747       (3,246 )     (8,755 )     3,064       (5,691 )     (43.0 %)
FX losses (gains)     (6,679 )     2,337       (4,342 )     4,754       (1,664 )     3,090     NM  
Net operating earnings   $ 74,380     $ (20,833 )   $ 53,547     $ 89,658     $ (28,945 )   $ 60,713       (11.8 %)
                                                         
Net operating earnings per common share:                                                        
Basic                   $ 3.69                     $ 4.22          
Diluted                   $ 3.57                     $ 4.11          
                                                         
NM - Percentage change not meaningful 
 

   
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS (Unaudited)  
   
amounts in thousands, except share and per share amounts.                
    September 30,     December 31,  
    2016     2015  
ASSETS                
Investments:                
Fixed maturities, available-for-sale, at fair value (amortized cost: 2016:  $2,591,050; 2015: $2,400,245)     $ 2,660,417     $ 2,414,210  
Equity securities, available-for-sale, at fair value (cost: 2016: $305,906; 2015: $281,943)     342,677       305,271  
Other invested assets     2,021        
Short-term investments, at fair value (amortized cost: 2016: $134,273; 2015: $217,743)     134,273       217,745  
Total investments   $ 3,139,388     $ 2,937,226  
                 
Cash     147,515       69,901  
Premiums receivable     320,429       276,616  
Prepaid reinsurance premiums     222,891       232,588  
Reinsurance recoverable on paid losses     73,331       49,506  
Reinsurance recoverable on unpaid losses and loss adjustment expenses     787,917       809,518  
Deferred policy acquisition costs     116,295       91,983  
Accrued investment income     16,840       16,001  
Goodwill and other intangible assets     6,568       6,807  
Current income tax receivable, net     15,879       22,323  
Deferred income tax, net           3,900  
Other assets     50,343       67,643  
Total assets   $ 4,897,396     $ 4,584,012  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Liabilities:                
Reserves for losses and loss adjustment expenses   $ 2,268,127     $ 2,202,644  
Unearned premiums     897,975       820,676  
Reinsurance balances payable     123,702       107,411  
Senior notes     263,690       263,580  
Deferred income tax, net     8,703        
Payable for investments purchased     42,783       1,495  
Accounts payable and other liabilities     88,135       92,058  
Total liabilities   $ 3,693,115     $ 3,487,864  
                 
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   18,070,815 shares for 2016 and 17,942,269 shares for 2015     1,806       1,793  
Additional paid-in capital     368,860       357,829  
Treasury stock, at cost (3,511,380 shares for 2016 and 2015)     (155,801 )     (155,801 )
Retained earnings     927,239       868,723  
Accumulated other comprehensive income     62,177       23,604  
Total stockholders' equity   $ 1,204,281     $ 1,096,148  
Total liabilities and stockholders' equity   $ 4,897,396     $ 4,584,012  
                 

 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
 
    Three Months Ended September 30, 2016  
    U.S.     Int'l                          
amounts in thousands   Insurance     Insurance     GlobalRe     Corporate   (1)     Total  
Gross written premiums   $ 234,647     $ 104,484     $ 35,799     $     $ 374,930  
Ceded written premiums     (61,359 )     (35,194 )     (1,376 )           (97,929 )
Net written premiums     173,288       69,290       34,423             277,001  
                                         
Net earned premiums   $ 161,722     $ 79,761     $ 42,527     $     $ 284,010  
Net losses and LAE     (106,320 )     (45,043 )     (21,430 )           (172,793 )
Commission expenses     (18,630 )     (15,348 )     (8,951 )     318       (42,611 )
Other operating expenses     (31,517 )     (20,183 )     (4,437 )           (56,137 )
Other underwriting income (expense)       240             122       (318 )     44  
                                         
Underwriting profit (loss)   $ 5,495     $ (813 )   $ 7,831     $     $ 12,513  
                                         
Net investment income                             19,875       19,875  
Net realized gains (losses)                             1,586       1,586  
Interest expense                             (3,859 )     (3,859 )
Other income (loss)                             (227 )     (227 )
Income before income taxes   $ 5,495     $ (813 )   $ 7,831     $ 17,375     $ 29,888  
Income tax (expense) benefit                             (7,875 )     (7,875 )
Net income (loss)                                   $ 22,013  
                                         
Losses and LAE ratio     65.7 %     56.5 %     50.4 %             60.8 %
Commission expense ratio     11.5 %     19.2 %     21.0 %             15.0 %
Other operating expense ratio (2)     19.4 %     25.3 %     10.2 %             19.8 %
Combined ratio     96.6 %     101.0 %     81.6 %             95.6 %

(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, 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
 
    Nine Months Ended September 30, 2016  
    U.S.     Int'l                          
amounts in thousands   Insurance     Insurance     GlobalRe     Corporate   (1)     Total  
Gross written premiums   $ 689,218     $ 384,367     $ 127,787     $     $ 1,201,372  
Ceded written premiums     (178,474 )     (112,075 )     (7,467 )           (298,016 )
Net written premiums     510,744       272,292       120,320             903,356  
                                         
Net earned premiums   $ 462,446     $ 235,602     $ 118,312     $     $ 816,360  
Net losses and LAE     (291,260 )     (133,519 )     (68,176 )           (492,955 )
Commission expenses     (50,379 )     (47,524 )     (24,188 )     1,200       (120,891 )
Other operating expenses     (96,848 )     (64,997 )     (14,175 )           (176,020 )
Other underwriting income (expense)       943             374       (1,200 )     117  
                                         
Underwriting profit (loss)   $ 24,902     $ (10,438 )   $ 12,147     $     $ 26,611  
                                         
Net investment income                             59,344       59,344  
Net realized gains (losses)                             4,993       4,993  
Interest expense                             (11,575 )     (11,575 )
Other income (loss)                             6,679       6,679  
Income (loss) before income taxes   $ 24,902     $ (10,438 )   $ 12,147     $ 59,441     $ 86,052  
Income tax (expense) benefit                             (24,917 )     (24,917 )
Net income (loss)                                   $ 61,135  
                                         
Losses and LAE ratio     63.0 %     56.7 %     57.6 %             60.4 %
Commission expense ratio     10.9 %     20.2 %     20.4 %             14.8 %
Other operating expense ratio (2)     20.7 %     27.5 %     11.7 %             21.5 %
Combined ratio     94.6 %     104.4 %     89.7 %             96.7 %

(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
Reportable Segment Results
 
    U.S. Insurance  
    Three Months Ended September 30, 2016     Three Months Ended September 30, 2015          
amounts in thousands   Marine     P&C      Professional Liability     Total     Marine     P&C      Professional Liability     Total     % Change Total  
Gross written premiums   $ 40,271     $ 161,600     $ 32,776     $ 234,647     $ 35,529     $ 154,009     $ 29,245     $ 218,783       7.3 %
Ceded written premiums     (17,636 )     (36,011 )     (7,712 )     (61,359 )     (13,865 )     (34,902 )     (14,986 )     (63,753 )     (3.8 %)
Net written  premiums     22,635       125,589       25,064       173,288       21,664       119,107       14,259       155,030       11.8 %
                                                                         
Net earned premiums   $ 25,465     $ 115,971     $ 20,286     $ 161,722     $ 24,292     $ 104,473     $ 13,644     $ 142,409       13.6 %
Net losses and LAE     (14,974 )     (74,129 )     (17,217 )     (106,320 )     (7,349 )     (69,054 )     (8,737 )     (85,140 )     24.9 %
Commission expenses     (2,117 )     (13,664 )     (2,849 )     (18,630 )     (2,412 )     (11,711 )     (1,034 )     (15,157 )     22.9 %
Other operating expenses     (6,767 )     (19,997 )     (4,753 )     (31,517 )     (6,754 )     (20,581 )     (5,613 )     (32,948 )     (4.3 %)
Other underwriting income (expense)       126       104       10       240       214       735       64       1,013       (76.3 %)
                                                                         
Underwriting profit (loss)   $ 1,733     $ 8,285     $ (4,523 )   $ 5,495     $ 7,991     $ 3,862     $ (1,676 )   $ 10,177       (46.0 %)
                                                                         
Losses and LAE ratio     58.8 %     63.9 %     84.9 %     65.7 %     30.3 %     66.1 %     64.0 %     59.8 %        
Commission expense ratio     8.3 %     11.8 %     14.0 %     11.5 %     9.9 %     11.2 %     7.6 %     10.6 %        
Other operating expense ratio (1)     26.1 %     17.2 %     23.4 %     19.4 %     26.9 %     19.0 %     40.7 %     22.5 %        
Combined ratio     93.2 %     92.9 %     122.3 %     96.6 %     67.1 %     96.3 %     112.3 %     92.9 %        

(1) - Includes Other operating expenses and Other underwriting income (expense).
 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
 
    Int'l Insurance  
    Three Months Ended September 30, 2016     Three Months Ended September 30, 2015          
amounts in thousands   Marine     P&C      Professional Liability     Total     Marine     P&C      Professional Liability     Total     % Change Total  
Gross written premiums   $ 38,453     $ 38,077     $ 27,954     $ 104,484     $ 41,002     $ 37,449     $ 20,337     $ 98,788       5.8 %
Ceded written premiums     (12,631 )     (15,331 )     (7,232 )     (35,194 )     (10,985 )     (20,034 )     (6,785 )     (37,804 )     (6.9 %)
Net written  premiums     25,822       22,746       20,722       69,290       30,017       17,415       13,552       60,984       13.6 %
                                                                         
Net earned premiums   $ 34,794     $ 25,584     $ 19,383     $ 79,761     $ 36,792     $ 16,879     $ 14,862     $ 68,533       16.4 %
Net losses and LAE     (17,289 )     (16,080 )     (11,674 )     (45,043 )     (23,002 )     (8,051 )     (8,129 )     (39,182 )     15.0 %
Commission expenses     (8,358 )     (3,502 )     (3,488 )     (15,348 )     (8,227 )     (2,779 )     (1,774 )     (12,780 )     20.1 %
Other operating expenses     (7,654 )     (7,913 )     (4,616 )     (20,183 )     (8,233 )     (6,604 )     (5,100 )     (19,937 )     1.2 %
Other underwriting income (expense)                                                     NM  
                                                                         
Underwriting profit (loss)   $ 1,493     $ (1,911 )   $ (395 )   $ (813 )   $ (2,670 )   $ (555 )   $ (141 )   $ (3,366 )     (75.8 %)
                                                                         
Losses and LAE ratio     49.7 %     62.8 %     60.2 %     56.5 %     62.5 %     47.7 %     54.7 %     57.2 %        
Commission expense ratio     24.0 %     13.7 %     18.0 %     19.2 %     22.4 %     16.5 %     11.9 %     18.6 %        
Other operating expense ratio (1)     22.0 %     31.0 %     23.8 %     25.3 %     22.4 %     39.1 %     34.4 %     29.1 %        
Combined ratio     95.7 %     107.5 %     102.0 %     101.0 %     107.3 %     103.3 %     101.0 %     104.9 %        

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  
    Nine Months Ended September 30, 2016     Nine Months Ended September 30, 2015          
amounts in thousands   Marine     P&C      Professional Liability     Total     Marine     P&C      Professional Liability     Total     % Change Total  
Gross written premiums   $ 129,621     $ 471,532     $ 88,065     $ 689,218     $ 118,167     $ 458,371     $ 81,559     $ 658,097       4.7 %
Ceded written premiums     (53,823 )     (103,286 )     (21,365 )     (178,474 )     (45,177 )     (123,765 )     (42,423 )     (211,365 )     (15.6 %)
Net written  premiums     75,798       368,246       66,700       510,744       72,990       334,606       39,136       446,732       14.3 %
                                                                         
Net earned premiums   $ 73,636     $ 335,342     $ 53,468     $ 462,446     $ 74,193     $ 291,648     $ 44,963     $ 410,804       12.6 %
Net losses and LAE     (35,448 )     (217,898 )     (37,914 )     (291,260 )     (28,952 )     (194,910 )     (23,232 )     (247,094 )     17.9 %
Commission expenses     (5,775 )     (38,337 )     (6,267 )     (50,379 )     (8,873 )     (29,018 )     (3,886 )     (41,777 )     20.6 %
Other operating expenses     (20,956 )     (61,568 )     (14,324 )     (96,848 )     (20,129 )     (60,976 )     (16,905 )     (98,010 )     (1.2 %)
Other underwriting income (expense)       357       550       36       943       389       876       65       1,330       (29.1 %)
                                                                         
Underwriting profit (loss)   $ 11,814     $ 18,089     $ (5,001 )   $ 24,902     $ 16,628     $ 7,620     $ 1,005     $ 25,253       (1.4 %)
                                                                         
Losses and LAE ratio     48.1 %     65.0 %     70.9 %     63.0 %     39.0 %     66.8 %     51.7 %     60.1 %        
Commission expense ratio     7.8 %     11.4 %     11.7 %     10.9 %     12.0 %     9.9 %     8.6 %     10.2 %        
Other operating expense ratio (1)     28.1 %     18.2 %     26.8 %     20.7 %     26.6 %     20.7 %     37.5 %     23.6 %        
Combined ratio     84.0 %     94.6 %     109.4 %     94.6 %     77.6 %     97.4 %     97.8 %     93.9 %        

(1) - Includes Other operating expenses and Other underwriting income (expense).
 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
 
    Int'l Insurance  
    Nine Months Ended September 30, 2016     Nine Months Ended September 30, 2015          
amounts in thousands   Marine     P&C      Professional Liability     Total     Marine     P&C      Professional Liability     Total     % Change Total  
Gross written premiums   $ 151,548     $ 145,125     $ 87,694     $ 384,367     $ 149,844     $ 112,014     $ 68,147     $ 330,005       16.5 %
Ceded written premiums     (33,274 )     (57,025 )     (21,776 )     (112,075 )     (30,933 )     (60,676 )     (22,072 )     (113,681 )     (1.4 %)
Net written  premiums     118,274       88,100       65,918       272,292       118,911       51,338       46,075       216,324       25.9 %
                                                                         
Net earned premiums   $ 109,746     $ 70,608     $ 55,248     $ 235,602     $ 114,716     $ 43,112     $ 39,416     $ 197,244       19.4 %
Net losses and LAE     (54,398 )     (49,174 )     (29,947 )     (133,519 )     (63,945 )     (17,015 )     (20,276 )     (101,236 )     31.9 %
Commission expenses     (26,124 )     (11,427 )     (9,973 )     (47,524 )     (26,912 )     (3,961 )     (4,618 )     (35,491 )     33.9 %
Other operating expenses     (24,794 )     (25,686 )     (14,517 )     (64,997 )     (21,677 )     (18,754 )     (13,881 )     (54,312 )     19.7 %
Other underwriting income (expense)                                                     NM  
                                                                         
Underwriting profit (loss)   $ 4,430     $ (15,679 )   $ 811     $ (10,438 )   $ 2,182     $ 3,382     $ 641     $ 6,205     NM  
                                                                         
Losses and LAE ratio     49.6 %     69.6 %     54.2 %     56.7 %     55.7 %     39.5 %     51.4 %     51.3 %        
Commission expense ratio     23.8 %     16.2 %     18.1 %     20.2 %     23.5 %     9.2 %     11.7 %     18.0 %        
Other operating expense ratio (1)     22.6 %     36.4 %     26.2 %     27.5 %     18.9 %     43.5 %     35.3 %     27.6 %        
Combined ratio     96.0 %     122.2 %     98.5 %     104.4 %     98.1 %     92.2 %     98.4 %     96.9 %        

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
 
    For the Three Months Ended September 30,  
amounts in thousands   Amounts     Loss Ratio  
Net Incurred Loss Activity   2016     2015     2016     2015  
US Insurance:                                
Loss and LAE payments   $ 81,461     $ 67,327       50.4 %     47.3 %
Change in reserves     24,859       17,813       15.3 %     12.5 %
Net incurred loss and LAE   $ 106,320     $ 85,140       65.7 %     59.8 %
                                 
Int'l Insurance:                                
Loss and LAE payments   $ 43,848     $ 29,306       55.0 %     42.8 %
Change in reserves     1,195       9,876       1.5 %     14.4 %
Net incurred loss and LAE   $ 45,043     $ 39,182       56.5 %     57.2 %
                                 
GlobalRe:                                
Loss and LAE payments   $ 20,770     $ 16,899       48.8 %     39.2 %
Change in reserves     660       5,325       1.6 %     12.3 %
Net incurred loss and LAE   $ 21,430     $ 22,224       50.4 %     51.5 %
                                 
Total                                
Loss and LAE payments   $ 146,079     $ 113,532       51.4 %     44.7 %
Change in reserves     26,714       33,014       9.4 %     13.0 %
Net incurred loss and LAE   $ 172,793     $ 146,546       60.8 %     57.7 %
                                 
    Amounts     Loss Ratio Impact  
Impact of Prior Years Reserves   September 30,     September 30,     September 30,     September 30,  
Favorable / (Unfavorable) Development     2016     2015     2016     2015  
US Insurance   $ (4,903 )   $ 7,057       -1.7 %     2.8 %
Int'l Insurance     2,860       2,794       1.0 %     1.1 %
GlobalRe     3,074       4,264       1.1 %     1.7 %
Total   $ 1,031     $ 14,115       0.4 %     5.6 %
                                 

 
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Incurred Loss Activity
 
    For the Nine Months Ended September 30,  
amounts in thousands   Amounts     Loss Ratio  
Net Incurred Loss Activity   2016     2015     2016     2015  
US Insurance:                                
Loss and LAE payments   $ 226,742     $ 186,780       49.0 %     45.4 %
Change in reserves     64,518       60,314       14.0 %     14.7 %
Net incurred loss and LAE   $ 291,260     $ 247,094       63.0 %     60.1 %
                                 
Int'l Insurance:                                
Loss and LAE payments   $ 106,087     $ 98,734       45.0 %     50.0 %
Change in reserves     27,432       2,502       11.7 %     1.3 %
Net incurred loss and LAE   $ 133,519     $ 101,236       56.7 %     51.3 %
                                 
GlobalRe:                                
Loss and LAE payments   $ 63,829     $ 58,148       53.9 %     46.7 %
Change in reserves     4,347       12,239       3.7 %     9.8 %
Net incurred loss and LAE   $ 68,176     $ 70,387       57.6 %     56.5 %
                                 
Total                                
Loss and LAE payments   $ 396,658     $ 343,662       48.6 %     47.0 %
Change in reserves     96,297       75,055       11.8 %     10.2 %
Net incurred loss and LAE   $ 492,955     $ 418,717       60.4 %     57.2 %
                                 
    Amounts     Loss Ratio Impact  
Impact of Prior Years Reserves   September 30,     September 30,     September 30,     September 30,  
Favorable / (Unfavorable) Development     2016     2015     2016     2015  
US Insurance   $ 1,768     $ 21,295       0.2 %     2.9 %
Int'l Insurance     5,359       8,404       0.7 %     1.1 %
GlobalRe     4,517       4,270       0.6 %     0.6 %
Total   $ 11,644     $ 33,969       1.5 %     4.6 %
                                 

   
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES  
Net Loss Data  
   
    As of September 30, 2016  
amounts in thousands   Case     IBNR          
Net Loss Reserves:    Reserves       Reserves      Total  
US Insurance:                        
Marine   $ 58,332     $ 53,462     $ 111,794  
Property Casualty     188,495       584,581       773,076  
Professional Liability     29,482       63,105       92,587  
Total US Insurance   $ 276,309     $ 701,148     $ 977,457  
Int'l Insurance:                        
Marine   $ 175,133     $ 42,824     $ 217,957  
Property Casualty     58,360       20,414       78,774  
Professional Liability     27,635       65,947       93,582  
Total Int'l Insurance   $ 261,128     $ 129,185     $ 390,313  
                         
GlobalRe   $ 47,448     $ 64,992     $ 112,440  
                         
Total Net Loss Reserves     $ 584,885     $ 895,325     $ 1,480,210  
                         
                         
    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  
Int'l 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 Int'l Insurance   $ 227,053     $ 144,373     $ 371,426  
                         
GlobalRe   $ 32,160     $ 76,616     $ 108,776  
                         
Total Net Loss Reserves   $ 541,424     $ 851,702     $ 1,393,126  
                         
                         

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Investment Data

As of September 30, 2016, the average quality of the investment portfolio as rated by S&P and Moody's was AA-/Aa3 with an average duration of 3.9 years. Our 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, 2016:

    As of September 30, 2016  
            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     $ 262,030     $ 3,691     $ (3,981 )   $ 262,320  
States, municipalities and political subdivisions     580,324       29,288       (769 )     551,805  
Mortgage-backed and asset-backed securities:                                
Agency mortgage-backed securities     526,069       11,778       (105 )     514,396  
Residential mortgage obligations     27,055       455       (97 )     26,697  
Asset-backed securities     288,636       1,503       (458 )     287,591  
Commercial mortgage-backed securities     165,405       6,392       (423 )     159,436  
  Subtotal   $ 1,007,165     $ 20,128     $ (1,083 )   $ 988,120  
Corporate bonds     810,898       23,447       (1,354 )     788,805  
Total fixed maturities   $ 2,660,417     $ 76,554     $ (7,187 )   $ 2,591,050  
Equity securities     342,677       38,538       (1,767 )     305,906  
Other invested assets     2,021                   2,021  
Short-term investments     134,273                   134,273  
Total investments   $ 3,139,388     $ 115,092     $ (8,954 )   $ 3,033,250  

 
Contact:Ciro M. DeFalcoSenior Vice President and Chief Financial Officer(203) 905-6343cdefalco@navg.comwww.navg.com

Primary Logo

More from Press Releases

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

21st Century Fox Scoops Up Local News Stations

21st Century Fox Scoops Up Local News Stations

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Three-Part FREE Webinar Series

Three-Part FREE Webinar Series

March 24 Full-Day Course Offering: Professional Approach to Trading SPX

March 24 Full-Day Course Offering: Professional Approach to Trading SPX