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Press release from GlobeNewswire (a Nasdaq OMX company)

Navigators Reports Fourth Quarter Earnings

Wednesday, February 13, 2013

Navigators Reports Fourth Quarter Earnings13:01 EST Wednesday, February 13, 2013NEW YORK, Feb. 13, 2013 (GLOBE NEWSWIRE) -- The Navigators Group, Inc. (Nasdaq:NAVG) reported net income of $28.0 million, or $1.96 per diluted share, for the three months ended December 31, 2012 compared to $10.1 million, or $0.70 per diluted share, for the comparable period in 2011. Operating earnings were $8.5 million, or $0.59 per diluted share, for the fourth quarter of 2012 compared to operating earnings of $5.8 million, or $0.41 per diluted share, for the comparable period in 2011. For the twelve months ended December 31, 2012, the Company reported net income of $63.8 million, or $4.45 per diluted share, compared to $25.6 million, or $1.69 per diluted share, for the comparable period in 2011. Operating earnings were $37.6 million, or $2.63 per diluted share, for the twelve months ended December 31, 2012 compared to $19.1 million, or $1.26 per diluted share, for the comparable period in 2011. Gross written premiums and net written premiums for the three months ended December 31, 2012 were $321.6 million and $212.3 million, respectively, an increase of 15.7% and 5.1% from the comparable period in 2011. Gross written premiums and net written premiums for the twelve months ended December 31, 2012 were $1,286.5 million and $833.7 million, respectively, an increase of 16.1% and 10.6% from the comparable period in 2011. The combined loss and expense ratios for the three and twelve months ended December 31, 2012 were 100.2% and 99.3%, respectively, compared to 102.5% and 104.7% for the comparable periods in 2011. The current quarter includes net reserve releases of $28.0 million from our Lloyd's Operations, most notably from our Lloyd's Marine business in connection with favorable settlement of several large losses and the continued favorable loss emergence for underwriting years 2010 and prior. The current quarter also includes a net loss from Superstorm Sandy of $20.4 million, inclusive of $8.3 million in reinsurance reinstatement premiums. Stan Galanski, President and Chief Executive Officer, commented, "In a year that began with the grounding of the Costa Concordia and concluded with Superstorm Sandy, we are pleased to have achieved profitable underwriting results. Our results were driven by an exceptionally strong performance at Lloyd's, where favorable loss emergence contributed to their best combined ratio since acquiring the Lloyd's operation in 1998." Stockholders' equity was $879.5 million, or $62.61 per share, as of December 31, 2012 compared to $803.4 million, or $57.57 per share, as of December 31, 2011. Net investment income for the three and twelve months ended December 31, 2012 was $13.6 million and $54.2 million, respectively, an increase of 9.6% for the three months ended December 31, 2012 and a decrease of 14.6% for the twelve months ended December 31, 2012. Investment income for the twelve months ended December 31, 2012 and 2011 was reduced by $4.5 million and $4.7 million, respectively, for a total of $9.2 million as a result of the settlement of a dispute with Equitas over foregone interest on amounts that were due on certain reinsurance contracts. The annualized pre-tax investment yield, excluding net realized gains and losses and net other-than-temporary impairment losses recognized in earnings, for the three and twelve months ended December 31, 2012 was 2.3% and 2.4%, respectively, compared to 2.3% and 3.0% for the comparable periods in 2011. The effective tax rate on net investment income was 26.7% and 26.8% for the three and twelve months ended December 31, 2012, compared to 23.6% and 27.6% for the comparable periods in 2011. The Company's investment portfolio mainly consists of fixed income securities with an average quality rating of "AA/Aa" as defined by Standard & Poor's and Moody's, respectively, and an average effective duration of 3.6 years as of December 31, 2012. As of December 31, 2012, net unrealized gains within our investment portfolio were $103.3 million, an increase of $9.7 million compared to December 31, 2011. There were $30.0 million and $40.2 million of net realized gains including other-than-temporary impairment losses recognized in earnings for the three and twelve months ended December 31, 2012, respectively, compared to $6.6 million and $10.0 million for the same periods in 2011. Consolidated net cash flow from operations for the three and twelve months ended December 31, 2012 were $27.6 million and $96.7 million, respectively, compared to $32.0 million and $118.3 million for the comparable periods in 2011. The Company will hold a conference call on Thursday, February 14, 2013 starting at 8:30 a.m. ET to discuss the 2012 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=123733 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 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. The Navigators Group, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7778 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 SUBSIDIARIESFinancial Highlights($ in thousands, except share and per share data)(unaudited)                              Three Months Ended December 31,  Twelve Months Ended December 31,  Results of Operations20122011Change20122011Change              Gross written premiums $ 321,587  $ 277,901 15.7% $ 1,286,465  $ 1,108,216 16.1%Net written premiums 212,312  202,002 5.1% 833,655  753,798 10.6%              Revenues:             Net earned premiums  201,566  191,757 5.1%  781,964  691,645 13.1% Net investment income  13,616  12,428 9.6%  54,248  63,500 -14.6% Total other-than-temporary impairment losses  (208)  (1,280) -83.8%  (902)  (3,617) -75.1% Portion of loss recognized in other comprehensive income (before tax)  --   691 NM  44  1,632 -97.3% Net other-than-temporary impairment losses recognized in earnings  (208)  (589) -64.7%  (858)  (1,985) -56.8% Net realized gains (losses)  30,254  7,141 NM  41,074  11,996 NM Other income   (599)  586 NM  1,488  1,229 21.1%Total revenues 244,629  211,323 15.8% 877,916  766,385 14.6%              Expenses:             Net losses and loss adjustment expenses  127,191  136,104 -6.5%  497,433  476,997 4.3% Commission expenses  31,259  30,273 3.3%  121,470  110,437 10.0% Other operating expenses  42,841  30,688 39.6%  159,079  138,029 15.3% Interest expense  2,051  2,048 0.1%  8,198  8,188 0.1%Total expenses 203,342  199,113 2.1% 786,180  733,651 7.2%            Income before income taxes 41,287  12,210 NM 91,736  32,734 NM              Income tax expense (benefit) 13,243  2,122 NM 27,974  7,137 NM            Net income (loss) $ 28,044  $ 10,088 NM $ 63,762  $ 25,597 149.1%                        Per Share Data                      Net income per common share:        Basic $ 2.00  $ 0.71 NM $ 4.54  $ 1.71 NMDiluted $ 1.96  $ 0.70 NM $ 4.45  $ 1.69 NM              Average common shares outstanding:          Basic 14,042,553  14,199,491   14,052,311  14,980,429  Diluted 14,340,057  14,380,161   14,327,820  15,183,285                Underwriting Ratios             Loss Ratio 63.1% 71.0%   63.6% 69.0%   Expense Ratio 37.1% 31.5%   35.7% 35.7%  Combined Ratio100.2%102.5%  99.3%104.7%                              Balance Sheet DataDec. 31,Sept. 30,  Dec. 31,Dec. 31,    20122012  20122011  Stockholders' equity $ 879,485  $ 874,811 0.5% $ 879,485  $ 803,435 9.5%Book value per share $ 62.61  $ 62.32 0.5% $ 62.61  $ 57.57 8.8%            THE NAVIGATORS GROUP, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS($ in thousands, except share data)      December 31,December 31,  20122011  (unaudited)  ASSETSInvestments and cash:     Fixed maturities, available-for-sale, at fair value (amortized cost: 2012, $2,034,765; 2011, $1,816,710)  $ 2,121,833  $ 1,888,069 Equity securities, available-for-sale, at fair value (cost: 2012, $85,004; 2011, $73,567)  101,297  95,849 Short-term investments, at cost which approximates fair value  153,788  122,220 Cash  45,336  127,360Total investments and cash 2,422,254  2,233,498       Premiums receivable  320,182  255,725 Prepaid reinsurance premiums  221,015  164,162 Reinsurance recoverable on paid losses  49,282  43,791 Reinsurance recoverable on unpaid losses and loss adjustment expenses  880,139  845,445 Deferred policy acquisition costs  61,005  63,984 Accrued investment income  12,587  14,492 Goodwill and other intangible assets  7,093  6,869 Current income tax receivable, net  --  15,391 Deferred income tax, net  3,216  -- Receivable for investments sold  4,310  2,583 Other assets  26,587  26,650Total assets $ 4,007,670  $ 3,672,590            LIABILITIES AND STOCKHOLDERS' EQUITYLiabilities:     Reserves for losses and loss adjustment expenses  $ 2,097,048  $ 2,082,679 Unearned premiums  642,407  532,628 Reinsurance balances payable  165,813  108,699 Senior notes  114,424  114,276 Current income tax payable, net  2,133  -- Deferred income tax, net  --   6,291 Payable for investments purchased  58,345  74 Accounts payable and other liabilities  48,015  24,508Total liabilities 3,128,185  2,869,155      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 17,558,046 shares for 2012 and 17,467,615 shares for 2011  1,755  1,746 Additional paid-in capital  329,452  322,133 Treasury stock, at cost (3,511,380 shares for 2012 and 2011)  (155,801)  (155,801) Retained earnings  628,871  565,109 Accumulated other comprehensive income  75,208  70,248Total stockholders' equity 879,485  803,435      Total liabilities and stockholders' equity $ 4,007,670  $ 3,672,590                            THE NAVIGATORS GROUP, INC. AND SUBSIDIARIESComparative Premium Data($ in thousands)                            Gross Written Premiums:Three Months  Twelve Months   Insurance Companies:20122011Change20122011Change Marine  $ 43,455  $ 52,688 -17.5%  $ 200,095  $ 228,500 -12.4% Property Casualty  164,247  121,293 35.4%  590,741  445,287 32.7% Professional Liability  32,860  29,720 10.6%  130,489  114,632 13.8%    240,562  203,701 18.1%  921,325  788,419 16.9% Lloyd's Operations:             Marine  47,895  39,977 19.8%  194,423  167,562 16.0% Property Casualty  20,965  24,032 -12.8%  127,028  115,138 10.3% Professional Liability  12,165  10,191 19.4%  43,689  37,097 17.8%    81,025  74,200 9.2%  365,140  319,797 14.2%Total $ 321,587  $ 277,901 15.7% $ 1,286,465  $ 1,108,216 16.1%              Net Written Premiums:Three Months  Twelve Months   Insurance Companies:20122011Change20122011Change Marine  $ 25,944  $ 40,442 -35.8%  $ 133,210  $ 170,642 -21.9% Property Casualty  115,345  91,780 25.7%  390,168  293,758 32.8% Professional Liability  24,204  20,933 15.6%  99,578  77,991 27.7%    165,493  153,155 8.1%  622,956  542,391 14.9% Lloyd's Operations:             Marine  34,111  34,844 -2.1%  143,600  137,206 4.7% Property Casualty  7,131  8,885 -19.7%  43,824  56,249 -22.1% Professional Liability  5,577  5,118 9.0%  23,275  17,952 29.7%    46,819  48,847 -4.2%  210,699  211,407 -0.3%Total $ 212,312  $ 202,002 5.1% $ 833,655  $ 753,798 10.6%              Net Earned Premiums:Three Months  Twelve Months   Insurance Companies:20122011Change20122011Change Marine  $ 30,779  $ 44,631 -31.0%  $ 142,181  $ 169,018 -15.9% Property Casualty  92,246  74,426 23.9%  332,782  231,297 43.9% Professional Liability  26,199  20,267 29.3%  96,476  72,148 33.7%    149,224  139,324 7.1%  571,439  472,463 20.9% Lloyd's Operations:             Marine  35,360  36,437 -3.0%  136,898  145,659 -6.0% Property Casualty  11,307  11,798 -4.2%  52,951  55,903 -5.3% Professional Liability  5,675  4,198 35.2%  20,676  17,620 17.3%    52,342  52,433 -0.2%  210,525  219,182 -3.9%Total $ 201,566  $ 191,757 5.1% $ 781,964  $ 691,645 13.1%                    THE NAVIGATORS GROUP, INC. AND SUBSIDIARIESSegment InformationThree Months EndedDecember 31, 2012          ($ in thousands)            Insurance Lloyd's      CompaniesOperationsCorporate (1)TotalGross written premiums  $ 240,562  $ 81,025  $ --  $ 321,587 Net written premiums 165,493 46,819  -- 212,312           Net earned premiums 149,224 52,342 -- 201,566 Net losses and loss adjustment expenses (112,599) (14,592) -- (127,191) Commission expenses (20,125) (11,714) 580 (31,259) Other operating expenses (29,979) (12,862) -- (42,841) Other income (expense) 40 (59) (580) (599)          Underwriting profit (loss)(13,439)13,115  --(324)           Net investment income 12,324 1,262 30 13,616 Net realized gains (losses) 29,659 194 193 30,046 Interest expense  --  --  (2,051)  (2,051)           Income (loss) before income taxes 28,544 14,571 (1,828) 41,287           Income tax expense (benefit) 9,083 5,162 (1,002) 13,243Net income (loss) $ 19,461  $ 9,409  $ (826) $ 28,044           Losses and loss adjustment expenses ratio 75.5% 27.9%   63.1% Commission expense ratio 13.5% 22.4%   15.5% Other operating expense ratio (2) 20.0% 24.6%   21.6%Combined ratio109.0%74.9%  100.2%           (1) The Corporate segment includes intercompany eliminations. (2) The Other operating expense ratio includes Other income (expense).                    THE NAVIGATORS GROUP, INC. AND SUBSIDIARIESSegment Information Three Months EndedDecember 31, 2011          ($ in thousands)            Insurance Lloyd's     CompaniesOperationsCorporate (1)Total Gross written premiums $ 203,701  $ 74,200  $ --  $ 277,901 Net written premiums153,155 48,847  -- 202,002           Net earned premiums 139,324 52,433  -- 191,757 Net losses and loss adjustment expenses (112,743) (23,361)  -- (136,104) Commission expenses (18,909) (11,939)  575 (30,273) Other operating expenses (22,467) (8,221)  -- (30,688) Other income (expense) 1,084 77  (575) 586          Underwriting profit (loss)(13,711)8,989  --(4,722)           Net investment income 10,155 2,222 51 12,428 Net realized gains (losses) 6,487 55  10 6,552 Interest expense  --  --  (2,048) (2,048)           Income (loss) before income taxes 2,931 11,266 (1,987) 12,210           Income tax expense (benefit) (953) 3,770 (695) 2,122Net income (loss) $ 3,884  $ 7,496  $ (1,292) $ 10,088           Losses and loss adjustment expenses ratio 80.9% 44.6%   71.0% Commission expense ratio 13.6% 22.8%   15.8% Other operating expense ratio (2) 15.3% 15.5%   15.7%Combined ratio109.8%82.9%  102.5%           (1) The Corporate segment includes intercompany eliminations. (2) The Other operating expense ratio includes Other income (expense).                    THE NAVIGATORS GROUP, INC. AND SUBSIDIARIESSegment InformationTwelve Months EndedDecember 31, 2012          ($ in thousands)            Insurance Lloyd's      CompaniesOperationsCorporate (1)TotalGross written premiums  $ 921,325  $ 365,140  $ --  $1,286,465 Net written premiums 622,956 210,699  -- 833,655           Net earned premiums 571,439 210,525  -- 781,964 Net losses and loss adjustment expenses (417,082) (80,351)  -- (497,433) Commission expenses (81,370) (42,449)  2,349 (121,470) Other operating expenses (113,625) (45,454)  -- (159,079) Other income (expense) 3,790 47  (2,349) 1,488          Underwriting profit (loss)(36,848)42,318  --5,470           Net investment income 46,549 7,551 148 54,248 Net realized gains (losses) 36,468 3,555 193 40,216 Interest expense  --  --  (8,198) (8,198)           Income (loss) before income taxes 46,169 53,424 (7,857) 91,736           Income tax expense (benefit) 12,686 18,620 (3,332) 27,974Net income (loss) $ 33,483  $ 34,804  $ (4,525) $ 63,762           Losses and loss adjustment expenses ratio 73.0% 38.2%   63.6% Commission expense ratio 14.2% 20.2%   15.5% Other operating expense ratio (2) 19.2% 21.5%   20.2%Combined ratio106.4%79.9%  99.3%           (1) The Corporate segment includes intercompany eliminations. (2) The Other operating expense ratio includes Other income (expense).                    THE NAVIGATORS GROUP, INC. AND SUBSIDIARIESSegment Information Twelve Months EndedDecember 31, 2011          ($ in thousands)            Insurance Lloyd's     CompaniesOperationsCorporate (1)Total Gross written premiums $ 788,419  $ 319,797  $ --  $1,108,216 Net written premiums542,391 211,407  -- 753,798           Net earned premiums 472,463 219,182  -- 691,645 Net losses and loss adjustment expenses (341,625) (135,372)  -- (476,997) Commission expenses (64,165) (48,341)  2,069 (110,437) Other operating expenses (101,517) (36,512)  -- (138,029) Other income (expense) 3,955 (657)  (2,069) 1,229          Underwriting profit (loss)(30,889)(1,700)  --(32,589)           Net investment income 54,164 8,955 381 63,500 Net realized gains (losses) 12,151 (2,354)  214 10,011 Interest expense  --  --  (8,188) (8,188)           Income (loss) before income taxes 35,426 4,901 (7,593) 32,734           Income tax expense (benefit) 8,271 1,523 (2,657) 7,137Net income (loss) $ 27,155  $ 3,378  $ (4,936) $ 25,597           Losses and loss adjustment expenses ratio 72.3% 61.8%   69.0% Commission expense ratio 13.6% 22.1%   16.0% Other operating expense ratio (2) 20.6% 16.9%   19.7%Combined ratio106.5%100.8%  104.7%           (1) The Corporate segment includes intercompany eliminations. (2) The Other operating expense ratio includes Other income (expense).                                THE NAVIGATORS GROUP, INC. AND SUBSIDIARIESUnderwriting Results($ in thousands)                  Three Months Ended December 31, 2012  Net Losses             Earnedand LAEUnderwritingUnderwritingLossExpenseCombined Insurance Companies:PremiumsIncurredExpensesProfit (Loss)RatioRatioRatio Marine  $ 30,779  $ 22,879  $ 15,048  $ (7,148) 74.3% 48.9% 123.2% Property Casualty  92,246  70,394  25,535  (3,683) 76.3% 27.7% 104.0% Professional Liability  26,199  19,326  9,481  (2,608) 73.8% 36.2% 110.0% Total Insurance Companies  149,224  112,599  50,064  (13,439) 75.5% 33.5% 109.0% Lloyd's Operations:               Marine  35,360  5,892  16,523  12,945 16.7% 46.7% 63.4% Property Casualty  11,307  6,476  5,609  (778) 57.3% 49.6% 106.9% Professional Liability  5,675  2,224  2,503  948 39.2% 44.1% 83.3% Total Lloyd's  52,342  14,592  24,635  13,115 27.9% 47.0% 74.9% Total All $ 201,566  $ 127,191  $ 74,699  $ (324)63.1%37.1%100.2%                  Three Months Ended December 31, 2011  Net Losses             Earnedand LAEUnderwritingUnderwritingLossExpenseCombined Insurance Companies:PremiumsIncurredExpensesProfit (Loss)RatioRatioRatio Marine  $ 44,631  $ 28,321  $ 13,537  $ 2,773 63.5% 30.3% 93.8% Property Casualty  74,426  41,297  20,227  12,902 55.5% 27.2% 82.7% Professional Liability  20,267  43,125  6,528  (29,386) 212.8% 32.2% 245.0% Total Insurance Companies  139,324  112,743  40,292  (13,711) 80.9% 28.9% 109.8% Lloyd's Operations:               Marine  36,437  14,089  14,024  8,324 38.7% 38.5% 77.2% Property Casualty  11,798  4,232  4,466  3,100 35.9% 37.8% 73.7% Professional Liability  4,198  5,040  1,593  (2,435) 120.1% 37.9% 158.0% Total Lloyd's  52,433  23,361  20,083  8,989 44.6% 38.3% 82.9% Total All $ 191,757  $ 136,104  $ 60,375  $ (4,722)71.0%31.5%102.5%                                    Amounts  Loss Ratio  Net Incurred Loss Activity  Dec. 31,Dec. 31,  Dec. 31,Dec. 31,  For the Three Months Ended:  20122011  20122011   Insurance Companies:                Loss and LAE payments    $ 120,293  $ 70,377   80.7% 50.5%    Change in reserves    (7,694)  42,366   -5.2% 30.4%    Net incurred loss and LAE    112,599  112,743   75.5% 80.9%                   Lloyd's Operations:                Loss and LAE payments    35,341  29,656   67.5% 56.6%    Change in reserves    (20,749)  (6,295)   -39.6% -12.0%    Net incurred loss and LAE    14,592  23,361   27.9% 44.6%                   Total                Loss and LAE payments    155,634  100,033   77.2% 52.2%    Change in reserves    (28,443)  36,071   -14.1% 18.8%   Net incurred loss and LAE   $ 127,191  $ 136,104  63.1%71.0%                                  Impact of Prior Years ReservesAmounts  Loss Ratio Impact  Favorable / (Unfavorable) DevelopmentDec. 31,Dec. 31,  Dec. 31,Dec. 31,  For the Three Months Ended:  20122011  20122011   Insurance Companies    $ (379)  $ (13,161)   -0.2% -6.9%   Lloyd's Operations    27,955  13,651   13.9% 7.2%    Total   $ 27,576  $ 490  13.7%0.3%                                  THE NAVIGATORS GROUP, INC. AND SUBSIDIARIESUnderwriting Results($ in thousands)                  Twelve Months Ended December 31, 2012  Net Losses             Earnedand LAEUnderwritingUnderwritingLossExpenseCombined Insurance Companies:PremiumsIncurredExpensesProfit (Loss)RatioRatioRatio Marine  $ 142,181  $ 110,119  $ 55,419  $ (23,357) 77.4% 39.0% 116.4% Property Casualty  332,782  235,740  100,770  (3,728) 70.8% 30.3% 101.1% Professional Liability  96,476  71,223  35,016  (9,763) 73.8% 36.3% 110.1% Total Insurance Companies  571,439  417,082  191,205  (36,848) 73.0% 33.4% 106.4% Lloyd's Operations:               Marine  136,898  51,116  59,110  26,672 37.3% 43.2% 80.5% Property Casualty  52,951  23,689  20,030  9,232 44.7% 37.9% 82.6% Professional Liability  20,676  5,546  8,716  6,414 26.8% 42.2% 69.0% Total Lloyd's  210,525  80,351  87,856  42,318 38.2% 41.7% 79.9% Total All $ 781,964  $ 497,433  $ 279,061  $ 5,470 63.6%35.7%99.3%                  Twelve Months Ended December 31, 2011  Net Losses             Earnedand LAEUnderwritingUnderwritingLossExpenseCombined Insurance Companies:PremiumsIncurredExpensesProfit (Loss)RatioRatioRatio Marine  $ 169,018  $ 111,209  $ 57,471  $ 338 65.8% 34.0% 99.8% Property Casualty  231,297  151,934  77,889  1,474 65.7% 33.7% 99.4% Professional Liability  72,148  78,482  26,367  (32,701) 108.8% 36.5% 145.3% Total Insurance Companies  472,463  341,625  161,727  (30,889) 72.3% 34.2% 106.5% Lloyd's Operations:               Marine  145,659  87,328  57,805  526 60.0% 39.6% 99.6% Property Casualty  55,903  27,208  20,186  8,509 48.7% 36.1% 84.8% Professional Liability  17,620  20,836  7,519  (10,735) 118.3% 42.6% 160.9% Total Lloyd's  219,182  135,372  85,510  (1,700) 61.8% 39.0% 100.8% Total All $ 691,645  $ 476,997  $ 247,237  $ (32,589)69.0%35.7%104.7%                                    Amounts  Loss Ratio  Net Incurred Loss Activity  Dec. 31,Dec. 31,  Dec. 31,Dec. 31,  For the Twelve Months Ended:20122011  20122011   Insurance Companies:                Loss and LAE payments    $ 403,113  $ 277,823   70.6% 58.8%    Change in reserves    13,969  63,802   2.4% 13.5%    Net incurred loss and LAE    417,082  341,625   73.0% 72.3%                   Lloyd's Operations:                Loss and LAE payments    114,645  104,482   54.5% 47.7%    Change in reserves    (34,294)  30,890   -16.3% 14.1%    Net incurred loss and LAE    80,351  135,372   38.2% 61.8%                   Total                Loss and LAE payments    517,758  382,305   66.2% 55.3%    Change in reserves    (20,325)  94,692   -2.6% 13.7%   Net incurred loss and LAE   $ 497,433  $ 476,997  63.6%69.0%                                  Impact of Prior Years ReservesAmounts  Loss Ratio Impact  Favorable / (Unfavorable) DevelopmentDec. 31,Dec. 31,  Dec. 31,Dec. 31,  For the Twelve Months Ended:20122011  20122011   Insurance Companies    $ (1,896)  $ (12,102)   -0.2% -1.7%   Lloyd's Operations    47,187  9,957   6.0% 1.4%    Total   $ 45,291  $ (2,145)  5.8%-0.3%                  THE NAVIGATORS GROUP, INC. AND SUBSIDIARIESNet Loss Data($ in thousands)         CaseIBNR  Net Loss Reserves, December 31, 2012:ReservesReservesTotal Insurance Companies:        Marine  $ 137,934  $ 114,236  $ 252,170  Property Casualty  204,988  290,455  495,443  Professional Liability  54,092  84,493  138,585  Total Insurance Companies  397,014  489,184  886,198 Lloyd's Operations:        Marine  125,884  95,122  221,006  Property Casualty  27,903  28,463  56,366  Professional Liability  14,694  38,645  53,339  Total Lloyd's Operations  168,481  162,230  330,711         Total Net Loss Reserves $ 565,495  $ 651,414  $ 1,216,909                  CaseIBNR  Net Loss Reserves, December 31, 2011:ReservesReservesTotal Insurance Companies:        Marine  $ 127,912  $ 121,875  $ 249,787  Property Casualty  185,822  296,177  481,999  Professional Liability  56,953  83,490  140,443  Total Insurance Companies  370,687  501,542  872,229 Lloyd's Operations:        Marine  117,448  123,136  240,584  Property Casualty  37,877  25,846  63,723  Professional Liability  13,580  47,118  60,698  Total Lloyd's Operations  168,905  196,100  365,005         Total Net Loss Reserves $ 539,592  $ 697,642  $ 1,237,234                        THE NAVIGATORS GROUP, INC. AND SUBSIDIARIESInvestment DataDecember 31, 2012             As of December 31, 2012, the average quality of the investment portfolio as rated by S&P and Moody's was AA/Aa with an average duration of 3.6 years. The Company does not own any collateralized debt obligations (CDO's), collateralized loan obligations (CLO's) or asset backed commercial paper.             As of December 31, 2012, the Company owned two asset-backed securities approximating $0.7 million with subprime mortgage exposures. The securities have an effective maturity of 3.2 years. In addition, the Company owned a total of seven collateralized mortgage obligations and asset-backed securities approximating $2.1 million classified as Alt-A which is a credit category between prime and subprime. They have an effective maturity of 6.2 years. Such subprime and Alt-A categories are as defined by S&P. The Company is receiving principal and/or interest payments on all these securities and believes such amounts are fully collectible.             The following table sets forth our cash and investments as of December 31, 2012:                            GrossGrossCost orOTTI  FairUnrealizedUnrealizedAmortizedRecognizedDecember 31, 2012ValueGains(Losses)Costin OCI   ($ in thousands)         Fixed maturities:           U.S.Treasury bonds, agency bonds and foreign government bonds  $ 649,692  $ 8,654  $ (36)  $ 641,074  $ -- States, municipalities and political subdivisions  322,947  18,712  (380)  304,615  -- Mortgage- and asset-backed securities:            Agency mortgage-backed securities  384,445  13,652  (204)  370,997  --  Residential mortgage obligations  38,692  1,053  (549)  38,188  20  Asset-backed securities  50,382  1,133  (49)  49,298  --  Commercial mortgage-backed securities  204,821  17,996  (18)  186,843  --  Subtotal  678,340  33,834  (820)  645,326  20 Corporate bonds  470,854  27,129  (25)  443,750  --             Total fixed maturities  2,121,833  88,329  (1,261)  2,034,765  20             Equity securities - common stocks  101,297  16,919  (626)  85,004  --             Short-term investments  153,788  --  --  153,788  --             Cash  45,336  --  --  45,336  --             Total  $ 2,422,254  $ 105,248  $ (1,887)  $ 2,318,893  $ 20                    THE NAVIGATORS GROUP, INC. AND SUBSIDIARIESInvestment DataDecember 31, 2012($ in thousands)                     The following tables set forth our agency mortgage-backed securities and residential mortgage obligations, categorized 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, 2012:               Gross  Gross  Cost or    Fair  Unrealized  Unrealized  Amortized Agency mortgage-backed securities: Value  Gains  (Losses)  Cost  GNMA  $ 132,595  $ 4,657  $ (198)  $ 128,136 FNMA  193,901  7,230  (6)  186,677 FHLMC  57,949  1,765  --  56,184 Total  $ 384,445  $ 13,652  $ (204)  $ 370,997               Gross  Gross  Cost or    Fair  Unrealized  Unrealized  Amortized Residential mortgage obligations: Value  Gains  (Losses)  Cost  Prime   $ 12,492  $ 217  $ (440)  $ 12,715 Alt-A  2,119  40  (109)  2,188 Subprime  699  26  --  673 Non-US RMBS  23,382  770  --  22,612 Total  $ 38,692  $ 1,053  $ (549)  $ 38,188CONTACT: Ciro M. DeFalco Senior Vice President and Chief Financial Officer (914) 933-6043 cdefalco@navg.com www.navg.com