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

For the twelve months ended December 31, 2015, the Company reported net income of $81.1 million, or $5.47 per diluted share compared to $95.3 million, or $6.51 per diluted share, for the comparable period in 2014. 2014 results included a one-time foreign exchange gain of $10.0 million ($6.6 million after-tax) due to a change in the functional currency of our Lloyd’s Syndicate, which was equally offset by a reversal within the Accumulated Other Comprehensive Income component of stockholders’ equity.  Excluding this gain, the twelve months ended December 31, 2014 net income per diluted share would have been $6.06. Operating earnings were $77.1 million, or $5.20 per diluted share, for the twelve months ended December 31, 2015 compared to $80.5 million, or $5.49 per diluted share, for the comparable period in 2014. The one-time foreign exchange gain discussed above had no impact on operating earnings.

Gross written premiums and net written premiums for the three months ended December 31, 2015 were $323.5 million and $244.7 million, respectively, a decrease of 2.9% and an increase of 7.3% from the comparable period in 2014.

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

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

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

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

Net investment income for the three and twelve months ended December 31, 2015 was $18.5 million and $68.7 million, respectively, an increase of 15.1% and 7.1% from the comparable periods in 2014. The annualized pre-tax investment yield, excluding net realized gains and losses and other-than-temporary impairment losses recognized in earnings, was 2.5% and 2.4% for the three and twelve months ended December 31, 2015, compared to 2.3% for both the comparable periods in 2014.

The Company’s investment portfolio mainly consists of fixed income securities with an average quality rating of “AA-/Aa3” as defined by Standard & Poor’s and Moody’s, respectively, and an average effective duration of 3.8 years as of December 31, 2015.  As of December 31, 2015, net unrealized gains within our investment portfolio were $37.3 million, a decrease of $34.1 million compared to December 31, 2014.

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

Other income (loss) for the three months ended December 31, 2015 was $4.1 million of income, compared to $0.6 million of income for the same period in 2014. For the twelve months ended December 31, 2015, Other income (loss) was a $0.5 million loss compared to $10.7 million of income for the same period in the prior year, largely impacted by a one-time foreign exchange gain in the first quarter of 2014.  Other income (loss) primarily consists of realized and unrealized foreign exchange gains and losses.

The Company will hold a conference call on Thursday, February 11, 2016 starting at 8:30 a.m. (EST) to discuss the 2015 fourth quarter results.  The call will be available via live webcast on Navigators’ website (www.navg.com).

To participate by telephone, the domestic dial-in number is (800) 850-2903 and the international dial-in is (224) 357-2399. Participants may connect to the webcast at: 

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

Net operating earnings, or net income excluding after-tax net realized gains (losses), after-tax net other-than-temporary impairment losses recognized in earnings, and after-tax foreign exchange gains and losses resulting from foreign currency transactions (transactions denominated in a currency other than the entity’s functional currency) and translation adjustments (translation of foreign currency denominated assets and liabilities into the entity’s functional currency), is a non-GAAP financial measure that is a common performance measurement for insurance companies.  We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business.

The Navigators Group, Inc. is an international specialty insurance holding company with insurance company operations, underwriting management companies and operations at Lloyd's. Navigators has offices in the United States, the United Kingdom and Continental Europe, as well as representative offices in China and Brazil.

This press release may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995.  Whenever used in this release, the words “estimate,” “expect,” “believe” or similar expressions are intended to identify such forward-looking statements.  Forward-looking statements are derived from information that we currently have and assumptions that we make. We cannot assure that results that we anticipate will be achieved, since results may differ materially because of known and unknown risks and uncertainties that we face.   Please refer to Navigators’ most recent reports on Forms 10-K and 10-Q and its other filings with the Securities and Exchange Commission for a description of Navigators’ business and the important factors that may affect that business.  Navigators’ undertakes no obligation to publicly update or revise any forward-looking statement.

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

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
amounts in thousands, except share and per share amounts.
				December 31,				December 31,
					2015				2014
ASSETS
Investments:
Fixed maturities, available-for-sale, at fair value (amortized cost: 2015: $2,400,245; 2014: $2,323,959)				$	2,414,210			$	2,365,934
Equity securities, available-for-sale, at fair value (cost: 2015: $281,943; 2014: $154,843)					305,271				184,295
Short-term investments, at fair value (amortized cost: 2015: $217,743; 2014: $179,527)					217,745				179,506
Total investments				$	2,937,226			$	2,729,735
Cash					69,901				90,751
Premiums receivable					276,616				342,479
Prepaid reinsurance premiums					232,588				237,851
Reinsurance recoverable on paid losses					49,506				51,347
Reinsurance recoverable on unpaid losses and loss adjustment expenses					809,518				851,498
Deferred policy acquisition costs					91,983				79,452
Accrued investment income					16,001				14,791
Goodwill and other intangible assets					6,807				7,013
Current income tax receivable, net.					22,323				14,549
Deferred income tax, net					3,900				-
Other assets					67,643				56,719
Total assets				$	4,584,012			$	4,476,185
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Reserves for losses and loss adjustment expenses				$	2,202,644			$	2,159,634
Unearned premiums					820,676				766,167
Reinsurance balances payable					107,411				152,774
Senior notes					263,580				263,440
Deferred income tax, net					-				1,467
Payable for investments purchased					1,495				134
Accounts payable and other liabilities					92,058				105,345
Total liabilities				$	3,487,864			$	3,448,961
Stockholders' equity:
Preferred stock, $.10 par value, authorized 1,000,000 shares, none issued				$	-			$	-
Common stock, $.10 par value, authorized 50,000,000 shares, issued 17,942,269 shares for 2015
and 17,792,846 shares for 2014					1,793				1,778
Additional paid-in capital					357,829				347,022
Treasury stock, at cost (3,511,380 shares for 2015 and 2014)					(155,801	)			(155,801	)
Retained earnings					868,723				787,666
Accumulated other comprehensive income					23,604				46,559
Total stockholders' equity				$	1,096,148			$	1,027,224
Total liabilities and stockholders' equity				$	4,584,012			$	4,476,185

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
		Three Months Ended December 31, 2015
		U.S.				Int'l
amounts in thousands		Insurance				Insurance				GlobalRe				Corporate (1)				Total
Gross written premiums		$	207,684			$	81,942			$	33,883			$	-			$	323,509
Ceded written premiums			(57,410	)			(20,324	)			(1,056	)			-				(78,790	)
Net written premiums			150,274				61,618				32,827				-				244,719
Net earned premiums			145,032				62,716				43,797				-				251,545
Net losses and LAE			(96,403	)			(33,466	)			(24,012	)			-				(153,881	)
Commission expenses			(14,542	)			(8,185	)			(9,198	)			586				(31,339	)
Other operating expenses			(33,397	)			(21,555	)			(4,267	)			-				(59,219	)
Other underwriting income (expense)			360				-				249				(586	)			23
Underwriting profit (loss)		$	1,050			$	(490	)		$	6,569			$	-			$	7,129
Net investment income															18,499				18,499
Net realized gains (losses)															(2,080	)			(2,080	)
Interest expense															(3,857	)			(3,857	)
Other income (loss)															4,124				4,124
Income before income taxes		$	1,050			$	(490	)		$	6,569			$	16,686			$	23,815
Income tax (expense) benefit															(6,072	)			(6,072	)
Net income (loss)																		$	17,743
Losses and LAE ratio			66.5	%			53.4	%			54.8	%							61.2	%
Commission expense ratio			10.0	%			13.1	%			21.0	%							12.5	%
Other operating expense ratio (2)			22.8	%			34.3	%			9.2	%							23.5	%
Combined ratio			99.3	%			100.8	%			85.0	%							97.2	%
(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other operating expenses and Other underwriting income (expense).

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
		Three Months Ended December 31, 2014
		U.S.				Int'l
amounts in thousands		Insurance				Insurance				GlobalRe				Corporate (1)				Total
Gross written premiums		$	202,334			$	90,819			$	40,146			$	-			$	333,299
Ceded written premiums			(68,259	)			(36,387	)			(646	)			-				(105,292	)
Net written premiums			134,075				54,432				39,500				-				228,007
Net earned premiums			133,425				55,492				45,255				-				234,172
Net losses and LAE			(85,022	)			(23,656	)			(25,980	)			-				(134,658	)
Commission expenses			(14,242	)			(11,770	)			(8,258	)			562				(33,708	)
Other operating expenses			(29,824	)			(17,492	)			(3,983	)			-				(51,299	)
Other underwriting income (expense)			458				14				188				(562	)			98
Underwriting profit (loss)		$	4,795			$	2,588			$	7,222			$	-			$	14,605
Net investment income															16,071				16,071
Net realized gains (losses)															788				788
Interest expense															(3,854	)			(3,854	)
Other income (loss)															488				488
Income before income taxes		$	4,795			$	2,588			$	7,222			$	13,493			$	28,098
Income tax (expense) benefit															(8,823	)			(8,823	)
Net income (loss)																		$	19,275
Losses and LAE ratio			63.7	%			42.6	%			57.4	%							57.5	%
Commission expense ratio			10.7	%			21.2	%			18.2	%							14.4	%
Other operating expense ratio (2)			22.0	%			31.5	%			8.4	%							21.9	%
Combined ratio			96.4	%			95.3	%			84.0	%							93.8	%
_______________
(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other operating expenses and Other underwriting income (expense).

 

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

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
		Twelve Months Ended December 31, 2014
		U.S.				Int'l
amounts in thousands		Insurance				Insurance				GlobalRe				Corporate (1)				Total
Gross written premiums		$	807,108			$	424,904			$	200,341			$	-			$	1,432,353
Ceded written premiums			(254,983	)			(171,921	)			(5,311	)			-				(432,215	)
Net written premiums			552,125				252,983				195,030				-				1,000,138
Net earned premiums			504,289				243,485				188,121				-				935,895
Net losses and LAE			(311,839	)			(115,079	)			(118,311	)			-				(545,229	)
Commission expenses			(49,840	)			(44,426	)			(33,429	)			2,167				(125,528	)
Other operating expenses			(115,817	)			(65,275	)			(15,733	)			-				(196,825	)
Other underwriting income (expense)			2,241				32				489				(2,167	)			595
Underwriting profit (loss)		$	29,034			$	18,737			$	21,137			$	-			$	68,908
Net investment income															64,168				64,168
Net realized gains (losses)															12,812				12,812
Interest expense															(15,413	)			(15,413	)
Other income (loss)															10,061				10,061
Income (loss) before income taxes		$	29,034			$	18,737			$	21,137			$	71,628			$	140,536
Income tax (expense) benefit															(45,207	)			(45,207	)
Net income (loss)																		$	95,329
Losses and LAE ratio			61.8	%			47.3	%			62.9	%							58.3	%
Commission expense ratio			9.9	%			18.2	%			17.8	%							13.4	%
Other operating expense ratio (2)			22.5	%			26.8	%			8.1	%							20.9	%
Combined ratio			94.2	%			92.3	%			88.8	%							92.6	%
(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other operating expenses and Other underwriting income (expense).

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
		U.S. Insurance
		Three months ended December 31, 2015													Three months ended December 31, 2014
amounts in thousands		Marine			P&C			Professional Liability			Total				Marine			P&C			Professional Liability			Total				% Change Total
Gross written premiums		$	40,045		$	138,214		$	29,425		$	207,684			$	37,055		$	139,637		$	25,642		$	202,334				2.6	%
Ceded written premiums			(16,747	)		(28,395	)		(12,268	)		(57,410	)			(13,320	)		(41,435	)		(13,504	)		(68,259	)			-15.9	%
Net written premiums			23,298			109,819			17,157			150,274				23,735			98,202			12,138			134,075				12.1	%
Net earned premiums			21,976			109,673			13,383			145,032				26,057			88,355			19,013			133,425				8.7	%
Net losses and LAE			(14,619	)		(71,878	)		(9,906	)		(96,403	)			(4,337	)		(68,187	)		(12,498	)		(85,022	)			13.4	%
Commission expenses			(2,254	)		(11,392	)		(896	)		(14,542	)			(2,970	)		(8,681	)		(2,591	)		(14,242	)			2.1	%
Other operating expenses			(6,953	)		(20,890	)		(5,554	)		(33,397	)			(6,486	)		(17,980	)		(5,358	)		(29,824	)			12.0	%
Other underwriting income (expense)			100			246			14			360				150			292			16			458				-21.2	%
Underwriting profit (loss)		$	(1,750	)	$	5,759		$	(2,959	)	$	1,050			$	12,414		$	(6,201	)	$	(1,418	)	$	4,795				-78.1	%
Losses and LAE ratio			66.5	%		65.5	%		74.0	%		66.5	%			16.6	%		77.2	%		65.7	%		63.7	%
Commission expense ratio			10.3	%		10.4	%		6.7	%		10.0	%			11.4	%		9.8	%		13.6	%		10.7	%
Other operating expense ratio (1)			31.2	%		18.8	%		41.4	%		22.8	%			24.4	%		20.0	%		28.2	%		22.0	%
Combined ratio			108.0	%		94.7	%		122.1	%		99.3	%			52.4	%		107.0	%		107.5	%		96.4	%
(1) - Includes Other operating expenses and Other underwriting income (expense).
		Int'l Insurance
		Three months ended December 31, 2015													Three months ended December 31, 2014
amounts in thousands		Marine			P&C			Professional Liability			Total				Marine			P&C			Professional Liability			Total				% Change Total
Gross written premiums		$	33,863		$	18,715		$	29,364		$	81,942			$	39,680		$	29,185		$	21,954		$	90,819				-9.8	%
Ceded written premiums			(5,582	)		(7,046	)		(7,696	)		(20,324	)			(11,454	)		(18,072	)		(6,861	)		(36,387	)			-44.1	%
Net written premiums			28,281			11,669			21,668			61,618				28,226			11,113			15,093			54,432				13.2	%
Net earned premiums			34,540			12,208			15,968			62,716				28,669			15,313			11,510			55,492				13.0	%
Net losses and LAE			(15,792	)		(3,463	)		(14,211	)		(33,466	)			(14,669	)		(2,858	)		(6,129	)		(23,656	)			41.5	%
Commission expenses			(5,275	)		(1,038	)		(1,872	)		(8,185	)			(7,898	)		(2,925	)		(947	)		(11,770	)			-30.5	%
Other operating expenses			(8,742	)		(7,540	)		(5,273	)		(21,555	)			(7,766	)		(5,631	)		(4,095	)		(17,492	)			23.2	%
Other underwriting income (expense)			-			-			-			-				6			4			4			14				NM
Underwriting profit (loss)		$	4,731		$	167		$	(5,388	)	$	(490	)		$	(1,658	)	$	3,903		$	343		$	2,588				NM
Losses and LAE ratio			45.7	%		28.4	%		89.0	%		53.4	%			51.2	%		18.7	%		53.2	%		42.6	%
Commission expense ratio			15.3	%		8.5	%		11.7	%		13.1	%			27.6	%		19.1	%		8.2	%		21.2	%
Other operating expense ratio (1)			25.3	%		61.7	%		33.0	%		34.3	%			27.1	%		36.7	%		35.7	%		31.5	%
Combined ratio			86.3	%		98.6	%		133.7	%		100.8	%			105.9	%		74.5	%		97.1	%		95.3	%
NM - Percentage change not meaningful
(1) - Includes Other operating expenses and Other underwriting income (expense).

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
		U.S. Insurance
		Twelve Months Ended December 31, 2015													Twelve Months Ended December 31, 2014
amounts in thousands		Marine			P&C			Professional Liability			Total				Marine			P&C			Professional Liability			Total				% Change Total
Gross written premiums		$	158,124		$	596,673		$	110,984		$	865,781			$	154,233		$	543,045		$	109,830		$	807,108				7.3	%
Ceded written premiums			(61,916	)		(152,168	)		(54,691	)		(268,775	)			(46,685	)		(169,953	)		(38,345	)		(254,983	)			5.4	%
Net written premiums			96,208			444,505			56,293			597,006				107,548			373,092			71,485			552,125				8.1	%
Net earned premiums			96,082			401,408			58,346			555,836				105,650			314,833			83,806			504,289				10.2	%
Net losses and LAE			(43,553	)		(266,806	)		(33,138	)		(343,497	)			(42,057	)		(220,263	)		(49,519	)		(311,839	)			10.2	%
Commission expenses			(11,606	)		(39,931	)		(4,782	)		(56,319	)			(13,025	)		(25,497	)		(11,318	)		(49,840	)			13.0	%
Other operating expenses			(27,082	)		(81,866	)		(22,459	)		(131,407	)			(24,205	)		(70,903	)		(20,709	)		(115,817	)			13.5	%
Other underwriting income (expense)			489			1,122			79			1,690				839			1,263			139			2,241				-24.6	%
Underwriting profit (loss)		$	14,330		$	13,927		$	(1,954	)	$	26,303			$	27,202		$	(567	)	$	2,399		$	29,034				-9.4	%
Losses and LAE ratio			45.3	%		66.5	%		56.8	%		61.8	%			39.8	%		70.0	%		59.1	%		61.8	%
Commission expense ratio			12.1	%		9.9	%		8.2	%		10.1	%			12.3	%		8.1	%		13.5	%		9.9	%
Other operating expense ratio (1)			27.7	%		20.1	%		38.3	%		23.4	%			22.2	%		22.1	%		24.5	%		22.5	%
Combined ratio			85.1	%		96.5	%		103.3	%		95.3	%			74.3	%		100.2	%		97.1	%		94.2	%
(1) - Includes Other operating expenses and Other underwriting income (expense).
		Int'l Insurance
		Twelve Months Ended December 31, 2015													Twelve Months Ended December 31, 2014
amounts in thousands		Marine			P&C			Professional Liability			Total				Marine			P&C			Professional Liability			Total				% Change Total
Gross written premiums		$	183,707		$	130,729		$	97,511		$	411,947			$	190,787		$	158,139		$	75,978		$	424,904				-3.0	%
Ceded written premiums			(36,515	)		(67,722	)		(29,768	)		(134,005	)			(47,805	)		(98,087	)		(26,029	)		(171,921	)			-22.1	%
Net written premiums			147,192			63,007			67,743			277,942				142,982			60,052			49,949			252,983				9.9	%
Net earned premiums			149,256			55,320			55,384			259,960				141,097			62,520			39,868			243,485				6.8	%
Net losses and LAE			(79,737	)		(20,478	)		(34,487	)		(134,702	)			(71,986	)		(23,317	)		(19,776	)		(115,079	)			17.1	%
Commission expenses			(32,187	)		(4,999	)		(6,490	)		(43,676	)			(37,660	)		(5,295	)		(1,471	)		(44,426	)			-1.7	%
Other operating expenses			(30,419	)		(26,294	)		(19,154	)		(75,867	)			(28,222	)		(22,156	)		(14,897	)		(65,275	)			16.2	%
Other underwriting income (expense)			-			-			-			-				16			9			7			32				NM
Underwriting profit (loss)		$	6,913		$	3,549		$	(4,747	)	$	5,715			$	3,245		$	11,761		$	3,731		$	18,737				-69.5	%
Losses and LAE ratio			53.4	%		37.0	%		62.3	%		51.8	%			51.0	%		37.3	%		49.6	%		47.3	%
Commission expense ratio			21.6	%		9.0	%		11.7	%		16.8	%			26.8	%		8.5	%		3.7	%		18.2	%
Other operating expense ratio (1)			20.4	%		47.6	%		34.6	%		29.2	%			20.0	%		35.4	%		37.4	%		26.8	%
Combined ratio			95.4	%		93.6	%		108.6	%		97.8	%			97.8	%		81.2	%		90.7	%		92.3	%
NM - Percentage change not meaningful
(1) - Includes Other operating expenses and Other underwriting income (expense).

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Incurred Loss Activity
($ in thousands)
		For the Three Months Ended December 31,
		Amounts							Loss Ratio
Net Incurred Loss Activity			2015			2014				2015			2014
US Insurance:
Loss and LAE payments		$	60,750		$	58,374				41.9	%		43.7	%
Change in reserves			35,653			26,648				24.6	%		20.0	%
Net incurred loss and LAE			96,403			85,022				66.5	%		63.7	%
International Insurance:
Loss and LAE payments			27,933			38,198				44.6	%		68.8	%
Change in reserves			5,533			(14,542	)			8.8	%		-26.2	%
Net incurred loss and LAE			33,466			23,656				53.4	%		42.6	%
Global Reinsurance:
Loss and LAE payments			48,320			45,396				110.3	%		100.4	%
Change in reserves			(24,308	)		(19,416	)			-55.5	%		-43.0	%
Net incurred loss and LAE			24,012			25,980				54.8	%		57.4	%
Total
Loss and LAE payments			137,003			141,968				54.5	%		60.6	%
Change in reserves			16,878			(7,310	)			6.7	%		-3.1	%
Net incurred loss and LAE		$	153,881		$	134,658				61.2	%		57.5	%
		Amounts							Loss Ratio Impact
Impact of Prior Years Reserves		Dec. 31			Dec. 31				Dec. 31			Dec. 31
Favorable / (Unfavorable) Development			2015			2014				2015			2014
US Insurance		$	8,023		$	(1,545	)			3.2	%		-0.7	%
International Insurance			17,812			17,156				7.1	%		7.3	%
Global Reinsurance			4,865			4,178				1.9	%		1.8	%
Total		$	30,700		$	19,789				12.2	%		8.4	%

 

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

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data
($ in thousands)
				As of December 31, 2015
				Case				IBNR
Net Loss Reserves:				Reserves				Reserves				Total
US Insurance:
Marine				$	68,677			$	55,408			$	124,085
Property Casualty					170,988				514,777				685,765
Professional Liability					42,546				60,528				103,074
Total US Insurance					282,211				630,713				912,924
International Insurance:
Marine					167,157				61,409				228,566
Property Casualty					40,313				19,735				60,048
Professional Liability					19,583				63,229				82,812
Total International Insurance					227,053				144,373				371,426
Global Reinsurance					32,160				76,616				108,776
Total Net Loss Reserves				$	541,424			$	851,702			$	1,393,126
				As of December 31, 2014
				Case				IBNR
Net Loss Reserves:				Reserves				Reserves				Total
US Insurance:
Marine				$	74,699			$	64,390			$	139,089
Property Casualty					144,334				391,643				535,977
Professional Liability					56,501				85,369				141,870
Total US Insurance					275,534				541,402				816,936
International Insurance:
Marine					168,575				75,673				244,248
Property Casualty					41,695				21,391				63,086
Professional Liability					12,466				49,712				62,178
Total International Insurance					222,736				146,776				369,512
Global Reinsurance					31,108				90,580				121,688
Total Net Loss Reserves				$	529,378			$	778,758			$	1,308,136

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Investment Data
As of December 31, 2015, the average quality of the investment portfolio as rated by S&P and Moody’s was AA-/Aa3 with an average duration of 3.8 years. The Company does not own any collateralized debt obligations (CDO’s) or asset backed commercial paper.
The following table sets forth our investments as of December 31, 2015:
								As of December 31, 2015
												Gross				Gross				Cost or
								Fair				Unrealized				Unrealized				Amortized
amounts in thousands								Value				Gains				(Losses)				Cost
Fixed maturities:
	U.S. Treasury bonds, agency bonds and
		foreign government bonds						$	252,880			$	2,273			$	(9,214	)		$	259,821
	States, municipalities and political subdivisions								576,859				21,233				(781	)			556,407
	Mortgage-backed and asset-backed securities:
		Agency mortgage-backed securities							379,270				5,573				(2,082	)			375,779
		Residential mortgage obligations							30,465				694				(82	)			29,853
		Asset-backed securities							225,012				85				(1,624	)			226,551
		Commercial mortgage-backed securities							189,714				3,119				(1,864	)			188,459
		Subtotal						$	824,461			$	9,471			$	(5,652	)		$	820,642
	Corporate bonds								760,010				7,373				(10,738	)			763,375
Total fixed maturities								$	2,414,210			$	40,350			$	(26,385	)		$	2,400,245
Equity securities									305,271				26,341				(3,013	)			281,943
Short-term investments									217,745				2				-				217,743
Total investments								$	2,937,226			$	66,693			$	(29,398	)		$	2,899,931

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