Diluted EPS $1.54 per share; Operating Earnings $1.36 per diluted share

STAMFORD, Conn., May 05, 2016 (GLOBE NEWSWIRE) -- The Navigators Group, Inc. (NASDAQ:NAVG) reported net income of $22.9 million, or $1.54 per diluted share, for the three months ended March 31, 2016 compared to $25.9 million, or $1.77 per diluted share, for the comparable period in 2015. Operating earnings were $20.2 million, or $1.36 per diluted share, for the three months ended March 31, 2016 compared to $20.9 million, or $1.43 per diluted share, for the comparable period in 2015. 

Gross written premiums and net written premiums for the three months ended March 31, 2016 were $413.9 million and $319.8 million, respectively, increases of 4.4% and 10.7% from the comparable period in 2015.

The combined ratio for the three months ended March 31, 2016 was 95.1% compared to 92.3% for the comparable period in 2015.

Stan Galanski, President and Chief Executive Officer commented, “We are pleased to report profitable underwriting results across all three of our reporting segments, contributing to strong operating earnings and book value growth for the quarter. Our marine business continued to perform very well globally as did our U.S. property and casualty products. Premium growth benefitted from the ongoing development of the previous investments made in new products and new offices over the past few years. This was most evident in our International Insurance segment, where our newer first-party products at Lloyd’s contributed meaningfully to growth as did our European regional offices. At the same time, we continue to walk away from business that does not meet our standards for rates and policy terms, emphasizing the integrity of individual risk underwriting. We are encouraged by the improved contribution to earnings from our investment portfolio, which was achieved while maintaining the overall credit quality of the portfolio.” 

Stockholders’ equity was $1.144 billion, or $78.72 per share, as of March 31, 2016 compared to $1.096 billion, or $75.96 per share, as of December 31, 2015.

Net investment income for the three months ended March 31, 2016 was $19.6 million, an increase of 20.6% from the comparable period in 2015. The annualized pre-tax investment yield, excluding net realized gains and losses and other-than-temporary impairment losses recognized in earnings, was 2.7% for the three months ended March 31, 2016, compared to 2.4% for the comparable period in 2015.

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 3.7 years as of March 31, 2016.  As of March 31, 2016, net unrealized gains within our investment portfolio were $72.9 million, an increase of $35.6 million compared to December 31, 2015.

There were $1.6 million of net realized gains recognized in earnings for the three months ended March 31, 2016, compared to $5.6 million for the same period in 2015. 

Other income (loss) for the three months ended March 31, 2016 was $2.6 million of income, compared to $2.2 million of income for the same period in 2015.  Other income (loss) primarily consists of realized and unrealized foreign exchange gains and losses.

The Company will hold a conference call on Friday, May 6, 2016 starting at 8:30 a.m. (EST) to discuss the 2016 first 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/uysns3xg

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
			March 31,
Results of Operations				2016			2015		Change
Gross written premiums			$	413,877		$	396,460			4.4	%
Net written premiums				319,820			288,958			10.7	%
Revenues:
	Net earned premiums			264,358			236,132			12.0	%
	Net investment income			19,594			16,253			20.6	%
	Net realized gains (losses):
	Total other-than-temporary impairment losses			(109	)		23			NM
	Portion of loss recognized in other comprehensive
	income (before tax)			109			(23	)		NM
	Net other-than-temporary impairment losses
	recognized in earnings			-			-			NM
	Other realized gains (losses)			1,597			5,596			-71.5	%
	Net realized gains (losses)			1,597			5,596			-71.5	%
	Other income (loss)			2,549			2,242			13.7	%
	Total revenues			288,098			260,223			10.7	%
Expenses:
	Net losses and loss adjustment expenses			152,956			130,198			17.5	%
	Commission expenses			37,554			32,905			14.1	%
	Other operating expenses			60,809			54,909			10.7	%
	Interest expense			3,858			3,855			0.1	%
	Total expenses			255,177			221,867			15.0	%
Income before income taxes				32,921			38,356			-14.2	%
Income tax expense (benefit)				9,989			12,427			-19.6	%
Net income (loss)			$	22,932		$	25,929			-11.6	%
Per Share Data
Net income per common share:
	Basic		$	1.58		$	1.81			-12.7	%
	Diluted		$	1.54		$	1.77			-13.1	%
Average common shares outstanding:
	Basic			14,492,214			14,327,606
	Diluted			14,891,646			14,637,837
Underwriting Ratios
Loss Ratio				57.9	%		55.1	%
Expense Ratio				37.2	%		37.2	%
Combined Ratio				95.1	%		92.3	%
Balance Sheet Data			March 31,			Dec. 31,
				2016			2015
Stockholders' equity			$	1,143,879		$	1,096,148			4.4	%
Book value per share			$	78.72		$	75.96			3.6	%
NM - Percentage change not meaningful

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
amounts in thousands, except share and per share amounts.
				March  31,				December 31,
					2016				2015
ASSETS
Investments:
Fixed maturities, available-for-sale, at fair value (amortized cost: 2016: $2,432,837; 2015: $2,400,245)				$	2,477,720			$	2,414,210
Equity securities, available-for-sale, at fair value (cost: 2016: $286,811; 2015: $281,943)					314,815				305,271
Short-term investments, at fair value (amortized cost: 2016: $211,782; 2015: $217,743)					211,782				217,745
Total investments				$	3,004,317			$	2,937,226
Cash					72,618				69,901
Premiums receivable					348,916				276,616
Prepaid reinsurance premiums					220,696				232,588
Reinsurance recoverable on paid losses					55,752				49,506
Reinsurance recoverable on unpaid losses and loss adjustment expenses					793,632				809,518
Deferred policy acquisition costs					105,359				91,983
Accrued investment income					16,451				16,001
Goodwill and other intangible assets					6,746				6,807
Current income tax receivable, net					13,032				22,323
Deferred income tax, net					-				3,900
Other assets Other assets					59,114				67,643
Total assets				$	4,696,633			$	4,584,012
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Reserves for losses and loss adjustment expenses				$	2,211,848			$	2,202,644
Unearned premiums					864,247				820,676
Reinsurance balances payable					123,165				107,411
Senior notes					263,616				263,580
Deferred income tax, net					8,280				-
Accounts payable and other liabilities					81,598				93,553
Total liabilities				$	3,552,754			$	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 18,042,474 shares for 2016
and 17,942,269 shares for 2015					1,803				1,793
Additional paid-in capital					359,829				357,829
Treasury stock, at cost (3,511,380 shares for 2016 and 2015)					(155,801	)			(155,801	)
Retained earnings					891,655				868,723
Accumulated other comprehensive income					46,393				23,604
Total stockholders' equity				$	1,143,879			$	1,096,148
Total liabilities and stockholders' equity				$	4,696,633			$	4,584,012

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
		Three Months Ended March 31, 2016
		U.S.				Int'l
amounts in thousands		Insurance				Insurance				GlobalRe				Corporate (1)				Total
Gross written premiums		$	210,647			$	144,143			$	59,087			$	-			$	413,877
Ceded written premiums			(54,497	)			(34,971	)			(4,589	)			-				(94,057	)
Net written premiums			156,150				109,172				54,498				-				319,820
Net earned premiums			148,340				78,008				38,010				-				264,358
Net losses and LAE			(91,512	)			(40,410	)			(21,034	)			-				(152,956	)
Commission expenses			(14,855	)			(15,355	)			(7,745	)			401				(37,554	)
Other operating expenses			(33,761	)			(21,771	)			(5,277	)			-				(60,809	)
Other underwriting income (expense)			361				-				49				(401	)			9
Underwriting profit (loss)		$	8,573			$	472			$	4,003			$	-			$	13,048
Net investment income															19,594				19,594
Net realized gains (losses)															1,597				1,597
Interest expense															(3,858	)			(3,858	)
Other income (loss)															2,540				2,540
Income before income taxes		$	8,573			$	472			$	4,003			$	19,873			$	32,921
Income tax (expense) benefit															(9,989	)			(9,989	)
Net income (loss)																		$	22,932
Losses and LAE ratio			61.7	%			51.8	%			55.3	%							57.9	%
Commission expense ratio			10.0	%			19.7	%			20.4	%							14.2	%
Other operating expense ratio (2)			22.5	%			27.9	%			13.8	%							23.0	%
Combined ratio			94.2	%			99.4	%			89.5	%							95.1	%
(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other operating expenses and Other underwriting income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
		Three Months Ended March 31, 2015
		U.S.				Int'l
amounts in thousands		Insurance				Insurance				GlobalRe				Corporate (1)				Total
Gross written premiums		$	199,327			$	122,427			$	74,706			$	-			$	396,460
Ceded written premiums			(68,730	)			(34,256	)			(4,516	)			-				(107,502	)
Net written premiums			130,597				88,171				70,190				-				288,958
Net earned premiums			131,091				65,525				39,516				-				236,132
Net losses and LAE			(77,799	)			(29,691	)			(22,708	)			-				(130,198	)
Commission expenses			(14,345	)			(11,413	)			(7,298	)			151				(32,905	)
Other operating expenses			(33,688	)			(17,009	)			(4,212	)			-				(54,909	)
Other underwriting income (expense)			196				-				10				(151	)			55
Underwriting profit (loss)		$	5,455			$	7,412			$	5,308			$	-			$	18,175
Net investment income															16,253				16,253
Net realized gains (losses)															5,596				5,596
Interest expense															(3,855	)			(3,855	)
Other income (loss)															2,187				2,187
Income before income taxes		$	5,455			$	7,412			$	5,308			$	20,181			$	38,356
Income tax (expense) benefit															(12,427	)			(12,427	)
Net income (loss)																		$	25,929
Losses and LAE ratio			59.3	%			45.3	%			57.5	%							55.1	%
Commission expense ratio			10.9	%			17.4	%			18.5	%							13.9	%
Other operating expense ratio (2)			25.6	%			26.0	%			10.6	%							23.3	%
Combined ratio			95.8	%			88.7	%			86.6	%							92.3	%
_______________
(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 March 31, 2016													Three months ended March 31, 2015
amounts in thousands		Marine			P&C			Professional Liability			Total				Marine			P&C			Professional Liability			Total				% Change Total
Gross written premiums		$	43,163		$	141,278		$	26,206		$	210,647			$	40,835		$	134,146		$	24,346		$	199,327				5.7	%
Ceded written premiums			(17,647	)		(30,507	)		(6,343	)		(54,497	)			(16,286	)		(39,558	)		(12,886	)		(68,730	)			-20.7	%
Net written premiums			25,516			110,771			19,863			156,150				24,549			94,588			11,460			130,597				19.6	%
Net earned premiums		$	23,250		$	109,159		$	15,931		$	148,340			$	23,924		$	90,735		$	16,432		$	131,091				13.2	%
Net losses and LAE			(9,775	)		(71,597	)		(10,140	)		(91,512	)			(10,188	)		(58,047	)		(9,564	)		(77,799	)			17.6	%
Commission expenses			(1,482	)		(11,852	)		(1,521	)		(14,855	)			(4,032	)		(8,556	)		(1,757	)		(14,345	)			3.6	%
Other operating expenses			(7,372	)		(21,522	)		(4,867	)		(33,761	)			(6,973	)		(21,059	)		(5,656	)		(33,688	)			0.2	%
Other underwriting income (expense)			79			268			14			361				151			44			1			196				84.2	%
Underwriting profit (loss)		$	4,700		$	4,456		$	(583	)	$	8,573			$	2,882		$	3,117		$	(544	)	$	5,455				57.2	%
Losses and LAE ratio			42.0	%		65.6	%		63.7	%		61.7	%			42.6	%		64.0	%		58.2	%		59.3	%
Commission expense ratio			6.4	%		10.9	%		9.5	%		10.0	%			16.9	%		9.4	%		10.7	%		10.9	%
Other operating expense ratio (1)			31.4	%		19.4	%		30.5	%		22.5	%			28.5	%		23.2	%		34.4	%		25.6	%
Combined ratio			79.8	%		95.9	%		103.7	%		94.2	%			88.0	%		96.6	%		103.3	%		95.8	%
(1) - Includes Other operating expenses and Other underwriting income (expense).
		Int'l Insurance
		Three months ended March 31, 2016													Three months ended March 31, 2015
amounts in thousands		Marine			P&C			Professional Liability			Total				Marine			P&C			Professional Liability			Total				% Change Total
Gross written premiums		$	71,948		$	44,046		$	28,149		$	144,143			$	67,410		$	32,950		$	22,067		$	122,427				17.7	%
Ceded written premiums			(11,089	)		(17,229	)		(6,653	)		(34,971	)			(10,822	)		(16,129	)		(7,305	)		(34,256	)			2.1	%
Net written premiums			60,859			26,817			21,496			109,172				56,588			16,821			14,762			88,171				23.8	%
Net earned premiums		$	38,856		$	21,209		$	17,943		$	78,008			$	37,792		$	16,034		$	11,699		$	65,525				19.1	%
Net losses and LAE			(20,088	)		(11,216	)		(9,106	)		(40,410	)			(19,511	)		(4,880	)		(5,300	)		(29,691	)			36.1	%
Commission expenses			(9,405	)		(2,775	)		(3,175	)		(15,355	)			(9,190	)		(1,027	)		(1,196	)		(11,413	)			34.5	%
Other operating expenses			(8,442	)		(8,708	)		(4,621	)		(21,771	)			(6,695	)		(5,984	)		(4,330	)		(17,009	)			28.0	%
Other underwriting income (expense)			-			-			-			-				-			-			-			-				NM
Underwriting profit (loss)		$	921		$	(1,490	)	$	1,041		$	472			$	2,396		$	4,143		$	873		$	7,412				-93.6	%
Losses and LAE ratio			51.7	%		52.9	%		50.7	%		51.8	%			51.6	%		30.4	%		45.3	%		45.3	%
Commission expense ratio			24.2	%		13.1	%		17.7	%		19.7	%			24.3	%		6.4	%		10.2	%		17.4	%
Other operating expense ratio (1)			21.7	%		41.0	%		25.8	%		27.9	%			17.8	%		37.4	%		37.0	%		26.0	%
Combined ratio			97.6	%		107.0	%		94.2	%		99.4	%			93.7	%		74.2	%		92.5	%		88.7	%
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 March 31,
		Amounts							Loss Ratio
Net Incurred Loss Activity			2016			2015				2016			2015
US Insurance:
Loss and LAE payments		$	73,035		$	62,734				49.2	%		47.8	%
Change in reserves			18,477			15,065				12.5	%		11.5	%
Net incurred loss and LAE			91,512			77,799				61.7	%		59.3	%
International Insurance:
Loss and LAE payments			29,243			35,537				37.5	%		54.2	%
Change in reserves			11,167			(5,846	)			14.3	%		-8.9	%
Net incurred loss and LAE			40,410			29,691				51.8	%		45.3	%
Global Reinsurance:
Loss and LAE payments			25,131			21,212				66.1	%		53.7	%
Change in reserves			(4,097	)		1,496				-10.8	%		3.8	%
Net incurred loss and LAE			21,034			22,708				55.3	%		57.5	%
Total
Loss and LAE payments			127,409			119,483				48.2	%		50.6	%
Change in reserves			25,547			10,715				9.7	%		4.5	%
Net incurred loss and LAE		$	152,956		$	130,198				57.9	%		55.1	%
		Amounts							Loss Ratio Impact
Impact of Prior Years Reserves		Mar. 31,			Mar. 31,				Mar. 31,			Mar. 31,
Favorable / (Unfavorable) Development			2016			2015				2016			2015
US Insurance		$	2,669		$	6,409				1.0	%		2.7	%
International Insurance			(855	)		6,191				-0.3	%		2.6	%
Global Reinsurance			20			(1	)			0.0	%		0.0	%
Total		$	1,834		$	12,599				0.7	%		5.3	%

 

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data
($ in thousands)
				As of March 31, 2016
				Case				IBNR
Net Loss Reserves:				Reserves				Reserves				Total
US Insurance:
Marine				$	61,330			$	52,905			$	114,235
Property Casualty					181,868				539,950				721,818
Professional Liability					35,188				60,167				95,355
Total US Insurance					278,386				653,022				931,408
International Insurance:
Marine					168,371				60,951				229,322
Property Casualty					42,189				21,437				63,626
Professional Liability					27,136				62,123				89,259
Total International Insurance					237,696				144,511				382,207
Global Reinsurance					37,309				67,292				104,601
Total Net Loss Reserves				$	553,391			$	864,825			$	1,418,216
				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

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Investment Data

As of March 31, 2016, the average quality of the investment portfolio as rated by S&P and Moody’s was AA-/Aa3 with an average duration of 3.7 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 March 31, 2016:

								As of  March 31, 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						$	322,009			$	4,934			$	(4,478	)		$	321,553
	States, municipalities and political subdivisions								550,855				26,085				(497	)			525,267
	Mortgage-backed and asset-backed securities:
		Agency mortgage-backed securities							380,418				8,831				(323	)			371,910
		Residential mortgage obligations							29,451				569				(131	)			29,013
		Asset-backed securities							235,714				421				(2,040	)			237,333
		Commercial mortgage-backed securities							188,169				4,903				(1,718	)			184,984
			Subtotal					$	833,752			$	14,724			$	(4,212	)		$	823,240
	Corporate bonds								771,104				15,457				(7,130	)			762,777
Total fixed maturities								$	2,477,720			$	61,200			$	(16,317	)		$	2,432,837
Equity securities									314,815				29,650				(1,646	)			286,811
Short-term investments									211,782				-				-				211,782
Total investments								$	3,004,317			$	90,850			$	(17,963	)		$	2,931,430

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

Legal Disclaimer:

EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.