Net Income up 46.3% and Record Quarterly Operating Earnings

STAMFORD, Conn., May 07, 2018 (GLOBE NEWSWIRE) -- The Navigators Group, Inc. (NASDAQ:NAVG) reported Net Income of $30.9 million, or $1.02 per diluted share, for the three months ended March 31, 2018 compared to $21.1 million, or $0.70 per diluted share, for the same period in 2017. Net Operating Earnings¹ were $32.9 million, or $1.09 per diluted share, for the three months ended March 31, 2018 compared to $20.4 million, or $0.68 per diluted share, for the same period in 2017.

Gross Written Premiums and Net Written Premiums for the three months ended March 31, 2018 were $495.2 million and $393.3 million, respectively, increasing 10.0% and 16.6%, respectively, from the comparable period in 2017. The Combined Ratio for the three months ended March 31, 2018 was 94.0%, compared to 96.4% for the same period in 2017.

Net Investment Income for the three months ended March 31, 2018 was $23.7 million, an increase of 10.5% as compared to the same period in 2017. The annualized pre-tax investment yield, excluding Total Net Realized and Unrealized Gains and Losses recognized in the Results of Operations, was 2.7% for the three months ended March 31, 2018 and 2017.

Other Income (Loss) for the three months ended March 31, 2018 was $(0.1) million, compared to $1.1 million for the same period in 2017. Other Income (Loss) for the three months ended March 31, 2018 included revenue from the sale of renewal rights for the Company’s fixed-premium protection and indemnity (“P&I”) business, offset by net realized and unrealized foreign exchange losses. Other Income (Loss) for the same period in 2017 primarily consisted of net realized and unrealized foreign exchange gains.

Stan Galanski, President and Chief Executive Officer, commented, “We are very  pleased with our financial performance for the first quarter, reporting strong net income, a record level of operating earnings, double digit premium growth and underwriting profit in all three of our reporting segments. GlobalRe was a stand-out, achieving significant premium growth, driven by our Accident & Health and Latin American business, and a combined ratio of 86.6%. Importantly, our International Insurance reporting segment returned to profitability, reflecting the concerted effort to re-position our portfolio by exiting non-performing product lines and reducing our cost structure. Our U.S. Insurance reporting segment produced profitable results, consistent with our expectations, while achieving growth in our Marine and Professional Liability operating segments during the quarter.”

As disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, accounting guidance for financial instruments changed under the Financial Accounting Standards Board’s Accounting Standard Update 2016-01 (“ASU 2016-01"), which upon adoption as of January 1, 2018, required Equity Securities to be measured at Fair Value through Net Income. Prior to adoption, these securities were classified as Available-For-Sale with unrealized gains and losses excluded from Net Income and reported in Accumulated Other Comprehensive Income. The adoption of this guidance required a cumulative-effect adjustment as of the adoption date that moved the unrealized gains and losses, net of tax, from Accumulated Other Comprehensive Income to Retained Earnings. As a result of this guidance, for 2018 and forward, the Results of Operations will be impacted by the volatility in the performance of these Equity Securities. The unrealized gains and losses on Equity Securities will be excluded from Net Operating Earnings.

The 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 effective duration of 3.5 years as of March 31, 2018. As of March 31, 2018, Net Unrealized Losses within the Available-For-Sale investment portfolio recognized in Accumulated Other Comprehensive Income were $(16.6) million, a decrease of $(58.0) million compared to December 31, 2017. Included in this decrease was the reclassification of $11.8 million of net unrealized gains, before tax, from Accumulated Other Comprehensive Income to Retained Earnings as a result of adopting ASU 2016-01.

The Company recognized $(2.0) million of Total Net Realized and Unrealized Losses within the Results of Operations for the three months ended March 31, 2018, compared to $(44) thousand of Total Net Realized and Unrealized Losses for the same period in 2017. The Net Realized and Unrealized Losses within the Results of Operations for the three months ended March 31, 2018 included $(3.2) million of net unrealized losses on Equity Securities.

The effective tax rate was 16.8% for the first quarter of 2018, which compares to 26.6% for the same period in 2017, primarily as a result of changes related to 2017 tax reform.

Stockholders’ Equity was $1.2 billion, or $40.96 per share, as of March 31, 2018 compared to $41.55 per share, as of December 31, 2017.

During the three months ended March 31, 2018, the Company declared and paid a quarterly cash dividend of $0.07 per share of Common Stock.

The Company will hold a conference call on Tuesday, May 8, 2018 starting at 8:30 a.m. (ET) to discuss the 2018 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 also connect to the webcast at: https://edge.media-server.com/m6/p/di3vjch8.

The Navigators Group, Inc. is an international specialty insurance holding company with operations in the United States, the United Kingdom, Continental Europe and Asia.

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. These forward-looking statements include statements on the financial impact of tax reform. We continue to assess the tax accounting effects of tax reform. 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.

¹ Net Operating Earnings is a “non-GAAP financial measure” as defined in Regulation G. A reconciliation of Net Income (the nearest GAAP financial measure) to Net Operating Earnings is provided on page 4 of this release, as is a discussion of the rationale for the presentation of this item.

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

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)
		Three Months Ended
amounts in thousands, except per share amounts		March 31,
Results of Operations		2018				2017				Change
Gross Written Premiums		$	495,224			$	450,305			10.0	%
Net Written Premiums			393,262				337,163			16.6	%
Revenues:
Net Earned Premiums		$	322,627			$	286,131			12.8	%
Net Investment Income			23,702				21,448			10.5	%
Net Realized and Unrealized Gains (Losses):
Total Other-Than-Temporary Impairment   Losses			(37	)			(1,077	)		(96.5	%)
Portion of Loss Recognized in Other   Comprehensive Income (Before Tax)			37				(16	)		NM
Net Other-Than-Temporary Impairment Losses   Recognized In Earnings			—				(1,093	)		NM
Net Realized Gains on Investments Sold			1,169				1,049			11.4	%
Net Unrealized Losses on Equity Securities at Fair  Value			(3,181	)			—			NM
Total Net Realized and Unrealized Losses			(2,012	)			(44	)		NM
Other Income (Loss)			(117	)			1,068			NM
Total Revenues		$	344,200			$	308,603			11.5	%
Expenses:
Net Losses and Loss Adjustment Expenses		$	186,145			$	169,600			9.8	%
Commission Expenses			54,152				47,844			13.2	%
Other Operating Expenses			62,926				58,538			7.5	%
Interest Expense			3,864				3,861			0.1	%
Total Expenses		$	307,087			$	279,843			9.7	%
Income Before Income Taxes		$	37,113			$	28,760			29.0	%
Income Tax Expense			6,235				7,650			(18.5	%)
Net Income		$	30,878			$	21,110			46.3	%
Per Share Data
Net Income Per Common Share:
Basic		$	1.04			$	0.72			44.7	%
Diluted		$	1.02			$	0.70			45.6	%
Average Common Shares Outstanding:
Basic			29,595				29,283
Diluted			30,137				30,000
Underwriting Ratios
Loss Ratio			57.7	%			59.3	%
Expense Ratio			36.3	%			37.1	%
Combined Ratio			94.0	%			96.4	%
Balance Sheet Data		March 31,				December 31,
		2018				2017
Stockholders' Equity		$	1,216,952			$	1,225,965			(0.7	%)
Book Value per Share		$	40.96			$	41.55			(1.4	%)

NM - Percentage change not meaningful.

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION OF NET INCOME TO NET OPERATING EARNINGS
(Unaudited)

In this release, we present Net Operating Earnings, which is a “non-GAAP financial measure” as defined in Regulation G.

Net Operating Earnings is comprised of Net Income excluding After-Tax Total Net Realized and Unrealized Gains (Losses), After-Tax Foreign Exchange Gains (Losses), and the Net Gain on Disposition of Product Line recognized in the Results of Operations.

We believe this presentation enhances the understanding of the results of operations by highlighting the underlying profitability of the business and enables investors and other users of the financial information to analyze underlying business performance in a manner similar to management. We also believe this measure follows industry practice and, therefore facilitates comparison of our performance with our peer group.

The following tables provide a reconciliation of Net Income (the nearest GAAP financial measure) to Net Operating Earnings:

		Three Months Ended March 31, 2018												Three Months Ended March 31, 2017												% Change
amounts in thousands, except per share amounts		Pre-Tax				Tax (1)				After-Tax				Pre-Tax				Tax (1)				After-Tax				QTD
Net Income		$	37,113			$	(6,235	)		$	30,878			$	28,760			$	(7,650	)		$	21,110				46.3	%
Adjustments to Net Income:
Total Net Realized and Unrealized Losses			2,012				(422	)			1,590				44				(15	)			29			NM
FX Losses (Gains)			1,522				(320	)			1,202				(1,123	)			393				(730	)		NM
Net Gain on Disposition of Product Line			(948	)			199				(749	)			—				—				—			NM
Net Operating Earnings		$	39,699			$	(6,778	)		$	32,921			$	27,681			$	(7,272	)		$	20,409				61.3	%
Average Common Shares Outstanding:
Basic											29,595												29,283
Diluted											30,137												30,000
Net Operating Earnings  per Common Share:
Basic										$	1.11											$	0.70
Diluted										$	1.09											$	0.68

(1) - Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of any other relevant factors.
NM - Percentage change not meaningful.

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
		March 31,				December 31,
		2018				2017
amounts in thousands, except per share amounts		(Unaudited)
ASSETS
Investments:
Fixed Maturities, available-for-sale, at fair value (amortized cost: 2018:  $2,987,492; 2017: $3,027,408)		$	2,970,934			$	3,057,054
Equity Securities, at fair value  (cost: 2018: $245,754; 2017: $224,159)			254,394				235,981
Other Invested Assets			35,276				30,488
Short-Term Investments, available-for-sale, at fair value (amortized cost: 2018: $6,707; 2017: $6,477)			6,704				6,480
Total Investments		$	3,267,308			$	3,330,003
Cash and Cash Equivalents			165,177				102,735
Restricted Cash and Cash Equivalents			58,956				56,229
Premiums Receivable			413,253				351,393
Prepaid Reinsurance Premiums			228,902				228,569
Reinsurance Recoverable on Paid Losses			82,506				72,494
Reinsurance Recoverable on Unpaid Losses and Loss Adjustment Expenses			790,388				809,765
Deferred Policy Acquisition Costs			151,661				135,249
Accrued Investment Income			20,738				19,480
Goodwill and Other Intangible Assets			6,668				6,596
Current Income Tax Receivable, Net			10,497				16,667
Deferred Income Tax, Net			31,026				22,271
Other Assets			81,686				73,171
Total Assets		$	5,308,766			$	5,224,622
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Reserves for Losses and Loss Adjustment Expenses		$	2,521,827			$	2,515,145
Unearned Premiums			1,059,085				987,681
Reinsurance Balances Payable			128,919				136,192
Senior Notes			263,926				263,885
Payable for Investments Purchased			23,776				—
Accounts Payable and Other Liabilities			94,281				95,754
Total Liabilities		$	4,091,814			$	3,998,657
Stockholders' Equity:
Preferred Stock ($.10 par value per share, authorized 1,000 shares, none issued)		$	—			$	—
Common Stock ($.10 par value per share, authorized 50,000 shares, issued 36,733 shares for 2018 and 36,530 shares for 2017)			3,670				3,650
Additional Paid-In Capital			372,866				376,868
Treasury Stock, at cost (7,023 shares for 2018 and 2017)			(155,801	)			(155,801	)
Retained Earnings			1,015,109				981,380
Accumulated Other Comprehensive Income			(18,892	)			19,868
Total Stockholders' Equity		$	1,216,952			$	1,225,965
Total Liabilities and Stockholders' Equity		$	5,308,766			$	5,224,622

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
(Unaudited)
		Three Months Ended March 31, 2018
		U.S.				Int'l
amounts in thousands		Insurance				Insurance				GlobalRe				Corporate (1)				Total
Gross Written Premiums		$	239,928			$	127,872			$	127,424			$	—			$	495,224
Ceded Written Premiums			(66,581	)			(28,888	)			(6,493	)			—				(101,962	)
Net Written Premiums			173,347				98,984				120,931				—				393,262
Net Earned Premiums		$	172,913			$	93,210			$	56,504			$	—			$	322,627
Net Losses and LAE			(110,422	)			(45,843	)			(29,880	)			—				(186,145	)
Commission Expenses			(20,861	)			(19,756	)			(13,768	)			233				(54,152	)
Other Operating Expenses			(36,991	)			(20,530	)			(5,405	)			—				(62,926	)
Other Underwriting Income (Expense)			98				—				138				(233	)			3
Underwriting Profit		$	4,737			$	7,081			$	7,589			$	—			$	19,407
Net Investment Income															23,702				23,702
Total Net Realized and Unrealized Losses															(2,012	)			(2,012	)
Interest Expense															(3,864	)			(3,864	)
Other Loss															(120	)			(120	)
Income Before Income Taxes		$	4,737			$	7,081			$	7,589			$	17,706			$	37,113
Income Tax Expense															(6,235	)			(6,235	)
Net Income																		$	30,878
Losses and LAE Ratio			63.9	%			49.2	%			52.9	%							57.7	%
Commission Expense Ratio			12.1	%			21.2	%			24.4	%							16.8	%
Other Operating Expense Ratio (2)			21.3	%			22.0	%			9.3	%							19.5	%
Combined Ratio			97.3	%			92.4	%			86.6	%							94.0	%

(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
(Unaudited)
		Three Months Ended March 31, 2017
		U.S.				Int'l
amounts in thousands		Insurance				Insurance				GlobalRe				Corporate (1)				Total
Gross Written Premiums		$	237,605			$	141,860			$	70,840			$	—			$	450,305
Ceded Written Premiums			(61,487	)			(46,593	)			(5,062	)			—				(113,142	)
Net Written Premiums			176,118				95,267				65,778				—				337,163
Net Earned Premiums		$	164,004			$	84,086			$	38,041			$	—			$	286,131
Net Losses and LAE			(98,826	)			(50,705	)			(20,069	)			—				(169,600	)
Commission Expenses			(20,384	)			(19,233	)			(8,492	)			265				(47,844	)
Other Operating Expenses			(33,472	)			(19,793	)			(5,273	)			—				(58,538	)
Other Underwriting Income (Expense)			110				—				176				(265	)			21
Underwriting Profit (Loss)		$	11,432			$	(5,645	)		$	4,383			$	—			$	10,170
Net Investment Income															21,448				21,448
Total Net Realized and Unrealized Losses															(44	)			(44	)
Interest Expense															(3,861	)			(3,861	)
Other Income															1,047				1,047
Income (Loss) Before Income Taxes		$	11,432			$	(5,645	)		$	4,383			$	18,590			$	28,760
Income Tax Expense															(7,650	)			(7,650	)
Net Income																		$	21,110
Losses and LAE Ratio			60.3	%			60.3	%			52.8	%							59.3	%
Commission Expense Ratio			12.4	%			22.9	%			22.3	%							16.7	%
Other Operating Expense Ratio (2)			20.3	%			23.5	%			13.4	%							20.4	%
Combined Ratio			93.0	%			106.7	%			88.5	%							96.4	%

(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
(Unaudited)
		U.S. Insurance
		Three Months Ended March 31, 2018																Three Months Ended March 31, 2017
amounts in thousands		Marine				P&C				Professional Liability				Total				Marine				P&C				Professional Liability				Total				% Change Total
Gross Written Premiums		$	41,724			$	168,193			$	30,011			$	239,928			$	40,950			$	170,634			$	26,021			$	237,605				1.0	%
Ceded Written Premiums			(17,480	)			(44,912	)			(4,189	)			(66,581	)			(17,520	)			(38,198	)			(5,769	)			(61,487	)			8.3	%
Net Written Premiums			24,244				123,281				25,822				173,347				23,430				132,436				20,252				176,118				(1.6	%)
Net Earned Premiums		$	21,092			$	127,590			$	24,231			$	172,913			$	22,694			$	119,123			$	22,187			$	164,004				5.4	%
Net Losses and LAE			(15,752	)			(80,918	)			(13,752	)			(110,422	)			(13,775	)			(71,749	)			(13,302	)			(98,826	)			11.7	%
Commission Expenses			(1,408	)			(15,167	)			(4,286	)			(20,861	)			(1,472	)			(15,366	)			(3,546	)			(20,384	)			2.3	%
Other Operating Expenses			(6,275	)			(25,624	)			(5,092	)			(36,991	)			(6,821	)			(21,814	)			(4,837	)			(33,472	)			10.5	%
Other Underwriting Income			77				15				6				98				83				18				9				110				(10.9	%)
Underwriting Profit (Loss)		$	(2,266	)		$	5,896			$	1,107			$	4,737			$	709			$	10,212			$	511			$	11,432				(58.6	%)
Losses and LAE Ratio			74.7	%			63.4	%			56.8	%			63.9	%			60.7	%			60.2	%			60.0	%			60.3	%
Commission Expense Ratio			6.7	%			11.9	%			17.7	%			12.1	%			6.5	%			12.9	%			16.0	%			12.4	%
Other Operating Expense Ratio (1)			29.3	%			20.1	%			20.9	%			21.3	%			29.7	%			18.3	%			21.7	%			20.3	%
Combined Ratio			110.7	%			95.4	%			95.4	%			97.3	%			96.9	%			91.4	%			97.7	%			93.0	%

(1) - Includes Other Operating Expenses and Other Underwriting Income.
NM – Percentage change not meaningful

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
(Unaudited)
		Int'l Insurance
		Three Months Ended March 31, 2018																Three Months Ended March 31, 2017
																																		%
										Professional																Professional								Change
amounts in thousands		Marine				P&C				Liability				Total				Marine				P&C				Liability				Total				Total
Gross Written Premiums		$	56,478			$	33,960			$	37,434			$	127,872			$	68,833			$	40,368			$	32,659			$	141,860				(9.9	%)
Ceded Written Premiums			(8,054	)			(13,667	)			(7,167	)			(28,888	)			(10,926	)			(29,646	)			(6,021	)			(46,593	)			(38.0	%)
Net Written Premiums			48,424				20,293				30,267				98,984				57,907				10,722				26,638				95,267				3.9	%
Net Earned Premiums		$	39,279			$	21,769			$	32,162			$	93,210			$	37,495			$	22,180			$	24,411			$	84,086				10.9	%
Net Losses and LAE			(20,446	)			(9,223	)			(16,174	)			(45,843	)			(20,601	)			(15,869	)			(14,235	)			(50,705	)			(9.6	%)
Commission Expenses			(9,730	)			(2,565	)			(7,461	)			(19,756	)			(9,541	)			(3,742	)			(5,950	)			(19,233	)			2.7	%
Other Operating Expenses			(6,810	)			(7,679	)			(6,041	)			(20,530	)			(8,440	)			(6,423	)			(4,930	)			(19,793	)			3.7	%
Underwriting Profit (Loss)		$	2,293			$	2,302			$	2,486			$	7,081			$	(1,087	)		$	(3,854	)		$	(704	)		$	(5,645	)		NM
Losses and LAE Ratio			52.1	%			42.4	%			50.3	%			49.2	%			54.9	%			71.5	%			58.3	%			60.3	%
Commission Expense Ratio			24.8	%			11.8	%			23.2	%			21.2	%			25.4	%			16.9	%			24.4	%			22.9	%
Other Operating Expense Ratio			17.3	%			35.2	%			18.8	%			22.0	%			22.6	%			29.0	%			20.2	%			23.5	%
Combined Ratio			94.2	%			89.4	%			92.3	%			92.4	%			102.9	%			117.4	%			102.9	%			106.7	%

NM – Percentage change not meaningful

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Incurred Loss Activity
(Unaudited)
		For the Three Months Ended March 31,
amounts in thousands		Amounts								Loss Ratio
Net Incurred Loss Activity		2018				2017				2018				2017
U.S. Insurance:
Loss and LAE Payments		$	87,551			$	69,771				50.7	%			42.5	%
Change in Reserves			22,871				29,055				13.2	%			17.8	%
Net Incurred Loss and LAE		$	110,422			$	98,826				63.9	%			60.3	%
Int'l Insurance:
Loss and LAE Payments		$	48,243			$	44,908				51.8	%			53.4	%
Change in Reserves			(2,400	)			5,797				(2.6	%)			6.9	%
Net Incurred Loss and LAE		$	45,843			$	50,705				49.2	%			60.3	%
GlobalRe:
Loss and LAE Payments		$	29,273			$	28,330				51.8	%			74.5	%
Change in Reserves			607				(8,261	)			1.1	%			(21.7	%)
Net Incurred Loss and LAE		$	29,880			$	20,069				52.9	%			52.8	%
Total
Loss and LAE Payments		$	165,066			$	143,009				51.2	%			50.0	%
Change in Reserves			21,078				26,591				6.5	%			9.3	%
Net Incurred Loss and LAE		$	186,145			$	169,600				57.7	%			59.3	%
		For the Three Months Ended March 31,
Impact of Prior Years Reserves		Amounts								Loss Ratio Impact
Favorable / (Unfavorable) Development		2018				2017				2018				2017
U.S. Insurance		$	(4,813	)		$	472				(1.5	%)			0.2	%
Int'l Insurance			2,483				(6,616	)			0.8	%			(2.4	%)
GlobalRe			364				(941	)			0.1	%			(0.3	%)
Total		$	(1,966	)		$	(7,085	)			(0.6	%)			(2.5	%)

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data
(Unaudited)
		As of March 31, 2018
amounts in thousands		Case				IBNR
Net Loss Reserves:		Reserves				Reserves				Total
U.S. Insurance:
Marine		$	55,621			$	51,317			$	106,938
P&C			190,414				716,879				907,293
Professional Liability			30,736				87,492				118,228
Total U.S. Insurance		$	276,771			$	855,688			$	1,132,459
Int'l Insurance:
Marine		$	179,931			$	35,943			$	215,874
P&C			61,417				35,678				97,095
Professional Liability			37,884				94,682				132,566
Total Int'l Insurance		$	279,232			$	166,303			$	445,535
GlobalRe		$	62,695			$	90,750			$	153,445
Total Net Loss Reserves		$	618,698			$	1,112,741			$	1,731,439
		As of December 31, 2017
		Case				IBNR
Net Loss Reserves:		Reserves				Reserves				Total
U.S. Insurance:
Marine		$	58,301			$	45,393			$	103,694
P&C			192,291				700,264				892,555
Professional Liability			26,774				86,649				113,423
Total U.S. Insurance		$	277,366			$	832,306			$	1,109,672
Int'l Insurance:
Marine		$	181,369			$	39,949			$	221,318
P&C			66,412				37,067				103,479
Professional Liability			31,463				87,211				118,674
Total Int'l Insurance		$	279,244			$	164,227			$	443,471
GlobalRe		$	58,962			$	93,275			$	152,237
Total Net Loss Reserves		$	615,572			$	1,089,808			$	1,705,380

 

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Investment Data
(Unaudited)

As of March 31, 2018, the average quality of the investment portfolio as rated by S&P and Moody’s was “AA-/Aa3”, respectively, with an effective duration of 3.5 years. The Company does not own any collateralized debt obligations or asset backed commercial paper.

The following table sets forth the Available-For-Sale investments as of March 31, 2018:

		As of March 31, 2018
						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		$	357,303			$	1,192			$	(4,082	)		$	360,193
States, Municipalities and Political Subdivisions			721,232				11,912				(4,554	)			713,874
Mortgage-Backed and Asset-Backed Securities:
Agency Mortgage-Backed Securities			379,354				1,389				(13,466	)			391,431
Residential Mortgage Obligations			63,430				499				(266	)			63,197
Asset-Backed Securities			369,337				1,361				(1,701	)			369,677
Commercial Mortgage-Backed Securities			161,391				1,088				(2,051	)			162,354
Subtotal		$	973,512			$	4,337			$	(17,484	)		$	986,659
Corporate Exposures (1)			918,887				6,140				(14,019	)			926,766
Total Fixed Maturities		$	2,970,934			$	23,581			$	(40,139	)		$	2,987,492
Short-Term Investments			6,704				—				(3	)			6,707
Total Available-For-Sale Investments		$	2,977,638			$	23,581			$	(40,142	)		$	2,994,199

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.