Navigators (NAVG) 8-K Navigators Reports Fourth Quarter Earnings

Exhibit 99.1

The Navigators Group, Inc.
CORPORATE NEWS

Navigators Reports Fourth Quarter Earnings

New York — February 25, 2010 — The Navigators Group, Inc. (NASDAQ:NAVG)reported net income of $6.1 million, or $0.35 per diluted share, for the three months ended December 31, 2009 compared to net income of $10.0 million, or $0.59 per diluted share, for the comparable period in 2008.

The summary of results for the three months ended December 31, 2009 and 2008 were as follows:

						Diluted earnings per share
($ in millions, except per share amounts)	2009		2008			2009		2008
Net income	$	6.1	$	10.0		$	0.35	$	0.59
Less: Net realized gains / (losses) after-tax		0.8		(16.1	)		0.05		(0.95	)
Operating earnings (1)	$	5.3	$	26.1		$	0.30	$	1.54

• The results for the three months ended December 31, 2009 included after-tax net realized gains of $0.8 million, or $0.05 per diluted share, which included other-than-temporary impairment losses on investments of $0.1 million after-tax, or $0.01 per diluted share.

• The results for the three months ended December 31, 2008 included after-tax net realized losses of $16.1 million, or $0.95 per diluted share, which included other-than-temporary impairment losses on investments of $15.5 million after-tax, or $0.91 per diluted share.

The summary of results for the twelve months ended December 31, 2009 and 2008 were as follows:

							Diluted earnings per share
($ in millions, except per share amounts)	2009			2008			2009			2008
Net income	$	63.2		$	51.7		$	3.65		$	3.04
Less: Net realized gains / (losses) after-tax		(2.0	)		(24.9	)		(0.11	)		(1.46	)
Operating earnings (1)	$	65.2		$	76.6		$	3.76		$	4.50

• The results for the twelve months ended December 31, 2009 included after-tax net realized losses of $2.0 million, or $0.11 per diluted share, which included other-than-temporary impairment losses on investments of $7.8 million after-tax, or $0.45 per diluted share.

• The results for the twelve months ended December 31, 2008 included $19.1 million, or $1.12 per diluted share, for after-tax net losses from Hurricanes Gustav and Ike. In addition, the results included after-tax net realized losses of $24.9 million, or $1.46 per diluted share, which included other-than-temporary impairment losses on investments of $24.1 million after-tax, or $1.42 per diluted share.

• For the three and twelve months ended December 31, 2009, book value per share decreased by 1% and increased by 16%, respectively, to $47.58.

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February 25, 2010
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Gross written premiums and net written premiums for the three months ended December 31, 2009 were $251.7 million and $161.6 million, respectively, a decrease of 5.2% and an increase of 1.4% from the comparable 2008 periods. Gross written premiums and net written premiums for the twelve months ended December 31, 2009 were $1,044.9 million and $701.3 million, respectively, a decrease of 3.7% and an increase of 6.0% from the comparable 2008 periods.

The combined loss and expense ratios for the three and twelve months ended December 31, 2009 were 106.5% and 97.2%, respectively, compared to 88.9% and 93.8% for the comparable 2008 periods. The combined loss and expense ratio for the three months ended December 31, 2009 was negatively impacted by 5.7 loss ratio points due to unfavorable development in prior period loss reserves. The combined loss and expense ratio for the twelve months ended December 31, 2009 was positively impacted by 1.3 loss ratio points due to favorable development in prior period loss reserves. The combined loss and expense ratios for the three and twelve months ended December 31, 2008 included 0.8 and 4.3 loss and expense ratio points, respectively, due to the net losses from Hurricanes Gustav and Ike. Such net losses are inclusive of reinsurance recoveries and related costs for reinsurance reinstatement premiums.

Navigators’ Chief Executive Officer Stan Galanski commented, “In what was an increasingly competitive underwriting environment and challenging economy, we are pleased to have generated an underwriting profit and grown book value by 16% during 2009. In times like these, a company’s ability and willingness to exercise underwriting, balance sheet and capital management discipline are put to the test. We continue to emphasize underwriting and pricing integrity, which has slowed the development of several of our more recent growth initiatives. We would rather take the time to build these businesses properly and profitably than to ignore the potential consequences of rapid growth in a soft market.

Our strategy is to maintain a conservative balance sheet and a strong capital position. We continued to experience favorable development in 2009 on our prior accident reserves and have taken appropriate underwriting and reserving actions to address those lines of business that were adversely impacted by higher than expected large loss activity.”

During the three and twelve months ended December 31, 2009, the Company repurchased 141,576 shares of its common stock for $6.8 million. The Company repurchased an additional 300,000 shares of its common stock for $13.0 million from January 1, 2010 through February 22, 2010.

Net investment income for the three and twelve months ended December 31, 2009 was $19.0 million and $75.5 million, respectively, which were decreases of 3.4% and 1.4% from the comparable 2008 periods. The annualized pre-tax investment yields, excluding net realized gains and losses, were 3.7% and 3.8% for the three and twelve months ended December 31, 2009, respectively, compared to 4.2% and 4.1% for the comparable 2008 periods. The effective tax rates on net investment income were 24.7% and 25.0% for the three and twelve months ended December 31, 2009, respectively, compared to 25.3% and 25.7% for the comparable 2008 periods.

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 4.2 years at December 31, 2009. At December 31, 2009, net unrealized gains within our investment portfolio were $53.9 million, a decrease of $13.5 million compared to September 30, 2009. There were $1.3 million of net realized gains for the three months ended December 31, 2009.

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February 25, 2010
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Consolidated cash flow from operations for the three and twelve months ended December 31, 2009 was $(1.3) million and $103.9 million, respectively, compared to $28.9 million and $245.3 million for the comparable 2008 periods.

Stockholders’ equity was $801.5 million, or $47.58 per share, at December 31, 2009 compared to $689.3 million, or $40.89 per share, at December 31, 2008. The statutory surplus of Navigators Insurance Company was $645.8 million at December 31, 2009 compared to $581.2 million at December 31, 2008.

Effective in 2009, the Company has reclassified certain of its business lines which had no effect on the segment classifications of the Insurance Companies and Lloyd’s Operations. Underwriting data for prior periods has been reclassified to reflect these changes.

• The offshore energy business, formerly included in the “Marine and Energy” businesses of the Insurance Companies and Lloyd’s Operations, is now included in the Insurance Companies’ and Lloyd’s “Property Casualty” businesses.

• The marine lines within both the Insurance Company and Lloyd’s are now presented as “Marine” instead of “Marine and Energy,” since the energy business has now been reclassified to “Property Casualty.”

• Engineering and construction, European Property and other run-off business, formerly included in the “Other” category of business within the Insurance Companies and Lloyd’s, are now included under “Property Casualty.”

• The “Middle Markets” business, formerly broken out separately in the Insurance Companies, is now included in the Insurance Companies’ “Property Casualty” business.

(1) Operating earnings, or net income excluding net realized gains (losses) after-tax, 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 Company will hold a conference call on Friday, February 26, 2010 starting at 8:30 a.m. ET to discuss the 2009 fourth quarter results. The call will be available via live webcast on Navigators’ website (www.navg.com) by clicking on the Earnings Webcast link under “News & Events”.

To participate by telephone, the domestic dial-in number is (888) 679-8034 and the international dial-in is (617) 213-4847. The access code is 53869873. Participants may pre-register for the call athttps://www.theconferencingservice.com/prereg/key.process?key=PFYLPDDAG. Pre-registrants will be issued a pin number to use when dialing into the live call that will provide quick access by bypassing the operator upon connection.

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.

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February 25, 2010
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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.

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Financial Highlights
($ in thousands, except per share amounts)
(unaudited)

	Three Months Ended									Twelve Months Ended
	December 31,									December 31,
Results of Operations	2009			2008			Change			2009			2008			Change
Gross written premiums	$	251,739		$	265,620			-5	%	$	1,044,918		$	1,084,922			-4	%
Net written premiums		161,595			159,288			1	%		701,255			661,615			6	%
Revenues:
Net earned premiums		177,278			171,493			3	%		683,363			643,976			6	%
Commission income		(92	)		269		NM				87			1,005			-91	%
Net investment income		19,003			19,663			-3	%		75,512			76,554			-1	%
Total other-than-temporary impairments		(496	)		(23,885	)	NM				(29,265	)		(37,045	)		-21	%
Portion of loss recognized in Other comprehensive income (before tax)		335			—		NM				17,388			—		NM
Net other-than-temporary impairment loss recognized in earnings		(161	)		(23,885	)	NM				(11,877	)		(37,045	)		-68	%
Net realized gains (losses)		1,476			(846	)	NM				9,217			(1,254	)	NM
Other income (expense)		71			(472	)	NM				6,578			430		NM
Total revenues		197,575			166,222			19	%		762,880			683,666			12	%
Expenses:
Net losses and loss adjustment expenses		127,432			99,553			28	%		435,998			393,131			11	%
Commission expenses		27,330			22,990			19	%		98,908			89,785			10	%
Other operating expenses		34,099			29,554			15	%		132,671			123,148			8	%
Interest expense		2,044			2,219			-8	%		8,455			8,871			-5	%
Total expenses		190,905			154,316			24	%		676,032			614,935			10	%
Income before income taxes		6,670			11,906			-44	%		86,848			68,731			26	%
Income tax expense		594			1,886			-69	%		23,690			17,039			39	%
Net income	$	6,076		$	10,020			-39	%	$	63,158		$	51,692			22	%
Per Share Data
Net income per common share:
Basic	$	0.36		$	0.60			-40	%	$	3.73		$	3.08			21	%
Diluted	$	0.35		$	0.59			-41	%	$	3.65		$	3.04			20	%
Average shares outstanding:
Basic		16,955			16,801						16,935			16,802
Diluted		17,355			16,971						17,322			16,992
Underwriting Ratios
Loss Ratio		71.9	%		58.1	%					63.8	%		61.0	%
Expense Ratio		34.6	%		30.8	%					33.4	%		32.8	%
Combined Ratio		106.5	%		88.9	%					97.2	%		93.8	%

	Dec. 31,		Sept. 30,				Dec. 31,		Dec. 31,
Balance Sheet Data	2009		2009				2009		2008
Stockholders’ equity	$	801,519	$	810,955	-1	%	$	801,519	$	689,317	16	%
Book value per share	$	47.58	$	47.78	0	%	$	47.58	$	40.89	16	%

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands, except par value)

	December 31,			December 31,
	2009			2008
	(unaudited)
ASSETS
Investments and cash:
Fixed maturities, available-for-sale, at fair value (amortized cost: 2009, $1,777,983; 2008, $1,664,755)	$	1,816,669		$	1,643,772
Equity securities, available-for-sale, at fair value (cost: 2009, $47,376; 2008, $52,523)		62,610			51,802
Short-term investments, at cost which approximates fair value		176,799			220,684
Cash		509			1,457
Total investments and cash		2,056,587			1,917,715
Premiums receivable		193,460			170,522
Prepaid reinsurance premiums		162,344			188,874
Reinsurance recoverable on paid losses		76,505			67,227
Reinsurance recoverable on unpaid losses and loss adjustment expenses		807,352			853,793
Deferred policy acquisition costs		56,575			47,618
Accrued investment income		17,438			17,411
Goodwill and other intangible assets		7,057			6,622
Current income tax receivable, net		4,854			—
Deferred income tax, net		31,222			54,736
Other assets		40,600			25,062
Total assets	$	3,453,994		$	3,349,580
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Reserves for losses and loss adjustment expenses	$	1,920,286		$	1,853,664
Unearned premiums		475,171			480,665
Reinsurance balances payable		98,555			140,319
Senior notes		114,010			123,794
Current income tax payable, net		—			5,874
Accounts payable and other liabilities		44,453			55,947
Total liabilities		2,652,475			2,660,263
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 17,212,814 shares for 2009 and 17,080,826 shares for 2008		1,721			1,708
Additional paid-in capital		304,505			298,872
Retained earnings		469,934			406,776
Treasury stock, at cost (366,330 shares for 2009 and 224,754 shares for 2008)		(18,296	)		(11,540	)
Accumulated other comprehensive income (loss)		43,655			(6,499	)
Total stockholders’ equity		801,519			689,317
Total liabilities and stockholders’ equity	$	3,453,994		$	3,349,580

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Comparative Premium Data
($ in thousands)

	Three Months							Twelve Months
	2009		2008		Change			2009		2008		Change
Gross Written Premiums:
Insurance Companies:
Marine	$	53,986	$	58,878		-8	%	$	241,438	$	248,080		-3	%
Property Casualty		80,158		94,009		-15	%		352,285		405,062		-13	%
Professional Liability		35,264		37,618		-6	%		137,053		109,048		26	%
		169,408		190,505		-11	%		730,776		762,190		-4	%
Lloyd’s Operations:
Marine		51,703		48,998		6	%		191,959		192,568		0	%
Property Casualty		19,093		16,621		15	%		78,151		91,292		-14	%
Professional Liability		11,535		9,496		21	%		44,032		38,872		13	%
		82,331		75,115		10	%		314,142		322,732		-3	%
Total	$	251,739	$	265,620		-5	%	$	1,044,918	$	1,084,922		-4	%

	Three Months							Twelve Months
	2009		2008		Change			2009		2008		Change
Net Written Premiums:
Insurance Companies:
Marine	$	38,242	$	35,130		9	%	$	171,289	$	147,569		16	%
Property Casualty		43,987		57,794		-24	%		227,234		261,322		-13	%
Professional Liability		19,970		21,139		-6	%		79,150		63,797		24	%
		102,199		114,063		-10	%		477,673		472,688		1	%
Lloyd’s Operations:
Marine		42,286		33,161		28	%		156,153		132,788		18	%
Property Casualty		11,316		6,588		72	%		45,097		32,735		38	%
Professional Liability		5,794		5,476		6	%		22,332		23,404		-5	%
		59,396		45,225		31	%		223,582		188,927		18	%
Total	$	161,595	$	159,288		1	%	$	701,255	$	661,615		6	%

	Three Months							Twelve Months
	2009		2008		Change			2009		2008		Change
Net Earned Premiums:
Insurance Companies:
Marine	$	43,075	$	38,350		12	%	$	157,534	$	132,005		19	%
Property Casualty		57,283		68,582		-16	%		246,143		273,977		-10	%
Professional Liability		19,446		14,239		37	%		75,444		57,316		32	%
		119,804		121,171		-1	%		479,121		463,298		3	%
Lloyd’s Operations:
Marine		40,800		34,873		17	%		142,958		126,126		13	%
Property Casualty		11,080		9,752		14	%		39,330		32,644		20	%
Professional Liability		5,594		5,697		-2	%		21,954		21,908		0	%
		57,474		50,322		14	%		204,242		180,678		13	%
Total	$	177,278	$	171,493		3	%	$	683,363	$	643,976		6	%

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Three Months Ended
December 31, 2009

($ in thousands)

	Insurance			Lloyd’s
	Companies			Operations			Corporate			Total
Gross written premiums	$	169,408		$	82,331		$	—		$	251,739
Net written premiums		102,199			59,396			—			161,595
Net earned premiums		119,804			57,474			—			177,278
Net losses and loss adjustment expenses		(89,838	)		(37,594	)		—			(127,432	)
Commission expenses		(16,575	)		(11,194	)		439			(27,330	)
Other operating expenses		(26,141	)		(7,963	)		—			(34,104	)
Other income (expense)		341			82			(439	)		(16	)
Underwriting profit (loss)		(12,409	)		805			—			(11,604	)
Investment income		16,674			2,169			160			19,003
Net realized gains (losses)		1,520			(205	)		—			1,315
Other operating expenses		—			—			5			5
Other income (expense)		—			—			(5	)		(5	)
Interest expense		—			—			(2,044	)		(2,044	)
Income (loss) before income tax expense (benefit)		5,785			2,769			(1,884	)		6,670
Income tax expense (benefit)		142			1,112			(660	)		594
Net income (loss)	$	5,643		$	1,657		$	(1,224	)	$	6,076
Loss and loss expenses ratio		75.0	%		65.4	%					71.9	%
Commission expense ratio		13.8	%		19.5	%					15.4	%
Other operating expenses ratio (1)		21.6	%		13.7	%					19.2	%
Combined ratio		110.4	%		98.6	%					106.5	%

(1) The Other operating expenses ratio includes Other income (expense).

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Three Months Ended
December 31, 2008

($ in thousands)

	Insurance			Lloyd’s
	Companies			Operations			Corporate			Total
Gross written premiums	$	190,505		$	75,115		$	—		$	265,620
Net written premiums		114,063			45,225			—			159,288
Net earned premiums		121,171			50,322			—			171,493
Net losses and loss adjustment expenses		(67,840	)		(31,713	)		—			(99,553	)
Commission expenses		(14,258	)		(8,732	)		—			(22,990	)
Other operating expenses		(22,795	)		(6,869	)		110			(29,554	)
Other income (expense)		92			(185	)		(110	)		(203	)
Underwriting profit		16,370			2,823			—			19,193
Investment income		16,513			2,728			422			19,663
Net realized gains (losses)		(24,460	)		(271	)		—			(24,731	)
Interest expense		—			—			(2,219	)		(2,219	)
Income (loss) before income tax expense (benefit)		8,423			5,280			(1,797	)		11,906
Income tax expense (benefit)		634			1,881			(629	)		1,886
Net income (loss)	$	7,789		$	3,399		$	(1,168	)	$	10,020
Loss and loss expenses ratio		56.0	%		63.0	%					58.1	%
Commission expense ratio		11.8	%		17.4	%					13.4	%
Other operating expenses ratio (1)		18.7	%		14.0	%					17.4	%
Combined ratio		86.5	%		94.4	%					88.9	%

(1) The Other operating expenses ratio includes Other income (expense).

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Twelve Months Ended
December 31, 2009

($ in thousands)

	Insurance			Lloyd’s
	Companies			Operations			Corporate			Total
Gross written premiums	$	730,776		$	314,142		$	—		$	1,044,918
Net written premiums		477,673			223,582			—			701,255
Net earned premiums		479,121			204,242			—			683,363
Net losses and loss adjustment expenses		(304,672	)		(131,326	)		—			(435,998	)
Commission expenses		(61,949	)		(37,727	)		768			(98,908	)
Other operating expenses		(104,801	)		(27,896	)		—			(132,697	)
Other income (expense)		3,498			961			(768	)		3,691
Underwriting profit		11,197			8,254			—			19,451
Investment income		65,717			9,229			566			75,512
Net realized losses		533			(3,193	)		—			(2,660	)
Other operating expenses		—			—			26			26
Other income (expense)		—			—			2,974			2,974
Interest expense		—			—			(8,455	)		(8,455	)
Income (loss) before income tax expense (benefit)		77,447			14,290			(4,889	)		86,848
Income tax expense (benefit)		19,819			5,582			(1,711	)		23,690
Net income (loss)	$	57,628		$	8,708		$	(3,178	)	$	63,158
Loss and loss expenses ratio		63.6	%		64.3	%					63.8	%
Commission expense ratio		12.9	%		18.5	%					14.5	%
Other operating expenses ratio (1)		21.1	%		13.2	%					18.9	%
Combined ratio		97.6	%		96.0	%					97.2	%

(1) The Other operating expenses ratio includes Other income (expense).

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Twelve Months Ended
December 31, 2008

($ in thousands)

	Insurance			Lloyd’s
	Companies			Operations			Corporate			Total
Gross written premiums	$	762,190		$	322,732		$	—		$	1,084,922
Net written premiums		472,688			188,927			—			661,615
Net earned premiums		463,298			180,678			—			643,976
Net losses and loss adjustment expenses		(275,767	)		(117,364	)		—			(393,131	)
Commission expenses		(55,752	)		(34,033	)		—			(89,785	)
Other operating expenses		(92,297	)		(30,961	)		110			(123,148	)
Other income (expense)		2,145			(600	)		(110	)		1,435
Underwriting profit (loss)		41,627			(2,280	)		—			39,347
Investment income		63,544			11,655			1,355			76,554
Net realized gains (losses)		(37,822	)		(477	)		—			(38,299	)
Interest expense		—			—			(8,871	)		(8,871	)
Income (loss) before income tax expense (benefit)		67,349			8,898			(7,516	)		68,731
Income tax expense (benefit)		16,401			3,269			(2,631	)		17,039
Net income (loss)	$	50,948		$	5,629		$	(4,885	)	$	51,692
Loss and loss expenses ratio		59.5	%		65.0	%					61.0	%
Commission expense ratio		12.0	%		18.8	%					13.9	%
Other operating expenses ratio (1)		19.5	%		17.5	%					18.9	%
Combined ratio		91.0	%		101.3	%					93.8	%

(1) The Other operating expenses ratio includes Other income (expense).

News Release
Page 12

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results
($ in thousands)

	Three Months Ended December 31, 2009
	Net		Losses
	Earned		and LAE		Underwriting		Underwriting			Combined Ratio
	Premiums		Incurred		Expenses		Gain(Loss)			Loss			Expense			Total
Insurance Companies:
Marine	$	43,075	$	26,677	$	14,998	$	1,400			61.9	%		34.8	%		96.7	%
Property Casualty		57,283		43,444		20,474		(6,635	)		75.8	%		35.7	%		111.5	%
Professional Liability		19,446		19,717		6,903		(7,174	)		101.4	%		35.5	%		136.9	%
		119,804		89,838		42,375		(12,409	)		75.0	%		35.4	%		110.4	%
Lloyd’s Operations		57,474		37,594		19,075		805			65.4	%		33.2	%		98.6	%
Total	$	177,278	$	127,432	$	61,450	$	(11,604	)		71.9	%		34.6	%		106.5	%

	Three Months Ended December 31, 2008
	Net		Losses
	Earned		and LAE		Underwriting		Underwriting		Combined Ratio
	Premiums		Incurred		Expenses		Gain(Loss)		Loss			Expense			Total
Insurance Companies:
Marine	$	38,350	$	25,891	$	10,294	$	2,165		67.5	%		26.8	%		94.3	%
Property Casualty		68,582		33,027		21,559		13,996		48.2	%		31.4	%		79.6	%
Professional Liability		14,239		8,922		5,108		209		62.7	%		35.9	%		98.6	%
		121,171		67,840		36,961		16,370		56.0	%		30.5	%		86.5	%
Lloyd’s Operations		50,322		31,713		15,786		2,823		63.0	%		31.4	%		94.4	%
Total	$	171,493	$	99,553	$	52,747	$	19,193		58.1	%		30.8	%		88.9	%

	Amounts				Loss Ratio
	Dec. 31,		Dec. 31,		Dec. 31,			Dec. 31,
	2009		2008		2009			2008
Net Incurred Loss Activity
For the Three Months Ended:
Insurance Companies:
Loss and LAE payments	$	75,175	$	56,373		62.8	%		46.5	%
Change in reserves		14,663		11,467		12.2	%		9.5	%
Net incurred loss and LAE		89,838		67,840		75.0	%		56.0	%
Lloyd’s Operations:
Loss and LAE payments		24,130		25,714		42.0	%		51.1	%
Change in reserves		13,464		5,999		23.4	%		11.9	%
Net incurred loss and LAE		37,594		31,713		65.4	%		63.0	%
						��
Total
Loss and LAE payments		99,305		82,087		56.0	%		47.9	%
Change in reserves		28,127		17,466		15.9	%		10.2	%
Net incurred loss and LAE	$	127,432	$	99,553		71.9	%		58.1	%

	Amounts					Loss Ratio Impact
	Dec. 31,			Dec. 31,		Dec. 31,			Dec. 31,
	2009			2008		2009			2008
Impact of Prior Years Reserves
Favorable / (Unfavorable) Development
For the Three Months Ended:
Insurance Companies	$	(10,164	)	$	16,170		-8.5	%		13.3	%
Lloyd’s Operations		9			2,296		0.0	%		4.6	%
Total	$	(10,155	)	$	18,466		-5.7	%		10.8	%

News Release
Page 13

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results
($ in thousands)

	Twelve Months Ended December 31, 2009
	Net		Losses
	Earned		and LAE		Underwriting		Underwriting			Combined Ratio
	Premiums		Incurred		Expenses		Gain(Loss)			Loss			Expense			Total
Insurance Companies:
Marine	$	157,534	$	109,916	$	50,451	$	(2,833	)		69.8	%		32.0	%		101.8	%
Property Casualty		246,143		123,775		86,116		36,252			50.3	%		35.0	%		85.3	%
Professional Liability		75,444		70,981		26,685		(22,222	)		94.1	%		35.4	%		129.5	%
		479,121		304,672		163,252		11,197			63.6	%		34.0	%		97.6	%
Lloyd’s Operations		204,242		131,326		64,662		8,254			64.3	%		31.7	%		96.0	%
Total	$	683,363	$	435,998	$	227,914	$	19,451			63.8	%		33.4	%		97.2	%

	Twelve Months Ended December 31, 2008
	Net		Losses
	Earned		and LAE		Underwriting		Underwriting			Combined Ratio
	Premiums		Incurred		Expenses		Gain(Loss)			Loss			Expense			Total
Insurance Companies:
Marine	$	132,005	$	84,099	$	38,184	$	9,722			63.7	%		28.9	%		92.6	%
Property Casualty		273,977		158,457		87,310		28,210			57.8	%		31.9	%		89.7	%
Professional Liability		57,316		33,211		20,410		3,695			57.9	%		35.6	%		93.5	%
		463,298		275,767		145,904		41,627			59.5	%		31.5	%		91.0	%
Lloyd’s Operations		180,678		117,364		65,594		(2,280	)		65.0	%		36.3	%		101.3	%
Total	$	643,976	$	393,131	$	211,498	$	39,347			61.0	%		32.8	%		93.8	%

	Effect of Hurricanes Gustav and Ike on the Twelve Months Ended Dec. 31, 2008
Insurance Companies	$	(7,214	)	$	9,077	$	—	$	(16,291	)	8.7	%	1.4	%	10.1	%
Lloyd’s Operations		(4,964	)		8,092		—		(13,056	)	6.1	%	1.0	%	7.1	%
Total	$	(12,178	)	$	17,169	$	—	$	(29,347	)	3.7	%	0.6	%	4.3	%

	Amounts				Loss Ratio
	Dec. 31,		Dec. 31,		Dec. 31,			Dec. 31,
	2009		2008		2009			2008
Net Incurred Loss Activity
For the Twelve Months Ended:
Insurance Companies:
Loss and LAE payments	$	246,457	$	162,389		51.4	%		35.1	%
Change in reserves		58,215		113,378		12.2	%		24.4	%
Net incurred loss and LAE		304,672		275,767		63.6	%		59.5	%
Lloyd’s Operations:
Loss and LAE payments		76,478		78,175		37.4	%		43.3	%
Change in reserves		54,848		39,189		26.9	%		21.7	%
Net incurred loss and LAE		131,326		117,364		64.3	%		65.0	%
Total
Loss and LAE payments		322,935		240,564		47.3	%		37.3	%
Change in reserves		113,063		152,567		16.5	%		23.7	%
Net incurred loss and LAE	$	435,998	$	393,131		63.8	%		61.0	%

	Amounts				Loss Ratio Impact
	Dec. 31,		Dec. 31,		Dec. 31,			Dec. 31,
	2009		2008		2009			2008
Impact of Prior Years Reserves
Favorable / (Unfavorable) Development
For the Twelve Months Ended:
Insurance Companies	$	3,079	$	41,922		0.6	%		9.0	%
Lloyd’s Operations		5,862		8,824		2.9	%		4.9	%
Total	$	8,941	$	50,746		1.3	%		7.9	%

News Release
Page 14

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data
($ in thousands)

	Case		IBNR
Net Loss Reserves, December 31, 2009	Reserves		Reserves		Total
Insurance Companies:
Marine	$	113,604	$	100,042	$	213,646
Property Casualty		134,427		351,985		486,412
Professional Liability		38,410		68,807		107,217
Total		286,441		520,834		807,275
Lloyd’s Operations:
Marine		107,800		101,851		209,651
Property Casualty		27,148		25,175		52,323
Professional Liability		7,442		36,243		43,685
Total		142,390		163,269		305,659
Total Net Loss Reserves	$	428,831	$	684,103	$	1,112,934

	Case		IBNR
Net Loss Reserves, December 31, 2008	Reserves		Reserves		Total
Insurance Companies:
Marine	$	96,244	$	96,995	$	193,239
Property Casualty		115,810		358,305		474,115
Professional Liability		22,913		58,793		81,706
Total		234,967		514,093		749,060
Lloyd’s Operations:
Marine		99,233		78,293		177,526
Property Casualty		26,218		16,386		42,604
Professional Liability		5,822		24,859		30,681
Total		131,273		119,538		250,811
Total Net Loss Reserves	$	366,240	$	633,631	$	999,871

News Release
Page 15

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Investment Data
December 31, 2009
($ in thousands)

At December 31, 2009, the average quality of the investment portfolio as rated by S&P and Moody’s was AA/Aa with an average duration of 4.2 years. We do not own any collateralized debt obligations (CDO’s), collateralized loan obligations (CLO’s) or asset backed commercial paper.

At December 31, 2009, we owned two asset-backed securities approximating $0.1 million with subprime mortgage exposures. The securities have an effective maturity of 3.1 years. In addition, we owned a total of five residential mortgage obligations approximating $1.5 million classified as Alt-A which is a credit category between prime and subprime. They have an effective maturity of 5.6 years. Such subprime and Alt-A categories are as defined by S&P. We are receiving principal and/or interest payments on all these securities and believe such amounts are fully collectible.

The following table sets forth our cash and investments at December 31, 2009:

			Gross		Gross			Cost or		OTTI
	Fair		Unrealized		Unrealized			Amortized		Recognized
December 31, 2009	Value		Gains		(Losses)			Cost		in OCI
	($ in thousands)
Fixed maturities:
U.S. Government Treasury bonds, agency bonds and foreign government bonds	$	471,598	$	7,397	$	(597	)	$	464,798	$	—
States, municipalities and political subdivisions		676,699		25,044		(2,917	)		654,572		—
Mortgage- and asset-backed securities
Agency mortgage-backed securities		283,578		12,607		(98	)		271,069		—
Residential mortgage obligations		31,071		—		(7,246	)		38,317		(5,723	)
Asset-backed securities		16,469		612		(34	)		15,891		(23	)
Commercial mortgage-backed securities		100,393		594		(5,028	)		104,827		—
Subtotal		431,511		13,813		(12,406	)		430,104		(5,746	)
Corporate bonds		236,861		9,111		(759	)		228,509		—
Total fixed maturities		1,816,669		55,365		(16,679	)		1,777,983		(5,746	)
Equity securities — common stocks		62,610		15,244		(10	)		47,376		—
Cash		509		—		—			509		—
Short-term investments		176,799		—		—			176,799		—
Total	$	2,056,587	$	70,609	$	(16,689	)	$	2,002,667	$	(5,746	)

News Release
Page 16

The Navigators Group, Inc. and Subsidiaries
Investment Data
December 31, 2009
($ in thousands)

The following three tables set forth our agency mortgage-backed securities, residential mortgage obligations, and asset-backed securities 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, 2009:

			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
	Value		Gains		(Losses)			Cost
Agency mortgage-backed securities:
GNMA	$	44,351	$	1,300	$	(53	)	$	43,104
FNMA		173,785		8,716		(11	)		165,080
FHLMC		65,442		2,591		(34	)		62,885
Total	$	283,578	$	12,607	$	(98	)	$	271,069

			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
	Value		Gains		(Losses)			Cost
Residential mortgage obligations:
Prime	$	29,565	$	—	$	(6,836	)	$	36,401
Alt-A		1,506		—		(410	)		1,916
Subprime		—		—		—			—
Total	$	31,071	$	—	$	(7,246	)	$	38,317

			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
	Value		Gains		(Losses)			Cost
Asset-backed securities:
Prime	$	16,323	$	612	$	(10	)	$	15,721
Alt-A		—		—		—			—
Subprime		146		—		(24	)		170
Total	$	16,469	$	612	$	(34	)	$	15,891

Contact: Francis W. McDonnell
Senior Vice President and Chief Financial Officer
(914) 933-6270
fmcdonnell@navg.com
www.navg.com