Navigators (NAVG) 8-K Navigators Reports First Quarter 2015 Earnings

Exhibit 99.1

The Navigators Group, Inc.

CORPORATE NEWS

Navigators Reports First Quarter 2015 Earnings

Stamford, CT – May 7, 2015 — The Navigators Group, Inc. (NASDAQ:NAVG) reported net income of $25.9 million, or $1.77 per diluted share, for the three months ended March 31, 2015 compared to $28.0 million, or $1.94 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 first quarter 2014 net income per diluted share would have been $1.49.

Net operating earnings were $20.9 million, or $1.43 per diluted share, for the first quarter of 2015 compared to $20.9 million, or $1.45 per diluted share, for the comparable period in 2014.

Gross written premiums and net written premiums for the three months ended March 31, 2015 were $396.5 million and $289.0 million, respectively, a decrease of 6.2% and 7.3% from the comparable period in 2014, due to our decision to non-renew a $30 million crop reinsurance treaty.

The combined ratio for the three months ended March 31, 2015 was 92.3% compared to 92.2% for the comparable period in 2014.

Stan Galanski, President and Chief Executive Officer commented, “We are pleased to report a combined ratio of 92.3% for the first quarter of 2015, our ninth consecutive quarter of underwriting profit. Each of our three new underwriting segments – U.S. Insurance, International Insurance, and Global Reinsurance experienced profitable results in the quarter. We produced a 10.1% annualized return on equity which contributed to growth in book value of 2.6%, and we continue to achieve growth in our U.S. Casualty, International Marine, and International Management Liability and E&O divisions. Our new Continental European offices are off to a good start and we are developing additional property and casualty products both in the U.S. and in London.”

Stockholders’ equity was $1,053.6 million, or $73.21 per share, as of March 31, 2015 compared to $1,027.2 million, or $71.93 per share, as of December 31, 2014.

Net investment income for the three months ended March 31, 2015 was $16.3 million, a decrease of 2.1% from the comparable period in 2014. The annualized pre-tax investment yield, excluding net realized gains and losses, was 2.4% for the three months ended March 31, 2015, compared to 2.8% for the comparable period in 2014.

The Company’s investment portfolio mainly consists of fixed income securities with an average quality rating of “AA/Aa” as defined by Standard & Poor’s and Moody’s, respectively, and an average effective duration of 3.7 years as of March 31, 2015. As of March 31, 2015, net unrealized gains within our investment portfolio were $74.4 million, an increase of $3.0 million compared to December 31, 2014.

400 Atlantic Street	Stamford, CT 06901
TEL (203) 905-6090	FAX (203) 658-1821

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May 7, 2015

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There were $5.6 million of net realized gains for the three months ended March 31, 2015, compared to $0.8 million for the same period in 2014.

Other income for the three months ended March 31, 2015 was $2.2 million, primarily consisting of a net foreign exchange gain, compared to $10.4 million in the first quarter of 2014; $10 million of which is the one-time foreign exchange gain noted above.

During the first quarter of 2015, we realigned our reporting segments from Insurance Companies, Lloyd’s Operations and Corporate to U.S. Insurance, International Insurance, Global Reinsurance and Corporate. We reclassified our international business from our previously reported Lloyd’s Operations segment to the International Insurance segment. We also reclassified our non-Lloyd’s business written internationally (primarily business written by the U.K. Branch) into this segment and have excluded Assumed Reinsurance. Our new Global Reinsurance business segment was previously reported within our U.S. Insurance and Lloyd’s Operations segments as Assumed Reinsurance. Our U.S. Insurance segment now excludes the U.K. Branch and Assumed Reinsurance. Our Corporate segment now includes investment income (loss), interest income (loss), foreign exchange gain (loss) and income tax benefit (expense), which are not allocated to the underwriting segments.

The Company will hold a conference call on Friday, May 8, 2015 starting at 8:30 a.m. ET to discuss the 2015 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 (888-240-9373) and the international dial-in is (913) 312-0956. Participants may connect to the webcast at:

http://edge.media-server.com/m/p/7uazasdp

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.

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May 7, 2015

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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.

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

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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	2015			2014			Change
Gross written premiums	$	396,460		$	422,790			-6.2	%
Net written premiums		288,958			311,850			-7.3	%
Revenues:
Net earned premiums		236,132			225,272			4.8	%
Net investment income		16,253			16,610			-2.1	%
Net realized gains (losses)		5,596			833			NM
Other income		2,242			10,399			-78.4	%
Total revenues		260,223			253,114			2.8	%
Expenses:
Net losses and loss adjustment expenses		130,198			135,067			-3.6	%
Commission expenses		32,905			25,727			27.9	%
Other operating expenses		54,909			47,146			16.5	%
Interest expense		3,855			3,852			0.1	%
Total expenses		221,867			211,792			4.8	%
Income before income taxes		38,356			41,322			-7.2	%
Income tax expense (benefit)		12,427			13,354			-6.9	%
Net income (loss)	$	25,929		$	27,968			-7.3	%
Per Share Data
Net income per common share:
Basic	$	1.81		$	1.96			-7.7	%
Diluted	$	1.77		$	1.94			-8.8	%
Average common shares outstanding:
Basic		14,327,606			14,233,504
Diluted		14,637,837			14,408,416
Underwriting Ratios
Loss Ratio		55.1	%		60.0	%
Expense Ratio		37.2	%		32.2	%
Combined Ratio		92.3	%		92.2	%
Balance Sheet Data	Mar. 31, 2015			Dec. 31, 2014
Stockholders’ equity	$	1,053,603		$	1,027,224			2.6	%
Book value per share	$	73.21		$	71.93			1.8	%

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

($ in thousands, except share data)

	March 31, 2015			December 31, 2014
	(unaudited)
ASSETS
Investments and cash:
Fixed maturities, available-for-sale, at fair value (amortized cost: 2015, $2,294,763; 2014, $2,323,959)	$	2,345,225		$	2,365,934
Equity securities, available-for-sale, at fair value (cost: 2015, $133,968; 2014, $154,843)		159,044			184,295
Short-term investments, at fair value (amortized cost: 2015: $243,730; 2014: $179,527)		242,553			179,506
Cash		90,016			90,751
Total investments and cash		2,836,838			2,820,486
Premiums receivable		396,357			342,479
Prepaid reinsurance premiums		244,599			237,851
Reinsurance recoverable on paid losses		55,990			51,347
Reinsurance recoverable on unpaid losses and loss adjustment expenses		828,799			851,498
Deferred policy acquisition costs		86,221			79,452
Accrued investment income		14,685			14,791
Goodwill and other intangible assets		6,785			7,013
Current income tax receivable, net		5,869			14,549
Receivable for investments sold		19			326
Other assets		42,663			44,384
Total assets	$	4,518,825		$	4,464,176
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Reserves for losses and loss adjustment expenses	$	2,141,705		$	2,159,634
Unearned premiums		825,740			766,167
Reinsurance balances payable		153,980			152,774
Senior notes		263,474			263,440
Deferred income tax, net		2,325			1,467
Payable for investments purchased		15,392			134
Accounts payable and other liabilities		62,606			93,336
Total liabilities		3,465,222			3,436,952
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 17,903,198 shares for 2015 and 17,792,846 shares for 2014		1,789			1,778
Additional paid-in capital		346,338			347,022
Treasury stock, at cost (3,511,380 shares for 2015 and 2014)		(155,801	)		(155,801	)
Retained earnings		813,595			787,666
Accumulated other comprehensive income		47,682			46,559
Total stockholders’ equity		1,053,603			1,027,224
Total liabilities and stockholders’ equity	$	4,518,825		$	4,464,176

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

Three Months Ended

March 31, 2015

($ in thousands)

	U.S.			International			Global
	Insurance			Insurance			Reinsurance			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 loss adjustment expenses		(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 (expenses)		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 (expense)											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 loss adjustment expenses 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) The Corporate segment includes intercompany eliminations.

(2) The Other operating expense ratio includes Other income (expense).

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Segment Information

Three Months Ended

March 31, 2014

($ in thousands)

	U.S. Insurance			International Insurance			Global Reinsurance			Corporate (1)			Total
Gross written premiums	$	198,348		$	119,192		$	105,250		$	—		$	422,790
Ceded written premiums		(65,066	)		(42,582	)		(3,292	)		—			(110,940	)
Net written premiums		133,282			76,610			101,958			—			311,850
Net earned premiums		115,190			62,054			48,028			—			225,272
Net losses and loss adjustment expenses		(72,964	)		(31,220	)		(30,883	)		—			(135,067	)
Commission expenses		(9,509	)		(8,855	)		(7,872	)		509			(25,727	)
Other operating expenses		(27,993	)		(15,059	)		(4,094	)		—			(47,146	)
Other underwriting income (expenses)		513			6			145			(509	)		155
Underwriting profit (loss)	$	5,237		$	6,926		$	5,324		$	—		$	17,487
Net investment income											16,610			16,610
Net realized gains (losses)											833			833
Interest expense											(3,852	)		(3,852	)
Other income (expense)											10,244			10,244
Income before income taxes	$	5,237		$	6,926		$	5,324		$	23,835		$	41,322
Income tax (expense) benefit											(13,354	)		(13,354	)
Net income (loss)													$	27,968
Losses and loss adjustment expenses ratio		63.3	%		50.3	%		64.3	%					60.0	%
Commission expense ratio		8.3	%		14.3	%		16.4	%					11.4	%
Other operating expense ratio(2)		23.9	%		24.2	%		8.2	%					20.8	%
Combined ratio		95.5	%		88.8	%		88.9	%					92.2	%

(1) The Corporate segment includes intercompany eliminations.

(2) The Other operating expense ratio includes Other income (expense).

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Reportable Segment Results

($ in thousands)

	U.S. Insurance
	Q1 2015												Q1 2014												% Change
amounts in thousands	Marine			P&C			Professional Liability			Total			Marine			P&C			Professional Liability			Total			Total
Gross written premiums	$	40,835		$	134,146		$	24,346		$	199,327		$	43,025		$	125,119		$	30,204		$	198,348			0.5	%
Ceded written premiums		(16,286	)		(39,558	)		(12,886	)		(68,730	)		(9,170	)		(46,156	)		(9,740	)		(65,066	)		5.6	%
Net written premiums		24,549			94,588			11,460			130,597			33,855			78,963			20,464			133,282			-2.0	%
Net earned premiums		23,924			90,735			16,432			131,091			27,986			64,931			22,273			115,190			13.8	%
Net losses and LAE		(10,188	)		(58,047	)		(9,564	)		(77,799	)		(14,683	)		(44,349	)		(13,932	)		(72,964	)		6.6	%
Commission expenses		(4,032	)		(8,556	)		(1,757	)		(14,345	)		(2,547	)		(3,945	)		(3,017	)		(9,509	)		50.9	%
Other operating expenses		(6,973	)		(21,059	)		(5,656	)		(33,688	)		(5,689	)		(17,313	)		(4,991	)		(27,993	)		20.3	%
Other underwriting income (expenses)		151			44			1			196			201			266			46			513			-61.8	%
Underwriting profit (loss)	$	2,882		$	3,117		$	(544	)	$	5,455		$	5,268		$	(410	)	$	379		$	5,237			4.2	%
Losses and LAE ratio		42.6	%		64.0	%		58.2	%		59.3	%		52.5	%		68.3	%		62.6	%		63.3	%
Commission expense ratio		16.9	%		9.4	%		10.7	%		10.9	%		9.1	%		6.1	%		13.5	%		8.3	%
Other operating expense ratio (1)		28.5	%		23.2	%		34.4	%		25.6	%		19.6	%		26.2	%		22.2	%		23.9	%
Combined ratio		88.0	%		96.6	%		103.3	%		95.8	%		81.2	%		100.6	%		98.3	%		95.5	%

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

	Int’l Insurance
	Q1 2015												Q1 2014												% Change
amounts in thousands	Marine			P&C			Professional Liability			Total			Marine			P&C			Professional Liability			Total			Total
Gross written premiums	$	67,410		$	32,950		$	22,067		$	122,427		$	61,982		$	42,250		$	14,960		$	119,192			2.7	%
Ceded written premiums		(10,822	)		(16,129	)		(7,305	)		(34,256	)		(12,394	)		(24,464	)		(5,724	)		(42,582	)		-19.6	%
Net written premiums		56,588			16,821			14,762			88,171			49,588			17,786			9,236			76,610			15.1	%
Net earned premiums		37,792			16,034			11,699			65,525			38,044			16,441			7,569			62,054			5.6	%
Net losses and LAE		(19,511	)		(4,880	)		(5,300	)		(29,691	)		(19,697	)		(6,957	)		(4,566	)		(31,220	)		-4.9	%
Commission expenses		(9,190	)		(1,027	)		(1,196	)		(11,413	)		(9,987	)		1,191			(59	)		(8,855	)		28.9	%
Other operating expenses		(6,695	)		(5,984	)		(4,330	)		(17,009	)		(6,415	)		(5,280	)		(3,364	)		(15,059	)		13.0	%
Other underwriting income (expenses)		—			—			—			—			6			—			—			6			NM
Underwriting profit (loss)	$	2,396		$	4,143		$	873		$	7,412		$	1,951		$	5,395		$	(420	)	$	6,926			7.0	%
Losses and LAE ratio		51.6	%		30.4	%		45.3	%		45.3	%		51.8	%		42.3	%		60.3	%		50.3	%
Commission expense ratio		24.4	%		6.4	%		10.2	%		17.4	%		26.4	%		-7.2	%		0.8	%		14.3	%
Other operating expense ratio (1)		17.8	%		37.4	%		37.1	%		26.0	%		16.8	%		32.1	%		44.5	%		24.2	%
Combined ratio		93.8	%		74.2	%		92.6	%		88.7	%		95.0	%		67.2	%		105.6	%		88.8	%

NM - Percentage change not meaningful

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

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Net Incurred Loss Activity

($ in thousands)

	Amounts						Loss Ratio
Net Incurred Loss Activity For the Three Months Ended:	Mar. 31, 2015			Mar. 31, 2014			Mar. 31, 2015			Mar. 31, 2014
US Insurance:
Loss and LAE payments	$	62,734		$	49,655			47.8	%		43.1	%
Change in reserves		15,065			23,309			11.5	%		20.2	%
Net incurred loss and LAE		77,799			72,964			59.3	%		63.3	%
International Insurance:
Loss and LAE payments		35,537			31,708			54.2	%		51.1	%
Change in reserves		(5,846	)		(488	)		-8.9	%		-0.8	%
Net incurred loss and LAE		29,691			31,220			45.3	%		50.3	%
Global Reinsurance:
Loss and LAE payments		21,212			19,291			53.7	%		40.2	%
Change in reserves		1,496			11,592			3.8	%		24.1	%
Net incurred loss and LAE		22,708			30,883			57.5	%		64.3	%
Total
Loss and LAE payments		119,483			100,654			50.6	%		44.7	%
Change in reserves		10,715			34,413			4.5	%		15.3	%
Net incurred loss and LAE	$	130,198		$	135,067			55.1	%		60.0	%
Impact of Prior Years Reserves	Amounts						Loss Ratio Impact
Favorable / (Unfavorable) Development For the Three Months Ended:	Mar. 31, 2015			Mar. 31, 2014			Mar. 31, 2015			Mar. 31, 2014
US Insurance	$	6,409		$	(437	)		2.7	%		-0.3	%
International Insurance		6,191			573			2.6	%		0.3	%
Global Reinsurance		(1	)		(98	)		0.0	%		0.0	%
Total	$	12,599		$	38			5.3	%		0.0	%

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Net Loss Data

($ in thousands)

Net Loss Reserves, March 31, 2015:	Case Reserves		IBNR Reserves		Total
US Insurance:
Marine	$	75,586	$	62,905	$	138,491
Property Casualty		145,540		419,345		564,885
Professional Liability		47,533		81,093		128,626
Total US Insurance		268,659		563,343		832,002
International Insurance:
Marine		172,408		69,630		242,038
Property Casualty		35,320		22,257		57,577
Professional Liability		7,477		51,229		58,706
Total International Insurance		215,205		143,116		358,321
Global Reinsurance		30,371		92,211		122,582
Total Net Loss Reserves	$	514,235	$	798,670	$	1,312,905

Net Loss Reserves, December 31, 2014	Case Reserves		IBNR 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

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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Investment Data

March 31, 2015

As of March 31, 2015, the average quality of the investment portfolio as rated by S&P and Moody’s was AA/Aa 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 cash and investments as of March 31, 2015:

March 31, 2015	Fair Value		Gross Unrealized Gains		Gross Unrealized (Losses)			Cost or Amortized Cost
	($ in thousands)
Fixed maturities:
U.S.Treasury bonds, agency bonds and foreign government bonds	$	310,389	$	4,858	$	(8,732	)	$	314,263
States, municipalities and political subdivisions		547,664		19,989		(321	)		527,996
Mortgage- and asset-backed securities:
Agency mortgage-backed securities		364,468		9,975		(589	)		355,082
Residential mortgage obligations		33,116		1,079		(117	)		32,154
Asset-backed securities		216,475		814		(554	)		216,215
Commercial mortgage-backed securities		231,703		7,789		(28	)		223,942
Subtotal		845,762		19,657		(1,288	)		827,393
Corporate bonds		641,410		17,231		(932	)		625,111
Total fixed maturities		2,345,225		61,735		(11,273	)		2,294,763
Equity securities		159,044		26,113		(1,037	)		133,968
Short-term investments		242,553		20		(1,197	)		243,730
Total	$	2,746,822	$	87,868	$	(13,507	)	$	2,672,461