Exhibit 99.1
The Navigators Group, Inc.
CORPORATE NEWS
Navigators Reports Record Net Income in Second Quarter 2018
Stamford, CT – August 8, 2018 -- The Navigators Group, Inc. (NASDAQ:NAVG) reported Net Income of $32.1 million, or $1.07 per diluted share, for the three months ended June 30, 2018 compared to $20.5 million, or $0.69 per diluted share, for the same period in 2017. Net Operating Earnings1 were $27.6 million, or $0.92 per diluted share, for the three months ended June 30, 2018 compared to $19.7 million, or $0.66 per diluted share, for the same period in 2017.
Gross Written Premiums and Net Written Premiums for the three months ended June 30, 2018 were $497.2 million and $379.3 million, respectively, increasing 10.0% and 13.8%, respectively, from the comparable period in 2017. The Combined Ratio for the three months ended June 30, 2018 was 96.0%, compared to 97.3% for the same period in 2017.
Net Investment Income for the three months ended June 30, 2018 was $24.6 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 2.8% for the three months ended June 30, 2018 and 2017.
Other Income (Loss) for the three months ended June 30, 2018 was $2.6 million, compared to $(0.4) million for the same period in 2017. Other Income (Loss) primarily consists of realized and unrealized foreign exchange gains and losses.
Stan Galanski, President and Chief Executive Officer, commented, “We are very pleased with our financial results and operating performance for the second quarter. We continued to achieve profitable underwriting results and double digit premium growth, led by our U.S. Insurance and GlobalRe segments. While the market remains competitive, we are encouraged by both positive renewal price movement for most of our specialty product lines during the quarter as well as by the number of insurers exiting unprofitable product lines, especially in the London market. Our investments continued to perform well, with Net Investment Income up 10.5% for the quarter and six months. During the quarter we completed the acquisition of Belgium based ASCO and BDM, a key to our future growth in the European Union.”
On June 7, 2018, the Company acquired 100% ownership interest in Bracht, Deckers & Mackelbert NV (“BDM”), a specialty underwriting agency, and its affiliated insurance company, Assurances Continentales – Continentale Verzekeringen NV (“ASCO”). The acquisition of BDM/ASCO was undertaken as part of the Company’s strategy of expanding to more brokers and insureds across Europe and reinforces the Company’s presence in the European Union’s single market. We anticipate that this will enable the Company to better serve its European clients after Brexit and will also provide an opportunity for BDM and ASCO to reach a wider European audience.
For the six months ended June 30, 2018 the Company reported Net Income of $63.0 million, or $2.09 per diluted share compared to $41.6 million, or $1.39 per diluted share, for the same period in 2017. Net Operating Earnings1 were $60.5 million, or $2.01 per diluted share, for the six months ended June 30, 2018 compared to $40.1 million, or $1.34 per diluted share, for the same period in 2017.
Gross Written Premiums and Net Written Premiums for the six months ended June 30, 2018 were $992.5 million and $772.6 million, respectively, increasing 10.0% and 15.2%, respectively, from the comparable period in 2017. The Combined Ratio for the six months ended June 30, 2018 was 95.0%, compared to 96.9% for the same period in 2017.
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.
News Release
August 8, 2018
Page 2
Net Investment Income for the six months ended June 30, 2018 was $48.3 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 2.8% for the six months ended June 30, 2018 compared to 2.7% for the same period in 2017.
Other Income for the six months ended June 30, 2018 was $2.5 million, compared to $0.7 million for the same period in 2017. Other Income for the six months ended June 30, 2018 included revenue from the sale of renewal rights for the Company’s fixed-premium protection and indemnity (“P&I”) business as well as net realized and unrealized foreign exchange gains. Other Income for the same period in 2017 primarily consisted of net realized and unrealized foreign exchange gains.
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 June 30, 2018. As of June 30, 2018, Net Unrealized Losses within the Available-For-Sale investment portfolio recognized in Accumulated Other Comprehensive Income were $30.1 million, a change of $71.6 million, compared to Net Unrealized Gains of $41.5 million as of December 31, 2017. Included in this change 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 $3.1 million of Total Net Realized and Unrealized Gains within the Results of Operations for the three months ended June 30, 2018, compared to $1.7 million for the same period in 2017. The Net Realized and Unrealized Gains within the Results of Operations for the three months ended June 30, 2018 included $1.3 million of Net Unrealized Gains on Equity Securities. For the six months ended June 30, 2018 the Company recognized $1.1 million of Total Net Realized and Unrealized Gains within the Results of Operations, compared to $1.7 million for the same period in 2017. The Net Realized and Unrealized Gains within the Results of Operations for the six months ended June 30, 2018 included $1.9 million of Net Unrealized Losses on Equity Securities.
The effective tax rate was 19.3% and 18.1% for the three and six months ended June 30, 2018, respectively, which compares to 25.4% and 26.0% for the same periods in 2017, with the decrease being primarily a result of changes related to 2017 tax reform.
Stockholders’ Equity was $1.2 billion, or $41.49 per share, as of June 30, 2018 compared to $40.96 per share, as of March 31, 2018, and $41.55 per share, as of December 31, 2017.
During the three months ended June 30, 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 Thursday, August 9, 2018 starting at 8:30 a.m. (ET) to discuss the 2018 second 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/spw5hg2q
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.
Contact: | | Ciro M. DeFalco |
| | Executive Vice President and Chief Financial Officer |
| | (203) 905-6343 |
| | cdefalco@navg.com |
| | www.navg.com |
News Release
August 8, 2018
Page 3
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)
| | Three Months Ended | | | | | | | Six Months Ended | | | | | |
amounts in thousands, except per share amounts | | June 30, | | | | | | | June 30, | | | | | |
Results of Operations | | 2018 | | | 2017 | | | Change | | | 2018 | | | 2017 | | | Change | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Gross Written Premiums | | $ | 497,236 | | | $ | 452,179 | | | | 10.0 | % | | $ | 992,460 | | | $ | 902,484 | | | | 10.0 | % |
Net Written Premiums | | | 379,292 | | | | 333,282 | | | | 13.8 | % | | | 772,554 | | | | 670,445 | | | | 15.2 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Revenues: | | | | | | | | | | | | | | | | | | | | | | | | |
Net Earned Premiums | | $ | 331,015 | | | $ | 293,835 | | | | 12.7 | % | | $ | 653,642 | | | $ | 579,966 | | | | 12.7 | % |
Net Investment Income | | | 24,601 | | | | 22,265 | | | | 10.5 | % | | | 48,303 | | | | 43,713 | | | | 10.5 | % |
Net Realized and Unrealized Gains (Losses): | | | | | | | | | | | | | | | | | | | | | | | | |
Total Other-Than-Temporary Impairment Losses | | | (18 | ) | | | 29 | | | NM | | | | (55 | ) | | | (1,048 | ) | | | (94.7 | %) |
Portion of Loss Recognized in Other Comprehensive Income (Before Tax) | | | 18 | | | | (29 | ) | | NM | | | | 55 | | | | (45 | ) | | NM | |
Net Other-Than-Temporary Impairment Losses Recognized In Earnings | | | — | | | | — | | | NM | | | | — | | | | (1,093 | ) | | NM | |
Net Realized Gains on Investments Sold | | | 1,787 | | | | 1,694 | | | | 5.5 | % | | | 2,956 | | | | 2,743 | | | | 7.7 | % |
Net Unrealized Gains (Losses) on Equity Securities at Fair Value | | | 1,329 | | | | — | | | NM | | | | (1,852 | ) | | | — | | | NM | |
Total Net Realized and Unrealized Gains | | | 3,116 | | | | 1,694 | | | | 83.9 | % | | | 1,104 | | | | 1,650 | | | | (33.1 | %) |
Other Income (Loss) | | | 2,628 | | | | (411 | ) | | NM | | | | 2,511 | | | | 657 | | | NM | |
Total Revenues | | $ | 361,360 | | | $ | 317,383 | | | | 13.9 | % | | $ | 705,560 | | | $ | 625,986 | | | | 12.7 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
Net Losses and Loss Adjustment Expenses | | $ | 196,333 | | | $ | 177,110 | | | | 10.9 | % | | $ | 382,478 | | | $ | 346,710 | | | | 10.3 | % |
Commission Expenses | | | 53,193 | | | | 48,173 | | | | 10.4 | % | | | 107,345 | | | | 96,017 | | | | 11.8 | % |
Other Operating Expenses | | | 68,182 | | | | 60,766 | | | | 12.2 | % | | | 131,108 | | | | 119,304 | | | | 9.9 | % |
Interest Expense | | | 3,864 | | | | 3,861 | | | | 0.1 | % | | | 7,728 | | | | 7,722 | | | | 0.1 | % |
Total Expenses | | $ | 321,572 | | | $ | 289,910 | | | | 10.9 | % | | $ | 628,659 | | | $ | 569,753 | | | | 10.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income Before Income Taxes | | $ | 39,788 | | | $ | 27,473 | | | | 44.8 | % | | $ | 76,901 | | | $ | 56,233 | | | | 36.8 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income Tax Expense | | | 7,684 | | | | 6,971 | | | | 10.2 | % | | | 13,919 | | | | 14,621 | | | | (4.8 | %) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net Income | | $ | 32,104 | | | $ | 20,502 | | | | 56.6 | % | | $ | 62,982 | | | $ | 41,612 | | | | 51.4 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Per Share Data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net Income Per Common Share: | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | $ | 1.08 | | | $ | 0.70 | | | | 55.2 | % | | $ | 2.12 | | | $ | 1.42 | | | | 49.9 | % |
Diluted | | $ | 1.07 | | | $ | 0.69 | | | | 55.6 | % | | $ | 2.09 | | | $ | 1.39 | | | | 50.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Average Common Shares Outstanding: | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | 29,733 | | | | 29,470 | | | | | | | | 29,664 | | | | 29,377 | | | | | |
Diluted | | | 30,103 | | | | 29,918 | | | | | | | | 30,143 | | | | 29,897 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Underwriting Ratios | | | | | | | | | | | | | | | | | | | | | | | | |
Loss Ratio | | | 59.3 | % | | | 60.3 | % | | | | | | | 58.5 | % | | | 59.8 | % | | | | |
Expense Ratio | | | 36.7 | % | | | 37.0 | % | | | | | | | 36.5 | % | | | 37.1 | % | | | | |
Combined Ratio | | | 96.0 | % | | | 97.3 | % | | | | | | | 95.0 | % | | | 96.9 | % | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Balance Sheet Data | | June 30, | | | March 31, | | | | | | | June 30, | | | December 31, | | | | | |
| | 2018 | | | 2018 | | | | | | | 2018 | | | 2017 | | | | | |
Stockholders' Equity | | $ | 1,234,084 | | | $ | 1,216,952 | | | | 1.4 | % | | $ | 1,234,084 | | | $ | 1,225,965 | | | | 0.7 | % |
Book Value per Share | | $ | 41.49 | | | $ | 40.96 | | | | 1.3 | % | | $ | 41.49 | | | $ | 41.55 | | | | (0.1 | %) |
NM - Percentage change not meaningful.
News Release
August 8, 2018
Page 4
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 June 30, 2018 | | | Three Months Ended June 30, 2017 | | | % Change | |
amounts in thousands, except per share amounts | | Pre-Tax | | | Tax (1) | | | After-Tax | | | Pre-Tax | | | Tax (1) | | | After-Tax | | | QTD | |
Net Income | | $ | 39,788 | | | $ | (7,684 | ) | | $ | 32,104 | | | $ | 27,473 | | | $ | (6,971 | ) | | $ | 20,502 | | | | 56.6 | % |
Adjustments to Net Income: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Net Realized and Unrealized Losses | | | (3,116 | ) | | | 654 | | | | (2,462 | ) | | | (1,694 | ) | | | 593 | | | | (1,101 | ) | | | 123.7 | % |
FX Losses (Gains) | | | (2,586 | ) | | | 543 | | | | (2,043 | ) | | | 463 | | | | (162 | ) | | | 301 | | | NM | |
Net Operating Earnings | | $ | 34,086 | | | $ | (6,487 | ) | | $ | 27,599 | | | $ | 26,242 | | | $ | (6,540 | ) | | $ | 19,702 | | | | 40.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Average Common Shares Outstanding: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | | | | | | | | | 29,733 | | | | | | | | | | | | 29,470 | | | | | |
Diluted | | | | | | | | | | | 30,103 | | | | | | | | | | | | 29,918 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Operating Earnings per Common Share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | | | | | | | | $ | 0.93 | | | | | | | | | | | $ | 0.67 | | | | | |
Diluted | | | | | | | | | | $ | 0.92 | | | | | | | | | | | $ | 0.66 | | | | | |
(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.
| | Six Months Ended June 30, 2018 | | | Six Months Ended June 30, 2017 | | | % Change | |
amounts in thousands, except per share amounts | | Pre-Tax | | | Tax (1) | | | After-Tax | | | Pre-Tax | | | Tax (1) | | | After-Tax | | | YTD | |
Net Income | | $ | 76,901 | | | $ | (13,919 | ) | | $ | 62,982 | | | $ | 56,233 | | | $ | (14,621 | ) | | $ | 41,612 | | | | 51.4 | % |
Adjustments to Net Income: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Net Realized and Unrealized Losses | | | (1,104 | ) | | | 232 | | | | (872 | ) | | | (1,650 | ) | | | 578 | | | | (1,072 | ) | | | (18.6 | %) |
FX Losses (Gains) | | | (1,064 | ) | | | 223 | | | | (841 | ) | | | (660 | ) | | | 231 | | | | (429 | ) | | | 96.1 | % |
Net Gain on Disposition of Product Line | | | (948 | ) | | | 199 | | | | (749 | ) | | | — | | | | — | | | | — | | | NM | |
Net Operating Earnings | | $ | 73,785 | | | $ | (13,265 | ) | | $ | 60,520 | | | $ | 53,923 | | | $ | (13,812 | ) | | $ | 40,111 | | | | 50.9 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Average Common Shares Outstanding: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | | | | | | | | | 29,664 | | | | | | | | | | | | 29,377 | | | | | |
Diluted | | | | | | | | | | | 30,143 | | | | | | | | | | | | 29,897 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Operating Earnings per Common Share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | | | | | | | | $ | 2.04 | | | | | | | | | | | $ | 1.37 | | | | | |
Diluted | | | | | | | | | | $ | 2.01 | | | | | | | | | | | $ | 1.34 | | | | | |
(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.
News Release
August 8, 2018
Page 5
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| | | | | | | | |
| | June 30, | | | 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: $2,991,629; 2017: $3,027,408) | | $ | 2,961,541 | | | $ | 3,057,054 | |
Equity Securities, at fair value (cost: 2018: $317,497; 2017: $224,159) | | | 327,466 | | | | 235,981 | |
Other Invested Assets | | | 38,372 | | | | 30,488 | |
Short-Term Investments, available-for-sale, at fair value (amortized cost: 2018: $6,368; 2017: $6,477) | | | 6,368 | | | | 6,480 | |
Total Investments | | $ | 3,333,747 | | | $ | 3,330,003 | |
Cash and Cash Equivalents | | | 175,834 | | | | 102,735 | |
Restricted Cash and Cash Equivalents | | | 47,522 | | | | 56,229 | |
Premiums Receivable | | | 455,742 | | | | 351,393 | |
Prepaid Reinsurance Premiums | | | 239,660 | | | | 228,569 | |
Reinsurance Recoverable on Paid Losses | | | 94,503 | | | | 72,494 | |
Reinsurance Recoverable on Unpaid Losses and Loss Adjustment Expenses | | | 799,084 | | | | 809,765 | |
Deferred Policy Acquisition Costs | | | 157,153 | | | | 135,249 | |
Accrued Investment Income | | | 20,276 | | | | 19,480 | |
Goodwill and Other Intangible Assets | | | 28,272 | | | | 6,596 | |
Current Income Tax Receivable, Net | | | 21,395 | | | | 16,667 | |
Deferred Income Tax, Net | | | 24,552 | | | | 22,271 | |
Other Assets | | | 91,205 | | | | 73,171 | |
Total Assets | | $ | 5,488,945 | | | $ | 5,224,622 | |
| | | | | | | | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
Liabilities: | | | | | | | | |
Reserves for Losses and Loss Adjustment Expenses | | $ | 2,574,116 | | | $ | 2,515,145 | |
Unearned Premiums | | | 1,125,731 | | | | 987,681 | |
Reinsurance Balances Payable | | | 132,285 | | | | 136,192 | |
Senior Notes | | | 263,967 | | | | 263,885 | |
Payable for Investments Purchased | | | 45,800 | | | | — | |
Accounts Payable and Other Liabilities | | | 112,962 | | | | 95,754 | |
Total Liabilities | | $ | 4,254,861 | | | $ | 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 36,764 shares for 2018 and 36,530 shares for 2017) | | | 3,673 | | | | 3,650 | |
Additional Paid-In Capital | | | 376,705 | | | | 376,868 | |
Treasury Stock, at cost (7,023 shares for 2018 and 2017) | | | (155,801 | ) | | | (155,801 | ) |
Retained Earnings | | | 1,045,131 | | | | 981,380 | |
Accumulated Other Comprehensive Income | | | (35,624 | ) | | | 19,868 | |
Total Stockholders' Equity | | $ | 1,234,084 | | | $ | 1,225,965 | |
Total Liabilities and Stockholders' Equity | | $ | 5,488,945 | | | $ | 5,224,622 | |
News Release
August 8, 2018
Page 6
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
(Unaudited)
| | Three Months Ended June 30, 2018 | |
| | U.S. | | | Int'l | | | | | | | | | | | | | |
amounts in thousands | | Insurance | | | Insurance | | | GlobalRe | | | Corporate (1) | | | Total | |
Gross Written Premiums | | $ | 288,478 | | | $ | 132,523 | | | $ | 76,235 | | | $ | — | | | $ | 497,236 | |
Ceded Written Premiums | | | (76,144 | ) | | | (39,882 | ) | | | (1,918 | ) | | | — | | | | (117,944 | ) |
Net Written Premiums | | | 212,334 | | | | 92,641 | | | | 74,317 | | | | — | | | | 379,292 | |
| | | | | | | | | | | | | | | | | | | | |
Net Earned Premiums | | $ | 179,746 | | | $ | 92,071 | | | $ | 59,198 | | | $ | — | | | $ | 331,015 | |
Net Losses and LAE | | | (111,885 | ) | | | (52,304 | ) | | | (32,144 | ) | | | — | | | | (196,333 | ) |
Commission Expenses | | | (20,382 | ) | | | (19,863 | ) | | | (13,148 | ) | | | 200 | | | | (53,193 | ) |
Other Operating Expenses | | | (38,447 | ) | | | (23,299 | ) | | | (6,436 | ) | | | — | | | | (68,182 | ) |
Other Underwriting Income (Expense) | | | 71 | | | | — | | | | 136 | | | | (200 | ) | | | 7 | |
| | | | | | | | | | | | | | | | | | | | |
Underwriting Profit (Loss) | | $ | 9,103 | | | $ | (3,395 | ) | | $ | 7,606 | | | $ | — | | | $ | 13,314 | |
| | | | | | | | | | | | | | | | | | | | |
Net Investment Income | | | | | | | | | | | | | | | 24,601 | | | | 24,601 | |
Total Net Realized and Unrealized Gains | | | | | | | | | | | | | | | 3,116 | | | | 3,116 | |
Interest Expense | | | | | | | | | | | | | | | (3,864 | ) | | | (3,864 | ) |
Other Income | | | | | | | | | | | | | | | 2,621 | | | | 2,621 | |
Income (Loss) Before Income Taxes | | $ | 9,103 | | | $ | (3,395 | ) | | $ | 7,606 | | | $ | 26,474 | | | $ | 39,788 | |
Income Tax Expense | | | | | | | | | | | | | | | (7,684 | ) | | | (7,684 | ) |
Net Income | | | | | | | | | | | | | | | | | | $ | 32,104 | |
| | | | | | | | | | | | | | | | | | | | |
Losses and LAE Ratio | | | 62.2 | % | | | 56.8 | % | | | 54.3 | % | | | | | | | 59.3 | % |
Commission Expense Ratio | | | 11.3 | % | | | 21.6 | % | | | 22.2 | % | | | | | | | 16.1 | % |
Other Operating Expense Ratio (2) | | | 21.4 | % | | | 25.3 | % | | | 10.7 | % | | | | | | | 20.6 | % |
Combined Ratio | | | 94.9 | % | | | 103.7 | % | | | 87.2 | % | | | | | | | 96.0 | % |
(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).
News Release
August 8, 2018
Page 7
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
(Unaudited)
| | Three Months Ended June 30, 2017 | |
| | U.S. | | | Int'l | | | | | | | | | | | | | |
amounts in thousands | | Insurance | | | Insurance | | | GlobalRe | | | Corporate (1) | | | Total | |
Gross Written Premiums | | $ | 257,186 | | | $ | 131,193 | | | $ | 63,800 | | | $ | — | | | $ | 452,179 | |
Ceded Written Premiums | | | (73,857 | ) | | | (43,809 | ) | | | (1,231 | ) | | | — | | | | (118,897 | ) |
Net Written Premiums | | | 183,329 | | | | 87,384 | | | | 62,569 | | | | — | | | | 333,282 | |
| | | | | | | | | | | | | | | | | | | | |
Net Earned Premiums | | $ | 167,087 | | | $ | 82,100 | | | $ | 44,648 | | | $ | — | | | $ | 293,835 | |
Net Losses and LAE | | | (105,270 | ) | | | (44,095 | ) | | | (27,745 | ) | | | — | | | | (177,110 | ) |
Commission Expenses | | | (20,460 | ) | | | (19,001 | ) | | | (8,970 | ) | | | 258 | | | | (48,173 | ) |
Other Operating Expenses | | | (33,140 | ) | | | (22,506 | ) | | | (5,120 | ) | | | — | | | | (60,766 | ) |
Other Underwriting Income (Expense) | | | 100 | | | | — | | | | 169 | | | | (258 | ) | | | 11 | |
| | | | | | | | | | | | | | | | | | | | |
Underwriting Profit (Loss) | | $ | 8,317 | | | $ | (3,502 | ) | | $ | 2,982 | | | $ | — | | | $ | 7,797 | |
| | | | | | | | | | | | | | | | | | | | |
Net Investment Income | | | | | | | | | | | | | | | 22,265 | | | | 22,265 | |
Total Net Realized and Unrealized Gains | | | | | | | | | | | | | | | 1,694 | | | | 1,694 | |
Interest Expense | | | | | | | | | | | | | | | (3,861 | ) | | | (3,861 | ) |
Other Loss | | | | | | | | | | | | | | | (422 | ) | | | (422 | ) |
Income (Loss) Before Income Taxes | | $ | 8,317 | | | $ | (3,502 | ) | | $ | 2,982 | | | $ | 19,676 | | | $ | 27,473 | |
Income Tax Expense | | | | | | | | | | | | | | | (6,971 | ) | | | (6,971 | ) |
Net Income | | | | | | | | | | | | | | | | | | $ | 20,502 | |
| | | | | | | | | | | | | | | | | | | | |
Losses and LAE Ratio | | | 63.0 | % | | | 53.7 | % | | | 62.1 | % | | | | | | | 60.3 | % |
Commission Expense Ratio | | | 12.2 | % | | | 23.1 | % | | | 20.1 | % | | | | | | | 16.4 | % |
Other Operating Expense Ratio (2) | | | 19.8 | % | | | 27.5 | % | | | 11.1 | % | | | | | | | 20.6 | % |
Combined Ratio | | | 95.0 | % | | | 104.3 | % | | | 93.3 | % | | | | | | | 97.3 | % |
(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).
News Release
August 8, 2018
Page 8
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
(Unaudited)
| | Six Months Ended June 30, 2018 | |
| | U.S. | | | Int'l | | | | | | | | | | | | | |
amounts in thousands | | Insurance | | | Insurance | | | GlobalRe | | | Corporate (1) | | | Total | |
Gross Written Premiums | | $ | 528,406 | | | $ | 260,395 | | | $ | 203,659 | | | $ | — | | | $ | 992,460 | |
Ceded Written Premiums | | | (142,725 | ) | | | (68,770 | ) | | | (8,411 | ) | | | — | | | | (219,906 | ) |
Net Written Premiums | | | 385,681 | | | | 191,625 | | | | 195,248 | | | | — | | | | 772,554 | |
| | | | | | | | | | | | | | | | | | | | |
Net Earned Premiums | | $ | 352,659 | | | $ | 185,281 | | | $ | 115,702 | | | $ | — | | | $ | 653,642 | |
Net Losses and LAE | | | (222,307 | ) | | | (98,147 | ) | | | (62,024 | ) | | | — | | | | (382,478 | ) |
Commission Expenses | | | (41,243 | ) | | | (39,619 | ) | | | (26,916 | ) | | | 433 | | | | (107,345 | ) |
Other Operating Expenses | | | (75,438 | ) | | | (43,829 | ) | | | (11,841 | ) | | | — | | | | (131,108 | ) |
Other Underwriting Income (Expense) | | | 169 | | | | — | | | | 274 | | | | (433 | ) | | | 10 | |
| | | | | | | | | | | | | | | | | | | | |
Underwriting Profit | | $ | 13,840 | | | $ | 3,686 | | | $ | 15,195 | | | $ | — | | | $ | 32,721 | |
| | | | | | | | | | | | | | | | | | | | |
Net Investment Income | | | | | | | | | | | | | | | 48,303 | | | | 48,303 | |
Total Net Realized and Unrealized Gains | | | | | | | | | | | | | | | 1,104 | | | | 1,104 | |
Interest Expense | | | | | | | | | | | | | | | (7,728 | ) | | | (7,728 | ) |
Other Income | | | | | | | | | | | | | | | 2,501 | | | | 2,501 | |
Income Before Income Taxes | | $ | 13,840 | | | $ | 3,686 | | | $ | 15,195 | | | $ | 44,179 | | | $ | 76,901 | |
Income Tax Expense | | | | | | | | | | | | | | | (13,919 | ) | | | (13,919 | ) |
Net Income | | | | | | | | | | | | | | | | | | $ | 62,982 | |
| | | | | | | | | | | | | | | | | | | | |
Losses and LAE Ratio | | | 63.0 | % | | | 53.0 | % | | | 53.6 | % | | | | | | | 58.5 | % |
Commission Expense Ratio | | | 11.7 | % | | | 21.4 | % | | | 23.3 | % | | | | | | | 16.4 | % |
Other Operating Expense Ratio (2) | | | 21.4 | % | | | 23.6 | % | | | 10.0 | % | | | | | | | 20.1 | % |
Combined Ratio | | | 96.1 | % | | | 98.0 | % | | | 86.9 | % | | | | | | | 95.0 | % |
(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).
News Release
August 8, 2018
Page 9
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
(Unaudited)
| | Six Months Ended June 30, 2017 | |
| | U.S. | | | Int'l | | | | | | | | | | | | | |
amounts in thousands | | Insurance | | | Insurance | | | GlobalRe | | | Corporate (1) | | | Total | |
Gross Written Premiums | | $ | 494,791 | | | $ | 273,053 | | | $ | 134,640 | | | $ | — | | | $ | 902,484 | |
Ceded Written Premiums | | | (135,344 | ) | | | (90,402 | ) | | | (6,293 | ) | | | — | | | | (232,039 | ) |
Net Written Premiums | | | 359,447 | | | | 182,651 | | | | 128,347 | | | | — | | | | 670,445 | |
| | | | | | | | | | | | | | | | | | | | |
Net Earned Premiums | | $ | 331,091 | | | $ | 166,186 | | | $ | 82,689 | | | $ | — | | | $ | 579,966 | |
Net Losses and LAE | | | (204,096 | ) | | | (94,800 | ) | | | (47,814 | ) | | | — | | | | (346,710 | ) |
Commission Expenses | | | (40,844 | ) | | | (38,234 | ) | | | (17,462 | ) | | | 523 | | | | (96,017 | ) |
Other Operating Expenses | | | (66,612 | ) | | | (42,299 | ) | | | (10,393 | ) | | | — | | | | (119,304 | ) |
Other Underwriting Income (Expense) | | | 210 | | | | — | | | | 345 | | | | (523 | ) | | | 32 | |
| | | | | | | | | | | | | | | | | | | | |
Underwriting Profit (Loss) | | $ | 19,749 | | | $ | (9,147 | ) | | $ | 7,365 | | | $ | — | | | $ | 17,967 | |
| | | | | | | | | | | | | | | | | | | | |
Net Investment Income | | | | | | | | | | | | | | | 43,713 | | | | 43,713 | |
Total Net Realized and Unrealized Gains | | | | | | | | | | | | | | | 1,650 | | | | 1,650 | |
Interest Expense | | | | | | | | | | | | | | | (7,722 | ) | | | (7,722 | ) |
Other Income | | | | | | | | | | | | | | | 625 | | | | 625 | |
Income (Loss) Before Income Taxes | | $ | 19,749 | | | $ | (9,147 | ) | | $ | 7,365 | | | $ | 38,266 | | | $ | 56,233 | |
Income Tax Expense | | | | | | | | | | | | | | | (14,621 | ) | | | (14,621 | ) |
Net Income | | | | | | | | | | | | | | | | | | $ | 41,612 | |
| | | | | | | | | | | | | | | | | | | | |
Losses and LAE Ratio | | | 61.6 | % | | | 57.0 | % | | | 57.8 | % | | | | | | | 59.8 | % |
Commission Expense Ratio | | | 12.3 | % | | | 23.0 | % | | | 21.1 | % | | | | | | | 16.6 | % |
Other Operating Expense Ratio (2) | | | 20.1 | % | | | 25.5 | % | | | 12.2 | % | | | | | | | 20.5 | % |
Combined Ratio | | | 94.0 | % | | | 105.5 | % | | | 91.1 | % | | | | | | | 96.9 | % |
(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).
News Release
August 8, 2018
Page 10
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
(Unaudited)
| | U.S. Insurance | |
| | Three Months Ended June 30, 2018 | | | Three Months Ended June 30, 2017 | | | | | |
amounts in thousands | | Marine | | | P&C | | | Professional Liability | | | Total | | | Marine | | | P&C | | | Professional Liability | | | Total | | | % Change Total | |
Gross Written Premiums | | $ | 38,830 | | | $ | 217,984 | | | $ | 31,664 | | | $ | 288,478 | | | $ | 41,687 | | | $ | 187,492 | | | $ | 28,007 | | | $ | 257,186 | | | | 12.2 | % |
Ceded Written Premiums | | | (16,918 | ) | | | (54,835 | ) | | | (4,391 | ) | | | (76,144 | ) | | | (19,451 | ) | | | (51,147 | ) | | | (3,259 | ) | | | (73,857 | ) | | | 3.1 | % |
Net Written Premiums | | | 21,912 | | | | 163,149 | | | | 27,273 | | | | 212,334 | | | | 22,236 | | | | 136,345 | | | | 24,748 | | | | 183,329 | | | | 15.8 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Earned Premiums | | $ | 21,177 | | | $ | 132,630 | | | $ | 25,939 | | | $ | 179,746 | | | $ | 21,812 | | | $ | 121,226 | | | $ | 24,049 | | | $ | 167,087 | | | | 7.6 | % |
Net Losses and LAE | | | (9,517 | ) | | | (86,192 | ) | | | (16,176 | ) | | | (111,885 | ) | | | (12,767 | ) | | | (77,858 | ) | | | (14,645 | ) | | | (105,270 | ) | | | 6.3 | % |
Commission Expenses | | | (780 | ) | | | (15,089 | ) | | | (4,513 | ) | | | (20,382 | ) | | | (1,575 | ) | | | (15,232 | ) | | | (3,653 | ) | | | (20,460 | ) | | | (0.4 | %) |
Other Operating Expenses | | | (6,934 | ) | | | (26,231 | ) | | | (5,282 | ) | | | (38,447 | ) | | | (6,798 | ) | | | (21,645 | ) | | | (4,697 | ) | | | (33,140 | ) | | | 16.0 | % |
Other Underwriting Income | | | 53 | | | | 13 | | | | 5 | | | | 71 | | | | 82 | | | | 9 | | | | 9 | | | | 100 | | | | (29.0 | %) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Underwriting Profit (Loss) | | $ | 3,999 | | | $ | 5,131 | | | $ | (27 | ) | | $ | 9,103 | | | $ | 754 | | | $ | 6,500 | | | $ | 1,063 | | | $ | 8,317 | | | | 9.5 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Losses and LAE Ratio | | | 44.9 | % | | | 65.0 | % | | | 62.4 | % | | | 62.2 | % | | | 58.5 | % | | | 64.2 | % | | | 60.9 | % | | | 63.0 | % | | | | |
Commission Expense Ratio | | | 3.7 | % | | | 11.4 | % | | | 17.4 | % | | | 11.3 | % | | | 7.2 | % | | | 12.6 | % | | | 15.2 | % | | | 12.2 | % | | | | |
Other Operating Expense Ratio (1) | | | 32.5 | % | | | 19.7 | % | | | 20.3 | % | | | 21.4 | % | | | 30.8 | % | | | 17.8 | % | | | 19.5 | % | | | 19.8 | % | | | | |
Combined Ratio | | | 81.1 | % | | | 96.1 | % | | | 100.1 | % | | | 94.9 | % | | | 96.5 | % | | | 94.6 | % | | | 95.6 | % | | | 95.0 | % | | | | |
(1) - Includes Other Operating Expenses and Other Underwriting Income.
News Release
August 8, 2018
Page 11
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
(Unaudited)
| | Int'l Insurance | |
| | Three Months Ended June 30, 2018 | | | Three Months Ended June 30, 2017 | | | | | |
amounts in thousands | | Marine | | | P&C | | | Professional Liability | | | Total | | | Marine | | | P&C | | | Professional Liability | | | Total | | | % Change Total | |
Gross Written Premiums | | $ | 40,714 | | | $ | 46,579 | | | $ | 45,230 | | | $ | 132,523 | | | $ | 49,597 | | | $ | 46,663 | | | $ | 34,933 | | | $ | 131,193 | | | | 1.0 | % |
Ceded Written Premiums | | | (11,523 | ) | | | (17,705 | ) | | | (10,654 | ) | | | (39,882 | ) | | | (12,536 | ) | | | (20,362 | ) | | | (10,911 | ) | | | (43,809 | ) | | | (9.0 | %) |
Net Written Premiums | | | 29,191 | | | | 28,874 | | | | 34,576 | | | | 92,641 | | | | 37,061 | | | | 26,301 | | | | 24,022 | | | | 87,384 | | | | 6.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Earned Premiums | | $ | 37,197 | | | $ | 23,715 | | | $ | 31,159 | | | $ | 92,071 | | | $ | 39,525 | | | $ | 23,337 | | | $ | 19,238 | | | $ | 82,100 | | | | 12.1 | % |
Net Losses and LAE | | | (29,287 | ) | | | (6,294 | ) | | | (16,723 | ) | | | (52,304 | ) | | | (23,848 | ) | | | (8,867 | ) | | | (11,380 | ) | | | (44,095 | ) | | | 18.6 | % |
Commission Expenses | | | (8,945 | ) | | | (2,984 | ) | | | (7,935 | ) | | | (19,863 | ) | | | (9,517 | ) | | | (4,577 | ) | | | (4,907 | ) | | | (19,001 | ) | | | 4.5 | % |
Other Operating Expenses | | | (7,931 | ) | | | (8,703 | ) | | | (6,664 | ) | | | (23,299 | ) | | | (9,226 | ) | | | (7,946 | ) | | | (5,334 | ) | | | (22,506 | ) | | | 3.5 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Underwriting Profit (Loss) | | $ | (8,966 | ) | | $ | 5,734 | | | $ | (163 | ) | | $ | (3,395 | ) | | $ | (3,066 | ) | | $ | 1,947 | | | $ | (2,383 | ) | | $ | (3,502 | ) | | | (3.0 | %) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Losses and LAE Ratio | | | 78.7 | % | | | 26.5 | % | | | 53.7 | % | | | 56.8 | % | | | 60.3 | % | | | 38.0 | % | | | 59.2 | % | | | 53.7 | % | | | | |
Commission Expense Ratio | | | 24.0 | % | | | 12.6 | % | | | 25.5 | % | | | 21.6 | % | | | 24.1 | % | | | 19.6 | % | | | 25.5 | % | | | 23.1 | % | | | | |
Other Operating Expense Ratio | | | 21.4 | % | | | 36.7 | % | | | 21.3 | % | | | 25.3 | % | | | 23.4 | % | | | 34.1 | % | | | 27.7 | % | | | 27.5 | % | | | | |
Combined Ratio | | | 124.1 | % | | | 75.8 | % | | | 100.5 | % | | | 103.7 | % | | | 107.8 | % | | | 91.7 | % | | | 112.4 | % | | | 104.3 | % | | | | |
News Release
August 8, 2018
Page 12
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
(Unaudited)
| | U.S. Insurance | |
| | Six Months Ended June 30, 2018 | | | Six Months Ended June 30, 2017 | | | | | |
amounts in thousands | | Marine | | | P&C | | | Professional Liability | | | Total | | | Marine | | | P&C | | | Professional Liability | | | Total | | | % Change Total | |
Gross Written Premiums | | $ | 80,554 | | | $ | 386,177 | | | $ | 61,675 | | | $ | 528,406 | | | $ | 82,637 | | | $ | 358,126 | | | $ | 54,028 | | | $ | 494,791 | | | | 6.8 | % |
Ceded Written Premiums | | | (34,398 | ) | | | (99,747 | ) | | | (8,580 | ) | | | (142,725 | ) | | | (36,971 | ) | | | (89,345 | ) | | | (9,028 | ) | | | (135,344 | ) | | | 5.5 | % |
Net Written Premiums | | | 46,156 | | | | 286,430 | | | | 53,095 | | | | 385,681 | | | | 45,666 | | | | 268,781 | | | | 45,000 | | | | 359,447 | | | | 7.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Earned Premiums | | $ | 42,269 | | | $ | 260,220 | | | $ | 50,170 | | | $ | 352,659 | | | $ | 44,506 | | | $ | 240,349 | | | $ | 46,236 | | | $ | 331,091 | | | | 6.5 | % |
Net Losses and LAE | | | (25,269 | ) | | | (167,110 | ) | | | (29,928 | ) | | | (222,307 | ) | | | (26,542 | ) | | | (149,607 | ) | | | (27,947 | ) | | | (204,096 | ) | | | 8.9 | % |
Commission Expenses | | | (2,188 | ) | | | (30,256 | ) | | | (8,799 | ) | | | (41,243 | ) | | | (3,047 | ) | | | (30,598 | ) | | | (7,199 | ) | | | (40,844 | ) | | | 1.0 | % |
Other Operating Expenses | | | (13,209 | ) | | | (51,855 | ) | | | (10,374 | ) | | | (75,438 | ) | | | (13,619 | ) | | | (43,459 | ) | | | (9,534 | ) | | | (66,612 | ) | | | 13.3 | % |
Other Underwriting Income | | | 130 | | | | 28 | | | | 11 | | | | 169 | | | | 165 | | | | 27 | | | | 18 | | | | 210 | | | | (19.5 | %) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Underwriting Profit | | $ | 1,733 | | | $ | 11,027 | | | $ | 1,080 | | | $ | 13,840 | | | $ | 1,463 | | | $ | 16,712 | | | $ | 1,574 | | | $ | 19,749 | | | | (29.9 | %) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Losses and LAE Ratio | | | 59.8 | % | | | 64.2 | % | | | 59.7 | % | | | 63.0 | % | | | 59.6 | % | | | 62.2 | % | | | 60.4 | % | | | 61.6 | % | | | | |
Commission Expense Ratio | | | 5.2 | % | | | 11.6 | % | | | 17.5 | % | | | 11.7 | % | | | 6.8 | % | | | 12.7 | % | | | 15.6 | % | | | 12.3 | % | | | | |
Other Operating Expense Ratio (1) | | | 30.9 | % | | | 20.0 | % | | | 20.6 | % | | | 21.4 | % | | | 30.3 | % | | | 18.1 | % | | | 20.6 | % | | | 20.1 | % | | | | |
Combined Ratio | | | 95.9 | % | | | 95.8 | % | | | 97.8 | % | | | 96.1 | % | | | 96.7 | % | | | 93.0 | % | | | 96.6 | % | | | 94.0 | % | | | | |
(1) - Includes Other Operating Expenses and Other Underwriting Income.
News Release
August 8, 2018
Page 13
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
(Unaudited)
| | Int'l Insurance | |
| | Six Months Ended June 30, 2018 | | | Six Months Ended June 30, 2017 | | | | | |
amounts in thousands | | Marine | | | P&C | | | Professional Liability | | | Total | | | Marine | | | P&C | | | Professional Liability | | | Total | | | % Change Total | |
Gross Written Premiums | | $ | 97,192 | | | $ | 80,539 | | | $ | 82,664 | | | $ | 260,395 | | | $ | 118,430 | | | $ | 87,031 | | | $ | 67,592 | | | $ | 273,053 | | | | (4.6 | %) |
Ceded Written Premiums | | | (19,577 | ) | | | (31,372 | ) | | | (17,821 | ) | | | (68,770 | ) | | | (23,462 | ) | | | (50,008 | ) | | | (16,932 | ) | | | (90,402 | ) | | | (23.9 | %) |
Net Written Premiums | | | 77,615 | | | | 49,167 | | | | 64,843 | | | | 191,625 | | | | 94,968 | | | | 37,023 | | | | 50,660 | | | | 182,651 | | | | 4.9 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Earned Premiums | | $ | 76,476 | | | $ | 45,484 | | | $ | 63,321 | | | $ | 185,281 | | | $ | 77,020 | | | $ | 45,517 | | | $ | 43,649 | | | $ | 166,186 | | | | 11.5 | % |
Net Losses and LAE | | | (49,733 | ) | | | (15,517 | ) | | | (32,897 | ) | | | (98,147 | ) | | | (44,449 | ) | | | (24,736 | ) | | | (25,615 | ) | | | (94,800 | ) | | | 3.5 | % |
Commission Expenses | | | (18,675 | ) | | | (5,549 | ) | | | (15,396 | ) | | | (39,619 | ) | | | (19,058 | ) | | | (8,319 | ) | | | (10,857 | ) | | | (38,234 | ) | | | 3.6 | % |
Other Operating Expenses | | | (14,741 | ) | | | (16,382 | ) | | | (12,705 | ) | | | (43,829 | ) | | | (17,666 | ) | | | (14,369 | ) | | | (10,264 | ) | | | (42,299 | ) | | | 3.6 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Underwriting Profit (Loss) | | $ | (6,673 | ) | | $ | 8,036 | | | $ | 2,323 | | | $ | 3,686 | | | $ | (4,153 | ) | | $ | (1,907 | ) | | $ | (3,087 | ) | | $ | (9,147 | ) | | NM | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Losses and LAE Ratio | | | 65.0 | % | | | 34.1 | % | | | 52.0 | % | | | 53.0 | % | | | 57.7 | % | | | 54.3 | % | | | 58.7 | % | | | 57.0 | % | | | | |
Commission Expense Ratio | | | 24.4 | % | | | 12.2 | % | | | 24.3 | % | | | 21.4 | % | | | 24.7 | % | | | 18.3 | % | | | 24.9 | % | | | 23.0 | % | | | | |
Other Operating Expense Ratio | | | 19.3 | % | | | 36.0 | % | | | 20.0 | % | | | 23.6 | % | | | 23.0 | % | | | 31.6 | % | | | 23.5 | % | | | 25.5 | % | | | | |
Combined Ratio | | | 108.7 | % | | | 82.3 | % | | | 96.3 | % | | | 98.0 | % | | | 105.4 | % | | | 104.2 | % | | | 107.1 | % | | | 105.5 | % | | | | |
NM – Percentage change not meaningful
News Release
August 8, 2018
Page 14
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Incurred Loss Activity
(Unaudited)
| | For the Three Months Ended June 30, | |
amounts in thousands | | Amounts | | | Loss Ratio | |
Net Incurred Loss Activity | | 2018 | | | 2017 | | | 2018 | | | 2017 | |
U.S. Insurance: | | | | | | | | | | | | | | | | |
Loss and LAE Payments | | $ | 81,269 | | | $ | 86,792 | | | | 45.2 | % | | | 51.9 | % |
Change in Reserves | | | 30,616 | | | | 18,478 | | | | 17.0 | % | | | 11.1 | % |
Net Incurred Loss and LAE | | $ | 111,885 | | | $ | 105,270 | | | | 62.2 | % | | | 63.0 | % |
| | | | | | | | | | | | | | | | |
Int'l Insurance: | | | | | | | | | | | | | | | | |
Loss and LAE Payments | | $ | 56,926 | | | $ | 46,050 | | | | 61.8 | % | | | 56.1 | % |
Change in Reserves | | | (4,622 | ) | | | (1,955 | ) | | | (5.0 | %) | | | (2.4 | %) |
Net Incurred Loss and LAE | | $ | 52,304 | | | $ | 44,095 | | | | 56.8 | % | | | 53.7 | % |
| | | | | | | | | | | | | | | | |
GlobalRe: | | | | | | | | | | | | | | | | |
Loss and LAE Payments | | $ | 22,413 | | | $ | 21,279 | | | | 37.9 | % | | | 47.6 | % |
Change in Reserves | | | 9,731 | | | | 6,466 | | | | 16.4 | % | | | 14.5 | % |
Net Incurred Loss and LAE | | $ | 32,144 | | | $ | 27,745 | | | | 54.3 | % | | | 62.1 | % |
| | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | |
Loss and LAE Payments | | $ | 160,608 | | | $ | 154,121 | | | | 48.5 | % | | | 52.5 | % |
Change in Reserves | | | 35,725 | | | | 22,989 | | | | 10.8 | % | | | 7.8 | % |
Net Incurred Loss and LAE | | $ | 196,333 | | | $ | 177,110 | | | | 59.3 | % | | | 60.3 | % |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | For the Three Months Ended June 30, | |
Impact of Prior Years Reserves | | Amounts | | | Loss Ratio Impact | |
Favorable / (Unfavorable) Development | | 2018 | | | 2017 | | | 2018 | | | 2017 | |
U.S. Insurance | | $ | 2,220 | | | $ | (295 | ) | | | 0.7 | % | | | (0.1 | %) |
Int'l Insurance | | | (3,330 | ) | | | (4,743 | ) | | | (1.0 | %) | | | (1.6 | %) |
GlobalRe | | | (244 | ) | | | (2,992 | ) | | | (0.1 | %) | | | (1.0 | %) |
Total | | $ | (1,354 | ) | | $ | (8,030 | ) | | | (0.4 | %) | | | (2.7 | %) |
News Release
August 8, 2018
Page 15
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Incurred Loss Activity
(Unaudited)
| | For the Six Months Ended June 30, | |
amounts in thousands | | Amounts | | | Loss Ratio | |
Net Incurred Loss Activity | | 2018 | | | 2017 | | | 2018 | | | 2017 | |
U.S. Insurance: | | | | | | | | | | | | | | | | |
Loss and LAE Payments | | $ | 168,820 | | | $ | 156,563 | | | | 47.8 | % | | | 47.2 | % |
Change in Reserves | | | 53,487 | | | | 47,533 | | | | 15.2 | % | | | 14.4 | % |
Net Incurred Loss and LAE | | $ | 222,307 | | | $ | 204,096 | | | | 63.0 | % | | | 61.6 | % |
| | | | | | | | | | | | | | | | |
Int'l Insurance: | | | | | | | | | | | | | | | | |
Loss and LAE Payments | | $ | 105,169 | | | $ | 90,958 | | | | 56.8 | % | | | 54.7 | % |
Change in Reserves | | | (7,022 | ) | | | 3,842 | | | | (3.8 | %) | | | 2.3 | % |
Net Incurred Loss and LAE | | $ | 98,147 | | | $ | 94,800 | | | | 53.0 | % | | | 57.0 | % |
| | | | | | | | | | | | | | | | |
GlobalRe: | | | | | | | | | | | | | | | | |
Loss and LAE Payments | | $ | 51,686 | | | $ | 49,609 | | | | 44.8 | % | | | 60.0 | % |
Change in Reserves | | | 10,338 | | | | (1,795 | ) | | | 8.8 | % | | | (2.2 | %) |
Net Incurred Loss and LAE | | $ | 62,024 | | | $ | 47,814 | | | | 53.6 | % | | | 57.8 | % |
| | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | |
Loss and LAE Payments | | $ | 325,675 | | | $ | 297,130 | | | | 49.8 | % | | | 51.3 | % |
Change in Reserves | | | 56,803 | | | | 49,580 | | | | 8.7 | % | | | 8.5 | % |
Net Incurred Loss and LAE | | $ | 382,478 | | | $ | 346,710 | | | | 58.5 | % | | | 59.8 | % |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | For the Six Months Ended June 30, | |
Impact of Prior Years Reserves | | Amounts | | | Loss Ratio Impact | |
Favorable / (Unfavorable) Development | | 2018 | | | 2017 | | | 2018 | | | 2017 | |
U.S. Insurance | | $ | (2,593 | ) | | $ | 177 | | | | (0.4 | %) | | | 0.0 | % |
Int'l Insurance | | | (847 | ) | | | (11,359 | ) | | | (0.1 | %) | | | (2.0 | %) |
GlobalRe | | | 120 | | | | (3,933 | ) | | | 0.0 | % | | | (0.7 | %) |
Total | | $ | (3,320 | ) | | $ | (15,115 | ) | | | (0.5 | %) | | | (2.7 | %) |
News Release
August 8, 2018
Page 16
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data
(Unaudited)
| | As of June 30, 2018 | |
amounts in thousands | | Case | | | IBNR | | | | | |
Net Loss Reserves: | | Reserves | | | Reserves | | | Total | |
U.S. Insurance: | | | | | | | | | | | | |
Marine | | $ | 51,576 | | | $ | 50,637 | | | $ | 102,213 | |
P&C | | | 197,765 | | | | 740,654 | | | | 938,419 | |
Professional Liability | | | 34,839 | | | | 87,603 | | | | 122,442 | |
Total U.S. Insurance | | $ | 284,180 | | | $ | 878,894 | | | $ | 1,163,074 | |
Int'l Insurance: | | | | | | | | | | | | |
Marine | | $ | 172,149 | | | $ | 36,540 | | | $ | 208,689 | |
P&C | | | 75,011 | | | | 24,928 | | | | 99,939 | |
Professional Liability | | | 39,551 | | | | 101,453 | | | | 141,004 | |
Total Int'l Insurance | | $ | 286,711 | | | $ | 162,921 | | | $ | 449,632 | |
| | | | | | | | | | | | |
GlobalRe | | $ | 58,300 | | | $ | 104,026 | | | $ | 162,326 | |
| | | | | | | | | | | | |
Total Net Loss Reserves | | $ | 629,191 | | | $ | 1,145,841 | | | $ | 1,775,032 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | 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 | |
News Release
August 8, 2018
Page 17
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Investment Data
(Unaudited)
As of June 30, 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 June 30, 2018:
| | As of June 30, 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 | | $ | 289,612 | | | $ | 955 | | | $ | (4,189 | ) | | $ | 292,846 | |
States, Municipalities and Political Subdivisions | | | 658,129 | | | | 10,410 | | | | (4,870 | ) | | | 652,589 | |
Mortgage-Backed and Asset-Backed Securities: | | | | | | | | | | | | | | | | |
Agency Mortgage-Backed Securities | | | 362,870 | | | | 1,091 | | | | (14,497 | ) | | | 376,276 | |
Residential Mortgage Obligations | | | 96,134 | | | | 464 | | | | (431 | ) | | | 96,101 | |
Asset-Backed Securities | | | 476,838 | | | | 737 | | | | (2,749 | ) | | | 478,850 | |
Commercial Mortgage-Backed Securities | | | 168,609 | | | | 807 | | | | (2,817 | ) | | | 170,619 | |
Subtotal | | $ | 1,104,451 | | | $ | 3,099 | | | $ | (20,494 | ) | | $ | 1,121,846 | |
Corporate Exposures (1) | | | 909,349 | | | | 4,303 | | | | (19,302 | ) | | | 924,348 | |
Total Fixed Maturities | | $ | 2,961,541 | | | $ | 18,767 | | | $ | (48,855 | ) | | $ | 2,991,629 | |
Short-Term Investments | | | 6,368 | | | | — | | | | — | | | | 6,368 | |
Total Available-For-Sale Investments | | $ | 2,967,909 | | | $ | 18,767 | | | $ | (48,855 | ) | | $ | 2,997,997 | |
(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.