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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 1998
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Commission file number 0-15886
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The Navigators Group, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 13-3138397
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
123 William Street, New York, New York 10038
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(Address of principal executive offices) (Zip Code)
(212) 349-1600
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes |X| No |_|
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
On May 6, 1998 there were 8,418,426 shares of common stock, $0.10 par value,
issued and outstanding.
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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
INDEX
Page No.
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Part I. FINANCIAL INFORMATION:
Consolidated Balance Sheets
March 31, 1998 and December 31, 1997 ................ 3
Consolidated Statements of Income
Three Months Ended March 31, 1998 and 1997 .......... 4
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1998 and 1997 .......... 5
Notes to Interim Consolidated Financial Statements ....... 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations ................. 8
Part II. OTHER INFORMATION .................................. 14
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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
March 31, 1998 Dec. 31, 1997
-------------- -------------
(Unaudited)
ASSETS
Investments and cash:
Fixed maturities, available-for-sale, at fair value
(amortized cost: 1998, $214,048; 1997, $218,418) .......... $ 221,382 $ 226,834
Equity securities, available-for-sale, at fair value
(cost: 1998, $4,761; 1997, $4,557) ........................ 7,151 6,132
Short-term investments, at cost which approximates fair
value ..................................................... 23,571 22,579
Cash ........................................................ 862 1,251
Other investments ........................................... 2,959 1,776
--------- ---------
Total investments and cash .............................. 255,925 258,572
--------- ---------
Premiums in course of collection .............................. 51,829 45,847
Commissions receivable ........................................ 10,016 6,434
Accrued investment income ..................................... 3,187 3,121
Prepaid reinsurance premiums .................................. 23,455 20,405
Reinsurance receivable on paid and unpaid losses and
loss adjustment expenses .................................... 145,299 147,104
Federal income tax recoverable ................................ -- 164
Net deferred Federal and foreign income tax benefit ........... 7,895 7,994
Deferred policy acquisition costs ............................. 5,419 5,403
Other assets .................................................. 8,939 6,163
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Total assets ............................................ $ 511,964 $ 501,207
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Reserves for losses and loss adjustment expenses ............ $ 277,075 $ 278,432
Unearned premium ............................................ 50,338 48,659
Reinsurance balances payable ................................ 17,607 16,539
Notes payable to banks ...................................... 20,334 20,000
Federal and foreign income tax payable ...................... 713 --
Deferred state and local income tax ......................... 989 1,184
Note payable to stockholder ................................. 942 942
Accounts payable and other liabilities ...................... 8,892 4,209
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Total liabilities ....................................... 376,890 369,965
--------- ---------
Commitments and contingencies .................................
Stockholders' equity:
Preferred stock, $.10 par value, authorized 1,000,000
shares, none issued ....................................... -- --
Common stock, $.10 par value, authorized 10,000,000
shares, issued and outstanding 8,402,801 in 1998 and
8,368,167 in 1997 ......................................... 840 837
Additional paid-in capital .................................. 38,673 38,119
Accumulated other comprehensive income....................... 6,318 6,433
Retained earnings ........................................... 89,243 85,853
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Total stockholders' equity .............................. 135,074 131,242
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Total liabilities and stockholders' equity .............. $ 511,964 $ 501,207
========= =========
See accompanying notes to consolidated financial statements.
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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except net income per share)
Three Months Ended
March 31,
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1998 1997
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(Unaudited)
Revenues:
Net earned premium .......................................... $ 17,890 $ 18,406
Commission income ........................................... 1,224 1,595
Net investment income ....................................... 3,918 3,371
Net realized capital gains .................................. 715 212
Other income ................................................ 280 353
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Total revenues .......................................... 24,027 23,937
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Operating expenses:
Net losses and loss adjustment expenses incurred ............ 10,415 10,846
Commission expense .......................................... 3,050 3,140
Other operating expenses .................................... 5,681 5,351
Interest expense ............................................ 364 287
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Total operating expenses ................................ 19,510 19,624
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Income before income tax ...................................... 4,517 4,313
Income tax expense (benefit):
Current ................................................... 1,138 562
Deferred .................................................. (11) 516
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Total income tax expense ................................ 1,127 1,078
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Net income .................................................... $ 3,390 $ 3,235
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Net income per common share:
Basic ....................................................... $ 0.40 $ 0.39
Diluted ..................................................... $ 0.40 $ 0.39
Average common shares outstanding:
Basic ....................................................... 8,385 8,261
Diluted ..................................................... 8,435 8,312
See accompanying notes to interim consolidated financial statements.
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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended
March 31,
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1998 1997
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(Unaudited)
Operating activities:
Net income ................................................ $ 3,390 $ 3,235
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation & amortization ............................. 258 98
Reinsurance receivable on paid and unpaid
losses and loss adjustment expenses ................... 1,805 11,056
Reserve for losses and loss adjustment
expenses ............................................... (1,357) (10,763)
Prepaid reinsurance premiums ............................ (3,050) 172
Unearned premium ........................................ 1,679 (197)
Premiums in course of collection ........................ (5,982) 2,446
Commissions receivable .................................. 78 (508)
Deferred policy acquisition costs ....................... (16) (209)
Accrued investment income ............................... (27) (286)
Reinsurance balances payable ............................ 1,068 (234)
Federal income tax ...................................... 851 349
Net deferred Federal and foreign income tax ............. 198 340
Net realized capital (gains) ............................ (715) (212)
Other ................................................... (1,344) (617)
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Net cash provided by (used in) operating activities ... (3,164) 4,670
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Investing activities:
Fixed maturities, available-for-sale
Redemptions and maturities .............................. 12,525 2,857
Sales ................................................... 12,144 2,368
Purchases ............................................... (19,958) (9,328)
Equity securities, available-for-sale
Sales ................................................... 1,023 729
Purchases ............................................... -- (1,235)
Payable for securities purchased .......................... 836 (1,959)
Net sales (purchases) of short-term investments ........... (992) 1,809
Payment for purchase of MTC, net of cash acquired ......... (2,975) --
Purchase of property and equipment ........................ (385) (212)
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Net cash provided by (used in) investing activities ..... 2,218 (4,971)
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Financing activities:
Proceeds from exercise of stock options ................... 557 497
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Net cash provided by financing activities ............... 557 497
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Increase (decrease) in cash ................................... (389) 196
Cash at beginning of year ..................................... 1,251 1,460
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Cash at end of period ......................................... $ 862 $ 1,656
========= =========
See accompanying notes to consolidated financial statements.
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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Notes to Interim Consolidated Financial Statements
(1) Accounting Policies
The interim financial statements are unaudited but reflect all adjustments
which, in the opinion of management, are necessary to provide a fair
statement of the results of The Navigators Group, Inc. and its subsidiaries
(the "Company") for the interim periods presented. All such adjustments are
of a normal recurring nature. The results of operations for any interim
period are not necessarily indicative of results for the full year. These
financial statements should be read in conjunction with the financial
statements and notes hereto contained in the Company's Form 10-K for the
year ended December 31, 1997. Certain amounts for prior years have been
reclassified to conform to the current year's presentation.
(2) Reinsurance Ceded
The Company's ceded earned premiums were $17,077,000 and $17,014,000 and
ceded losses were $14,466,000 and $11,879,000 for the three months ended
March 31, 1998 and 1997, respectively.
(3) Net Income Per Share
The Company adopted the Financial Accounting Standards Board's ("FASB")
Statement of Financial Accounting Standards ("SFAS") No. 128, Earnings Per
Share, on December 31, 1997. SFAS No. 128 supersedes APB Opinion No. 15,
Earnings Per Share, and replaces primary earnings per share and fully
diluted earnings per share with basic earnings per share and diluted
earnings per share, respectively. The Company has restated earnings per
share for all prior periods presented to comply with the provisions of SFAS
No. 128.
(4) Comprehensive Income
The Company adopted SFAS No. 130, Reporting Comprehensive Income, as of
January 1, 1998. SFAS No. 130 establishes standards for the reporting and
presentation of comprehensive income and its components in the financial
statements. Comprehensive income encompasses all changes in shareholders'
equity (except those arising from transactions with owners) and includes net
income, net unrealized capital gains or losses on available for sale
securities and foreign currency translation adjustments. Application of SFAS
No. 130 will not impact amounts previously reported for net income or affect
the comparability of previously issued financial statements.
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The following table summarizes comprehensive income for the three months
ended March 31, 1998 and 1997:
March 31,
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1998 1997
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In thousands
Net income ...................................................... $ 3,390 $ 3,235
Other comprehensive income, net of tax:
Net unrealized gains (losses) on securities available for sale:
Unrealized holding gain (loss) arising during period
(net of income tax expense (benefit) of $157 for
1998 and $(844) for 1997) ................................. 292 (1,637)
Less: reclassification adjustment for gains
included in net income (net of income tax expense
of $250 for 1998 and $72 for 1997) .................... 465 140
Foreign currency translation adjustment, net of tax ........ 58 (71)
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Other comprehensive income ........................ (115) (1,848)
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Comprehensive income ......................... $ 3,275 $ 1,387
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The following table summarizes the componants of accumulated other comprehensive income:
March 31, December 31,
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1998 1997
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(In thousands)
Net unrealized gains on securities available-for-sale
(net of tax of $3,463 in 1998 and $3,497 in 1997)........ $6,321 $6,494
Foreign currency translation adjustment, net of tax......... (3) (61)
------ ------
Accumulated other comprehensive income...................... $6,318 $6,433
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(5) Future Application of Accounting Standards
SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information, was issued in June 1997 and establishes standards for the
reporting of information relating to operating segments in annual financial
statements, as well as disclosure of selected information in interim
financial reports. This statement supersedes SFAS No. 14, Financial
Reporting for Segments of a Business Enterprise, which requires reporting
segment information by industry and geographic area (industry approach).
Under SFAS No. 131, operating segments are defined as components of a
company for which separate financial information is available and is used by
management to allocate resources and assess performance (management
approach). This statement is effective for year-end 1998 financial
statements. Interim financial information will be required beginning in 1999
(with comparative 1998 information).
In December 1997, the American Institute of Certified Public Accountants
issued Statement of Position No. 97-3, Accounting by Insurance and Other
Enterprises for Insurance Related Assessments, ("SOP 97-3"). SOP 97-3
establishes standards for accounting for guaranty-fund and certain other
insurance related assessments. SOP 97-3 is effective for fiscal years
beginning after December 15, 1998. The adoption of this statement is not
expected to have a material effect on the Company's results of operations or
financial condition.
(6) Acquisition of Mander, Thomas & Cooper (Underwriting Agencies) Limited
In January 1998, the Company purchased 100% of Mander, Thomas & Cooper
(Underwriting Agencies) Limited, a Lloyd's of London marine underwriting
managing agency and its wholly owned subsidiary, Millennium Underwriting
Limited. The purchase price consists of initial cash payments plus future
performance contingent consideration. The purchase was funded through a bank
loan and working capital. The total purchase price was not material to the
Company's total assets. The acquisition has been recorded under the
purchase method of accounting. Goodwill amounted to $3,992,000 and
is being amortized over 20 years. Additional goodwill may be recorded in
future years when the amount of the future performance contingencies are
determinable.
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THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
General
The accompanying consolidated financial statements consisting of the
accounts of The Navigators Group, Inc., a Delaware holding company, and its
fifteen wholly owned subsidiaries, are prepared on the basis of generally
accepted accounting principles. Unless the context otherwise requires, the term
"Company" as used herein means The Navigators Group, Inc. and its subsidiaries.
All significant intercompany transactions and balances are eliminated.
The Company's two insurance subsidiaries are Navigators Insurance Company
("Navigators Insurance") and NIC Insurance Company ("NIC"). Navigators Insurance
is the Company's largest insurance subsidiary and has been active since 1983. It
specializes principally in underwriting marine, aviation, onshore energy,
engineering and construction insurance. NIC, a wholly owned subsidiary of
Navigators Insurance, began operations in 1990. It underwrites a small book of
surplus lines insurance in certain states and, pursuant to an intercompany
reinsurance pooling agreement, cedes 100% of its gross direct writings from this
business to Navigators Insurance in exchange for assuming 10% of Navigators
Insurance's net premium. Navigators Insurance and NIC are collectively referred
to herein as the "Insurance Companies".
Navigators Corporate Underwriters Limited ("NCUL"), a subsidiary formed in
the fourth quarter of 1996, is admitted to do business at Lloyd's of London as a
corporate member with limited liability.
Seven of the Company's subsidiaries are underwriting management companies:
Somerset Marine, Inc., Somerset Insurance Services of Texas, Inc., Somerset
Insurance Services of California, Inc., Somerset Insurance Services of
Washington, Inc., Somerset of Georgia, Inc., Somerset Marine (UK) Limited
("Somerset UK") and Somerset Asia Pacific Pty Limited ("Somerset Asia")
(collectively, the "Somerset Companies"). The Somerset Companies produce, manage
and underwrite insurance and reinsurance for Navigators Insurance, NIC and six
unaffiliated insurance companies.
The Somerset Companies specialize principally in producing marine,
aviation, onshore energy, engineering and construction insurance premium. They
underwrite marine business for a syndicate of insurance companies with
Navigators Insurance having a 60% participation in the syndicate for 1998. The
Somerset Companies derive their revenue from commissions, investment income,
service fees and cost reimbursement arrangements from their parent company,
Navigators Insurance, NIC and the unaffiliated insurers. Commissions are earned
both from a fixed percentage of premiums and from underwriting profits on
business placed with the participating insurance companies within the syndicate.
Property and casualty insurance premiums historically have been cyclical in
nature and, accordingly, during a "hard market" demand for property and casualty
insurance exceeds
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supply, or capacity, and as a result, premiums and commissions may increase. On
the downturn of the property and casualty cycle, supply exceeds demand, and as a
result, premiums and commissions may decrease.
Somerset Asia was formed in the third quarter of 1996 and operates from an
office in Sydney, Australia. This office concentrates on producing marine,
onshore energy, engineering and construction insurance premium primarily in
Indonesia, Thailand, Malaysia, Taiwan, China and Vietnam. Somerset Asia began
writing business in early 1997 and is supported by Somerset Services Pte Limited
which provides loss prevention consultancy to Somerset Asia's assureds and
producers. Somerset Services Pte Limited, a wholly owned subsidiary of Somerset
Asia, was formed in September 1997 and is located in Singapore.
Somerset UK, formed in the fourth quarter of 1996, concentrates on
producing marine, aviation, onshore energy, engineering and construction
insurance premium. Navigators Insurance was authorized to operate an United
Kingdom ("UK") Branch on October 22, 1997. Somerset UK began producing business
in the fourth quarter of 1997 for the UK Branch of Navigators Insurance ("UK
Branch").
Navigators Holdings (UK) Limited was formed on September 15, 1997 as a
holding company for the Company's UK subsidiaries. The Company also owns
Somerset Marine Aviation Property Managers, Inc., an inactive subsidiary.
In January 1998, the Company acquired 100% of Mander, Thomas & Cooper
(Underwriting Agencies) Limited ("MTC"), a Lloyd's of London marine underwriting
managing agency, and its wholly owned subsidiary, Millennium Underwriting
Limited ("Millennium"), a Lloyd's corporate member with limited liability.
The Company's revenue is primarily comprised of premiums, commissions and
investment income. The Insurance Companies derive the majority of their business
from the Somerset Companies through either business written specifically for the
Insurance Companies or through Navigators participation in insurance pools
managed by the Somerset Companies. The Insurance Companies are managed by
Somerset Marine, Inc.
Other investments include the Company's 8% interest in Riverside
Underwriters Plc ("Riverside"), which through a wholly owned subsidiary is
admitted to underwrite at Lloyd's of London as a corporate name with limited
liability. The investment in Riverside is recorded at cost.
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Results of Operations
The Company's 1998 and 1997 results of operations reflect intense market
competition in the core marine and aviation lines.
Revenues. Gross written premium for the first three months of 1998
increased by 4% to $36,644,000 from $35,223,000 for the first three months of
1997.
The following table sets forth the Company's gross written premium by line
of business and net written premium in the aggregate for the periods indicated:
Three Months Ended March 31,
--------------------------------
1998 1997
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(Dollars in thousands)
Marine ..................... $ 14,335 39% $ 9,575 27%
Aviation ................... 5,286 14 9,738 28
Inland Marine .............. 353 1 4,506 13
Onshore Energy ............. 2,764 8 3,144 9
Engineering and Construction 3,767 10 -- --
Lloyd's - Marine ........... 6,523 18 -- --
Specialty Reinsurance
and Program Insurance .... 3,616 10 8,260 23
-------- --- -------- ---
Gross Written Premium ...... 36,644 100% 35,223 100%
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Ceded Written Premium ...... (20,125) (16,841)
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Net Written Premium ........ $ 16,519 $ 18,382
======== ========
Marine Premium. Marine gross written premium (non-Lloyd's) increased 50%
when comparing the first quarter of 1998 to the first quarter of 1997 primarily
due to Navigators increasing its participation in the marine pool from 48% to
60% and the first full quarter of premium from the UK Branch.
Aviation Premium. Aviation gross written premium decreased 46% from the
first three months of 1997 to 1998 due to generally lower rates on aviation
business and the recording of return premiums from rate adjustments on certain
profitable large airline policies.
Inland Marine Premium. As of June 1997, the Company no longer writes inland
marine business.
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Onshore Energy Premium. In 1996, Navigators began to underwrite onshore
energy business which principally focuses on the oil and gas, chemical and
petrochemical, and power generation industries with coverages primarily for
property damage and machinery breakdown. The Onshore Energy premium decreased
12% from the first three months of 1997 to 1998.
Engineering and Construction Premium. The Company began writing engineering
and construction business in mid 1997. The business is produced by Somerset Asia
and Somerset UK.
Lloyd's Marine Premium. NCUL provided capacity to Lloyd's Syndicate 1221
managed by MTC and one other Lloyd's syndicate in 1998 and 1997, and Millennium
provided capacity to Syndicate 1221 in 1998. The premiums, losses and
expenses from the Lloyd's marine syndicates are included in the Company's
financials but are not included in the Insurance Companies' results since NCUL
and Millennium are wholly owned by the parent company.
Specialty Reinsurance and Program Insurance Premium. Navigators Insurance's
reinsurance business was produced and managed by one of the Company's
subsidiaries. This reinsurance premium consisted primarily of excess of loss and
quota share property, surety, and other specialty reinsurance lines. Navigators
Insurance did not renew this business after 1995 except for a few treaties which
were written through 1997. The program insurance, which began in 1995, was
reduced during 1997 and currently consists of one managing general agent writing
primarily general liability insurance for contractors.
Ceded Premium. In the ordinary course of business, Navigators Insurance
reinsures certain insurance risks with unaffiliated insurance companies for the
purpose of limiting its maximum loss exposure, protecting against catastrophic
losses, and maintaining desired ratios of net premiums written to statutory
surplus. The increase in the ceded premium when comparing the first three months
of 1997 to 1998 resulted from the engineering and construction business, which
is heavily reinsured, and from the purchase of additional reinsurance to protect
the marine business.
Net Written Premium. Net written premium decreased 10% when comparing the
first three months of 1997 to the first three months of 1998 primarily due to
the decrease in the program and aviation premium and the Company's decision to
no longer write inland marine and specialty reinsurance business, partially
offset by the increase in the marine premium.
Net Earned Premium. Net earned premium decreased 3% for the first three
months of 1998 to $17,890,000 as compared to $18,406,000 for the first three
months of 1997. Net earned premium generally follows the pattern of written
premium but at a slower rate since unearned premium from the prior year is
partially earned in the current period along with a portion of the premium
written in the current period.
Commission Income. Commission income decreased 23% from $1,595,000 for the
first quarter of 1997 to $1,224,000 for the first quarter of 1998. The decrease
is primarily due to Navigators Insurance's increased participation in the marine
pool which results in the Company receiving less commission income from the
unaffiliated members of the pool.
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Net Investment Income. Net investment income increased 16% to $3,918,000
during the first three months of 1998 from $3,371,000 during the corresponding
period in 1997. This increase was due primarily to the overall increase in
invested assets and the decrease of the amount of municipal bonds in the
portfolio.
Net Realized Capital Gains. Pre-tax net income included $715,000 of realized
capital gains for the first three months of 1998 compared to $212,000 for the
same period last year. On an after tax basis, the realized capital gains were
$0.06 per share in 1998 and $0.02 per share in 1997.
Operating Expenses.
Net Loss and Loss Adjustment Expenses Incurred. The ratio of net loss and
loss adjustment expenses incurred to net earned premium was 58.2% and 58.9%
during the first three months of 1998 and 1997, respectively. This decrease was
primarily due to better results in the company's program business and the
decrease in inland marine and specialty reinsurance business written which
generally had a greater loss ratio.
Commission Expense. Commission expense as a percentage of net earned premium
was 17.0% and 17.1% during the first three months of 1998 and 1997,
respectively.
Other Operating Expenses. Other operating expenses increased 6% to
$5,681,000 during the first three months of 1998 from $5,351,000 during the
corresponding period of 1997. This increase was primarily due to expenses
incurred by Somerset UK, Somerset Asia and NCUL.
Interest Expense. Interest expense increased 27% to $364,000 during the
first three months of 1998 from $287,000 during the corresponding period of
1997. This increase is primarily due to an increase in the loan balance under
the Company's Amended Credit Agreement (as defined below) from $17,000,000 at
March 31, 1997 to $20,000,000 at March 31, 1998 and higher interest rates in the
1998 period.
Income Taxes. The effective tax rate was 25.0% for each of the three months
ended March 31, 1998 and 1997.
Net Income. The Company had net income of $3,390,000 for the first quarter
of 1998 compared to $3,235,000 for the same period last year. On a diluted per
share basis, this represents net income per share of $0.40 and $0.39 for the
1998 and 1997 first quarters, respectively.
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Liquidity and Capital Resources
Cash flow from operations was $(3,164,000) and $4,670,000 for the first
three months of 1998 and 1997, respectively. Invested assets and cash decreased
to $255,925,000 at March 31, 1998 from $258,572,000 at December 31, 1997.
The Company's credit agreement, as amended, currently provides for a $25
million revolving credit loan facility, which reduces each quarter by amounts
ranging from $500,000 to $2,000,000 until it terminates on December 31, 2003,
and a $30 million letter of credit facility. At March 31, 1998, $20 million in
loans were outstanding under the revolving credit loan facility at an interest
rate of 6.6% and letters of credit with an aggregate face amount of $29 million
were issued under the letter of credit facility. The letters of credit are
primarily utilized by NCUL as collateral to participate in two Lloyd's marine
syndicates specializing in marine insurance. No letters of credit have been
drawn upon.
As of March 31, 1998, the Company's consolidated stockholders' equity was
$135,074,000, an increase of 3% from $131,242,000 at December 31, 1997.
Year 2000 Compliance
The Company is aware of the issues associated with Year 2000 issue in
existing computer systems and is currently replacing its major computer systems
with systems that are Year 2000 compliant and thereby will benefit from
state-of-the-art integrated systems along with being Year 2000 compliant. The
project is expected to be completed in 1998. If the project is not completed
timely, the Year 2000 issue may have material impact on the operations of the
Company. The costs directly related to the Year 2000 issue to date have been
minimal. There can be no assurance that the systems of the other companies on
which the Company's systems rely will also be timely converted or that any such
failure to convert by another company would not have an adverse effect on the
Company's sytems.
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Part II - Other Information
Item 1. Legal Proceedings:
The Company is not a party to or the subject of, any material pending
legal proceedings which depart from the ordinary routine litigation
incident to the kinds of business conducted by the Company.
Item 2. Changes in Securities:
None.
Item 3. Defaults Upon Senior Securities:
None.
Item 4. Submissions of Matters to a Vote of Securities Holders:
None.
Item 5. Other Information:
None.
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
Exhibit No. Description of Exhibit
----------- ----------------------
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed for the three months
ended March 31, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
The Navigators Group, Inc.
--------------------------------------
(Registrant)
Dated: May 15, 1998 /s / Bradley D. Wiley
------------ --------------------------------------
Bradley D. Wiley
Senior Vice President, Chief Financial
Officer and Secretary
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INDEX OF EXHIBITS
Sequentially
Numbered
Exhibit No. Description of Exhibit Page
- ----------- ---------------------- ------------
27.1 Financial Data Schedule
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