Exhibit 99.1
Navigators Reports First Quarter 2005 Earnings
NEW YORK--(BUSINESS WIRE)--May 3, 2005--The Navigators Group, Inc.
(NAVG/NASDAQ) reported net income for the 2005 first quarter of $9,699,000 or
$0.76 per share compared to $8,913,000 or $0.70 per share for the 2004 first
quarter.
The 2005 and 2004 first quarter results include net realized capital gains
of $0.01 and $0.02 per share, respectively.
Gross written premium and net written premium for the 2005 first quarter
were $216,996,000 and $117,090,000 respectively, increases of 11% and 22% from
the comparable 2004 period. The 2005 first quarter net written premium reflects
a reduction of approximately $14,500,000 in ceded reinsurance premium resulting
from the cancellation of a quota share reinsurance agreement for specialty
business effective March 31, 2005. Such amount represents the unearned portion
of the premium ceded to the reinsurance agreement that has been retained and
will be earned over the next twelve months by the Company.
The combined loss and expense ratio for the 2005 first quarter was 91.0%
compared to 88.8% for the 2004 comparable period.
Navigators' Chief Executive Officer, Stan Galanski commented, "We are
pleased with the continued profitable underwriting results generated across our
business units. Net written premium growth benefited from increased net
retentions in select product lines, reflecting our continuing confidence in the
risk selection and pricing decisions of our underwriters. Cash flow was strong,
contributing to increased investment income. As a niche underwriter, we remain
focused on attractive specialty opportunities in markets where rates and terms
are consistent with our objective of underwriting profitability."
Consolidated cash flow from operations for the 2005 first quarter was
$65,190,000, compared to $26,733,000 for the comparable 2004 period. Included in
the 2005 first quarter cash flow is approximately $24 million attributable to
the settlement of the reinsurance to close ("RITC") premium recorded by Lloyd's
Syndicate 1221 in the 2004 fourth quarter representing the transfer of assets
and liabilities from the participants of the 2002 underwriting year to the 2003
underwriting year in which Navigators had increased its participation to 97.4%
from 68.1%. Approximately 70% of the RITC settlement has been recorded as
interest-earning funds withheld for reinsurers of the syndicate or will be
distributed to third party participants of the 2002 year of account.
Net investment income for the 2005 first quarter was $7,622,000, an
increase of 29% compared to $5,902,000 for the comparable 2004 period. The
pre-tax investment yield for the 2005 and 2004 first quarters was 3.5% and 3.4%,
respectively.
Stockholders' equity was $333,756,000 or $26.16 per share at March 31, 2005
compared to $328,578,000 or $25.96 per share at December 31, 2004. Statutory
surplus of Navigators Insurance Company was $240,153,000 at March 31, 2005.
The Company will hold a conference call on Wednesday, May 4, 2005 starting
at 8:30 a.m. EST to discuss the first quarter's results. To access the call
domestically, please dial 1-800-510-0146 using confirmation code 38627959.
Internationally, the call may be accessed by dialing 617-614-3449 using the same
confirmation code. To listen via live audio webcast, please visit the Company's
website (www.navg.com) at least ten minutes prior to the start of the call and
click on the May 4th Live Audio Webcast link. The webcast will also be available
as a replay at the same location starting one hour after the call is finished.
The Navigators Group, Inc. is an international insurance holding company
with insurance company operations, underwriting management companies, and
operations at Lloyd's of London. Headquartered in New York City, Navigators has
offices in major insurance centers in the United States, the United Kingdom and
Belgium.
This press release may contain "forward-looking statements" as defined in
the Private Securities Litigation Reform Act of 1995. Whenever used in this
release, the words "estimate", "expect", "believe" or similar expressions are
intended to identify such forward-looking statements. We cannot assure that
results which we anticipate will be achieved, since results may differ
materially because of known and unknown risks and uncertainties which we face.
Please refer to Navigators' most recent Form 10-K and its other filings with the
Securities and Exchange Commission for a description of Navigators' business and
the important factors which may affect that business. Navigators undertakes no
obligation to publicly update or revise any forward-looking statement.
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Financial Highlights
($'s in thousands, except per share data)
Three Months Ended
March 31,
------------------
Financial Highlights 2005 2004 Change
- -------------------- ---- ---- ------
Gross written premium $216,996 $195,951 11%
Net written premium 117,090 95,935 22%
Revenues:
Net earned premium 77,538 74,175 5%
Commission income 1,270 1,127 13%
Investment Income 7,622 5,902 29%
Net realized capital gains 167 422 -60%
Other income 897 128 NM
-----------------
Total revenues 87,494 81,754 7%
-----------------
Operating expenses:
Net losses and loss adjustment
expenses incurred 46,221 43,752 6%
Commission expense 9,604 11,028 -13%
Other operating expenses 17,444 13,432 30%
-----------------
Total operating expenses 73,269 68,212 7%
-----------------
Income before income taxes 14,225 13,542 5%
-----------------
Income Tax Expense / (Benefit):
Current 5,172 5,007 3%
Deferred (646) (378) NM
-----------------
Income tax expense 4,526 4,629 -2%
-----------------
Net income $ 9,699 $ 8,913 9%
=================
Per Share Data
- --------------
Net income per common share:
Basic $ 0.77 $ 0.71 8%
Diluted $ 0.76 $ 0.70 8%
Average shares outstanding:
Basic 12,677 12,554
Diluted 12,760 12,654
Underwriting Ratios
- -------------------
Loss Ratio 59.6% 59.0%
Expense Ratio 31.4% 29.8%
-----------------
Combined Ratio 91.0% 88.8%
Balance Sheet Data March 31, Dec. 31,
- ------------------ 2005 2004
------------------
Stockholders' equity $333,756 $328,578 2%
Book value per share $ 26.16 $ 25.96 1%
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($'s in thousands)
March 31, December 31,
2005 2004
-------- -----------
ASSETS
Investments and cash:
Fixed maturities, available-for-sale, at
fair value (amortized cost: 2005,
$771,506: 2004, $713,049) $ 771,307 $ 722,434
Equity securities, available-for-sale, at
fair value (cost: 2005, $19,254: 2004,
$19,101) 20,884 21,170
Short-term investments, at cost which
approximates fair value 107,574 96,653
Cash 7,652 14,676
---------- ----------
Total investments and cash 907,417 854,933
---------- ----------
Premiums in course of collection 179,181 176,720
Commissions receivable 3,138 3,062
Prepaid reinsurance premiums 147,012 130,761
Reinsurance receivable on paid losses 18,861 20,955
Reinsurance receivable on unpaid losses and
loss adjustment expenses 520,262 502,329
Net deferred income tax benefit 21,427 17,348
Deferred policy acquisition costs 35,935 23,882
Accrued investment income 7,341 7,303
Goodwill 5,241 5,282
Other assets 19,218 14,103
---------- ----------
Total assets $1,865,033 $1,756,678
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Reserves for losses and loss adjustment
expenses $ 999,766 $ 966,117
Unearned premium 326,571 270,970
Reinsurance balances payable 140,451 143,427
Federal income tax payable 9,270 5,614
Payable for securities purchased 2,695 3,027
Accounts payable and other liabilities 52,524 38,945
---------- ----------
Total liabilities 1,531,277 1,428,100
---------- ----------
Stockholders' equity:
Preferred stock, $.10 par value, authorized
1,000,000 shares, none issued - -
Common stock, $.10 par value, 20,000,000
shares authorized for 2005 and 2004; issued
and outstanding: 12,759,958 for 2005 and
12,657,160 for 2004 1,276 1,266
Additional paid-in capital 156,514 154,670
Retained earnings 173,036 163,337
Accumulated other comprehensive income 2,930 9,305
---------- ----------
Total stockholders' equity 333,756 328,578
---------- ----------
Total liabilities and stockholders'
equity $1,865,033 $1,756,678
========== ==========
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Comparative Premium Data
($'s in thousands)
Gross Written Premium: First Quarter
-----------------
Insurance Companies: 2005 2004 Change
-------------------------
Marine $ 68,284 $ 59,426 15%
Specialty 42,949 34,230 25%
Professional Liability 17,930 15,033 19%
Assumed from Lloyd's 125 3,054 -96%
Other (includes run-off) - 86 NM
-----------------
129,288 111,829 16%
Lloyd's Operations:
Marine 73,931 79,316 -7%
Other 13,899 7,842 77%
-----------------
87,830 87,158 1%
Intercompany elimination (122) (3,036) NM
-----------------
Total $216,996 $195,951 11%
=================
Net Written Premium: First Quarter
-----------------
Insurance Companies: 2005 2004 Change
-------------------------
Marine $ 30,347 $ 25,258 20%
Specialty 36,398 20,511 77%
Professional Liability 6,679 5,473 22%
Assumed from Lloyd's 126 2,906 -96%
Other (includes run-off) 31 (3) NM
-----------------
73,581 54,145 36%
Lloyd's Operations:
Marine 40,060 39,059 3%
Other 3,449 2,731 26%
-----------------
43,509 41,790 4%
-----------------
Total $117,090 $ 95,935 22%
=================
Net Earned Premium: First Quarter
-----------------
Insurance Companies: 2005 2004 Change
-------------------------
Marine $ 19,879 $ 20,428 -3%
Specialty 20,022 21,539 -7%
Professional Liability 6,717 3,811 76%
Assumed from Lloyd's 711 7,405 -90%
Other (includes run-off) 34 (1) NM
-----------------
47,363 53,182 -11%
Lloyd's Operations:
Marine 29,627 20,518 44%
Other 548 475 15%
-----------------
30,175 20,993 44%
-----------------
Total $ 77,538 $ 74,175 5%
=================
THE NAVIGATORS GROUP, INC. AND
SUBSIDIARIES
Segment Information
Three Months Ended
March 31, 2005
($'s in thousands)
Insurance Lloyd's Navigators Parent &
Companies Operations Agencies Other (1) Total
-------------------------------------------------
Gross premium written $129,288 $87,830 $ (122)$216,996
Net premium written 73,581 43,509 - 117,090
Revenues:
Net earned premium 47,363 30,175 - 77,538
Commission income - 268 $ 9,750 (8,748) 1,270
Investment Income 6,855 749 2 16 7,622
Net realized capital
gains / (losses) 266 (99) - - 167
Other income (expense) (2) 628 271 - 897
-------- ------- ------- ------- --------
Total revenues 54,482 31,721 10,023 (8,732) 87,494
-------- ------- ------- ------- --------
Operating expenses:
Net losses and loss
adjustment expenses 28,842 17,379 - - 46,221
Commission expense 12,586 4,881 - (7,863) 9,604
Other operating
expenses 2,112 4,761 10,996 (425) 17,444
-------- ------- ------- ------- --------
Total operating
expenses 43,540 27,021 10,996 (8,288) 73,269
-------- ------- ------- ------- --------
Income before income
taxes 10,942 4,700 (973) (444) 14,225
Income tax expense
(benefit) 3,399 1,645 (362) (156) 4,526
-------- ------- ------- ------- --------
Net Income (loss) $ 7,543 $ 3,055 $ (611) $ (288)$ 9,699
======== ======= ======= ======= ========
Loss and loss expenses
ratio 60.9% 57.6% 59.6%
Commission expense
ratio 26.6% 16.2% 22.5%
Other operating
expense ratio 4.5% 15.8% 8.9%
-------- ------- --------
Combined ratio 92.0% 89.6% 91.0%
======== ======= ========
Notes:
(1) Includes inter- segment eliminations.
THE NAVIGATORS GROUP, INC. AND
SUBSIDIARIES
Segment Information
Three Months Ended
March 31, 2004
($'s in thousands)
Insurance Lloyd's Navigators Parent &
Companies Operations Agencies Other (1) Total
------------------------------------------------
Gross premium written $111,829 $87,158 $(3,036)$195,951
Net premium written 54,145 41,790 - 95,935
Revenues:
Net earned premium 53,182 20,993 - 74,175
Commission income - 62 $7,932 (6,867) 1,127
Investment Income 5,484 404 3 11 5,902
Net realized capital
gains 205 217 - - 422
Other income (expense) (61) 4 185 - 128
-------- ------- ------- ------- --------
Total revenues 58,810 21,680 8,120 (6,856) 81,754
-------- ------- ------- ------- --------
Operating expenses:
Net losses and loss
adjustment expenses 32,710 11,042 - - 43,752
Commission expense 14,145 3,750 - (6,867) 11,028
Other operating
expenses 1,198 3,036 8,605 593 13,432
-------- ------- ------- ------- --------
Total operating
expenses 48,053 17,828 8,605 (6,274) 68,212
-------- ------- ------- ------- --------
Income before income
taxes 10,757 3,852 (485) (582) 13,542
Income tax expense
(benefit) 3,478 1,348 (140) (57) 4,629
-------- ------- ------- ------- --------
Net Income (loss) $ 7,279 $ 2,504 $ (345)$ (525)$ 8,913
======== ======= ======= ======= ========
Loss and loss expenses
ratio 61.5% 52.6% 59.0%
Commission expense
ratio 26.6% 17.9% 24.1%
Other operating
expense ratio 2.3% 14.4% 5.7%
-------- ------- --------
Combined ratio 90.4% 84.9% 88.8%
======== ======= ========
Notes:
(1) Includes inter- segment eliminations.
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results
($'s in thousands)
Three Months Ended March 31, 2005
----------------------------------------------
Net Losses Combined Ratio
Earned and LAE Underwriting --------------
Insurance Companies: Premium Incurred Expenses Loss Expense Total
----------------------------------------------
Marine $19,879 $12,743 $ 5,520 64.1% 27.8% 91.9%
Specialty 20,022 11,533 6,850 57.6% 34.2% 91.8%
Professional Liability 6,717 4,440 2,001 66.1% 29.8% 95.9%
Assumed from Lloyd's 711 573 322 80.6% 45.4% 126.0%
Other (includes run-off) 34 (447) 5 NM NM NM
----------------------------------------------
47,363 28,842 14,698 60.9% 31.1% 92.0%
Lloyd's Operations 30,175 17,379 9,642 57.6% 32.0% 89.6%
----------------------------------------------
Total $77,538 $46,221 $24,340 59.6% 31.4% 91.0%
==============================================
Three Months Ended March 31, 2004
----------------------------------------------
Net Losses Combined Ratio
Earned and LAE Underwriting --------------
Insurance Companies: Premium Incurred Expenses Loss Expense Total
----------------------------------------------
Marine $20,428 $12,046 $5,599 59.0% 27.4% 86.4%
Specialty 21,539 14,317 6,968 66.5% 32.3% 98.8%
Professional Liability 3,811 2,299 776 60.3% 20.4% 80.7%
Assumed from Lloyd's 7,405 4,217 1,999 57.0% 27.0% 84.0%
Other (includes run-off) (1) (169) 1 NM NM NM
----------------------------------------------
53,182 32,710 15,343 61.5% 28.9% 90.4%
Lloyd's Operations 20,993 11,042 6,786 52.6% 32.3% 84.9%
----------------------------------------------
Total $74,175 $43,752 $22,129 59.0% 29.8% 88.8%
==============================================
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Reserves
($'s in thousands)
3/31/2005 12/31/2004
--------- ----------
Insurance Companies:
Marine $ 134,936 $ 130,439
Specialty 155,313 150,347
Professional Liability 22,871 19,001
Assumed from Lloyd's Operations 36,078 37,790
Other (primarily run-off business) 21,334 22,512
---------- -----------
Total Insurance Companies 370,532 360,089
---------- -----------
Lloyd's Operations:
Marine 104,214 99,565
Other 4,758 4,134
---------- -----------
Total Lloyd's Operations 108,972 103,699
---------- -----------
Total net loss reserves $ 479,504 $ 463,788
========== ===========
Total net case loss reserves $ 198,632 $ 189,746
Total net IBNR loss reserves 280,872 274,042
---------- -----------
Total net loss reserves $ 479,504 $ 463,788
========== ===========
Asbestos & Environmental Claim Data
($'s in thousands)
Three Months Ended
March 31, 2005
Asbestos Environmental Total
---------- ------------- ------------
Gross of Reinsurance
Beginning reserve $ 78,421 $ 7,513 $ 85,934
Incurred loss & LAE 251 1,498 1,749
Calendar year payments 109 662 771
--------- ---------- -----------
Ending reserves $ 78,563 $ 8,349 $ 86,912
========= ========== ===========
Net of Reinsurance
Beginning reserve $ 31,394 $ 1,494 $ 32,888
Incurred loss & LAE 199 900 1,099
Calendar year payments 3 569 572
--------- ---------- -----------
Ending reserves $ 31,590 $ 1,825 $ 33,415
========= ========== ===========
Outstanding Claim Count 135 98 233
========= ========== ===========
CONTACT: The Navigators Group, Inc.
Paul J. Malvasio
Executive Vice President
and Chief Financial Officer
914-933-6088
pmalvasio@navg.com
www.navg.com