Exhibit 99.1
Navigators Reports Record Third Quarter Results
NEW YORK--(BUSINESS WIRE)--Oct. 30, 2006--The Navigators Group, Inc.
(NASDAQ:NAVG) reported record net income of $18,333,000 or $1.09 per share for
the 2006 third quarter compared to a net loss of $12,725,000 or $0.99 per share
for the 2005 third quarter. The 2006 third quarter results include a net
realized capital loss of $.01 per share and the 2005 third quarter results
include a net realized capital gain of $.02 per share. The 2005 third quarter
net loss includes $23,889,000 or $1.87 per share for after-tax net losses from
Hurricanes Katrina and Rita.
Gross written premium and net written premium for the 2006 third quarter
were $221,667,000 and $119,037,000, respectively, increases of 18% and 57% from
the comparable 2005 period. Such 2006 third quarter increases were 21% and 31%,
respectively, when the effects of reinsurance reinstatement premiums for
hurricane losses are excluded from the 2005 gross and net written premium
amounts.
Net income for the nine month period ended September 30, 2006 was
$51,956,000 or $3.09 per share compared to $8,254,000 or $0.64 per share for the
nine month period ended September 30, 2005. The results for the nine months
ended September 30, 2006 included a net realized capital loss of $.03 per share
and the results for the nine months ended September 30, 2005 included a net
realized capital gain of $.05 per share.
Gross written premium and net written premium for the nine month period
ended September 30, 2006 were $737,816,000 and $391,711,000, respectively,
increases of 24% and 37% from the comparable 2005 periods.
The combined loss and expense ratios for the 2006 third quarter and nine
month period were 87.4% and 87.9%, respectively, compared to 139.8% and 106.7%
for the comparable 2005 periods. The combined loss and expense ratios for the
2006 third quarter and nine month period were favorably impacted by 5.1 and 3.8
loss ratio points, respectively, by redundancies of prior year loss reserves.
Net paid loss ratios for the 2006 third quarter and nine month period were 35.9%
and 34.6%, respectively, compared to 39.1% and 39.3% for the comparable 2005
periods. The combined loss and expense ratios for the 2005 third quarter and
nine month period were increased by an aggregate 47.2 and 14.9 loss and expense
ratio points, respectively, for the net losses from Hurricanes Katrina and Rita.
Stan Galanski, Navigators' Chief Executive Officer, commented, "We continue
to generate excellent underwriting results, reflecting what we believe to be a
well underwritten and properly priced book of business. Loss emergence patterns
continue to be favorable, particularly in Specialty and Professional Liability
business. Despite some softening in these two areas, we view the underwriting
environment as favorable. Our strong growth comes from the continued development
of several initiatives launched over the past two years."
Galanski continued, "Market conditions in the marine business remain
favorable. With the lack of hurricane activity during the quarter, we hope that
marine and energy underwriters will recall the significant rate deficiencies in
pricing catastrophe exposures for energy risks made evident by last year's
storms, and will maintain the discipline required to profitably underwrite this
challenging niche."
Net investment income for the 2006 third quarter and nine month period was
$14,691,000 and $41,244,000, respectively, both increases of 60% from the
comparable 2005 periods. The pre-tax investment yields for the 2006 third
quarter and nine month period were 4.5% and 4.4%, respectively, compared to 3.8%
for the comparable 2005 periods.
Consolidated cash flow from operations for the 2006 third quarter and nine
month period ended September 30, 2006 was $76,043,000 and $92,715,000,
respectively, compared to $52,041,000 and $167,947,000 for the comparable 2005
periods. The 2006 nine month cash flow from operations was reduced by gross loss
payments of approximately $114,500,000 for 2005 hurricane losses and $19,900,000
for settled asbestos claims of which $67,200,000 and $10,689,000, respectively,
are due to be collected from reinsurers in subsequent accounting periods.
Stockholders' equity was $527,515,000 or $31.59 per share at September 30,
2006 compared to $470,238,000 or $28.30 per share at December 31, 2005.
Statutory surplus of Navigators Insurance Company was $500,760,000 at September
30, 2006.
The Company will hold a conference call on Tuesday, October 31, 2006
starting at 8:30 a.m. ET to discuss the third quarter's results. To access the
call domestically, please dial 1-866-578-5771 using confirmation code 96967220.
Internationally, the call may be accessed by dialing 617-213-8055 using the same
confirmation code. To listen via live audio webcast, please visit the Company's
website (www.navg.com) at least ten minutes prior to the start of the call and
click on the October 31st Live Audio Webcast link. The webcast will also be
available as a replay at the same location starting one hour after the call is
finished.
The Navigators Group, Inc. is an international insurance holding company
with insurance company operations, underwriting management companies, and
operations at Lloyd's of London. Headquartered in New York City, Navigators has
offices in major insurance centers in the United States, the United Kingdom and
Belgium.
This press release may contain "forward-looking statements" as defined in
the Private Securities Litigation Reform Act of 1995. Whenever used in this
release, the words "estimate", "expect", "believe" or similar expressions are
intended to identify such forward-looking statements. We cannot assure that
results that we anticipate will be achieved, since results may differ materially
because of known and unknown risks and uncertainties that we face. Please refer
to Navigators' most recent Forms 10-K and 10-Q and its other filings with the
Securities and Exchange Commission for a description of Navigators' business and
the important factors that may affect that business. Navigators undertakes no
obligation to publicly update or revise any forward-looking statement.
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Financial Highlights
($'s in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------------
Financial Highlights 2006 2005 Change 2006 2005 Change
- ------------------------------------------------------ ---------------
Gross written
premium $221,667 $188,114 18% $737,816 $595,243 24%
Net written premium 119,037 76,049 57% 391,711 286,396 37%
Revenues:
Net earned premium 115,696 74,734 55% 333,959 238,104 40%
Commission income 639 1,025 -38% 2,465 3,809 -35%
Investment Income 14,691 9,196 60% 41,244 25,779 60%
Net realized capital
gains (losses) (151) 344 NM (767) 927 NM
Other income
(expense) (884) 459 NM (654) 1,826 NM
--------- -------- --------- --------
Total revenues 129,991 85,758 52% 376,247 270,445 39%
--------- -------- --------- --------
Operating expenses:
Net losses and loss
adjustment
expenses incurred 64,456 76,836 -16% 193,200 176,668 9%
Commission expense 13,769 11,656 18% 41,098 30,502 35%
Other operating
expenses 22,683 17,482 30% 61,018 52,554 16%
Interest expense 2,214 - NM 4,034 - NM
--------- -------- --------- --------
Total operating
expenses 103,122 105,974 -3% 299,350 259,724 15%
--------- -------- --------- --------
Income before income
taxes 26,869 (20,216) NM 76,897 10,721 617%
--------- -------- --------- --------
Income tax expense
(benefit):
Current 8,126 (5,605) NM 27,492 7,636 260%
Deferred 410 (1,886) NM (2,551) (5,169) NM
--------- -------- --------- --------
Income tax expense
(benefit) 8,536 (7,491) NM 24,941 2,467 911%
--------- -------- --------- --------
Net income (loss) $ 18,333 $(12,725) NM $ 51,956 $ 8,254 529%
========= ======== ========= ========
Per Share Data
- --------------------
Net income per common
share:
Basic $ 1.10 $ (0.99) NM $ 3.12 $ 0.65 381%
Diluted $ 1.09 $ (0.99) NM $ 3.09 $ 0.64 381%
Average shares
outstanding:
Basic 16,685 12,791 16,664 12,744
Diluted 16,827 12,791 16,812 12,849
Underwriting Ratios
- --------------------
Loss Ratio 55.7% 102.8% 57.9% 74.2%
Expense Ratio 31.7% 37.0% 30.0% 32.5%
--------- -------- --------- --------
Combined Ratio 87.4% 139.8% 87.9% 106.7%
Balance Sheet Data Sept. Dec.
30, 2006 31, 2005
- -------------------- --------- ---------
Stockholders' equity $527,515 $470,238 12%
Book value per share $ 31.59 $ 28.30 12%
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($'s in thousands)
Sept. December
30, 2006 31, 2005
----------- -----------
ASSETS
Investments and cash:
Fixed maturities, available-for-sale, at fair
value
(amortized cost: 2006, $1,178,056; 2005,
$986,726) $1,174,196 $ 984,113
Equity securities, available-for-sale, at fair
value (cost: 2006, $28,853; 2005, $19,667) 32,524 20,911
Short-term investments, at cost which
approximates fair value 199,470 164,047
Cash 1,891 13,165
----------- -----------
Total investments and cash 1,408,081 1,182,236
----------- -----------
Premiums in course of collection 181,897 155,977
Commissions receivable 2,661 3,467
Prepaid reinsurance premiums 183,458 136,341
Reinsurance receivable on paid losses 110,429 37,055
Reinsurance receivable on unpaid losses and
loss adjustment expenses 962,687 979,015
Net deferred income tax benefit 29,558 28,317
Deferred policy acquisition costs 43,458 29,697
Accrued investment income 12,109 10,297
Goodwill and other intangible assets 7,769 7,341
Other assets 19,889 13,506
----------- -----------
Total assets $2,961,996 $2,583,249
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Reserves for losses and loss adjustment
expenses $1,619,450 $1,557,991
Unearned premium 423,419 316,516
Reinsurance balances payable 201,606 180,059
Senior notes 123,533 -
Federal income tax payable 5,511 1,274
Payable for securities purchased 846 823
Accounts payable and other liabilities 60,116 56,348
----------- -----------
Total liabilities 2,434,481 2,113,011
----------- -----------
Stockholders' equity:
Preferred stock, $.10 par value, authorized
1,000,000 shares, none issued - -
Common stock, $.10 par value, 50,000,000 shares
authorized for 2006 and 20,000,000 for 2005;
issued and outstanding: 16,700,279 for 2006
and 16,616,781 for 2005 1,670 1,662
Additional paid-in capital 285,616 282,463
Retained earnings 238,857 186,901
Accumulated other comprehensive income 1,372 (788)
----------- -----------
Total stockholders' equity 527,515 470,238
----------- -----------
Total liabilities and stockholders'
equity $2,961,996 $2,583,249
=========== ===========
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Comparative Premium Data
($'s in thousands)
Gross Written Third Quarter Nine Months
Premium:
------------------ ------------------
Insurance Companies: 2006 2005 Change 2006 2005 Change
------------------------ ------------------------
Marine $ 54,116 $ 53,084 2% $209,928 $181,500 16%
Specialty 85,675 59,307 44% 219,843 152,454 44%
Professional
Liability 22,848 21,528 6% 65,164 60,708 7%
Assumed from Lloyd's 850 (261) NM 1,070 (1,066) NM
Other (includes run-
off) 184 60 NM 211 90 NM
------------------ ------------------
163,673 133,718 22% 496,216 393,686 26%
Lloyd's Operations:
Marine before Hurr.
reinstatements 44,962 42,838 5% 202,074 163,958 23%
Hurricane
reinstatements - 4,500 NM - 4,500 NM
------------------ ------------------
Marine 44,962 47,338 -5% 202,074 168,458 20%
Professional
Liability 9,015 3,131 NM 16,104 4,718 NM
Other 3,803 3,673 4% 23,422 27,343 -14%
------------------ ------------------
57,780 54,142 7% 241,600 200,519 20%
Intercompany
elimination 214 254 NM - 1,038 NM
------------------ ------------------
Total $221,667 $188,114 18% $737,816 $595,243 24%
================== ==================
Net Written Premium: Third Quarter Nine Months
------------------ ------------------
Insurance Companies: 2006 2005 Change 2006 2005 Change
------------------------ ------------------------
Marine before Hurr.
reinstatements $ 24,566 $ 20,525 20% $101,891 $ 77,336 32%
Hurricane
reinstatements - (9,147) NM - (9,147) NM
------------------ ------------------
Marine 24,566 11,378 116% 101,891 68,189 49%
Specialty 52,923 38,313 38% 136,246 107,991 26%
Professional
Liability 13,450 9,823 37% 34,894 24,333 43%
Assumed from Lloyd's 224 (413) NM 241 (1,209) NM
Other (includes run-
off) 25 (8) NM 5 45 NM
------------------ ------------------
91,188 59,093 54% 273,277 199,349 37%
Lloyd's Operations:
Marine before Hurr.
reinstatements 23,743 19,920 19% 107,026 82,710 29%
Hurricane
reinstatements - (5,318) NM - (5,318) NM
------------------ ------------------
Marine 23,743 14,602 63% 107,026 77,392 38%
Professional
Liability 3,381 1,231 NM 6,326 1,855 NM
Other 725 1,123 -35% 5,082 7,800 -35%
------------------ ------------------
27,849 16,956 64% 118,434 87,047 36%
------------------ ------------------
Total $119,037 $ 76,049 57% $391,711 $286,396 37%
================== ==================
Net Earned Premium: Third Quarter Nine Months
------------------ ------------------
Insurance Companies: 2006 2005 Change 2006 2005 Change
------------------------ ------------------------
Marine before Hurr.
reinstatements $ 29,291 $ 23,538 24% $ 80,679 $ 66,747 21%
Hurricane
reinstatements - (9,147) NM - (9,147) NM
------------------ ------------------
Marine 29,291 14,391 104% 80,679 57,600 40%
Specialty 45,234 31,965 42% 121,133 81,429 49%
Professional
Liability 10,938 7,786 40% 29,494 21,493 37%
Assumed from Lloyd's 83 (356) NM 100 (320) NM
Other (includes run-
off) (52) (8) NM (72) 46 NM
------------------ ------------------
85,494 53,778 59% 231,334 160,248 44%
Lloyd's Operations:
Marine before Hurr.
reinstatements 29,126 24,771 18% 99,029 79,961 24%
Hurricane
reinstatements - (5,318) NM - (5,318) NM
------------------ ------------------
Marine 29,126 19,453 50% 99,029 74,643 33%
Professional
Liability 1,525 545 NM 2,130 711 NM
Other (449) 958 -147% 1,466 2,502 -41%
------------------ ------------------
30,202 20,956 44% 102,625 77,856 32%
------------------ ------------------
Total $115,696 $ 74,734 55% $333,959 $238,104 40%
================== ==================
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information (1)
Three Months Ended
September 30, 2006
($'s in thousands)
Insurance Lloyd's Corporate Total (2)
Companies Operations
--------- ---------- --------- ---------
Gross premium written $163,673 $ 57,780 $221,667
Net premium written 91,188 27,849 119,037
Net earned premium 85,494 30,202 115,696
Net losses and loss
adjustment expenses (47,926) (16,530) (64,456)
Commission expense (9,889) (3,880) (13,769)
Other operating expenses (16,697) (5,986) (22,683)
Commission and other income /
(expense) 661 (906) (245)
--------- ---------- ---------
Underwriting profit 11,643 2,900 14,543
Investment income 12,345 1,774 $ 572 14,691
Net realized capital (losses) (29) (122) (151)
Interest expense (2,214) (2,214)
--------- ---------- --------- ---------
Income (loss) before income
tax expense (benefit) 23,959 4,552 (1,642) 26,869
Income tax expense (benefit) 7,658 1,627 (749) 8,536
--------- ---------- --------- ---------
Net Income (loss) $ 16,301 $ 2,925 $ (893) $ 18,333
========= ========== ========= =========
Loss and loss expenses ratio 56.1% 54.7% 55.7%
Commission expense ratio 11.6% 12.8% 11.9%
Other operating expense ratio
(3) 18.8% 22.8% 19.8%
--------- ---------- ---------
Combined ratio 86.5% 90.3% 87.4%
========= ========== =========
(1) Effective in 2006, the Company classifies its business into two
underwriting segments, Insurance Companies and Lloyd's Operations,
and a Corporate segment. Segment data for each of the two
underwriting operations include allocations of revenues and expenses
of Navigators Agencies and Holding Company expenses and related
income tax amounts previously reported separately. Segment data for
2005 and prior periods have been restated to reflect this change in
segment reporting.
(2) Certain amounts included in gross written premium, commission
expense and other income relate to inter-segment transactions,
accordingly the sum for each segment does not agree to the totals
shown in the table above.
(3) The other operating expense ratio is adjusted to include
commission and other income/(expense).
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information (1)
Three Months Ended
September 30, 2005
($'s in thousands)
Insurance Lloyd's Corporate Total (2)
Companies Operations
--------- ---------- --------- ---------
Gross premium written $133,718 $ 54,142 $188,114
Net premium written 59,093 16,956 76,049
Net earned premium 53,778 20,956 74,734
Net losses and loss
adjustment expenses (47,332) (29,504) (76,836)
Commission expense (6,465) (5,191) (11,656)
Other operating expenses (13,284) (4,198) (17,482)
Commission and other income 704 780 1,484
--------- ---------- ---------
Underwriting (loss) (12,599) (17,157) (29,756)
Investment income 7,694 1,439 $ 63 9,196
Net realized capital gains /
(losses) 401 (57) 344
--------- ---------- --------- ---------
Income (loss) before income
tax expense (benefit) (4,504) (15,775) 63 (20,216)
Income tax expense (benefit) (1,992) (5,521) 22 (7,491)
--------- ---------- --------- ---------
Net Income (loss) $ (2,512) $ (10,254) $ 41 $(12,725)
========= ========== ========= =========
Loss and loss expenses ratio 88.0% 140.8% 102.8%
Commission expense ratio 12.0% 24.8% 15.6%
Other operating expense ratio
(3) 23.4% 16.3% 21.4%
--------- ---------- ---------
Combined ratio 123.4% 181.9% 139.8%
========= ========== =========
(1) Effective in 2006, the Company classifies its business into two
underwriting segments, Insurance Companies and Lloyd's Operations,
and a Corporate segment. Segment data for each of the two
underwriting operations include allocations of revenues and expenses
of Navigators Agencies and Holding Company expenses and related
income tax amounts previously reported separately. Segment data for
2005 and prior periods have been restated to reflect this change in
segment reporting.
(2) Certain amounts included in gross written premium, commission
expense and other income relate to inter-segment transactions,
accordingly the sum for each segment does not agree to the totals
shown in the table above.
(3) The other operating expense ratio is adjusted to include
commission and other income/(expense).
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information (1)
Nine Months Ended
September 30, 2006
($'s in thousands)
Insurance Lloyd's Corporate Total (2)
Companies Operations
---------- ---------- --------- ----------
Gross premium written $ 496,216 $ 241,600 $ 737,816
Net premium written 273,277 118,434 391,711
Net earned premium 231,334 102,625 333,959
Net losses and loss
adjustment expenses (135,556) (57,644) (193,200)
Commission expense (24,925) (16,173) (41,098)
Other operating expenses (44,096) (16,922) (61,018)
Commission and other income
/ (expense) 2,661 (850) 1,811
---------- ---------- ----------
Underwriting profit 29,418 11,036 40,454
Investment income 34,778 5,448 $ 1,018 41,244
Net realized capital
(losses) (329) (438) (767)
Interest expense (4,034) (4,034)
---------- ---------- --------- ----------
Income (loss) before income
tax expense (benefit) 63,867 16,046 (3,016) 76,897
Income tax expense
(benefit) 20,442 5,650 (1,151) 24,941
---------- ---------- --------- ----------
Net Income (loss) $ 43,425 $ 10,396 $(1,865) $ 51,956
========== ========== ========= ==========
Loss and loss expenses
ratio 58.6% 56.2% 57.9%
Commission expense ratio 10.8% 15.8% 12.3%
Other operating expense
ratio (3) 17.9% 17.3% 17.7%
---------- ---------- ----------
Combined ratio 87.3% 89.3% 87.9%
========== ========== ==========
(1) Effective in 2006, the Company classifies its business into two
underwriting segments, Insurance Companies and Lloyd's Operations,
and a Corporate segment. Segment data for each of the two
underwriting operations include allocations of revenues and expenses
of Navigators Agencies and Holding Company expenses and related
income tax amounts previously reported separately. Segment data for
2005 and prior periods have been restated to reflect this change in
segment reporting.
(2) Certain amounts included in gross written premium, commission
expense and other income relate to inter-segment transactions,
accordingly the sum for each segment does not agree to the totals
shown in the table above.
(3) The other operating expense ratio is adjusted to include
commission and other income/(expense).
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information (1)
Nine Months Ended
September 30, 2005
($'s in thousands)
Insurance Lloyd's Corporate Total (2)
Companies Operations
---------- ---------- --------- ----------
Gross premium written $ 393,686 $ 200,519 $ 595,243
Net premium written 199,349 87,047 286,396
Net earned premium 160,248 77,856 238,104
Net losses and loss
adjustment expenses (114,856) (61,812) (176,668)
Commission expense (15,597) (14,905) (30,502)
Other operating expenses (37,540) (15,014) (52,554)
Commission and other income 3,599 2,036 5,635
---------- ---------- ----------
Underwriting (loss) (4,146) (11,839) (15,985)
Investment income 22,037 3,642 $ 100 25,779
Net realized capital gains
/ (losses) 1,348 (421) 927
---------- ---------- --------- ----------
Income (loss) before income
tax expense (benefit) 19,239 (8,618) 100 10,721
Income tax expense
(benefit) 5,449 (3,017) 35 2,467
---------- ---------- --------- ----------
Net Income (loss) $ 13,790 $ (5,601) $ 65 $ 8,254
========== ========== ========= ==========
Loss and loss expenses
ratio 71.7% 79.4% 74.2%
Commission expense ratio 9.7% 19.1% 12.8%
Other operating expense
ratio (3) 21.2% 16.7% 19.7%
---------- ---------- ----------
Combined ratio 102.6% 115.2% 106.7%
========== ========== ==========
(1) Effective in 2006, the Company classifies its business into two
underwriting segments, Insurance Companies and Lloyd's Operations,
and a Corporate segment. Segment data for each of the two
underwriting operations include allocations of revenues and expenses
of Navigators Agencies and Holding Company expenses and related
income tax amounts previously reported separately. Segment data for
2005 and prior periods have been restated to reflect this change in
segment reporting.
(2) Certain amounts included in gross written premium, commission
expense and other income relate to inter-segment transactions,
accordingly the sum for each segment does not agree to the totals
shown in the table above.
(3) The other operating expense ratio is adjusted to include
commission and other income/(expense).
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results
($'s in thousands)
Three Months Ended September 30, 2006
----------------------------------------------------
Combined Ratio
Net Losses ---------------------
Insurance Earned and LAE Underwriting
Companies: Premium Incurred Expenses Loss Expense Total
------------------------------------- ------- ------
Marine $ 29,291 $17,064 $ 8,696 58.3% 29.7% 88.0%
Specialty 45,234 24,216 13,713 53.5% 30.3% 83.8%
Professional
Liability 10,938 6,417 3,615 58.7% 33.1% 91.8%
Assumed from
Lloyd's 83 51 (27) NM NM NM
Other (includes
run-off) (52) 178 (72) NM NM NM
------------------------------------- ------- ------
85,494 47,926 25,925 56.1% 30.4% 86.5%
Lloyd's Operations 30,202 16,530 10,772 54.7% 35.6% 90.3%
------------------------------------- ------- ------
Total $115,696 $64,456 $36,697 55.7% 31.7% 87.4%
===================================== ======= ======
Three Months Ended September 30, 2005
--------------------------------------------- ------
Combined Ratio
Net Losses ---------------------
Insurance Earned and LAE Underwriting
Companies: Premium Incurred Expenses Loss Expense Total
------------------------------------- ------- ------
Marine $ 14,391 $23,850 $ 6,846 165.7% 47.6% 213.3%
Specialty 31,965 19,184 9,403 60.0% 29.4% 89.4%
Professional
Liability 7,786 5,205 2,617 66.9% 33.6% 100.5%
Assumed from
Lloyd's (356) (575) 163 NM NM NM
Other (includes
run-off) (8) (332) 17 NM NM NM
------------------------------------- ------- ------
53,778 47,332 19,046 88.0% 35.4% 123.4%
Lloyd's Operations 20,956 29,504 8,608 140.8% 41.1% 181.9%
------------------------------------- ------- ------
Total $ 74,734 $76,836 $27,654 102.8% 37.0% 139.8%
===================================== ======= ======
Effect of Hurrs. Katrina and Rita on the Three
Months Ended Sept. 30, 2005
----------------------------------------------------
Marine $ (9,147) $ 7,430 $ - 96.0% 18.5% 114.5%
Lloyd's Operations (5,318) 14,858 - 85.0% 8.3% 93.3%
------------------------------------- ------- ------
Total $(14,465) $22,288 $ - 41.7% 6.0% 47.7%
===================================== ======= ======
Amounts Loss Ratio
------------------------------
Net Incurred Loss Activity Sept. Sept. Sept. Sept.
For the Three Months Ended: 30, 30, 30, 30,
2006 2005 2006 2005
------------------------------
Insurance Companies:
Loss and LAE payments $22,987 $20,149 26.9% 37.5%
Change in reserves 24,939 27,183 29.2% 50.5%
------------------------------
Net incurred loss and LAE 47,926 47,332 56.1% 88.0%
------------------------------
Lloyd's Operations:
Loss and LAE payments 18,601 9,064 61.6% 43.3%
Change in reserves (2,071) 20,440 -6.9% 97.5%
------------------------------
Net incurred loss and LAE 16,530 29,504 54.7% 140.8%
------------------------------
Total
Loss and LAE payments 41,588 29,213 35.9% 39.1%
Change in reserves 22,868 47,623 19.8% 63.7%
------------------------------
Net incurred loss and LAE $64,456 $76,836 55.7% 102.8%
==============================
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results
($'s in thousands)
Nine Months Ended September 30, 2006
--------------------------------------------------
Net Losses Combined Ratio
Earned and LAE Underwriting-------------------
Insurance Companies: Premium Incurred Expenses Loss Expense Total
------------------------------------------- ------
Marine $ 80,679 $ 47,609 $ 22,038 59.0% 27.3% 86.3%
Specialty 121,133 69,177 35,312 57.1% 29.2% 86.3%
Professional
Liability 29,494 18,715 9,076 63.5% 30.8% 94.3%
Assumed from Lloyd's 100 (155) (36) NM NM NM
Other (includes run-
off) (72) 210 (30) NM NM NM
------------------------------------------- ------
231,334 135,556 66,360 58.6% 28.7% 87.3%
Lloyd's Operations 102,625 57,644 33,945 56.2% 33.1% 89.3%
------------------------------------------- ------
Total $333,959 $193,200 $100,305 57.9% 30.0% 87.9%
=========================================== ======
Nine Months Ended September 30, 2005
--------------------------------------------------
Net Losses Combined Ratio
Earned and LAE Underwriting-------------------
Insurance Companies: Premium Incurred Expenses Loss Expense Total
------------------------------------------- ------
Marine $ 57,600 $ 52,461 $ 17,437 91.1% 30.3% 121.4%
Specialty 81,429 49,639 25,547 61.0% 31.4% 92.4%
Professional
Liability 21,493 14,676 6,710 68.3% 31.2% 99.5%
Assumed from Lloyd's (320) (890) 466 NM NM NM
Other (includes run-
off) 46 (1,030) (622) NM NM NM
------------------------------------------- ------
160,248 114,856 49,538 71.7% 30.9% 102.6%
Lloyd's Operations 77,856 61,812 27,883 79.4% 35.8% 115.2%
------------------------------------------- ------
Total $238,104 $176,668 $ 77,421 74.2% 32.5% 106.7%
=========================================== ======
Effect of Hurrs. Katrina and Rita on the Nine
Months Ended Sept. 30, 2005
--------------------------------------------------
Marine $ (9,147)$ 7,430 $ - 23.6% 4.1% 27.7%
Lloyd's Operations (5,318) 14,858 - 22.9% 2.3% 25.2%
------------------------------------------- ------
Total $(14,465)$ 22,288 $ - 13.1% 1.9% 14.9%
=========================================== ======
Amounts Loss Ratio
----------------------------------
Net Incurred Loss Sept. 30, Sept. 30, Sept.Sept.
Activity For the 2006 2005 30, 30,
Nine Months Ended: 2006 2005
----------------------------------
Insurance Companies:
Loss and LAE
payments $ 67,141 $ 61,869 29.0% 38.6%
Change in
reserves 68,415 52,987 29.6% 33.1%
----------------------------------
Net incurred
loss and LAE 135,556 114,856 58.6% 71.7%
----------------------------------
Lloyd's Operations:
Loss and LAE
payments 48,272 31,668 47.0% 40.7%
Change in
reserves 9,372 30,144 9.1% 38.7%
----------------------------------
Net incurred
loss and LAE 57,644 61,812 56.2% 79.4%
----------------------------------
Total
Loss and LAE
payments 115,413 93,537 34.6% 39.3%
Change in
reserves 77,787 83,131 23.3% 34.9%
----------------------------------
Net incurred
loss and LAE $193,200 $176,668 57.9% 74.2%
==================================
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data
($'s in thousands)
Net Loss Reserves: 9/30/2006 12/31/2005
----------- ------------
Insurance Companies:
Marine $ 173,350 $ 162,644
Specialty 239,378 193,755
Professional Liability 46,490 33,133
Assumed from Lloyd's Operations 972 1,218
Other (primarily run-off business) 18,588 19,613
----------- ------------
Total Insurance Companies 478,778 410,363
----------- ------------
Lloyd's Operations:
Marine 169,295 161,262
Other 8,690 7,351
----------- ------------
Total Lloyd's Operations 177,985 168,613
----------- ------------
Total net loss reserves $ 656,763 $ 578,976
=========== ============
Total net case loss reserves $ 227,202 $ 228,423
Total net IBNR loss reserves 429,561 350,553
----------- ------------
Total net loss reserves $ 656,763 $ 578,976
=========== ============
CONTACT: The Navigators Group, Inc.
Paul J. Malvasio, 914-933-6088
Executive Vice President
and Chief Financial Officer
pmalvasio@navg.com
www.navg.com