Navigators Reports Record Third Quarter Earnings

STAMFORD, Conn., Nov. 6, 2014 (GLOBE NEWSWIRE) -- The Navigators Group, Inc. (Nasdaq:NAVG) reported net income of $31.2 million, or $2.14 per diluted share, for the three months ended September 30, 2014 compared to $21.3 million, or $1.48 per diluted share, for the comparable period in 2013. Operating earnings were $26.1 million, or $1.79 per diluted share, for the third quarter of 2014 compared to $23.1 million, or $1.60 per diluted share, for the comparable period in 2013.

For the nine months ended September 30, 2014, the Company reported net income of $76.1 million, or $5.22 per diluted share compared to $49.1 million, or $3.42 per diluted share, for the comparable period in 2013. Operating earnings were $62.0 million, or $4.25 per diluted share, for the nine months ended September 30, 2014 compared to $45.7 million, or $3.18 per diluted share, for the comparable period in 2013.

Gross written premiums and net written premiums for the three months ended September 30, 2014 were $327.5 million and $228.4 million, respectively, an increase of 4.9% and 16.2% from the comparable period in 2013.

Gross written premiums and net written premiums for the nine months ended September 30, 2014 were $1,099.1 million and $772.1 million, respectively, an increase of 5.9% and 16.2% from the comparable period in 2013.

The combined loss and expense ratio for the three and nine months ended September 30, 2014 was 89.5% and 92.3%, respectively, compared to 89.8% and 95.1% for the comparable periods in 2013.

"We are pleased to report excellent underwriting results, continued premium growth, increased book value per share and strong cash flow for the quarter and first nine months of 2014. Despite increasingly challenging competitive conditions, our underwriters continue to focus on risk selection and achieving appropriate rates for exposures" stated Stan Galanski, President and Chief Executive Officer.

Stockholders' equity was $996.6 million, or $69.85 per share, as of September 30, 2014 compared to $902.2 million, or $63.54 per share, as of December 31, 2013.

Net investment income for the three and nine months ended September 30, 2014 was $15.8 million and $48.1 million, respectively, an increase of 12.4% and 14.5% from the comparable periods in 2013. The annualized pre-tax investment yield, excluding net realized gains and losses and other-than-temporary impairment losses recognized in earnings, was 2.2% and 2.4% for the three and nine months ended September 30, 2014, compared to 2.4% for each of the comparable periods in 2013. The effective tax rate on net investment income was 27.5% for both the three and nine months ended September 30, 2014, compared to 27.5% and 27.9% for the comparable periods in 2013.

The Company's investment portfolio mainly consists of fixed income securities with an average quality rating of "AA/Aa" as defined by Standard & Poor's and Moody's, respectively, and an average effective duration of 3.7 years as of September 30, 2014. As of September 30, 2014, net unrealized gains within our investment portfolio were $59.5 million, an increase of $23.5 million compared to December 31, 2013.

There were $6.7 million of net realized gains recognized in earnings for the three months ended September 30, 2014, compared to $2.8 million of net realized losses for the same period in 2013. For the nine months ended September 30, there were $12.0 million of net realized gains, compared to $5.3 million of net realized gains for the same period in 2013.

Other income for the nine months ended September 30, 2014 includes a one-time foreign exchange gain of $10.0 million ($6.6 million after-tax) due to a change in the functional currency of our Lloyd's Operations, which is equally offset by a reversal within the Accumulated Other Comprehensive Income component of stockholders' equity.

Consolidated net cash flow from operations for the three and nine months ended September 30, 2014 was $103.2 million and $181.4 million, respectively, compared to $81.5 million and $130.0 million for the comparable periods in 2013.

The Company will hold a conference call on Friday, November 7, 2014 starting at 8:30 a.m. ET to discuss the 2014 third quarter results. The call will be available via live webcast on Navigators' website (www.navg.com).

To participate by telephone, the domestic dial-in number is (888-438-5535) and the international dial-in is (719) 325-2215. Participants may connect to the webcast at:

http://www.media-server.com/m/p/trvmhk48

Operating earnings, or net income excluding after-tax net realized gains (losses), net other-than-temporary impairment losses recognized in earnings, and after-tax foreign exchange gains and losses resulting from foreign currency transactions (transactions denominated in a currency other than the entity's functional currency) and translation adjustments (translation of foreign currency denominated assets and liabilities into the entity's functional currency), is a non-GAAP financial measure that is a common performance measurement for insurance companies. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business.

The Navigators Group, Inc. is an international specialty insurance holding company with insurance company operations, underwriting management companies and operations at Lloyd's. Navigators has offices in the United States, the United Kingdom and Continental Europe, as well as representative offices in China and Brazil.

The Navigators Group, Inc. logo is available at http://www.globenewswire.com/newsroom/prs /?pkgid=7778

This press release may contain "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Whenever used in this release, the words "estimate", "expect", "believe" or similar expressions are intended to identify such forward-looking statements. Forward-looking statements are derived from information that we currently have and assumptions that we make. We cannot assure that results that we anticipate will be achieved, since results may differ materially because of known and unknown risks and uncertainties that we face. Please refer to Navigators' most recent reports on Forms 10-K and 10-Q and its other filings with the Securities and Exchange Commission for a description of Navigators' business and the important factors that may affect that business. Navigators' undertakes no obligation to publicly update or revise any forward-looking statement.

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Financial Highlights
($ in thousands, except share and per share data)
(unaudited)

	Three Months Ended			Nine Months Ended
	September 30,			September 30,
Results of Operations	2014	2013	Change	2014	2013	Change

Gross written premiums	$ 327,469	$ 312,076	4.9%	$ 1,099,054	$ 1,037,426	5.9%
Net written premiums	228,417	196,556	16.2%	772,131	664,477	16.2%

Revenues:
Net earned premiums	245,367	213,895	14.7%	701,723	622,037	12.8%
Net investment income	15,839	14,094	12.4%	48,097	41,997	14.5%
Total other-than-temporary impairment losses	(41)	(1,821)	-97.7%	158	(1,863)	NM
Portion of loss recognized in other comprehensive income (before tax)	41	--	NM	(158)	--	NM
Net other-than-temporary impairment losses recognized in earnings	--	(1,821)	NM	--	(1,863)	NM
Net realized gains (losses)	6,718	(988)	NM	12,024	7,171	67.7%
Other income	1,336	(210)	NM	10,070	(507)	NM
Total revenues	269,260	224,970	19.7%	771,914	668,835	15.4%

Expenses:
Net losses and loss adjustment expenses	135,284	125,086	8.2%	410,571	387,576	5.9%
Commission expenses	33,943	27,685	22.6%	91,820	82,631	11.1%
Other operating expenses	50,388	39,056	29.0%	145,526	120,608	20.7%
Interest expense	3,388	2,053	65.0%	11,559	6,156	87.8%
Total expenses	223,003	193,880	15.0%	659,476	596,971	10.5%

Income before income taxes	46,257	31,090	48.8%	112,438	71,864	56.5%

Income tax expense (benefit)	15,032	9,804	53.3%	36,384	22,731	60.1%

Net income (loss)	$ 31,225	$ 21,286	46.7%	$ 76,054	$ 49,133	54.8%

Per Share Data

Net income per common share:
Basic	$ 2.19	$ 1.50	45.5%	$ 5.34	$ 3.48	53.4%
Diluted	$ 2.14	$ 1.48	44.6%	$ 5.22	$ 3.42	52.7%

Average common shares outstanding:
Basic	14,265,260	14,144,478		14,252,910	14,120,788
Diluted	14,613,744	14,408,413		14,577,297	14,379,943

Underwriting Ratios
Loss Ratio	55.1%	58.5%		58.5%	62.3%
Expense Ratio	34.4%	31.3%		33.8%	32.8%
Combined Ratio	89.5%	89.8%		92.3%	95.1%


Balance Sheet Data	Sept. 30,	June 30,		Sept. 30,	Dec. 31,
	2014	2014		2014	2013
Stockholders' equity	$ 996,593	$ 972,080	2.5%	$ 996,593	$ 902,212	10.5%
Book value per share	$ 69.85	$ 68.16	2.5%	$ 69.85	$ 63.54	9.9%

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands, except share data)

	September 30,	December 31,
	2014	2013
	(unaudited)
ASSETS
Investments and cash:
Fixed maturities, available-for-sale, at fair value (amortized cost: 2014, $2,277,384; 2013, $2,036,999)	$ 2,310,195	$ 2,047,873
Equity securities, available-for-sale, at fair value (cost: 2014, $136,762; 2013, $118,804)	163,473	143,954
Short-term investments, at fair value (amortized cost: 2014: $255,434; 2013: $296,250)	255,445	296,250
Cash	74,408	86,509
Total investments and cash	2,803,521	2,574,586

Premiums receivable	363,053	325,025
Prepaid reinsurance premiums	237,094	247,822
Reinsurance recoverable on paid losses	49,327	38,384
Reinsurance recoverable on unpaid losses and loss adjustment expenses	850,582	822,438
Deferred policy acquisition costs	76,268	67,007
Accrued investment income	15,075	13,866
Goodwill and other intangible assets	7,089	7,177
Current income tax receivable, net	2,506	9,918
Deferred income tax, net	14,531	28,187
Other assets	44,267	35,042
Total assets	$ 4,463,313	$ 4,169,452


LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Reserves for losses and loss adjustment expenses	$ 2,168,974	$ 2,045,071
Unearned premiums	772,755	714,606
Reinsurance balances payable	157,900	167,252
Senior notes	263,406	263,308
Payable for investments purchased	35,757	7,624
Accounts payable and other liabilities	67,928	69,379
Total liabilities	3,466,720	3,267,240

Stockholders' equity:
Preferred stock, $.10 par value, authorized 1,000,000 shares, none issued	$ --	$ --
Common stock, $.10 par value, authorized 50,000,000 shares, issued 17,778,131 shares for 2014 and 17,709,876 shares for 2013	1,777	1,770
Additional paid-in capital	343,407	335,546
Treasury stock, at cost (3,511,380 shares for 2014 and 2013)	(155,801)	(155,801)
Retained earnings	768,391	692,337
Accumulated other comprehensive income	38,819	28,360
Total stockholders' equity	996,593	902,212

Total liabilities and stockholders' equity	$ 4,463,313	$ 4,169,452

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Comparative Premium Data
($ in thousands)


Gross Written Premiums:	Three Months			Nine Months
Insurance Companies:	2014	2013	Change	2014	2013	Change
Marine	$ 38,726	$ 38,912	-0.5%	$ 139,078	$ 132,836	4.7%
Property Casualty	174,868	156,228	11.9%	572,821	527,287	8.6%
Professional Liability	28,888	32,469	-11.0%	86,110	97,679	-11.8%
	242,482	227,609	6.5%	798,009	757,802	5.3%
Lloyd's Operations:
Marine	38,568	36,009	7.1%	147,530	135,546	8.8%
Property Casualty	31,172	35,869	-13.1%	101,413	102,144	-0.7%
Professional Liability	15,247	12,589	21.1%	52,102	41,934	24.2%
	84,987	84,467	0.6%	301,045	279,624	7.7%
Total	$ 327,469	$ 312,076	4.9%	$ 1,099,054	$ 1,037,426	5.9%

Net Written Premiums:	Three Months			Nine Months
Insurance Companies:	2014	2013	Change	2014	2013	Change
Marine	$ 24,166	$ 26,437	-8.6%	$ 100,647	$ 94,944	6.0%
Property Casualty	126,665	97,553	29.8%	418,659	338,215	23.8%
Professional Liability	21,653	25,300	-14.4%	61,170	75,830	-19.3%
	172,484	149,290	15.5%	580,476	508,989	14.0%
Lloyd's Operations:
Marine	32,245	26,795	20.3%	113,938	100,413	13.5%
Property Casualty	13,758	13,761	0.0%	44,684	33,254	34.4%
Professional Liability	9,930	6,710	48.0%	33,033	21,821	51.4%
	55,933	47,266	18.3%	191,655	155,488	23.3%
Total	$ 228,417	$ 196,556	16.2%	$ 772,131	$ 664,477	16.2%

Net Earned Premiums:	Three Months			Nine Months
Insurance Companies:	2014	2013	Change	2014	2013	Change
Marine	$ 31,123	$ 31,490	-1.2%	$ 95,635	$ 100,013	-4.4%
Property Casualty	129,547	105,759	22.5%	365,068	297,954	22.5%
Professional Liability	21,381	25,713	-16.8%	65,644	75,873	-13.5%
	182,051	162,962	11.7%	526,347	473,840	11.1%
Lloyd's Operations:
Marine	39,368	34,264	14.9%	110,468	102,932	7.3%
Property Casualty	12,980	10,472	23.9%	37,401	26,913	39.0%
Professional Liability	10,968	6,197	77.0%	27,507	18,352	49.9%
	63,316	50,933	24.3%	175,376	148,197	18.3%
Total	$ 245,367	$ 213,895	14.7%	$ 701,723	$ 622,037	12.8%

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Three Months Ended
September 30, 2014

($ in thousands)

	Insurance	Lloyd's
	Companies	Operations	Corporate ⁽¹⁾	Total
Gross written premiums	$ 242,482	$ 84,987	$ --	$ 327,469
Net written premiums	172,484	55,933	--	228,417

Net earned premiums	182,051	63,316	--	245,367
Net losses and loss adjustment expenses	(108,425)	(26,859)	--	(135,284)
Commission expenses	(22,705)	(11,788)	550	(33,943)
Other operating expenses	(35,161)	(15,227)	--	(50,388)
Other underwriting income (expense)	656	1	(550)	107

Underwriting profit (loss)	16,416	9,443	--	25,859

Net investment income	13,971	1,849	19	15,839
Net realized gains (losses)	6,673	45	--	6,718
Interest expense	--	--	(3,388)	(3,388)
Other income (expense)	(1,100)	2,329	--	1,229

Income (loss) before income taxes	35,960	13,666	(3,369)	46,257

Income tax expense (benefit)	11,489	4,787	(1,244)	15,032
Net income (loss)	$ 24,471	$ 8,879	$ (2,125)	$ 31,225

Losses and loss adjustment expenses ratio	59.6%	42.4%		55.1%
Commission expense ratio	12.5%	18.6%		13.8%
Other operating expense ratio ⁽²⁾	18.9%	24.1%		20.6%
Combined ratio	91.0%	85.1%		89.5%

(1) The Corporate segment includes intercompany eliminations.
(2) The Other operating expense ratio includes Other underwriting income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Three Months Ended
September 30, 2013

($ in thousands)

	Insurance	Lloyd's
	Companies	Operations	Corporate ⁽¹⁾	Total
Gross written premiums	$ 227,609	$ 84,467	$ --	$ 312,076
Net written premiums	149,290	47,266	--	196,556

Net earned premiums	162,962	50,933	--	213,895
Net losses and loss adjustment expenses	(95,315)	(29,771)	--	(125,086)
Commission expenses	(20,039)	(8,289)	643	(27,685)
Other operating expenses	(28,510)	(10,546)	--	(39,056)
Other underwriting income (expense)	955	(522)	(643)	(210)

Underwriting profit (loss)	20,053	1,805	--	21,858

Net investment income	12,285	1,807	2	14,094
Net realized gains (losses)	(1,890)	(919)	--	(2,809)
Interest expense	--	--	(2,053)	(2,053)
Other income (expense)	--	--	--	--

Income (loss) before income taxes	30,448	2,693	(2,051)	31,090

Income tax expense (benefit)	9,355	878	(429)	9,804
Net income (loss)	$ 21,093	$ 1,815	$ (1,622)	$ 21,286

Losses and loss adjustment expenses ratio	58.5%	58.5%		58.5%
Commission expense ratio	12.3%	16.3%		12.9%
Other operating expense ratio ⁽²⁾	16.9%	21.7%		18.4%
Combined ratio	87.7%	96.5%		89.8%

(1) The Corporate segment includes intercompany eliminations.
(2) The Other operating expense ratio includes Other income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Nine Months Ended
September 30, 2014

($ in thousands)

	Insurance	Lloyd's
	Companies	Operations	Corporate ⁽¹⁾	Total
Gross written premiums	$ 798,009	$ 301,045	$ --	$1,099,054
Net written premiums	580,476	191,655	--	772,131

Net earned premiums	526,347	175,376	--	701,723
Net losses and loss adjustment expenses	(323,354)	(87,217)	--	(410,571)
Commission expenses	(62,436)	(30,989)	1,605	(91,820)
Other operating expenses	(102,963)	(42,563)	--	(145,526)
Other underwriting income (expense)	2,082	20	(1,605)	497

Underwriting profit (loss)	39,676	14,627	--	54,303

Net investment income	42,553	5,488	56	48,097
Net realized gains (losses)	12,368	(344)	--	12,024
Interest expense	--	--	(11,559)	(11,559)
Other income (expense)	(1,119)	10,692	--	9,573

Income (loss) before income taxes	93,478	30,463	(11,503)	112,438

Income tax expense (benefit)	29,650	10,753	(4,019)	36,384
Net income (loss)	$ 63,828	$ 19,710	$ (7,484)	$ 76,054

Losses and loss adjustment expenses ratio	61.4%	49.7%		58.5%
Commission expense ratio	11.9%	17.7%		13.1%
Other operating expense ratio ⁽²⁾	19.2%	24.3%		20.7%
Combined ratio	92.5%	91.7%		92.3%

(1) The Corporate segment includes intercompany eliminations.
(2) The Other operating expense ratio includes Other underwriting income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Nine Months Ended
September 30, 2013

($ in thousands)

	Insurance	Lloyd's
	Companies	Operations	Corporate ⁽¹⁾	Total
Gross written premiums	$ 757,802	$ 279,624	$ --	$1,037,426
Net written premiums	508,989	155,488	--	664,477

Net earned premiums	473,840	148,197	--	622,037
Net losses and loss adjustment expenses	(308,968)	(78,608)	--	(387,576)
Commission expenses	(59,129)	(25,245)	1,743	(82,631)
Other operating expenses	(87,682)	(32,926)	--	(120,608)
Other underwriting income (expense)	2,303	(1,067)	(1,743)	(507)

Underwriting profit (loss)	20,364	10,351	--	30,715

Net investment income	36,751	5,237	9	41,997
Net realized gains (losses)	6,001	(697)	4	5,308
Interest expense	--	--	(6,156)	(6,156)
Other income (expense)	--	--	--	--

Income (loss) before income taxes	63,116	14,891	(6,143)	71,864

Income tax expense (benefit)	19,554	5,120	(1,943)	22,731
Net income (loss)	$ 43,562	$ 9,771	$ (4,200)	$ 49,133

Losses and loss adjustment expenses ratio	65.2%	53.0%		62.3%
Commission expense ratio	12.5%	17.0%		13.3%
Other operating expense ratio ⁽²⁾	18.0%	23.0%		19.5%
Combined ratio	95.7%	93.0%		95.1%

(1) The Corporate segment includes intercompany eliminations.
(2) The Other operating expense ratio includes Other income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results
($ in thousands)

	Three Months Ended September 30, 2014
	Net	Losses
	Earned	and LAE	Underwriting	Underwriting	Loss	Expense	Combined
Insurance Companies:	Premiums	Incurred	Expenses	Profit (Loss)	Ratio	Ratio	Ratio
Marine	$ 31,123	$ 13,080	$ 12,014	$ 6,029	42.0%	38.6%	80.6%
Property Casualty	129,547	81,682	37,171	10,694	63.1%	28.6%	91.7%
Professional Liability	21,381	13,663	8,025	(307)	63.9%	37.5%	101.4%
Total Insurance Companies	182,051	108,425	57,210	16,416	59.6%	31.4%	91.0%
Lloyd's Operations:
Marine	39,368	16,389	15,629	7,350	41.6%	39.7%	81.3%
Property Casualty	12,980	4,260	7,105	1,615	32.8%	54.8%	87.6%
Professional Liability	10,968	6,210	4,280	478	56.6%	39.0%	95.6%
Total Lloyd's	63,316	26,859	27,014	9,443	42.4%	42.7%	85.1%
Total All	$ 245,367	$ 135,284	$ 84,224	$ 25,859	55.1%	34.4%	89.5%

	Three Months Ended September 30, 2013
	Net	Losses
	Earned	and LAE	Underwriting	Underwriting	Loss	Expense	Combined
Insurance Companies:	Premiums	Incurred	Expenses	Profit (Loss)	Ratio	Ratio	Ratio
Marine	$ 31,490	$ 14,745	$ 10,997	$ 5,748	46.8%	34.9%	81.7%
Property Casualty	105,759	64,156	28,203	13,400	60.7%	26.6%	87.3%
Professional Liability	25,713	16,414	8,394	905	63.8%	32.7%	96.5%
Total Insurance Companies	162,962	95,315	47,594	20,053	58.5%	29.2%	87.7%
Lloyd's Operations:
Marine	34,264	22,129	13,240	(1,105)	64.6%	38.6%	103.2%
Property Casualty	10,472	3,661	4,428	2,383	35.0%	42.2%	77.2%
Professional Liability	6,197	3,981	1,689	527	64.3%	27.2%	91.5%
Total Lloyd's	50,933	29,771	19,357	1,805	58.5%	38.0%	96.5%
Total All	$ 213,895	$ 125,086	$ 66,951	$ 21,858	58.5%	31.3%	89.8%


		Amounts			Loss Ratio
Net Incurred Loss Activity		Sept. 30,	Sept. 30,		Sept. 30,	Sept. 30,
For the Three Months Ended:		2014	2013		2014	2013
Insurance Companies:
Loss and LAE payments		$ 84,899	$ 83,008		46.7%	50.9%
Change in reserves		23,526	12,307		12.9%	7.6%
Net incurred loss and LAE		108,425	95,315		59.6%	58.5%

Lloyd's Operations:
Loss and LAE payments		23,181	27,038		36.6%	53.1%
Change in reserves		3,678	2,733		5.8%	5.4%
Net incurred loss and LAE		26,859	29,771		42.4%	58.5%

Total
Loss and LAE payments		108,080	110,046		44.0%	51.5%
Change in reserves		27,204	15,040		11.1%	7.0%
Net incurred loss and LAE		$ 135,284	$ 125,086		55.1%	58.5%


Impact of Prior Years Reserves		Amounts			Loss Ratio Impact
Favorable / (Unfavorable) Development		Sept. 30,	Sept. 30,		Sept. 30,	Sept. 30,
For the Three Months Ended:		2014	2013		2014	2013
Insurance Companies		$ 9,970	$ 3,094		4.1%	1.4%
Lloyd's Operations		5,500	4,591		2.2%	2.1%
Total		$ 15,470	$ 7,685		6.3%	3.5%

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results
($ in thousands)

	Nine Months Ended September 30, 2014
	Net	Losses
	Earned	and LAE	Underwriting	Underwriting	Loss	Expense	Combined
Insurance Companies:	Premiums	Incurred	Expenses	Profit (Loss)	Ratio	Ratio	Ratio
Marine	$ 95,635	$ 41,654	$ 34,943	$ 19,038	43.6%	36.5%	80.1%
Property Casualty	365,068	244,202	104,024	16,842	66.9%	28.5%	95.4%
Professional Liability	65,644	37,498	24,350	3,796	57.1%	37.1%	94.2%
Total Insurance Companies	526,347	323,354	163,317	39,676	61.4%	31.1%	92.5%
Lloyd's Operations:
Marine	110,468	60,032	45,492	4,944	54.3%	41.2%	95.5%
Property Casualty	37,401	14,015	17,110	6,276	37.5%	45.7%	83.2%
Professional Liability	27,507	13,170	10,930	3,407	47.9%	39.7%	87.6%
Total Lloyd's	175,376	87,217	73,532	14,627	49.7%	42.0%	91.7%
Total All	$ 701,723	$ 410,571	$ 236,849	$ 54,303	58.5%	33.8%	92.3%

	Nine Months Ended September 30, 2013
	Net	Losses
	Earned	and LAE	Underwriting	Underwriting	Loss	Expense	Combined
Insurance Companies:	Premiums	Incurred	Expenses	Profit (Loss)	Ratio	Ratio	Ratio
Marine	$ 100,013	$ 55,425	$ 36,949	$ 7,639	55.4%	37.0%	92.4%
Property Casualty	297,954	196,151	82,844	18,959	65.8%	27.8%	93.6%
Professional Liability	75,873	57,392	24,715	(6,234)	75.6%	32.6%	108.2%
Total Insurance Companies	473,840	308,968	144,508	20,364	65.2%	30.5%	95.7%
Lloyd's Operations:
Marine	102,932	59,184	41,266	2,482	57.5%	40.1%	97.6%
Property Casualty	26,913	11,207	12,109	3,597	41.6%	45.0%	86.6%
Professional Liability	18,352	8,217	5,863	4,272	44.8%	31.9%	76.7%
Total Lloyd's	148,197	78,608	59,238	10,351	53.0%	40.0%	93.0%
Total All	$ 622,037	$ 387,576	$ 203,746	$ 30,715	62.3%	32.8%	95.1%


		Amounts			Loss Ratio
Net Incurred Loss Activity		Sept. 30,	Sept. 30,		Sept. 30,	Sept. 30,
For the Nine Months Ended:		2014	2013		2014	2013
Insurance Companies:
Loss and LAE payments		$ 237,109	$ 263,832		45.0%	55.7%
Change in reserves		86,245	45,136		16.4%	9.5%
Net incurred loss and LAE		323,354	308,968		61.4%	65.2%

Lloyd's Operations:
Loss and LAE payments		75,256	84,928		42.9%	57.3%
Change in reserves		11,961	(6,320)		6.8%	-4.3%
Net incurred loss and LAE		87,217	78,608		49.7%	53.0%

Total
Loss and LAE payments		312,365	348,760		44.5%	56.1%
Change in reserves		98,206	38,816		14.0%	6.2%
Net incurred loss and LAE		$ 410,571	$ 387,576		58.5%	62.3%


Impact of Prior Years Reserves		Amounts			Loss Ratio Impact
Favorable / (Unfavorable) Development		Sept. 30,	Sept. 30,		Sept. 30,	Sept. 30,
For the Nine Months Ended:		2014	2013		2014	2013
Insurance Companies		$ 23,274	$ (12,383)		3.3%	-2.0%
Lloyd's Operations		12,749	14,072		1.8%	2.3%
Total		$ 36,023	$ 1,689		5.1%	0.3%

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data
($ in thousands)

	Case	IBNR
Net Loss Reserves, September 30, 2014:	Reserves	Reserves	Total
Insurance Companies:
Marine	$ 115,304	$ 91,775	$ 207,079
Property Casualty	167,328	471,193	638,521
Professional Liability	56,937	86,326	143,263
Total Insurance Companies	339,569	649,294	988,863
Lloyd's Operations:
Marine	138,062	85,430	$ 223,492
Property Casualty	26,914	16,679	43,593
Professional Liability	16,246	46,198	62,444
Total Lloyd's Operations	181,222	148,307	329,529

Total Net Loss Reserves	$ 520,791	$ 797,601	$ 1,318,392


	Case	IBNR
Net Loss Reserves, December 31, 2013	Reserves	Reserves	Total
Insurance Companies:
Marine	$ 122,909	$ 101,077	$ 223,986
Property Casualty	150,477	377,173	527,650
Professional Liability	61,117	89,865	150,982
Total Insurance Companies	334,503	568,115	902,618
Lloyd's Operations:
Marine	133,060	85,685	218,745
Property Casualty	25,870	18,271	44,141
Professional Liability	14,013	43,116	57,129
Total Lloyd's Operations	172,943	147,072	320,015

Total Net Loss Reserves	$ 507,446	$ 715,187	$ 1,222,633

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Investment Data
September 30, 2014

As of September 30, 2014, the average quality of the investment portfolio as rated by S&P and Moody's was AA/Aa with an average duration of 3.7 years. The Company does not own any collateralized debt obligations (CDO's) or asset backed commercial paper.

As of September 30, 2014, the Company owned two collateralized mortgage obligations approximating $0.4 million with subprime mortgage exposures. The securities have an effective maturity of 3.2 years. In addition, the Company owned a total of seven collateralized mortgage obligations and asset-backed securities approximating $1.8 million classified as Alt-A which is a credit category between prime and subprime. They have an effective maturity of 7.3 years. Such subprime and Alt-A categories are as defined by S&P. The Company is receiving principal and/or interest payments on all these securities and believes such amounts are fully collectible.

The following table sets forth our cash and investments as of September 30, 2014:

		Gross	Gross	Cost or
	Fair	Unrealized	Unrealized	Amortized
September 30, 2014	Value	Gains	(Losses)	Cost
	($ in thousands)
Fixed maturities:
U.S.Treasury bonds, agency bonds and foreign government bonds	$ 414,348	$ 2,712	$ (6,215)	$ 417,851
States, municipalities and political subdivisions	550,327	16,585	(1,360)	535,102
Mortgage- and asset-backed securities:
Agency mortgage-backed securities	296,198	7,201	(2,363)	291,360
Residential mortgage obligations	34,738	1,238	(133)	33,633
Asset-backed securities	195,180	414	(519)	195,285
Commercial mortgage-backed securities	210,712	6,244	(588)	205,056
Subtotal	736,828	15,097	(3,603)	725,334
Corporate bonds	608,692	11,945	(2,350)	599,097

Total fixed maturities	2,310,195	46,339	(13,528)	2,277,384

Equity securities - common stocks	113,250	26,251	(772)	87,771
Equity securities - preferred stocks	50,223	1,481	(249)	48,991

Short-term investments	255,445	11	--	255,434

Cash	74,408	--	--	74,408

Total	$ 2,803,521	$ 74,082	$ (14,549)	$ 2,743,988

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Investment Data
September 30, 2014
($ in thousands)

The following tables set forth our agency mortgage-backed securities and residential mortgage obligations, categorized by those issued by GNMA, FNMA and FHLMC and the quality category (prime, Alt-A and subprime) for all other such investments at September 30, 2014:

		Gross	Gross	Cost or
	Fair	Unrealized	Unrealized	Amortized
Agency mortgage-backed securities:	Value	Gains	(Losses)	Cost
GNMA	$ 87,953	$ 2,917	$ (1,341)	$ 86,377
FNMA	150,283	3,144	(953)	148,092
FHLMC	57,962	1,140	(69)	56,891
Total	$ 296,198	$ 7,201	$ (2,363)	$ 291,360


		Gross	Gross	Cost or
	Fair	Unrealized	Unrealized	Amortized
Residential mortgage obligations:	Value	Gains	(Losses)	Cost
Prime	$ 13,970	$ 574	$ (112)	$ 13,508
Alt-A	1,777	115	(21)	1,683
Subprime	429	15	--	414
Non-US RMBS	18,562	534	--	18,028
Total	$ 34,738	$ 1,238	$ (133)	$ 33,633

Navigators Reports Record Third Quarter Earnings

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