Navigators Reports Second Quarter 2016 Earnings

STAMFORD, Conn., Aug. 04, 2016 (GLOBE NEWSWIRE) -- The Navigators Group, Inc. (NASDAQ:NAVG) reported Net income of $16.2 million, or $1.08 per diluted share, for the three months ended June 30, 2016 compared to $19.2 million, or $1.30 per diluted share, for the comparable period in 2015. Operating earnings were $12.2 million, or $0.81 per diluted share, for the three months ended June 30, 2016 compared to $19.7 million, or $1.34 per diluted share, for the comparable period in 2015.

For the six months ended June 30, 2016, our Company reported Net income of $39.1 million, or $2.62 per diluted share, compared to $45.1 million, or $3.06 per diluted share, for the comparable period in 2015. Operating earnings were $32.4 million, or $2.17 per diluted share, for the six months ended June 30, 2016 compared to $40.6 million, or $2.76 per diluted share, for the comparable period in 2015.

Gross written premiums and Net written premiums for the three months ended June 30, 2016 were $412.6 million and $306.5 million, respectively, increases of 8.7% and 18.7% from the comparable period in 2015.

Gross written premiums and Net written premiums for the six months ended June 30, 2016 were $826.4 million and $626.4 million, respectively, increases of 6.5% and 14.5% from the comparable period in 2015.

The combined ratio for the three and six months ended June 30, 2016 was 99.6% and 97.4%, respectively, compared to 93.4% and 92.8% for the comparable periods in 2015.

Stan Galanski, President and Chief Executive Officer commented, “We are pleased to have produced our fourteenth consecutive quarter of profitable underwriting results despite absorbing $18.3 million of property catastrophe loss in the second quarter. Our U.S. Insurance business had another solidly profitable quarter, while our International Insurance business was adversely impacted by property catastrophe activity, largely stemming from the Fort McMurray fires. We achieved double digit Net written premium growth for the second quarter and first six months of 2016, driven by strong growth in both the P&C and Professional Liability operating segments within International Insurance. Net investment income was up nearly 20.0% over the second quarter of 2015, leading to a 3.2% increase in Book value per share from March 31, 2016. Given the turmoil in the global financial markets and the level of natural catastrophe loss activity impacting the industry during the second quarter, we believe our results reflect a well balanced risk portfolio and a sound investment philosophy.”

Stockholders’ equity was $1.182 billion, or $81.24 per share, as of June 30, 2016 compared to $1.096 billion, or $75.96 per share, as of December 31, 2015.

On August 4, 2016, the Board of Directors declared a quarterly cash dividend of $0.09 per share of common stock to be paid on September 30, 2016 to stockholders of record at the close of business on August 19, 2016.

Net investment income for the three and six months ended June 30, 2016 was $19.9 million and $39.5 million, respectively, increases of 19.8% and 20.2% from the comparable periods in 2015. The annualized pre-tax investment yield, excluding net realized gains and losses and other-than-temporary impairment losses recognized in earnings, was 2.6% for both the three and six months ended June 30, 2016, compared to 2.4% for both comparable periods in 2015.

Our Company’s investment portfolio mainly consists of fixed income securities with an average quality rating of “AA-/Aa3” as defined by S&P and Moody’s, respectively, with an average effective duration of 3.9 years as of June 30, 2016. As of June 30, 2016, Net unrealized gains within our investment portfolio were $110.6 million, an increase of $73.3 million compared to December 31, 2015.

There were $1.8 million of Net realized gains recognized in earnings for the three months ended June 30, 2016, compared to $3.9 million for the same period in 2015. For the six months ended June 30, 2016, there were $3.4 million of Net realized gains, compared to $9.5 million for the same period in 2015.

Other income (loss) for the three months ended June 30, 2016 was $4.4 million of income, compared to $4.4 million of loss for the same period in 2015. For the six months ended June 30, 2016 Other income (loss) was $7.0 million of income, compared to $2.1 million of loss for the same period in 2015. Other income (loss) primarily consists of realized and unrealized foreign exchange gains and losses.

Our Company will hold a conference call on Friday, August 5, 2016 starting at 8:30 a.m. (EDT) to discuss the 2016 second quarter results. The call will be available via live webcast on Navigators’ website (www.navg.com).

To participate by telephone, the domestic dial-in number is 800-850-2903 and the international dial-in is 224-357-2399. Participants may connect to the webcast at:

http://edge.media-server.com/m/p/bx9cyqqq

Net operating earnings, or net income excluding after-tax net realized gains (losses), after-tax 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.

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									Six Months Ended
	June 30,									June 30,
Results of Operations	2016			2015			Change			2016			2015			Change

Gross written premiums	$	412,565		$	379,471			8.7	%	$	826,442		$	775,931			6.5	%
Net written premiums		306,535			258,244			18.7	%		626,355			547,202			14.5	%

Revenues:
Net earned premiums		267,992			242,328			10.6	%		532,350			478,460			11.3	%
Net investment income		19,875			16,595			19.8	%		39,469			32,848			20.2	%
Net realized gains (losses):
Total other-than-temporary impairment losses		(162	)		(472	)		-65.7	%		(271	)		(450	)		-39.8	%
Portion of loss recognized in other comprehensive income (before tax)		12			49			-75.5	%		121			27		NM
Net other-than-temporary impairment losses recognized in earnings		(150	)		(423	)		-64.6	%		(150	)		(423	)		-64.6	%
Other realized gains (losses)		1,960			4,339			-54.8	%		3,557			9,935			-64.2	%
Net realized gains (losses)		1,810			3,916			-53.8	%		3,407			9,512			-64.2	%
Other income (loss)		4,430			(4,362	)	NM				6,979			(2,120	)	NM
Total revenues	$	294,107		$	258,477			13.8	%	$	582,205		$	518,700			12.2	%

Expenses:
Net losses and loss adjustment expenses		167,206			141,973			17.8	%		320,162			272,171			17.6	%
Commission expenses		40,726			31,480			29.4	%		78,280			64,385			21.6	%
Other operating expenses		59,074			52,789			11.9	%		119,883			107,698			11.3	%
Interest expense		3,858			3,856			0.1	%		7,716			7,711			0.1	%
Total expenses	$	270,864		$	230,098			17.7	%	$	526,041		$	451,965			16.4	%

Income before income taxes	$	23,243		$	28,379			-18.1	%	$	56,164		$	66,735			-15.8	%

Income tax expense (benefit)		7,053			9,195			-23.3	%		17,042			21,622			-21.2	%

Net income (loss)	$	16,190		$	19,184			-15.6	%	$	39,122		$	45,113			-13.3	%


Per Share Data

Net income per common share:
Basic	$	1.11		$	1.33			-16.5	%	$	2.70		$	3.14			-14.1	%
Diluted	$	1.08		$	1.30			-16.8	%	$	2.62		$	3.06			-14.5	%

Average common shares outstanding:
Basic		14,536,849			14,396,048						14,514,532			14,370,123
Diluted		14,976,593			14,763,002						14,942,193			14,726,282

Underwriting Ratios
Loss Ratio		62.4	%		58.6	%					60.1	%		56.9	%
Expense Ratio		37.2	%		34.8	%					37.3	%		35.9	%
Combined Ratio		99.6	%		93.4	%					97.4	%		92.8	%

Balance Sheet Data	June 30,			March 31,						June 30,			Dec. 31,
	2016			2016						2016			2015
Stockholders' equity	$	1,181,558		$	1,143,879			3.3	%	$	1,181,558		$	1,096,148			7.8	%
Book value per share	$	81.24		$	78.72			3.2	%	$	81.24		$	75.96			6.9	%

NM- Percentage change not meaningful

THE NAVIGATORS GROUP, INC AND SUBSIDIARIES
NON-GAAP RECONCILIATION OF NET INCOME TO NET OPERATING EARNINGS
($ in thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,						% Change
amounts in thousands	2016			2015			2016			2015			QTD			YTD
Net income	$	16,190		$	19,184		$	39,122		$	45,113			(15.6	%)		(13.3	%)
After-tax realized losses (gains)		(1,176	)		(2,398	)		(2,214	)		(6,035	)		(50.9	%)		(63.3	%)
After-tax FX losses (gains)		(2,838	)		2,915			(4,490	)		1,497		NM			NM
Net operating earnings	$	12,176		$	19,701		$	32,418		$	40,575			(38.2	%)		(20.1	%)

Net operating earnings per common share:
Basic	$	0.84		$	1.37		$	2.23		$	2.82
Diluted	$	0.81		$	1.34		$	2.17		$	2.76

NM - Percentage change not meaningful

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)

amounts in thousands, except share and per share amounts.
	June 30,			December 31,
	2016			2015
ASSETS
Investments:
Fixed maturities, available-for-sale, at fair value (amortized cost: 2016: $2,558,621; 2015: $2,400,245)	$	2,632,313		$	2,414,210
Equity securities, available-for-sale, at fair value (cost: 2016: $292,698; 2015: $281,943)		329,635			305,271
Short-term investments, at fair value (amortized cost: 2016: $144,845; 2015: $217,743)		144,843			217,745
Total investments	$	3,106,791		$	2,937,226

Cash		121,868			69,901
Premiums receivable		363,343			276,616
Prepaid reinsurance premiums		222,414			232,588
Reinsurance recoverable on paid losses		59,950			49,506
Reinsurance recoverable on unpaid losses and loss adjustment expenses		814,261			809,518
Deferred policy acquisition costs		113,394			91,983
Accrued investment income		16,176			16,001
Goodwill and other intangible assets		6,579			6,807
Current income tax receivable, net		18,522			22,323
Deferred income tax, net		-			3,900
Other assets		53,323			67,643
Total assets	$	4,896,621		$	4,584,012

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Reserves for losses and loss adjustment expenses	$	2,268,763		$	2,202,644
Unearned premiums		904,507			820,676
Reinsurance balances payable		127,742			107,411
Senior notes		263,653			263,580
Deferred income tax, net		14,475			-
Payable for investments purchased		48,558			1,495
Accounts payable and other liabilities		87,365			92,058
Total liabilities	$	3,715,063		$	3,487,864

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 18,055,818 shares for 2016 and 17,942,269 shares for 2015		1,805			1,793
Additional paid-in capital		363,588			357,829
Treasury stock, at cost (3,511,380 shares for 2016 and 2015)		(155,801	)		(155,801	)
Retained earnings		906,536			868,723
Accumulated other comprehensive income		65,430			23,604
Total stockholders' equity	$	1,181,558		$	1,096,148
Total liabilities and stockholders' equity	$	4,896,621		$	4,584,012

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information

	Three Months Ended June 30, 2016
	U.S.			Int’l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate ⁽¹⁾			Total
Gross written premiums	$	243,924		$	135,740		$	32,901		$	-		$	412,565
Ceded written premiums		(62,618	)		(41,910	)		(1,502	)		-			(106,030	)
Net written premiums		181,306			93,830			31,399			-			306,535

Net earned premiums		152,384			77,833			37,775			-			267,992
Net losses and LAE		(93,428	)		(48,066	)		(25,712	)		-			(167,206	)
Commission expenses		(16,894	)		(16,821	)		(7,492	)		481			(40,726	)
Other operating expenses		(31,570	)		(23,043	)		(4,461	)		-			(59,074	)
Other underwriting income (expense)		342			-			203			(481	)		64

Underwriting profit (loss)	$	10,834		$	(10,097	)	$	313		$	-		$	1,050

Net investment income											19,875			19,875
Net realized gains (losses)											1,810			1,810
Interest expense											(3,858	)		(3,858	)
Other income (loss)											4,366			4,366
Income before income taxes	$	10,834		$	(10,097	)	$	313		$	22,193		$	23,243
Income tax (expense) benefit											(7,053	)		(7,053	)
Net income (loss)													$	16,190

Losses and LAE ratio		61.3	%		61.8	%		68.1	%					62.4	%
Commission expense ratio		11.1	%		21.6	%		19.8	%					15.2	%
Other operating expense ratio ⁽²⁾		20.5	%		29.6	%		11.3	%					22.0	%
Combined ratio		92.9	%		113.0	%		99.2	%					99.6	%

(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other operating expenses and Other underwriting income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information

	Three Months Ended June 30, 2015
	U.S.			Int’l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate ⁽¹⁾			Total
Gross written premiums	$	239,987		$	108,790		$	30,694		$	-		$	379,471
Ceded written premiums		(78,882	)		(41,621	)		(724	)		-			(121,227	)
Net written premiums		161,105			67,169			29,970			-			258,244

Net earned premiums		137,304			63,186			41,838			-			242,328
Net losses and LAE		(84,155	)		(32,363	)		(25,455	)		-			(141,973	)
Commission expenses		(12,275	)		(11,298	)		(8,039	)		132			(31,480	)
Other operating expenses		(31,374	)		(17,366	)		(4,049	)		-			(52,789	)
Other underwriting income (expense)		121			-			36			(132	)		25

Underwriting profit (loss)	$	9,621		$	2,159		$	4,331		$	-		$	16,111

Net investment income											16,595			16,595
Net realized gains (losses)											3,916			3,916
Interest expense											(3,856	)		(3,856	)
Other income (loss)											(4,387	)		(4,387	)
Income before income taxes	$	9,621		$	2,159		$	4,331		$	12,268		$	28,379
Income tax (expense) benefit											(9,195	)		(9,195	)
Net income (loss)													$	19,184


Losses and LAE ratio		61.3	%		51.2	%		60.8	%					58.6	%
Commission expense ratio		8.9	%		17.9	%		19.2	%					13.0	%
Other operating expense ratio ⁽²⁾		22.8	%		27.5	%		9.6	%					21.8	%
Combined ratio		93.0	%		96.6	%		89.6	%					93.4	%

(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other operating expenses and Other underwriting income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information

	Six Months Ended June 30, 2016
	U.S.			Int’l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate ⁽¹⁾			Total
Gross written premiums	$	454,571		$	279,883		$	91,988		$	-		$	826,442
Ceded written premiums		(117,115	)		(76,881	)		(6,091	)		-			(200,087	)
Net written premiums		337,456			203,002			85,897			-			626,355

Net earned premiums		300,724			155,841			75,785			-			532,350
Net losses and LAE		(184,940	)		(88,476	)		(46,746	)		-			(320,162	)
Commission expenses		(31,749	)		(32,176	)		(15,237	)		882			(78,280	)
Other operating expenses		(65,331	)		(44,814	)		(9,738	)		-			(119,883	)
Other underwriting income (expense)		703			-			252			(882	)		73

Underwriting profit (loss)	$	19,407		$	(9,625	)	$	4,316		$	-		$	14,098

Net investment income											39,469			39,469
Net realized gains (losses)											3,407			3,407
Interest expense											(7,716	)		(7,716	)
Other income (loss)											6,906			6,906
Income (loss) before income taxes	$	19,407		$	(9,625	)	$	4,316		$	42,066		$	56,164
Income tax (expense) benefit											(17,042	)		(17,042	)
Net income (loss)													$	39,122

Losses and LAE ratio		61.5	%		56.8	%		61.7	%					60.1	%
Commission expense ratio		10.6	%		20.6	%		20.1	%					14.7	%
Other operating expense ratio ⁽²⁾		21.4	%		28.8	%		12.5	%					22.6	%
Combined ratio		93.5	%		106.2	%		94.3	%					97.4	%

(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other operating expenses and Other underwriting income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information

	Six Months Ended June 30, 2015
	U.S.			Int’l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate ⁽¹⁾			Total
Gross written premiums	$	439,314		$	231,217		$	105,400		$	-		$	775,931
Ceded written premiums		(147,612	)		(75,877	)		(5,240	)		-			(228,729	)
Net written premiums		291,702			155,340			100,160			-			547,202

Net earned premiums		268,395			128,711			81,354			-			478,460
Net losses and LAE		(161,954	)		(62,054	)		(48,163	)		-			(272,171	)
Commission expenses		(26,620	)		(22,711	)		(15,337	)		283			(64,385	)
Other operating expenses		(65,062	)		(34,375	)		(8,261	)		-			(107,698	)
Other underwriting income (expense)		317			-			46			(283	)		80

Underwriting profit (loss)	$	15,076		$	9,571		$	9,639		$	-		$	34,286

Net investment income											32,848			32,848
Net realized gains (losses)											9,512			9,512
Interest expense											(7,711	)		(7,711	)
Other income (loss)											(2,200	)		(2,200	)
Income (loss) before income taxes	$	15,076		$	9,571		$	9,639		$	32,449		$	66,735
Income tax (expense) benefit											(21,622	)		(21,622	)
Net income (loss)													$	45,113

Losses and LAE ratio		60.3	%		48.2	%		59.2	%					56.9	%
Commission expense ratio		9.9	%		17.6	%		18.9	%					13.5	%
Other operating expense ratio ⁽²⁾		24.2	%		26.8	%		10.1	%					22.4	%
Combined ratio		94.4	%		92.6	%		88.2	%					92.8	%

(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other operating expenses and Other underwriting income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results

	U.S. Insurance
	Three Months Ended June 30, 2016												Three Months Ended June 30, 2015
amounts in thousands	Marine			P&C			Professional Liability			Total			Marine			P&C			Professional Liability			Total			% Change Total
Gross written premiums	$	46,187		$	168,654		$	29,083		$	243,924		$	41,803		$	170,216		$	27,968		$	239,987			1.6	%
Ceded written premiums		(18,540	)		(36,768	)		(7,310	)		(62,618	)		(15,026	)		(49,305	)		(14,551	)		(78,882	)		-20.6	%
Net written premiums		27,647			131,886			21,773			181,306			26,777			120,911			13,417			161,105			12.5	%

Net earned premiums	$	24,921		$	110,212		$	17,251		$	152,384		$	25,977		$	96,440		$	14,887		$	137,304			11.0	%
Net losses and LAE		(10,699	)		(72,172	)		(10,557	)		(93,428	)		(11,415	)		(67,809	)		(4,931	)		(84,155	)		11.0	%
Commission expenses		(2,176	)		(12,821	)		(1,897	)		(16,894	)		(2,429	)		(8,751	)		(1,095	)		(12,275	)		37.6	%
Other operating expenses		(6,817	)		(20,049	)		(4,704	)		(31,570	)		(6,402	)		(19,661	)		(5,311	)		(31,374	)		0.6	%
Other underwriting income (expense)		152			178			12			342			24			97			-			121		NM

Underwriting profit (loss)	$	5,381		$	5,348		$	105		$	10,834		$	5,755		$	316		$	3,550		$	9,621			12.6	%

Losses and LAE ratio		42.9	%		65.5	%		61.2	%		61.3	%		43.9	%		70.3	%		33.1	%		61.3	%
Commission expense ratio		8.7	%		11.6	%		11.0	%		11.1	%		9.4	%		9.1	%		7.4	%		8.9	%
Other operating expense ratio ⁽¹⁾		26.8	%		18.0	%		27.2	%		20.5	%		24.5	%		20.3	%		35.7	%		22.8	%
Combined ratio		78.4	%		95.1	%		99.4	%		92.9	%		77.8	%		99.7	%		76.2	%		93.0	%

NM - Percentage change not meaningful
(1) - Includes Other operating expenses and Other underwriting income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results

	Int’l Insurance
	Three Months Ended June 30, 2016												Three Months Ended June 30, 2015
amounts in thousands	Marine			P&C			Professional Liability			Total			Marine			P&C			Professional Liability			Total			% Change Total
Gross written premiums	$	41,147		$	63,002		$	31,591		$	135,740		$	41,432		$	41,615		$	25,743		$	108,790			24.8	%
Ceded written premiums		(9,554	)		(24,465	)		(7,891	)		(41,910	)		(9,126	)		(24,513	)		(7,982	)		(41,621	)		0.7	%
Net written premiums		31,593			38,537			23,700			93,830			32,306			17,102			17,761			67,169			39.7	%

Net earned premiums	$	36,096		$	23,815		$	17,922		$	77,833		$	40,132		$	10,199		$	12,855		$	63,186			23.2	%
Net losses and LAE		(17,021	)		(21,878	)		(9,167	)		(48,066	)		(21,432	)		(4,084	)		(6,847	)		(32,363	)		48.5	%
Commission expenses		(8,361	)		(5,150	)		(3,310	)		(16,821	)		(9,495	)		(155	)		(1,648	)		(11,298	)		48.9	%
Other operating expenses		(8,698	)		(9,065	)		(5,280	)		(23,043	)		(6,749	)		(6,166	)		(4,451	)		(17,366	)		32.7	%
Other underwriting income (expense)		-			-			-			-			-			-			-			-		NM

Underwriting profit (loss)	$	2,016		$	(12,278	)	$	165		$	(10,097	)	$	2,456		$	(206	)	$	(91	)	$	2,159		NM

Losses and LAE ratio		47.2	%		91.9	%		51.2	%		61.8	%		53.4	%		40.0	%		53.3	%		51.2	%
Commission expense ratio		23.2	%		21.6	%		18.5	%		21.6	%		23.7	%		1.5	%		12.8	%		17.9	%
Other operating expense ratio ⁽¹⁾		24.0	%		38.1	%		29.4	%		29.6	%		16.8	%		60.5	%		34.6	%		27.5	%
Combined ratio		94.4	%		151.6	%		99.1	%		113.0	%		93.9	%		102.0	%		100.7	%		96.6	%

NM - Percentage change not meaningful
(1) - Includes Other operating expenses and Other underwriting income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results

	U.S. Insurance
	Six Months Ended June 30, 2016												Six Months Ended June 30, 2015
amounts in thousands	Marine			P&C			Professional Liability			Total			Marine			P&C			Professional Liability			Total			% Change Total
Gross written premiums	$	89,350		$	309,932		$	55,289		$	454,571		$	82,638		$	304,362		$	52,314		$	439,314			3.5	%
Ceded written premiums		(36,187	)		(67,275	)		(13,653	)		(117,115	)		(31,312	)		(88,863	)		(27,437	)		(147,612	)		-20.7	%
Net written premiums		53,163			242,657			41,636			337,456			51,326			215,499			24,877			291,702			15.7	%

Net earned premiums	$	48,171		$	219,371		$	33,182		$	300,724		$	49,901		$	187,175		$	31,319		$	268,395			12.0	%
Net losses and LAE		(20,474	)		(143,769	)		(20,697	)		(184,940	)		(21,603	)		(125,856	)		(14,495	)		(161,954	)		14.2	%
Commission expenses		(3,658	)		(24,673	)		(3,418	)		(31,749	)		(6,461	)		(17,307	)		(2,852	)		(26,620	)		19.3	%
Other operating expenses		(14,189	)		(41,571	)		(9,571	)		(65,331	)		(13,375	)		(40,720	)		(10,967	)		(65,062	)		0.4	%
Other underwriting income (expense)		231			446			26			703			175			141			1			317			121.7	%

Underwriting profit (loss)	$	10,081		$	9,804		$	(478	)	$	19,407		$	8,637		$	3,433		$	3,006		$	15,076			28.7	%

Losses and LAE ratio		42.5	%		65.5	%		62.4	%		61.5	%		43.3	%		67.2	%		46.3	%		60.3	%
Commission expense ratio		7.6	%		11.2	%		10.3	%		10.6	%		12.9	%		9.2	%		9.1	%		9.9	%
Other operating expense ratio ⁽¹⁾		29.0	%		18.8	%		28.7	%		21.4	%		26.5	%		21.8	%		35.0	%		24.2	%
Combined ratio		79.1	%		95.5	%		101.4	%		93.5	%		82.7	%		98.2	%		90.4	%		94.4	%

(1) - Includes Other operating expenses and Other underwriting income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results

	Int’l Insurance
	Six Months Ended June 30, 2016												Six Months Ended June 30, 2015
amounts in thousands	Marine			P&C			Professional Liability			Total			Marine			P&C			Professional Liability			Total			% Change Total
Gross written premiums	$	113,095		$	107,048		$	59,740		$	279,883		$	108,842		$	74,565		$	47,810		$	231,217			21.0	%
Ceded written premiums		(20,643	)		(41,694	)		(14,544	)		(76,881	)		(19,948	)		(40,642	)		(15,287	)		(75,877	)		1.3	%
Net written premiums		92,452			65,354			45,196			203,002			88,894			33,923			32,523			155,340			30.7	%

Net earned premiums	$	74,952		$	45,024		$	35,865		$	155,841		$	77,924		$	26,233		$	24,554		$	128,711			21.1	%
Net losses and LAE		(37,109	)		(33,094	)		(18,273	)		(88,476	)		(40,943	)		(8,964	)		(12,147	)		(62,054	)		42.6	%
Commission expenses		(17,766	)		(7,925	)		(6,485	)		(32,176	)		(18,685	)		(1,182	)		(2,844	)		(22,711	)		41.7	%
Other operating expenses		(17,140	)		(17,773	)		(9,901	)		(44,814	)		(13,444	)		(12,150	)		(8,781	)		(34,375	)		30.4	%
Other underwriting income (expense)		-			-			-			-			-			-			-			-		NM

Underwriting profit (loss)	$	2,937		$	(13,768	)	$	1,206		$	(9,625	)	$	4,852		$	3,937		$	782		$	9,571		NM

Losses and LAE ratio		49.5	%		73.5	%		50.9	%		56.8	%		52.5	%		34.2	%		49.5	%		48.2	%
Commission expense ratio		23.7	%		17.6	%		18.1	%		20.6	%		24.0	%		4.5	%		11.6	%		17.6	%
Other operating expense ratio ⁽¹⁾		22.9	%		39.5	%		27.6	%		28.8	%		17.3	%		46.3	%		35.7	%		26.8	%
Combined ratio		96.1	%		130.6	%		96.6	%		106.2	%		93.8	%		85.0	%		96.8	%		92.6	%

NM - Percentage change not meaningful
(1) - Includes Other operating expenses and Other underwriting income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Incurred Loss Activity

	For the Three Months Ended June 30,
amounts in thousands	Amounts					Loss Ratio
Net Incurred Loss Activity	2016		2015			2016			2015
U.S. Insurance:
Loss and LAE payments	$	72,246	$	56,719			47.4	%		41.3	%
Change in reserves		21,182		27,436			13.9	%		20.0	%
Net incurred loss and LAE	$	93,428	$	84,155			61.3	%		61.3	%

Int’l Insurance:
Loss and LAE payments		32,996		33,891			42.4	%		53.6	%
Change in reserves		15,070		(1,528	)		19.4	%		-2.4	%
Net incurred loss and LAE	$	48,066	$	32,363			61.8	%		51.2	%

GlobalRe:
Loss and LAE payments		17,928		20,037			47.5	%		47.9	%
Change in reserves		7,784		5,418			20.6	%		12.9	%
Net incurred loss and LAE	$	25,712	$	25,455			68.1	%		60.8	%

Total
Loss and LAE payments		123,170		110,647			46.0	%		45.7	%
Change in reserves		44,036		31,326			16.4	%		12.9	%
Net incurred loss and LAE	$	167,206	$	141,973			62.4	%		58.6	%

	Amounts					Loss Ratio Impact
Impact of Prior Years Reserves	June 30,		June 30,			June 30,			June 30,
Favorable / (Unfavorable) Development	2016		2015			2016			2015
U.S. Insurance	$	4,002	$	7,829			1.5	%		3.2	%
Int’l Insurance		3,354		(581	)		1.3	%		-0.2	%
GlobalRe		1,423		7			0.5	%		0.0	%
Total	$	8,779	$	7,255			3.3	%		3.0	%

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Incurred Loss Activity

	For the Six Months Ended June 30,
amounts in thousands	Amounts					Loss Ratio
Net Incurred Loss Activity	2016		2015			2016			2015
U.S. Insurance:
Loss and LAE payments	$	145,281	$	119,453			48.3	%		44.5	%
Change in reserves		39,659		42,501			13.2	%		15.8	%
Net incurred loss and LAE	$	184,940	$	161,954			61.5	%		60.3	%

Int’l Insurance:
Loss and LAE payments		62,239		69,428			39.9	%		53.9	%
Change in reserves		26,237		(7,374	)		16.9	%		-5.7	%
Net incurred loss and LAE	$	88,476	$	62,054			56.8	%		48.2	%

GlobalRe:
Loss and LAE payments		43,059		41,249			56.8	%		50.7	%
Change in reserves		3,687		6,914			4.9	%		8.5	%
Net incurred loss and LAE	$	46,746	$	48,163			61.7	%		59.2	%

Total
Loss and LAE payments		250,579		230,130			47.1	%		48.1	%
Change in reserves		69,583		42,041			13.0	%		8.8	%
Net incurred loss and LAE	$	320,162	$	272,171			60.1	%		56.9	%

	Amounts					Loss Ratio Impact
Impact of Prior Years Reserves	June 30,		June 30,			June 30,			June 30,
Favorable / (Unfavorable) Development	2016		2015			2016			2015
U.S. Insurance	$	6,671	$	14,238			1.3	%		3.0	%
Int’l Insurance		2,499		5,610			0.5	%		1.2	%
GlobalRe		1,443		6			0.3	%		0.0	%
Total	$	10,613	$	19,854			2.1	%		4.2	%

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data

	As of June 30, 2016
amounts in thousands	Case		IBNR
Net Loss Reserves:	Reserves		Reserves		Total
U.S. Insurance:
Marine	$	57,895	$	52,573	$	110,468
P&C		192,440		555,945		748,385
Professional Liability		30,150		63,592		93,742
Total U.S. Insurance	$	280,485	$	672,110	$	952,595
Int’l Insurance:
Marine		162,364		59,347		221,711
P&C		55,811		19,815		75,626
Professional Liability		28,850		63,843		92,693
Total Int’l Insurance	$	247,025	$	143,005	$	390,030

GlobalRe	$	45,705	$	66,172	$	111,877

Total Net Loss Reserves	$	573,215	$	881,287	$	1,454,502


	As of December 31, 2015
	Case		IBNR
Net Loss Reserves:	Reserves		Reserves		Total
U.S. Insurance:
Marine	$	68,677	$	55,408	$	124,085
P&C		170,988		514,777		685,765
Professional Liability		42,546		60,528		103,074
Total U.S. Insurance	$	282,211	$	630,713	$	912,924
Int’l Insurance:
Marine		167,157		61,409		228,566
P&C		40,313		19,735		60,048
Professional Liability		19,583		63,229		82,812
Total Int’l Insurance	$	227,053	$	144,373	$	371,426

GlobalRe	$	32,160	$	76,616	$	108,776

Total Net Loss Reserves	$	541,424	$	851,702	$	1,393,126

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Investment Data

As of June 30, 2016, the average quality of the investment portfolio as rated by S&P and Moody’s was "AA-/Aa3" with an average duration of 3.9 years. Our Company does not own any collateralized debt obligations (CDO’s) or asset backed commercial paper.

The following table sets forth our investments as of June 30, 2016:

	As of June 30, 2016
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
amounts in thousands	Value		Gains		(Losses)			Cost
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	353,579	$	6,019	$	(3,860	)	$	351,420
States, municipalities and political subdivisions		553,824		34,183		(602	)		520,243
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		504,731		11,203		(183	)		493,711
Residential mortgage obligations		28,258		470		(130	)		27,918
Asset-backed securities		262,903		1,339		(836	)		262,400
Commercial mortgage-backed securities		172,579		6,581		(1,028	)		167,026
Subtotal	$	968,471	$	19,593	$	(2,177	)	$	951,055
Corporate bonds		756,439		22,172		(1,636	)		735,903
Total fixed maturities	$	2,632,313	$	81,967	$	(8,275	)	$	2,558,621
Equity securities		329,635		39,159		(2,222	)		292,698
Short-term investments		144,843		-		(2	)		144,845
Total investments	$	3,106,791	$	121,126	$	(10,499	)	$	2,996,164

Navigators Reports Second Quarter 2016 Earnings

Contact Data

Contact