A.M. Best Assigns Indicative and Issuer Credit Ratings to The Navigators Group, Inc.; Affirms Rating of Navigators Insurance Group.

OLDWICK, N.J. -- A.M. Best Co. has assigned indicative ratings of "bbb" to senior unsecured debt, "bbb-" to subordinated debt and "bb+" to preferred stock to The Navigators Group, Inc.'s (New York, NY) (NASDAQ: NAVG) $250 million shelf registration. A.M. Best has also assigned an issuer credit rating of "bbb" to The Navigators Group, Inc. and affirmed the financial strength rating of A (Excellent) for the Navigators Insurance Group, which comprises Navigators Insurance Company and its wholly-owned subsidiary, NIC Insurance Company. The outlook for these ratings has been revised to stable from negative. The outlook for all ratings is stable.

These rating actions reflect the group's leading position as a global provider of insurance to the marine energy sector; the anticipated benefits to be derived from hardening market conditions within the marine energy field; management's conservative approach to underwriting and claims management; and the group's solid level of capitalization. The latter is further enhanced by the additional financial flexibility afforded by virtue of the recently filed shelf registration and the anticipated raising of approximately $125 million in new equity during October to support the insurance operations. These positive factors are somewhat offset by the group's elevated ceded reinsurance leverage, which increased further due to recent Hurricane Katrina losses, the rapid growth in relatively new lines of business seen in recent years and the tempered concern regarding overall loss reserve adequacy on these newer lines. While the net after tax impact from Katrina was negligible, the gross loss estimates were high enough to cause some strain on the insurance companies' consolidated risk-adjusted capitalization. Nevertheless, the financial flexibility afforded through the holding company parent is sufficient to offset these concerns. The additional equity capital to be provided during October is expected to support the group's planned expansion of existing lines of business during what is anticipated to be a further hardening of rates, terms and conditions in their primary markets.

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A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.