Navigators Reports First Quarter 2005 Earnings.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- 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 ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $14,500,000 in ceded reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. premium resulting from the cancellation cancellation (See: cancel) CANCELLATION. Its general acceptation, is the act of crossing a writing; it is used sometimes to signify the manual operation of tearing or destroying the instrument itself. Hyde v. Hyde, 1 Eq. Cas. Abr. 409; Rob. of a quota share For This article is about quota shares (shares of the quota). For other usages of quota, see, see . A quota share is a specified number or percentage of the allotment as a whole (quota), that is prescribed to each individual entity (see Non-tariff barriers to trade). reinsurance agreement for specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. 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 STAN Stanchion STAN Stärke- und Ausrüstungsnachweis (German) Stan Standard Man (human patient simulator) STAN SEMCIP Technical Assistance Network STAN System Trace Audit Number STAN Star Trek Area Network Galanski commented, "We are pleased with the continued profitable underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. 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 niche: see ecology. niche Smallest unit of a habitat that is occupied by an organism. A habitat niche is the physical space occupied by the organism; an ecological niche is the role the organism plays in the community of organisms found in the underwriter underwriter n. a company or person which/who underwrites an insurance policy, issue of corporate securities, business, or project. (See: underwrite) UNDERWRITER, insurances. One who signs a policy of insurance, by which he becomes an insurer. , we remain focused on attractive specialty opportunities in markets where rates and terms are consistent with our objective of underwriting profitability." Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses 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 attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the settlement of the reinsurance to close ("RITC RITC Research for International Tobacco Control (Canada) RITC ReInsurance To Close (Lloyd's process of closing open syndicates) RITC Rhodopi International Theater Collective ") premium recorded by Lloyd's Lloyd's, London insurance underwriting corporation of many separate syndicates; often called Lloyd's of London. Founded in the late 17th cent. by a group of merchants, shipowners, and insurance brokers at the coffeehouse of Edward Lloyd, the association is now Syndicate Syndicate organized crime unit throughout major cities of the United States. [Am. Hist.: NCE, 2018] See : Gangsterism 1221 in the 2004 fourth quarter representing the transfer of assets The conveyance of something of value from one person, place, or situation to another. The law recognizes that persons are generally entitled to transfer their assets to whomever they wish and for whatever reason. The most common means of transfer are wills, trusts, and gifts. 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 pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta investment yield for the 2005 and 2004 first quarters was 3.5% and 3.4%, respectively. Stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. 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 December: see month. 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 Wednesday: see week. , May 4, 2005 starting at 8:30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy 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 Not to be confused with Lloyds Bank or Lloyd's Register. Lloyd's of London is a British insurance market. It serves as a meeting place where multiple financial backers or “members”, whether individuals (traditionally known as . Headquartered in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. , Navigators has offices in major insurance centers in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , the United Kingdom and Belgium Belgium (bĕl`jəm), Du. België, Fr. La Belgique, officially Kingdom of Belgium, constitutional kingdom (2005 est. pop. 10,364,000), 11,781 sq mi (30,513 sq km), NW Europe. . This press release may contain "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 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
========= ========== ===========
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