Navigators Reports Record Fourth Quarter 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. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :NAVG NAVG Navigation ) reported net income of $15,310,000 or $0.96 per share for the 2005 fourth quarter based on 16,012,000 diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. shares compared to net income of $10,635,000 or $0.84 per share for the 2004 fourth quarter based on 12,710,000 diluted shares. The 2005 and 2004 fourth quarter results include net realized capital gains of $0.01 per share and $0.02 per share, respectively. Net income for the year ended December December: see month. 31, 2005 was $23,564,000 or $1.73 per share, compared to $34,865,000 or $2.74 per share for the year ended December 31, 2004. Included in these results were net realized capital gains of $0.06 per share and $0.05 per share for the years ended December 31, 2005 and 2004, respectively. Gross written premium for the 2005 fourth quarter and year was $184,336,000 and $779,579,000, respectively, compared to $187,390,000 and $696,146,000 for the comparable 2004 year periods. Included in the 2004 fourth quarter gross written premium is approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $38,129,000 of "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. 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 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 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. year to the 2003 underwriting year in which Navigators had increased its participation to 97.4% from 68.1%. The RITC transaction is recorded as additional gross written and earned premium Earned premium is the portion of an insurance written premium which is considered "earned" by the insurer, based on the part of the policy period that the insurance has been in effect, and during which the insurer has been exposed to loss. , losses incurred, loss reserves and receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed all in the same amount, net of applicable ceded reinsurance amounts. There are no gains or losses recorded on the RITC transaction. The comparable 2005 fourth quarter RITC transaction amount was $7,000. Gross written premium for the 2005 fourth quarter and year increased 23% and 18%, respectively, from the comparable 2004 year periods, excluding RITC gross written premiums. Net written premium for the 2005 fourth quarter and year was $94,263,000 and $380,659,000, respectively, an increase of 22% from both the 2004 fourth quarter and full year period. Net written premium for the 2005 fourth quarter increased 27% excluding RITC net written premium of $2,500,000 and $12,756,000 recorded in the 2005 and 2004 fourth quarters, respectively, and the reduction of the 2004 fourth quarter net written premium by approximately $7,500,000 for ceded reinsurance premium for a 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. 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). treaty not renewed re·new v. re·newed, re·new·ing, re·news v.tr. 1. To make new or as if new again; restore: renewed the antique chair. 2. on March 31, 2005. The combined loss and expense ratios for the 2005 fourth quarter and year were 90.0% and 100.9%, respectively, compared to 89.4% and 90.1% for the comparable 2004 periods. The combined loss and expense ratios for the 2005 year and 2004 year were reduced by 1.1 loss ratio points and 1.2 loss ratio points, respectively, resulting from the release of a net loss reserve redundancy Having a secondary peripheral, computer system or network device that takes over when the primary unit fails. See fault tolerant, mirroring, RAID, hot standby and backup types. 1. of $3.8 million in each of 2005 and 2004, respectively, relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc prior years. During the 2005 fourth quarter, the Company settled the two large remaining claims where excess policy limits were exposed to class action suits involved in the manufacturing or distribution of asbestos asbestos, mineral asbestos, common name for any of a variety of silicate minerals within the amphibole and serpentine groups that are fibrous in structure and more or less resistant to acid and fire. products. The Company has also withdrawn its demand for arbitration arbitration Process of resolving a dispute or a grievance outside a court system by presenting it for decision to an impartial third party. Both sides in the dispute usually must agree in advance to the choice of arbitrator and certify that they will abide by the against Equitas Equitas is the general label given to a group of companies linked to Lloyd's of London. It was set up in 1996 specifically to reinsure liabilities that had accumulated in the syndicates at Lloyd's of London on policies written from the 1930s up to and including 1992. after reaching a settlement pursuant to which Equitas, as the Company's excess of loss reinsurer re·in·sure tr.v. re·in·sured, re·in·sur·ing, re·in·sures To insure again, especially by transferring all or part of the risk in a contract to a new contract with another insurance company. , agreed to reimburse re·im·burse tr.v. re·im·bursed, re·im·burs·ing, re·im·burs·es 1. To repay (money spent); refund. 2. To pay back or compensate (another party) for money spent or losses incurred. the Company for past and future loss payments in connection with a 2004 settlement of a large asbestos claim. Equitas is a lead reinsurer participating in excess of loss reinsurance agreements for all three settled claims. No significant net gain or loss was recorded as a result of such settlements. 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, "Our 2005 earnings were the second highest in our Company's history despite the impact of two of the largest offshore energy catastrophe Catastrophe, from the Greek Καταστροφή (katastrephein), literally means "to turn" (strephein) "downwards" (kata-). losses ever to hit the marine insurance industry. We are proud of the performance of our underwriting and claims teams. Absent Hurricanes Katrina KATRINA Keeping All the Resources in New Orleans Alive KATRINA Krewe Aiding Trash Removal In the New Orleans Area and Rita, our results were stellar. We are pleased that our original loss estimates for these two storms continue to appear adequate and to be contained well within our reinsurance program. While we have always emphasized em·pha·size tr.v. em·pha·sized, em·pha·siz·ing, em·pha·siz·es To give emphasis to; stress. [From emphasis.] Adj. 1. the importance of making an underwriting profit Underwriting profit is a term used in the insurance industry. It consists of the earned premium remaining after losses have been paid and administrative expenses have been deducted. It does not include any investment income earned on held premiums. , our increased asset base, coupled with strong cash flow, resulted in 38% growth in our investment income in 2005. "Market conditions continue to support profitable growth for all of our business units and we anticipate premium growth for our product lines in 2006. We remain focused on expanding our 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 underwriting operations by targeting additional products and seasoned underwriting professionals to help expand our business 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. and United Kingdom." 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 fourth quarter and year ended December 31, 2005 was $70,879,000 and $238,826,000, respectively, compared to $20,743,000 and $162,491,000 for the comparable 2004 periods. Net investment income for the 2005 fourth quarter and year was $11,290,000 and $37,069,000, respectively, increases of 53% and 38% from the 2004 comparable periods. The 2005 fourth quarter increase in net investment income reflects the strong cash flow from operations generated throughout 2005 coupled with the investment of $124 million in net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). received in October October: see month. from the sale of 3,795,000 shares of common stock. The pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta investment yields for the 2005 fourth quarter and year were 4.2% and 3.8%, respectively, compared to 3.6% and 3.5% for the comparable 2004 periods. 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 $470,238,000 or $28.30 per share at December 31, 2005 compared to $328,578,000 or $25.96 per share at December 31, 2004. Statutory surplus of Navigators Insurance Company was $356,484,000 at December 31, 2005. The Company will hold a conference call on Thursday Thursday: see week. , February February: see month. 16, 2006 starting at 8:30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy to discuss the fourth quarter's results. To access the call, please dial 1-800-591-6930, using confirmation code 16111044. Internationally, the call may be accessed by dialing 617-614-4908 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 February 16th 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, 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 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 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 Twelve Months Ended
December 31, December 31,
------------------ ----------------
Financial Highlights 2005 2004 Change 2005 2004 Change
-------------------- ------- ------ ------- -------- ------ ------
Gross written premium $184,336 $187,390 -2% $779,579 $696,146 12%
Net written premium 94,263 77,114 22% 380,659 312,730 22%
Revenues:
Net earned premium 100,447 86,368 16% 338,551 310,995 9%
Commission income 1,877 1,146 64% 5,686 4,754 20%
Investment Income 11,290 7,387 53% 37,069 26,795 38%
Net realized capital
gains 311 334 -7% 1,238 922 34%
Other income (expense) 849 (704) NM 2,675 (437) NM
------------------ ------------------
Total revenues 114,774 94,531 21% 385,219 343,029 12%
------------------ ------------------
Operating expenses:
Net losses and loss
adjustment expenses
incurred 58,987 49,623 19% 235,655 188,014 25%
Commission expense 12,168 9,300 31% 42,671 39,140 9%
Other operating
expenses 20,586 19,717 4% 73,139 63,783 15%
------------------ ------------------
Total operating
expenses 91,741 78,640 17% 351,465 290,937 21%
------------------ ------------------
Income before income
taxes 23,033 15,891 45% 33,754 52,092 -35%
------------------ ------------------
Income tax expense
(benefit):
Current 8,190 5,610 46% 15,826 19,794 -20%
Deferred (467) (354) NM (5,636) (2,567) NM
------------------ ------------------
Income tax expense 7,723 5,256 47% 10,190 17,227 -41%
------------------ ------------------
Net income $ 15,310 $ 10,635 44% $ 23,564 $ 34,865 -32%
================== ==================
Per Share Data
--------------
Net income per
common share:
Basic $ 0.97 $ 0.84 15% $ 1.74 $ 2.77 -37%
Diluted $ 0.96 $ 0.84 14% $ 1.73 $ 2.74 -37%
Average shares
outstanding:
Basic 15,856 12,639 13,528 12,598
Diluted 16,012 12,710 13,657 12,715
Underwriting Ratios
-------------------
Loss Ratio 58.7% 57.5% 69.6% 60.5%
Expense Ratio 31.3% 31.9% 31.3% 29.6%
------------------ ------------------
Combined Ratio 90.0% 89.4% 100.9% 90.1%
Balance Sheet Data Dec. 31, Dec. 31,
------------------ 2005 2004
------------------
Stockholders' equity $470,238 $328,578 43%
Book value per share $28.30 $25.96 9%
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($'s in thousands)
December 31, December 31,
2005 2004
------------ ------------
ASSETS
Investments and cash:
Fixed maturities, available-for-sale,
at fair value (amortized cost: 2005,
$986,726; 2004, $713,049) $ 984,113 $ 722,434
Equity securities, available-for-sale, at fair
value (cost: 2005, $19,667; 2004, $19,101) 20,911 21,170
Short-term investments, at cost which
approximates fair value 164,047 96,653
Cash 13,165 14,676
----------- -----------
Total investments and cash 1,182,236 854,933
----------- -----------
Premiums in course of collection 155,977 176,720
Commissions receivable 3,467 3,062
Prepaid reinsurance premiums 136,341 130,761
Reinsurance receivable on paid losses 37,055 20,955
Reinsurance receivable on unpaid losses and
loss adjustment expenses 979,015 502,329
Net deferred income tax benefit 28,317 17,348
Deferred policy acquisition costs 29,697 23,882
Accrued investment income 10,297 7,303
Goodwill and other intangible assets 7,341 5,282
Other assets 13,506 14,103
----------- -----------
Total assets $2,583,249 $1,756,678
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Reserves for losses and loss adjustment
expenses $1,557,991 $ 966,117
Unearned premium 316,516 270,970
Reinsurance balances payable 180,059 143,427
Federal income tax payable 1,274 5,614
Payable for securities purchased 823 3,027
Accounts payable and other liabilities 56,348 38,945
----------- -----------
Total liabilities 2,113,011 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: 16,616,781 for
2005 and 12,657,160 for 2004 1,662 1,266
Additional paid-in capital 282,463 154,670
Retained earnings 186,901 163,337
Accumulated other comprehensive income (788) 9,305
----------- -----------
Total stockholders' equity 470,238 328,578
----------- -----------
Total liabilities and stockholders'
equity $2,583,249 $1,756,678
=========== ===========
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Comparative Premium Data
($'s in thousands)
Gross Written
Premium: Fourth Quarter Twelve Months
------------------ -----------------
Insurance Companies: 2005 2004 Change 2005 2004 Change
------------------------ ------------------------
Marine $ 52,188 $ 50,914 3% $233,688 $210,326 11%
Specialty 58,029 39,329 48% 210,483 150,068 40%
Professional
Liability 26,221 18,973 38% 86,929 70,955 23%
Assumed from Lloyd's (489) 21,616 NM (1,555) 26,014 NM
Other (includes run-
off) 46 30 NM 136 254 NM
------------------ ------------------
135,995 130,862 4% 529,681 457,617 16%
Lloyd's Operations:
Marine 38,712 62,261 -38% 207,170 230,825 -10%
Professional Liability 1,928 - NM 6,646 - NM
Other 7,224 15,135 -52% 34,567 33,042 5%
------------------ ------------------
47,864 77,396 -38% 248,383 263,867 -6%
Intercompany
elimination 477 (20,868) NM 1,515 (25,338) NM
------------------ ------------------
Total $184,336 $187,390 -2% $779,579 $696,146 12%
================== ==================
Net Written Premium: Fourth Quarter Twelve Months
------------------ -----------------
Insurance Companies: 2005 2004 Change 2005 2004 Change
------------------------ ------------------------
Marine $ 20,402 $ 18,059 13% $ 88,591 $ 79,278 12%
Specialty 37,208 19,715 89% 145,199 79,944 82%
Professional
Liability 11,293 7,545 50% 35,626 26,625 34%
Assumed from Lloyd's (490) 21,608 NM (1,699) 25,799 NM
Other (includes run-
off) (17) 209 NM 28 1,104 NM
------------------ ------------------
68,396 67,136 2% 267,745 212,750 26%
Lloyd's Operations:
Marine 22,405 11,266 99% 99,797 93,245 7%
Professional Liability 758 - NM 2,613 - NM
Other 2,704 (1,288) NM 10,504 6,735 56%
------------------ ------------------
25,867 9,978 159% 112,914 99,980 13%
------------------ ------------------
Total $94,263 $77,114 22% $380,659 $312,730 22%
================== ==================
Net Earned Premium: Fourth Quarter Twelve Months
------------------ -----------------
Insurance Companies: 2005 2004 Change 2005 2004 Change
------------------------ ------------------------
Marine $25,899 $21,351 21% $83,499 $80,476 4%
Specialty 35,779 20,710 73% 117,208 86,437 36%
Professional Liability 8,625 6,822 26% 30,118 21,021 43%
Assumed from Lloyd's (489) 23,160 NM (809) 39,714 NM
Other (includes run-
off) (16) 210 NM 30 1,111 NM
------------------ ------------------
69,798 72,253 -3% 230,046 228,759 1%
Lloyd's Operations:
Marine 27,989 14,990 87% 102,632 79,908 28%
Professional Liability 529 - NM 1,240 - NM
Other 2,131 (875) NM 4,633 2,328 99%
------------------ ------------------
30,649 14,115 117% 108,505 82,236 32%
------------------ ------------------
Total $100,447 $ 86,368 16% $338,551 $310,995 9%
================== ==================
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Quarter Ended
December 31, 2005
($'s in thousands)
Parent
Insurance Lloyd's Navigators &
Companies Operations Agencies Other(1) Total
--------- ---------- ---------- ------- ---------
Gross premium written $135,995 $47,864 $ 477 $184,336
Net premium written 68,396 25,867 94,263
Net earned premium 69,798 30,649 100,447
Net losses and loss
adjustment expenses (40,437) (18,550) (58,987)
Commission expense (18,294) (4,781) (23,075)
Other operating
expenses (2,189) (6,026) (8,215)
--------------------------------------------------
Underwriting profit 8,878 1,292 10,170
Commission income - 741 $12,508 (11,372) 1,877
Investment Income 9,714 1,419 13 144 11,290
Net realized capital
gains / (losses) 357 (46) - - 311
Other income (13) 872 330 (340) 849
Commission expense - 10,907 10,907
Other operating expenses (11,732) (639) (12,371)
--------------------------------------------------
Income (loss) before
income tax expense
(benefit) 18,936 4,278 1,119 (1,300) 23,033
Income tax expense
(benefit) 6,035 1,497 646 (455) 7,723
--------------------------------------------------
Net Income (loss) $ 12,901 $ 2,781 $ 473 $(845) $15,310
==================================================
Loss and loss expenses
ratio 57.9% 60.5% 58.7%
Commission expense
ratio 26.2% 15.6% 23.0%
Other operating expense
ratio 3.2% 19.7% 8.3%
------------------- --------
Combined ratio 87.3% 95.8% 90.0%
=================== ========
Notes: (1) Includes inter-segment eliminations.
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Quarter Ended
December 31, 2004
($'s in thousands)
Parent
Insurance Lloyd's Navigators &
Companies Operations Agencies Other(1) Total
--------- ---------- ---------- ------- ---------
Gross premium written $130,862 $77,396 $(20,868)$187,390
Net premium written 67,136 9,978 77,114
Net earned premium 72,253 14,115 86,368
Net losses and loss
adjustment expenses (48,404) (1,219) (49,623)
Commission expense (16,051) (3,678) (19,729)
Other operating
expenses (3,041) (4,779) (7,820)
-------------------------------------------------
Underwriting profit 4,757 4,439 9,196
Commission income - 394 $11,181 (10,429) 1,146
Investment Income 6,581 801 2 3 7,387
Net realized capital
gains / (losses) 458 (124) - - 334
Other income (23) (949) 255 13 (704)
Commission expense - 10,429 10,429
Other operating expenses (11,967) 70 (11,897)
-------------------------------------------------
Income (loss) before
income tax expense
(benefit) 11,773 4,561 (529) 86 15,891
Income tax expense
(benefit) 3,734 1,596 40 (114) 5,256
-------------------------------------------------
Net Income (loss) $ 8,039 $ 2,965 $ (569) $ 200 $10,635
=================================================
Loss and loss expenses
ratio 67.0% 8.6% 57.5%
Commission expense ratio 22.2% 26.1% 22.8%
Other operating expense
ratio 4.2% 33.9% 9.1%
------------------- --------
Combined ratio 93.4% 68.6% 89.4%
=================== ========
Notes: (1) Includes inter-segment eliminations.
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Twelve Months Ended
December 31, 2005
($'s in thousands)
Parent
Insurance Lloyd's Navigators &
Companies Operations Agencies Other(1) Total
--------- ---------- ---------- ------- ---------
Gross premium written $529,681 $248,383 $ 1,515 $779,579
Net premium written 267,745 112,914 380,659
Net earned premium 230,046 108,505 338,551
Net losses and loss
adjustment expenses (155,293) (80,362) (235,655)
Commission expense (57,816) (19,687) (77,503)
Other operating
expenses (8,759) (19,766) (28,525)
--------------------------------------------------
Underwriting profit /
(loss) 8,178 (11,310) (3,132)
Commission income - 1,902 $41,547 (37,763) 5,686
Investment Income 31,746 5,061 18 244 37,069
Net realized capital
gains / (losses) 1,705 (467) - - 1,238
Other income 225 1,747 1,043 (340) 2,675
Commission expense - 34,832 34,832
Other operating expenses (43,678) (936) (44,614)
-------------------------------------------------
Income (loss) before
income tax expense
(benefit) 41,854 (3,067) (1,070) (3,963) 33,754
Income tax expense
(benefit) 12,585 (1,074) 65 (1,386) 10,190
-------------------------------------------------
Net Income (loss) $ 29,269 $ (1,993) $(1,135) $(2,577) $23,564
=================================================
Loss and loss expenses
ratio 67.5% 74.1% 69.6%
Commission expense
ratio 25.1% 18.1% 22.9%
Other operating expense
ratio 3.8% 18.2% 8.4%
------------------- -------
Combined ratio 96.4% 110.4% 100.9%
=================== =======
Notes: (1) Includes inter-segment eliminations.
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Twelve Months Ended
December 31, 2004
($'s in thousands)
Parent
Insurance Lloyd's Navigators &
Companies Operations Agencies Other(1) Total
--------- ---------- ---------- ------- ---------
Gross premium written $457,617 $263,867 $(25,338)$696,146
Net premium written 212,750 99,980 312,730
Net earned premium 228,759 82,236 310,995
Net losses and loss
adjustment expenses (149,073) (38,941) (188,014)
Commission expense (55,120) (15,588) (70,708)
Other operating
expenses (7,007) (14,433) (21,440)
-------------------------------------------------
Underwriting profit 17,559 13,274 30,833
Commission income - 1,257 $35,065 $(31,568) 4,754
Investment Income 24,118 2,645 8 24 26,795
Net realized capital
gains 1,164 (242) - - 922
Other income (17) (1,317) 884 13 (437)
Commission expense - 31,568 31,568
Other operating expenses (39,281) (3,062) (42,343)
-------------------------------------------------
Income (loss) before
income tax expense
(benefit) 42,824 15,617 (3,324) (3,025) 52,092
Income tax expense
(benefit) 13,625 5,466 (812) (1,052) 17,227
-------------------------------------------------
Net Income (loss) $ 29,199 $ 10,151 $(2,512) $ (1,973) $34,865
=================================================
Loss and loss expenses
ratio 65.2% 47.4% 60.5%
Commission expense ratio 24.1% 19.0% 22.7%
Other operating expense
ratio 3.1% 17.6% 6.9%
------------------- -------
Combined ratio 92.4% 84.0% 90.1%
=================== =======
Notes: (1) Includes inter-segment eliminations.
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results
($'s in thousands)
Three Months Ended December 31, 2005
----------------------------------------------------------
Net Losses Combined Ratio
Earned and LAE Underwriting ---------------------
Insurance Premium Incurred Expenses Loss Expense Total
Companies: -----------------------------------------------------------
Marine $ 25,899 $15,723 $ 7,276 60.7% 28.1% 88.8%
Specialty 35,779 21,500 10,350 60.1% 28.9% 89.0%
Professional
Liability 8,625 3,616 2,747 41.9% 31.8% 73.7%
Assumed from
Lloyd's (489) (661) 114 NM NM NM
Other (includes
run-off) (16) 259 (4) NM NM NM
----------------------------------------------------------
69,798 40,437 20,483 57.9% 29.4% 87.3%
Lloyd's
Operations 30,649 18,550 10,807 60.5% 35.3% 95.8%
----------------------------------------------------------
Total $100,447 $58,987 $31,290 58.7% 31.3% 90.0%
==========================================================
Three Months Ended December 31, 2004
----------------------------------------------------------
Net Losses Combined Ratio
Earned and LAE Underwriting ---------------------
Insurance Premium Incurred Expenses Loss Expense Total
Companies: -----------------------------------------------------------
Marine $21,351 $10,471 $ 8,000 49.0% 37.5% 86.5%
Specialty 20,710 12,441 7,876 60.1% 38.0% 98.1%
Professional
Liability 6,822 4,046 2,927 59.3% 42.9% 102.2%
Assumed from
Lloyd's 23,160 21,662 364 93.5% 1.6% 95.1%
Other (includes
run-off) 210 (216) (75) NM NM NM
----------------------------------------------------------
72,253 48,404 19,092 67.0% 26.4% 93.4%
Lloyd's
Operations 14,115 1,219 8,457 8.6% 60.0% 68.6%
----------------------------------------------------------
Total $86,368 $49,623 $27,549 57.5% 31.9% 89.4%
==========================================================
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results
($'s in thousands)
Twelve Months Ended December 31, 2005
----------------------------------------------------------
Net Losses Combined Ratio
Earned and LAE Underwriting ---------------------
Insurance Premium Incurred Expenses Loss Expense Total
Companies: -----------------------------------------------------------
Marine $ 83,499 $ 68,184 $ 22,302 81.7% 26.8% 108.5%
Specialty 117,208 71,139 35,086 60.7% 29.9% 90.6%
Professional
Liability 30,118 18,292 9,125 60.7% 30.3% 91.0%
Assumed from
Lloyd's (809) (1,552) 589 191.9% -72.9% 119.0%
Other (includes
run-off) 30 (770) (527) NM NM NM
----------------------------------------------------------
230,046 155,293 66,575 67.5% 28.9% 96.4%
Lloyd's
Operations 108,505 80,362 39,453 74.1% 36.3% 110.4%
----------------------------------------------------------
Total $338,551 $235,655 $106,028 69.6% 31.3% 100.9%
==========================================================
Effect of Hurrs. Katrina and Rita on the Twelve Months
Ended Dec. 31, 2005
-----------------------------------------------------------
Marine $ (9,147) $ 7,430 $ - 16.1% 2.7% 18.8%
Lloyd's
Operations (5,318) 14,858 - 16.6% 1.7% 18.3%
-----------------------------------------------------------
Total $(14,465) $ 22,288 $ - 9.2% 1.3% 10.5%
===========================================================
Twelve Months Ended December 31, 2004
----------------------------------------------------------
Net Losses Combined Ratio
Earned and LAE Underwriting ---------------------
Insurance Premium Incurred Expenses Loss Expense Total
Companies: -----------------------------------------------------------
Marine $ 80,476 $ 48,163 $24,044 59.8% 29.9% 89.7%
Specialty 86,437 56,992 27,236 65.9% 31.5% 97.4%
Professional
Liability 21,021 12,627 5,588 60.1% 26.6% 86.7%
Assumed from
Lloyd's 39,714 30,604 5,327 77.1% 13.4% 90.5%
Other (includes
run-off) 1,111 687 (68) 61.8% -6.1% 55.7%
-----------------------------------------------------------
228,759 149,073 62,127 65.2% 27.2% 92.4%
Lloyd's
Operations 82,236 38,941 30,021 47.4% 36.6% 84.0%
-----------------------------------------------------------
Total $310,995 $188,014 $92,148 60.5% 29.6% 90.1%
===========================================================
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Reserves
($'s in thousands)
12/31/2005 12/31/2004
----------- -----------
Insurance Companies:
Marine $162,644 $130,439
Specialty 193,755 150,347
Professional Liability 33,133 19,001
Assumed from Lloyd's Operations 1,218 37,790
Other (primarily run-off business) 19,613 22,512
----------- -----------
Total Insurance Companies 410,363 360,089
----------- -----------
Lloyd's Operations:
Marine 161,262 99,565
Other 7,351 4,134
----------- -----------
Total Lloyd's Operations 168,613 103,699
----------- -----------
Total net loss reserves $578,976 $463,788
=========== ===========
Total net case loss reserves $228,423 $189,746
Total net IBNR loss reserves 350,553 274,042
----------- -----------
Total net loss reserves $578,976 $463,788
=========== ===========
Asbestos Claim Data
($'s in thousands)
Quarter Year Year
Ended Ended Ended
Gross of Reinsurance 12/31/2005 12/31/2005 12/31/2004
----------- ----------- -----------
Beginning reserve $74,799 $78,421 $78,472
Incurred loss & LAE (17,888) (17,409) 1,183
Calendar year payments 73 4,174 1,234
----------- ----------- -----------
Ending gross reserves $56,838 $56,838 $78,421
=========== =========== ===========
Gross case loss reserves $48,958 $26,276
Gross IBNR loss reserves 7,880 52,145
----------- -----------
Ending gross reserves $56,838 $78,421
=========== ===========
Net of Reinsurance Beginning reserve $30,221 $31,394 $32,083
Incurred loss & LAE 173 529 405
Calendar year payments 22 1,551 1,094
----------- ----------- -----------
Ending net reserves $30,372 $30,372 $31,394
=========== =========== ===========
Net case loss reserves $22,669 $9,904
Net IBNR loss reserves 7,703 21,490
----------- -----------
Ending net reserves $30,372 $31,394
=========== ===========
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