Navigators Reports Record Quarterly and Annual 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 $10,635,000 or $0.84 per share for the 2004 fourth quarter compared to a net loss of $9,490,000 or $0.78 per share for the 2003 fourth quarter. The 2004 and 2003 fourth quarter results include net realized capital gains of $0.02 per share and $0.03 per share, respectively. Net income for the year ended December December: see month. 31, 2004 was $34,865,000 or $2.74 per share, compared to $7,685,000 or $0.80 per share for the year ended December 31, 2003. Included in these results were net realized capital gains of $0.05 per share and $0.13 per share for the year ended December 31, 2004 and 2003, respectively. The 2003 fourth quarter and full year results include an after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. charge of $20.5 million or $1.68 per share and $2.14 per share, respectively, for incurred losses related to 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. exposures. Gross written premium for the 2004 fourth quarter and year was $187,390,000 and $696,146,000, respectively, representing increases of 24% and 15% from the comparable 2003 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 2003 fourth quarter RITC transaction amount was $514,000. Net written premium for the 2004 fourth quarter and year was $77,114,000 and $312,730,000, respectively, a decrease of 8% from the 2003 fourth quarter and an increase of 2% from the 2003 full year period. The 2003 fourth quarter included a reduction of approximately $11,000,000 in ceded reinsurance premium, which increased net written premium by the same amount, 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 due to a reinsurance treaty Reinsurance Treaty (June 18, 1887) Secret agreement between Germany and Russia. Arranged by Otto von Bismarck after the collapse of the Three Emperors' League, it provided that each party would remain neutral if either became involved in a war with a third nation, and that change effective October October: see month. 1, 2003 which had no impact on net income. The decrease in Lloyd's 2004 fourth quarter net written premium results stems from ceded premiums of $47,566,000 to the Syndicate's reinsurers in connection with the RITC transaction described above. This was offset by $22,193,000 of net premiums assumed by Navigators Insurance Company via a retrocession RETROCESSION, civil law. When the assignee of heritable rights conveys his rights back to the cedent, it is called a retrocession. Erskine, Prin. B. 3, t. 5, n. 1; Dict. do Jur. h.t. of the Syndicate's reinsurance. The net effect of the RITC transaction to The Navigators Group, Inc. was an increase in net premiums of $12,756,000. The combined loss and expense ratios for the 2004 fourth quarter and year were 89.4% and 90.1%, respectively, compared to 129.9% and 104.0% for the comparable 2003 periods. The combined loss and expense ratios for the 2004 fourth quarter and year were increased by 1.9 and 0.4 combined loss and expense ratio points, respectively, for the RITC which had no impact on underwriting results. The combined loss and expense ratio for the 2004 year was reduced by 1.2 loss ratio points 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 relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc prior years. The combined loss and expense ratios for the 2003 fourth quarter and full year were negatively impacted by 44.2% and 11.7%, respectively, for incurred losses related to asbestos and environmental exposures. 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, "Each of our business units generated profitable underwriting results and showed strong operating performance in 2004. Our Marine & Energy business led the way, with solid results both in our insurance companies and at Lloyd's. Navigators Pro expanded its product portfolio 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, while maintaining underwriting discipline despite an irrational ir·ra·tion·al adj. Not rational; marked by a lack of accord with reason or sound judgment. irrational adjective Unreasonable, illogical marketplace for public company D&O. Navigators Specialty continued to perform well, particularly in its core construction liability segment. We are pleased to have achieved a satisfactory return for our shareholders in 2004 while maintaining our balance sheet integrity of prudent loss reserving and conservative investment management in a culture that emphasizes integrity, professionalism professionalism the upholding by individuals of the principles, laws, ethics and conventions of their profession. and pride. We are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that each of our business units is well positioned to continue to generate profitable underwriting results in the current environment." 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 2004 fourth quarter and year ended December 31, 2004 was $20,743,000 and $162,491,000, respectively, compared to $23,594,000 and $134,527,000 for the comparable 2003 periods. Net investment income for the 2004 fourth quarter and year was $7,387,000 and $26,795,000, respectively, increases of 30% and 37% from the 2003 comparable periods. 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 2004 fourth quarter and year were 3.6% and 3.5%, respectively, compared to 3.8% and 3.8% for the comparable 2003 periods. The Company's effective tax rate for foreign operations was 35% for the 2004 fourth quarter. Included in the 2003 fourth quarter and year were tax benefits of $2,885,000 or $0.24 per share and $5,284,000 or $0.55 per share, respectively, resulting from the reduction of a tax valuation allowance related to the Company's foreign operations. The balance of the tax valuation allowance was eliminated in the 2003 fourth quarter. 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 $328,578,000 or $25.96 per share at December 31, 2004 compared to $290,028,000 or $23.14 per share at December 31, 2003. Statutory surplus of Navigators Insurance Company was $235,561,000 at December 31, 2004. The Company will hold a conference call on Thursday Thursday: see week. , February February: see month. 24, 2005 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 1-800-591-6923, using confirmation code 51693376. Internationally, the call may be accessed by dialing 617-614-4907 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 24th 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 2004 2003 Change 2004 2003 Change
----------- --------- -------- ------ -------- -------- ------
Gross written
premium $187,390 $150,966 24% $696,146 $606,492 15%
Net written
premium 77,114 83,833 -8% 312,730 307,128 2%
Revenues:
Net earned
premium 86,368 71,536 21% 310,995 277,651 12%
Commission
income 1,146 1,533 -25% 4,754 4,281 11%
Investment
Income 7,387 5,703 30% 26,795 19,550 37%
Net realized
capital gains 334 640 -48% 922 1,875 -51%
Other income
(expense) (704) 633 NM (437) 1,361 NM
------------------- -------------------
Total revenues 94,531 80,045 18% 343,029 304,718 13%
------------------- -------------------
Operating expenses:
Net losses and loss
adjustment
expenses
incurred 49,623 75,232 -34% 188,014 211,089 -11%
Commission
expense 9,300 11,569 -20% 39,140 40,267 -3%
Other operating
expenses 19,717 12,581 57% 63,783 50,315 27%
Interest
expense - 4 NM - 255 NM
------------------- -------------------
Total operating
expenses 78,640 99,386 -21% 290,937 301,926 -4%
------------------- -------------------
Income (loss)
before income
taxes 15,891 (19,341) NM 52,092 2,792 NM
------------------- -------------------
Income tax expense (benefit):
Current 5,610 (5,156) NM 19,794 3,610 448%
Deferred (354) (4,695) NM (2,567) (8,503) NM
------------------- -------------------
Income tax
expense
(benefit) 5,256 (9,851) NM 17,227 (4,893) NM
------------------- -------------------
Net income (loss) $ 10,635 $ (9,490) NM $ 34,865 $ 7,685 354%
=================== ===================
Per Share Data
--------------
Net income per common share:
Basic $ 0.84 $ (0.78) NM $ 2.77 $ 0.81 240%
Diluted $ 0.84 $ (0.78) NM $ 2.74 $ 0.80 242%
Average shares outstanding (000s):
Basic 12,639 12,210 12,598 9,446
Diluted 12,710 12,210 12,715 9,585
Underwriting Ratios
-------------------
Loss Ratio 57.5% 105.2% 60.5% 76.0%
Expense Ratio 31.9% 24.7% 29.6% 28.0%
------------------- -------------------
Combined Ratio 89.4% 129.9% 90.1% 104.0%
Balance Sheet Data
------------------ Dec. 31, Dec. 31,
2004 2003
------------------
Stockholders' equity $328,578 $290,028 13%
Book value per share $ 25.96 $ 23.14 12%
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($'s in thousands)
Dec. 31, Dec. 31,
2004 2003
---------- ----------
ASSETS
Investments and cash:
Fixed maturities, available-for-sale, at fair
value (amortized cost: 2004, $713,049:
2003, $577,904) $ 722,434 $ 588,545
Equity securities, available-for-sale, at
fair value (cost: 2004, $19,101: 2003,
$11,977) 21,170 13,446
Short-term investments, at cost which
approximates fair value 96,653 83,202
Cash 14,676 8,399
---------- ----------
Total investments and cash 854,933 693,592
---------- ----------
Premiums in course of collection 176,720 128,676
Commissions receivable 3,062 3,970
Prepaid reinsurance premiums 130,761 102,141
Reinsurance receivable on paid losses 20,955 26,270
Reinsurance receivable on unpaid losses and
loss adjustment expense 502,329 350,441
Federal income tax recoverable - 8,747
Net deferred income tax benefit 17,348 15,195
Deferred policy acquisition costs 23,882 24,720
Accrued investment income 7,303 5,546
Goodwill 5,282 5,093
Other assets 14,103 15,067
---------- ----------
Total assets $1,756,678 $1,379,458
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Reserves for losses and loss adjustment
expenses $ 966,117 $ 724,612
Unearned premium 270,970 238,803
Reinsurance balances payable 143,427 97,583
Federal income tax payable 5,614 -
Payable for securities purchased 3,027 12,857
Accounts payable and other liabilities 38,945 15,575
---------- ----------
Total liabilities 1,428,100 1,089,430
---------- ----------
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 2004 and 2003; issued
and outstanding: 12,657,160 for 2004 and
12,535,360 for 2003 1,266 1,254
Additional paid-in capital 154,670 151,765
Accumulated other comprehensive income 9,305 8,537
Retained earnings 163,337 128,472
---------- ----------
Total stockholders' equity 328,578 290,028
---------- ----------
Total liabilities and stockholders'
equity $1,756,678 $1,379,458
========== ==========
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Comparative Premium Data
($'s in thousands)
Gross Written
Premium:
Fourth Quarter Twelve Months
------------------- -------------------
Insurance
Companies: 2004 2003 Change 2004 2003 Change
-------------------------- --------------------------
Marine $ 50,914 $ 47,229 8% $210,326 $196,309 7%
Specialty 39,329 33,661 17% 150,068 131,136 14%
Professional
Liability 18,973 15,023 26% 70,955 53,010 34%
Assumed from
Lloyd's 21,616 6,855 215% 26,014 33,019 -21%
Other (includes
run-off) 30 102 NM 254 720 NM
------------------- -------------------
130,862 102,870 27% 457,617 414,194 10%
Lloyd's
Operations:
Marine 62,261 44,318 40% 230,825 190,026 21%
Other 15,135 10,052 51% 33,042 33,824 -2%
------------------- -------------------
77,396 54,370 42% 263,867 223,850 18%
Intercompany
elimination (20,868) (6,274) NM (25,338) (31,552) NM
------------------- -------------------
Total $187,390 $150,966 24% $696,146 $606,492 15%
=================== ===================
Net Written
Premium: Fourth Quarter Twelve Months
------------------- -------------------
Insurance
Companies: 2004 2003 Change 2004 2003 Change
-------------------------- --------------------------
Marine $ 18,059 $ 18,749 -4% $ 79,278 $ 91,976 -14%
Specialty 19,715 34,330 -43% 79,944 85,886 -7%
Professional
Liability 7,545 4,825 56% 26,625 14,280 86%
Assumed from
Lloyd's 21,608 6,811 217% 25,799 32,962 -22%
Other (includes
run-off) 209 139 51% 1,104 38 NM
------------------- -------------------
67,136 64,854 4% 212,750 225,142 -6%
Lloyd's
Operations:
Marine 11,266 15,278 -26% 93,245 69,538 34%
Other (1,288) 3,701 -135% 6,735 12,448 -46%
------------------- -------------------
9,978 18,979 -47% 99,980 81,986 22%
------------------- -------------------
Total $ 77,114 $ 83,833 -8% $312,730 $307,128 2%
=================== ===================
Net Earned
Premium: Fourth Quarter Twelve Months
------------------- -------------------
Insurance
Companies: 2004 2003 Change 2004 2003 Change
-------------------------- --------------------------
Marine $ 21,351 $ 21,876 -2% $ 80,476 $ 92,448 -13%
Specialty 20,710 22,531 -8% 86,437 84,842 2%
Professional
Liability 6,822 3,225 112% 21,021 9,410 123%
Assumed from
Lloyd's
Operations 23,160 5,867 295% 39,714 21,368 86%
Other (includes
run-off) 210 153 37% 1,111 121 NM
------------------- -------------------
72,253 53,652 35% 228,759 208,189 10%
Lloyd's
Operations:
Marine 14,990 14,939 0% 79,908 62,851 27%
Other (875) 2,945 -130% 2,328 6,611 -65%
------------------- -------------------
14,115 17,884 -21% 82,236 69,462 18%
------------------- -------------------
Total $ 86,368 $ 71,536 21% $310,995 $277,651 12%
=================== ===================
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Quarter Ended
December 31, 2004
($'s in thousands)
Insurance Lloyd's Navigators Parent &
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
Revenues:
Net earned premium 72,253 14,115 - - 86,368
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
(expense) (23) (949) 255 13 (704)
---------------------------------------------------
Total revenues 79,269 14,237 11,438 (10,413) 94,531
---------------------------------------------------
Operating expenses:
Net losses and loss
adjustment
expenses 48,404 1,219 - - 49,623
Commission expense 16,051 3,678 - (10,429) 9,300
Other operating
expenses 3,041 4,779 11,967 (70) 19,717
Interest expense - - - - -
---------------------------------------------------
Total operating
expenses 67,496 9,676 11,967 (10,499) 78,640
---------------------------------------------------
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
Quarter Ended
December 31, 2003
($'s in thousands)
Insurance Lloyd's Navigators Parent &
Companies Operations Agencies Other (1) Total
--------------------------------------------------
Gross premium
written $102,870 $54,370 $ - $(6,274) $150,966
Net premium written 64,853 18,980 - - 83,833
Revenues:
Net earned premium 53,652 17,884 - - 71,536
Commission income - 58 4,191 (2,716) 1,533
Investment Income 5,049 596 2 56 5,703
Net realized
capital gains 589 51 - - 640
Other income
(expense) 182 265 312 (126) 633
--------------------------------------------------
Total revenues 59,472 18,854 4,505 (2,786) 80,045
--------------------------------------------------
Operating expenses:
Net losses and loss
adjustment expenses 64,948 10,284 - - 75,232
Commission expense 11,382 2,903 - (2,716) 11,569
Other operating
expenses 881 2,554 8,100 1,046 12,581
Interest expense - - - 4 4
--------------------------------------------------
Total operating
expenses 77,211 15,741 8,100 (1,666) 99,386
--------------------------------------------------
Income (loss) before
income tax expense
(benefit) (17,739) 3,113 (3,595) (1,120) (19,341)
Income tax expense
(benefit) (6,465) (1,727) (1,268) (391) (9,851)
--------------------------------------------------
Net Income (loss) $(11,274) $ 4,840 $(2,327) $ (729) $ (9,490)
==================================================
Loss and loss
expenses ratio 121.1% 57.5% 105.2%
Commission expense
ratio 21.2% 16.2% 20.0%
Other operating
expense ratio 1.6% 14.3% 4.7%
-------------------- --------
Combined ratio 143.9% 88.0% 129.9%
==================== ========
Notes:
(1) Includes inter-segment eliminations.
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Twelve Months Ended
December 31, 2004
($'s in thousands)
Insurance Lloyd's Navigators Parent &
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
Revenues:
Net earned
premium 228,759 82,236 - - 310,995
Commission income - 1,257 35,065 (31,568) 4,754
Investment Income 24,118 2,645 8 24 26,795
Net realized
capital gains
(losses) 1,164 (242) - - 922
Other income
(expense) (17) (1,317) 884 13 (437)
---------------------------------------------------
Total revenues 254,024 84,579 35,957 (31,531) 343,029
---------------------------------------------------
Operating expenses:
Net losses and
loss adjustment
expenses 149,073 38,941 - - 188,014
Commission
expense 55,120 15,588 - (31,568) 39,140
Other operating
expenses 7,007 14,433 39,281 3,062 63,783
Interest expense - - - - -
---------------------------------------------------
Total operating
expenses 211,200 68,962 39,281 (28,506) 290,937
---------------------------------------------------
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
Segment Information
Twelve Months Ended
December 31, 2003
($'s in thousands)
Insurance Lloyd's Navigators Parent &
Companies Operations Agencies Other (1) Total
---------------------------------------------------
Gross premium
written $414,194 $223,850 $ - $(31,552) $606,492
Net premium
written 225,142 81,986 - - 307,128
Revenues:
Net earned premium 208,189 69,462 - - 277,651
Commission income - 538 27,904 (24,161) 4,281
Investment Income 17,455 2,009 22 64 19,550
Net realized
capital gains 1,231 644 - - 1,875
Other income
(expense) 188 381 1,292 (500) 1,361
---------------------------------------------------
Total revenues 227,063 73,034 29,218 (24,597) 304,718
---------------------------------------------------
Operating expenses:
Net losses and loss
adjustment
expenses 167,550 43,539 - - 211,089
Commission expense 52,313 12,115 - (24,161) 40,267
Other operating
expenses 4,845 8,449 31,913 5,108 50,315
Interest expense - - - 255 255
---------------------------------------------------
Total operating
expenses 224,708 64,103 31,913 (18,798) 301,926
---------------------------------------------------
Income (loss)
before income tax
expense (benefit) 2,355 8,931 (2,695) (5,799) 2,792
Income tax expense
(benefit) (104) (1,727) (1,061) (2,001) (4,893)
---------------------------------------------------
Net Income (loss) $ 2,459 $ 10,658 $(1,634) $ (3,798) $ 7,685
===================================================
Loss and loss
expenses ratio 80.5% 62.7% 76.0%
Commission expense
ratio 25.1% 17.4% 23.2%
Other operating
expense ratio 2.3% 12.2% 4.8%
-------------------- --------
Combined ratio 107.9% 92.3% 104.0%
==================== ========
Notes:
(1) Includes inter-segment eliminations.
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results
($'s in thousands)
Three Months Ended December 31, 2004
----------------------------------------------------
Net Losses Combined Ratio
Insurance Earned and LAE Underwriting ---------------------
Companies: Premium Incurred Expenses Loss Expense Total
----------------------------------------------------
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%
====================================================
Three Months Ended December 31, 2003
----------------------------------------------------
Net Losses Combined Ratio
Insurance Earned and LAE Underwriting ---------------------
Companies: Premium Incurred Expenses Loss Expense Total
----------------------------------------------------
Marine $21,876 $32,297 $ 2,520 147.6% 11.5% 159.1%
Specialty 22,531 25,195 7,104 111.8% 31.5% 143.3%
Professional
Liability 3,225 1,969 738 61.1% 22.9% 84.0%
Assumed from
Lloyd's 5,867 4,128 1,894 70.4% 32.3% 102.7%
Other (includes
run-off) 153 1,359 7 NM NM NM
----------------------------------------------------
53,652 64,948 12,263 121.1% 22.8% 143.9%
Lloyd's
Operations 17,884 10,284 5,457 57.5% 30.5% 88.0%
----------------------------------------------------
Total $71,536 $75,232 $17,720 105.2% 24.7% 129.9%
====================================================
Effect of A & E losses on Three Months Ended
December 31, 2003
----------------------------------------------------
Net Losses Combined Ratio
Earned and LAE Underwriting ---------------------
Premium Incurred Expenses Loss Expense Total
----------------------------------------------------
Marine $ - $30,264 $ - 138.3% 0.0% 138.3%
Other (includes
run-off) - 1,384 - NM 0.0% NM
-----------------------------
Total $ - $31,648 $ - 44.2% 0.0% 44.2%
=============================
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results
($'s in thousands)
Twelve Months Ended December 31, 2004
-----------------------------------------------------
Net Losses Combined Ratio
Insurance Earned and LAE Underwriting --------------------
Companies: Premium Incurred Expenses Loss Expense Total
-----------------------------------------------------
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%
=====================================================
Twelve Months Ended December 31, 2003
-----------------------------------------------------
Net Losses Combined Ratio
Insurance Earned and LAE Underwriting --------------------
Companies: Premium Incurred Expenses Loss Expense Total
-----------------------------------------------------
Marine $ 92,448 $ 74,799 $23,543 80.9% 25.5% 106.4%
Specialty 84,842 68,986 25,077 81.3% 29.6% 110.9%
Professional
Liability 9,410 5,856 2,136 62.2% 22.7% 84.9%
Assumed from
Lloyd's 21,368 13,761 6,368 64.4% 29.8% 94.2%
Other (includes
run-off) 121 4,148 34 NM NM NM
-----------------------------------------------------
208,189 167,550 57,158 80.5% 27.4% 107.9%
Lloyd's
Operations 69,462 43,539 20,564 62.7% 29.6% 92.3%
-----------------------------------------------------
Total $277,651 $211,089 $77,722 76.0% 28.0% 104.0%
=====================================================
Effect of A & E losses on Twelve Months Ended
December 31, 2003
-----------------------------------------------------
Net Losses Combined Ratio
Earned and LAE Underwriting --------------------
Premium Incurred Expenses Loss Expense Total
-----------------------------------------------------
Marine $ - $ 31,095 $ - 33.6% 0.0% 33.6%
Other (includes
run-off) - 1,384 - NM 0.0% NM
--------------------------------
Total $ - $ 32,479 $ - 11.7% 0.0% 11.7%
================================
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results - Effect of RITC
($'s in thousands)
Effect of RITC on Three Months Ended
December 31, 2004
------------------------------------------------------
Net Losses Combined Ratio
Insurance Earned and LAE Underwriting ---------------------
Companies: Premium Incurred Expenses Loss Expense Total
------------------------------------------------------
As reported $ 72,253 $ 48,404 $19,092 67.0% 26.4% 93.4%
Effect of RITC 22,193 22,193 - 100.0% 0.0% 100.0%
------------------------------------------------------
Excluding RITC $ 50,060 $ 26,211 $19,092 52.4% 38.1% 90.5%
======================================================
Lloyd's
Operations:
As reported $ 14,115 $ 1,219 $ 8,457 8.6% 60.0% 68.6%
Effect of RITC (9,437) (9,437) - 100.0% 0.0% 100.0%
------------------------------------------------------
Excluding RITC $ 23,552 $ 10,656 $ 8,457 45.2% 35.9% 81.2%
======================================================
Consolidated:
As reported $ 86,368 $ 49,623 $27,549 57.5% 31.9% 89.4%
Effect of RITC 12,756 12,756 - 100.0% 0.0% 100.0%
------------------------------------------------------
Excluding RITC $ 73,612 $ 36,867 $27,549 50.1% 37.4% 87.5%
======================================================
Effect of RITC on Twelve Months Ended
December 31, 2004
------------------------------------------------------
Net Losses Combined Ratio
Insurance Earned and LAE Underwriting ---------------------
Companies: Premium Incurred Expenses Loss Expense Total
------------------------------------------------------
As reported $228,759 $149,073 $62,127 65.2% 27.2% 92.4%
Effect of RITC 22,193 22,193 - 100.0% 0.0% 100.0%
------------------------------------------------------
Excluding RITC $206,566 $126,880 $62,127 61.4% 30.1% 91.5%
======================================================
Lloyd's
Operations:
As reported $ 82,236 $ 38,941 $30,021 47.4% 36.6% 84.0%
Effect of RITC (9,437) (9,437) - 100.0% 0.0% 100.0%
------------------------------------------------------
Excluding RITC $ 91,673 $ 48,378 $30,021 52.8% 32.7% 85.5%
======================================================
Consolidated:
As reported $310,995 $188,014 $92,148 60.5% 29.6% 90.1%
Effect of RITC 12,756 12,756 - 100.0% 0.0% 100.0%
------------------------------------------------------
Excluding RITC $298,239 $175,258 $92,148 58.8% 30.9% 89.7%
======================================================
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Reserves
($'s in thousands)
12/31/2004 12/31/2003
------------ ------------
Insurance Companies:
Marine $ 130,439 $ 110,698
Specialty 150,347 114,167
Professional Liability 19,001 7,059
Assumed from Lloyd's Operations 37,790 14,323
Other (primarily run-off) 22,512 24,390
------------ ------------
Total Insurance Companies 360,089 270,637
------------ ------------
Lloyd's Operations:
Marine 99,565 100,936
Other 4,134 2,598
------------ ------------
Total Lloyd's Operations 103,699 103,534
------------ ------------
Total net loss reserves $ 463,788 $ 374,171
============ ============
Total net case loss reserves $ 189,746 $ 154,531
Total net IBNR loss reserves 274,042 219,640
------------ ------------
Total net loss reserves $ 463,788 $ 374,171
============ ============
Asbestos & Environmental Claim Data
($'s in thousands)
Twelve Months Ended
December 31, 2004
Asbestos Environmental Total
-------- ------------- --------
Gross of Reinsurance
Beginning reserve $78,472 $6,800 $85,272
Incurred loss & LAE 1,183 1,492 2,675
Calendar year payments 1,234 779 2,013
-------- ------------- --------
Ending reserves $78,421 $7,513 $85,934
======== ============= ========
Net of Reinsurance
Beginning reserve $32,083 $1,153 $33,236
Incurred loss & LAE 405 638 1,043
Calendar year payments 1,094 297 1,391
-------- ------------- --------
Ending reserves $31,394 $1,494 $32,888
======== ============= ========
Outstanding Claim Count 129 89 218
======== ============= ========
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