Navigators Reports Fourth Quarter and Full Year Earnings
February 10, 2016: 04:01 PM ET
STAMFORD, Conn., Feb. 10, 2016 (GLOBE NEWSWIRE) -- The Navigators Group, Inc. (NASDAQ:NAVG) reported net income of $17.7 million, or $1.19 per diluted share, for the three months ended December 31, 2015 compared to $19.3 million, or $1.31 per diluted share, for the comparable period in 2014. Operating earnings were $16.4 million, or $1.10 per diluted share, for the three months ended December 31, 2015 compared to $18.4 million, or $1.25 per diluted share, for the comparable period in 2014.
For the twelve months ended December 31, 2015, the Company reported net income of $81.1 million, or $5.47 per diluted share compared to $95.3 million, or $6.51 per diluted share, for the comparable period in 2014. 2014 results included a one-time foreign exchange gain of $10.0 million ($6.6 million after-tax) due to a change in the functional currency of our Lloyd’s Syndicate, which was equally offset by a reversal within the Accumulated Other Comprehensive Income component of stockholders’ equity. Excluding this gain, the twelve months ended December 31, 2014 net income per diluted share would have been $6.06. Operating earnings were $77.1 million, or $5.20 per diluted share, for the twelve months ended December 31, 2015 compared to $80.5 million, or $5.49 per diluted share, for the comparable period in 2014. The one-time foreign exchange gain discussed above had no impact on operating earnings.
Gross written premiums and net written premiums for the three months ended December 31, 2015 were $323.5 million and $244.7 million, respectively, a decrease of 2.9% and an increase of 7.3% from the comparable period in 2014.
Gross written premiums and net written premiums for the twelve months ended December 31, 2015 were $1.454 billion and $1.044 billion, respectively, an increase of 1.5% and 4.4% from the comparable period in 2014.
The combined ratio for the three and twelve months ended December 31, 2015 was 97.2% and 94.1%, respectively, compared to 93.8% and 92.6% for the comparable periods in 2014.
Stan Galanski, President and Chief Executive Officer commented, “We are pleased to report profitable underwriting results across all three of our reporting segments for 2015. Net income was $81 million, representing our third best year ever, and book value per share increased to $75.96. Market conditions were challenging, particularly in economically-sensitive products like Offshore Energy and Marine Liability, for which gross written premium decreased during the fourth quarter and year. Our U.S. P&C operating segment continued to perform well and we remain encouraged by the momentum of our newer initiatives, including our property insurance and reinsurance product lines.”
Stockholders’ equity was $1.096 billion, or $75.96 per share, as of December 31, 2015 compared to $1.027 billion, or $71.93 per share, as of December 31, 2014.
Net investment income for the three and twelve months ended December 31, 2015 was $18.5 million and $68.7 million, respectively, an increase of 15.1% and 7.1% from the comparable periods in 2014. The annualized pre-tax investment yield, excluding net realized gains and losses and other-than-temporary impairment losses recognized in earnings, was 2.5% and 2.4% for the three and twelve months ended December 31, 2015, compared to 2.3% for both the comparable periods in 2014.
The Company’s investment portfolio mainly consists of fixed income securities with an average quality rating of “AA-/Aa3” as defined by Standard & Poor’s and Moody’s, respectively, and an average effective duration of 3.8 years as of December 31, 2015. As of December 31, 2015, net unrealized gains within our investment portfolio were $37.3 million, a decrease of $34.1 million compared to December 31, 2014.
There were $2.1 million of net realized losses recognized in earnings for the three months ended December 31, 2015, compared to $0.8 million of net realized gains for the same period in 2014. For the twelve months ended December 31, 2015, there were $6.7 million of net realized gains, compared to $12.8 million of net realized gains for the same period in 2014.
Other income (loss) for the three months ended December 31, 2015 was $4.1 million of income, compared to $0.6 million of income for the same period in 2014. For the twelve months ended December 31, 2015, Other income (loss) was a $0.5 million loss compared to $10.7 million of income for the same period in the prior year, largely impacted by a one-time foreign exchange gain in the first quarter of 2014. Other income (loss) primarily consists of realized and unrealized foreign exchange gains and losses.
The Company will hold a conference call on Thursday, February 11, 2016 starting at 8:30 a.m. (EST) to discuss the 2015 fourth quarter results. The call will be available via live webcast on Navigators’ website (www.navg.com).
To participate by telephone, the domestic dial-in number is (800) 850-2903 and the international dial-in is (224) 357-2399. Participants may connect to the webcast at:
Net operating earnings, or net income excluding after-tax net realized gains (losses), after-tax net other-than-temporary impairment losses recognized in earnings, and after-tax foreign exchange gains and losses resulting from foreign currency transactions (transactions denominated in a currency other than the entity’s functional currency) and translation adjustments (translation of foreign currency denominated assets and liabilities into the entity’s functional currency), is a non-GAAP financial measure that is a common performance measurement for insurance companies. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business.
The Navigators Group, Inc. is an international specialty insurance holding company with insurance company operations, underwriting management companies and operations at Lloyd's. Navigators has offices in the United States, the United Kingdom and Continental Europe, as well as representative offices in China and Brazil.
This press release may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Whenever used in this release, the words “estimate,” “expect,” “believe” or similar expressions are intended to identify such forward-looking statements. Forward-looking statements are derived from information that we currently have and assumptions that we make. We cannot assure that results that we anticipate will be achieved, since results may differ materially because of known and unknown risks and uncertainties that we face. Please refer to Navigators’ most recent reports on Forms 10-K and 10-Q and its other filings with the Securities and Exchange Commission for a description of Navigators’ business and the important factors that may affect that business. Navigators’ undertakes no obligation to publicly update or revise any forward-looking statement.
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Financial Highlights
($ in thousands, except share and per share data)
(unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
Results of Operations
2015
2014
Change
2015
2014
Change
Gross written premiums
$
323,509
$
333,299
-2.9
%
$
1,453,502
$
1,432,353
1.5
%
Net written premiums
244,719
228,007
7.3
%
1,043,860
1,000,138
4.4
%
Revenues:
Net earned premiums
251,545
234,172
7.4
%
984,087
935,895
5.1
%
Net investment income
18,499
16,071
15.1
%
68,718
64,168
7.1
%
Net realized gains (losses):
Total other-than-temporary impairment losses
(123
)
(21
)
NM
(1,870
)
137
NM
Portion of loss recognized in other comprehensive
income (before tax)
123
21
NM
172
(137
)
NM
Net other-than-temporary impairment losses
recognized in earnings
-
-
NM
(1,698
)
-
NM
Other realized gains (losses)
(2,080
)
788
NM
8,373
12,812
-34.6
%
Net realized gains (losses)
(2,080
)
788
NM
6,675
12,812
-47.9
%
Other income (loss)
4,147
586
NM
(491
)
10,656
NM
Total revenues
272,111
251,617
8.1
%
1,058,989
1,023,531
3.5
%
Expenses:
Net losses and loss adjustment expenses
153,881
134,658
14.3
%
572,598
545,229
5.0
%
Commission expenses
31,339
33,708
-7.0
%
129,977
125,528
3.5
%
Other operating expenses
59,219
51,299
15.4
%
223,516
196,825
13.6
%
Interest expense
3,857
3,854
0.1
%
15,424
15,413
0.1
%
Total expenses
248,296
223,519
11.1
%
941,515
882,995
6.6
%
Income before income taxes
23,815
28,098
-15.2
%
117,474
140,536
-16.4
%
Income tax expense (benefit)
6,072
8,823
-31.2
%
36,417
45,207
-19.4
%
Net income (loss)
$
17,743
$
19,275
-7.9
%
$
81,057
$
95,329
-15.0
%
Per Share Data
Net income per common share:
Basic
$
1.23
$
1.35
-8.9
%
$
5.63
$
6.69
-15.8
%
Diluted
$
1.19
$
1.31
-9.2
%
$
5.47
$
6.51
-16.0
%
Average common shares outstanding:
Basic
14,416,947
14,280,045
14,392,522
14,259,768
Diluted
14,917,646
14,715,265
14,825,745
14,646,369
Underwriting Ratios
Loss Ratio
61.2
%
57.5
%
58.2
%
58.3
%
Expense Ratio
36.0
%
36.3
%
35.9
%
34.3
%
Combined Ratio
97.2
%
93.8
%
94.1
%
92.6
%
Balance Sheet Data
Dec. 31,
Sept. 30,
Dec. 31,
Dec. 31,
2015
2015
2015
2014
Stockholders' equity
$
1,096,148
$
1,076,855
1.8
%
$
1,096,148
$
1,027,224
6.7
%
Book value per share
$
75.96
$
74.70
1.7
%
$
75.96
$
71.93
5.6
%
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
amounts in thousands, except share and per share amounts.
December 31,
December 31,
2015
2014
ASSETS
Investments:
Fixed maturities, available-for-sale, at fair value (amortized cost: 2015: $2,400,245; 2014: $2,323,959)
$
2,414,210
$
2,365,934
Equity securities, available-for-sale, at fair value (cost: 2015: $281,943; 2014: $154,843)
305,271
184,295
Short-term investments, at fair value (amortized cost: 2015: $217,743; 2014: $179,527)
217,745
179,506
Total investments
$
2,937,226
$
2,729,735
Cash
69,901
90,751
Premiums receivable
276,616
342,479
Prepaid reinsurance premiums
232,588
237,851
Reinsurance recoverable on paid losses
49,506
51,347
Reinsurance recoverable on unpaid losses and loss adjustment expenses
809,518
851,498
Deferred policy acquisition costs
91,983
79,452
Accrued investment income
16,001
14,791
Goodwill and other intangible assets
6,807
7,013
Current income tax receivable, net.
22,323
14,549
Deferred income tax, net
3,900
-
Other assets
67,643
56,719
Total assets
$
4,584,012
$
4,476,185
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Reserves for losses and loss adjustment expenses
$
2,202,644
$
2,159,634
Unearned premiums
820,676
766,167
Reinsurance balances payable
107,411
152,774
Senior notes
263,580
263,440
Deferred income tax, net
-
1,467
Payable for investments purchased
1,495
134
Accounts payable and other liabilities
92,058
105,345
Total liabilities
$
3,487,864
$
3,448,961
Stockholders' equity:
Preferred stock, $.10 par value, authorized 1,000,000 shares, none issued
$
-
$
-
Common stock, $.10 par value, authorized 50,000,000 shares, issued 17,942,269 shares for 2015
and 17,792,846 shares for 2014
1,793
1,778
Additional paid-in capital
357,829
347,022
Treasury stock, at cost (3,511,380 shares for 2015 and 2014)
(155,801
)
(155,801
)
Retained earnings
868,723
787,666
Accumulated other comprehensive income
23,604
46,559
Total stockholders' equity
$
1,096,148
$
1,027,224
Total liabilities and stockholders' equity
$
4,584,012
$
4,476,185
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Three Months Ended December 31, 2015
U.S.
Int'l
amounts in thousands
Insurance
Insurance
GlobalRe
Corporate (1)
Total
Gross written premiums
$
207,684
$
81,942
$
33,883
$
-
$
323,509
Ceded written premiums
(57,410
)
(20,324
)
(1,056
)
-
(78,790
)
Net written premiums
150,274
61,618
32,827
-
244,719
Net earned premiums
145,032
62,716
43,797
-
251,545
Net losses and LAE
(96,403
)
(33,466
)
(24,012
)
-
(153,881
)
Commission expenses
(14,542
)
(8,185
)
(9,198
)
586
(31,339
)
Other operating expenses
(33,397
)
(21,555
)
(4,267
)
-
(59,219
)
Other underwriting income (expense)
360
-
249
(586
)
23
Underwriting profit (loss)
$
1,050
$
(490
)
$
6,569
$
-
$
7,129
Net investment income
18,499
18,499
Net realized gains (losses)
(2,080
)
(2,080
)
Interest expense
(3,857
)
(3,857
)
Other income (loss)
4,124
4,124
Income before income taxes
$
1,050
$
(490
)
$
6,569
$
16,686
$
23,815
Income tax (expense) benefit
(6,072
)
(6,072
)
Net income (loss)
$
17,743
Losses and LAE ratio
66.5
%
53.4
%
54.8
%
61.2
%
Commission expense ratio
10.0
%
13.1
%
21.0
%
12.5
%
Other operating expense ratio (2)
22.8
%
34.3
%
9.2
%
23.5
%
Combined ratio
99.3
%
100.8
%
85.0
%
97.2
%
(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other operating expenses and Other underwriting income (expense).
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Three Months Ended December 31, 2014
U.S.
Int'l
amounts in thousands
Insurance
Insurance
GlobalRe
Corporate (1)
Total
Gross written premiums
$
202,334
$
90,819
$
40,146
$
-
$
333,299
Ceded written premiums
(68,259
)
(36,387
)
(646
)
-
(105,292
)
Net written premiums
134,075
54,432
39,500
-
228,007
Net earned premiums
133,425
55,492
45,255
-
234,172
Net losses and LAE
(85,022
)
(23,656
)
(25,980
)
-
(134,658
)
Commission expenses
(14,242
)
(11,770
)
(8,258
)
562
(33,708
)
Other operating expenses
(29,824
)
(17,492
)
(3,983
)
-
(51,299
)
Other underwriting income (expense)
458
14
188
(562
)
98
Underwriting profit (loss)
$
4,795
$
2,588
$
7,222
$
-
$
14,605
Net investment income
16,071
16,071
Net realized gains (losses)
788
788
Interest expense
(3,854
)
(3,854
)
Other income (loss)
488
488
Income before income taxes
$
4,795
$
2,588
$
7,222
$
13,493
$
28,098
Income tax (expense) benefit
(8,823
)
(8,823
)
Net income (loss)
$
19,275
Losses and LAE ratio
63.7
%
42.6
%
57.4
%
57.5
%
Commission expense ratio
10.7
%
21.2
%
18.2
%
14.4
%
Other operating expense ratio (2)
22.0
%
31.5
%
8.4
%
21.9
%
Combined ratio
96.4
%
95.3
%
84.0
%
93.8
%
_______________
(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other operating expenses and Other underwriting income (expense).
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Twelve Months Ended December 31, 2015
U.S.
Int'l
amounts in thousands
Insurance
Insurance
GlobalRe
Corporate (1)
Total
Gross written premiums
$
865,781
$
411,947
$
175,774
$
-
$
1,453,502
Ceded written premiums
(268,775
)
(134,005
)
(6,862
)
-
(409,642
)
Net written premiums
597,006
277,942
168,912
-
1,043,860
Net earned premiums
555,836
259,960
168,291
-
984,087
Net losses and LAE
(343,497
)
(134,702
)
(94,399
)
-
(572,598
)
Commission expenses
(56,319
)
(43,676
)
(32,240
)
2,258
(129,977
)
Other operating expenses
(131,407
)
(75,867
)
(16,242
)
-
(223,516
)
Other underwriting income (expense)
1,690
-
690
(2,258
)
122
Underwriting profit (loss)
$
26,303
$
5,715
$
26,100
$
-
$
58,118
Net investment income
68,718
68,718
Net realized gains (losses)
6,675
6,675
Interest expense
(15,424
)
(15,424
)
Other income (loss)
(613
)
(613
)
Income (loss) before income taxes
$
26,303
$
5,715
$
26,100
$
59,356
$
117,474
Income tax (expense) benefit
(36,417
)
(36,417
)
Net income (loss)
$
81,057
Losses and LAE ratio
61.8
%
51.8
%
56.1
%
58.2
%
Commission expense ratio
10.1
%
16.8
%
19.2
%
13.2
%
Other operating expense ratio (2)
23.4
%
29.2
%
9.2
%
22.7
%
Combined ratio
95.3
%
97.8
%
84.5
%
94.1
%
(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other operating expenses and Other underwriting income (expense).
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Twelve Months Ended December 31, 2014
U.S.
Int'l
amounts in thousands
Insurance
Insurance
GlobalRe
Corporate (1)
Total
Gross written premiums
$
807,108
$
424,904
$
200,341
$
-
$
1,432,353
Ceded written premiums
(254,983
)
(171,921
)
(5,311
)
-
(432,215
)
Net written premiums
552,125
252,983
195,030
-
1,000,138
Net earned premiums
504,289
243,485
188,121
-
935,895
Net losses and LAE
(311,839
)
(115,079
)
(118,311
)
-
(545,229
)
Commission expenses
(49,840
)
(44,426
)
(33,429
)
2,167
(125,528
)
Other operating expenses
(115,817
)
(65,275
)
(15,733
)
-
(196,825
)
Other underwriting income (expense)
2,241
32
489
(2,167
)
595
Underwriting profit (loss)
$
29,034
$
18,737
$
21,137
$
-
$
68,908
Net investment income
64,168
64,168
Net realized gains (losses)
12,812
12,812
Interest expense
(15,413
)
(15,413
)
Other income (loss)
10,061
10,061
Income (loss) before income taxes
$
29,034
$
18,737
$
21,137
$
71,628
$
140,536
Income tax (expense) benefit
(45,207
)
(45,207
)
Net income (loss)
$
95,329
Losses and LAE ratio
61.8
%
47.3
%
62.9
%
58.3
%
Commission expense ratio
9.9
%
18.2
%
17.8
%
13.4
%
Other operating expense ratio (2)
22.5
%
26.8
%
8.1
%
20.9
%
Combined ratio
94.2
%
92.3
%
88.8
%
92.6
%
(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other operating expenses and Other underwriting income (expense).
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
U.S. Insurance
Three months ended December 31, 2015
Three months ended December 31, 2014
amounts in thousands
Marine
P&C
Professional Liability
Total
Marine
P&C
Professional Liability
Total
% Change Total
Gross written premiums
$
40,045
$
138,214
$
29,425
$
207,684
$
37,055
$
139,637
$
25,642
$
202,334
2.6
%
Ceded written premiums
(16,747
)
(28,395
)
(12,268
)
(57,410
)
(13,320
)
(41,435
)
(13,504
)
(68,259
)
-15.9
%
Net written premiums
23,298
109,819
17,157
150,274
23,735
98,202
12,138
134,075
12.1
%
Net earned premiums
21,976
109,673
13,383
145,032
26,057
88,355
19,013
133,425
8.7
%
Net losses and LAE
(14,619
)
(71,878
)
(9,906
)
(96,403
)
(4,337
)
(68,187
)
(12,498
)
(85,022
)
13.4
%
Commission expenses
(2,254
)
(11,392
)
(896
)
(14,542
)
(2,970
)
(8,681
)
(2,591
)
(14,242
)
2.1
%
Other operating expenses
(6,953
)
(20,890
)
(5,554
)
(33,397
)
(6,486
)
(17,980
)
(5,358
)
(29,824
)
12.0
%
Other underwriting income (expense)
100
246
14
360
150
292
16
458
-21.2
%
Underwriting profit (loss)
$
(1,750
)
$
5,759
$
(2,959
)
$
1,050
$
12,414
$
(6,201
)
$
(1,418
)
$
4,795
-78.1
%
Losses and LAE ratio
66.5
%
65.5
%
74.0
%
66.5
%
16.6
%
77.2
%
65.7
%
63.7
%
Commission expense ratio
10.3
%
10.4
%
6.7
%
10.0
%
11.4
%
9.8
%
13.6
%
10.7
%
Other operating expense ratio (1)
31.2
%
18.8
%
41.4
%
22.8
%
24.4
%
20.0
%
28.2
%
22.0
%
Combined ratio
108.0
%
94.7
%
122.1
%
99.3
%
52.4
%
107.0
%
107.5
%
96.4
%
(1) - Includes Other operating expenses and Other underwriting income (expense).
Int'l Insurance
Three months ended December 31, 2015
Three months ended December 31, 2014
amounts in thousands
Marine
P&C
Professional Liability
Total
Marine
P&C
Professional Liability
Total
% Change Total
Gross written premiums
$
33,863
$
18,715
$
29,364
$
81,942
$
39,680
$
29,185
$
21,954
$
90,819
-9.8
%
Ceded written premiums
(5,582
)
(7,046
)
(7,696
)
(20,324
)
(11,454
)
(18,072
)
(6,861
)
(36,387
)
-44.1
%
Net written premiums
28,281
11,669
21,668
61,618
28,226
11,113
15,093
54,432
13.2
%
Net earned premiums
34,540
12,208
15,968
62,716
28,669
15,313
11,510
55,492
13.0
%
Net losses and LAE
(15,792
)
(3,463
)
(14,211
)
(33,466
)
(14,669
)
(2,858
)
(6,129
)
(23,656
)
41.5
%
Commission expenses
(5,275
)
(1,038
)
(1,872
)
(8,185
)
(7,898
)
(2,925
)
(947
)
(11,770
)
-30.5
%
Other operating expenses
(8,742
)
(7,540
)
(5,273
)
(21,555
)
(7,766
)
(5,631
)
(4,095
)
(17,492
)
23.2
%
Other underwriting income (expense)
-
-
-
-
6
4
4
14
NM
Underwriting profit (loss)
$
4,731
$
167
$
(5,388
)
$
(490
)
$
(1,658
)
$
3,903
$
343
$
2,588
NM
Losses and LAE ratio
45.7
%
28.4
%
89.0
%
53.4
%
51.2
%
18.7
%
53.2
%
42.6
%
Commission expense ratio
15.3
%
8.5
%
11.7
%
13.1
%
27.6
%
19.1
%
8.2
%
21.2
%
Other operating expense ratio (1)
25.3
%
61.7
%
33.0
%
34.3
%
27.1
%
36.7
%
35.7
%
31.5
%
Combined ratio
86.3
%
98.6
%
133.7
%
100.8
%
105.9
%
74.5
%
97.1
%
95.3
%
NM - Percentage change not meaningful
(1) - Includes Other operating expenses and Other underwriting income (expense).
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
U.S. Insurance
Twelve Months Ended December 31, 2015
Twelve Months Ended December 31, 2014
amounts in thousands
Marine
P&C
Professional Liability
Total
Marine
P&C
Professional Liability
Total
% Change Total
Gross written premiums
$
158,124
$
596,673
$
110,984
$
865,781
$
154,233
$
543,045
$
109,830
$
807,108
7.3
%
Ceded written premiums
(61,916
)
(152,168
)
(54,691
)
(268,775
)
(46,685
)
(169,953
)
(38,345
)
(254,983
)
5.4
%
Net written premiums
96,208
444,505
56,293
597,006
107,548
373,092
71,485
552,125
8.1
%
Net earned premiums
96,082
401,408
58,346
555,836
105,650
314,833
83,806
504,289
10.2
%
Net losses and LAE
(43,553
)
(266,806
)
(33,138
)
(343,497
)
(42,057
)
(220,263
)
(49,519
)
(311,839
)
10.2
%
Commission expenses
(11,606
)
(39,931
)
(4,782
)
(56,319
)
(13,025
)
(25,497
)
(11,318
)
(49,840
)
13.0
%
Other operating expenses
(27,082
)
(81,866
)
(22,459
)
(131,407
)
(24,205
)
(70,903
)
(20,709
)
(115,817
)
13.5
%
Other underwriting income (expense)
489
1,122
79
1,690
839
1,263
139
2,241
-24.6
%
Underwriting profit (loss)
$
14,330
$
13,927
$
(1,954
)
$
26,303
$
27,202
$
(567
)
$
2,399
$
29,034
-9.4
%
Losses and LAE ratio
45.3
%
66.5
%
56.8
%
61.8
%
39.8
%
70.0
%
59.1
%
61.8
%
Commission expense ratio
12.1
%
9.9
%
8.2
%
10.1
%
12.3
%
8.1
%
13.5
%
9.9
%
Other operating expense ratio (1)
27.7
%
20.1
%
38.3
%
23.4
%
22.2
%
22.1
%
24.5
%
22.5
%
Combined ratio
85.1
%
96.5
%
103.3
%
95.3
%
74.3
%
100.2
%
97.1
%
94.2
%
(1) - Includes Other operating expenses and Other underwriting income (expense).
Int'l Insurance
Twelve Months Ended December 31, 2015
Twelve Months Ended December 31, 2014
amounts in thousands
Marine
P&C
Professional Liability
Total
Marine
P&C
Professional Liability
Total
% Change Total
Gross written premiums
$
183,707
$
130,729
$
97,511
$
411,947
$
190,787
$
158,139
$
75,978
$
424,904
-3.0
%
Ceded written premiums
(36,515
)
(67,722
)
(29,768
)
(134,005
)
(47,805
)
(98,087
)
(26,029
)
(171,921
)
-22.1
%
Net written premiums
147,192
63,007
67,743
277,942
142,982
60,052
49,949
252,983
9.9
%
Net earned premiums
149,256
55,320
55,384
259,960
141,097
62,520
39,868
243,485
6.8
%
Net losses and LAE
(79,737
)
(20,478
)
(34,487
)
(134,702
)
(71,986
)
(23,317
)
(19,776
)
(115,079
)
17.1
%
Commission expenses
(32,187
)
(4,999
)
(6,490
)
(43,676
)
(37,660
)
(5,295
)
(1,471
)
(44,426
)
-1.7
%
Other operating expenses
(30,419
)
(26,294
)
(19,154
)
(75,867
)
(28,222
)
(22,156
)
(14,897
)
(65,275
)
16.2
%
Other underwriting income (expense)
-
-
-
-
16
9
7
32
NM
Underwriting profit (loss)
$
6,913
$
3,549
$
(4,747
)
$
5,715
$
3,245
$
11,761
$
3,731
$
18,737
-69.5
%
Losses and LAE ratio
53.4
%
37.0
%
62.3
%
51.8
%
51.0
%
37.3
%
49.6
%
47.3
%
Commission expense ratio
21.6
%
9.0
%
11.7
%
16.8
%
26.8
%
8.5
%
3.7
%
18.2
%
Other operating expense ratio (1)
20.4
%
47.6
%
34.6
%
29.2
%
20.0
%
35.4
%
37.4
%
26.8
%
Combined ratio
95.4
%
93.6
%
108.6
%
97.8
%
97.8
%
81.2
%
90.7
%
92.3
%
NM - Percentage change not meaningful
(1) - Includes Other operating expenses and Other underwriting income (expense).
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Incurred Loss Activity
($ in thousands)
For the Three Months Ended December 31,
Amounts
Loss Ratio
Net Incurred Loss Activity
2015
2014
2015
2014
US Insurance:
Loss and LAE payments
$
60,750
$
58,374
41.9
%
43.7
%
Change in reserves
35,653
26,648
24.6
%
20.0
%
Net incurred loss and LAE
96,403
85,022
66.5
%
63.7
%
International Insurance:
Loss and LAE payments
27,933
38,198
44.6
%
68.8
%
Change in reserves
5,533
(14,542
)
8.8
%
-26.2
%
Net incurred loss and LAE
33,466
23,656
53.4
%
42.6
%
Global Reinsurance:
Loss and LAE payments
48,320
45,396
110.3
%
100.4
%
Change in reserves
(24,308
)
(19,416
)
-55.5
%
-43.0
%
Net incurred loss and LAE
24,012
25,980
54.8
%
57.4
%
Total
Loss and LAE payments
137,003
141,968
54.5
%
60.6
%
Change in reserves
16,878
(7,310
)
6.7
%
-3.1
%
Net incurred loss and LAE
$
153,881
$
134,658
61.2
%
57.5
%
Amounts
Loss Ratio Impact
Impact of Prior Years Reserves
Dec. 31
Dec. 31
Dec. 31
Dec. 31
Favorable / (Unfavorable) Development
2015
2014
2015
2014
US Insurance
$
8,023
$
(1,545
)
3.2
%
-0.7
%
International Insurance
17,812
17,156
7.1
%
7.3
%
Global Reinsurance
4,865
4,178
1.9
%
1.8
%
Total
$
30,700
$
19,789
12.2
%
8.4
%
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Incurred Loss Activity
($ in thousands)
For the Twelve Months Ended December 31,
Amounts
Loss Ratio
Net Incurred Loss Activity
2015
2014
2015
2014
US Insurance:
Loss and LAE payments
$
247,530
$
222,237
44.5
%
44.0
%
Change in reserves
95,967
89,602
17.3
%
17.8
%
Net incurred loss and LAE
343,497
311,839
61.8
%
61.8
%
International Insurance:
Loss and LAE payments
126,667
128,452
48.7
%
52.8
%
Change in reserves
8,035
(13,373
)
3.1
%
-5.5
%
Net incurred loss and LAE
134,702
115,079
51.8
%
47.3
%
Global Reinsurance:
Loss and LAE payments
106,468
103,644
63.3
%
55.1
%
Change in reserves
(12,069
)
14,667
-7.2
%
7.8
%
Net incurred loss and LAE
94,399
118,311
56.1
%
62.9
%
Total
Loss and LAE payments
480,665
454,333
48.9
%
48.6
%
Change in reserves
91,933
90,896
9.3
%
9.7
%
Net incurred loss and LAE
$
572,598
$
545,229
58.2
%
58.3
%
Amounts
Loss Ratio Impact
Impact of Prior Years Reserves
Dec. 31
Dec. 31
Dec. 31
Dec. 31
Favorable / (Unfavorable) Development
2015
2014
2015
2014
US Insurance
$
29,319
$
15,420
3.0
%
1.6
%
International Insurance
26,216
38,252
2.7
%
4.1
%
Global Reinsurance
9,134
2,140
0.9
%
0.2
%
Total
$
64,669
$
55,812
6.6
%
5.9
%
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data
($ in thousands)
As of December 31, 2015
Case
IBNR
Net Loss Reserves:
Reserves
Reserves
Total
US Insurance:
Marine
$
68,677
$
55,408
$
124,085
Property Casualty
170,988
514,777
685,765
Professional Liability
42,546
60,528
103,074
Total US Insurance
282,211
630,713
912,924
International Insurance:
Marine
167,157
61,409
228,566
Property Casualty
40,313
19,735
60,048
Professional Liability
19,583
63,229
82,812
Total International Insurance
227,053
144,373
371,426
Global Reinsurance
32,160
76,616
108,776
Total Net Loss Reserves
$
541,424
$
851,702
$
1,393,126
As of December 31, 2014
Case
IBNR
Net Loss Reserves:
Reserves
Reserves
Total
US Insurance:
Marine
$
74,699
$
64,390
$
139,089
Property Casualty
144,334
391,643
535,977
Professional Liability
56,501
85,369
141,870
Total US Insurance
275,534
541,402
816,936
International Insurance:
Marine
168,575
75,673
244,248
Property Casualty
41,695
21,391
63,086
Professional Liability
12,466
49,712
62,178
Total International Insurance
222,736
146,776
369,512
Global Reinsurance
31,108
90,580
121,688
Total Net Loss Reserves
$
529,378
$
778,758
$
1,308,136
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Investment Data
As of December 31, 2015, the average quality of the investment portfolio as rated by S&P and Moody’s was AA-/Aa3 with an average duration of 3.8 years. The Company does not own any collateralized debt obligations (CDO’s) or asset backed commercial paper.
The following table sets forth our investments as of December 31, 2015:
As of December 31, 2015
Gross
Gross
Cost or
Fair
Unrealized
Unrealized
Amortized
amounts in thousands
Value
Gains
(Losses)
Cost
Fixed maturities:
U.S. Treasury bonds, agency bonds and
foreign government bonds
$
252,880
$
2,273
$
(9,214
)
$
259,821
States, municipalities and political subdivisions
576,859
21,233
(781
)
556,407
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities
379,270
5,573
(2,082
)
375,779
Residential mortgage obligations
30,465
694
(82
)
29,853
Asset-backed securities
225,012
85
(1,624
)
226,551
Commercial mortgage-backed securities
189,714
3,119
(1,864
)
188,459
Subtotal
$
824,461
$
9,471
$
(5,652
)
$
820,642
Corporate bonds
760,010
7,373
(10,738
)
763,375
Total fixed maturities
$
2,414,210
$
40,350
$
(26,385
)
$
2,400,245
Equity securities
305,271
26,341
(3,013
)
281,943
Short-term investments
217,745
2
-
217,743
Total investments
$
2,937,226
$
66,693
$
(29,398
)
$
2,899,931
Contact:
Ciro M. DeFalco
Senior Vice President and Chief Financial Officer
(203) 905-6343
cdefalco@navg.com
www.navg.com
