NAVIGATORS GROUP INC
STAMFORD, Conn., Nov. 07, 2018 (GLOBE NEWSWIRE) -- The Navigators Group, Inc. (NASDAQ:NAVG) reported Net Income of $4.6 million, or $0.15 per diluted share, for the three months ended September 30, 2018 compared to a Net Loss of $(28.0) million, or $(0.95) per diluted share, for the same period in 2017. Net Operating Earnings (Loss)1 were $4.2 million, or $0.14 per diluted share, for the three months ended September 30, 2018 compared to $(29.6) million, or $(1.00) per diluted share, for the same period in 2017.
Gross Written Premiums and Net Written Premiums for the three months ended September 30, 2018 were $455.9 million and $352.4 million, respectively, increasing 13.4% and 19.1%, respectively, from the comparable period in 2017. The Combined Ratio for the three months ended September 30, 2018 was 105.3%, compared to 121.9% for the same period in 2017.
The current quarter included Net Losses and Loss Adjustment Expenses of $11.8 million, net of reinsurance reinstatement premiums, from Typhoon Jebi and Hurricane Florence, as well as prior accident year reserve strengthening of $16.5 million primarily within our Primary Casualty division of our U.S. Insurance reporting segment. This compares with the same quarter in 2017 which included Net Losses and Loss Adjustment Expenses of $75.1 million, net of reinsurance reinstatement premiums, from Hurricanes Maria, Irma and Harvey and the Puebla, Mexico Earthquake, as well as prior accident year reserve strengthening of $29.5 million primarily within our U.S. and International Insurance reporting segments.
Net Investment Income for the three months ended September 30, 2018 was $25.7 million, an increase of 13.5% as compared to the same period in 2017. The annualized pre-tax investment yield, excluding Total Net Realized and Unrealized Gains and Losses recognized in the Results of Operations, was 2.8% for the three months ended September 30, 2018 compared to 2.7% for the same period in 2017.
The Company recognized $2.6 million of Total Net Realized and Unrealized Gains within the Results of Operations for the three months ended September 30, 2018, compared to $4.2 million for the same period in 2017. The Net Realized and Unrealized Gains within the Results of Operations for the three months ended September 30, 2018 included $2.3 million of Net Unrealized Gains on Equity Securities.
Other Income (Loss) for the three months ended September 30, 2018 was $1.7 million, compared to $(1.7) million for the same period in 2017. Other Income (Loss) primarily consists of managing agent fee income and realized and unrealized foreign exchange gains and losses.
The effective tax rate was (11.1%) for the three months ended September 30, 2018, which compares to 37.6% for the same period in 2017, with the decrease being primarily driven by low pretax earnings resulting from an underwriting loss during the third quarter of 2018 and a consistent level of permanent tax adjustments, which generated a tax benefit for the quarter. This compares to the third quarter of 2017 which incurred large catastrophe losses driving a pretax loss resulting in a tax benefit.
Stan Galanski, President and Chief Executive Officer, commented, “We are pleased to report continued strong revenue growth in the third quarter, with each of our three reporting segments producing positive premium growth. We benefited from modest rate increases across the majority of our specialty product lines. The ongoing strength of the U.S. economy, and particularly the construction segment, also benefited us, providing a strong growth of new business. In a quarter in which the insurance industry experienced significant natural catastrophe activity, our natural catastrophe loss estimates were well within our expectations. GlobalRe had another excellent quarter, with 9.4% growth in gross written premium and a 93.2% combined ratio. Within the U.S. Insurance segment, gross written premium grew 19.2%. Underwriting results for the U.S. Insurance segment were adversely impacted by a strengthening of reserves for a portfolio of primary casualty policies on habitational risks that is largely now in runoff. Absent that action, the U.S. Insurance business would have been profitable, with continued solid performance in our primary construction liability, excess casualty, environmental, life sciences, marine and management and professional liability products. The International Insurance segment showed improved results over third quarter 2017 and for the first nine months and our team is focused on actions required to improve both the loss ratio and cost structure. Our investment portfolio continued to perform well, with net investment income up 13.5% for the quarter and 11.5% for the first nine months of 2018.”
On August 22, 2018, the Company announced that it had entered into a definitive agreement to be acquired by The Hartford Financial Services Group, Inc. (NYSE: HIG) in an all-cash transaction that values Navigators at approximately $2.1 billion. Holders of the Company’s common shares will be entitled to receive consideration of $70.00 in cash per common share. The Merger is expected to close in the first half of 2019, subject to the receipt of regulatory approvals and other customary closing conditions.
For the nine months ended September 30, 2018 the Company reported Net Income of $67.6 million, or $2.24 per diluted share compared to $13.6 million, or $0.45 per diluted share, for the same period in 2017. Net Operating Earnings1 were $64.7 million, or $2.15 per diluted share, for the nine months ended September 30, 2018 compared to $10.5 million, or $0.35 per diluted share, for the same period in 2017.
Gross Written Premiums and Net Written Premiums for the nine months ended September 30, 2018 were $1.4 billion and $1.1 billion, respectively, increasing 11.0% and 16.4%, respectively, from the comparable period in 2017. The Combined Ratio for the nine months ended September 30, 2018 was 98.6%, compared to 105.5% for the same period in 2017.
Net Investment Income for the nine months ended September 30, 2018 was $74.0 million, an increase of 11.5% as compared to the same period in 2017. The annualized pre-tax investment yield, excluding Total Net Realized and Unrealized Gains and Losses recognized in the Results of Operations, was 2.8% for the nine months ended September 30, 2018 compared to 2.7% for the same period in 2017.
The Company recognized $3.7 million of Total Net Realized and Unrealized Gains within the Results of Operations for the nine months ended September 30, 2018, compared to $5.9 million for the same period in 2017. The Net Realized and Unrealized Gains within the Results of Operations for the nine months ended September 30, 2018 included $0.5 million of Net Unrealized Gains on Equity Securities.
Other Income (Loss) for the nine months ended September 30, 2018 was $4.2 million, compared to $(1.0) million for the same period in 2017. Other Income for the nine months ended September 30, 2018 included revenue from the sale of renewal rights for the Company’s fixed-premium protection and indemnity (“P&I”) business as well as net realized and unrealized foreign exchange gains and managing agent fee income. Other Income for the same period in 2017 primarily consisted of net realized and unrealized foreign exchange losses.
The effective tax rate was 16.6% for the nine months ended September 30, 2018, which compares to (19.7%) for the same period in 2017. The tax benefit for the nine months ended September 30, 2017 was the result of a lower level of pretax earnings driven by catastrophe losses incurred during 2017 and a consistent level of permanent tax adjustments.
The Company’s investment portfolio mainly consists of fixed income securities with an average quality rating of “AA-/Aa3” as defined by S&P and Moody’s, respectively, with an effective duration of 3.4 years as of September 30, 2018. As of September 30, 2018, Net Unrealized Losses within the Available-For-Sale investment portfolio recognized in Accumulated Other Comprehensive Income were $38.4 million, a change of $79.8 million, compared to Net Unrealized Gains of $41.5 million as of December 31, 2017. Included in this change was the reclassification of $11.8 million of net unrealized gains, before tax, from Accumulated Other Comprehensive Income to Retained Earnings as a result of adopting ASU 2016-01.
Stockholders’ Equity was $1.2 billion, or $41.38 per share, as of September 30, 2018 compared to $41.49 per share, as of June 30, 2018, and $41.55 per share, as of December 31, 2017.
During the three months ended September 30, 2018, the Company declared and paid a quarterly cash dividend of $0.07 per share of Common Stock.
On November 7, 2018 our Board of Directors declared a cash dividend on our Company’s Common Stock of $0.07 per share, payable on December 21, 2018 to stockholders of record on November 30, 2018.
The Navigators Group, Inc. is an international specialty insurance holding company with operations in the United States, the United Kingdom, Continental Europe and Asia.
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. These forward-looking statements include statements on the financial impact of tax reform. We continue to assess the tax accounting effects of tax reform. 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.
___________________________
1 Net Operating Earnings (Loss) is a “non-GAAP financial measure” as defined in Regulation G. A reconciliation of Net Income (Loss) (the nearest GAAP financial measure) to Net Operating Earnings (Loss) is provided on page 4 of this release, as is a discussion of the rationale for the presentation of this item.
| Contact: | Ciro M. DeFalco | |
| Executive Vice President and Chief Financial Officer | ||
| (203) 905-6343 | ||
| cdefalco@navg.com | ||
| www.navg.com |
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
| amounts in thousands, except per share amounts | September 30, | September 30, | ||||||||||||||||||||||
| Results of Operations | 2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||
| Gross Written Premiums | $ | 455,943 | $ | 402,038 | 13.4 | % | $ | 1,448,403 | $ | 1,304,522 | 11.0 | % | ||||||||||||
| Net Written Premiums | 352,412 | 296,016 | 19.1 | % | 1,124,966 | 966,461 | 16.4 | % | ||||||||||||||||
| Revenues: | ||||||||||||||||||||||||
| Net Earned Premiums | $ | 347,038 | $ | 301,355 | 15.2 | % | $ | 1,000,680 | $ | 881,321 | 13.5 | % | ||||||||||||
| Net Investment Income | 25,651 | 22,598 | 13.5 | % | 73,954 | 66,311 | 11.5 | % | ||||||||||||||||
| Net Realized and Unrealized Gains (Losses): | ||||||||||||||||||||||||
| Total Other-Than-Temporary Impairment Losses | (15 | ) | (957 | ) | (98.4 | %) | (71 | ) | (2,005 | ) | (96.5 | %) | ||||||||||||
| Portion of Loss Recognized in Other Comprehensive Income | 15 | (15 | ) | NM | 71 | (60 | ) | NM | ||||||||||||||||
| Net Other-Than-Temporary Impairment Losses Recognized In Earnings | — | (972 | ) | NM | — | (2,065 | ) | NM | ||||||||||||||||
| Net Realized Gains on Investments Sold | 253 | 5,190 | (95.1 | %) | 3,210 | 7,933 | (59.5 | %) | ||||||||||||||||
| Net Unrealized Gains on Equity Securities | 2,310 | — | NM | 457 | — | NM | ||||||||||||||||||
| Total Net Realized and Unrealized Gains | 2,563 | 4,218 | (39.2 | %) | 3,667 | 5,868 | (37.5 | %) | ||||||||||||||||
| Other Income (Loss) | 1,724 | (1,699 | ) | NM | 4,235 | (1,042 | ) | NM | ||||||||||||||||
| Total Revenues | $ | 376,976 | $ | 326,472 | 15.5 | % | $ | 1,082,536 | $ | 952,458 | 13.7 | % | ||||||||||||
| Expenses: | ||||||||||||||||||||||||
| Net Losses and Loss Adjustment Expenses | $ | 240,900 | $ | 276,171 | (12.8 | %) | $ | 623,378 | $ | 622,881 | 0.1 | % | ||||||||||||
| Commission Expenses | 57,999 | 45,509 | 27.4 | % | 165,344 | 141,526 | 16.8 | % | ||||||||||||||||
| Other Operating Expenses | 67,584 | 45,773 | 47.6 | % | 198,692 | 165,077 | 20.4 | % | ||||||||||||||||
| Merger Transaction Costs | 2,439 | — | NM | 2,439 | — | NM | ||||||||||||||||||
| Interest Expense | 3,891 | 3,862 | 0.8 | % | 11,619 | 11,584 | 0.3 | % | ||||||||||||||||
| Total Expenses | $ | 372,813 | $ | 371,315 | 0.4 | % | $ | 1,001,472 | $ | 941,068 | 6.4 | % | ||||||||||||
| Income (Loss) Before Income Taxes | $ | 4,163 | $ | (44,843 | ) | NM | $ | 81,064 | $ | 11,390 | NM | |||||||||||||
| Income Tax Expense (Benefit) | (462 | ) | (16,864 | ) | (97.3 | %) | 13,457 | (2,243 | ) | NM | ||||||||||||||
| Net Income (Loss) | $ | 4,625 | $ | (27,979 | ) | NM | $ | 67,607 | $ | 13,633 | NM | |||||||||||||
| Per Share Data | ||||||||||||||||||||||||
| Net Income (Loss) Per Common Share: | ||||||||||||||||||||||||
| Basic | $ | 0.16 | $ | (0.95 | ) | NM | $ | 2.28 | $ | 0.46 | NM | |||||||||||||
| Diluted | $ | 0.15 | $ | (0.95 | ) | NM | $ | 2.24 | $ | 0.45 | NM | |||||||||||||
| Average Common Shares Outstanding: | ||||||||||||||||||||||||
| Basic | 29,768 | 29,500 | 29,699 | 29,419 | ||||||||||||||||||||
| Diluted | 30,184 | 29,500 | 30,160 | 30,006 | ||||||||||||||||||||
| Underwriting Ratios | ||||||||||||||||||||||||
| Loss Ratio | 69.4 | % | 91.6 | % | 62.3 | % | 70.7 | % | ||||||||||||||||
| Expense Ratio | 35.9 | % | 30.3 | % | 36.3 | % | 34.8 | % | ||||||||||||||||
| Combined Ratio | 105.3 | % | 121.9 | % | 98.6 | % | 105.5 | % | ||||||||||||||||
| Balance Sheet Data | September 30, | June 30, | September 30, | December 31, | ||||||||||||||||||||
| 2018 | 2018 | 2018 | 2017 | |||||||||||||||||||||
| Stockholders' Equity | $ | 1,231,828 | $ | 1,234,084 | (0.2 | %) | $ | 1,231,828 | $ | 1,225,965 | 0.5 | % | ||||||||||||
| Book Value per Share | $ | 41.38 | $ | 41.49 | (0.3 | %) | $ | 41.38 | $ | 41.55 | (0.4 | %) | ||||||||||||
NM - Percentage change not meaningful.
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION OF NET INCOME (LOSS) TO NET OPERATING EARNINGS (LOSS)
(Unaudited)
In this release, we present Net Operating Earnings (Loss), which is a “non-GAAP financial measure” as defined in Regulation G.
Net Operating Earnings (Loss) is comprised of Net Income (Loss) excluding After-Tax adjustments, including: Total Net Realized and Unrealized Gains (Losses), Foreign Exchange Gains (Losses), the Net Gain on Disposition of Product Line, and Merger Transaction Costs recognized in the Results of Operations.
We believe this presentation enhances the understanding of the results of operations by highlighting the underlying profitability of the business and enables investors and other users of the financial information to analyze underlying business performance in a manner similar to management. We also believe this measure follows industry practice and, therefore facilitates comparison of our performance with our peer group.
The following tables provide a reconciliation of Net Income (Loss) (the nearest GAAP financial measure) to Net Operating Earnings (Loss):
| Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 | % Change | ||||||||||||||||||||||||||
| amounts in thousands, except per share amounts | Pre-Tax | Tax (1) | After-Tax | Pre-Tax | Tax (1) | After-Tax | QTD | |||||||||||||||||||||
| Net Income (Loss) | $ | 4,163 | $ | 462 | $ | 4,625 | $ | (44,843 | ) | $ | 16,864 | $ | (27,979 | ) | NM | |||||||||||||
| Adjustments to Net Income (Loss): | ||||||||||||||||||||||||||||
| Total Net Realized and Unrealized Gains | (2,563 | ) | 538 | (2,025 | ) | (4,218 | ) | 1,477 | (2,741 | ) | (26.1 | %) | ||||||||||||||||
| FX Losses (Gains) | (706 | ) | 148 | (558 | ) | 1,675 | (586 | ) | 1,089 | NM | ||||||||||||||||||
| Merger Transaction Costs | 2,439 | (302 | ) | 2,137 | — | — | — | NM | ||||||||||||||||||||
| Net Operating Earnings (Loss) | $ | 3,333 | $ | 846 | $ | 4,179 | $ | (47,386 | ) | $ | 17,755 | $ | (29,631 | ) | NM | |||||||||||||
| Average Common Shares Outstanding: | ||||||||||||||||||||||||||||
| Basic | 29,768 | 29,500 | ||||||||||||||||||||||||||
| Diluted | 30,184 | 29,500 | ||||||||||||||||||||||||||
| Net Operating Earnings (Loss) per Common Share: | ||||||||||||||||||||||||||||
| Basic | $ | 0.14 | $ | (1.00 | ) | |||||||||||||||||||||||
| Diluted | $ | 0.14 | $ | (1.00 | ) | |||||||||||||||||||||||
(1) - Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of any other relevant factors.
NM - Percentage change not meaningful.
| Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | % Change | ||||||||||||||||||||||||||
| amounts in thousands, except per share amounts | Pre-Tax | Tax (1) | After-Tax | Pre-Tax | Tax (1) | After-Tax | YTD | |||||||||||||||||||||
| Net Income | $ | 81,064 | $ | (13,457 | ) | $ | 67,607 | $ | 11,390 | $ | 2,243 | $ | 13,633 | NM | ||||||||||||||
| Adjustments to Net Income: | ||||||||||||||||||||||||||||
| Total Net Realized and Unrealized Gains | (3,667 | ) | 770 | (2,897 | ) | (5,868 | ) | 2,055 | (3,813 | ) | (24.0 | %) | ||||||||||||||||
| FX Losses (Gains) | (1,770 | ) | 371 | (1,399 | ) | 1,015 | (355 | ) | 660 | NM | ||||||||||||||||||
| Net Gain on Disposition of Product Line | (948 | ) | 199 | (749 | ) | — | — | — | NM | |||||||||||||||||||
| Merger Transaction Costs | 2,439 | (302 | ) | 2,137 | — | — | — | NM | ||||||||||||||||||||
| Net Operating Earnings | $ | 77,118 | $ | (12,419 | ) | $ | 64,699 | $ | 6,537 | $ | 3,943 | $ | 10,480 | NM | ||||||||||||||
| Average Common Shares Outstanding: | ||||||||||||||||||||||||||||
| Basic | 29,699 | 29,419 | ||||||||||||||||||||||||||
| Diluted | 30,160 | 30,006 | ||||||||||||||||||||||||||
| Net Operating Earnings per Common Share: | ||||||||||||||||||||||||||||
| Basic | $ | 2.18 | $ | 0.36 | ||||||||||||||||||||||||
| Diluted | $ | 2.15 | $ | 0.35 | ||||||||||||||||||||||||
(1) - Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of any other relevant factors.
NM - Percentage change not meaningful.
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| September 30, | December 31, | |||||||
| 2018 | 2017 | |||||||
| amounts in thousands, except per share amounts | (Unaudited) | |||||||
| ASSETS | ||||||||
| Investments: | ||||||||
| Fixed Maturities, available-for-sale, at fair value (amortized cost: 2018: $3,027,835; 2017: $3,027,408) | $ | 2,989,473 | $ | 3,057,054 | ||||
| Equity Securities, at fair value (cost: 2018: $359,400; 2017: $224,159) | 371,680 | 235,981 | ||||||
| Other Invested Assets | 42,489 | 30,488 | ||||||
| Short-Term Investments, available-for-sale, at fair value (amortized cost: 2018: $7,268; 2017: $6,477) | 7,264 | 6,480 | ||||||
| Total Investments | $ | 3,410,906 | $ | 3,330,003 | ||||
| Cash and Cash Equivalents | 219,980 | 102,735 | ||||||
| Restricted Cash and Cash Equivalents | 61,644 | 56,229 | ||||||
| Premiums Receivable | 392,392 | 351,393 | ||||||
| Prepaid Reinsurance Premiums | 235,642 | 228,569 | ||||||
| Reinsurance Recoverable on Paid Losses | 102,829 | 72,494 | ||||||
| Reinsurance Recoverable on Unpaid Losses and Loss Adjustment Expenses | 780,215 | 809,765 | ||||||
| Deferred Policy Acquisition Costs | 161,419 | 135,249 | ||||||
| Accrued Investment Income | 21,981 | 19,480 | ||||||
| Goodwill and Other Intangible Assets | 28,140 | 6,596 | ||||||
| Current Income Tax Receivable, Net | 25,429 | 16,667 | ||||||
| Deferred Income Tax, Net | 26,377 | 22,271 | ||||||
| Other Assets | 81,373 | 73,171 | ||||||
| Total Assets | $ | 5,548,327 | $ | 5,224,622 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Liabilities: | ||||||||
| Reserves for Losses and Loss Adjustment Expenses | $ | 2,633,835 | $ | 2,515,145 | ||||
| Unearned Premiums | 1,128,762 | 987,681 | ||||||
| Reinsurance Balances Payable | 147,129 | 136,192 | ||||||
| Senior Notes | 264,009 | 263,885 | ||||||
| Payable for Investments Purchased | 16,968 | — | ||||||
| Accounts Payable and Other Liabilities | 125,796 | 95,754 | ||||||
| Total Liabilities | $ | 4,316,499 | $ | 3,998,657 | ||||
| Stockholders' Equity: | ||||||||
| Preferred Stock ($.10 par value per share, authorized 1,000 shares, none issued) | $ | — | $ | — | ||||
| Common Stock ($.10 par value per share, authorized 50,000 shares, issued 36,795 shares for 2018 and 36,530 shares for 2017) | 3,677 | 3,650 | ||||||
| Additional Paid-In Capital | 379,212 | 376,868 | ||||||
| Treasury Stock, at cost (7,023 shares for 2018 and 2017) | (155,801 | ) | (155,801 | ) | ||||
| Retained Earnings | 1,047,673 | 981,380 | ||||||
| Accumulated Other Comprehensive Income (Loss) | (42,933 | ) | 19,868 | |||||
| Total Stockholders' Equity | $ | 1,231,828 | $ | 1,225,965 | ||||
| Total Liabilities and Stockholders' Equity | $ | 5,548,327 | $ | 5,224,622 | ||||
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
(Unaudited)
| Three Months Ended September 30, 2018 | ||||||||||||||||||||
| U.S. | Int'l | |||||||||||||||||||
| amounts in thousands | Insurance | Insurance | GlobalRe | Corporate (1) | Total | |||||||||||||||
| Gross Written Premiums | $ | 280,183 | $ | 117,376 | $ | 58,384 | $ | — | $ | 455,943 | ||||||||||
| Ceded Written Premiums | (72,615 | ) | (29,020 | ) | (1,896 | ) | — | (103,531 | ) | |||||||||||
| Net Written Premiums | $ | 207,568 | $ | 88,356 | $ | 56,488 | $ | — | $ | 352,412 | ||||||||||
| Retention Ratio | 74.1 | % | 75.3 | % | 96.8 | % | — | 77.3 | % | |||||||||||
| Net Earned Premiums | $ | 188,504 | $ | 95,226 | $ | 63,308 | $ | — | $ | 347,038 | ||||||||||
| Net Losses and LAE | (141,182 | ) | (60,275 | ) | (39,443 | ) | — | (240,900 | ) | |||||||||||
| Commission Expenses | (22,247 | ) | (22,547 | ) | (13,282 | ) | 77 | (57,999 | ) | |||||||||||
| Other Operating Expenses | (36,826 | ) | (24,441 | ) | (6,317 | ) | — | (67,584 | ) | |||||||||||
| Other Underwriting Income (Expense) | 65 | 945 | 20 | (77 | ) | 953 | ||||||||||||||
| Underwriting Profit (Loss) | $ | (11,686 | ) | $ | (11,092 | ) | $ | 4,286 | $ | — | $ | (18,492 | ) | |||||||
| Net Investment Income | 25,651 | 25,651 | ||||||||||||||||||
| Total Net Realized and Unrealized Gains | 2,563 | 2,563 | ||||||||||||||||||
| Interest Expense | (3,891 | ) | (3,891 | ) | ||||||||||||||||
| Other Income | 771 | 771 | ||||||||||||||||||
| Merger Transaction Costs | (2,439 | ) | (2,439 | ) | ||||||||||||||||
| Income (Loss) Before Income Taxes | $ | (11,686 | ) | $ | (11,092 | ) | $ | 4,286 | $ | 22,655 | $ | 4,163 | ||||||||
| Income Tax Benefit | 462 | 462 | ||||||||||||||||||
| Net Income | $ | 4,625 | ||||||||||||||||||
| Losses and LAE Ratio | 74.9 | % | 63.3 | % | 62.3 | % | 69.4 | % | ||||||||||||
| Commission Expense Ratio | 11.8 | % | 23.7 | % | 21.0 | % | 16.7 | % | ||||||||||||
| Other Operating Expense Ratio (2) | 19.5 | % | 24.6 | % | 9.9 | % | 19.2 | % | ||||||||||||
| Combined Ratio | 106.2 | % | 111.6 | % | 93.2 | % | 105.3 | % | ||||||||||||
(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
(Unaudited)
| Three Months Ended September 30, 2017 | ||||||||||||||||||||
| U.S. | Int'l | |||||||||||||||||||
| amounts in thousands | Insurance | Insurance | GlobalRe | Corporate (1) | Total | |||||||||||||||
| Gross Written Premiums | $ | 235,052 | $ | 113,601 | $ | 53,385 | $ | — | $ | 402,038 | ||||||||||
| Ceded Written Premiums | (64,328 | ) | (38,966 | ) | (2,728 | ) | — | (106,022 | ) | |||||||||||
| Net Written Premiums | $ | 170,724 | $ | 74,635 | $ | 50,657 | $ | — | $ | 296,016 | ||||||||||
| Retention Ratio | 72.6 | % | 65.7 | % | 94.9 | % | — | 73.6 | % | |||||||||||
| Net Earned Premiums | $ | 169,150 | $ | 84,407 | $ | 47,798 | $ | — | $ | 301,355 | ||||||||||
| Net Losses and LAE | (135,340 | ) | (81,713 | ) | (59,118 | ) | — | (276,171 | ) | |||||||||||
| Commission Expenses | (18,286 | ) | (16,201 | ) | (11,233 | ) | 211 | (45,509 | ) | |||||||||||
| Other Operating Expenses | (25,375 | ) | (16,388 | ) | (4,010 | ) | — | (45,773 | ) | |||||||||||
| Other Underwriting Income (Expense) | 125 | — | 94 | (211 | ) | 8 | ||||||||||||||
| Underwriting Loss | $ | (9,726 | ) | $ | (29,895 | ) | $ | (26,469 | ) | $ | — | $ | (66,090 | ) | ||||||
| Net Investment Income | 22,598 | 22,598 | ||||||||||||||||||
| Total Net Realized and Unrealized Gains | 4,218 | 4,218 | ||||||||||||||||||
| Interest Expense | (3,862 | ) | (3,862 | ) | ||||||||||||||||
| Other Loss | (1,707 | ) | (1,707 | ) | ||||||||||||||||
| Income (Loss) Before Income Taxes | $ | (9,726 | ) | $ | (29,895 | ) | $ | (26,469 | ) | $ | 21,247 | $ | (44,843 | ) | ||||||
| Income Tax Benefit | 16,864 | 16,864 | ||||||||||||||||||
| Net Loss | $ | (27,979 | ) | |||||||||||||||||
| Losses and LAE Ratio | 80.0 | % | 96.8 | % | 123.7 | % | 91.6 | % | ||||||||||||
| Commission Expense Ratio | 10.8 | % | 19.2 | % | 23.5 | % | 15.1 | % | ||||||||||||
| Other Operating Expense Ratio (2) | 14.9 | % | 19.4 | % | 8.2 | % | 15.2 | % | ||||||||||||
| Combined Ratio | 105.7 | % | 135.4 | % | 155.4 | % | 121.9 | % | ||||||||||||
(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
(Unaudited)
| Nine Months Ended September 30, 2018 | ||||||||||||||||||||
| U.S. | Int'l | |||||||||||||||||||
| amounts in thousands | Insurance | Insurance | GlobalRe | Corporate (1) | Total | |||||||||||||||
| Gross Written Premiums | $ | 808,589 | $ | 377,771 | $ | 262,043 | $ | — | $ | 1,448,403 | ||||||||||
| Ceded Written Premiums | (215,340 | ) | (97,790 | ) | (10,307 | ) | — | (323,437 | ) | |||||||||||
| Net Written Premiums | $ | 593,249 | $ | 279,981 | $ | 251,736 | $ | — | $ | 1,124,966 | ||||||||||
| Retention Ratio | 73.4 | % | 74.1 | % | 96.1 | % | — | 77.7 | % | |||||||||||
| Net Earned Premiums | $ | 541,163 | $ | 280,507 | $ | 179,010 | $ | — | $ | 1,000,680 | ||||||||||
| Net Losses and LAE | (363,489 | ) | (158,422 | ) | (101,467 | ) | — | (623,378 | ) | |||||||||||
| Commission Expenses | (63,490 | ) | (62,166 | ) | (40,198 | ) | 510 | (165,344 | ) | |||||||||||
| Other Operating Expenses | (112,264 | ) | (68,270 | ) | (18,158 | ) | — | (198,692 | ) | |||||||||||
| Other Underwriting Income (Expense) | 234 | 945 | 294 | (510 | ) | 963 | ||||||||||||||
| Underwriting Profit (Loss) | $ | 2,154 | $ | (7,406 | ) | $ | 19,481 | $ | — | $ | 14,229 | |||||||||
| Net Investment Income | 73,954 | 73,954 | ||||||||||||||||||
| Total Net Realized and Unrealized Gains | 3,667 | 3,667 | ||||||||||||||||||
| Interest Expense | (11,619 | ) | (11,619 | ) | ||||||||||||||||
| Other Income | 3,272 | 3,272 | ||||||||||||||||||
| Merger Transaction Costs | (2,439 | ) | (2,439 | ) | ||||||||||||||||
| Income (Loss) Before Income Taxes | $ | 2,154 | $ | (7,406 | ) | $ | 19,481 | $ | 66,835 | $ | 81,064 | |||||||||
| Income Tax Expense | (13,457 | ) | (13,457 | ) | ||||||||||||||||
| Net Income | $ | 67,607 | ||||||||||||||||||
| Losses and LAE Ratio | 67.2 | % | 56.5 | % | 56.7 | % | 62.3 | % | ||||||||||||
| Commission Expense Ratio | 11.7 | % | 22.2 | % | 22.5 | % | 16.5 | % | ||||||||||||
| Other Operating Expense Ratio (2) | 20.7 | % | 23.9 | % | 9.9 | % | 19.8 | % | ||||||||||||
| Combined Ratio | 99.6 | % | 102.6 | % | 89.1 | % | 98.6 | % | ||||||||||||
(1) - Includes Corporate segment intercompany eliminations.
(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
(Unaudited)
| Nine Months Ended September 30, 2017 | ||||||||||||||||||||
| U.S. | Int'l | |||||||||||||||||||
| amounts in thousands | Insurance | Insurance | GlobalRe | Corporate (1) | Total | |||||||||||||||
| Gross Written Premiums | $ | 729,843 | $ | 386,654 | $ | 188,025 | $ | — | $ | 1,304,522 | ||||||||||
| Ceded Written Premiums | (199,672 | ) | (129,368 | ) | (9,021 | ) | — | (338,061 | ) | |||||||||||
| Net Written Premiums | $ | 530,171 | $ | 257,286 | $ | 179,004 | $ | — | $ | 966,461 | ||||||||||
| Retention Ratio | 72.6 | % | 66.5 | % | 95.2 | % | — | 74.1 | % | |||||||||||
| Net Earned Premiums | $ | 500,241 | $ | 250,593 | $ | 130,487 | $ | — | $ | 881,321 | ||||||||||
| Net Losses and LAE | (339,436 | ) | (176,513 | ) | (106,932 | ) | — | (622,881 | ) | |||||||||||
| Commission Expenses | (59,130 | ) | (54,435 | ) | (28,695 | ) | 734 | (141,526 | ) | |||||||||||
| Other Operating Expenses | (91,987 | ) | (58,687 | ) | (14,403 | ) | — | (165,077 | ) | |||||||||||
| Other Underwriting Income (Expense) | 335 | — | 439 | (734 | ) | 40 | ||||||||||||||
| Underwriting Profit (Loss) | $ | 10,023 | $ | (39,042 | ) | $ | (19,104 | ) | $ | — | $ | (48,123 | ) | |||||||
| Net Investment Income | 66,311 | 66,311 | ||||||||||||||||||
| Total Net Realized and Unrealized Gains | 5,868 | 5,868 | ||||||||||||||||||
| Interest Expense | (11,584 | ) | (11,584 | ) | ||||||||||||||||
| Other Loss | (1,082 | ) | (1,082 | ) | ||||||||||||||||
| Income (Loss) Before Income Taxes | $ | 10,023 | $ | (39,042 | ) | $ | (19,104 | ) | $ | 59,513 | $ | 11,390 | ||||||||
| Income Tax Benefit | 2,243 | 2,243 | ||||||||||||||||||
| Net Income | $ | 13,633 | ||||||||||||||||||
| Losses and LAE Ratio | 67.9 | % | 70.4 | % | 81.9 | % | 70.7 | % | ||||||||||||
| Commission Expense Ratio | 11.8 | % | 21.7 | % | 22.0 | % | 16.1 | % | ||||||||||||
| Other Operating Expense Ratio (2) | 18.3 | % | 23.5 | % | 10.7 | % | 18.7 | % | ||||||||||||
| Combined Ratio | 98.0 | % | 115.6 | % | 114.6 | % | 105.5 | % | ||||||||||||
(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
(Unaudited)
| U.S. Insurance | ||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 | |||||||||||||||||||||||||||||||||||
| amounts in thousands | Marine | P&C | Professional Liability | Total | Marine | P&C | Professional Liability | Total | % Change Total | |||||||||||||||||||||||||||
| Gross Written Premiums | $ | 31,681 | $ | 212,911 | $ | 35,591 | $ | 280,183 | $ | 36,403 | $ | 166,097 | $ | 32,552 | $ | 235,052 | 19.2 | % | ||||||||||||||||||
| Ceded Written Premiums | (14,442 | ) | (52,993 | ) | (5,180 | ) | (72,615 | ) | (18,859 | ) | (39,952 | ) | (5,517 | ) | (64,328 | ) | 12.9 | % | ||||||||||||||||||
| Net Written Premiums | $ | 17,239 | $ | 159,918 | $ | 30,411 | $ | 207,568 | $ | 17,544 | $ | 126,145 | $ | 27,035 | $ | 170,724 | 21.6 | % | ||||||||||||||||||
| Net Earned Premiums | $ | 20,401 | $ | 141,650 | $ | 26,453 | $ | 188,504 | $ | 20,129 | $ | 125,931 | $ | 23,090 | $ | 169,150 | 11.4 | % | ||||||||||||||||||
| Net Losses and LAE | (11,939 | ) | (112,993 | ) | (16,250 | ) | (141,182 | ) | (18,325 | ) | (89,568 | ) | (27,447 | ) | (135,340 | ) | 4.3 | % | ||||||||||||||||||
| Commission Expenses | (915 | ) | (16,597 | ) | (4,735 | ) | (22,247 | ) | (967 | ) | (13,515 | ) | (3,804 | ) | (18,286 | ) | 21.7 | % | ||||||||||||||||||
| Other Operating Expenses | (6,394 | ) | (25,202 | ) | (5,230 | ) | (36,826 | ) | (4,661 | ) | (16,897 | ) | (3,817 | ) | (25,375 | ) | 45.1 | % | ||||||||||||||||||
| Other Underwriting Income | 49 | 12 | 4 | 65 | 105 | 18 | 2 | 125 | (48.0 | %) | ||||||||||||||||||||||||||
| Underwriting Profit (Loss) | $ | 1,202 | $ | (13,130 | ) | $ | 242 | $ | (11,686 | ) | $ | (3,719 | ) | $ | 5,969 | $ | (11,976 | ) | $ | (9,726 | ) | 20.2 | % | |||||||||||||
| Losses and LAE Ratio | 58.5 | % | 79.8 | % | 61.4 | % | 74.9 | % | 91.0 | % | 71.1 | % | 118.9 | % | 80.0 | % | ||||||||||||||||||||
| Commission Expense Ratio | 4.5 | % | 11.7 | % | 17.9 | % | 11.8 | % | 4.8 | % | 10.7 | % | 16.5 | % | 10.8 | % | ||||||||||||||||||||
| Other Operating Expense Ratio (1) | 31.1 | % | 17.8 | % | 19.8 | % | 19.5 | % | 22.7 | % | 13.5 | % | 16.5 | % | 14.9 | % | ||||||||||||||||||||
| Combined Ratio | 94.1 | % | 109.3 | % | 99.1 | % | 106.2 | % | 118.5 | % | 95.3 | % | 151.9 | % | 105.7 | % | ||||||||||||||||||||
(1) - Includes Other Operating Expenses and Other Underwriting Income.
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
(Unaudited)
| Int'l Insurance | ||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 | |||||||||||||||||||||||||||||||||||
| amounts in thousands | Marine | P&C | Professional Liability | Total | Marine | P&C | Professional Liability | Total | % Change Total | |||||||||||||||||||||||||||
| Gross Written Premiums | $ | 32,486 | $ | 41,898 | $ | 42,992 | $ | 117,376 | $ | 41,689 | $ | 37,415 | $ | 34,497 | $ | 113,601 | 3.3 | % | ||||||||||||||||||
| Ceded Written Premiums | (4,965 | ) | (13,727 | ) | (10,328 | ) | (29,020 | ) | (9,948 | ) | (19,772 | ) | (9,246 | ) | (38,966 | ) | (25.5 | %) | ||||||||||||||||||
| Net Written Premiums | $ | 27,521 | $ | 28,171 | $ | 32,664 | $ | 88,356 | $ | 31,741 | $ | 17,643 | $ | 25,251 | $ | 74,635 | 18.4 | % | ||||||||||||||||||
| Net Earned Premiums | $ | 38,866 | $ | 29,616 | $ | 26,744 | $ | 95,226 | $ | 39,038 | $ | 21,775 | $ | 23,594 | $ | 84,407 | 12.8 | % | ||||||||||||||||||
| Net Losses and LAE | (27,873 | ) | (12,728 | ) | (19,674 | ) | (60,275 | ) | (39,457 | ) | (29,918 | ) | (12,338 | ) | (81,713 | ) | (26.2 | %) | ||||||||||||||||||
| Commission Expenses | (8,889 | ) | (6,465 | ) | (7,193 | ) | (22,547 | ) | (8,532 | ) | (2,666 | ) | (5,003 | ) | (16,201 | ) | 39.2 | % | ||||||||||||||||||
| Other Operating Expenses | (8,200 | ) | (9,705 | ) | (6,536 | ) | (24,441 | ) | (6,788 | ) | (5,614 | ) | (3,986 | ) | (16,388 | ) | 49.1 | % | ||||||||||||||||||
| Other Underwriting Income | 640 | 305 | — | 945 | — | — | — | — | NM | |||||||||||||||||||||||||||
| Underwriting Profit (Loss) | $ | (5,456 | ) | $ | 1,023 | $ | (6,659 | ) | $ | (11,092 | ) | $ | (15,739 | ) | $ | (16,423 | ) | $ | 2,267 | $ | (29,895 | ) | (62.9 | %) | ||||||||||||
| Losses and LAE Ratio | 71.7 | % | 43.0 | % | 73.6 | % | 63.3 | % | 101.1 | % | 137.4 | % | 52.3 | % | 96.8 | % | ||||||||||||||||||||
| Commission Expense Ratio | 22.9 | % | 21.8 | % | 26.9 | % | 23.7 | % | 21.9 | % | 12.2 | % | 21.2 | % | 19.2 | % | ||||||||||||||||||||
| Other Operating Expense Ratio (1) | 19.4 | % | 31.7 | % | 24.4 | % | 24.6 | % | 17.3 | % | 25.8 | % | 16.9 | % | 19.4 | % | ||||||||||||||||||||
| Combined Ratio | 114.0 | % | 96.5 | % | 124.9 | % | 111.6 | % | 140.3 | % | 175.4 | % | 90.4 | % | 135.4 | % | ||||||||||||||||||||
(1) - Includes Other Operating Expenses and Other Underwriting Income.
NM – Percentage change not meaningful
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
(Unaudited)
| U.S. Insurance | ||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | |||||||||||||||||||||||||||||||||||
| amounts in thousands | Marine | P&C | Professional Liability | Total | Marine | P&C | Professional Liability | Total | % Change Total | |||||||||||||||||||||||||||
| Gross Written Premiums | $ | 112,235 | $ | 599,088 | $ | 97,266 | $ | 808,589 | $ | 119,040 | $ | 524,223 | $ | 86,580 | $ | 729,843 | 10.8 | % | ||||||||||||||||||
| Ceded Written Premiums | (48,840 | ) | (152,740 | ) | (13,760 | ) | (215,340 | ) | (55,830 | ) | (129,297 | ) | (14,545 | ) | (199,672 | ) | 7.8 | % | ||||||||||||||||||
| Net Written Premiums | $ | 63,395 | $ | 446,348 | $ | 83,506 | $ | 593,249 | $ | 63,210 | $ | 394,926 | $ | 72,035 | $ | 530,171 | 11.9 | % | ||||||||||||||||||
| Net Earned Premiums | $ | 62,670 | $ | 401,870 | $ | 76,623 | $ | 541,163 | $ | 64,635 | $ | 366,280 | $ | 69,326 | $ | 500,241 | 8.2 | % | ||||||||||||||||||
| Net Losses and LAE | (37,208 | ) | (280,103 | ) | (46,178 | ) | (363,489 | ) | (44,867 | ) | (239,175 | ) | (55,394 | ) | (339,436 | ) | 7.1 | % | ||||||||||||||||||
| Commission Expenses | (3,103 | ) | (46,853 | ) | (13,534 | ) | (63,490 | ) | (4,014 | ) | (44,113 | ) | (11,003 | ) | (59,130 | ) | 7.4 | % | ||||||||||||||||||
| Other Operating Expenses | (19,603 | ) | (77,057 | ) | (15,604 | ) | (112,264 | ) | (18,280 | ) | (60,356 | ) | (13,351 | ) | (91,987 | ) | 22.0 | % | ||||||||||||||||||
| Other Underwriting Income | 179 | 40 | 15 | 234 | 270 | 45 | 20 | 335 | (30.2 | %) | ||||||||||||||||||||||||||
| Underwriting Profit (Loss) | $ | 2,935 | $ | (2,103 | ) | $ | 1,322 | $ | 2,154 | $ | (2,256 | ) | $ | 22,681 | $ | (10,402 | ) | $ | 10,023 | (78.5 | %) | |||||||||||||||
| Losses and LAE Ratio | 59.4 | % | 69.7 | % | 60.3 | % | 67.2 | % | 69.4 | % | 65.3 | % | 79.9 | % | 67.9 | % | ||||||||||||||||||||
| Commission Expense Ratio | 5.0 | % | 11.7 | % | 17.7 | % | 11.7 | % | 6.2 | % | 12.0 | % | 15.9 | % | 11.8 | % | ||||||||||||||||||||
| Other Operating Expense Ratio (1) | 30.9 | % | 19.1 | % | 20.3 | % | 20.7 | % | 27.9 | % | 16.5 | % | 19.2 | % | 18.3 | % | ||||||||||||||||||||
| Combined Ratio | 95.3 | % | 100.5 | % | 98.3 | % | 99.6 | % | 103.5 | % | 93.8 | % | 115.0 | % | 98.0 | % | ||||||||||||||||||||
(1) - Includes Other Operating Expenses and Other Underwriting Income.
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
(Unaudited)
| Int'l Insurance | ||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | |||||||||||||||||||||||||||||||||||
| amounts in thousands | Marine | P&C | Professional Liability | Total | Marine | P&C | Professional Liability | Total | % Change Total | |||||||||||||||||||||||||||
| Gross Written Premiums | $ | 129,678 | $ | 122,437 | $ | 125,656 | $ | 377,771 | $ | 160,119 | $ | 124,446 | $ | 102,089 | $ | 386,654 | (2.3 | %) | ||||||||||||||||||
| Ceded Written Premiums | (24,542 | ) | (45,099 | ) | (28,149 | ) | (97,790 | ) | (33,410 | ) | (69,780 | ) | (26,178 | ) | (129,368 | ) | (24.4 | %) | ||||||||||||||||||
| Net Written Premiums | $ | 105,136 | $ | 77,338 | $ | 97,507 | $ | 279,981 | $ | 126,709 | $ | 54,666 | $ | 75,911 | $ | 257,286 | 8.8 | % | ||||||||||||||||||
| Net Earned Premiums | $ | 115,342 | $ | 75,100 | $ | 90,065 | $ | 280,507 | $ | 116,058 | $ | 67,292 | $ | 67,243 | $ | 250,593 | 11.9 | % | ||||||||||||||||||
| Net Losses and LAE | (77,606 | ) | (28,245 | ) | (52,571 | ) | (158,422 | ) | (83,906 | ) | (54,654 | ) | (37,953 | ) | (176,513 | ) | (10.2 | %) | ||||||||||||||||||
| Commission Expenses | (27,563 | ) | (12,014 | ) | (22,589 | ) | (62,166 | ) | (27,590 | ) | (10,985 | ) | (15,860 | ) | (54,435 | ) | 14.2 | % | ||||||||||||||||||
| Other Operating Expenses | (22,942 | ) | (26,087 | ) | (19,241 | ) | (68,270 | ) | (24,454 | ) | (19,983 | ) | (14,250 | ) | (58,687 | ) | 16.3 | % | ||||||||||||||||||
| Other Underwriting Income | 640 | 305 | — | 945 | — | — | — | — | NM | |||||||||||||||||||||||||||
| Underwriting Profit (Loss) | $ | (12,129 | ) | $ | 9,059 | $ | (4,336 | ) | $ | (7,406 | ) | $ | (19,892 | ) | $ | (18,330 | ) | $ | (820 | ) | $ | (39,042 | ) | (81.0 | %) | |||||||||||
| Losses and LAE Ratio | 67.3 | % | 37.6 | % | 58.4 | % | 56.5 | % | 72.3 | % | 81.2 | % | 56.4 | % | 70.4 | % | ||||||||||||||||||||
| Commission Expense Ratio | 23.9 | % | 16.0 | % | 25.1 | % | 22.2 | % | 23.8 | % | 16.3 | % | 23.6 | % | 21.7 | % | ||||||||||||||||||||
| Other Operating Expense Ratio (1) | 19.3 | % | 34.3 | % | 21.3 | % | 23.9 | % | 21.0 | % | 29.7 | % | 21.2 | % | 23.5 | % | ||||||||||||||||||||
| Combined Ratio | 110.5 | % | 87.9 | % | 104.8 | % | 102.6 | % | 117.1 | % | 127.2 | % | 101.2 | % | 115.6 | % | ||||||||||||||||||||
(1) - Includes Other Operating Expenses and Other Underwriting Income.
NM – Percentage change not meaningful
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Incurred Loss Activity
(Unaudited)
| For the Three Months Ended September 30, | ||||||||||||||||
| amounts in thousands | Amounts | Loss Ratio | ||||||||||||||
| Net Incurred Loss Activity | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| U.S. Insurance: | ||||||||||||||||
| Loss and LAE Payments | $ | 74,090 | $ | 68,454 | 39.3 | % | 40.5 | % | ||||||||
| Change in Reserves | 67,092 | 66,886 | 35.6 | % | 39.5 | % | ||||||||||
| Net Incurred Loss and LAE | $ | 141,182 | $ | 135,340 | 74.9 | % | 80.0 | % | ||||||||
| Int'l Insurance: | ||||||||||||||||
| Loss and LAE Payments | $ | 55,647 | $ | 55,148 | 58.4 | % | 65.3 | % | ||||||||
| Change in Reserves | 4,628 | 26,565 | 4.9 | % | 31.5 | % | ||||||||||
| Net Incurred Loss and LAE | $ | 60,275 | $ | 81,713 | 63.3 | % | 96.8 | % | ||||||||
| GlobalRe: | ||||||||||||||||
| Loss and LAE Payments | $ | 30,903 | $ | 13,659 | 48.8 | % | 28.6 | % | ||||||||
| Change in Reserves | 8,540 | 45,459 | 13.5 | % | 95.1 | % | ||||||||||
| Net Incurred Loss and LAE | $ | 39,443 | $ | 59,118 | 62.3 | % | 123.7 | % | ||||||||
| Total | ||||||||||||||||
| Loss and LAE Payments | $ | 160,640 | $ | 137,261 | 46.3 | % | 45.5 | % | ||||||||
| Change in Reserves | 80,260 | 138,910 | 23.1 | % | 46.1 | % | ||||||||||
| Net Incurred Loss and LAE | $ | 240,900 | $ | 276,171 | 69.4 | % | 91.6 | % | ||||||||
| For the Three Months Ended September 30, | ||||||||||||||||
| Impact of Prior Years Reserves | Amounts | Loss Ratio Impact | ||||||||||||||
| Favorable / (Unfavorable) Development | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| U.S. Insurance | $ | (16,640 | ) | $ | (18,383 | ) | (4.8 | %) | (6.0 | %) | ||||||
| Int'l Insurance | (1,813 | ) | (10,714 | ) | (0.5 | %) | (3.7 | %) | ||||||||
| GlobalRe | 1,959 | (397 | ) | 0.6 | % | (0.1 | %) | |||||||||
| Total | $ | (16,494 | ) | $ | (29,494 | ) | (4.7 | %) | (9.8 | %) | ||||||
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Incurred Loss Activity
(Unaudited)
| For the Nine Months Ended September 30, | ||||||||||||||||
| amounts in thousands | Amounts | Loss Ratio | ||||||||||||||
| Net Incurred Loss Activity | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| U.S. Insurance: | ||||||||||||||||
| Loss and LAE Payments | $ | 242,910 | $ | 225,017 | 44.9 | % | 45.0 | % | ||||||||
| Change in Reserves | 120,579 | 114,419 | 22.3 | % | 22.9 | % | ||||||||||
| Net Incurred Loss and LAE | $ | 363,489 | $ | 339,436 | 67.2 | % | 67.9 | % | ||||||||
| Int'l Insurance: | ||||||||||||||||
| Loss and LAE Payments | $ | 160,816 | $ | 146,106 | 57.3 | % | 58.3 | % | ||||||||
| Change in Reserves | (2,394 | ) | 30,407 | (0.9 | %) | 12.1 | % | |||||||||
| Net Incurred Loss and LAE | $ | 158,422 | $ | 176,513 | 56.4 | % | 70.4 | % | ||||||||
| GlobalRe: | ||||||||||||||||
| Loss and LAE Payments | $ | 82,589 | $ | 63,268 | 46.2 | % | 48.5 | % | ||||||||
| Change in Reserves | 18,878 | 43,664 | 10.5 | % | 33.4 | % | ||||||||||
| Net Incurred Loss and LAE | $ | 101,467 | $ | 106,932 | 56.7 | % | 81.9 | % | ||||||||
| Total | ||||||||||||||||
| Loss and LAE Payments | $ | 486,315 | $ | 434,391 | 48.6 | % | 49.3 | % | ||||||||
| Change in Reserves | 137,063 | 188,490 | 13.7 | % | 21.4 | % | ||||||||||
| Net Incurred Loss and LAE | $ | 623,378 | $ | 622,881 | 62.3 | % | 70.7 | % | ||||||||
| For the Nine Months Ended September 30, | ||||||||||||||||
| Impact of Prior Years Reserves | Amounts | Loss Ratio Impact | ||||||||||||||
| Favorable / (Unfavorable) Development | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| U.S. Insurance | $ | (19,233 | ) | $ | (18,206 | ) | (1.9 | %) | (2.1 | %) | ||||||
| Int'l Insurance | (2,660 | ) | (22,073 | ) | (0.3 | %) | (2.5 | %) | ||||||||
| GlobalRe | 2,079 | (4,330 | ) | 0.2 | % | (0.5 | %) | |||||||||
| Total | $ | (19,814 | ) | $ | (44,609 | ) | (2.0 | %) | (5.1 | %) | ||||||
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data
(Unaudited)
| As of September 30, 2018 | ||||||||||||
| amounts in thousands | Case | IBNR | ||||||||||
| Net Loss Reserves: | Reserves | Reserves | Total | |||||||||
| U.S. Insurance: | ||||||||||||
| Marine | $ | 55,476 | $ | 48,904 | $ | 104,380 | ||||||
| P&C | 217,004 | 783,350 | 1,000,354 | |||||||||
| Professional Liability | 36,075 | 89,358 | 125,433 | |||||||||
| Total U.S. Insurance | $ | 308,555 | $ | 921,612 | $ | 1,230,167 | ||||||
| Int'l Insurance: | ||||||||||||
| Marine | $ | 174,517 | $ | 38,034 | $ | 212,551 | ||||||
| P&C | 59,152 | 31,539 | 90,691 | |||||||||
| Professional Liability | 42,193 | 107,591 | 149,784 | |||||||||
| Total Int'l Insurance | $ | 275,862 | $ | 177,164 | $ | 453,026 | ||||||
| GlobalRe | $ | 55,752 | $ | 114,675 | $ | 170,427 | ||||||
| Total Net Loss Reserves | $ | 640,169 | $ | 1,213,451 | $ | 1,853,620 | ||||||
| As of December 31, 2017 | ||||||||||||
| Case | IBNR | |||||||||||
| Net Loss Reserves: | Reserves | Reserves | Total | |||||||||
| U.S. Insurance: | ||||||||||||
| Marine | $ | 58,301 | $ | 45,393 | $ | 103,694 | ||||||
| P&C | 192,291 | 700,264 | 892,555 | |||||||||
| Professional Liability | 26,774 | 86,649 | 113,423 | |||||||||
| Total U.S. Insurance | $ | 277,366 | $ | 832,306 | $ | 1,109,672 | ||||||
| Int'l Insurance: | ||||||||||||
| Marine | $ | 181,369 | $ | 39,949 | $ | 221,318 | ||||||
| P&C | 66,412 | 37,067 | 103,479 | |||||||||
| Professional Liability | 31,463 | 87,211 | 118,674 | |||||||||
| Total Int'l Insurance | $ | 279,244 | $ | 164,227 | $ | 443,471 | ||||||
| GlobalRe | $ | 58,962 | $ | 93,275 | $ | 152,237 | ||||||
| Total Net Loss Reserves | $ | 615,572 | $ | 1,089,808 | $ | 1,705,380 | ||||||
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Investment Data
(Unaudited)
As of September 30, 2018, the average quality of the investment portfolio as rated by S&P and Moody’s was “AA-/Aa3”, respectively, with an effective duration of 3.4 years. The Company does not own any collateralized debt obligations or asset backed commercial paper.
The following table sets forth the Available-For-Sale Investments as of September 30, 2018:
| As of September 30, 2018 | ||||||||||||||||
| 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 | $ | 245,285 | $ | 1,031 | $ | (3,879 | ) | $ | 248,133 | |||||||
| States, Municipalities and Political Subdivisions | 631,514 | 7,569 | (7,534 | ) | 631,479 | |||||||||||
| Mortgage-Backed and Asset-Backed Securities: | ||||||||||||||||
| Agency Mortgage-Backed Securities | 344,016 | 874 | (17,219 | ) | 360,361 | |||||||||||
| Residential Mortgage Obligations | 124,191 | 521 | (493 | ) | 124,163 | |||||||||||
| Asset-Backed Securities | 540,566 | 554 | (4,033 | ) | 544,045 | |||||||||||
| Commercial Mortgage-Backed Securities | 186,251 | 696 | (3,126 | ) | 188,681 | |||||||||||
| Subtotal | $ | 1,195,024 | $ | 2,645 | $ | (24,871 | ) | $ | 1,217,250 | |||||||
| Corporate Exposures (1) | 917,650 | 4,191 | (17,514 | ) | 930,973 | |||||||||||
| Total Fixed Maturities | $ | 2,989,473 | $ | 15,436 | $ | (53,798 | ) | $ | 3,027,835 | |||||||
| Short-Term Investments | 7,264 | — | (4 | ) | 7,268 | |||||||||||
| Total Available-For-Sale Investments | $ | 2,996,737 | $ | 15,436 | $ | (53,802 | ) | $ | 3,035,103 | |||||||
(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.
