Navigators Reports First Quarter 2018 Earnings

STAMFORD, Conn., May 07, 2018 (GLOBE NEWSWIRE) -- The Navigators Group, Inc. (NASDAQ:NAVG) reported Net Income of $30.9 million, or $1.02 per diluted share, for the three months ended March 31, 2018 compared to $21.1 million, or $0.70 per diluted share, for the same period in 2017. Net Operating Earnings¹ were $32.9 million, or $1.09 per diluted share, for the three months ended March 31, 2018 compared to $20.4 million, or $0.68 per diluted share, for the same period in 2017.

Gross Written Premiums and Net Written Premiums for the three months ended March 31, 2018 were $495.2 million and $393.3 million, respectively, increasing 10.0% and 16.6%, respectively, from the comparable period in 2017. The Combined Ratio for the three months ended March 31, 2018 was 94.0%, compared to 96.4% for the same period in 2017.

Net Investment Income for the three months ended March 31, 2018 was $23.7 million, an increase of 10.5% 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 2.7% for the three months ended March 31, 2018 and 2017.

Other Income (Loss) for the three months ended March 31, 2018 was $(0.1) million, compared to $1.1 million for the same period in 2017. Other Income (Loss) for the three months ended March 31, 2018 included revenue from the sale of renewal rights for the Company’s fixed-premium protection and indemnity (“P&I”) business, offset by net realized and unrealized foreign exchange losses. Other Income (Loss) for the same period in 2017 primarily consisted of net realized and unrealized foreign exchange gains.

Stan Galanski, President and Chief Executive Officer, commented, “We are very pleased with our financial performance for the first quarter, reporting strong net income, a record level of operating earnings, double digit premium growth and underwriting profit in all three of our reporting segments. GlobalRe was a stand-out, achieving significant premium growth, driven by our Accident & Health and Latin American business, and a combined ratio of 86.6%. Importantly, our International Insurance reporting segment returned to profitability, reflecting the concerted effort to re-position our portfolio by exiting non-performing product lines and reducing our cost structure. Our U.S. Insurance reporting segment produced profitable results, consistent with our expectations, while achieving growth in our Marine and Professional Liability operating segments during the quarter.”

As disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, accounting guidance for financial instruments changed under the Financial Accounting Standards Board’s Accounting Standard Update 2016-01 (“ASU 2016-01"), which upon adoption as of January 1, 2018, required Equity Securities to be measured at Fair Value through Net Income. Prior to adoption, these securities were classified as Available-For-Sale with unrealized gains and losses excluded from Net Income and reported in Accumulated Other Comprehensive Income. The adoption of this guidance required a cumulative-effect adjustment as of the adoption date that moved the unrealized gains and losses, net of tax, from Accumulated Other Comprehensive Income to Retained Earnings. As a result of this guidance, for 2018 and forward, the Results of Operations will be impacted by the volatility in the performance of these Equity Securities. The unrealized gains and losses on Equity Securities will be excluded from Net Operating Earnings.

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 3.5 years as of March 31, 2018. As of March 31, 2018, Net Unrealized Losses within the Available-For-Sale investment portfolio recognized in Accumulated Other Comprehensive Income were $(16.6) million, a decrease of $(58.0) million compared to December 31, 2017. Included in this decrease 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.

The Company recognized $(2.0) million of Total Net Realized and Unrealized Losses within the Results of Operations for the three months ended March 31, 2018, compared to $(44) thousand of Total Net Realized and Unrealized Losses for the same period in 2017. The Net Realized and Unrealized Losses within the Results of Operations for the three months ended March 31, 2018 included $(3.2) million of net unrealized losses on Equity Securities.

The effective tax rate was 16.8% for the first quarter of 2018, which compares to 26.6% for the same period in 2017, primarily as a result of changes related to 2017 tax reform.

Stockholders’ Equity was $1.2 billion, or $40.96 per share, as of March 31, 2018 compared to $41.55 per share, as of December 31, 2017.

During the three months ended March 31, 2018, the Company declared and paid a quarterly cash dividend of $0.07 per share of Common Stock.

The Company will hold a conference call on Tuesday, May 8, 2018 starting at 8:30 a.m. (ET) to discuss the 2018 first 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 also connect to the webcast at: https://edge.media-server.com/m6/p/di3vjch8.

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 is a “non-GAAP financial measure” as defined in Regulation G. A reconciliation of Net Income (the nearest GAAP financial measure) to Net Operating Earnings 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
amounts in thousands, except per share amounts	March 31,
Results of Operations	2018			2017			Change

Gross Written Premiums	$	495,224		$	450,305		10.0	%
Net Written Premiums		393,262			337,163		16.6	%

Revenues:
Net Earned Premiums	$	322,627		$	286,131		12.8	%
Net Investment Income		23,702			21,448		10.5	%
Net Realized and Unrealized Gains (Losses):
Total Other-Than-Temporary Impairment Losses		(37	)		(1,077	)	(96.5	%)
Portion of Loss Recognized in Other Comprehensive Income (Before Tax)		37			(16	)	NM
Net Other-Than-Temporary Impairment Losses Recognized In Earnings		—			(1,093	)	NM
Net Realized Gains on Investments Sold		1,169			1,049		11.4	%
Net Unrealized Losses on Equity Securities at Fair Value		(3,181	)		—		NM
Total Net Realized and Unrealized Losses		(2,012	)		(44	)	NM
Other Income (Loss)		(117	)		1,068		NM
Total Revenues	$	344,200		$	308,603		11.5	%

Expenses:
Net Losses and Loss Adjustment Expenses	$	186,145		$	169,600		9.8	%
Commission Expenses		54,152			47,844		13.2	%
Other Operating Expenses		62,926			58,538		7.5	%
Interest Expense		3,864			3,861		0.1	%
Total Expenses	$	307,087		$	279,843		9.7	%

Income Before Income Taxes	$	37,113		$	28,760		29.0	%

Income Tax Expense		6,235			7,650		(18.5	%)

Net Income	$	30,878		$	21,110		46.3	%


Per Share Data

Net Income Per Common Share:
Basic	$	1.04		$	0.72		44.7	%
Diluted	$	1.02		$	0.70		45.6	%

Average Common Shares Outstanding:
Basic		29,595			29,283
Diluted		30,137			30,000

Underwriting Ratios
Loss Ratio		57.7	%		59.3	%
Expense Ratio		36.3	%		37.1	%
Combined Ratio		94.0	%		96.4	%

Balance Sheet Data	March 31,			December 31,
	2018			2017
Stockholders' Equity	$	1,216,952		$	1,225,965		(0.7	%)
Book Value per Share	$	40.96		$	41.55		(1.4	%)

NM - Percentage change not meaningful.

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION OF NET INCOME TO NET OPERATING EARNINGS
(Unaudited)

In this release, we present Net Operating Earnings, which is a “non-GAAP financial measure” as defined in Regulation G.

Net Operating Earnings is comprised of Net Income excluding After-Tax Total Net Realized and Unrealized Gains (Losses), After-Tax Foreign Exchange Gains (Losses), and the Net Gain on Disposition of Product Line 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 (the nearest GAAP financial measure) to Net Operating Earnings:


	Three Months Ended March 31, 2018									Three Months Ended March 31, 2017									% Change
amounts in thousands, except per share amounts	Pre-Tax			Tax ⁽¹⁾			After-Tax			Pre-Tax			Tax ⁽¹⁾			After-Tax			QTD
Net Income	$	37,113		$	(6,235	)	$	30,878		$	28,760		$	(7,650	)	$	21,110			46.3	%
Adjustments to Net Income:
Total Net Realized and Unrealized Losses		2,012			(422	)		1,590			44			(15	)		29		NM
FX Losses (Gains)		1,522			(320	)		1,202			(1,123	)		393			(730	)	NM
Net Gain on Disposition of Product Line		(948	)		199			(749	)		—			—			—		NM
Net Operating Earnings	$	39,699		$	(6,778	)	$	32,921		$	27,681		$	(7,272	)	$	20,409			61.3	%

Average Common Shares Outstanding:
Basic								29,595									29,283
Diluted								30,137									30,000

Net Operating Earnings per Common Share:
Basic							$	1.11								$	0.70
Diluted							$	1.09								$	0.68

(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

	March 31,			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: $2,987,492; 2017: $3,027,408)	$	2,970,934		$	3,057,054
Equity Securities, at fair value (cost: 2018: $245,754; 2017: $224,159)		254,394			235,981
Other Invested Assets		35,276			30,488
Short-Term Investments, available-for-sale, at fair value (amortized cost: 2018: $6,707; 2017: $6,477)		6,704			6,480
Total Investments	$	3,267,308		$	3,330,003
Cash and Cash Equivalents		165,177			102,735
Restricted Cash and Cash Equivalents		58,956			56,229
Premiums Receivable		413,253			351,393
Prepaid Reinsurance Premiums		228,902			228,569
Reinsurance Recoverable on Paid Losses		82,506			72,494
Reinsurance Recoverable on Unpaid Losses and Loss Adjustment Expenses		790,388			809,765
Deferred Policy Acquisition Costs		151,661			135,249
Accrued Investment Income		20,738			19,480
Goodwill and Other Intangible Assets		6,668			6,596
Current Income Tax Receivable, Net		10,497			16,667
Deferred Income Tax, Net		31,026			22,271
Other Assets		81,686			73,171
Total Assets	$	5,308,766		$	5,224,622

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Reserves for Losses and Loss Adjustment Expenses	$	2,521,827		$	2,515,145
Unearned Premiums		1,059,085			987,681
Reinsurance Balances Payable		128,919			136,192
Senior Notes		263,926			263,885
Payable for Investments Purchased		23,776			—
Accounts Payable and Other Liabilities		94,281			95,754
Total Liabilities	$	4,091,814		$	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 36,733 shares for 2018 and 36,530 shares for 2017)		3,670			3,650
Additional Paid-In Capital		372,866			376,868
Treasury Stock, at cost (7,023 shares for 2018 and 2017)		(155,801	)		(155,801	)
Retained Earnings		1,015,109			981,380
Accumulated Other Comprehensive Income		(18,892	)		19,868
Total Stockholders' Equity	$	1,216,952		$	1,225,965
Total Liabilities and Stockholders' Equity	$	5,308,766		$	5,224,622


THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
(Unaudited)

	Three Months Ended March 31, 2018
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate ⁽¹⁾			Total
Gross Written Premiums	$	239,928		$	127,872		$	127,424		$	—		$	495,224
Ceded Written Premiums		(66,581	)		(28,888	)		(6,493	)		—			(101,962	)
Net Written Premiums		173,347			98,984			120,931			—			393,262

Net Earned Premiums	$	172,913		$	93,210		$	56,504		$	—		$	322,627
Net Losses and LAE		(110,422	)		(45,843	)		(29,880	)		—			(186,145	)
Commission Expenses		(20,861	)		(19,756	)		(13,768	)		233			(54,152	)
Other Operating Expenses		(36,991	)		(20,530	)		(5,405	)		—			(62,926	)
Other Underwriting Income (Expense)		98			—			138			(233	)		3

Underwriting Profit	$	4,737		$	7,081		$	7,589		$	—		$	19,407

Net Investment Income											23,702			23,702
Total Net Realized and Unrealized Losses											(2,012	)		(2,012	)
Interest Expense											(3,864	)		(3,864	)
Other Loss											(120	)		(120	)
Income Before Income Taxes	$	4,737		$	7,081		$	7,589		$	17,706		$	37,113
Income Tax Expense											(6,235	)		(6,235	)
Net Income													$	30,878

Losses and LAE Ratio		63.9	%		49.2	%		52.9	%					57.7	%
Commission Expense Ratio		12.1	%		21.2	%		24.4	%					16.8	%
Other Operating Expense Ratio ⁽²⁾		21.3	%		22.0	%		9.3	%					19.5	%
Combined Ratio		97.3	%		92.4	%		86.6	%					94.0	%

(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 March 31, 2017
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate ⁽¹⁾			Total
Gross Written Premiums	$	237,605		$	141,860		$	70,840		$	—		$	450,305
Ceded Written Premiums		(61,487	)		(46,593	)		(5,062	)		—			(113,142	)
Net Written Premiums		176,118			95,267			65,778			—			337,163

Net Earned Premiums	$	164,004		$	84,086		$	38,041		$	—		$	286,131
Net Losses and LAE		(98,826	)		(50,705	)		(20,069	)		—			(169,600	)
Commission Expenses		(20,384	)		(19,233	)		(8,492	)		265			(47,844	)
Other Operating Expenses		(33,472	)		(19,793	)		(5,273	)		—			(58,538	)
Other Underwriting Income (Expense)		110			—			176			(265	)		21

Underwriting Profit (Loss)	$	11,432		$	(5,645	)	$	4,383		$	—		$	10,170

Net Investment Income											21,448			21,448
Total Net Realized and Unrealized Losses											(44	)		(44	)
Interest Expense											(3,861	)		(3,861	)
Other Income											1,047			1,047
Income (Loss) Before Income Taxes	$	11,432		$	(5,645	)	$	4,383		$	18,590		$	28,760
Income Tax Expense											(7,650	)		(7,650	)
Net Income													$	21,110

Losses and LAE Ratio		60.3	%		60.3	%		52.8	%					59.3	%
Commission Expense Ratio		12.4	%		22.9	%		22.3	%					16.7	%
Other Operating Expense Ratio ⁽²⁾		20.3	%		23.5	%		13.4	%					20.4	%
Combined Ratio		93.0	%		106.7	%		88.5	%					96.4	%

(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 March 31, 2018												Three Months Ended March 31, 2017
amounts in thousands	Marine			P&C			Professional Liability			Total			Marine			P&C			Professional Liability			Total			% Change Total
Gross Written Premiums	$	41,724		$	168,193		$	30,011		$	239,928		$	40,950		$	170,634		$	26,021		$	237,605			1.0	%
Ceded Written Premiums		(17,480	)		(44,912	)		(4,189	)		(66,581	)		(17,520	)		(38,198	)		(5,769	)		(61,487	)		8.3	%
Net Written Premiums		24,244			123,281			25,822			173,347			23,430			132,436			20,252			176,118			(1.6	%)

Net Earned Premiums	$	21,092		$	127,590		$	24,231		$	172,913		$	22,694		$	119,123		$	22,187		$	164,004			5.4	%
Net Losses and LAE		(15,752	)		(80,918	)		(13,752	)		(110,422	)		(13,775	)		(71,749	)		(13,302	)		(98,826	)		11.7	%
Commission Expenses		(1,408	)		(15,167	)		(4,286	)		(20,861	)		(1,472	)		(15,366	)		(3,546	)		(20,384	)		2.3	%
Other Operating Expenses		(6,275	)		(25,624	)		(5,092	)		(36,991	)		(6,821	)		(21,814	)		(4,837	)		(33,472	)		10.5	%
Other Underwriting Income		77			15			6			98			83			18			9			110			(10.9	%)

Underwriting Profit (Loss)	$	(2,266	)	$	5,896		$	1,107		$	4,737		$	709		$	10,212		$	511		$	11,432			(58.6	%)

Losses and LAE Ratio		74.7	%		63.4	%		56.8	%		63.9	%		60.7	%		60.2	%		60.0	%		60.3	%
Commission Expense Ratio		6.7	%		11.9	%		17.7	%		12.1	%		6.5	%		12.9	%		16.0	%		12.4	%
Other Operating Expense Ratio ⁽¹⁾		29.3	%		20.1	%		20.9	%		21.3	%		29.7	%		18.3	%		21.7	%		20.3	%
Combined Ratio		110.7	%		95.4	%		95.4	%		97.3	%		96.9	%		91.4	%		97.7	%		93.0	%

(1) - Includes Other Operating Expenses and Other Underwriting Income.
NM – Percentage change not meaningful


THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Reportable Segment Results
(Unaudited)


	Int'l Insurance
	Three Months Ended March 31, 2018												Three Months Ended March 31, 2017
																									%
							Professional												Professional						Change
amounts in thousands	Marine			P&C			Liability			Total			Marine			P&C			Liability			Total			Total
Gross Written Premiums	$	56,478		$	33,960		$	37,434		$	127,872		$	68,833		$	40,368		$	32,659		$	141,860			(9.9	%)
Ceded Written Premiums		(8,054	)		(13,667	)		(7,167	)		(28,888	)		(10,926	)		(29,646	)		(6,021	)		(46,593	)		(38.0	%)
Net Written Premiums		48,424			20,293			30,267			98,984			57,907			10,722			26,638			95,267			3.9	%

Net Earned Premiums	$	39,279		$	21,769		$	32,162		$	93,210		$	37,495		$	22,180		$	24,411		$	84,086			10.9	%
Net Losses and LAE		(20,446	)		(9,223	)		(16,174	)		(45,843	)		(20,601	)		(15,869	)		(14,235	)		(50,705	)		(9.6	%)
Commission Expenses		(9,730	)		(2,565	)		(7,461	)		(19,756	)		(9,541	)		(3,742	)		(5,950	)		(19,233	)		2.7	%
Other Operating Expenses		(6,810	)		(7,679	)		(6,041	)		(20,530	)		(8,440	)		(6,423	)		(4,930	)		(19,793	)		3.7	%

Underwriting Profit (Loss)	$	2,293		$	2,302		$	2,486		$	7,081		$	(1,087	)	$	(3,854	)	$	(704	)	$	(5,645	)	NM

Losses and LAE Ratio		52.1	%		42.4	%		50.3	%		49.2	%		54.9	%		71.5	%		58.3	%		60.3	%
Commission Expense Ratio		24.8	%		11.8	%		23.2	%		21.2	%		25.4	%		16.9	%		24.4	%		22.9	%
Other Operating Expense Ratio		17.3	%		35.2	%		18.8	%		22.0	%		22.6	%		29.0	%		20.2	%		23.5	%
Combined Ratio		94.2	%		89.4	%		92.3	%		92.4	%		102.9	%		117.4	%		102.9	%		106.7	%

NM – Percentage change not meaningful


THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Incurred Loss Activity
(Unaudited)

	For the Three Months Ended March 31,
amounts in thousands	Amounts						Loss Ratio
Net Incurred Loss Activity	2018			2017			2018			2017
U.S. Insurance:
Loss and LAE Payments	$	87,551		$	69,771			50.7	%		42.5	%
Change in Reserves		22,871			29,055			13.2	%		17.8	%
Net Incurred Loss and LAE	$	110,422		$	98,826			63.9	%		60.3	%

Int'l Insurance:
Loss and LAE Payments	$	48,243		$	44,908			51.8	%		53.4	%
Change in Reserves		(2,400	)		5,797			(2.6	%)		6.9	%
Net Incurred Loss and LAE	$	45,843		$	50,705			49.2	%		60.3	%

GlobalRe:
Loss and LAE Payments	$	29,273		$	28,330			51.8	%		74.5	%
Change in Reserves		607			(8,261	)		1.1	%		(21.7	%)
Net Incurred Loss and LAE	$	29,880		$	20,069			52.9	%		52.8	%

Total
Loss and LAE Payments	$	165,066		$	143,009			51.2	%		50.0	%
Change in Reserves		21,078			26,591			6.5	%		9.3	%
Net Incurred Loss and LAE	$	186,145		$	169,600			57.7	%		59.3	%


	For the Three Months Ended March 31,
Impact of Prior Years Reserves	Amounts						Loss Ratio Impact
Favorable / (Unfavorable) Development	2018			2017			2018			2017
U.S. Insurance	$	(4,813	)	$	472			(1.5	%)		0.2	%
Int'l Insurance		2,483			(6,616	)		0.8	%		(2.4	%)
GlobalRe		364			(941	)		0.1	%		(0.3	%)
Total	$	(1,966	)	$	(7,085	)		(0.6	%)		(2.5	%)


THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data
(Unaudited)

	As of March 31, 2018
amounts in thousands	Case		IBNR
Net Loss Reserves:	Reserves		Reserves		Total
U.S. Insurance:
Marine	$	55,621	$	51,317	$	106,938
P&C		190,414		716,879		907,293
Professional Liability		30,736		87,492		118,228
Total U.S. Insurance	$	276,771	$	855,688	$	1,132,459
Int'l Insurance:
Marine	$	179,931	$	35,943	$	215,874
P&C		61,417		35,678		97,095
Professional Liability		37,884		94,682		132,566
Total Int'l Insurance	$	279,232	$	166,303	$	445,535

GlobalRe	$	62,695	$	90,750	$	153,445

Total Net Loss Reserves	$	618,698	$	1,112,741	$	1,731,439


	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 March 31, 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 3.5 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 March 31, 2018:


	As of March 31, 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	$	357,303	$	1,192	$	(4,082	)	$	360,193
States, Municipalities and Political Subdivisions		721,232		11,912		(4,554	)		713,874
Mortgage-Backed and Asset-Backed Securities:
Agency Mortgage-Backed Securities		379,354		1,389		(13,466	)		391,431
Residential Mortgage Obligations		63,430		499		(266	)		63,197
Asset-Backed Securities		369,337		1,361		(1,701	)		369,677
Commercial Mortgage-Backed Securities		161,391		1,088		(2,051	)		162,354
Subtotal	$	973,512	$	4,337	$	(17,484	)	$	986,659
Corporate Exposures ⁽¹⁾		918,887		6,140		(14,019	)		926,766
Total Fixed Maturities	$	2,970,934	$	23,581	$	(40,139	)	$	2,987,492
Short-Term Investments		6,704		—		(3	)		6,707
Total Available-For-Sale Investments	$	2,977,638	$	23,581	$	(40,142	)	$	2,994,199

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

Navigators Reports First Quarter 2018 Earnings

Net Income up 46.3% and Record Quarterly Operating Earnings