<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended March 31, 1995
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Commission file number 0-15886
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The Navigators Group, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 13-3138397
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
123 William Street, New York, New York 10038
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(Address of principal executive offices) (Zip Code)
(212) 406-2900
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
---------- ----------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
On May 12, 1995 there were 8,151,401 shares of common stock, $0.10 par value
issued and outstanding.
<PAGE> 2
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. FINANCIAL INFORMATION:
Balance Sheets
March 31, 1995 and December 31, 1994 . . . . . . . . . . . . . . . . . . . 1
Statements of Income
Three Months Ended March 31, 1995 and
Three Months Ended March 31, 1994 . . . . . . . . . . . . . . . . . . . . 2
Statements of Cash Flows
Three Months Ended March 31, 1995 and
Three Months Ended March 31, 1994 . . . . . . . . . . . . . . . . . . . . 3
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . 7
Part II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
<PAGE> 3
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 1995 Dec. 31, 1994
-------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities, available for sale, at fair value (amortized cost: 1995,
$180,008,956; 1994, $174,579,590) $180,526,530 $174,579,590
Equity securities, available for sale, at fair value (cost: 1995,
$4,926,380; 1994, $4,574,115) 6,255,888 5,763,444
Short-term investments, at cost which approximates market 22,156,902 19,643,813
----------- -----------
Sub-total investments 208,939,320 199,986,847
Investment in affiliated company 2,451,911 2,386,258
----------- -----------
Total investments 211,391,231 202,373,105
Cash 2,245,039 730,047
Premiums in course of collection 16,414,349 24,608,943
Commissions receivable 5,576,191 5,126,953
Accrued investment income 2,877,922 2,949,340
Prepaid reinsurance premiums 7,345,598 12,224,772
Reinsurance receivable on paid and unpaid losses
and loss adjustment expenses 187,501,397 199,888,216
Federal income tax recoverable 6,247,519 6,406,340
Deferred federal income tax benefit 11,659,047 13,413,513
Deferred policy acquisition costs 2,547,139 2,910,422
Other assets 2,981,573 3,399,430
----------- -----------
Total assets $456,787,005 $474,031,081
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Reserves for loss and loss adjustment expenses $311,160,073 $314,898,083
Unearned premiums 28,250,354 35,721,013
Reinsurance balances payable 7,008,217 11,002,226
Loans payable to banks 22,250,000 25,500,000
Deferred state & local income taxes 1,238,890 1,221,459
Notes payable to shareholders 2,594,868 2,608,072
Accounts payable and other liabilities 1,075,240 5,556,994
----------- -----------
Total liabilities 373,577,642 396,507,847
----------- -----------
Commitments and contingencies -- --
Stockholders' equity:
Preferred Stock, $.10 par value, authorized
1,000,000 shares, no shares issued -- --
Common Stock, $.10 par value
Authorized 10,000,000 shares
Issued and outstanding 8,151,401 in 1995 and 8,151,401 in 1994 815,140 815,140
Additional paid-in capital 34,983,877 34,983,877
Net unrealized gains (losses) on securities available for sale (net of
income taxes (benefits) of $628,008 in 1995 and $(1,212,296) in 1994) 1,219,074 (2,353,281)
Foreign currency translation adjustment 193,081 105,033
Retained earnings 45,998,191 43,972,465
----------- -----------
Total stockholders' equity 83,209,363 77,523,234
----------- -----------
Total liabilities and stockholders' equity $456,787,005 $474,031,081
=========== ===========
</TABLE>
See accompanying notes to interim consolidated financial statements.
<PAGE> 4
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
March 31
1995 1994
(Unaudited)
<S> <C> <C>
Revenues:
Net premiums earned $17,718,090 $ 24,024,484
Commission income 2,594,170 2,640,717
Net investment income 3,412,370 3,045,425
Net realized capital gains (62,147) 241,829
Other income 217,123 32,975
---------- -----------
Total revenues 23,879,606 29,985,430
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Operating expenses:
Losses and loss adjustment
expenses incurred 13,112,306 46,603,272
Commissions 2,460,155 3,842,029
Other operating expenses 5,514,635 5,067,459
Interest expense 539,923 85,898
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Total operating expenses 21,627,019 55,598,658
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Operating income (loss) before income taxes 2,252,587 (25,613,228)
Income tax expense:
Current 308,329 (6,045,202)
Deferred (81,470) (7,631,974)
----------- -----------
Total income tax expense 226,859 (13,677,176)
Net income (loss) $ 2,025,728 $(11,936,052)
========== ===========
Per share data:
Average common and common equivalent
shares outstanding 8,205,946 8,233,140
Net income (loss) $ 0.25 $ (1.45)
========== ===========
</TABLE>
See accompanying notes to interim consolidated financial statements.
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<PAGE> 5
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31
1995 1994
(Unaudited)
<S> <C> <C>
Operating activities:
Net income $ 2,025,728 $(11,936,052)
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation & amortization 181,901 94,527
Reinsurance receivable on paid
and unpaid losses and loss
adjustment expenses 12,386,819 (71,712,228)
Reserve for losses and loss
adjustment expenses (3,738,010) 109,698,077
Prepaid reinsurance premiums 4,879,174 1,955,648
Unearned premiums (7,470,659) (2,946,690)
Premiums in course of collection 8,194,594 4,062,117
Commissions receivable (449,238) 371,800
Advance to insurance companies -- (1,334,676)
Deferred policy acquisition costs 363,283 398,304
Accrued investment income 71,418 160,426
Reinsurance balances payable (3,994,009) 1,708,554
Deposits with reinsurers -- 907,500
Funds due reinsurers -- 152,760
Federal income taxes recoverable 158,821 (6,296,424)
Deferred federal income taxes (85,838) (7,545,710)
Net realized losses (gains) on investments 62,147 (241,829)
Other (1,980,870) (2,135,780)
----------- -----------
Net cash provided by operating activities $ 10,605,261 $ 15,360,324
----------- -----------
Investing activities:
Fixed maturities available for sale at fair value:
Redemption and maturities $ 411,010 $ 3,675,186
Sales 21,171,214 7,437,592
Purchases (22,479,777) (15,966,580)
Equity securities:
Sales 152,857 2,900,126
Purchases (476,217) (444,142)
Payable for securities purchased (2,028,556) (33,180)
Net sale (purchases) of short-term investments (2,513,089) (2,769,793)
Purchase of property and equipment (64,507) (341,118)
------------ -----------
Net cash used in investing activities $ (5,827,065) $ (5,541,909)
------------ -----------
Financing activities:
Proceeds from bank loans $ 1,000,000 $ 23,000,000
Repayment of bank loans (4,250,000) (4,270,000)
Notes payable to shareholders (13,204) --
Distribution to shareholders -- (6,700,266)
----------- -----------
Net cash provided by financing activities (3,263,204) 12,029,734
----------- -----------
Increase (decrease) in cash 1,514,992 21,848,149
Cash at beginning of period 730,047 2,107,687
----------- -----------
Cash at end of period $ 2,245,039 $ 23,955,836
=========== ===========
</TABLE>
See accompanying notes to interim consolidated financial statements.
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<PAGE> 6
THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Notes to Interim Consolidated Financial Statements
(1) Accounting Policies
The interim financial statements are unaudited but reflect all
adjustments which, in the opinion of management, are necessary to
provide a fair statement of the results of The Navigators Group, Inc.
and its subsidiaries (the "Company") for the interim periods
presented. All such adjustments are of a normal recurring nature.
The results of operations for any interim period are not necessarily
indicative of results for the full year. These financial statements
should be read in conjunction with the financial statements and notes
thereto contained in the Company's Form 10-K for the year ended
December 31, 1994.
(2) Acquisition of the Somerset Companies
On June 30, 1994, the stockholders of the Company approved eight
substantially identical agreements of merger providing for the
acquisition by the Company of eight affiliated underwriting agencies,
Somerset Marine, Inc., Somerset of Georgia, Inc., Somerset Insurance
Services of Texas, Inc., Somerset Insurance Services of California,
Inc., Somerset Insurance Services of Washington, Inc., Somerset
Property, Inc., Somerset Re Management, Inc. and Navigators Management
Corporation, collectively known as the Somerset Companies.
The Company issued 2,875,000 shares of its common stock for all the
outstanding common stock of the Somerset Companies. The mergers were
accounted for under a method of accounting similar to "pooling of
interests." The prior period's financial statements have been
restated to include the historical accounts, results of operations and
cash flows of the Somerset Companies. Included in the restated
financial statements are adjustments to account for the elimination of
intercompany transactions.
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<PAGE> 7
Reconciliations of amounts of total revenues and net income previously reported
by the Company with the combined amounts currently presented in the
accompanying consolidated financial statements are as follows:
<TABLE>
<CAPTION>
Three Months Ended The Navigators Intercompany
March 31, 1994 Group, Inc. Somerset Companies Transactions Consolidated
------------------ -------------- ------------------ ------------ ------------
<S> <C> <C> <C> <C>
Total revenues 27,021,740 7,701,888 (4,738,198) 29,985,430
Net income* (16,139,777) 3,511,468 692,257 (11,936,052)
</TABLE>
_______________
* Somerset Companies' income from operations does not include a provision for
federal income taxes as the companies were S Corporations under federal laws
through June 30, 1994.
(3) Reinsurance Ceded
The Company's ceded earned premiums were $21,039,928 and $29,028,210
for the three months ended March 31, 1995 and 1994, respectively. The
Company's ceded losses were $19,354,793 and $91,161,910 for the three
months ended March 31, 1995 and 1994, respectively.
(4) Northridge Earthquake
On January 17, 1994, an earthquake (the "Northridge Earthquake")
occurred in the vicinity of the Northridge area of Los Angeles,
California. The Company's pre-tax loss in 1994 (including direct
property losses, net of reinsurance, of $35,388,000, reinsurance
reinstatement premiums of $1,925,000 and reinsurance account losses of
$1,952,000) from the Northridge Earthquake totalled $39,265,000.
During the first quarter of 1995, the total gross losses on direct
property claims arising from the Northridge Earthquake increased
$6,070,000 from $125,361,000 million to $131,431,000. The net loss to
the Company from this increase was $2,580,000 in the first quarter of
1995. There can be no assurance given that additional losses will not
be reported or adjustments made to existing reserves.
(5) Notes Payable and Loans
In conjunction with the mergers, the Somerset Companies distributed
$5,280,263 in the form of notes payable to the then existing
shareholders of the Somerset Companies. These notes represent certain
pre-merger income to such shareholders and were interest free through
December 30, 1994. The Company paid $2,672,193 of these notes on
December 30, 1994, and an additional $13,204 on March 15, 1995. As of
March 31, 1995, $2,594,868, remained outstanding.
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<PAGE> 8
On August 5, 1994, the Company entered into a Credit Agreement (the
"Credit Agreement") with three banks. The Credit Agreement provides
for (i) revolving credit loans of up to $5,000,000 through August 5,
1997 (the "Revolving Credit Loans"), (ii) a term loan of $25,000,000,
the principal of which is payable in quarterly installments of
$1,250,000 for the first eight quarters and $3,750,000 for the last
four quarters, with the last installment due on June 30, 1997 (the
"Term Loan"), and (iii) an irrevocable stand-by letter of credit
issued by one of the banks for the benefit of the Society of Lloyd's
in the amount of L.2,585,000 (approximately U.S. $4,185,115 at the
exchange rate as of March 31, 1995) for the account of the Company
(the "Letter of Credit"). The Revolving Credit Loans bear interest at
the prime rate of one of the banks plus .25%. The Term Loan bears
interest, at the election of the Company, at either the prime rate of
one of the banks plus .25% or at LIBOR plus 2.25%. Any amounts drawn
under the Letter of Credit and not repaid initially bear interest at
the prime rate of one of the banks plus .25%. The Revolving Credit
Loans, the Term Loan and the Letter of Credit are currently
collateralized by shares of common stock of the active subsidiaries of
the Company other than NIC Insurance Company. The Credit Agreement
contains covenants common to transactions of this type, including
restrictions on indebtedness and liens, limitations on mergers and the
sale of assets, and maintenance of consolidated total stockholders'
equity, statutory surplus, minimum liquidity and loss reserves. In
addition, the covenants prevent the Company from declaring or paying
dividends during the term of the loans. On September 30, 1994,
December 30, 1994 and March 31, 1995 the Company paid to the Lenders
its first, second and third quarterly installments of $1,250,000 with
respect to the Term Loan. During the first quarter of 1995 the
amounts outstanding under the Revolving Credit Loans were reduced by
the net amount of $2,000,000. As of March 31, 1995, there was
$21,250,000 outstanding under the Term Loan and there was $1,000,000
outstanding under the Revolving Credit Loans.
(6) Commitments and Contingencies
In February 1995, the Insurance Commissioner of the State of
California, in accordance with voter referendum "Proposition 103,"
provided the Company with an initial notification of a rollback of
premium rates. In addition, the Company is a defendant in various
legal actions arising from the normal course of its business.
Management does not believe that the outcome of these actions will
result in a material adverse effect to the Company.
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<PAGE> 9
THE NAVIGATORS GROUP, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
GENERAL
The Company is a holding company with 12 wholly owned
subsidiaries.
Two of the Company's subsidiaries, Navigators Insurance
Company and NIC Insurance Company ("NIC"), specialize principally in
underwriting marine, aviation and property (including inland marine) insurance
and certain lines of specialty reinsurance. Navigators Insurance Company has
been active since 1983. NIC is a wholly owned subsidiary of Navigators, was
licensed in 1989 and began operations during 1990. Navigators Insurance
Company and NIC are collectively referred to herein as "Navigators."
Eight of the Company's subsidiaries, Somerset Marine, Inc.,
Somerset of Georgia, Inc., Somerset Insurance Services of Texas, Inc., Somerset
Insurance Services of California, Inc., Somerset Insurance Services of
Washington, Inc., Somerset Property, Inc., Somerset Re Management, Inc. and
Navigators Management Corporation (collectively, the "Somerset Companies"), are
a group of underwriting management companies which produce, manage and
underwrite insurance and reinsurance for Navigators and nine other unrelated
insurance companies. The other subsidiaries of the Company are Somerset
Casualty Agency, Inc. and Somerset Marine Aviation Property Managers Inc.,
which are both inactive.
The Somerset Companies were acquired by the Company pursuant
to mergers (the "Mergers") that were approved by the stockholders of the
Company at a special meeting held June 30, 1994. The Company accounted for the
transfer of the Somerset Companies' assets and liabilities at historical cost
under a method of accounting similar to "pooling of interests" and,
accordingly, has reported results of operations as if the Company and the
Somerset Companies had been combined as of January 1, 1994. In addition,
financial statements presented from the prior year have been restated to
include the historical accounts of the Somerset Companies.
The Company's revenue is primarily comprised of premiums,
commissions and investment income. Navigators derives substantially all of its
business from direct participation in, or by reinsuring certain members of,
insurance pools managed by the Somerset Companies. The insurance business and
operations of Navigators are managed by one of the Somerset Companies,
Navigators Management Corporation.
The Somerset Companies specialize principally in four lines of
business: marine, aviation and property (including inland
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<PAGE> 10
marine) insurance and certain lines of specialty reinsurance. They underwrite
this business through four syndicates of insurance companies, Navigators having
the largest participation in each of the four syndicates. The Somerset
Companies derive their revenue from commissions, investment income and service
fees from Navigators and other insurers. Commissions are earned both on a
fixed percentage of premiums and on underwriting profits on business placed
with the participating insurance companies within the four syndicates.
Property and casualty insurance premiums are cyclical in nature and,
accordingly, during a "hard market" demand for property and casualty insurance
exceeds supply, or capacity, and as a result, premiums and commissions
increase. On the downturn of the property and casualty cycle, supply exceeds
demand, and as a result, premiums and commissions decrease.
Navigators and the Somerset Companies earn investment income
on cash balances and invested assets. The Somerset Companies also earn
investment income on fiduciary funds. Such fiduciary funds are invested,
subject to applicable insurance regulations, primarily in short-term
instruments.
RESULTS OF OPERATIONS
General. The 1994 results of operations of the Company were
dominated by the Northridge, California earthquake, which occurred on January
17, 1994. The Company's pre-tax loss in 1994 from the Northridge Earthquake
totalled $39,265,000.
As a result of this loss, management has restructured the
Company by withdrawing from the large commercial and industrial property
business which produced most of the earthquake loss, emphasizing its core ocean
marine business, and developing its inland marine business as well as a new
non-marine program book of business.
The results of the first quarter of 1995 reflect this
restructuring in that premiums have been reduced while the continuing book of
business has produced profits.
However, the results also reflect the continued deterioration
of losses from the Northridge Earthquake. During the first quarter of 1995,
the total gross losses on direct property claims arising from the Northridge
Earthquake increased $6,070,000 from $125,361,000 to $131,431,000. The net
loss to the Company from this increase was $2,580,000 in the first quarter of
1995. There can be no assurance given that additional losses will not be
reported or adjustments made to existing reserves.
Revenues. Gross written premium for the first three months of
1995 decreased by 38% to $31,287,000 from $50,118,000 for the first three
months of 1994.
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<PAGE> 11
The following table sets forth Navigators' gross written
premium by line of business and net written premium in the aggregate:
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1995 1994
---- ----
(Dollars in thousands)
--------------------
<S> <C> <C> <C> <C>
Marine $12,957 42% $17,485 35%
Aviation 11,357 36% 9,888 20%
Property and Inland 2,544 8% 15,741 31%
Marine
Reinsurance 4,429 14% 7,004 14%
------ --- ------ --
Total Gross Premium Written $31,287 100% $50,118 100%
====== ==== ====== ====
Ceded Premium Written (16,160) (26,750)
------ ------
Total Net Premium Written 15,127 23,368
====== ======
</TABLE>
Marine Premium. Marine premium decreased 26% when comparing
the first three months of 1995 to the first three months of 1994. Management
believes this decrease is due to the timing of certain policies and does not
reflect the actual condition of its marine business. It anticipates that the
total amount of marine business written in 1995 will be similar to the amount
written in 1994.
Aviation Premium. Aviation premium increased 15% from the
first three months of 1994 to the first three months of 1995 reflecting
continuing increases in airline premium rates. However, the aviation business
has produced underwriting losses and management is currently assessing the
future of Navigators' participation in this line. Among the alternatives being
considered are a sale of the aviation line of business or a substantial
reduction of Navigators' participation in the aviation insurance pool.
Property Premium. Property and Inland Marine premium
decreased 84% from the first three months of 1994 to the first three months of
1995. In 1994, this business consisted primarily of large commercial and
industrial risks with a relatively small amount of inland marine risks. In
late 1994, Navigators decided to cease writing large commercial and industrial
property risks, which is essentially a property catastrophe book of business,
and to concentrate on the inland marine risks and, therefore, 1995 gross written
premium is primarily inland marine.
Reinsurance Premium. Reinsurance premium decreased 37% from
the first three months of 1994 to the first three months
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<PAGE> 12
of 1995. The decrease was due primarily to management's decision to cease
writing proportional reinsurance. Management is now developing non-marine
program business to augment its reinsurance book and anticipates the premium
from this new book of business will begin to appear in the last half of 1995.
Ceded Premium. The decrease in ceded premium corresponds with
the decrease in gross writings along with reinstatement premiums incurred
during the first quarter of 1994 due primarily to the Northridge Earthquake.
Total Premium. Net earned premium for the first three months
of 1995 was $17,718,000 as compared to $24,024,000 for the first three months
of 1994. Net earned premium generally follows the pattern of written premium.
Commission income, based on gross premiums earned and net
underwriting profits, remained substantially level during the first three
months of 1995 at approximately $2,594,000 compared to approximately $2,641,000
during the corresponding period in 1994.
Investment income increased 12% to approximately $3,412,000
during the first three months of 1995 from approximately $3,045,000 during the
corresponding period in 1994. This increase is due primarily to the increased
amount of invested assets.
Included in pre-tax net income were $62,000 in realized
capital losses for the first three months of 1995 and $242,000 in realized
capital gains for the same period last year. On an after tax basis these
represent realized gains of $0 and $0.02 per share for the respective periods.
Expenses. The ratio of loss and loss adjustment expenses
incurred to net premiums earned was 74% and 194% during the first three months
of 1995 and 1994, respectively. The 1994 loss ratio includes the losses, at
that time, from the Northridge Earthquake of $28,625,000. The decrease is due
primarily to a return to more normal experience in comparison to the losses
from the Northridge Earthquake, various airline losses and reinsurance costs in
1994.
Commission expense as a percentage of net premiums earned were
13.9% and 16.0% during the first three months of 1995 and 1994, respectively.
This decrease is reflective of increased reinstatement premium payments to
reinsurers in 1994 as a result of the Northridge Earthquake.
Other operating expenses increased 8.8% to approximately
$5,515,000 during the first three months of 1995 from approximately $5,067,000
during the corresponding period in 1994. This increase is primarily due to
$420,000 of severance
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<PAGE> 13
charges as a result of a reduction in staff in the property division.
Interest expense reflected during the first three months of
1995 is attributable to revolving credit loans and a term loan provided for by
a credit agreement entered into on August 5, 1994. The term loan's principal
was reduced from $22,500,000 at December 31, 1994 to $21,250,000 at March 31,
1995. The revolving credit loans were reduced by $2,000,000 from $3,000,000 at
December 31, 1994 to $1,000,000 at March 31, 1994.
The effective tax rate was a 10.1% expense and a 53.4% benefit
for the three months ended March 31, 1995 and 1994, respectively.
For the first three months of 1995, the Company had after tax
income of $2,026,000 compared to an after tax loss of $11,936,000 for the same
period last year, primarily due to a return to normal experience in comparison
to the losses from the Northridge Earthquake. On a per share basis, this
represents net income of $0.25 and a net loss of $1.45 for the first three
months of 1995 and 1994, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from operations was $10,605,000 and $15,360,000 for
the first three months of 1995 and 1994, respectively.
Investment assets grew at the rate of 4% during the first
three months of 1995 to $211,391,000 at March 31, 1995. Investment income
during the three months was $3,412,000, an increase of 12%, reflecting
increased assets .
The Company has entered into a credit agreement dated as of
August 5, 1994. Pursuant to the credit agreement, the Company may borrow,
subject to certain conditions, up to an aggregate of $5,000,000 in revolving
credit loans. As of March 31, 1995, the Company had outstanding $1,000,000 in
revolving credit loans.
As of March 31, 1995, the Company's consolidated stockholders'
equity was $83,209,000, an increase from $77,523,000 as of December 31, 1994.
As of April 30, 1995, the Company has paid approximately
$77,413,000 of claims related to the Northridge Earthquake, of which
approximately $56,553,000 is subject to indemnification by reinsurers. To date
the Company has experienced no significant difficulties collecting reinsured
losses.
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<PAGE> 14
THE NAVIGATORS GROUP, INC. & SUBSIDIARIES
Part II - Other Information
Item 1. Legal Proceedings:
Neither the Company nor any of its subsidiaries is a party to, nor is
the property thereof the subject of, any pending legal proceedings
which depart from the ordinary routine litigation incident to the kinds
of business conducted by the Company and its subsidiaries or, if such
proceedings constitute other than routine litigation, in which there is
a reasonable possibility of an adverse decision which could have any
material adverse effect upon the financial condition of the Company.
In February 1995, the Insurance Commissioner of the State of
California, in accordance with voter referendum "Proposition 103,"
provided the Company with an initial notification of a rollback of
premium rates. Management does not believe that the outcome of this
action will result in a material adverse effect to the Company.
Item 2. Changes in Securities:
None.
Item 3. Defaults Upon Senior Securities:
None.
Item 4. Submissions of Matters to a Vote of Securities Holders:
None.
Item 5. Other Information:
None.
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
27.1 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed for the three months
ended March 31, 1995.
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<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
The Navigators Group, Inc.
----------------------------------------
(Registrant)
May 12, 1995 /s/ W. ALLEN BARNETT
- ------------------ ----------------------------------------
(Date) W. Allen Barnett, Senior Vice
President, Chief Financial Officer
-13-
<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Numbered
Exhibit No. Description of Exhibit Page
- ----------- ---------------------- ------------
<S> <C>
27.1 Financial Data Schedule
</TABLE>
-14-
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 180,526,530
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 6,255,888
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 211,391,231
<CASH> 2,245,039
<RECOVER-REINSURE> 13,225,338
<DEFERRED-ACQUISITION> 2,547,139
<TOTAL-ASSETS> 456,787,005
<POLICY-LOSSES> 311,160,073
<UNEARNED-PREMIUMS> 28,250,354
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 24,844,868
<COMMON> 815,140
0
0
<OTHER-SE> 82,394,223
<TOTAL-LIABILITY-AND-EQUITY> 456,787,005
17,718,090
<INVESTMENT-INCOME> 3,412,370
<INVESTMENT-GAINS> (62,147)
<OTHER-INCOME> 2,811,293
<BENEFITS> 13,112,306
<UNDERWRITING-AMORTIZATION> 2,460,155
<UNDERWRITING-OTHER> 5,514,635
<INCOME-PRETAX> 2,252,587
<INCOME-TAX> 226,859
<INCOME-CONTINUING> 2,025,728
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,025,728
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.25
<RESERVE-OPEN> 135,377,082
<PROVISION-CURRENT> 10,765,678
<PROVISION-PRIOR> 2,346,627
<PAYMENTS-CURRENT> 268,965
<PAYMENTS-PRIOR> 11,336,410
<RESERVE-CLOSE> 136,884,012
<CUMULATIVE-DEFICIENCY> 2,346,627
</TABLE>
