Navigators Reports Second Quarter Earnings

The Navigators Group, Inc. (NASDAQ:NAVG) reported net income of $19.0 million, or $1.16 per diluted share, for the three months ended June 30, 2010 compared to net income of $23.7 million, or $1.39 per diluted share, for the comparable period in 2009. Operating earnings ⁽¹⁾ were $11.9 million, or $0.73 per diluted share for the second quarter of 2010 compared to $22.3 million, or $1.31 per diluted share, for the comparable period in 2009.

For the six months ended June 30, 2010, the Company reported net income of $36.0 million, or $2.16 per diluted share, compared to $35.7 million, or $2.10 per diluted share, for the comparable period in 2009. Operating earnings were $25.0 million, or $1.50 per diluted share for the six months ended June 30, 2010 compared to $42.5 million, or $2.50 per diluted share, for the comparable period of 2009.

Gross written premiums and net written premiums for the three months ended June 30, 2010 were $253.6 million and $165.0 million, respectively, a decrease of 7.0% and 9.8% from the comparable 2009 periods. Gross written premiums and net written premiums for the six months ended June 30, 2010 were $523.7 million and $354.3 million, respectively, a decrease of 4.4% and 7.6% from the comparable 2009 periods. During the second quarter of 2010, Navigators recorded $7.9 million of reinstatement costs related to large loss events, primarily the April 2010 Deepwater Horizon loss event in the Gulf of Mexico, which reduced net written and net earned premiums.

The combined loss and expense ratio for the three and six months ended June 30, 2010 were 99.7% and 99.4%, respectively, compared to 92.9% and 92.8% for the comparable 2009 periods. The combined loss and expense ratio for the three months ended June 30, 2010 was favorably impacted by 3.3 loss ratio points due to favorable development in prior period loss reserves. The combined loss and expense ratio for the six months ended June 30, 2010 was favorably impacted by 2.0 loss ratio points due to favorable development in prior period loss reserves.

Navigators' Chief Executive Officer Stan Galanski commented, "Despite challenging economic and competitive conditions, we were able to produce an underwriting profit and grow book value per share to a record high of $51.48. We continue to emphasize underwriting quality and pricing discipline, coupled with conservative investment and capital management. From an underwriting standpoint, while written premium was down, we are pleased with the continued development of our recent underwriting initiatives. While most product lines continue to experience low single digit rate reductions, we are encouraged by improved trading conditions in the offshore energy market and in marine and energy liability. From a financial standpoint, we sold virtually all of our general obligation municipal bonds during the quarter, realizing $10.4 million of investment gains, which we believe strengthens the quality of our overall investment portfolio."

During the three and six months ended June 30, 2010, the Company repurchased 558,003 and 1,131,603 shares of its common stock for an aggregate purchase price of $22.5 million and $46.2 million, respectively, pursuant to its share repurchase program. The Company repurchased an additional 62,114 shares of its common stock for an aggregate purchase price of $2.6 million from July 1, 2010 through August 3, 2010 pursuant to its share repurchase program.

Net investment income for the three and six months ended June 30, 2010 was $17.9 million and $35.8 million, respectively, which were decreases of 4.3% and 4.2% from the comparable 2009 periods. The annualized pre-tax investment yield, excluding net realized gains and losses and net other-than-temporary impairment losses recognized in earnings, was 3.6% and 3.5% for the three and six months ended June 30, 2010, respectively, compared to 3.8% and 3.9% for the comparable 2009 periods. The effective tax rate on net investment income was 27.2% and 25.9% for the three and six months ended June 30, 2010, respectively, compared to 25.2% and 25.1% for the comparable 2009 periods.

The Company’s investment portfolio mainly consists of fixed income securities with an average quality rating of "AA/Aa” as defined by Standard & Poor’s and Moody’s, respectively, and an average effective duration of 4.0 years at June 30, 2010. At June 30, 2010, net unrealized gains within our investment portfolio were $75.5 million, an increase of $21.6 million compared to December 31, 2009. There were $11.0 million and $17.1 million of net realized gains for the three and six months ended June 30, 2010.

In April 2009, the Company repurchased $10.0 million aggregate principal amount of its issued and outstanding 7% Senior notes from an unaffiliated noteholder on the open market for $7.0 million, which generated a $2.9 million pre-tax gain that is reflected in Other income (loss) and added $0.11 to the second quarter 2009 earnings per share.

Consolidated cash flow from operations for the three and six months ended June 30, 2010 was $60.2 million and $64.4 million, respectively, compared to $26.6 million and $69.5 million for the comparable 2009 period.

Stockholders’ equity was $814.7 million, or $51.48 per share, at June 30, 2010 compared to $801.5 million, or $47.58 per share, at December 31, 2009. The statutory surplus of Navigators Insurance Company was $654.8 million at June 30, 2010 compared to $645.8 million at December 31, 2009.

(1) Operating earnings, or net income excluding after-tax net realized gains (losses) and net other-than-temporary impairment losses recognized in earnings, is a non-GAAP financial measure that is a common performance measurement for insurance companies. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business.

The Company will hold a conference call on Thursday, August 5, 2010 starting at 8:30 a.m. ET to discuss the 2010 second quarter results. The call will be available via live webcast on Navigators’ website (www.navg.com) by clicking on the Earnings Webcast link under "News & Events".

To participate by telephone, the domestic dial-in number is (888) 713-4211 and the international dial-in is (617) 213-4864. The access code is 35424449. Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=PBAANTWE8. Pre-registrants will be issued a pin number to use when dialing into the live call that will provide quick access by bypassing the operator upon connection.

The Navigators Group, Inc. is an international specialty insurance holding company with insurance company operations, underwriting management companies, and operations at Lloyd’s of London. Headquartered in New York, Navigators has offices in major insurance centers in the United States, the United Kingdom and Continental Europe.

This press release may contain "forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Whenever used in this release, the words "estimate”, "expect”, "believe” or similar expressions are intended to identify such forward-looking statements. Forward-looking statements are derived from information that we currently have and assumptions that we make. We cannot assure that results that we anticipate will be achieved, since results may differ materially because of known and unknown risks and uncertainties that we face. Please refer to Navigators’ most recent reports on Forms 10-K and 10-Q and its other filings with the Securities and Exchange Commission for a description of Navigators’ business and the important factors that may affect that business. Navigators undertakes no obligation to publicly update or revise any forward-looking statement.

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Financial Highlights
($ in thousands, except per share data)
(unaudited)
				Three Months Ended													Six Months Ended
				June 30,													June 30,
Results of Operations				2010					2009				Change				2010					2009					Change
Gross written premiums				$	253,568				$	272,729			-7	%			$	523,713				$	547,988				-4	%
Net written premiums					165,005					183,007			-10	%				354,322					383,659				-8	%
Revenues:
	Net earned premiums				161,471					169,868			-5	%				325,540					334,814				-3	%
	Investment income				17,853					18,656			-4	%				35,825					37,399				-4	%
	Total other-than-temporary impairment losses				(489	)				(1,876	)		-74	%				(740	)				(28,747	)			-97	%
	Portion of loss recognized in other comprehensive
	income (before tax)				334					1,407			-76	%				504					17,578				-97	%
	Net other-than-temporary impairment losses
	recognized in earnings				(155	)				(469	)		-67	%				(236	)				(11,169	)			-98	%
	Net realized gains				11,020					2,596			325	%				17,133					1,059				NM
	Other income (expense)				(899	)				5,302			NM					171					5,445				NM
	Total revenues				189,290					195,953			-3	%				378,433					367,548				3	%
Expenses:
	Net losses and loss adjustment expenses				99,863					100,728			-1	%				203,670					200,975				1	%
	Commission expenses				25,677					26,278			-2	%				50,993					48,726				5	%
	Other operating expenses				34,513					33,019			5	%				69,099					63,554				9	%
	Interest expense				2,044					2,150			-5	%				4,088					4,369				-6	%
	Total expenses				162,097					162,175			0	%				327,850					317,624				3	%
Income before income taxes					27,193					33,778			-19	%				50,583					49,924				1	%
Income tax expense					8,223					10,128			-19	%				14,568					14,274				2	%
Net income				$	18,970				$	23,650			-20	%			$	36,015				$	35,650				1	%
Per Share Data
Net income per common share:
	Basic			$	1.18				$	1.40			-16	%			$	2.20				$	2.11				4	%
	Diluted			$	1.16				$	1.39			-17	%			$	2.16				$	2.10				3	%
Average shares outstanding:
	Basic				16,100					16,938								16,369					16,910
	Diluted				16,422					16,993								16,686					17,010
Underwriting Ratios
Loss Ratio					61.8	%				59.3	%							62.6	%				60.0	%
Expense Ratio					37.9	%				33.6	%							36.8	%				32.8	%
Combined Ratio					99.7	%				92.9	%							99.4	%				92.8	%
Balance Sheet Data				June 30,					Mar. 31,								June 30,					Dec. 31,
				2010					2010								2010					2009
Stockholders' equity				$	814,743				$	810,044			1	%			$	814,743				$	801,519				2	%
Book value per share				$	51.48				$	49.47			4	%			$	51.48				$	47.58				8	%

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands, except share data)
				June 30,				December 31,
				2010				2009
				(unaudited)
		ASSETS
Investments and cash:
	Fixed maturities, available-for-sale, at fair value
	(amortized cost: 2010, $1,795,021; 2009, $1,777,983)			$	1,860,628			$	1,816,669
	Equity securities, available-for-sale, at fair value (cost: 2010, $62,975; 2009, $47,376)				72,862				62,610
	Short-term investments, at cost which approximates fair value				164,827				176,799
	Cash				11,941				509
		Total investments and cash			2,110,258				2,056,587
	Premiums receivable				221,166				193,460
	Prepaid reinsurance premiums				161,356				162,344
	Reinsurance recoverable on paid losses				52,593				76,505
	Reinsurance recoverable on unpaid losses and loss adjustment expenses				800,378				807,352
	Deferred policy acquisition costs				61,929				56,575
	Accrued investment income				15,337				17,438
	Goodwill and other intangible assets				6,717				7,057
	Current income tax receivable, net				12,517				4,854
	Deferred income tax, net				11,221				31,222
	Other assets				26,783				40,600
		Total assets		$	3,480,255			$	3,453,994
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
	Reserves for losses and loss adjustment expenses			$	1,919,352			$	1,920,286
	Unearned premiums				501,172				475,171
	Reinsurance balances payable				93,723				98,555
	Senior notes				114,073				114,010
	Accounts payable and other liabilities				37,192				44,453
		Total liabilities			2,665,512				2,652,475
Stockholders' equity:
	Preferred stock, $.10 par value, authorized 1,000,000 shares, none issued				-				-
	Common stock, $.10 par value, authorized 50,000,000 shares, issued 17,237,242 shares for 2010 and 17,212,814 shares for 2009			1,724				1,721
	Additional paid-in capital				308,549				304,505
	Retained earnings				505,949				469,934
	Treasury stock, at cost (1,411,845 for 2010 and 366,330 shares for 2009)				(59,788	)			(18,296	)
	Accumulated other comprehensive income				58,309				43,655
		Total stockholders' equity			814,743				801,519
		Total liabilities and stockholders' equity		$	3,480,255			$	3,453,994

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Comparative Premium Data
($ in thousands)
Gross Written Premiums:			Three Months												Six Months
Insurance Companies:			2010				2009				Change				2010				2009				Change
Marine			$	55,204			$	57,086			-3	%			$	122,730			$	134,323			-9	%
Property Casualty				81,797				94,567			-14	%				161,143				178,825			-10	%
Professional Liability				33,640				37,732			-11	%				64,606				68,220			-5	%
				170,641				189,385			-10	%				348,479				381,368			-9	%
Lloyd's Operations:
Marine				41,829				47,273			-12	%				100,970				106,296			-5	%
Property Casualty				29,122				25,506			14	%				49,081				39,034			26	%
Professional Liability				11,976				10,565			13	%				25,183				21,290			18	%
				82,927				83,344			-1	%				175,234				166,620			5	%
Total			$	253,568			$	272,729			-7	%			$	523,713			$	547,988			-4	%
Net Written Premiums:			Three Months												Six Months
Insurance Companies:			2010				2009				Change				2010				2009				Change
Marine			$	37,153			$	34,956			6	%			$	88,156				93,415			-6	%
Property Casualty				54,300				65,704			-17	%				103,997				125,680			-17	%
Professional Liability				19,948				21,699			-8	%				40,588				40,346			1	%
				111,401				122,359			-9	%				232,741				259,441			-10	%
Lloyd's Operations:
Marine				34,421				40,077			-14	%				84,063				90,051			-7	%
Property Casualty				13,924				15,070			-8	%				25,635				22,665			13	%
Professional Liability				5,259				5,501			-4	%				11,883				11,502			3	%
				53,604				60,648			-12	%				121,581				124,218			-2	%
Total			$	165,005			$	183,007			-10	%			$	354,322			$	383,659			-8	%
Net Earned Premiums:			Three Months												Six Months
Insurance Companies:			2010				2009				Change				2010				2009				Change
Marine			$	40,554			$	34,678			17	%			$	81,648				71,839			14	%
Property Casualty				50,171				63,068			-20	%				101,252				128,480			-21	%
Professional Liability				19,700				18,477			7	%				38,736				36,194			7	%
				110,425				116,223			-5	%				221,636				236,513			-6	%
Lloyd's Operations:
Marine				34,727				37,038			-6	%				70,287				68,213			3	%
Property Casualty				10,763				11,201			-4	%				22,678				19,124			19	%
Professional Liability				5,556				5,406			3	%				10,939				10,964			0	%
				51,046				53,645			-5	%				103,904				98,301			6	%
Total			$	161,471			$	169,868			-5	%			$	325,540			$	334,814			-3	%

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Three Months Ended
June 30, 2010
($ in thousands)
			Insurance				Lloyd's
			Companies				Operations				Corporate				Total
Gross written premiums			$	170,641			$	82,927			$	-			$	253,568
Net written premiums				111,401				53,604				-				165,005
Net earned premiums				110,425				51,046				-				161,471
Net losses and loss adjustment expenses				(64,862	)			(35,001	)			-				(99,863	)
Commission expenses				(14,615	)			(11,402	)			340				(25,677	)
Other operating expenses				(25,907	)			(8,617	)			-				(34,524	)
Other income (expense)				(114	)			(434	)			(340	)			(888	)
Underwriting profit (loss)				4,927				(4,408	)			-				519
Investment income				15,556				2,128				169				17,853
Net realized gains (losses)				10,729				19				117				10,865
Other operating expenses				-				-				11				11
Other income (expense)				-				-				(11	)			(11	)
Interest expense				-				-				(2,044	)			(2,044	)
Income (loss) before income tax
expense (benefit)				31,212				(2,261	)			(1,758	)			27,193
Income tax expense (benefit)				9,654				(815	)			(616	)			8,223
Net income (loss)			$	21,558			$	(1,446	)		$	(1,142	)		$	18,970
Loss and loss expenses ratio				58.7	%			68.6	%							61.8	%
Commission expense ratio				13.2	%			22.3	%							15.9	%
Other operating expenses ratio (1)				23.6	%			17.7	%							22.0	%
Combined ratio				95.5	%			108.6	%							99.7	%
(1) The Other operating expenses ratio includes Other income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Three Months Ended
June 30, 2009
($ in thousands)
			Insurance				Lloyd's
			Companies				Operations				Corporate				Total
Gross written premiums			$	189,385			$	83,344			$	-			$	272,729
Net written premiums				122,359				60,648				-				183,007
Net earned premiums				116,223				53,645				-				169,868
Net losses and loss adjustment expenses				(68,843	)			(31,885	)			-				(100,728	)
Commission expenses				(15,060	)			(11,218	)			-				(26,278	)
Other operating expenses				(26,906	)			(6,117	)			4				(33,019	)
Other income (expense)				1,655				651				(4	)			2,302
Underwriting profit				7,069				5,076				-				12,145
Investment income				16,239				2,316				101				18,656
Net realized gains (losses)				2,210				(83	)			-				2,127
Other income (expense)				-				-				3,000				3,000
Interest expense				-				-				(2,150	)			(2,150	)
Income (loss) before income tax
expense (benefit)				25,518				7,309				951				33,778
Income tax expense (benefit)				7,171				2,624				333				10,128
Net income (loss)			$	18,347			$	4,685			$	618			$	23,650
Loss and loss expenses ratio				59.2	%			59.4	%							59.3	%
Commission expense ratio				13.0	%			20.9	%							15.5	%
Other operating expenses ratio (1)				21.7	%			10.2	%							18.1	%
Combined ratio				93.9	%			90.5	%							92.9	%
(1) The Other operating expenses ratio includes Other income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Six Months Ended
June 30, 2010
($ in thousands)
			Insurance				Lloyd's
			Companies				Operations				Corporate				Total
Gross written premiums			$	348,479			$	175,234			$	-			$	523,713
Net written premiums				232,741				121,581				-				354,322
Net earned premiums				221,636				103,904				-				325,540
Net losses and loss adjustment expenses				(133,265	)			(70,405	)			-				(203,670	)
Commission expenses				(28,977	)			(22,368	)			352				(50,993	)
Other operating expenses				(53,260	)			(15,860	)			-				(69,120	)
Other income (expense)				(1,091	)			1,635				(352	)			192
Underwriting profit (loss)				5,043				(3,094	)			-				1,949
Investment income				31,304				4,197				324				35,825
Net realized gains (losses)				15,934				732				231				16,897
Other operating expenses				-				-				21				21
Other income (expense)				-				-				(21	)			(21	)
Interest expense				-				-				(4,088	)			(4,088	)
Income (loss) before income tax
expense (benefit)				52,281				1,835				(3,533	)			50,583
Income tax expense (benefit)				15,117				688				(1,237	)			14,568
Net income (loss)			$	37,164			$	1,147			$	(2,296	)		$	36,015
Loss and loss expenses ratio				60.1	%			67.8	%							62.6	%
Commission expense ratio				13.1	%			21.5	%							15.7	%
Other operating expenses ratio (1)				24.5	%			13.7	%							21.1	%
Combined ratio				97.7	%			103.0	%							99.4	%
(1) The Other operating expenses ratio includes Other income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Six Months Ended
June 30, 2009
($ in thousands)
			Insurance				Lloyd's
			Companies				Operations				Corporate				Total
Gross written premiums			$	381,368			$	166,620			$	-			$	547,988
Net written premiums				259,441				124,218				-				383,659
Net earned premiums				236,513				98,301				-				334,814
Net losses and loss adjustment expenses				(138,996	)			(61,979	)			-				(200,975	)
Commission expenses				(30,028	)			(18,698	)			-				(48,726	)
Other operating expenses				(51,466	)			(12,098	)			10				(63,554	)
Other income (expense)				1,856				599				(10	)			2,445
Underwriting profit				17,879				6,125				-				24,004
Investment income				32,446				4,699				254				37,399
Net realized gains (losses)				(6,697	)			(3,413	)			-				(10,110	)
Other income (expense)				-				-				3,000				3,000
Interest expense				-				-				(4,369	)			(4,369	)
Income (loss) before income tax
expense (benefit)				43,628				7,411				(1,115	)			49,924
Income tax expense (benefit)				11,704				2,960				(390	)			14,274
Net income (loss)			$	31,924			$	4,451			$	(725	)		$	35,650
Loss and loss expenses ratio				58.8	%			63.0	%							60.0	%
Commission expense ratio				12.7	%			19.0	%							14.6	%
Other operating expenses ratio (1)				21.0	%			11.7	%							18.2	%
Combined ratio				92.5	%			93.7	%							92.8	%
(1) The Other operating expenses ratio includes other income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results
($ in thousands)
			Three Months Ended June 30, 2010
			Net				Losses
			Earned				and LAE					Underwriting				Underwriting					Combined Ratio
Insurance Companies:			Premiums				Incurred					Expenses				Gain(Loss)					Loss				Expense				Total
Marine			$	40,554			$	25,521				$	14,171			$	862				62.9	%			35.0	%			97.9	%
Property Casualty				50,171				24,936					19,192				6,043				49.7	%			38.3	%			88.0	%
Professional Liability				19,700				14,405					7,273				(1,978	)			73.1	%			36.9	%			110.0	%
				110,425				64,862					40,636				4,927				58.7	%			36.8	%			95.5	%
Lloyd's Operations				51,046				35,001					20,453				(4,408	)			68.6	%			40.0	%			108.6	%
Total			$	161,471			$	99,863				$	61,089			$	519				61.8	%			37.9	%			99.7	%
			Three Months Ended June 30, 2009
			Net				Losses
			Earned				and LAE					Underwriting				Underwriting					Combined Ratio
Insurance Companies:			Premiums				Incurred					Expenses				Gain(Loss)					Loss				Expense				Total
Marine			$	34,678			$	25,238				$	10,572			$	(1,132	)			72.8	%			30.5	%			103.3	%
Property Casualty				63,068				28,446					23,559				11,063				45.1	%			37.4	%			82.5	%
Professional Liability				18,477				15,159					6,180				(2,862	)			82.0	%			33.4	%			115.4	%
				116,223				68,843					40,311				7,069				59.2	%			34.7	%			93.9	%
Lloyd's Operations				53,645				31,885					16,684				5,076				59.4	%			31.1	%			90.5	%
Total			$	169,868			$	100,728				$	56,995			$	12,145				59.3	%			33.6	%			92.9	%

			Amounts									Loss Ratio
Net Incurred Loss Activity			June 30,					June 30,				June 30,				June 30,
For the Three Months Ended:			2010					2009				2010				2009
Insurance Companies:
Loss and LAE payments			$	68,098				$	53,262			61.7	%			45.8	%
Change in reserves				(3,236	)				15,581			-3.0	%			13.4	%
Net incurred loss and LAE				64,862					68,843			58.7	%			59.2	%
Lloyd's Operations:
Loss and LAE payments				30,637					8,491			60.0	%			15.8	%
Change in reserves				4,364					23,394			8.6	%			43.6	%
Net incurred loss and LAE				35,001					31,885			68.6	%			59.4	%
Total
Loss and LAE payments				98,735					61,753			61.1	%			36.4	%
Change in reserves				1,128					38,975			0.7	%			22.9	%
Net incurred loss and LAE			$	99,863				$	100,728			61.8	%			59.3	%
Impact of Prior Years Reserves			Amounts									Loss Ratio Impact
Favorable / (Unfavorable) Development			June 30,					June 30,				June 30,				June 30,
For the Three Months Ended:			2010					2009				2010				2009
Insurance Companies			$	4,844				$	4,890			4.4	%			4.2	%
Lloyd's Operations				406					4,588			0.8	%			8.6	%
Total			$	5,250				$	9,478			3.3	%			5.6	%

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results
($ in thousands)
			Six Months Ended June 30, 2010
			Net				Losses
			Earned				and LAE					Underwriting				Underwriting					Combined Ratio
Insurance Companies:			Premiums				Incurred					Expenses				Gain(Loss)					Loss				Expense				Total
Marine			$	81,648			$	51,654				$	29,099			$	895				63.3	%			35.6	%			98.9	%
Property Casualty				101,252				57,062					39,508				4,682				56.4	%			39.0	%			95.4	%
Professional Liability				38,736				24,549					14,721				(534	)			63.4	%			38.0	%			101.4	%
				221,636				133,265					83,328				5,043				60.1	%			37.6	%			97.7	%
Lloyd's Operations				103,904				70,405					36,593				(3,094	)			67.8	%			35.2	%			103.0	%
Total			$	325,540			$	203,670				$	119,921			$	1,949				62.6	%			36.8	%			99.4	%
			Six Months Ended June 30, 2009
			Net				Losses
			Earned				and LAE					Underwriting				Underwriting					Combined Ratio
Insurance Companies:			Premiums				Incurred					Expenses				Gain(Loss)					Loss				Expense				Total
Marine			$	71,839			$	51,628				$	22,194			$	(1,983	)			71.9	%			30.9	%			102.8	%
Property Casualty				128,480				56,450					44,312				27,718				43.9	%			34.5	%			78.4	%
Professional Liability				36,194				30,918					13,132				(7,856	)			85.4	%			36.3	%			121.7	%
				236,513				138,996					79,638				17,879				58.8	%			33.7	%			92.5	%
Lloyd's Operations				98,301				61,979					30,197				6,125				63.0	%			30.7	%			93.7	%
Total			$	334,814			$	200,975				$	109,835			$	24,004				60.0	%			32.8	%			92.8	%

			Amounts									Loss Ratio
Net Incurred Loss Activity			June 30,					June 30,				June 30,				June 30,
For the Six Months Ended:			2010					2009				2010				2009
Insurance Companies:
Loss and LAE payments			$	140,771				$	102,066			63.5	%			43.2	%
Change in reserves				(7,506	)				36,930			-3.4	%			15.6	%
Net incurred loss and LAE				133,265					138,996			60.1	%			58.8	%
Lloyd's Operations:
Loss and LAE payments				56,859					31,613			54.8	%			32.1	%
Change in reserves				13,546					30,366			13.0	%			30.9	%
Net incurred loss and LAE				70,405					61,979			67.8	%			63.0	%
Total
Loss and LAE payments				197,630					133,679			60.7	%			39.9	%
Change in reserves				6,040					67,296			1.9	%			20.1	%
Net incurred loss and LAE			$	203,670				$	200,975			62.6	%			60.0	%
Impact of Prior Years Reserves			Amounts									Loss Ratio Impact
Favorable / (Unfavorable) Development			June 30,					June 30,				June 30,				June 30,
For the Six Months Ended:			2010					2009				2010				2009
Insurance Companies			$	5,497				$	10,022			2.5	%			4.2	%
Lloyd's Operations				999					5,223			1.0	%			5.3	%
Total			$	6,496				$	15,245			2.0	%			4.6	%

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data
($ in thousands)
							Case				IBNR
Net Loss Reserves, June 30, 2010:							Reserves				Reserves				Total
Insurance Companies:
Marine							$	111,760			$	96,925			$	208,685
Property Casualty								145,609				339,370				484,979
Professional Liability								42,193				63,912				106,105
Total Insurance Companies								299,562				500,207				799,769
Lloyd's Operations:
Marine								111,957				107,213				219,170
Property Casualty								25,561				27,293				52,854
Professional Liability								9,913				37,268				47,181
Total Lloyd's Operations								147,431				171,774				319,205
Total Net Loss Reserves							$	446,993			$	671,981			$	1,118,974
							Case				IBNR
Net Loss Reserves, December 31, 2009:							Reserves				Reserves				Total
Insurance Companies:
Marine							$	113,604			$	100,042			$	213,646
Property Casualty								134,427				351,985				486,412
Professional Liability								38,410				68,807				107,217
Total Insurance Companies								286,441				520,834				807,275
Lloyd's Operations:
Marine								107,800				101,851				209,651
Property Casualty								27,148				25,175				52,323
Professional Liability								7,442				36,243				43,685
Total Lloyd's Operations								142,390				163,269				305,659
Total Net Loss Reserves							$	428,831			$	684,103			$	1,112,934

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES Investment Data June 30, 2010 ($ in thousands)
At June 30, 2010, the average quality of the investment portfolio as rated by S&P and Moody's was AA/Aa with an average duration of 4.0 years. The Company does not own any collateralized debt obligations (CDO's), collateralized loan obligations (CLO's) or asset backed commercial paper.
At June 30, 2010, the Company owned two asset-backed securities approximating $0.1 million with subprime mortgage exposures. The securities have an effective maturity of 2.9 years. In addition, the Company owned a total of five collateralized mortgage obligations and asset-backed securities approximating $1.5 million classified as Alt-A which is a credit category between prime and subprime. They have an effective maturity of 5.5 years. Such subprime and Alt-A categories are as defined by S&P. The Company is receiving principal and/or interest payments on all these securities and believes such amounts are fully collectible.
The following table sets forth our cash and investments at June 30, 2010:
						Gross			Gross				Cost or			OTTI
			Fair			Unrealized			Unrealized				Amortized			Recognized
June 30, 2010			Value			Gains			(Losses)				Cost			in OCI
			($ in thousands)
Fixed maturities:
U.S. Government Treasury bonds,
agency bonds and foreign government bonds			$	493,675		$	14,409		$	(2	)		$	479,268		$	-
States, municipalities and political
subdivisions				406,757			17,332			(638	)			390,063			-
Mortgage- and asset-backed securities
Agency mortgage-backed securities				478,083			21,560			-				456,523			-
Residential mortgage obligations				29,727			-			(4,990	)			34,717			(3,852	)
Asset-backed securities				10,845			377			(9	)			10,477			(9	)
Commercial mortgage-backed securities				106,791			4,237			(242	)			102,796			-
Subtotal				625,446			26,174			(5,241	)			604,513			(3,861	)
Corporate bonds				334,750			15,537			(1,964	)			321,177
Total fixed maturities				1,860,628			73,452			(7,845	)			1,795,021			(3,861	)
Equity securities - common stocks				72,862			11,316			(1,429	)			62,975			-
Cash				11,941			-			-				11,941			-
Short-term investments				164,827			-			-				164,827			-
Total			$	2,110,258		$	84,768		$	(9,274	)		$	2,034,764		$	(3,861	)

The Navigators Group, Inc. and Subsidiaries
Investment Data
June 30, 2010
($ in thousands)
The following three tables set forth our agency mortgage-backed securities, residential mortgage obligations, and asset-backed securities by those issued by GNMA, FNMA and FHLMC and the quality category (prime, Alt-A and subprime) for all other such investments at June 30, 2010:
					Gross			Gross				Cost or
		Fair			Unrealized			Unrealized				Amortized
Agency mortgage-backed securities:		Value			Gains			(Losses)				Cost
GNMA		$	254,693		$	7,365		$	-			$	247,328
FNMA			156,380			10,534			-				145,846
FHLMC			67,010			3,661			-				63,349
Total		$	478,083		$	21,560		$	-			$	456,523
					Gross			Gross				Cost or
		Fair			Unrealized			Unrealized				Amortized
Residential mortgage obligations:		Value			Gains			(Losses)				Cost
Prime		$	28,268		$	-		$	(4,674	)		$	32,942
Alt-A			1,459			-			(316	)			1,775
Subprime			-			-			-				-
Total		$	29,727		$	-		$	(4,990	)		$	34,717
					Gross			Gross				Cost or
		Fair			Unrealized			Unrealized				Amortized
Asset-backed securities:		Value			Gains			(Losses)				Cost
Prime		$	10,701		$	377		$	-			$	10,324
Alt-A			-			-			-				-
Subprime			144			-			(9	)			153
Total		$	10,845		$	377		$	(9	)		$	10,477