Friedman, Billings, Ramsey & Co. New York, NY November 30, 2010 The Navigators Group, Inc....
If you can't read please download the document
Friedman, Billings, Ramsey & Co. New York, NY November 30, 2010 The Navigators Group, Inc. “Insuring a World in Motion” Stan Galanski President and CEO
Friedman, Billings, Ramsey & Co. New York, NY November 30,
2010 The Navigators Group, Inc. Insuring a World in Motion Stan
Galanski President and CEO Frank McDonnell Senior Vice President
& CFO
Slide 2
2 This presentation contains forward-looking statements that
are subject to risks and uncertainties. All statements other than
statements of historical fact included in this presentation are
forward-looking statements. Forward-looking statements give our
current expectations and projections relating to our financial
condition, results of operations, plans, objectives, future
performance and business. You can identify forward-looking
statements by the fact that they do not relate strictly to
historical or current facts. These statements may include words
such as "anticipate," "estimate," "expect," "project," "plan,
"intend," "believe" and other words and terms of similar meaning in
connection with any discussion of the timing or nature of future
operating or financial performance or other events. These
forward-looking statements are based on assumptions that we have
made in light of our industry experience and on our perceptions of
historical trends, current conditions, expected future developments
and other factors we believe are appropriate under the
circumstances. As you consider this presentation, you should
understand that these statements are not guarantees of performance
or results. They involve risks, uncertainties (some of which are
beyond our control) and assumptions. Although we believe that these
forward-looking statements are based on reasonable assumptions, you
should be aware that many factors could affect our actual financial
results and cause them to differ materially from those anticipated
in the forward-looking statements. Because of these factors, we
caution that you should not place undue reliance on any of our
forward-looking statements. Further, any forward-looking statement
speaks only as of the date on which it is made. New risks and
uncertainties arise from time to time, and it is impossible for us
to predict those events or how they may affect us. Except as
required by law, we have no duty to, and do not intend to, update
or revise the forward-looking statements in this presentation after
the date of this presentation. Forward Looking Statements
Slide 3
Specialty insurer operating in targeted property/casualty
niches Top 5 U.S. Marine insurer Top 25 U.S. Excess & Surplus
Lines casualty insurer Emerging leader in D&O / Professional
Liability A global specialty insurance platform Two U.S. domiciled
insurance companies with licenses in the U.K. and South America
Navigators Syndicate 1221 at Lloyds provides global access to
desired markets 40% of Navigators premiums are produced outside the
U.S. A growing brand and market reputation #66 New Yorks
fastest-growing companies, 2010 Crains New York Business #137 New
Yorks largest publicly held companies, 2010, Crains New York
Business Recognized as one of 100 Most Trustworthy Companies by
Forbes.com Financial Strength rated A by Standard & Poors and
A.M. Best 3 The Navigators Group, Inc.
Slide 4
4 Underwriting Profit, not premium volume. Specialization in
complex risks where the know-how of our Intellectual Capital is a
competitive advantage. Commitment to Customer Service backed by a
Strong Balance Sheet. Discipline to walk away from business that
doesnt meet our terms and standards. Expense Control by spending
money like it is our own. Teamwork gets the job done. We conduct
our business with Integrity, Professionalism and Pride. Core
Values
Slide 5
5 Track Record of Underwriting Excellence
Slide 6
2001 D&O Chicago Marine 2004 Excess Casualty Antwerp Office
2005 Acquired 100% Control of Lloyds Syndicate 1221 2006 Primary
Casualty Inland Marine 2007 Orange County Office Miami Office
(Latin America) 2008 New Jersey Office Stockholm Office Brazilian
License Environmental Underwriting Team Professional Liability
Expansion Lloyds China 2009 UK D&O Expansion Architect &
Engineering Team Philadelphia Office Pittsburgh Office Charlotte
Office Copenhagen Office 2010 Los Angeles Office Lloyds Brazil
Navigators Re 6 Gross Written Premium ($ in millions) $1,044.9 18%
4% 7% 23% 34% 13% $278.2 21% 38% 39% $779.6 4% 27% 11% 27% 30% A
Decade of Successful Growth and Diversification
Slide 7
7 41.2% Specialty Focus $1.045 Billion Gross Written Premium
Full Year 2009 41.5% 17.3%
Slide 8
Market Leaders In: Marine Liability Bluewater Hull Specie /
Cash In Transit Transport Policyholders Include: Terminal Operators
Port Authorities Cruise Ships Ship Owners Logistics Providers
Importers / Exporters Armored Car Services Museums 8 Gross Written
Premium $433 million 41% of 2009 Group Total A Market Leader In
Marine (Green = Higher Growth Potential)
Slide 9
9 Focus on Select Specialty Property & Casualty Niches
Gross Written Premium $430 million 41% of 2009 Group Total (Green =
Higher Growth Potential) Nav Tech: Property Insurance for Energy
and Power Generation Risks Excess Casualty: Monoline Commercial
Umbrella & Commercial Excess Liability Western States
Construction: A Market Leader in California Construction Liability
Since 1995 E&S Primary Casualty: Construction East of the
Rockies, Product Liability, Real Estate and Environmental Casualty
NAV PAC: Admitted Niche Property/Casualty Products for Middle
Market Businesses Life Sciences: Product Liability and Clinical
Trials Coverage
Slide 10
10 Management & Professional Liability Niche Focus Gross
Written Premium $181 million 17% of 2009 Group Total (Green =
Higher Growth Potential) Specializing In: US D&O Primary and
Excess on Small to Mid Cap Public Companies Private Companies Not
for Profit Organization International D&O High Excess D&O
on Large Cap Primary D&O on Small to Mid Cap Underwriters in
London, Stockholm, Copenhagen and Shanghai E&O Lawyers
Architects & Engineers Insurance Agents Miscellaneous
Professional
Slide 11
11 Navigators U.S. Footprint 2001 $278 Million Gross Written
Premium Taking Our Products to New Geographic Markets in The U.S.
Number of Products One Black Two Blue Multiple - Red
Slide 12
12 Navigators U.S. Footprint 2010 $1 Billion Gross Written
Premium Taking Our Products to New Geographic Markets in The U.S.
Number of Products One Black Two Blue Multiple - Red
Slide 13
13 Project: 42 story, 116 unit residential condominium in
Dallas, Texas Duration: 3 years Number of contractors: 40 Solution:
One shared liability program with primary limits of $2 million NAVG
advantages: Contract review Proprietary terms and conditions
Construction claims expertise Specialty Expertise Construction
Wrap-up
Slide 14
14 Emphasize Profit Not Premium Reduce premium when profit
margins are not apparent Reward underwriters for profit, not
premiums Diligent commission negotiations and expense management
Targeted Growth Opportunities in High Margin/Low Market Share
Products NavTech Excess Casualty International D&O Professional
Liability Expansion of Distribution System/Regional Office Network
Improve Productivity / Service Efficiency Navigate Proprietary
Policy Administration Systems Expansion of remote service centers
Preserve & Grow our Intellectual Capital Responsible Capital
Management Share Re-Purchase Conservative Investment Strategy
Enterprise Risk Management Strategies For A Softening Market
Slide 15
Global Leadership Team 15
Slide 16
Financial Overview The Navigators Group, Inc.
Slide 17
17 The Navigators Group, Inc. EXCHANGE/TICKER MARKET CAP
(11/18/10) SHARE PRICE (11/18/10) BOOK VALUE/SHARE (9/30/10)
FINANCIAL STRENGTH WEBSITE NASDAQ/NAVG $855 MILLION $49.52 $54.17 A
(A.M. BEST/S&P) WWW.NAVG.COM
Slide 18
18 Stockholders Equity ($ in millions) - A&E Charge -
Hurricanes 106.6% 101.3% 93.8% - Hurricanes Combined Ratio
Stockholders Equity Strong Book Value Growth
Slide 19
19 Invested assets: $2.2 billion Fixed Maturities, Cash and
Short-term Investments: 96% of portfolio Average AA rating Duration
of approximately 4.1 years Average 2010 investment yield of 3.5%
Equity securities: 4% of portfolio Substantially all mortgage and
asset- backed securities are investment grade No CDOs, CLOs or
asset-backed commercial paper Underlying credit rating of A+ for
credit enhanced securities High Quality Investment Portfolio At
September 30, 2010
22 Mitigate Risks Diversification of reinsurers High credit
quality Strong collateral position Reserve for Uncollectible
Reinsurance Integration of reinsurance risk into ERM practices
Utilize reinsurance to reduce exposure to individual risks &
catastrophic losses Stabilize underwriting results Ratio of NWP to
GWP for 2009 was 67.1% Philosophy Reinsurance - Integral Part of
Our Business
Slide 23
Reinsurer Financial Strength Ratings 23 Total Recoverables
$1,046 Total Offsets/Funds Held(179) Net Recoverables $867 (A.M.
Best or equivalent ratings - December 31, 2009) ($ in
millions)
Slide 24
24 West Coast Construction Liability Ultimate Premium Ultimate
Loss Ratio 2001 2002 2003 2004 2005 2006 2007 2008 2009 ($ in
thousands) $ Managing the Cycle Underwriting Discipline
Slide 25
Managing the Cycle Aggregate Management Offshore Energy Gulf of
Mexico Wind Aggregate Exposure 25 ($ in millions)
Slide 26
Managing the Cycle Capital Management Maintain financial
strength ratings Grow book value per share Conservative &
proactive investment management Accretive debt repurchase - $3
million gain Accretive share repurchases 2008 - $11.5 million 2009
- $ 6.8 million 2010 - $ 50.3 million Average cost per share
through 9/30/2010 - $42.99 26
Slide 27
2010 Financial Highlights The Navigators Group, Inc.
Slide 28
28 The Navigators Group, Inc. and Subsidiaries 2010 Financial
Highlights ($ in thousands, except per share data, unaudited)
Slide 29
Specialty underwriter with proven track record of profitable
growth Track record of attracting/retaining strong underwriting
expertise Strong balance sheet High quality, liquid and
conservative investment portfolio Experienced at insurance cycle
management Experienced at capital management Focused on growing
book value per share 29 Summary