1 The Navigators Group, Inc. “Insuring a World in Motion” New York Society of Security Analysts,...
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1 The Navigators Group, Inc. “Insuring a World in Motion” New York Society of Security Analysts, Inc. Insurance Industry Conference January 26, 2004 ley A. Galanski, President & Chief Executive Officer J. Malvasio, Executive Vice President & Chief Financial Officer
1 The Navigators Group, Inc. “Insuring a World in Motion” New York Society of Security Analysts, Inc. Insurance Industry Conference January 26, 2004 Stanley
1 The Navigators Group, Inc. Insuring a World in Motion New
York Society of Security Analysts, Inc. Insurance Industry
Conference January 26, 2004 Stanley A. Galanski, President &
Chief Executive Officer Paul J. Malvasio, Executive Vice President
& Chief Financial Officer
Slide 2
2 This press release may contain forward looking statements as
defined in the Private Securities Litigation Act of 1995. We cannot
assure that results which we anticipate will be achieved, since
results may differ materially because of known and unknown risks
and uncertainties which we face. Please refer to Navigators most
recent Forms 10-K and 10-Q for a description of Navigators business
and the important factors which may affect that business.
Navigators undertakes no obligation to publicly update or revise
any forward looking statement.
Slide 3
3 Navigators Corporate Overview Specialty Insurance Holding
Company Specialty niches include: Marine, Energy, Construction,
D&O, Professional Liability, Specialty Property/Casualty
Insurance subsidiaries A rated by A.M. Best and S&P Operations
at Lloyds provide a global platform Offices in major
ports/insurance centers in the U.S. and U.K. New York, Seattle, San
Francisco/Oakland, Houston, Chicago London, Manchester, Leeds,
Basingstoke
Slide 4
4 Navigators Investment Highlights A global leader in marine
insurance Business founded through Navigators Agencies in 1974
Lloyds presence through Syndicate 1221 acquired in 1998 Complements
US operations and provides global market access Commitment to
underwriting profit 29 consecutive years of underwriting profit in
marine agencies Emphasis on bottom-line results, not market share
Diversifying opportunistically into attractive new business lines
Specialty Property & Casualty and Professional Liability
Excellent market opportunities and producer support Portfolio
diversification for stronger earnings stream across market cycles
Operating from a strong and leveragable platform Rated A by A.M.
Best and Standard and Poors Lloyds licenses provide access to major
world markets No legacy balance sheet issues No debt
Slide 5
5 Senior underwriting management team has an average of
approximately 29 years in the industry and 12 years at NAVG. Deep,
Experienced Underwriting Team
Slide 6
6 Navigators Agencies Marine & Energy For 2003 Navigators
has 80% participation in marine insurance pool operated by
Navigators Agencies in 2003 One of the largest marine portfolios in
the U.S. market Recognized leader in the U.S. Bluewater Hull and
Liability lines Navigators Agencies have produced 29 consecutive
years of underwriting profit for the marine insurance pool it
manages Rate increases on renewal business of 15% in first nine
months of 2003 and 21% in the year 2002 33% of 2003 GPW
Slide 7
7 2002 U.S. Market Share ($ in thousands) Note: As reported by
the AIMU.
Slide 8
8 Lloyds Marine & Energy Navigators Underwriting Agency,
Ltd. manages Syndicate 1221 Navigators provides 97.4% of Syndicate
1221s gross capacity / $200mm for 2003 and $255mm for 2004
underwriting year A Lloyds market leader in cargo and specie
insurance Millennium Consortium at Lloyds for
construction/engineering risks Rate increase of 14% for the first
nine months of 2003, after 26% rate increase in 2002 37% of 2003
GPW
Slide 9
9 2002 Lloyds Market Share ($ in thousands) Source: Lloyds
Market Association
Slide 10
10 Navigators Specialty Since 1995 has underwritten general
liability insurance for small general and artisan contractors,
mostly in California Acquired Anfield Insurance Services in 1999
Specialty underwriting/claims expertise Strategy to diversify by
product line and geographically Opened a Midwest branch in 2002
Added surety and personal umbrella products Rate increase of 46% in
first nine months of 2003, after 30% rate increase in 2002 for
contractors liability business 21% of 2003 GPW
Slide 11
11 Navigators Pro Introduced D&O liability insurance in
late 2001 after attracting team of experienced professionals
Traditionally very profitable niche business in P&C industry
Compelling market opportunity given recent shareholder lawsuits
Focus on privately held and small to mid-size public corporations
In late 2002, introduced employment practices liability, lawyers
professional liability and other miscellaneous professional
liability coverages Complementary products for D&O clients
include: Fiduciary liability Crime insurance 8% of 2003 GPW
Slide 12
12 Growth and Portfolio Diversification Gross Premium Written
by Segment ($ in millions) CAGR: 54.1% Growth: 34.6%
Slide 13
13 Underwriting Culture Focuses on Profitability (1) Based on
statutory combined ratios for Navigators Insurance Companies only.
(2) Source, A.M. Best. Navigators outperforms the industry in
underwriting Combined ratio below 100% in 7 of 10 years 1994 and
1995 losses represent Northridge Earthquake 1999 loss reflects
charge related to unrecoverable reinsurance (2) Statutory Combined
Ratios (1) Operator: Be advised I cheated making this chart. The
1994 Navigator data is actually 151%. The banker requested that it
be adjusted. So a text box has been placed over 130% and replaced
w/150%. I also had to add a little line to extend the y axis.
6/30/03 9/30/03
Slide 14
14 Improving Underwriting Results GAAP Loss, Expense and
Combined Ratios 2000 2001 2001 PF2002 9/30/02 9/30/03 Note: 2001 PF
results adjusted for World Trade Center losses of $4.5 million, or
$0.53 per share.
Slide 15
15 Net Income Growth ($ in millions except per share data)
Note: 2001 PF results adjusted for World Trade Center losses of
$4.5 million, or $0.53 per share. 2000 20012001PF 2002 9/30/02
9/30/03 EPS$0.84$0.43$0.91$1.89 $1.48 $2.06
Slide 16
16 Prudent Reserving Practices (in millions)
Slide 17
17 High Quality Investment Portfolio Total Portfolio Size: $562
million Fixed Maturities and Cash: 98% of portfolio 39% U.S.
Treasury Bonds and GNMAs Average AA rating Duration of
approximately 3.6 years Average yield of 4.78% for 2002 Equity
Securities: 2% of portfolio (as of 9/30/03)
Slide 18
18 Capitalization (in millions, except per share data)
*Offering completed on October 10, 2003 for 3.977 million shares at
$28.50 per share with net proceeds received of $110.8 million
(including underwriters over allotment).
Slide 19
19 Why Navigators Now? Global leader in marine insurance
Diversification strategy is on target Experienced management team
Intellectual capital / specialty expertise Commitment to
underwriting profit Proven track record Operating from a strong and
leveragable platform