The Navigators Group Inc. reported net income of $7,685,000 or $0.80 per diluted share for the year ended Dec. 31, 2003 compared to $16,397,000 or $1.89 per diluted share for the year ended 2002.
The net loss for the 2003 fourth quarter was $9,490,000 or $0.78 per basic share compared to net income of $3,901,000 or $0.45 per diluted share for the 2002 fourth quarter. Included in the 2003 fourth quarter and full year results is the previously announced after-tax charge of $20.5 million or $1.68 per basic share and $2.14 per diluted share, respectively for incurred losses related to asbestos exposures.
The 2003 fourth quarter and full year results include net realized capital gains of $0.03 per basic share and $0.13 per diluted share, respectively compared to $0.04 per diluted share and $0.14 per diluted share included in the comparable 2002 fourth quarter and full year results. Gross written premium and net written premium for the 2003 fourth quarter were $150,966,000 and $83,833,000 respectively, both increases of 40 percent from the comparable 2002 period. Gross written premium and net written premium for the 2003 full year were $606,492,000 and $307,128,000 respectively, increases of 35 percent and 15 percent respectively, from the 2002 year.
The increase in the 2003 fourth quarter net written premium reflects a reduction of approximately $11 million in ceded reinsurance premium for specialty business due to a reinsurance treaty change effective Oct. 1, 2003. The reinsurance treaty had provided a statutory capital benefit and was changed given the increased level of statutory surplus of Navigators Insurance Company. The change had no impact on net income.
The combined loss and expense ratio for the 2003 fourth quarter and full year was 129.9 percent and 104.0 percent, respectively compared to 98.0 percent and 98.5 percent for the comparable 2002 year periods. The combined loss and expense ratio for the 2003 fourth quarter and full year were negatively impacted by 44.2 percent and 11.7 percent, respectively for incurred losses related to asbestos and environmental exposures.
Navigators’ CEO, Stan Galanski, commented, “The company achieved strong but controlled growth in line with our expectations. We are pleased with the profitability of our current book of business, and have taken appropriate action to maintain adequate loss reserves across all lines of business, including reserves for asbestos and environmental exposures. We are particularly proud of the strong results generated by our London operations, both in the U.K. branch of Navigators Insurance Company and Syndicate 1221.”
Consolidated cash flow from operations for the 2003 full year was $134,527,000, an increase of 24 percent from the comparable 2002 period.
Net investment income for the 2003 fourth quarter and full year was $5,703,000 and $19,550,000, respectively, increases of 25 percent and 8 percent from the comparable 2002 periods. The 2003 fourth quarter increase in net investment income reflects the strong cash flow from operations generated throughout 2003 coupled with the $110.8 million net proceeds received in October from the sale of 3,977,500 new shares of common stock. Pre-tax investment yields for the 2003 fourth quarter and year were 3.8 percent, compared to 4.2 percent and 4.8 percent respectively, for the comparable 2002 periods.
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