Navigators Group Sees Record Q4

February 15, 2006

The Navigators Group Inc. reported net income of $15,310,000 or $0.96 per share for the 2005 fourth quarter based on 16,012,000 diluted shares compared to net income of $10,635,000 or $0.84 per share for the 2004 fourth quarter based on 12,710,000 diluted shares. The 2005 and 2004 fourth quarter results include net realized capital gains of $0.01 per share and $0.02 per share, respectively.

Net income for the year ended Dec. 31, 2005 was $23,564,000 or $1.73 per share, compared to $34,865,000 or $2.74 per share for the year ended Dec. 31, 2004. Included in these results were net realized capital gains of $0.06 per share and $0.05 per share for the years ended Dec. 31, 2005 and 2004, respectively.

Gross written premium for the 2005 fourth quarter and year was $184,336,000 and $779,579,000, respectively, compared to $187,390,000 and $696,146,000 for the comparable 2004 year periods. Included in the 2004 fourth quarter gross written premium is approximately $38,129,000 of “reinsurance to close” (“RITC”) premium recorded by Lloyd’s Syndicate 1221 representing the transfer of assets and liabilities from the participants of the 2002 underwriting year to the 2003 underwriting year in which Navigators had increased its participation to 97.4% from 68.1%. The RITC transaction is recorded as additional gross written and earned premium, losses incurred, loss reserves and receivables all in the same amount, net of applicable ceded reinsurance amounts. There are no gains or losses recorded on the RITC transaction. The comparable 2005 fourth quarter RITC transaction amount was $7,000. Gross written premium for the 2005 fourth quarter and year increased 23% and 18%, respectively, from the comparable 2004 year periods, excluding RITC gross written premiums.

Net written premium for the 2005 fourth quarter and year was $94,263,000 and $380,659,000, respectively, an increase of 22% from both the 2004 fourth quarter and full year period. Net written premium for the 2005 fourth quarter increased 27% excluding RITC net written premium of $2,500,000 and $12,756,000 recorded in the 2005 and 2004 fourth quarters, respectively, and the reduction of the 2004 fourth quarter net written premium by approximately $7,500,000 for ceded reinsurance premium for a specialty quota share treaty not renewed on March 31, 2005.

The combined loss and expense ratios for the 2005 fourth quarter and year were 90.0% and 100.9%, respectively, compared to 89.4% and 90.1% for the comparable 2004 periods. The combined loss and expense ratios for the 2005 year and 2004 year were reduced by 1.1 loss ratio points and 1.2 loss ratio points, respectively, resulting from the release of a net loss reserve redundancy of $3.8 million in each of 2005 and 2004, respectively, relating to prior years.

During the 2005 fourth quarter, the Company settled the two large remaining claims where excess policy limits were exposed to class action suits involved in the manufacturing or distribution of asbestos products.

The Company has also withdrawn its demand for arbitration against Equitas after reaching a settlement pursuant to which Equitas, as the Company’s excess of loss reinsurer, agreed to reimburse the Company for past and future loss payments in connection with a 2004 settlement of a large asbestos claim. Equitas is a lead reinsurer participating in excess of loss reinsurance agreements for all three settled claims. No significant net gain or loss was recorded as a result of such settlements.

Navigators’ Chief Executive Officer Stan Galanski commented, “Our 2005 earnings were the second highest in our Company’s history despite the impact of two of the largest offshore energy catastrophe losses ever to hit the marine insurance industry. We are proud of the performance of our underwriting and claims teams. Absent Hurricanes Katrina and Rita, our results were stellar. We are pleased that our original loss estimates for these two storms continue to appear adequate and to be contained well within our reinsurance program. While we have always emphasized the importance of making an underwriting profit, our increased asset base, coupled with strong cash flow, resulted in 38% growth in our investment income in 2005.

“Market conditions continue to support profitable growth for all of our business units and we anticipate premium growth for our product lines in 2006. We remain focused on expanding our niche underwriting operations by targeting additional products and seasoned underwriting professionals to help expand our business in the United States and United Kingdom.”

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

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