S&P Revises Navigators Outlook to Stable

June 3, 2003

Standard & Poor’s has revised its outlook on Navigators Insurance Co. and NIC Insurance Co. (collectively referred to as Navigators) to stable from positive because of the belief that Navigators’s capital adequacy could become strained if the company’s explosive growth continues at the current rate.

Standard & Poor’s also said that it affirmed its ‘A’ counterparty credit and financial strength ratings on these companies.

“The group’s capitalization, though still considered strong, has decreased from previous levels because of the company’s explosive growth,” Standard & Poor’s credit analyst Polina Chernyak remarked. “Although some growth can be explained by significant double-digit rate increases, Standard & Poor’s is concerned about the company’s ability to manage such aggressive growth.” Navigators’s profitability is expected to remain very strong.

Navigators is a leading writer in the marine insurance market. In ocean marine, it benefits from the strong franchise value of the Navigators agencies, which are wholly owned underwriting agencies of Navigators Group Inc. In 2002 and 2001, Navigators continued to grow its market share by increasing net premiums.

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