NAVG Beats Earnings Estimates, Lags Y/Y

Zacks

Navigators Group Inc.’s (NAVG) second-quarter adjusted earnings of $11.8 million or 82 cents per share breezed past the Zacks Consensus Estimate of 76 cents per share. Results were down from $12.5 million or 88 cents per share earned in the year-ago quarter.

Including net realized gain worth $3.3 million, Navigators Group reported net income of $13.9 million or 97 cents per share in the reported quarter, down 6.7% year over year from $14.9 million or $1.05 per share.

Quarterly Operational Update

Total revenue of Navigators Group increased 3.1% year over year to $222.5 million in the second quarter of 2013. This was driven by improvement in net earned premiums (up 5% year over year). Total revenues lagged the Zacks Consensus Estimate of $236 million.

Net written premiums of Navigators Group in the quarter increased 4.3% year over year to $198.5 million. Net investment income declined 9.7% year over year to $14.2 million.

Navigators Group’s total expenses of $202.3 million in the quarter grew 3.8% year over year due to higher net loss and loss adjustment expenses (up 6.3% year over year), other operating expenses (up 2.2% year over year) and a marginal increase in interest expense by 0.1% year over year.

In the second quarter, underwriting profit for Navigators Group was $4.7 million compared with $3.7 million in the prior-year period. The combined ratio improved 40 basis points year over year to 97.7%.

Segment Update

The Insurance Companies reported underwriting profit of $166 million compared to a loss of $7.6 million in the prior-year period. Net written premiums in the segment were $143.4 million, up 6.9% year over year. Combined ratio improved 550 basis points to 99.9%.

The Lloyd’s Operations reported underwriting profit of $4.5 million, down 59.9% year over year. Net written premiums in the segment were $55.1 million, down 2% year over year. Combined ratio deteriorated 1150 basis points to 90.8%.

Financial Position

Navigators Group exited the reported quarter with cash and investments of $2.37 billion, down 2% from 2012-end. Net cash from operating activities stood at $44.2 million in the quarter, compared with operating cash outflow of $1.3 million in the year-ago quarter.

As of Jun 30, 2013, total assets of Navigators Group were $4.1 billion, up 2.2% year over year. Shareholder equity decreased 0.63% year over year to $874 million at June-end from $879.5 million at the end of 2012.

Performance of Few Other Property and Casualty Insurers

Berkshire Hathaway Inc. (BRK.A) (BRK.B) reported second quarter 2013 operating earnings of $1.53 per share, surpassing the Zack Consensus estimate of $1.45 per share. Earnings also compared favorably with $1.50 per share reported in the year-ago quarter.

Chubb Corp. (CB) reported second-quarter operating earnings of $1.77 per share, significantly ahead of the Zacks Consensus Estimate of $1.38 per share. Earnings also increased 29% year over year.

Allstate Corporation’s (ALL) second-quarter 2013 operating earnings per share of $1.12 noticeably outpaced the Zacks Consensus Estimate of 98 cents and the year-ago quarter figure of 87 cents.

Zacks Rank

Navigators Group currently carries a Zacks Rank #3 (Hold).

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