Navigators Reports Second Quarter Earnings

NEW YORK--(BUSINESS WIRE)--The Navigators Group, Inc. (NASDAQ:NAVG) reported net income of $17,421,000 or $1.03 per share for the 2008 second quarter compared to net income of $24,375,000 or $1.44 per share for the 2007 second quarter. The 2008 second quarter results include net realized capital losses of $7,976,000 or $0.31 per share and the 2007 second quarter results include net realized capital gains of $840,000 or $0.03 per share. The 2008 second quarter net realized capital losses include a provision of $8,412,000 for declines in the market value of equity securities which were considered to be other than temporary. The after-tax loss of such provision was $5,468,000 or $0.32 per share. The decision to record realized capital losses on such securities has no impact on the Company’s shareholders’ equity or book value per share.

Net income for the six month period ended June 30, 2008 was $40,671,000 or $2.39 per share, compared to $44,047,000 or $2.60 per share for the six month period ended June 30, 2007. The results for the six months ended June 30, 2008 included a net realized capital loss of $0.31 per share and the results for the six months ended June 30, 2007 included a net realized capital gain of $0.04 per share.

Gross written premium and net written premium for the 2008 second quarter were $279,213,000 and $174,287,000, respectively, increases of 1% and 8%, respectively, from the comparable 2007 period. Gross written premium and net written premium for the six month period ended June 30, 2008 were $566,359,000 and $362,009,000, respectively, a decrease of 2% and an increase of 8%, respectively, from the comparable 2007 period.

The combined loss and expense ratios for the 2008 second quarter and six month period were 90.4% and 89.8%, respectively, compared to 86.4% and 87.8% for the comparable 2007 periods. The combined loss and expense ratios for the 2008 second quarter and six month period were favorably impacted by 6.5 and 7.6 loss ratio points, respectively, for redundancies in prior period loss reserves. Net paid loss ratios for the 2008 second quarter and six month period were 29.7% and 31.2%, respectively, compared to 32.6% and 31.9% for the comparable 2007 periods.

Navigators’ Chief Executive Officer Stan Galanski commented, "We continue to focus on underwriting profit and disciplined risk-taking, which is the foundation of our culture. Our second quarter earnings reflect solid underwriting results in our insurance companies and we continue to experience favorable loss emergence from prior underwriting years. We continue to emphasize the importance of cost control through expense management, implementation of enhanced technology and productivity initiatives."

Net investment income for the 2008 second quarter and six month period was $18,731,000 and $37,569,000, respectively, increases of 8% and 12% from the comparable 2007 periods. The pre-tax investment yields for the 2008 second quarter and six month period were 4.1% and 4.2%, respectively, compared to 4.5% and 4.4% for the comparable 2007 periods. The effective tax rates on net investment income were 25.4% and 25.9% for the 2008 second quarter and six month period, respectively, compared to 28.2% and 28.3% for the comparable 2007 periods.

The Company’s investment portfolio mainly consists of high quality fixed income securities with an average quality rating of “AA/Aa” by Standard & Poor’s and Moody’s, respectively, and an average effective duration of 4.3 years at June 30, 2008.

Consolidated cash flow from operations for the 2008 second quarter and six month period was $73,748,000 and $133,400,000, respectively, compared to $91,589,000 and $111,667,000 for the comparable 2007 periods.

During the 2008 second quarter, the Company repurchased 50,000 shares of its common stock at an average cost of $49.90 per share, for an aggregate amount of $2,495,000. At June 30, 2008 there is approximately $20.2 million in remaining capacity from the $30 million stock repurchase program approved in October 2007.

Stockholders’ equity was $676,357,000 or $40.29 per share at June 30, 2008 compared to $662,106,000 or $39.24 per share at December 31, 2007. Statutory surplus of Navigators Insurance Company was $592,752,000 at June 30, 2008.

The Company will hold a conference call on Tuesday, July 29, 2008 starting at 8:30 a.m. ET to discuss the 2008 second quarter’s results. The call will be available via live webcast on Navigators’ website (www.navg.com) by clicking on the Earnings Webcast link.

To participate by telephone, the domestic dial-in number is 888-679-8034 and the international dial-in is 617-213-4847. The access code is 99254593. Participants may pre-register for the call at www.theconferencingservice.com/prereg/key.process?key=PPKA3UVLK. Pre-registrants will be issued a pin number to use when dialing into the live call that will provide quick access by bypassing the operator upon connection.

The webcast will be available for replay on the "News & Events" page of Navigators' website.

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

This press release may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Whenever used in this release, the words “estimate”, “expect”, “believe” or similar expressions are intended to identify such forward-looking statements. We cannot assure that results that we anticipate will be achieved, since results may differ materially because of known and unknown risks and uncertainties that we face. Please refer to Navigators’ most recent Forms 10-K and 10-Q and its other filings with the Securities and Exchange Commission for a description of Navigators’ business and the important factors that may affect that business. Navigators undertakes no obligation to publicly update or revise any forward-looking statement.

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Financial Highlights
($'s in thousands, except per share data)
			Three Months Ended									Six Months Ended
			June 30,									June 30,
Financial Highlights				2008			2007		Change				2008			2007		Change
Gross written premium				279,213			276,549		1	%		$	566,359		$	577,410		-2	%
Net written premium				174,287			161,350		8	%			362,009			334,369		8	%
Revenues:
	Net earned premium			162,703			145,617		12	%			318,443			284,663		12	%
	Commission income			467			486		-4	%			728			894		-19	%
	Investment income			18,731			17,330		8	%			37,569			33,546		12	%
	Net realized capital gains (losses)			(7,976	)		840		NM				(8,052	)		1,041		NM
	Other income (expense)			1,010			(253	)	NM				1,021			(324	)	NM
	Total revenues			174,935			164,020		7	%			349,709			319,820		9	%
Operating expenses:
	Net losses and loss adjustment
	expenses incurred			91,889			79,739		15	%			180,309			160,931		12	%
	Commission expense			23,490			17,650		33	%			44,438			34,749		28	%
	Other operating expenses			33,237			28,608		16	%			62,993			54,897		15	%
	Interest expense			2,217			2,215		NM				4,434			4,430		NM
	Total operating expenses			150,833			128,212		18	%			292,174			255,007		15	%
Income before income taxes				24,102			35,808		-33	%			57,535			64,813		-11	%
Income tax expense (benefit):
	Current			12,156			13,505		-10	%			22,462			22,781		-1	%
	Deferred			(5,475	)		(2,072	)	NM				(5,598	)		(2,015	)	NM
Income tax expense (benefit)				6,681			11,433		-42	%			16,864			20,766		-19	%
Net income				17,421			24,375		-29	%		$	40,671		$	44,047		-8	%
Per Share Data
Net income per common share:
	Basic		$	1.04		$	1.45		-28	%		$	2.42		$	2.63		-8	%
	Diluted		$	1.03		$	1.44		-28	%		$	2.39		$	2.60		-8	%
Average shares outstanding:
	Basic			16,773			16,786						16,817			16,771
	Diluted			16,912			16,919						17,002			16,947
Underwriting Ratios
Loss Ratio				56.5	%		54.8	%					56.6	%		56.5	%
Expense Ratio				33.9	%		31.6	%					33.2	%		31.3	%
Combined Ratio				90.4	%		86.4	%					89.8	%		87.8	%
Balance Sheet Data												Jun. 30,			Dec. 31,
													2008			2007
Stockholders' equity												$	676,357		$	662,106		2	%
Book value per share												$	40.29		$	39.24		3	%

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($'s in thousands)
			June 30,				December 31,
				2008				2007
ASSETS
Investments and cash:
	Fixed maturities, available-for-sale, at fair value (amortized cost: 2008, $1,604,039; 2007, $1,508,489)
			$	1,590,566			$	1,522,320
	Equity securities, available-for-sale, at fair value (cost: 2008, $70,178; 2007, $65,492)			68,089				67,240
	Short-term investments, at cost which approximates fair value			174,874				170,685
	Cash			14,499				7,056
		Total investments and cash		1,848,028				1,767,301
	Premiums in course of collection			197,490				163,081
	Commissions receivable			444				2,381
	Prepaid reinsurance premiums			194,195				188,961
	Reinsurance receivable on paid losses			78,087				94,818
	Reinsurance receivable on unpaid losses and loss adjustment expenses			778,715				801,461
	Net deferred income tax benefit			45,412				29,249
	Deferred policy acquisition costs			55,100				51,895
	Accrued investment income			16,870				15,605
	Goodwill and other intangible assets			8,101				8,084
	Other assets			23,058				20,935
		Total assets	$	3,245,500			$	3,143,771
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
	Reserves for losses and loss adjustment expenses		$	1,707,101			$	1,648,764
	Unearned premium			518,354				469,481
	Reinsurance balances payable			148,632				161,829
	Senior notes			123,732				123,673
	Federal income tax payable			16,279				10,868
	Accounts payable and other liabilities			55,045				67,050
		Total liabilities		2,569,143				2,481,665
Stockholders' equity:
	Preferred stock, $.10 par value, authorized 1,000,000 shares, none issued			-				-
	Common stock, $.10 par value, 50,000,000 shares authorized for 2008 and 2007;  issued and outstanding: 16,788,446 for 2008 and 16,873,094 for 2007
				1,700				1,687
	Additional paid-in capital			295,304				291,616
	Retained earnings			395,755				355,084
	Treasury stock held at cost (186,026 common shares for 2008)			(9,816	)			-
	Accumulated other comprehensive income (loss)			(6,586	)			13,719
		Total stockholders' equity		676,357				662,106
		Total liabilities and stockholders' equity	$	3,245,500			$	3,143,771

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Comparative Premium Data
($'s in thousands)
Gross Written Premium:	Second Quarter									Six Months
Insurance Companies:	2008			2007			Change			2008			2007		Change
Marine & Energy	$	77,996		$	70,601		10	%		$	160,531		$	157,457	2	%
Specialty		84,013			91,398		-8	%			162,895			180,815	-10	%
Professional Liability		26,437			24,351		9	%			45,724			44,833	2	%
Middle Markets		7,744			6,637		17	%			15,758			12,941	22	%
Property/Other		1,766			5,573		NM				4,644			11,388	NM
		197,956			198,560		0	%			389,552			407,434	-4	%
Lloyd's Operations:
Marine		59,872			55,922		7	%			134,825			133,601	1	%
Professional Liability		8,399			10,534		-20	%			19,069			16,012	19	%
Property/Other		12,986			11,533		13	%			22,913			20,363	13	%
		81,257			77,989		4	%			176,807			169,976	4	%
Total	$	279,213		$	276,549		1	%		$	566,359		$	577,410	-2	%
Net Written Premium:	Second Quarter									Six Months
Insurance Companies:	2008			2007			Change			2008			2007		Change
Marine & Energy	$	45,123		$	37,229		21	%		$	94,794		$	82,964	14	%
Specialty		57,998			62,490		-7	%			111,942			117,076	-4	%
Professional Liability		15,906			14,767		8	%			27,639			26,959	3	%
Middle Markets		7,252			4,624		57	%			13,778			8,593	60	%
Property/Other		1,903			4,963		NM				4,339			10,529	NM
		128,182			124,073		3	%			252,492			246,121	3	%
Lloyd's Operations:
Marine		38,297			27,038		42	%			90,799			72,526	25	%
Professional Liability		5,081			6,126		-17	%			11,873			9,509	25	%
Property/Other		2,727			4,113		-34	%			6,845			6,213	10	%
		46,105			37,277		24	%			109,517			88,248	24	%
Total	$	174,287		$	161,350		8	%		$	362,009		$	334,369	8	%
Net Earned Premium:	Second Quarter									Six Months
Insurance Companies:	2008			2007			Change			2008			2007		Change
Marine & Energy	$	36,456		$	34,005		7	%		$	69,682		$	67,494	3	%
Specialty		56,574			54,378		4	%			113,243			103,421	9	%
Professional Liability		14,388			13,334		8	%			28,461			26,371	8	%
Middle Markets		6,736			4,539		48	%			12,433			9,109	36	%
Property/Other		3,280			3,479		NM				5,861			5,152	NM
		117,434			109,735		7	%			229,680			211,547	9	%
Lloyd's Operations:
Marine		37,103			30,005		24	%			71,095			62,346	14	%
Professional Liability		5,141			1,954		163	%			11,100			4,911	126	%
Property/Other		3,025			3,923		-23	%			6,568			5,859	12	%
		45,269			35,882		26	%			88,763			73,116	21	%
Total	$	162,703		$	145,617		12	%		$	318,443		$	284,663	12	%

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Three Months Ended
June 30, 2008
($'s in thousands)
		Insurance				Lloyd's
		Companies				Operations				Corporate				Total
Gross written premium		$	197,956			$	81,257							$	279,213
Net written premium			128,182				46,105								174,287
Net earned premium			117,434				45,269								162,703
Net losses and loss adjustment expenses			(62,225	)			(29,664	)							(91,889	)
Commission expense			(14,723	)			(8,767	)							(23,490	)
Other operating expenses			(24,552	)			(8,685	)							(33,237	)
Other income (expense)			1,516				(39	)							1,477
Underwriting profit			17,450				(1,886	)							15,564
Investment income			15,593				2,871			$	267				18,731
Net realized capital gains			(8,053	)			77				-				(7,976	)
Interest expense			-				-				(2,217	)			(2,217	)
Income (loss) before income tax expense (benefit)
			24,990				1,062				(1,950	)			24,102
Income tax expense (benefit)			6,939				425				(683	)			6,681
Net income (loss)		$	18,051			$	637			$	(1,267	)		$	17,421
Loss and loss expenses ratio			53.0	%			65.5	%							56.5	%
Commission expense ratio			12.5	%			19.4	%							14.4	%
Other operating expenses ratio (1)			19.6	%			19.3	%							19.5	%
Combined ratio			85.1	%			104.2	%							90.4	%
(1) The other operating expenses ratio includes other income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Three Months Ended
June 30, 2007
($'s in thousands)
		Insurance				Lloyd's
		Companies				Operations				Corporate				Total
Gross written premium		$	198,560			$	77,989							$	276,549
Net written premium			124,073				37,277								161,350
Net earned premium			109,735				35,882								145,617
Net losses and loss adjustment expenses			(63,725	)			(16,014	)							(79,739	)
Commission expense			(13,903	)			(3,747	)							(17,650	)
Other operating expenses			(21,057	)			(7,551	)							(28,608	)
Other income (expense)			96				137								233
Underwriting profit			11,146				8,707								19,853
Investment income			14,440				2,407			$	483				17,330
Net realized capital gains (losses)			834				6				-				840
Interest expense			0.00				-				(2,215	)			(2,215	)
Income (loss) before income tax expense (benefit)		26,420				11,120				(1,732		)		35,808
Income tax expense (benefit)			8,163				3,875				(605	)			11,433
Net income (loss)		$	18,257			$	7,245			$	(1,127	)		$	24,375
Loss and loss expenses ratio			58.1	%			44.6	%							54.8	%
Commission expense ratio			12.7	%			10.4	%							12.1	%
Other operating expenses ratio (1)			19.0	%			20.6	%							19.5	%
Combined ratio			89.8	%			75.6	%							86.4	%
(1) The other operating expenses ratio includes other income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Six Months Ended
June 30, 2008
($'s in thousands)
		Insurance				Lloyd's
		Companies				Operations				Corporate				Total
Gross written premium		$	389,552			$	176,807							$	566,359
Net written premium			252,492				109,517								362,009
Net earned premium			229,680				88,763								318,443
Net losses and loss adjustment expenses			(129,581	)			(50,728	)							(180,309	)
Commission expense			(27,671	)			(16,767	)							(44,438	)
Other operating expenses			(46,700	)			(16,293	)							(62,993	)
Other income (expense)			1,774				(25	)							1,749
Underwriting profit			27,502				4,950								32,452
Investment income			31,058				5,853			$	658				37,569
Net realized capital gains			(8,155	)			103				-				(8,052	)
Interest expense			-				-				(4,434	)			(4,434	)
Income (loss) before income tax expense (benefit)			50,405				10,906				(3,776	)			57,535
Income tax expense (benefit)			14,309				3,877				(1,322	)			16,864
Net income (loss)		$	36,096			$	7,029			$	(2,454	)		$	40,671
Loss and loss expenses ratio			56.4	%			57.1	%							56.6	%
Commission expense ratio			12.0	%			18.9	%							14.0	%
Other operating expenses ratio (1)			19.6	%			18.4	%							19.2	%
Combined ratio			88.0	%			94.4	%							89.8	%
(1) The other operating expenses ratio includes other income (expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Segment Information
Six Months Ended
June 30, 2007
($'s in thousands)
		Insurance				Lloyd's
		Companies				Operations				Corporate				Total
Gross written premium		$	407,434			$	169,976							$	577,410
Net written premium			246,121				88,248								334,369
Net earned premium			211,547				73,116								284,663
Net losses and loss adjustment expenses			(125,065	)			(35,866	)							(160,931	)
Commission expense			(24,986	)			(9,763	)							(34,749	)
Other operating expenses			(39,826	)			(15,071	)							(54,897	)
Other income (expense)			585				(15	)							570
Underwriting profit			22,255				12,401								34,656
Investment income			28,094				4,558			$	894				33,546
Net realized capital gains / (losses)			1,077				(36	)			-				1,041
Interest expense			-				-				(4,430	)			(4,430	)
Income (loss) before income tax expense			51,426				16,923				(3,536	)			64,813
Income tax expense (benefit)			16,074				5,929				(1,237	)			20,766
Net income (loss)		$	35,352			$	10,994			$	(2,299	)		$	44,047
Loss and loss expenses ratio			59.1	%			49.1	%							56.5	%
Commission expense ratio			11.8	%			13.4	%							12.2	%
Other operating expense ratio (1)			18.6	%			20.5	%							19.1	%
Combined ratio			89.5	%			83.0	%							87.8	%
(1) The other operating expense ratio is adjusted to include commission and other income/(expense).

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results
($'s in thousands)
	Three Months Ended June 30,2008
	Net			Losses
	Earned			and LAE				Underwriting				Combined Ratio
Insurance Companies:	Premium			Incurred				Expenses				Loss			Expense		Total
Marine & Energy	$	36,456		$	17,497			$	12,194			48.0	%		33.4	%	81.4	%
Specialty		56,574			33,614				16,685			59.4	%		29.5	%	88.9	%
Professional Liability		14,388			7,374				5,020			51.3	%		34.9	%	86.2	%
Middle Markets		6,736			3,719				2,751			55.2	%		40.8	%	96.0	%
Property/Other		3,280			21				1,109			0.6	%		33.8	%	34.4	%
		117,434			62,225				37,759			53.0	%		32.1	%	85.1	%
Lloyd's Operations		45,269			29,664				17,491			65.5	%		38.7	%	104.2	%
Total	$	162,703		$	91,889			$	55,250			56.5	%		33.9	%	90.4	%
	Three Months Ended June 30, 2007
	Net			Losses
	Earned			and LAE				Underwriting				Combined Ratio
Insurance Companies:	Premium			Incurred				Expenses				Loss			Expense		Total
Marine & Energy	$	34,005		$	17,913			$	12,340			52.7	%		36.3	%	89.0	%
Specialty		54,378			31,261				14,317			57.5	%		26.3	%	83.8	%
Professional Liability		13,334			7,741				5,330			58.1	%		39.9	%	98.0	%
Middle Markets		4,539			2,045				1,723			45.1	%		38.0	%	83.1	%
Property/Other		3,479			4,765				1,154			137.0	%		33.2	%	170.2	%
		109,735			63,725				34,864			58.1	%		31.7	%	89.8	%
Lloyd's Operations		35,882			16,014				11,161			44.6	%		31.0	%	75.6	%
Total	$	145,617		$	79,739			$	46,025			54.8	%		31.6	%	86.4	%
				Amounts								Loss Ratio
Net Incurred Loss Activity				June. 30,				June. 30,				June. 30,			June. 30,
For the Three Months Ended:					2008				2007			2008			2007
Insurance Companies:
Loss and LAE payments				$	34,922			$	31,066			29.8	%		28.3	%
Change in reserves					27,303				32,659			23.2	%		29.8	%
Net incurred loss and LAE					62,225				63,725			53.0	%		58.1	%
Lloyd's Operations:
Loss and LAE payments					13,369			$	16,348			29.5	%		45.5	%
Change in reserves					16,295				(334	)		36.0	%		-0.9	%
Net incurred loss and LAE					29,664				16,014			65.5	%		44.6	%
Total
Loss and LAE payments					48,291				47,414			29.7	%		32.6	%
Change in reserves					43,598				32,325			26.8	%		22.2	%
Net incurred loss and LAE				$	91,889			$	79,739			56.5	%		54.8	%
Impact of Prior Years Reserves				Amounts								Loss Ratio Impact
Favorable / (Unfavorable) Development				June. 30,				June. 30,				June. 30,			June. 30,
For the Three Months Ended:					2008				2007			2008			2007
Insurance Companies				$	11,652			$	5,491			9.9	%		5.0	%
Lloyd's Operations					(1,072	)			5,126			-2.4	%		14.3	%
Total				$	10,580			$	10,617			6.5	%		7.3	%

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Underwriting Results
($'s in thousands)
	Six Months Ended June 30,2008
	Net		Losses
	Earned		and LAE		Underwriting		Combined Ratio
Insurance Companies:	Premium		Incurred		Expenses		Loss		Expense		Total
Marine & Energy	$ 69,682		$ 41,868		$ 23,256		60.1%		33.4%		93.5%
Specialty	113,243		63,094		32,183		55.7%		28.4%		84.1%
Professional Liability	28,461		16,279		10,118		57.2%		35.6%		92.8%
Middle Markets	12,433		8,003		4,740		64.4%		38.1%		102.5%
Property/Other	5,861		337		2,300		5.8%		39.2%		45.0%
	229,680		129,581		72,597		56.4%		31.6%		88.0%
Lloyd's Operations	88,763		50,728		33,085		57.1%		37.3%		94.4%
Total	$ 318,443		$ 180,309		$ 105,682		56.6%		33.2%		89.8%
	Six Months Ended June 30,2007
	Net		Losses
	Earned		and LAE		Underwriting		Combined Ratio
Insurance Companies:	Premium		Incurred		Expenses		Loss		Expense		Total
Marine & Energy	$ 67,494		$ 38,235		$ 20,114		56.6%		29.8%		86.4%
Specialty	103,421		60,288		29,195		58.3%		28.2%		86.5%
Professional Liability	26,371		16,225		9,653		61.5%		36.5%		98.0%
Middle Markets	9,109		4,785		3,336		52.5%		36.6%		89.1%
Property/Other	5,152		5,532		1,929		107.4%		37.4%		144.8%
	211,547		125,065		64,227		59.1%		30.4%		89.5%
Lloyd's Operations	73,116		35,866		24,849		49.1%		33.9%		83.0%
Total	$ 284,663		$ 160,931		$ 89,076		56.5%		31.3%		87.8%
			Amounts				Loss Ratio
Net Incurred Loss Activity			June. 30,		June. 30,		June. 30,		June. 30,
For the Six Months Ended:			2008		2007		2008		2007
Insurance Companies:
Loss and LAE payments			$ 69,086		$ 60,410		30.1%		28.5%
Change in reserves			60,495		64,655		26.3%		30.6%
Net incurred loss and LAE			129,581		125,065		56.4%		59.1%
Lloyd's Operations:
Loss and LAE payments			$ 30,141		$ 30,465		34.0%		41.7%
Change in reserves			20,587		5,401		23.1%		7.4%
Net incurred loss and LAE			50,728		35,866		57.1%		49.1%
Total
Loss and LAE payments			99,227		90,875		31.2%		31.9%
Change in reserves			81,082		70,056		25.4%		24.6%
Net incurred loss and LAE			$ 180,309		$ 160,931		56.6%		56.5%
Impact of Prior Years Reserves			Amounts				Loss Ratio Impact
Favorable / (Unfavorable) Development			June. 30,		June. 30,		June. 30,		June. 30,
For the six Months Ended:			2008		2007		2008		2007
Insurance Companies			$ 20,152		$ 11,191		8.8%		5.3%
Lloyd's Operations			4,108		6,226		4.6%		8.5%
Total			$ 24,260		$ 17,417		7.6%		6.1%

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Net Loss Data
($'s in thousands)
					Case			IBNR
Net Loss Reserves, June 30, 2008:					Reserves			Reserves			Total
Insurance Companies:
Marine & Energy					$	104,796		$	108,502		$	213,298
Specialty						64,524			294,602			359,126
Professional Liability						22,383			55,936			78,319
Middle Markets						12,055			12,681			24,736
Property/Other						10,870			9,827			20,697
Total Insurance Companies						214,628			481,548			696,176
Lloyd's Operations:
Marine						104,679			89,886			194,565
Other						12,238			25,407			37,645
Total Lloyd's Operations						116,917			115,293			232,210
Total Net Loss Reserves					$	331,545		$	596,841		$	928,386
					Case			IBNR
Net Loss Reserves, December 31, 2007:					Reserves			Reserves			Total
Insurance Companies:
Marine & Energy					$	93,467		$	103,500		$	196,967
Specialty						53,276			268,485			321,761
Professional Liability						20,335			50,584			70,919
Middle Markets						11,469			10,329			21,798
Property/Other						12,790			11,446			24,236
Total Insurance Companies						191,337			444,344			635,681
Lloyd's Operations:
Marine						89,957			93,069			183,026
Other						7,485			21,111			28,596
Total Lloyd's Operations						97,442			114,180			211,622
Total Net Loss Reserves					$	288,779		$	558,524		$	847,303

Professional Liability
Reported Claims or Notices of Potential Claims
Related to Subprime Exposure
June 30, 2008
($'s in thousands)
The following table sets forth claims data and other information related to subprime exposure for our professional liability business. Our management believes that its reserves for losses and loss adjustment expenses are adequate to cover the ultimate costs for such loss contingencies related to subprime exposure for our professional liability business.
		Number		Average			Average			Average
		of		Gross			Net			Excess
		Claims (1)		Limit			Limit (2)			Attachment
Primary:
D&O Securities/Other Claims		1		$	1,000		$	650
Excess:
D&O Securities Claims		4			7,500			4,500		$	37,500
D&O Side A Securities Claims		2			5,000			3,500			137,500
Other Claims		2			10,000			5,500			35,000
Subtotal/Average		8			7,500			4,500
Total		9		$	6,778		$	4,072
(1) Claims data for professional liability policies written by the Insurance Companies. There are no reported claims or notices of potential claims reported for the Lloyd’s Operations. All policies are claims made. Defense costs are inside the limits of liability. There was one new reported claim/ notice of potential claim reported for the six months ended June 30, 2008.
(2) Amounts are net of reinsurance.

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES
Investment Data
June 30, 2008
($'s in thousands)
At June 30, 2008, the average quality of the investment portfolio as rated by S&P and Moody’s was AA/Aa with an average duration of 4.3 years. All of the Company’s mortgage-backed and asset-backed securities are rated AAA/Aaa by S&P and Moody’s except for ten securities approximating $6.3 million, which are all rated investment grade. The Company does not own any collateralized debt obligations (CDO’s), collateralized loan obligations (CLO’s) or asset backed commercial paper.
At June 30, 2008, the Company owned two asset-backed securities approximating $0.4 million with subprime mortgage exposures. The securities are rated AAA/Aaa and have an effective maturity of 0.9 years. In addition, the Company owned eleven collateralized mortgage obligations approximating $16.6 million classified as Alt-A which is a credit category between prime and subprime. The Alt-A bonds, also rated AAA/Aaa, have an effective maturity of 2.1 years. Such subprime and Alt-A categories are as defined by S&P. The Company is receiving principal and/or interest payments on all these securities and believes such amounts are fully collectible.
The following table sets forth our cash and investments at June 30, 2008:
					Gross				Gross					Cost or
		Fair			Unrealized				Unrealized					Amortized
		Value			Gains				(Losses)					Cost
Fixed maturities:
U.S. Government Treasury Bonds,
GNMAs and foreign government bonds		$	237,360		$	5,444			$	(471	)			$	232,387
States, municipalities and political
subdivisions			612,577			4,007				(4,952	)				613,522
Mortgage- and asset-backed securities:
Non-guaranteed government agency bonds			28,711			373				(58	)				28,396
Mortgage-backed securities			235,304			709				(1,955	)				236,550
Collateralized mortgage obligations			114,005			404				(8,074	)				121,675
Asset-backed securities			51,868			504				(249	)				51,613
Commercial mortgage-backed securities			108,168