Back to top

Analyst Blog

Credit ratings agency A.M. Best has affirmed its Financial Strength Rating (FSR) and Issuer Credit Rating (ICR) on Navigators Insurance Company (Navigators) and its wholly owned and 100% reinsured subsidiary, Navigators Specialty Insurance Company (Specialty). Navigators writes the insurance businesses for The Navigators Group Inc. (NAVG - Snapshot Report). The rating agency provided FSR of “A“ (Excellent) and ICR of “a+” to Navigators and Specialty.

It also affirmed the ICR of “bbb+” and the debt ratings of “bbb+” on the 7% senior unsecured notes worth $114 million, scheduled to mature in 2016 and the shelf ratings of “bbb+” on senior unsecured notes, “bbb” on subordinated notes and “bbb-” on preferred securities of the parent company, Navigators Inc. All the ratings carried a stable outlook.

The rating affirmation came on the back of robust risk-adjusted capitalization of the company owing to steady operating profitability. Management’s conservative approach towards controlling the business by means of comprehensive risk selection, underwriting and claims handling processes, while balancing and diversifying Navigators’ portfolio was also accounted for in the affirmation.

However, these positive factors were mitigated by the underwriting results, which in recent years have exhibited a decline over that of the prior years. The underwriting results were affected by adverse development of prior years’ loss reserves of the company. Moreover, Navigators was affected by catastrophe losses from U.S. drought, Superstorm Sandy and the Costa Concordia disaster which were partially mitigated by the improvement in non-catastrophe losses.

Low debt levels of the company reflected in the 12.5% debt-to-capital ratio of Navigators Inc. and coverage and operating ratios surpassing A.M. Best’s requirements for the current rating level contributed to the rating affirmation.

The stable outlook on the ratings came on the back of a probable consistency in Navigators’ capitalization and operating profits in tandem with its historical levels of performance.

Rating affirmations or upgrades from credit rating agencies play an important part in retaining investor confidence in the stock as well as maintaining creditworthiness in the market. We believe that the company’s present score with the credit rating agency will help it write more business going forward.

Navigators currently carries a Zacks Rank #2 (Buy). Among other stocks, Montpelier Re Holdings Limited (MRH - Analyst Report), American Safety Insurance Holdings Limited and Platinum Underwriters Holdings Limited (PTP - Snapshot Report) carry a favorable Zacks Rank #1 (Strong Buy) and appear impressive.

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UNITED THER… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%