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Navigators Group Inc. (NAVG - Snapshot Report) reported fourth-quarter 2013 operating earnings of $1.13 per share, outpacing the Zacks Consensus Estimate of 88 cents. The results also surged from 59 cents per share earned in the year-ago quarter.

Bottom-line growth reflects improved combined ratio and strong underwriting performances both the Insurance Companies and Lloyd’s Operations segments.
Including a post-tax charge for the call premium payments related to the 7.0% note redemption, Navigators Group reported net income of $1.00 per share for the fourth quarter, down from $1.96 per share in the year-ago period.

Quarterly Operational Update

Total revenue of Navigators Group increased 1.7% year over year to nearly $249 million in the fourth quarter of 2013. The improvement was driven by higher net earned premiums (up 9.1% year over year) as well as net investment income (up 4.7% year over year). The total revenue figure also surpassed the Zacks Consensus Estimate of $235 million.

Net written premiums of Navigators Group rose 5.2% year over year to $223.4 million.

Navigators Group’s total expenses increased 12.3% to $228.3 million in the reported quarter.

In the reported quarter, underwriting profit for Navigators Group stood at $13.2 million comparing favorably with an underwriting loss of $324 million in the prior-year period. As a result, combined ratio improved 620 basis points (bps) year over year to 94%.

Segment Update

The Insurance Companies generated net written premiums of $171 million, up 3.3% year over year.

Underwriting profit came in at nearly $5.3 million, rebounding from an underwriting loss of $13.4 million in the prior-year quarter. Combined ratio significantly improved 1220 bps year over year to 96.8%.

The Lloyd’s Operations’ net written premiums in the segment were $52.4 million, up 12% year over year.

Underwriting profit of $7.9 million declined 39.8% year over year. Combined ratio deteriorated 1060 bps to 85.5%.

Full Year Highlights

Navigators Group reported full-year 2013 operating earnings of $4.30 per share, outpacing the Zacks Consensus Estimate of $4.05. The results also surged from $2.63 per share earned in 2012.

Including a post-tax charge for the call premium payments related to the 7.0% note redemption, Navigators Group reported net income of $4.42 per share in 2013, down from $4.45 per share in 2012.

Navigators Group’s total revenue improved 4.5% year over year to roughly $918 million in 2013. The upside was driven by higher net earned premiums as well as net investment income.

In 2013, underwriting profit for Navigators Group stood at $43.9 million compared with $5.5 million in 2012. As a result, the combined ratio improved 450 basis points (bps) year over year to 94.8%.

Financial Position

Navigators Group exited 2013 with cash and investments of $2.57 billion, higher than $2.42 billion in 2012.

Net cash flow from operating activities stood at $136.9 million in 2013, increasing 41.6% from the 2012 number.

As of Dec 31, 2013, total assets of Navigators Group were valued at $4.2 billion, up 4% from the end of 2012.

Total stockholders’ equity of $902.2 million as of Dec 31, 2013 increased 2.6% from $879.5 million at 2012-end.

Performances of Other Property and Casualty Insurers

Allied World Assurance Company Holdings, AG’s (AWH - Snapshot Report) fourth-quarter 2013 operating net income of $2.17 per share missed the Zacks Consensus Estimate of $2.40 by 10.4%.

Markel Corp. (MKL - Snapshot Report) reported fourth-quarter operating net income of $5.92 per share, lagging the Zacks Consensus Estimate of $5.99 per share by 1.2%. However, the results improved 2.4% year over year.

Arch Capital Group Ltd. (ACGL - Snapshot Report) reported fourth-quarter 2013 operating net income of $1.12 per share, which surpassed the Zacks Consensus Estimate of 99 cents by 13.1%.

Zacks Rank

Navigators Group currently carries a Zacks Rank #1 (Strong Buy).
 

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