Back to top

Analyst Blog

Navigators Group, Inc. (NAVG - Snapshot Report) expects its fourth quarter pre-tax loss from Sandy to be in the range of $18-$25 million, net of reinsurance and effects of reinstatement premiums. The estimate includes the expected claims and claim expenses incurred, reinsurance recoveries and reinstatement premiums.

The estimates of Navigators is based on claims information reported to date, a review of its potential exposures, information received from its insureds and catastrophe modeling techniques.

However, owing to the magnitude of Sandy, limited availability of claims data, the  dependent nature of business interruption and other exposures, coverage complexity, legal issues relating to Sandy and uncertainties prevalent to loss estimation,  the ambiguity regarding industry loss from hurricane Sandy remains and hence the company’s estimate may change based on revised data. Thus the actual losses will vary from the estimate. Such estimate revision will be recorded by the company in the period in which it occurs.

Navigators posted better numbers in each of the first three quarters of 2012 partly owing to lower catastrophe activities. It outpaced the Zacks Consensus Estimate for the last three quarter with an average earnings surprise of approximately 14.3%. Overall combined ratio in the first and second quarters showed improvement but in the third quarter remained flat with the year-ago period. The first and second quarters reported underwriting profit which rebounded from the year-ago losses, while the third quarter experienced an 18.4% improvement y/y.

However, the picture is expected to change in the fourth quarter owing to the huge losses from Super Storm Sandy. Nevertheless the Zacks Consensus Estimate for the fourth quarter of 2012 is 63 cents representing a year-over-year growth of 52.6%. We also expect the solid performance in each of the three quarters to more than offset the headwinds in the fourth quarter, thereby aiding the company to come up with better numbers. The Zack Consensus Estimate is $2.68, reflecting a year over year increase of 112.5%.

Other property and casualty insurers like Cincinnati Financial Corp. (CINF - Analyst Report) and ACE Limited (ACE - Analyst Report), which closely compete with Navigators, have also provided their loss estimates from Hurricane Sandy for the fourth quarter of 2012. Cincinnati estimates pretax net loss of approximately $25-$35 million while ACE Limited’s loss estimate stands at $380 million after tax, net of reinsurance and including reinstatement premiums.

Navigators Group currently holds a Zacks #3 Rank, which translates into a short-term Hold rating. ACE Limited also shares the same Zacks Rank while Cincinnati holds a Zacks #2 Rank which translates into a short-term Buy rating.

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
CENTURY ALU… CENX 22.53 +4.50%
ERBA DIAGNO… ERB 2.91 +4.30%
PLANAR SYST… PLNR 4.31 +3.86%
MALLINCKROD… MNK 72.17 +3.83%
GTT COMMUNI… GTT 12.06 +3.52%