10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2013

or

¨ Transitional Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                      to                     

Commission file number 0-15886

The Navigators Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware	13-3138397
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
6 International Drive, Rye Brook, New York	10573
(Address of principal executive offices)	(Zip Code)

(914) 934-8999

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report.)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of common shares outstanding as of July 25, 2013 was 14,133,953.

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

INDEX

	Page Number
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets June 30, 2013 (Unaudited) and December 31, 2012		3
Consolidated Statements of Income (Unaudited) Three and Six Months Ended June 30, 2013 and 2012		4
Consolidated Statements of Comprehensive Income (Unaudited) Three and Six Months Ended June 30, 2013 and 2012		5
Consolidated Statements of Stockholders’ Equity (Unaudited) Six Months Ended June 30, 2013		6
Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30, 2013 and 2012		7
Notes to Interim Consolidated Financial Statements (Unaudited)		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		29
Item 3. Quantitative and Qualitative Disclosures About Market Risk		62
Item 4. Controls and Procedures		62
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		63
Item 1A. Risk Factors		63
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		63
Item 3. Defaults Upon Senior Securities		63
Item 4. Mine Safety Disclosures		63
Item 5. Other Information		63
Item 6. Exhibits		64
Signatures		65
Index to Exhibits		66

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

	June 30,			December 31,
	2013			2012
	(Unaudited)
ASSETS
Investments and cash:
Fixed maturities, available-for-sale, at fair value (amortized cost: 2013, $1,988,507; 2012, $2,034,765)	$	2,007,806		$	2,121,833
Equity securities, available-for-sale, at fair value (cost: 2013, $115,221; 2012, $85,004)		138,549			101,297
Short-term investments, at cost which approximates fair value		124,726			153,788
Cash		101,960			45,336
Total investments and cash	$	2,373,041		$	2,422,254
Premiums receivable		394,395			320,182
Prepaid reinsurance premiums		251,046			221,015
Reinsurance recoverable on paid losses		52,569			49,282
Reinsurance recoverable on unpaid losses and loss adjustment expenses		881,962			880,139
Deferred policy acquisition costs		65,109			61,005
Accrued investment income		13,691			12,587
Goodwill and other intangible assets		6,785			7,093
Deferred income tax, net		25,882			3,216
Receivable for investments sold		25			4,310
Other assets		32,005			26,587
Total assets	$	4,096,510		$	4,007,670
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Reserves for losses and loss adjustment expenses	$	2,116,384		$	2,097,048
Unearned premiums		729,568			642,407
Reinsurance balances payable		183,683			165,813
Senior Notes		114,502			114,424
Current income tax payable, net		6,324			2,133
Payable for investments purchased		21,428			58,345
Accounts payable and other liabilities		50,669			48,015
Total liabilities	$	3,222,558		$	3,128,185
Stockholders’ equity:
Preferred stock, $.10 par value, authorized 1,000,000 shares, none issued	$	—		$	—
Common stock, $.10 par value, authorized 50,000,000 shares, issued 17,645,043 shares for 2013 and 17,558,046 shares for 2012		1,764			1,755
Additional paid-in capital		333,954			329,452
Treasury stock, at cost (3,511,380 shares for 2013 and 2012)		(155,801	)		(155,801	)
Retained earnings		656,718			628,871
Accumulated other comprehensive income		37,317			75,208
Total stockholders’ equity	$	873,952		$	879,485
Total liabilities and stockholders’ equity	$	4,096,510		$	4,007,670

The accompanying Notes to Interim Consolidated Financial Statements are an integral part of these financial statements.

3

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(In thousands, except share and per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Gross written premiums	$	332,128		$	322,987		$	725,350		$	666,136
Revenues:
Net written premiums	$	198,469		$	190,252		$	467,921		$	433,297
Change in unearned premiums		7,345			5,765			(59,779	)		(54,161	)
Net earned premiums		205,814			196,017			408,142			379,136
Net investment income		14,246			15,777			27,903			27,035
Total other-than-temporary impairment losses		—			(496	)		(42	)		(693	)
Portion of loss recognized in other comprehensive income (before tax)		—			—			—			43
Net other-than-temporary impairment losses recognized in earnings		—			(496	)		(42	)		(650	)
Net realized gains (losses)		3,345			4,217			8,159			6,059
Other income (expense)		(915	)		387			(297	)		1,298
Total revenues	$	222,490		$	215,902		$	443,865		$	412,878
Expenses:
Net losses and loss adjustment expenses	$	131,148		$	123,407		$	262,490		$	241,392
Commission expenses		28,391			29,503			54,946			58,953
Other operating expenses		40,678			39,819			81,552			76,126
Interest expense		2,052			2,049			4,103			4,098
Total expenses		202,269			194,778			403,091			380,569
Income (loss) before income taxes		20,221			21,124			40,774			32,309
Income tax expense (benefit)		6,284			6,225			12,927			9,506
Net income (loss)	$	13,937		$	14,899		$	27,847		$	22,803
Net income per common share:
Basic	$	0.99		$	1.06		$	1.97		$	1.63
Diluted	$	0.97		$	1.05		$	1.93		$	1.60
Average common shares outstanding:
Basic		14,131,422			14,006,361			14,108,747			13,992,901
Diluted		14,428,117			14,208,759			14,434,232			14,245,947

The accompanying Notes to Interim Consolidated Financial Statements are an integral part of these financial statements.

4

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(In thousands)

	Three Months Ended June 30,
	2013			2012
Net income (loss)	$	13,937		$	14,899
Other comprehensive income (loss):
Change in net unrealized gains (losses) on investments:
Unrealized gains (losses) on investments arising during the period, net of deferred tax of $19,404 and $3,790 in 2013 and 2012, respectively	$	(36,123	)	$	9,113
Reclassification adjustment for net realized (gains) losses included in net income net of deferred tax of $870 and $865 in 2013 and 2012, respectively		(1,616	)		(1,607	)
Change in net unrealized gains (losses) on investments	$	(37,739	)	$	7,506
Change in other-than-temporary impairments:
Non-credit other-than-temporary impairments arising during the period, net of deferred tax of $13 and $53 in 2013 and 2012, respectively	$	24		$	98
Reclassification adjustment for non-credit other-than-temporary impairment losses recognized in net income		—			—
Change in other-than-temporary impairments	$	24		$	98
Change in foreign currency translation gains (losses), net of deferred tax of $566 and $452 in 2013 and 2012, respectively		(1,051	)		(840	)
Other comprehensive income (loss)	$	(38,766	)	$	6,764
Comprehensive income (loss)	$	(24,829	)	$	21,663
	Six Months Ended June 30,
	2013			2012
Net income (loss)	$	27,847		$	22,803
Other comprehensive income (loss):
Change in net unrealized gains (losses) on investments:
Unrealized gains (losses) on investments arising during the period, net of deferred tax of $19,037 and $8,237 in 2013 and 2012, respectively	$	(35,335	)	$	17,371
Reclassification adjustment for net realized (gains) losses included in net income net of deferred tax of $2,390 and $719 in 2013 and 2012, respectively		(4,438	)		(1,335	)
Change in net unrealized gains (losses) on investments	$	(39,773	)	$	16,036
Change in other-than-temporary impairments:
Non-credit other-than-temporary impairments arising during the period, net of deferred tax of $163 and $263 in 2013 and 2012, respectively	$	303		$	489
Reclassification adjustment for non-credit other-than-temporary impairment losses recognized in net income net of deferred tax of $15 in 2012		—			28
Change in other-than-temporary impairments	$	303		$	517
Change in foreign currency translation gains (losses), net of deferred tax of $975 and $1,851 in 2013 and 2012, respectively		1,579			(3,812	)
Other comprehensive income (loss)	$	(37,891	)	$	12,741
Comprehensive income (loss)	$	(10,044	)	$	35,544

The accompanying Notes to Interim Consolidated Financial Statements are an integral part of these financial statements.

5

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

(In thousands, except share amounts)

					Additional									Accumulated Other			Total
	Common Stock				Paid-in		Treasury Stock					Retained		Comprehensive			Stockholders’
	Shares		Amount		Capital		Shares		Amount			Earnings		Income (Loss)			Equity
Balance, December 31, 2012		17,558,046	$	1,755	$	329,452		3,511,380	$	(155,801	)	$	628,871	$	75,208		$	879,485
Net income													27,847		—			27,847
Changes in other comprehensive income:
Change in net unrealized gain (loss) on investments		—		—		—		—		—			—		(39,773	)		(39,773	)
Change in net non-credit other-than-temporary impairment losses		—		—		—		—		—			—		303			303
Change in foreign currency translation gain (loss)		—		—		—		—		—			—		1,579			1,579
Total other comprehensive income		—		—		—		—		—			—		(37,891	)		(37,891	)
Shares issued under stock plan		86,997		9		1,028		—		—			—		—			1,037
Share-based compensation		—		—		3,474		—		—			—		—			3,474
Balance, June 30, 2013		17,645,043	$	1,764	$	333,954		3,511,380	$	(155,801	)	$	656,718	$	37,317		$	873,952

The accompanying Notes to Interim Consolidated Financial Statements are an integral part of these financial statements.

6

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)

	Six Months Ended June 30,
	2013			2012
Operating activities:
Net income (loss)	$	27,847		$	22,803
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation & amortization		1,953			2,040
Deferred income taxes		(2,457	)		(9,800	)
Net realized (gains) losses		(8,159	)		(6,059	)
Net other-than-temporary losses recognized in earnings		42			650
Changes in assets and liabilities:
Reinsurance recoverable on paid and unpaid losses and loss adjustment expenses		(5,110	)		3,741
Reserves for losses and loss adjustment expenses		19,336			5,845
Prepaid reinsurance premiums		(30,031	)		(46,927	)
Unearned premiums		87,161			101,292
Premiums receivable		(74,213	)		(119,834	)
Deferred policy acquisition costs		(4,104	)		(525	)
Accrued investment income		(1,104	)		413
Reinsurance balances payable		17,870			35,379
Current income tax payable, net		4,191			1,497
Other		15,263			24,513
Net cash provided by (used in) operating activities	$	48,485		$	15,028
Investing activities:
Fixed maturities
Redemptions and maturities	$	121,340		$	97,345
Sales		411,634			526,753
Purchases		(491,255	)		(747,421	)
Equity securities
Sales		11,439			1,600
Purchases		(38,094	)		(3,397	)
Change in payable for securities		(32,632	)		70,265
Net change in short-term investments		29,062			(39,763	)
Purchase of property and equipment		(4,855	)		(2,353	)
Net cash provided by (used in) investing activities	$	6,639		$	(96,971	)
Financing activities:
Proceeds of stock issued from employee stock purchase plan	$	374		$	313
Proceeds of stock issued from exercise of stock options		1,126			112
Net cash provided by (used in) financing activities	$	1,500		$	425
Increase (decrease) in cash	$	56,624		$	(81,518	)
Cash at beginning of year		45,336			127,360
Cash at end of period	$	101,960		$	45,842
Supplemental cash information:
Income taxes paid, net	$	9,223		$	14,188
Interest paid	$	4,025		$	4,025
Issuance of stock to directors	$	400		$	242

The accompanying Notes to Interim Consolidated Financial Statements are an integral part of these financial statements.

7

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements

(Unaudited)

Note 1. Accounting Policies

The accompanying interim consolidated financial statements are unaudited and reflect all adjustments which, in the opinion of management, are necessary to fairly present the results of The Navigators Group, Inc. and its subsidiaries for the interim periods presented on the basis of United States generally accepted accounting principles (“GAAP” or “U.S. GAAP”). All such adjustments are of a normal recurring nature. All significant intercompany transactions and balances have been eliminated. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting periods. The results of operations for any interim period are not necessarily indicative of results for the full year. The term “the Company” as used herein is used to mean The Navigators Group, Inc. and its subsidiaries, unless the context otherwise requires. The terms “Parent” or “Parent Company” are used to mean The Navigators Group, Inc. without its subsidiaries. These financial statements should be read in conjunction with the consolidated financial statements and notes contained in the Company’s 2012 Annual Report on Form 10-K.

Note 2. Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013 -02 amending Codification topic 220 – Comprehensive Income. The amendments do not change the current requirements for reporting net income or other comprehensive income in the financial statements. The guidance requires an entity to present information about significant items reclassified out of Accumulated Other Comprehensive Income (“AOCI”) by component and for items reclassified out of AOCI and into net income, the entity must disclose the effect of such items on the affected net income line item. The Company adopted this standard effective January 1, 2013, and presents this information on the consolidated statements of comprehensive income. Adoption of this standard did not have any impact on the Company’s consolidated balance sheets, results of operations or cash flows.

In July 2012, the FASB issued ASU 2012-02 amending Codification topic 350 – Intangibles – Goodwill and Other. The amendment is intended to reduce cost and complexity, in addition to enhancing consistency of impairment testing guidance among long-lived asset categories by permitting entities to assess qualitative factors to determine whether it is necessary to calculate an asset’s fair value when testing an indefinite-lived asset for impairment. The amendment is effective for fiscal years beginning after September 15, 2012. The Company adopted this standard effective January 1, 2013. Adoption of this standard did not have any impact on the Company’s consolidated financial position, results of operating or cash flows.

8

Note 3. Segment Information

The Company classifies its business into two underwriting segments consisting of the Insurance Companies segment (“Insurance Companies”) and the Lloyd’s Operations segment (“Lloyd’s Operations”), which are separately managed, and a Corporate segment (“Corporate”). Segment data for each of the two underwriting segments include allocations of the operating expenses of the wholly-owned underwriting management companies and the Parent Company’s operating expenses and related income tax amounts. The Corporate segment consists of the Parent Company’s investment income, interest expense and the related tax effect.

The Company evaluates the performance of each underwriting segment based on its underwriting and GAAP results. The Insurance Companies and the Lloyd’s Operations results are measured by taking into account net earned premiums, net losses and loss adjustment expenses (“LAE”), commission expenses, other operating expenses and other income (expense). Each segment maintains its own investments on which it earns income and realizes capital gains or losses. The Company’s underwriting performance is evaluated separately from the performance of its investment portfolios.

The Insurance Companies segment consists of Navigators Insurance Company, which includes a United Kingdom Branch (the “U.K. Branch”), and Navigators Specialty Insurance Company, which underwrites specialty and professional liability insurance on an excess and surplus lines basis. All of the insurance business written by Navigators Specialty Insurance Company is fully reinsured by Navigators Insurance Company pursuant to a 100% quota share reinsurance agreement. The insurance and reinsurance business written by our Insurance Companies is underwritten through our wholly-owned underwriting management Companies, Navigators Management Company, Inc. (“NMC”) and Navigators Management (UK) Ltd. (“NMUK”).

Our Lloyd’s Operations segment includes Navigators Underwriting Agency Ltd. (“NUAL”), a Lloyd’s of London (“Lloyd’s”) underwriting agency which manages Lloyd’s Syndicate 1221 (“Syndicate 1221”). Our Lloyd’s Operations primarily underwrite marine and related lines of business along with offshore energy, construction coverages for onshore energy business and professional liability insurance at Lloyd’s through Syndicate 1221. We control 100% of Syndicate 1221’s stamp capacity through our wholly-owned subsidiary, Navigators Corporate Underwriters Ltd. (“NCUL”), which is referred to as a corporate name in the Lloyd’s market.

The Insurance Companies and the Lloyd’s Operations underwriting results are measured based on underwriting profit or loss and the related combined ratio, which are both non-GAAP measures of underwriting profitability. Underwriting profit or loss is calculated from net earned premiums, less the sum of net losses and LAE, commission expenses, other operating expenses and other income (expense). The combined ratio is derived by dividing the sum of net losses and LAE, commission expenses, other operating expenses and other income (expense) by net earned premiums. A combined ratio of less than 100% indicates an underwriting profit and greater than 100% indicates an underwriting loss.

9

Financial data by segment for the three and six months ended June 30, 2013 and 2012 were as follows:

	Three Month Ended June 30, 2013
In thousands	Insurance Companies			Lloyd’s Operations			Corporate(1)			Total
Gross written premiums	$	228,565		$	103,563		$	—		$	332,128
Net written premiums		143,380			55,089			—			198,469
Net earned premiums		156,547			49,267			—			205,814
Net losses and loss adjustment expenses		(106,668	)		(24,480	)		—			(131,148	)
Commission expenses		(20,573	)		(8,335	)		517			(28,391	)
Other operating expenses		(29,829	)		(10,849	)		—			(40,678	)
Other income (expense)		689			(1,087	)		(517	)		(915	)
Underwriting profit (loss)	$	166		$	4,516		$	—		$	4,682
Net investment income		12,515			1,728			3			14,246
Net realized gains (losses)		3,099			242			4			3,345
Interest expense		—			—			(2,052	)		(2,052	)
Income (loss) before income taxes	$	15,780		$	6,486		$	(2,045	)	$	20,221
Income tax expense (benefit)		4,785			2,206			(707	)		6,284
Net income (loss)	$	10,995		$	4,280		$	(1,338	)	$	13,937
Identifiable assets	$	3,097,754		$	947,736		$	51,020		$	4,096,510
Losses and loss adjustment expenses ratio		68.1	%		49.7	%					63.7	%
Commission expense ratio		13.1	%		16.9	%					13.8	%
Other operating expense ratio (2)		18.7	%		24.2	%					20.2	%
Combined ratio		99.9	%		90.8	%					97.7	%

(1)  -  Includes Corporate segment intercompany eliminations.

(2)  -  Includes Other operating expenses and Other income.

10

	Three Month Ended June 30, 2012
	Insurance			Lloyd’s
In thousands	Companies			Operations			Corporate(1)			Total
Gross written premiums	$	214,064		$	108,923		$	—		$	322,987
Net written premiums		134,065			56,187			—			190,252
Net earned premiums		141,577			54,440			—			196,017
Net losses and loss adjustment expenses		(100,003	)		(23,404	)		—			(123,407	)
Commission expenses		(21,117	)		(8,938	)		552			(29,503	)
Other operating expenses		(28,914	)		(10,905	)		—			(39,819	)
Other income (expense)		879			60			(552	)		387
Underwriting profit (loss)	$	(7,578	)	$	11,253		$	—		$	3,675
Net investment income		13,286			2,454			37			15,777
Net realized gains (losses)		2,325			1,396			—			3,721
Interest expense		—			—			(2,049	)		(2,049	)
Income (loss) before income taxes	$	8,033		$	15,103		$	(2,012	)	$	21,124
Income tax expense (benefit)		2,101			5,207			(1,083	)		6,225
Net income (loss)	$	5,932		$	9,896		$	(929	)	$	14,899
Identifiable assets	$	2,933,334		$	967,862		$	37,870		$	3,939,066
Losses and loss adjustment expenses ratio		70.6	%		43.0	%					63.0	%
Commission expense ratio		14.9	%		16.4	%					15.1	%
Other operating expense ratio (2)		19.9	%		19.9	%					20.0	%
Combined ratio		105.4	%		79.3	%					98.1	%

(1)  -  Includes Corporate segment intercompany eliminations.

(2)  -  Includes Other operating expenses and Other income.

11

	Six Month Ended June 30, 2013
	Insurance			Lloyd’s
In thousands	Companies			Operations			Corporate(1)			Total
Gross written premiums	$	530,193		$	195,157		$	—		$	725,350
Net written premiums		359,699			108,222			—			467,921
Net earned premiums		310,878			97,264			—			408,142
Net losses and loss adjustment expenses		(213,653	)		(48,837	)		—			(262,490	)
Commission expenses		(39,090	)		(16,956	)		1,100			(54,946	)
Other operating expenses		(59,172	)		(22,380	)		—			(81,552	)
Other income (expense)		1,348			(545	)		(1,100	)		(297	)
Underwriting profit (loss)	$	311		$	8,546		$	—		$	8,857
Net investment income		24,466			3,430			7			27,903
Net realized gains (losses)		7,891			222			4			8,117
Interest expense		—			—			(4,103	)		(4,103	)
Income (loss) before income taxes	$	32,668		$	12,198		$	(4,092	)	$	40,774
Income tax expense (benefit)		10,199			4,242			(1,514	)		12,927
Net income (loss)	$	22,469		$	7,956		$	(2,578	)	$	27,847
Identifiable assets	$	3,097,754		$	947,736		$	51,020		$	4,096,510
Losses and loss adjustment expenses ratio		68.7	%		50.2	%					64.3	%
Commission expense ratio		12.6	%		17.4	%					13.5	%
Other operating expense ratio (2)		18.6	%		23.6	%					20.0	%
Combined ratio		99.9	%		91.2	%					97.8	%

(1)  -  Includes Corporate segment intercompany eliminations.

(2)  -  Includes Other operating expenses and Other income.

12

	Six Month Ended June 30, 2012
	Insurance			Lloyd’s
In thousands	Companies			Operations			Corporate(1)			Total
Gross written premiums	$	462,402		$	203,734		$	—		$	666,136
Net written premiums		315,315			117,982			—			433,297
Net earned premiums		273,125			106,011			—			379,136
Net losses and loss adjustment expenses		(191,180	)		(50,212	)		—			(241,392	)
Commission expenses		(40,418	)		(19,824	)		1,289			(58,953	)
Other operating expenses		(54,259	)		(21,867	)		—			(76,126	)
Other income (expense)		2,521			66			(1,289	)		1,298
Underwriting profit (loss)	$	(10,211	)	$	14,174		$	—		$	3,963
Net investment income		22,221			4,737			77			27,035
Net realized gains (losses)		4,200			1,209			—			5,409
Interest expense		—			—			(4,098	)		(4,098	)
Income (loss) before income taxes	$	16,210		$	20,120		$	(4,021	)	$	32,309
Income tax expense (benefit)		3,980			6,933			(1,407	)		9,506
Net income (loss)	$	12,230		$	13,187		$	(2,614	)	$	22,803
Identifiable assets	$	2,933,334		$	967,862		$	37,870		$	3,939,066
Losses and loss adjustment expenses ratio		70.0	%		47.4	%					63.7	%
Commission expense ratio		14.8	%		18.7	%					15.5	%
Other operating expense ratio (2)		18.9	%		20.5	%					19.8	%
Combined ratio		103.7	%		86.6	%					99.0	%

(1)  -  Includes Corporate segment intercompany eliminations.

(2)  -  Includes Other operating expenses and Other income.

13

The following tables provide additional financial data by segment for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30, 2013
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	43,077	$	45,893	$	88,970
Property casualty		152,095		41,217		193,312
Professional liability		33,393		16,453		49,846
Total	$	228,565	$	103,563	$	332,128
Net written premiums:
Marine	$	27,366	$	34,060	$	61,426
Property casualty		90,711		12,181		102,892
Professional liability		25,303		8,848		34,151
Total	$	143,380	$	55,089	$	198,469
Net earned premiums:
Marine	$	31,798	$	34,623	$	66,421
Property casualty		99,477		8,562		108,039
Professional liability		25,272		6,082		31,354
Total	$	156,547	$	49,267	$	205,814

	Three Months Ended June 30, 2012
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	49,896	$	47,037	$	96,933
Property casualty		130,627		48,978		179,605
Professional liability		33,541		12,908		46,449
Total	$	214,064	$	108,923	$	322,987
Net written premiums:
Marine	$	31,786	$	33,492	$	65,278
Property casualty		76,842		15,705		92,547
Professional liability		25,437		6,990		32,427
Total	$	134,065	$	56,187	$	190,252
Net earned premiums:
Marine	$	35,535	$	34,272	$	69,807
Property casualty		82,175		15,272		97,447
Professional liability		23,867		4,896		28,763
Total	$	141,577	$	54,440	$	196,017

14

	Six Months Ended June 30, 2013
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	93,924	$	99,537	$	193,461
Property casualty		371,059		66,275		437,334
Professional liability		65,210		29,345		94,555
Total	$	530,193	$	195,157	$	725,350
Net written premiums:
Marine	$	68,507	$	73,618	$	142,125
Property casualty		240,662		19,493		260,155
Professional liability		50,530		15,111		65,641
Total	$	359,699	$	108,222	$	467,921
Net earned premiums:
Marine	$	68,523	$	68,668	$	137,191
Property casualty		192,195		16,441		208,636
Professional liability		50,160		12,155		62,315
Total	$	310,878	$	97,264	$	408,142

	Six Months Ended June 30, 2012
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	111,761	$	108,812	$	220,573
Property casualty		286,546		73,274		359,820
Professional liability		64,095		21,648		85,743
Total	$	462,402	$	203,734	$	666,136
Net written premiums:
Marine	$	74,651	$	81,550	$	156,201
Property casualty		191,374		25,060		216,434
Professional liability		49,290		11,372		60,662
Total	$	315,315	$	117,982	$	433,297
Net earned premiums:
Marine	$	70,810	$	67,536	$	138,346
Property casualty		156,543		29,774		186,317
Professional liability		45,772		8,701		54,473
Total	$	273,125	$	106,011	$	379,136

The Insurance Companies net earned premiums include $12.7 million and $18.2 million of net earned premiums from the U.K. Branch for the three months ended June 30, 2013 and 2012, respectively, and $22.8 million and $39.1 million of net earned premiums from the U.K. Branch for the six months ended June 30, 2013 and 2012, respectively.

15

Note 4. Reinsurance Ceded

The Company’s ceded earned premiums were $115.3 million and $120.7 million for the three months ended June 30, 2013 and 2012 and $226.3 million and $185.8 million for the six months ended June 30, 2013 and 2012, respectively.

The Company’s ceded incurred losses were $77.6 million and $61.7 million for the three months ended June 30, 2013 and 2012 and $131.1 million and $123.2 million for the six months ended June 30, 2013 and 2012, respectively.

The following table lists the Company’s 20 largest reinsurers measured by the amount of reinsurance recoverable for ceded losses and loss adjustment expenses (“LAE”) and ceded unearned premium (constituting 73.4% of the total recoverable), together with the reinsurance recoverable and collateral as of June 30, 2013, and the reinsurers’ ratings from A.M. Best Company (“A.M. Best”) and Standard & Poor’s (“S&P”):

	Reinsurance Recoverables
In thousands	Unearned Premium		Paid/ Unpaid Losses		Total (1)		Collateral Held (2)		A.M. Best		S&P
National Indemnity Company	$	53,397	$	64,605	$	118,002	$	35,018		A++		AA+
Swiss Reinsurance America Corporation		5,949		86,684		92,633		7,685		A+		AA-
Transatlantic Reinsurance Company		20,597		70,872		91,469		8,971		A		A+
Everest Reinsurance Company		21,219		69,516		90,735		8,025		A+		A+
Munich Reinsurance America Inc.		7,923		80,115		88,038		4,133		A+		AA-
Lloyd’s Syndicate #2003		10,938		39,381		50,319		12,490		A		A+
Partner Reinsurance Europe		10,485		37,600		48,085		20,108		A+		A+
Scor Global P&C SE		11,642		27,768		39,410		10,455		A		A+
Allied World Reinsurance		12,803		26,519		39,322		3,872		A		A
Tower Insurance Company		13,397		16,537		29,934		8,462		A-		NR
General Reinsurance Corporation		194		25,967		26,161		1,092		A++		AA+
Validus Reinsurance Ltd.		2,695		22,860		25,555		12,884		A		A
Berkley Insurance Company		1,653		19,389		21,042		405		A+		A+
Scor Holding (Switzerland) AG		691		18,159		18,850		8,681		A		A+
AXIS Re Europe		4,182		13,102		17,284		4,718		A		A+
Atlantic Specialty Insurance		8,658		7,550		16,208		3,102		A		A-
Employers Mutual Casualty Company		10,867		5,317		16,184		10,557		A		NR
Platinum Underwriters Re		304		13,899		14,203		1,696		A		A-
Ace Property and Casualty Insurance Company		730		13,297		14,027		—		A+		AA-
QBE Reinsurance Corp		6,362		6,950		13,312		2,094		A		A+
Top 20 Reinsurers	$	204,686	$	666,087	$	870,773	$	164,448
Others		46,360		268,444		314,804		79,424
Total	$	251,046	$	934,531	$	1,185,577	$	243,872

(1)  -  Net of reserve for uncollectible reinsurance of approximately $10.8 million.

(2)  -  Collateral of $243.9 million consists of $183.7 million in ceded balances payable, $57.2 million in letters of credit, and $3.0     million of other balances held by the Company’s Insurance Companies and Lloyd’s Operations.

16

Note 5. Stock-Based Compensation

Stock-based compensation granted under the Company’s stock plans is expensed in tranches over the vesting period. Options and non-performance based grants generally vest equally over a three or four year period and the options have a maximum term of ten years. Certain non-performance based grants vest over five years with one-third vesting in each of the third, fourth and fifth years. The Company’s performance based share grants generally consist of two types of awards. The restricted stock units issued in 2011 and after will cliff vest on the third anniversary of the date of grant, with 50% vesting in full, and 50% dependent on the rate of compound annual growth in book value per share for the three years immediately prior to the vesting date, with actual shares that vest ranging between 150% to 0% of that portion of the original award. Those performance based restricted stock units issued prior to 2011 generally vest over five years with one-third vesting in each of the third, fourth and fifth years, dependent on the rolling three-year average return on equity based on the three years prior to the year in which the vesting occurs, with actual shares that vest ranging between 150% to 0% of the original award.

The amounts charged to expense for stock-based compensation for the three and six months ended June 30, 2013 and 2012 are presented in the following table:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2013		2012		2013		2012
Restricted stock units	$	2,116	$	1,974	$	3,474	$	3,186
Directors restricted stock grants(1)		106		60		206		120
Employee stock purchase plan		38		41		47		15
Total stock based compensation	$	2,260	$	2,075	$	3,727	$	3,321

(1)  -  Relates to non-employee directors serving on the Parent Company’s Board of Directors, all of whom have been elected by     the Company’s stockholders, as well as non-employee directors serving on NUAL’s Board of Directors.

Note 6. Lloyd’s Syndicate 1221

The Company’s Lloyd’s Operations included in the consolidated financial statements represents its participation in Syndicate 1221. Syndicate 1221’s stamp capacity is £195 million ($296 million) for the 2013 underwriting year compared to £184 million ($300 million) for the 2012 underwriting year. Stamp capacity is a measure of the amount of premiums a Lloyd’s syndicate is authorized to write based on a business plan approved by the Council of Lloyd’s. Syndicate 1221’s stamp capacity is expressed net of commission (as is standard at Lloyd’s). The Syndicate 1221 premiums recorded in the Company’s financial statements are gross of commission. The Company controlled 100% of Syndicate 1221’s stamp capacity for the 2013 and 2012 underwriting years through its wholly-owned Lloyd’s corporate member.

The Company provides letters of credit and posts cash to Lloyd’s to support its participation in Syndicate 1221’s stamp capacity. As of June 30, 2013, the Company had provided letters of credit of $142.6 million and has $0.8 million of cash collateral posted. If Syndicate 1221 increases its stamp capacity and the Company participates in the additional stamp capacity, or if Lloyd’s changes the capital requirements, the Company may be required to supply additional collateral acceptable to Lloyd’s. If the Company is unwilling or unable to provide additional acceptable collateral, the Company will be required to reduce its participation in the stamp capacity of Syndicate 1221. The letters of credit are provided through a credit facility with a consortium of banks which provides the Company with the ability to have letters of credit issued to support Syndicate 1221’s stamp capacity at Lloyd’s for the 2013 and 2014 underwriting years, as well as open prior years. If any letters of credit remain outstanding under the facility after December 31, 2014, we would be required to post additional collateral to secure the remaining letters of credit. If the credit facility is not renewed prior to December 31, 2014, the Company will need to find internal and/or external sources to provide either letters of credit or other collateral in order to continue to participate in Syndicate 1221. The credit facility is collateralized by all of the common stock of Navigators Insurance Company. Refer to Note 11, Credit Facility, for additional information.

17

Note 7. Income Taxes

The Company is subject to the tax laws and regulations of the United States (“U.S.”) and the foreign countries in which it operates. The Company files a consolidated U.S. Federal tax return, which includes all domestic subsidiaries and the U.K. Branch. The income from the foreign operations is designated as either U.S. connected income or non-U.S. connected income. Lloyd’s is required to pay U.S. income tax on U.S. connected income written by Lloyd’s syndicates. Lloyd’s and the U.S. Internal Revenue Service (“IRS”) have entered into an agreement whereby the amount of tax due on U.S. connected income is calculated by Lloyd’s and remitted directly to the IRS. These amounts are then charged to the corporate member in proportion to its participation in the relevant syndicates. The Company’s corporate member is subject to this agreement and will receive United Kingdom (“U.K.”) tax credits in the U.K. for any U.S. income tax incurred up to the U.K. income tax charged on the U.S. connected income. The non-U.S. connected insurance income would generally constitute taxable income under the Subpart F income section of the U.S. Internal Revenue Code (“Subpart F”) since less than 50% of Syndicate 1221’s premiums are derived within the U.K. and would therefore be subject to U.S. taxation when the Lloyd’s year of account closes. Taxes are accrued at a 35% rate on the Company’s foreign source insurance income and foreign tax credits, where available, are utilized to offset U.S. tax as permitted. The Company’s effective tax rate for Syndicate 1221 taxable income could substantially exceed 35% to the extent the Company is unable to offset U.S. taxes paid under Subpart F tax regulations with U.K. tax credits on future underwriting year distributions. U.S. taxes are not accrued on the earnings of the Company’s foreign agencies as these earnings are not includable as Subpart F income in the current year. These earnings were subject to taxes under U.K. tax regulations at a 26% rate through March 31, 2012. A finance bill was enacted in the U.K. that reduced the U.K. corporate tax rate from 26% to 24% effective April 2012 and from 24% to 23% effective April 2013. The effect of such tax rate change was not material.

The Company has not provided for U.S. income taxes on approximately $17.2 million of undistributed earnings of its non-U.S. subsidiaries since it is intended that those earnings will be reinvested indefinitely in those subsidiaries. If a future determination is made that those earnings no longer are intended to be reinvested indefinitely in those subsidiaries, U.S. income taxes of approximately $1.8 million, assuming all foreign tax credits are realized, would be included in the tax provision at that time and would be payable if those earnings were distributed to the Company.

Unrecognized tax benefits are differences between tax positions taken in the tax returns and benefits recognized in the financial statements. The Company has no unrecognized tax benefits as of June 30, 2013 and 2012. The Company did not incur any interest or penalties related to unrecognized tax benefits for the three and six months ended June 30, 2013 and 2012. The Company currently is under examination by the Internal Revenue Service for taxable years 2010 and 2011, and generally is subject to U.S. Federal, state or local, or foreign tax examinations by tax authorities for 2009 and subsequent years.

The Company recorded income tax expense of $6.3 million and $12.9 million for the three and six months ended June 30, 2013 compared to $6.2 million and $9.5 million for the same period in 2012, resulting in an effective tax rate of 31.1% and 31.7% for the three and six months ended June 30, 2013 and 29.5% and 29.4% for the comparable period in 2012.

The Company had state and local deferred tax assets amounting to potential future tax benefits of $0.5 million as of both June 30, 2013 and December 31, 2012, respectively. Included in the deferred tax assets are state and local net operating loss carry-forwards of $0.2 million for both June 30, 2013 and December 31, 2012. A valuation allowance was established for the full amount of these potential future tax benefits due to the uncertainty associated with their realization. The Company’s state and local tax carry-forwards as of June 30, 2013 expire from 2023 to 2031.

18

Note 8. Senior Notes due May 1, 2016

On April 17, 2006, we completed a public debt offering of $125 million principal amount of 7% senior unsecured notes (the “Senior Notes”) and received net proceeds of $123.5 million. The principal amount of the Senior Notes is payable in a single installment on May 1, 2016. In April 2009, the Company repurchased $10.0 million aggregate principal amount of the Senior Notes from an unaffiliated note holder on the open market for $7.0 million, which generated a $3.0 million pre-tax gain that was reflected in Other income. The Senior Notes liability as of June 30, 2013 was $114.5 million. The unamortized discount at June 30, 2013 was $0.5 million. The aggregate principal amount of the Senior Notes that will be repaid on May 1, 2016, as a result of these transactions, is $115.0 million.

The fair value of the Senior Notes was $125.8 million and $123.2 million as of June 30, 2013 and December 31, 2012, respectively. The fair value was determined using quoted prices for similar instruments in active markets and is classified as Level 2 within the fair value hierarchy as defined by the accounting guidance for fair value measurements.

Interest is payable on the Senior Notes each May 1 and November 1. The effective interest rate related to the Senior Notes, based on the proceeds net of discount and all issuance costs, approximates 7.17%. Interest expense on the Senior Notes for the three and six months ended each of June 30, 2013 and 2012 was approximately $2.1 million and $4.1 million, respectively.

The Senior Notes, the Company’s only senior unsecured obligation, will rank equally with any future senior unsecured indebtedness. The Company may redeem the Senior Notes at any time and from time to time, in whole or in part, at a “make-whole” redemption price. The terms of the Senior Notes contain various restrictive business and financial covenants typical for debt obligations of this type, including limitations on mergers, liens and dispositions of the common stock of certain subsidiaries. As of June 30, 2013, the Company was in compliance with all such covenants.

Note 9. Commitments and Contingencies

In the ordinary course of conducting business, the Company’s subsidiaries are involved in various legal proceedings, either indirectly as insurers for parties or directly as defendants. Most of these proceedings consist of claims litigation involving the Company’s subsidiaries as either (a) liability insurers defending or providing indemnity for third party claims brought against insureds or (b) insurers defending first party coverage claims brought against them. The Company accounts for such activity through the establishment of unpaid loss and loss adjustment reserves. The Company’s management believes that the ultimate liability, if any, with respect to such ordinary-course claims litigation, after consideration of provisions made for potential losses and cost of defense, will not be material to the Company’s consolidated financial condition, results of operations, or cash flows.

The Company’s subsidiaries are also from time to time involved with other legal actions, some of which assert claims for substantial amounts. These actions include claims asserting extra contractual obligations, such as claims involving allegations of bad faith in the handling of claims or the underwriting of policies. In general, the Company believes it has valid defenses to these cases. The Company’s management expects that the ultimate liability, if any, with respect to future extra-contractual matters will not be material to its consolidated financial position. Nonetheless, given the large or indeterminate amounts sought in certain of these matters, and the inherent unpredictability of litigation, an adverse outcome in such matters could, from time to time, have a material adverse outcome on the Company’s consolidated results of operations or cash flows in a particular fiscal quarter or year.

19

Note 10. Investments

The following tables set forth the Company’s cash and investments as of June 30, 2013 and December 31, 2012. The table below includes other-than-temporarily impaired (“OTTI”) securities recognized within other comprehensive income (“OCI”).

	June 30, 2013
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
In thousands	Value		Gains		(Losses)			Cost
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	464,167	$	3,538	$	(7,492	)	$	468,121
States, municipalities and political subdivisions		452,084		10,281		(13,114	)		454,917
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		320,150		7,782		(4,645	)		317,013
Residential mortgage obligations		37,335		1,196		(221	)		36,360
Asset-backed securities		75,311		747		(113	)		74,677
Commercial mortgage-backed securities		173,388		8,731		(514	)		165,171
Subtotal	$	606,184	$	18,456	$	(5,493	)	$	593,221
Corporate bonds		485,371		16,285		(3,162	)		472,248
Total fixed maturities	$	2,007,806	$	48,560	$	(29,261	)	$	1,988,507
Equity securities—common stocks		138,549		25,238		(1,910	)		115,221
Short-term investments		124,726		—		—			124,726
Cash		101,960		—		—			101,960
Total	$	2,373,041	$	73,798	$	(31,171	)	$	2,330,414

	December 31, 2012
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
In thousands	Value		Gains		(Losses)			Cost
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	649,692	$	8,654	$	(36	)	$	641,074
States, municipalities and political subdivisions		322,947		18,712		(380	)		304,615
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		384,445		13,652		(204	)		370,997
Residential mortgage obligations		38,692		1,053		(549	)		38,188
Asset-backed securities		50,382		1,133		(49	)		49,298
Commercial mortgage-backed securities		204,821		17,996		(18	)		186,843
Subtotal	$	678,340	$	33,834	$	(820	)	$	645,326
Corporate bonds		470,854		27,129		(25	)		443,750
Total fixed maturities	$	2,121,833	$	88,329	$	(1,261	)	$	2,034,765
Equity securities—common stocks		101,297		16,919		(626	)		85,004
Short-term investments		153,788		—		—			153,788
Cash		45,336		—		—			45,336
Total	$	2,422,254	$	105,248	$	(1,887	)	$	2,318,893

As of June 30, 2013 and December 31, 2012, debt securities for which non-credit OTTI was previously recognized and included in other comprehensive income are now in an unrealized gains position of $0.5 million and $20 thousand, respectively.

20

The fair value of the Company’s investment portfolio may fluctuate significantly in response to various factors such as changes in interest rates, investment quality ratings, equity prices, foreign exchange rates and credit spreads. The Company does not have the intent to sell nor is it more likely than not that it will have to sell debt securities in unrealized loss positions that are not other-than-temporarily impaired before recovery. For structured securities, default probability and severity assumptions differ based on property type, vintage and the stress of the collateral. We do not intend to sell any of these securities and it is more likely than not that we will not be required to sell these securities before the recovery of the amortized cost basis. For equity securities, the Company also considers its intent to hold securities as part of the process of evaluating whether a decline in fair value represents an other-than-temporary decline in value. The Company may realize investment losses to the extent its liquidity needs require the disposition of fixed maturity securities in unfavorable interest rate, liquidity or credit spread environments. Significant changes in the factors the Company considers when evaluating investments for impairment losses could result in a significant change in impairment losses reported in the consolidated financial statements.

The contractual maturity dates for fixed maturity securities categorized by the number of years until maturity as of June 30, 2013 are shown in the following table:

	June 30, 2013
	Fair		Amortized
In thousands	Value		Cost
Due in one year or less	$	117,677	$	116,999
Due after one year through five years		576,742		566,164
Due after five years through ten years		462,171		461,911
Due after ten years		245,032		250,212
Mortgage- and asset-backed securities		606,184		593,221
Total	$	2,007,806	$	1,988,507

Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Due to the periodic repayment of principal, the mortgage-backed and asset-backed securities are estimated to have an effective maturity of approximately 4.6 years.

The following table shows the amount and percentage of the Company’s fixed maturities as of June 30, 2013 by S&P credit rating or, if an S&P rating is not available, the equivalent Moody’s Investor Services (“Moody’s”) rating. The table includes fixed maturities at fair value, and the total rating is the weighted average quality rating.

	June 30, 2013
		Fair		Percent
In thousands	Rating	Value		of Total
Rating description:
Extremely strong	AAA	$	293,952		15	%
Very strong	AA		1,088,098		53	%
Strong	A		454,692		23	%
Adequate	BBB		152,317		8	%
Speculative	BB & Below		15,073		1	%
Not rated	NR		3,674		0	%
Total	AA	$	2,007,806		100	%

21

The following table summarizes all securities in a gross unrealized loss position as of June 30, 2013 and December 31, 2012, showing the aggregate fair value and gross unrealized loss by the length of time those securities had continuously been in a gross unrealized loss position as well as the relevant number of securities.

	June 30, 2013						December 31, 2012
	Number of		Fair		Gross Unrealized		Number of		Fair		Gross Unrealized
In thousands, except # of securities	Securities		Value		Loss		Securities		Value		Loss
Fixed maturities:
U.S. Treasury bonds, agency bonds, and foreign government bonds
0-6 months		60	$	278,158	$	7,492		8	$	23,760	$	22
7-12 months		—		—		—		3		14,118		11
> 12 months		—		—		—		1		4,652		3
Subtotal		60	$	278,158	$	7,492		12	$	42,530	$	36
States, municipalities and political subdivisions
0-6 months		110	$	223,186	$	11,556		10	$	21,299	$	325
7-12 months		7		17,168		1,546		—		—		—
> 12 months		3		1,970		12		4		2,908		55
Subtotal		120	$	242,324	$	13,114		14	$	24,207	$	380
Agency mortgage-backed securities
0-6 months		89	$	104,138	$	3,096		10	$	62,516	$	174
7-12 months		9		24,070		1,431		2		1,671		30
> 12 months		2		1,559		118		—		—		—
Subtotal		100	$	129,767	$	4,645		12	$	64,187	$	204
Residential mortgage obligations
0-6 months		12	$	2,953	$	47		6	$	1,825	$	22
7-12 months		—		—		—		—		—		—
> 12 months		17		3,140		174		35		7,252		527
Subtotal		29	$	6,093	$	221		41	$	9,077	$	549
Asset-backed securities
0-6 months		4	$	16,905	$	29		—	$	—	$	—
7-12 months		—		—		—		—		—		—
> 12 months		1		1,634		84		2		2,369		49
Subtotal		5	$	18,539	$	113		2	$	2,369	$	49
Commercial mortgage-backed securities
0-6 months		5	$	15,143	$	488		7	$	2,639	$	7
7-12 months		2		651		10		—		—		—
> 12 months		3		559		16		5		845		11
Subtotal		10	$	16,353	$	514		12	$	3,484	$	18
Corporate bonds
0-6 months		43	$	121,470	$	3,162		2	$	3,528	$	6
7-12 months		—		—		—		—		—		—
> 12 months		—		—		—		4		6,689		19
Subtotal		43	$	121,470	$	3,162		6	$	10,217	$	25
Total fixed maturities		367	$	812,704	$	29,261		99	$	156,071	$	1,261
Equity securities—common stocks
0-6 months		6	$	33,817	$	1,910		13	$	23,345	$	522
7-12 months		—		—		—		1		1,943		104
> 12 months		—		—		—		—		—		—
Total equity securities		6	$	33,817	$	1,910		14	$	25,288	$	626

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As of June 30, 2013 and December 31, 2012, the largest single unrealized loss by a non-government backed issuer in the investment portfolio was $1.4 million and $0.2 million, respectively.

The Company analyzes the unrealized losses quarterly to determine if any are other-than-temporary. The above unrealized losses have been determined to be temporary based on our policies.

For debt securities, when assessing whether the amortized cost basis of the security will be recovered, the Company compares the present value of cash flows expected to be collected in relation to the current book value. Any shortfalls of the present value of the cash flows expected to be collected to the amortized cost basis is considered the credit loss portion of OTTI losses and is recognized in earnings. All non-credit losses are recognized as changes in OTTI losses within OCI.

To determine whether the unrealized loss on structured securities is other-than-temporary, the Company analyzes the projections provided by its investment managers with respect to an expected principal loss under a range of scenarios and utilizes the most likely outcomes. The analysis relies on actual collateral performance measures such as default rate, prepayment rate and loss severity. These assumptions are applied throughout the remaining term of the deal, incorporating the transaction structure and priority of payments, to generate loss adjusted cash flows. Results of the analysis will indicate whether the security is expected ultimately to incur a loss or whether there is a material impact on yield due to either a projected loss or a change in cash flow timing. A break even default rate is also calculated. A comparison of the break even default rate to the actual default rate provides an indication of the level of cushion or coverage to the first dollar principal loss. The analysis applies the stated assumptions throughout the remaining term of the transaction to forecast cash flows, which are then applied through the transaction structure to determine whether there is a loss to the security. For securities in which a tranche loss is present, and the net present value of loss adjusted cash flows is less than book value, impairment is recognized. The output data also includes a number of additional metrics such as average life remaining, original and current credit support, over 60 day delinquency and security rating.

The significant inputs used to measure the amount of credit loss recognized in earnings were actual delinquency rates, default probability assumptions, severity assumptions and prepayment assumptions. Projected losses are a function of both loss severity and probability of default. Default probability and severity assumptions differ based on property type, vintage and the stress of the collateral. The Company does not intend to sell any of these securities and it is more likely than not that it will not be required to sell these securities before the recovery of the amortized cost basis.

For equity securities, in general, the Company focuses its attention on those securities with a fair value less than 80% of their cost for six or more consecutive months. If warranted as the result of conditions relating to a particular security, the Company will focus on a significant decline in fair value regardless of the time period involved. Factors considered in evaluating potential impairment include, but are not limited to, the current fair value as compared to cost of the security, the length of time the investment has been below cost and by how much the investment is below cost. If an equity security is deemed to be other-than-temporarily impaired, the cost is written down to fair value with the loss recognized in earnings.

For equity securities, the Company also considers its intent to hold securities as part of the process of evaluating whether a decline in fair value represents an other-than-temporary decline in value. For fixed maturity securities, the Company considers its intent to sell a security and whether it is more likely than not that the Company will be required to sell a security before the anticipated recovery as part of the process of evaluating whether a security’s unrealized loss represents an other-than-temporary decline. The Company’s ability to hold such securities is supported by sufficient cash flow from its operations and from maturities within its investment portfolio in order to meet its claims payment and other disbursement obligations arising from its underwriting operations without selling such investments. With respect to securities where the decline in value is determined to be temporary and the security’s value is not written down, a subsequent decision may be made to sell that security and realize a loss. Subsequent decisions on security sales are made within the context of overall risk monitoring, changing information and market conditions.

As of June 30, 2013, there were no investments with a fair value that was less than 80% of amortized cost.

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The table below summarizes the Company’s activity related to OTTI losses for the periods indicated:

	Three Months Ended June 30,								Six Months Ended June 30,
	2013				2012				2013				2012
	Number of				Number of				Number of				Number of
In thousands, except # of securities	Securities		Amount		Securities		Amount		Securities		Amount		Securities		Amount
Total OTTI losses:
Corporate and other bonds		—	$	—		—	$	—		—	$	—		—	$	—
Commercial mortgage-backed securities		—		—		—		—		—		—		—		—
Residential mortgage-backed securities		—		—		—		—		—		—		1		54
Asset-backed securities		—		—		—		—		—		—		—		—
Equities		—		—		2		496		2		42		3		639
Total		—	$	—		2	$	496		2	$	42		4	$	693
Less: Portion of loss in accumulated other comprehensive income (loss):
Corporate and other bonds			$	—			$	—			$	—			$	—
Commercial mortgage-backed securities				—				—				—				—
Residential mortgage-backed securities				—				—				—				43
Asset-backed securities				—				—				—				—
Equities				—				—				—				—
Total			$	—			$	—			$	—			$	43
Impairment losses recognized in earnings:
Corporate and other bonds			$	—			$	—			$	—			$	—
Commercial mortgage-backed securities				—				—				—				—
Residential mortgage-backed securities				—				—				—				11
Asset-backed securities				—				—				—				—
Equities				—				496				42				639
Total			$	—			$	496			$	42			$	650

The following table summarizes the cumulative amounts related to the Company’s credit loss portion of the OTTI losses on debt securities for the three and six months ended June 30, 2013 and 2012. The Company does not intend to sell and it is more likely than not that it will not be required to sell the securities prior to recovery of the amortized cost basis and for which the non-credit loss portion is included in OCI.

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2013		2012		2013		2012
Beginning balance	$	3,332	$	3,322	$	3,332	$	3,321
Additions for credit loss impairments recognized in the current period on securities not previously impaired		—		—		—		—
Additions for credit loss impairments recognized in the current period on securities previously impaired		—		—		—		11
Reductions for credit loss impairments previously recognized on securities sold during the period		—		—		—		—
Ending balance	$	3,332	$	3,332	$	3,332	$	3,332

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The contractual maturity dates for fixed maturity securities categorized by the number of years until maturity, with a gross unrealized loss as of June 30, 2013 is presented in the following table:

	June 30, 2013
	Gross Unrealized Losses					Fair Value
			Percent					Percent
In thousands	Amount		of Total			Amount		of Total
Due in one year or less	$	12		0	%	$	11,813		1	%
Due after one year through five years		2,442		8	%		192,689		24	%
Due after five years through ten years		11,394		39	%		267,617		33	%
Due after ten years		9,920		34	%		169,833		21	%
Mortgage- and asset-backed securities		5,493		19	%		170,752		21	%
Total	$	29,261		100	%	$	812,704		100	%

The Company’s net investment income was derived from the following sources:

	Three Months Ended June 30,						Six Months Ended June 30,
In thousands	2013			2012			2013			2012
Fixed maturities	$	13,578		$	15,006		$	26,743		$	30,416
Equity securities		1,257			994			2,288			1,941
Short-term investments		198			701			388			1,014
Total investment income	$	15,033		$	16,701		$	29,419		$	33,371
Investment expenses		(787	)		(924	)		(1,516	)		(6,336	)
Net investment income	$	14,246		$	15,777		$	27,903		$	27,035

Interest expense for the six months ended June 30, 2012 included $4.5 million of interest expense related to a total $9.2 million settlement of a dispute with Equitas over foregone interest on amounts that were due on certain reinsurance contracts.

The portfolio duration was 4.0 years and 3.9 years for the six months ended June 30, 2013 and 2012, respectively.

The change in net unrealized gains and losses, inclusive of the change in the non credit portion of other-than-temporary impairment losses, consisted of:

	Six Months Ended June 30,
In thousands	2013			2012
Fixed maturities	$	(67,769	)	$	17,439
Equity securities		7,035			6,910
Gross unrealized gains (losses)	$	(60,734	)	$	24,349
Deferred income tax		(21,264	)		7,796
Change in net unrealized gains (losses), net	$	(39,470	)	$	16,553

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Realized gains and losses, excluding net OTTI losses recognized in earnings, for the periods indicated were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
In thousands	2013			2012			2013			2012
Fixed maturities:
Gains	$	1,730		$	4,717		$	4,936		$	7,858
Losses		(73	)		(231	)		(383	)		(1,530	)
Fixed maturities, net	$	1,657		$	4,486		$	4,553		$	6,328
Equity securities:
Gains	$	1,815		$	204		$	3,733		$	204
Losses		(127	)		(473	)		(127	)		(473	)
Equity securities, net	$	1,688		$	(269	)	$	3,606		$	(269	)
Net realized gains (losses)	$	3,345		$	4,217		$	8,159		$	6,059

Net realized gains and losses are generated as part of the normal ongoing management of our investment portfolio. Net realized gains of $3.3 million and $8.2 million for the three and six months ended June 30, 2013 are primarily due to the sale of commercial mortgage-backed securities, municipal bonds and equity securities. Net realized gains of $4.2 million and $6.1 million for the three and six months ended June 30, 2012 were due to the sale of corporate bonds and Treasury bonds.

The following tables present, for each of the fair value hierarchy levels as defined by the accounting guidance for fair value measurements, the Company’s fixed maturities and equity securities by asset class that are measured at fair value on a recurring basis as of June 30, 2013 and December 31, 2012:

	June 30, 2013
In thousands	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	276,111	$	188,056	$	—	$	464,167
States, municipalities and political subdivisions		—		452,084		—		452,084
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		—		320,150		—		320,150
Residential mortgage obligations		—		37,335		—		37,335
Asset-backed securities		—		75,311		—		75,311
Commercial mortgage-backed securities		—		173,388		—		173,388
Subtotal	$	—	$	606,184	$	—	$	606,184
Corporate bonds		—		485,371		—		485,371
Total fixed maturities	$	276,111	$	1,731,695	$	—	$	2,007,806
Equity securities—common stocks		138,549		—		—		138,549
Total	$	414,660	$	1,731,695	$	—	$	2,146,355

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	December 31, 2012
In thousands	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	414,502	$	235,190	$	—	$	649,692
States, municipalities and political subdivisions		—		322,947		—		322,947
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		—		384,445		—		384,445
Residential mortgage obligations		—		38,692		—		38,692
Asset-backed securities		—		50,382		—		50,382
Commercial mortgage-backed securities		—		204,821		—		204,821
Subtotal	$	—	$	678,340	$	—	$	678,340
Corporate bonds		—		470,854		—		470,854
Total fixed maturities	$	414,502	$	1,707,331	$	—	$	2,121,833
Equity securities—common stocks		101,297		—		—		101,297
Total	$	515,799	$	1,707,331	$	—	$	2,223,130

The fair value of financial instruments is determined based on the following fair value hierarchy:

Level 1 – Quoted prices for identical instruments in active markets. Examples are listed equity and fixed income securities traded on an exchange. U.S. Treasury securities are reported as level 1 and are valued based on unadjusted quoted prices for identical assets in active markets that the Company can access.

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Examples are asset-backed and mortgage-backed securities that are similar to other asset-backed or mortgage-backed securities observed in the market. U.S. government agency securities are reported as level 2 and are valued using yields and spreads that are observable in active markets.

Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. An example would be a private placement with minimal liquidity.

The Company did not have any significant transfers between Level 1 and 2 as of June 30, 2013 and December 31, 2012.

As of June 30, 2013 and 2012, the Company did not have any Level 3 assets.

As of June 30, 2013 and December 31, 2012, the Company did not have a concentration of greater than 5% of invested assets in a single non-U.S. government-backed issuer.

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Note 11. Credit Facility

On November 22, 2012, we entered into a $165 million credit facility agreement with ING Bank N.V., London Branch, individually and as Administrative Agent, and a syndicate of lenders. The new credit facility amended and restated a $165 million letter of credit facility entered into by the parties on March 28, 2011. The credit facility, which is denominated in U.S. dollars, is utilized to fund our participation in Syndicate 1221 through letters of credit for the 2013 and 2014 underwriting years, as well as open prior years. The letters of credit issued under the facility are denominated in British pounds and their aggregate face amount will fluctuate based on exchange rates. If any letters of credit remain outstanding under the facility after December 31, 2014, we would be required to post additional collateral to secure the remaining letters of credit. As of June 30, 2013, letters of credit with an aggregate face amount of $142.6 million were outstanding under the credit facility and we have $0.8 million of cash collateral posted.

This credit facility contains customary covenants for facilities of this type, including restrictions on indebtedness and liens, limitations on mergers, dividends and the sale of assets, and requirements as to maintaining certain consolidated tangible net worth, statutory surplus and other financial ratios. The credit facility also provides for customary events of default, including failure to pay principal, interest or fees when due, failure to comply with covenants, any representation or warranty made by the Company being false in any material respect, default under certain other indebtedness, certain insolvency or receivership events affecting the Company and its subsidiaries, the occurrence of certain material judgments, or a change in control of the Company. The letter of credit facility is secured by a pledge of the stock of certain insurance subsidiaries of the Company. To the extent the aggregate face amount issued under the credit facility exceeds the commitment amount, the Company is required to post collateral with the lead bank of the consortium. The Company was in compliance with all covenants under the credit facility as of June 30, 2013.

The applicable margin and applicable fee rate payable under the credit facility are based on a tiered schedule that is based on the Company’s then-current ratings issued by S&P and Moody’s with respect to the Company’s Senior Notes without third-party credit enhancement, and the amount of the Company’s own collateral utilized to fund its participation in Syndicate 1221.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

NOTE ON FORWARD-LOOKING STATEMENTS

Some of the statements in this Quarterly Report on Form 10-Q for The Navigators Group, Inc. and its subsidiaries (“the Company”, “we”, “us”, and “our”) are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in or incorporated by reference in this Quarterly Report are forward-looking statements. Whenever used in this report, the words “estimate,” “expect,” “believe” or similar expressions or their negative are intended to identify such forward-looking statements. Forward-looking statements are derived from information that we currently have and assumptions that we make. We cannot assure that anticipated results will be achieved, since actual results may differ materially because of both known and unknown risks and uncertainties which we face. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Factors that could cause actual results to differ materially from our forward-looking statements include, but are not limited to, the factors discussed in the “Risk Factors” section of our 2012 Annual Report on Form 10-K as well as:

• continued volatility in the financial markets and the current recession;

• risks arising from the concentration of our business in marine and energy, general liability and professional liability insurance, including the risk that market conditions for these lines could change adversely or that we could experience large losses in these lines;

• cyclicality in the property and casualty insurance business generally, and the marine insurance business specifically;

• risks that we face in entering new markets and diversifying the products and services that we offer, including risks arising from the development of our new specialty lines or our ability to manage effectively the rapid growth in our lines of business;

• changing legal, social and economic trends and inherent uncertainties in the loss estimation process, which could adversely impact the adequacy of loss reserves and the allowance for reinsurance recoverables;

• risks inherent in the preparation of our financial statements, which require us to make many estimates and judgments;

• our ability to continue to obtain reinsurance covering our exposures at appropriate prices and/or in sufficient amounts;

• the counterparty credit risk of our reinsurers, including risks associated with the collection of reinsurance recoverable amounts from our reinsurers, who may not pay losses in a timely fashion, or at all;

• the effects of competition from other insurers;

• unexpected turnover of our professional staff and our ability to attract and retain qualified employees;

• increases in interest rates during periods in which we must sell fixed-income securities to satisfy liquidity needs may result in realized investment losses;

• our investment portfolio is exposed to market-wide risks and fluctuations, as well as to risks inherent in particular types of securities;

• exposure to significant capital market risks related to changes in interest rates, credit spreads, equity prices and foreign exchange rates which may adversely affect our results of operations, financial condition or cash flows;

• capital may not be available in the future, or may not be available on favorable terms;

• our ability to maintain or improve our insurance company ratings, as downgrades could significantly adversely affect us, including reducing our competitive position in the industry, or causing clients to choose an insurer with a certain rating level to use higher-rated insurers;

• risks associated with continued or increased premium levies by Lloyd’s of London (“Lloyd’s) for the Lloyd’s Central Fund and cash calls for trust fund deposits, or a significant downgrade of Lloyd’s rating by the A.M. Best Company (“A.M. Best”);

29

• changes in the laws, rules and regulations that apply to our insurance companies;

• the effect of the European Union Directive on Solvency II on how we manage our business, capital requirements and costs associated with conducting business, including the impact of the delay in the implementation of Solvency II;

• the inability of our subsidiaries to pay dividends to us in sufficient amounts, which would harm our ability to meet our obligations;

• weather-related events and other catastrophes (including man-made catastrophes) impacting our insureds and/or reinsurers;

• volatility in the market price of our common stock;

• exposure to recent uncertainties with regard to European sovereign debt holdings;

• the determination of the impairments taken on our investments is subjective and could materially impact our financial position or results of operations;

• if we experience difficulties with our information technology and telecommunications systems and/or data security, our ability to conduct our business might be adversely affected;

• compliance by our Marine business with the legal and regulatory requirements to which they are subject is evolving and unpredictable. In addition, compliance with new sanctions and embargo laws could have a material adverse effect on our business; and

• other risks that we identify in current and future filings with the Securities and Exchange Commission (“SEC”).

In light of these risks, uncertainties and assumptions, any forward-looking events discussed in this Form 10-Q may not occur. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of their respective dates.

OVERVIEW

The discussion and analysis of our financial condition and results of operations contained herein should be read in conjunction with our consolidated financial statements and accompanying notes which appear elsewhere in this Form 10-Q. It contains forward-looking statements that involve risks and uncertainties. Please refer to “Note on Forward-Looking Statements” for more information. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Form 10-Q.

We are an international insurance company focusing on specialty products within the overall property and casualty insurance market. Our largest product line and most long-standing area of specialization is ocean marine insurance. We have also developed other specialty insurance lines such as commercial primary and excess liability as well as specialty niches in professional liability, and have expanded our specialty reinsurance business since launching Navigators Re in the fourth quarter of 2010.

We conduct operations through our Insurance Companies and our Lloyd’s Operations segments. The Insurance Companies segment consists of Navigators Insurance Company, which includes a United Kingdom Branch (the “U.K. Branch”), and Navigators Specialty Insurance Company, which underwrites specialty and professional liability insurance on an excess and surplus lines basis. All of the insurance business written by Navigators Specialty Insurance Company is fully reinsured by Navigators Insurance Company pursuant to a 100% quota share reinsurance agreement. The insurance and reinsurance business written by our Insurance Companies is underwritten through our wholly-owned underwriting management Companies, Navigators Management Company, Inc. (“NMC”) and Navigators Management (UK) Ltd. (“NMUK”).

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Our Lloyd’s Operations segment includes Navigators Underwriting Agency Ltd. (“NUAL”), a Lloyd’s of London (“Lloyd’s”) underwriting agency which manages Lloyd’s Syndicate 1221 (“Syndicate 1221”). Our Lloyd’s Operations primarily underwrite marine and related lines of business along with offshore energy, professional liability insurance and construction coverages for onshore energy business at Lloyd’s through Syndicate 1221. We controlled 100% of Syndicate 1221’s stamp capacity for the 2013 and 2012 underwriting years through our wholly-owned subsidiary, Navigators Corporate Underwriters Ltd. (“NCUL”), which is referred to as a corporate name in the Lloyd’s market. We have also established underwriting agencies in Antwerp, Belgium, Stockholm, Sweden, and Copenhagen, Denmark, which underwrite risks pursuant to binding authorities with NUAL into Syndicate 1221. We have also established a presence in Brazil and China through contractual arrangements with local affiliates of Lloyd’s.

Catastrophe Risk Management

Our Insurance Companies and Lloyd’s Operations have exposure to losses caused by natural and man-made catastrophic events. The frequency and severity of catastrophes are unpredictable. The extent of covered losses from a catastrophe is a function of both the total amount of insured exposure in an area affected by the event and the severity of the event. We continually assess our concentration of underwriting exposures in catastrophe exposed areas globally and manage this exposure through individual risk selection and through the purchase of reinsurance. We also use modeling and concentration management tools that allow us to better monitor and control our accumulations of potential losses from catastrophe events. Despite these efforts, there remains uncertainty about the characteristics, timing and extent of insured losses given the unpredictable nature of catastrophes. The occurrence of one or more catastrophic events could have a material adverse effect on our results of operations, financial condition and/or liquidity.

We have significant natural catastrophe exposures throughout the world. We estimate that our largest exposure to loss from a single natural catastrophe event comes from a potential earthquake on the west coast of the United States. As of June 30, 2013, we estimate that our probable maximum pre-tax gross and net loss exposure from such an earthquake event would be approximately $100 million and $40 million, respectively, including the cost of reinsurance reinstatement premiums (“RRPs”).

Like all catastrophe exposure estimates, the foregoing estimate of our probable maximum loss is inherently uncertain. This estimate is highly dependent upon numerous assumptions and subjective underwriting judgments. Examples of significant assumptions and judgments related to such an estimate include the intensity, depth and location of the earthquake, the various types of the insured risks exposed to the event at the time the event occurs and the estimated costs or damages incurred for each insured risk. The composition of our portfolio also makes such estimates challenging due to the non-static nature of the exposures covered under our policies in lines of business such as cargo and hull. There can be no assurances that the gross and net loss amounts that we could incur in such an event or in any natural catastrophe event would not be materially higher than the estimates discussed above given the significant uncertainties with respect to such an estimate. Moreover, our portfolio of insured risks changes dynamically over time and there can be no assurance that our probable maximum loss will not change materially over time.

The occurrence of large loss events could reduce the reinsurance coverage that is available to us and could weaken the financial condition of our reinsurers, which could have a material adverse effect on our results of operations. Although the reinsurance agreements make the reinsurers liable to us to the extent the risk is transferred or ceded to the reinsurer, ceded reinsurance arrangements do not eliminate our obligation to pay claims to our policyholders as we are required to pay the losses if a reinsurer fails to meet its obligations under the reinsurance agreement. Accordingly, we bear credit risk with respect to our reinsurers. Specifically, our reinsurers may not pay claims made by us on a timely basis, or they may not pay some or all of these claims. Either of these events would increase our costs and could have a material adverse effect on our business.

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CRITICAL ACCOUNTING ESTIMATES

The Company’s Annual Report on Form 10-K for the year ended December 31, 2012 discloses our critical accounting estimates (refer to Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates). Certain of these estimates are critical to the portrayal of our financial condition and results since they require management to establish estimates based on complex and subjective judgments, including those related to our estimates for losses and loss adjustment expenses (“LAE”) (including losses that have occurred but were not reported to us by the financial reporting date), reinsurance recoverables, written and unearned premium, the recoverability of deferred tax assets, the impairment of investment securities and accounting for Lloyd’s results. For additional information regarding our critical accounting estimates, refer to our Annual Report on Form 10-K for the year ended December 31, 2012.

RECENT ACCOUNTING PRONOUNCEMENTS

Refer to Note 2, Recent Accounting Pronouncements, in the Notes to Interim Consolidated Financial Statements included herein for a discussion about accounting standards recently adopted by the Company, as well as recent accounting developments relating to standards not yet adopted by the Company.

RESULTS OF OPERATIONS

The following is a discussion and analysis of our consolidated and segment results of operations for the three and six months ended June 30, 2013 and 2012. Our financial results are presented on the basis of U.S. GAAP. However, in presenting our financial results, we discuss our performance with reference to operating earnings, book value per share, underwriting profit or loss, and the combined ratio, all of which are non-GAAP financial measures of performance and/or underwriting profitability. Operating earnings is calculated as net income less after-tax net realized gains (losses) and net other-than-temporary impairment (“OTTI”) losses recognized in earnings. Book value per share is calculated by dividing stockholders’ equity by the number of outstanding shares at any period end. Underwriting profit or loss is calculated from net earned premiums, less the sum of net losses and LAE, commission expenses, other operating expenses and other income (expense). The combined ratio is derived by dividing the sum of net losses and LAE, commission expenses, other operating expenses and other income (expense) by net earned premiums. A combined ratio of less than 100% indicates an underwriting profit and greater than 100% indicates an underwriting loss. We consider such measures, which may be defined differently by other companies, to be important in the understanding of our overall results of operations by highlighting the underlying profitability of our insurance business.

Summary of Consolidated Results

The following table presents a summary of our consolidated financial results for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30,				Six Months Ended June 30,				Percentage Change
In thousands, except for per share amounts	2013		2012		2013		2012		QTD			YTD
Gross written premiums	$	332,128	$	322,987	$	725,350	$	666,136		2.8	%		8.9	%
Net written premiums		198,469		190,252		467,921		433,297		4.3	%		8.0	%
Total revenues		222,490		215,902		443,865		412,878		3.1	%		7.5	%
Total expenses		202,269		194,778		403,091		380,569		3.8	%		5.9	%
Pre-tax income (loss)	$	20,221	$	21,124	$	40,774	$	32,309		-4.3	%		26.2	%
Provision (benefit) for income taxes		6,284		6,225		12,927		9,506		0.9	%		36.0	%
Net income (loss)	$	13,937	$	14,899	$	27,847	$	22,803		-6.5	%		22.1	%
Net income (loss) per common share:
Basic	$	0.99	$	1.06	$	1.97	$	1.63
Diluted	$	0.97	$	1.05	$	1.93	$	1.60

32

Net income for the three months ended June 30, 2013 was $13.9 million or $0.97 per diluted share compared to $14.9 million or $1.05 per diluted share for the three months ended June 30, 2012. Operating earnings for the three months ended June 30, 2013 were $11.8 million or $0.82 per diluted share compared to $12.5 million or $0.88 per diluted share for the comparable period in 2012. In comparison to net income, operating earnings excluded after-tax net realized gains of $2.2 million for the three months ended June 30, 2013. For the three months ended June 30, 2012, operating earnings excluded $2.7 million of net realized gains and after-tax other-than-temporary impairment losses of $0.3 million. The decrease in our operating earnings was largely attributable to a decrease in net investment income on account of lower investment yields.

Net income for the six months ended June 30, 2013 was $27.8 million or $1.93 per diluted share compared to $22.8 million or $1.60 per diluted share for the six months ended June 30, 2012. Operating earnings for the six months ended June 30, 2013 were $22.6 million or $1.56 per diluted share compared to $19.3 million or $1.35 per diluted share for the comparable period in 2012. In comparison to net income, operating earnings excluded after-tax net realized gains of $5.3 million and after-tax other-than-temporary impairment losses of $0.03 million for the six months ended June 30, 2013. For the six months ended June 30, 2012, operating earnings excluded $3.9 million of net realized gains and after-tax other-than-temporary impairment losses of $0.4 million. The increase in our operating earnings was largely attributable to stronger underwriting results.

Our book value per share as of June 30, 2013 was $61.83, decreasing from $62.61 as of December 31, 2012. The decrease in book value per share primarily resulted from unrealized losses in our investment portfolio across all fixed income classes due to an increase in interest rates during the quarter. Our consolidated stockholders’ equity decreased 0.6% to $874.0 million as of June 30, 2013 compared to $879.5 million as of December 31, 2012.

Cash flow provided by operations was $48.5 million for the six months ended June 30, 2013 compared to $15.0 million for the comparable period in 2012. The increase in cash flow from operations was due to improved collection on premium receivables, partially offset by the timing of payments to our reinsurers in connection with the increased use of proportional reinsurance to support our offshore energy business in 2013.

33

The following table presents our consolidated underwriting results and provides a reconciliation of our underwriting profit or loss to GAAP net income or net loss for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30,						Six Months Ended June 30,						Percentage Change
In thousands	2013			2012			2013			2012			QTD			YTD
Gross written premiums	$	332,128		$	322,987		$	725,350		$	666,136			2.8	%		8.9	%
Net written premiums		198,469			190,252			467,921			433,297			4.3	%		8.0	%
Net earned premiums		205,814			196,017			408,142			379,136			5.0	%		7.7	%
Net losses and loss adjustment expenses		(131,148	)		(123,407	)		(262,490	)		(241,392	)		6.3	%		8.7	%
Commission expenses		(28,391	)		(29,503	)		(54,946	)		(58,953	)		-3.8	%		-6.8	%
Other operating expenses		(40,678	)		(39,819	)		(81,552	)		(76,126	)		2.2	%		7.1	%
Other income (expenses)		(915	)		387			(297	)		1,298			NM			NM
Underwriting profit (loss)	$	4,682		$	3,675		$	8,857		$	3,963			27.4	%		123.5	%
Net investment income		14,246			15,777			27,903			27,035			-9.7	%		3.2	%
Net other-than-temporary impairment losses recognized in earnings		—			(496	)		(42	)		(650	)		NM			-93.5	%
Net realized gains (losses)		3,345			4,217			8,159			6,059			-20.7	%		34.7	%
Interest expense		(2,052	)		(2,049	)		(4,103	)		(4,098	)		0.1	%		0.1	%
Income (loss) before income taxes	$	20,221		$	21,124		$	40,774		$	32,309			-4.3	%		26.2	%
Income tax expense (benefit)		6,284			6,225			12,927			9,506			0.9	%		36.0	%
Net income (loss)	$	13,937		$	14,899		$	27,847		$	22,803			-6.5	%		22.1	%
Losses and loss adjustment expenses ratio		63.7	%		63.0	%		64.3	%		63.7	%
Commission expense ratio		13.8	%		15.1	%		13.5	%		15.5	%
Other operating expense ratio (1)		20.2	%		20.0	%		20.0	%		19.8	%
Combined ratio		97.7	%		98.1	%		97.8	%		99.0	%

(1)  -  Includes Other operating expenses & Other income (expense)

NM  -  Percentage change not meaningful

The combined ratio for the three months ended June 30, 2013 was 97.7% compared to 98.1% for the same period in 2012. Our pre-tax underwriting profit increased $1.0 million to $4.7 million for the three months ended June 30, 2013 compared to $3.7 million for the same period in 2012.

Our pre-tax underwriting results for the three months ended June 30, 2013 included $4.5 million of underwriting profit from our Lloyd’s Operations due to continued favorable loss emergence for underwriting years (“UYs”) 2011 and prior. Our pre-tax underwriting results also included a slight underwriting profit from our Insurance Companies, inclusive of $2.0 million of underwriting profit from our Excess Casualty and Primary Casualty businesses due in part to strong production attributable to the expansion of those underwriting teams and the dislocation of certain competitors, mostly offset by a net underwriting loss of $1.9 million from our Management Liability (“D&O”) and Errors & Omissions (“E&O”) business driven by net prior period reserve deficiencies from UYs 2010 and prior.

Our underwriting results for the three months ended June 30, 2012 include $3.0 million of RRPs related to significant large losses from our marine business, as well as net prior period reserve redundancies of $6.0 million from our Lloyd’s Operations.

The combined ratio for the six months ended June 30, 2013 was 97.8% compared to 99.0% for the same period in 2012. Our pre-tax underwriting profit increased $4.9 million to $8.9 million for the six months ended June 30, 2013 compared to $4.0 million for the same period in 2012.

34

Our pre-tax underwriting results for the six months ended June 30, 2013 included $8.5 million of underwriting profit from our Lloyd’s Operations due to continued favorable loss emergence for UYs 2011 and prior. Our pre-tax underwriting results also included a slight underwriting profit from our Insurance Companies, inclusive of $6.4 million of underwriting profit from our Excess Casualty and Primary Casualty businesses due in part to strong production attributable to the expansion of those underwriting teams and the dislocation of certain competitors, mostly offset by a net underwriting loss of $5.5 million from our D&O business driven by net prior period reserve deficiencies from UYs 2010 and prior.

Our underwriting results for the first six months of 2012 reflect net losses of $11.3 million inclusive of $10.0 million of reinsurance reinstatement premiums, related to several large losses from our marine business, including the grounding of the cruise ship Costa Concordia off the coast of Italy. The results also include net prior period reserve redundancies of $12.2 million primarily driven by our Lloyd’s Operations.

Revenues

Gross Written Premiums

The following tables set forth our gross written premiums, net written premiums and net earned premiums by segment and line of business for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30,
	2013									2012
	Gross					Net		Net		Gross					Net		Net
	Written					Written		Earned		Written					Written		Earned
In thousands	Premiums		%			Premiums		Premiums		Premiums		%			Premiums		Premiums
Insurance Companies:
Marine	$	43,077		13	%	$	27,366	$	31,798	$	49,896		15	%	$	31,786	$	35,535
Property Casualty		152,095		46	%		90,711		99,477		130,627		41	%		76,842		82,175
Professional Liability		33,393		10	%		25,303		25,272		33,541		10	%		25,437		23,867
Insurance Companies Total	$	228,565		69	%	$	143,380	$	156,547	$	214,064		66	%	$	134,065	$	141,577
Lloyd’s Operations:
Marine	$	45,893		14	%	$	34,060	$	34,623	$	47,037		15	%	$	33,492	$	34,272
Property Casualty		41,217		12	%		12,181		8,562		48,978		15	%		15,705		15,272
Professional Liability		16,453		5	%		8,848		6,082		12,908		4	%		6,990		4,896
Lloyd’s Operations Total	$	103,563		31	%	$	55,089	$	49,267	$	108,923		34	%	$	56,187	$	54,440
Total	$	332,128		100	%	$	198,469	$	205,814	$	322,987		100	%	$	190,252	$	196,017

	Six Months Ended June 30,
	2013									2012
	Gross					Net		Net		Gross					Net		Net
	Written					Written		Earned		Written					Written		Earned
In thousands	Premiums		%			Premiums		Premiums		Premiums		%			Premiums		Premiums
Insurance Companies:
Marine	$	93,924		13	%	$	68,507	$	68,523	$	111,761		17	%	$	74,651	$	70,810
Property Casualty		371,059		51	%		240,662		192,195		286,546		43	%		191,374		156,543
Professional Liability		65,210		9	%		50,530		50,160		64,095		10	%		49,290		45,772
Insurance Companies Total	$	530,193		73	%	$	359,699	$	310,878	$	462,402		70	%	$	315,315	$	273,125
Lloyd’s Operations:
Marine	$	99,537		14	%	$	73,618	$	68,668	$	108,812		16	%	$	81,550	$	67,536
Property Casualty		66,275		9	%		19,493		16,441		73,274		11	%		25,060		29,774
Professional Liability		29,345		4	%		15,111		12,155		21,648		3	%		11,372		8,701
Lloyd’s Operations Total	$	195,157		27	%	$	108,222	$	97,264	$	203,734		30	%	$	117,982	$	106,011
Total	$	725,350		100	%	$	467,921	$	408,142	$	666,136		100	%	$	433,297	$	379,136

35

Gross written premiums increased $9.1 million, or 2.8%, to $332.1 million for the three months ended June 30, 2013 compared to $323.0 million for the same period in 2012. The increase in gross written premiums is primarily attributed to growth within our Insurance Companies Property Casualty business, specifically from our Excess Casualty and Primary Casualty divisions as a result of strong production attributable to an expansion of our underwriting teams and continued dislocation among certain competitors, partially offset by a decrease in our Assumed Reinsurance division attributable to the timing of policy renewals on our Accident and Health (“A&H”) business relative to the quarter. The increase in gross written premiums was further offset by a decrease in our Marine business in connection with the re-underwriting of our Inland Marine division.

Gross written premiums increased $59.3 million, or 8.9%, to $725.4 million for the six months ended June 30, 2013 compared to $666.1 million for the same period in 2012. The increase in gross written premiums is primarily attributed to growth within our Insurance Companies Property Casualty business, specifically from our Excess Casualty and Primary Casualty divisions as a result of strong production attributable to an expansion of our underwriting teams and continued dislocation among certain competitors, as well as continued growth from our Assumed Reinsurance division, partially offset by a decrease in our Marine business in connection with the re-underwriting of our Inland Marine division.

Average renewal premium rates for our Insurance Companies segment for the three months ended June 30, 2013 increased as compared to the same period in 2012 across substantially all of our businesses within each segment. Our Insurance Companies Marine business has realized a 5.0% and 15.2% increase in rates for the Marine Liability and Inland Marine divisions, respectively. Within our Insurance Companies Property Casualty business we have realized a 4.6% increase in rates for the Excess Casualty division and a 3.5% increase in the Primary Casualty division, partially offset by a 2.1% decrease from our Energy & Engineering division. Our Insurance Companies Professional Liability business has experienced an overall increase in its renewal rates of 2.8%, consisting of 2.5% and 2.9% for the D&O and E&O divisions, respectively. For the three months ended June 30, 2013, average renewal premium rates for our Lloyd’s Operations segment include increases for Lloyd’s Marine and Lloyd’s Property Casualty of 4.0% and 2.0%, partially offset by a decrease for Lloyd’s Professional Liability of 0.5%.

Average renewal premium rates for our Insurance Companies segment for the six months ended June 30, 2013 increased as compared to the same period in 2012 across substantially all of our businesses within each segment. Our Insurance Companies Marine business has realized a 4.9% and 8.0% increase in rates for the Marine Liability and Inland Marine divisions, respectively. Within our Insurance Companies Property Casualty business we have realized a 3.3% increase in rates for the Excess Casualty division and a 3.4% increase in the Primary Casualty division, partially offset by a 1.6% decrease from our Energy & Engineering division. Our Insurance Companies Professional Liability business has experienced an overall increase in its renewal rates of 4.4%, consisting of 6.9% and 3.4% for the D&O and E&O divisions, respectively. For the six months ended June 30, 2013, average renewal premium rates for our Lloyd’s Operations segment include increases for Lloyd’s Marine and Lloyd’s Property Casualty of approximately 4.6% and 1.9%, respectively. Our Lloyd’s Professional Liability business experienced an average decrease of 1.9%.

The average premium rate increases or decreases as noted above for the Marine, Property Casualty and Professional Liability businesses are calculated primarily by comparing premium amounts on policies that have renewed. The premiums are adjusted for changes in exposures and sometimes represent an aggregation of several lines of business. The rate change calculations provide an indicated pricing trend and are not meant to be a precise analysis of the numerous factors that affect premium rates or the adequacy of such rates to cover all underwriting costs and generate an underwriting profit. The calculation can also be affected quarter by quarter depending on the particular policies and the number of policies that renew during that period. Due to market conditions, these rate changes may or may not apply to new business that generally would be more competitively priced compared to renewal business. The calculation does not reflect the rate on business that we are unwilling or unable to renew due to loss experience or competition.

36

Ceded Written Premiums

In the ordinary course of business, we reinsure certain insurance risks with unaffiliated insurance companies for the purpose of limiting our maximum loss exposure, protecting against catastrophic losses and maintaining desired ratios of net premiums written to statutory surplus. The relationship of ceded to gross written premium varies based upon the types of business written and whether the business is written by the Insurance Companies or the Lloyd’s Operations.

Our reinsurance program includes contracts for proportional reinsurance, per risk and whole account excess-of-loss reinsurance for both property and casualty risks and property catastrophe excess-of-loss reinsurance. In recent years we have increased our utilization of excess-of-loss reinsurance for marine, property and certain casualty risks. Our excess-of-loss reinsurance contracts generally provide for a specific amount of coverage in excess of an attachment point and sometimes provides for reinstatement of the coverage to the extent the limit has been exhausted for payment of additional reinsurance premium (referred to as RRPs). The number of reinsurance reinstatements available varies by contract.

We record an estimate of the expected RRPs for losses ceded to excess-of-loss agreements where this feature applies.

For the three and six months ended June 30, 2013, we incurred $4.3 million and $5.0 million in RRPs primarily driven by large losses from our Marine business. For the three and six months ended June 30, 2012, we incurred $5.0 million and $16.4 million in RRPs, respectively, primarily attributable to large losses from our Marine business, including the grounding of the cruise ship Costa Concordia off the coast of Italy.

The following table sets forth our ceded written premiums by segment and major line of business for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30,										Six Months Ended June 30,
	2013					2012					2013					2012
	Ceded		% of Gross			Ceded		% of Gross			Ceded		% of Gross			Ceded		% of Gross
	Written		Written			Written		Written			Written		Written			Written		Written
In thousands	Premiums		Premiums			Premiums		Premiums			Premiums		Premiums			Premiums		Premiums
Insurance Companies:
Marine	$	15,711		36	%	$	18,110		36	%	$	25,417		27	%	$	37,110		33	%
Property Casualty		61,384		40	%		53,785		41	%		130,397		35	%		95,172		33	%
Professional Liability		8,090		24	%		8,104		24	%		14,680		23	%		14,805		23	%
Total Insurance Companies	$	85,185		37	%	$	79,999		37	%	$	170,494		32	%	$	147,087		32	%
Lloyd’s Operations:
Marine	$	11,833		26	%	$	13,545		29	%	$	25,919		26	%	$	27,262		25	%
Property Casualty		29,036		70	%		33,273		68	%		46,782		71	%		48,214		66	%
Professional Liability		7,605		46	%		5,918		46	%		14,234		49	%		10,276		47	%
Total Lloyd’s Operations	$	48,474		47	%	$	52,736		48	%	$	86,935		45	%	$	85,752		42	%
Total	$	133,659		40	%	$	132,735		41	%	$	257,429		35	%	$	232,839		35	%

Overall, the decrease in the percentage of total ceded written premiums to total gross written premiums for the three months ended June 30, 2013 compared to the same period in 2012 was primarily due to changes in the mix of our Lloyd’s Marine business driven by a decrease in classes subject to proportional reinsurance, such as energy liability and war, partially offset by an increase in percentage for the Lloyd’s Property Casualty business driven by the increased use of proportional reinsurance to support our offshore energy business in 2013.

Overall, the percentage of total ceded written premiums to total gross written premiums for the six months ended June 30, 2013 and 2012 has remained constant at 35%. The decrease in percentage for Insurance Companies Marine is driven by RRPs recorded in 2012 in connection with several large losses, including Costa Concordia as explained above. The increase in the percentage for Insurance Companies Property Casualty is driven by the significant growth of our Excess Casualty business, where our retention is lower, partially offset by the continued growth of our Assumed Reinsurance business where our retentions are higher. The increase in the Property Casualty business for the Lloyd’s Operations is driven by increased use of proportional reinsurance to support our offshore energy business for 2013.

37

Net Written Premiums

Net written premiums increased 4.3% for the three months ended June 30, 2013 compared to the same period in 2012. The increase is due to the mix of our Insurance Companies Property Casualty business and is specifically driven by the growth of our Excess Casualty and Primary Casualty business as well as more RRPs recorded in 2012 in connection with several losses from our Marine businesses. The aforementioned increases are partially offset by a decrease in our Energy & Engineering business in connection with the increased use of proportional reinsurance to support our offshore energy lines for 2013, and a decrease in our Marine business in connection with the re-underwriting of our Inland Marine division.

Net written premiums increased 8.0% for the six months ended June 30, 2013 compared to the same period in 2012. The increase is due to the mix of our Insurance Companies Property Casualty business and is specifically driven by the growth of our Excess Casualty and Primary Casualty business, the continued growth of our Assumed Reinsurance business, and as well more RRPs recorded in 2012 in connection with several losses from our Marine businesses. The aforementioned increases are partially offset by a decrease in our Energy & Engineering business in connection with the increased use of proportional reinsurance to support our offshore energy lines for 2013, and a decrease in our Marine business in connection with the re-underwriting of our Inland Marine division.

Net Earned Premiums

Net earned premiums increased 5.0% and 7.7% for the three and six months ended June 30, 2013 compared to the same periods in 2012, driven by earnings from the continued growth of our Insurance Companies Excess Casualty, Primary Casualty, and our Assumed Reinsurance business, which includes the A&H lines that are recognized in earnings over a longer exposure period than our other lines of business. In addition, the increases are also attributable to the RRPs recorded in 2012, and are partially offset by a decrease from our Energy & Engineering business, as described above.

Net Investment Income

Our net investment income was derived from the following sources:

	Three Months Ended June 30,						Six Months Ended June 30,						Percentage Change
In thousands	2013			2012			2013			2012			QTD			YTD
Fixed maturities	$	13,578		$	15,006		$	26,743		$	30,416			-9.5	%		-12.1	%
Equity securities		1,257			994			2,288			1,941			26.5	%		17.9	%
Short-term investments		198			701			388			1,014			-71.8	%		-61.7	%
Total investment income	$	15,033		$	16,701		$	29,419		$	33,371			-10.0	%		-11.8	%
Investment expenses		(787	)		(924	)		(1,516	)		(6,336	)		-14.8	%		-76.1	%
Net investment income	$	14,246		$	15,777		$	27,903		$	27,035			-9.7	%		3.2	%

The decrease in total investment income before investment expenses was 10.0% and 11.8% for the three and six months ended June 30, 2013 compared to the same periods in 2012, primarily due to lower investment yields. The annualized pre-tax investment yield, excluding net realized gains and losses and net other-than-temporary impairment (“OTTI”) losses recognized in earnings, was 2.4% for the three and six months ended June 30, 2013 compared to 2.8% and 2.4% for the same periods in 2012, respectively.

The 2.4% average yield for the six months ended June 30, 2012 included $4.5 million of interest expense related to a total $9.2 million settlement of a dispute with Equitas over foregone interest on amounts that were due on certain reinsurance contracts. In the dispute Equitas alleged that we failed to make timely payments to them under certain reinsurance agreements in connection with subrogation recoveries received by us with respect to several catastrophe losses that occurred in the in the late 1980’s and early 1990’s. Excluding the impact of the aforementioned accrued interest expense, the average yield for the six months ended June 30, 2012 would have been 2.8%.

The portfolio duration was 4.0 years and 3.9 years for the six months ended June 30, 2013 and 2012, respectively.

38

Net Other-Than-Temporary Impairment Losses Recognized In Earnings

Our net OTTI losses recognized in earnings for the periods indicated were as follows:

	Three Months Ended June  30,				Six Months Ended June  30,				Percentage Change
In thousands	2013		2012		2013		2012		QTD		YTD
Fixed maturities	$	—	$	—	$	—	$	11		NM		NM
Equity securities		—		496		42		639		NM		-93.4	%
OTTI recognized in earnings	$	—	$	496	$	42	$	650		NM		-93.5	%

NM  -  Percentage change not meaningful

Net OTTI losses of $0.5 million for the three months ended June 30, 2012 consisted of two equity securities.

Net OTTI losses of $0.7 million for the six months ended June 30, 2012 consisted of one non-agency mortgage-backed security and three equity securities.

Net Realized Gains and Losses

Our realized gains and losses for the periods indicated were as follows:

	Three Months Ended June  30,						Six Months Ended June  30,						Percentage Change
In thousands	2013			2012			2013			2012			QTD			YTD
Fixed maturities:
Gains	$	1,730		$	4,717		$	4,936		$	7,858			-63.3	%		-37.2	%
Losses		(73	)		(231	)		(383	)		(1,530	)		-68.4	%		-75.0	%
Fixed maturities, net	$	1,657		$	4,486		$	4,553		$	6,328			-63.1	%		-28.0	%
Equity securities:
Gains	$	1,815		$	204		$	3,733		$	204			NM			NM
Losses		(127	)		(473	)		(127	)		(473	)		-73.2	%		-73.2	%
Equity securities, net	$	1,688		$	(269	)	$	3,606		$	(269	)		NM			NM
Net realized gains (losses)	$	3,345		$	4,217		$	8,159		$	6,059			-20.7	%		34.7	%

NM  -  Percentage change not meaningful

Net realized gains and losses are generated as part of the normal ongoing management of our investment portfolio. Net realized gains of $3.3 million and $8.2 million for the three and six months ended June 30, 2013 are due to the sale of municipal bonds, commercial mortgage-backed securities and equity securities. Net realized gains of $4.2 million and $6.1 million for the three and six months ended June 30, 2012 were due to the sale of corporate bonds and Treasury bonds.

Other Income/Expense

Total other expense for the three and six months ended June 30, 2013 was $0.9 million and $0.3 million compared to other income of $0.4 million and $1.3 million for the three and six months ended June 30, 2012, respectively. Other income consists of foreign exchange gains and losses from our Lloyd’s Operations, commission income and inspection fees related to our specialty insurance business.

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Expenses

Net Losses and Loss Adjustment Expenses

The ratio of net losses and LAE to net earned premiums (“loss ratios”) for the three and six months ended June 30, 2013 and 2012 is presented in the following table:

	Three Months Ended June  30,						Six Months Ended June  30,
Net Loss and LAE Ratio	2013			2012			2013			2012
Net Loss and LAE Payments		62.3	%		61.7	%		58.5	%		63.1	%
Change in reserves		0.4	%		4.0	%		4.3	%		3.8	%
Subtotal—current year loss ratio		62.7	%		65.7	%		62.8	%		66.9	%
Prior year deficiencies (redundancies)		1.0	%		-2.7	%		1.5	%		-3.2	%
Net loss and LAE ratio		63.7	%		63.0	%		64.3	%		63.7	%

The changes in current accident year loss ratios, as noted above, are driven by mix of business and loss trends.

The segment and line of business breakdown of the net loss and LAE ratios for the three and six months ended June 30, 2013 and 2012 are as follows:

	Three Months Ended June  30,						Six Months Ended June  30,
In thousands	2013			2012			2013			2012
Insurance Companies:
Marine		54.4	%		85.2	%		59.4	%		82.0	%
Property Casualty		71.1	%		60.5	%		68.7	%		62.5	%
Professional Liability		73.7	%		83.8	%		81.7	%		77.0	%
Insurance Companies		68.1	%		70.6	%		68.7	%		70.0	%
Lloyd’s Operations:
Marine		52.6	%		37.1	%		54.0	%		50.8	%
Property Casualty		79.4	%		50.6	%		45.9	%		39.5	%
Professional Liability		-8.8	%		60.3	%		34.9	%		47.7	%
Lloyd’s Operations		49.7	%		43.0	%		50.2	%		47.4	%
Net loss and LAE ratio		63.7	%		63.0	%		64.3	%		63.7	%

The changes in the net loss and LAE ratios by segment and line of business, as noted above, are primarily related to prior year reserve deficiencies and or redundancies, as described below.

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Prior Year Reserve Deficiencies/Redundancies

The relevant factors that may have a significant impact on the establishment and adjustment of losses and LAE reserves can vary by line of business and from period to period. As part of our regular review of prior reserves, management, in consultation with our actuaries, may determine, based on their judgments that certain assumptions made in the reserving process in prior year periods may need to be revised to reflect various factors, typically including the availability of additional information. Based on their reserve analyses, management may make corresponding reserve adjustments.

The segment and line of business breakdowns of prior period net reserve deficiencies (redundancies) for the three and six months ended June 30, 2013 and 2012 is as follows:

	Three Months Ended June  30,						Six Months Ended June 30,
In thousands	2013			2012			2013			2012
Insurance Companies:
Marine	$	(2,469	)	$	(94	)	$	(1,276	)	$	(588	)
Property Casualty		7,311			(2,951	)		7,155			(6,280	)
Professional Liability		2,905			3,671			9,598			4,778
Insurance Companies	$	7,747		$	626		$	15,477		$	(2,090	)
Lloyd’s Operations:
Marine	$	(1,352	)	$	(4,026	)	$	(2,979	)	$	(3,970	)
Property Casualty		361			(1,272	)		(1,669	)		(4,010	)
Professional Liability		(4,843	)		(700	)		(4,833	)		(2,168	)
Lloyd’s Operations	$	(5,834	)	$	(5,998	)	$	(9,481	)	$	(10,148	)
Total deficiencies (redundancies)	$	1,913		$	(5,372	)	$	5,996		$	(12,238	)

The following is a discussion of relevant factors related to the $1.9 million prior period net reserve deficiencies recorded for the three months ended June 30, 2013:

The Insurance Companies recorded $7.7 million of net prior period reserve deficiencies primarily driven by our Property Casualty business. Within the Property Casualty business we reported prior period reserve deficiencies of $4.8 million from our Assumed Reinsurance business mostly related to several large losses from our A&H business, $1.4 million from our Primary Casualty business in connection with increased loss activity across all product lines, and $1.1 million in losses from commercial auto and liquor liability lines which are in run-off. In addition, we reported prior period reserve deficiencies of $2.9 million from our Professional Liability business, which included $1.9 million of reserve deficiencies directly related to our D&O division in connection with specific large losses from our public directors and officers liability lines for UYs 2010 and prior, as well as $1.0 million of reserve deficiencies from our E&O division also related to specific large losses from our small lawyers lines from UYs 2011 and prior. The aforementioned strengthening was partially offset by $2.5 million of prior period reserve redundancies from our Marine business related to favorable emergence from our Cargo and Marine Liability lines from UYs 2008 and prior.

Our Lloyd’s Operations recorded $5.8 million of net prior period reserve redundancies primarily driven by our Lloyd’s Professional Liability business. Within our Lloyd’s Professional Liability business we reported prior period reserve redundancies of $5.8 million in connection with continued favorable emergence from our Lloyd’s D&O business, partially offset by $1.0 million of strengthening on our Lloyd’s E&O business. In addition, our Lloyd’s Operations recorded $1.4 million of prior period reserve redundancies from our Lloyd’s Marine business and is related to the favorable settlement of specific claims from our marine liability lines for UYs 2012 and prior.

The following is a discussion of relevant factors related to the $5.4 million prior period net reserve redundancies recorded for the three months ended June 30, 2012:

The Insurance Companies recorded $0.6 million of net prior period reserve deficiency. The net reserve deficiency includes adverse development from our Professional Liability business related to our lawyers and accountants products, partially offset by favorable development from our Property Casualty business related to our Primary Casualty and NavTech divisions.

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Our Lloyd’s Operations recorded $6.0 million of net prior period reserve redundancies driven by the Marine and Property Casualty businesses.

The following is a discussion of relevant factors related to the $6.0 million prior period net reserve deficiencies for the six months ended June 30, 2013:

The Insurance Companies recorded $15.5 million of net prior period reserve deficiencies, primarily driven by our Professional Liability and Property Casualty businesses. Within the Professional Liability business, we reported prior period net reserve deficiencies of $5.6 million from the D&O division related to specific large claims from our public and private sectors directors and officers liability lines for UYs 2010 and prior. In addition, we reported prior period net reserve deficiencies of $4.0 million from the E&O division related to specific large claims from our insurance agents, miscellaneous professional liability, and small lawyers lines from UYs 2011 and prior. Within the Property Casualty business we reported prior period reserve deficiencies of $7.4 million from our NavRe division mostly related to several large losses from our A&H business and $2.2 million in losses from commercial auto and liquor liability lines which are in run-off, partially offset by $2.6 million of prior period redundancies from our Energy & Engineering business related to favorable emergence from our Offshore Energy lines for UYs 2011 and prior. The aforementioned net strengthening was partially offset by $1.3 million of net prior period reserve redundancies from our Marine business primarily related to $3.1 million of favorable emergence from our Cargo and Marine Liability lines from UYs 2008 and prior, partially offset by $1.8 million of prior period reserve deficiencies from our Inland Marine business across all product lines.

Our Lloyd’s Operations recorded $9.5 million of net prior period reserve redundancies across all businesses. Within our Lloyd’s Professional Liability business we reported prior period reserve redundancies of $5.4 million in connection with continued favorable emergence from our Lloyd’s D&O business, partially offset by $0.6 million of strengthening on our Lloyd’s E&O business. Within the Lloyd’s Marine business we reported prior period reserve redundancies of $3.0 million related to the favorable settlement of specific claims from our Ocean Marine liability lines from UYs 2012 and prior. In addition, our Lloyd’s Property Casualty business also reported net prior period reserve redundancies of $1.6 million from the Energy & Engineering division due in part to the favorable settlement of two claims from our onshore lines from UY 2011

The following is a discussion of relevant factors related to the $12.2 million prior period net reserve redundancies recorded for the six months ended June 30, 2012:

The Insurance Companies recorded $2.1 million of net prior period reserve redundancies driven by net favorable development from our Property Casualty business related to our Primary Casualty and NavTech divisions, partially offset by adverse development from our Professional Liability business across multiple products within our D&O and E&O divisions.

Our Lloyd’s Operations recorded $10.1 million of net prior period reserve redundancies across all businesses and divisions.

Commission Expenses

Commission expenses paid to brokers and agents are generally based on a percentage of gross written premiums and are partially offset by ceding commissions we may receive on ceded written premiums. Commissions are generally deferred and recorded as deferred policy acquisition costs to the extent that they relate to unearned premium. The percentage of commission expenses to net earned premiums (“commission expense ratio”) for the three and six months ended June 30, 2013 were 13.8% and 13.5%, respectively, compared to 15.1% and 15.5% for the comparable periods during 2012. The decrease in the commission expense ratio for the three and six months ended June 30, 2013 when compared to the same periods in 2012 is attributed to changes in the mix of business, mostly driven by an increase in the ceding commission on the new quota share program for our offshore energy business, and to a lesser extent RRPs recorded in 2012 in connection with loss events from our Marine business.

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Other Operating Expenses

Other operating expenses were $40.7 million and $81.6 million for the three and six months ended June 30, 2013 compared to $39.8 million and $76.1 million for the same periods in 2012. The increase in operating expenses is primarily due to an increase in overall headcount due to continued investments in new underwriting teams and related support staff, closely aligned with business growth.

Interest Expense

Interest expense relates to our Senior Notes due May 1, 2016. Interest on these Senior Notes is due each May 1 and November 1 and the effective interest rate, based on the proceeds net of discount and all issuance costs, is approximately 7.17%. Interest expense for both the three and six months ended June 30, 2013 and 2012 was approximately $2.1 million and $4.1 million.

Income Taxes

We recorded income tax expense of $6.3 million and $12.9 million for the three and six months ended June 30, 2013 compared to $6.2 million and $9.5 million for the comparable periods in 2012, resulting in effective tax rates of 31.1% and 31.7% for the three and six months ended June 30, 2013 compared to 29.5% and 29.4% for the same periods in 2012. The effective tax rate on net investment income was 27.6% and 28.0% for the three and six months ended June 30, 2013 compared to 28.2% and 26.9% for the same periods during 2012.

As of June 30, 2013, the net deferred federal, foreign, state and local tax assets were $25.9 million compared to $3.2 million as of December 31, 2012 with the change primarily due to the increase in unrealized losses on investments and the increase in the deferred tax asset for unearned premium reserve, in line with the growth of our business.

We had net state and local deferred tax assets amounting to potential future tax benefits of $0.5 million as of both June 30, 2013 and December 31, 2012, respectively. Included in the deferred tax assets are state and local net operating loss carry-forwards of $0.2 million as of both June 30, 2013 and December 31, 2012. A valuation allowance was established for the full amount of these potential future tax benefits due to uncertainty associated with their realization. Our state and local tax carry-forwards as of June 30, 2013 expire from 2023 to 2031.

The Company has not provided for U.S. income taxes on approximately $17.2 million of undistributed earnings of its non-U.S. subsidiaries since it is intended that those earnings will be reinvested indefinitely in those subsidiaries. If a future determination is made that those earnings no longer are intended to be reinvested indefinitely in those subsidiaries, U.S. income taxes of approximately $1.8 million, assuming all foreign tax credits are realized, would be included in the tax provision at that time and would be payable if those earnings were distributed to the Company.

Segment Information

We classify our business into two underwriting segments consisting of the Insurance Companies and the Lloyd’s Operations, which are separately managed, and a Corporate segment. Segment data for each of the two underwriting segments include allocations of the operating expenses of the wholly-owned underwriting management companies and The Navigators Group, Inc.’s (the “Parent Company’s”) operating expenses and related income tax amounts. The Corporate segment consists of the Parent Company’s investment income, interest expense and the related tax effect.

We evaluate the performance of each segment based on its underwriting and GAAP results. The underwriting results of the Insurance Companies and the Lloyd’s Operations are measured by taking into account net earned premium, net loss and LAE, commission expenses, other operating expenses and other income (expense). Each segment also maintains its own investments, on which it earns income and realizes capital gains or losses. Our underwriting performance is evaluated separately from the performance of our investment portfolios.

Following are the financial results of our two underwriting segments.

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Insurance Companies

The Insurance Companies consist of Navigators Insurance Company, including its U.K. Branch, and its wholly-owned subsidiary, Navigators Specialty. They are primarily engaged in underwriting marine insurance and related lines of business, specialty insurance lines of business, including contractors general liability insurance, commercial umbrella and primary and excess casualty businesses, specialty assumed reinsurance business, and professional liability insurance. Navigators Specialty underwrites specialty and professional liability insurance on an excess and surplus lines basis. Navigators Specialty is 100% reinsured by Navigators Insurance Company.

The following table sets forth the results of operations for the Insurance Companies for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June  30,						Six Months Ended June 30,						Percentage Change
In thousands	2013			2012			2013			2012			QTD			YTD
Gross written premiums	$	228,565		$	214,064		$	530,193		$	462,402			6.8	%		14.7	%
Net written premiums		143,380			134,065			359,699			315,315			6.9	%		14.1	%
Net earned premiums		156,547			141,577			310,878			273,125			10.6	%		13.8	%
Net losses and loss adjustment expenses		(106,668	)		(100,003	)		(213,653	)		(191,180	)		6.7	%		11.8	%
Commission expenses		(20,573	)		(21,117	)		(39,090	)		(40,418	)		-2.6	%		-3.3	%
Other operating expenses		(29,829	)		(28,914	)		(59,172	)		(54,259	)		3.2	%		9.1	%
Other income (expense)		689			879			1,348			2,521			-21.6	%		-46.5	%
Underwriting profit (loss)	$	166		$	(7,578	)	$	311		$	(10,211	)		NM			NM
Net investment income		12,515			13,286			24,466			22,221			-5.8	%		10.1	%
Net realized gains (losses)		3,099			2,325			7,891			4,200			33.3	%		87.9	%
Income (loss) before income taxes	$	15,780		$	8,033		$	32,668		$	16,210			96.4	%		101.5	%
Income tax expense (benefit)		4,785			2,101			10,199			3,980			127.7	%		NM
Net income (loss)	$	10,995		$	5,932		$	22,469		$	12,230			85.4	%		83.7	%
Losses and loss adjustment expenses ratio		68.1	%		70.6	%		68.7	%		70.0	%
Commission expense ratio		13.1	%		14.9	%		12.6	%		14.8	%
Other operating expense ratio (1)		18.7	%		19.9	%		18.6	%		18.9	%
Combined ratio		99.9	%		105.4	%		99.9	%		103.7	%

(1)  -  Includes Other operating expenses & Other income (expense)

NM  -  Percentage change not meaningful

Our Insurance Companies reported net income of $11.0 million for the three months ended June 30, 2013 compared to $5.9 million for the same period in 2012. The increase in net income for the three months ended June 30, 2013 as compared to the same period in 2012 was largely related to an improvement in underwriting results.

Our Insurance Companies combined ratio for the three months ended June 30, 2013 was 99.9% compared to 105.4% for the same period in 2012. Our Insurance Companies pre-tax underwriting results increased by $7.8 million to a $0.2 million pre-tax underwriting profit for the three months ended June 30, 2013 compared to an underwriting loss of $7.6 million for the same period in 2012.

Our Insurance Companies pre-tax underwriting results for the three months ended June 30, 2013 included $2.0 million of underwriting profit from our Excess Casualty and Primary Casualty businesses due in part to strong production attributable to the expansion of those underwriting teams and the continued dislocation of certain competitors, mostly offset by a net underwriting loss of $1.9 million from our D&O and E&O businesses driven by net prior period reserve deficiencies from UYs 2010 and prior.

Our Insurance Companies underwriting results for the three months ended June 30, 2012 includes $3.9 million of RRPs related to several large losses from our Marine business.

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Our Insurance Companies reported net income of $22.5 million for the six months ended June 30, 2013 compared to $12.2 million for the same period in 2012. The increase in net income for the six months ended June 30, 2013 as compared to the same period in 2012 was largely related to an improvement in underwriting results.

Our Insurance Companies combined ratio for the six months ended June 30, 2013 was 99.9% compared to 103.7% for the same period in 2012. Our Insurance Companies pre-tax underwriting results increased by $10.5 million to a $0.3 million pre-tax underwriting profit for the six months ended June 30, 2013 compared to an underwriting loss of $10.2 million for the same period in 2012.

Our Insurance Companies pre-tax underwriting results for the six months ended June 30, 2013 included $6.4 million of underwriting profit from our Excess Casualty and Primary Casualty businesses due in part to strong production attributable to the expansion of those underwriting teams and the continued dislocation of certain competitors, mostly offset by an underwriting loss of $5.5 million from our D&O business driven by net prior period reserve deficiencies from UYs 2010 and prior.

Our Insurance Companies underwriting results for the six months ended June 30, 2012 reflected net losses of $9.6 million related to several large losses from our marine business, including the grounding of the cruise ship Costa Concordia off the coast of Italy.

Insurance Companies Gross Written Premiums

Marine Premiums. The gross written premiums for our Marine business for the three and six months ended June 30, 2013 and 2012 consisted of the following:

	Three Months Ended June  30,				Six Months Ended June  30,				Percentage Change
In thousands	2013		2012		2013		2012		QTD			YTD
Marine Liability	$	16,951	$	16,562	$	31,756	$	34,805		2.3	%		-8.8	%
Craft/Fishing Vessels		7,176		6,000		17,956		14,244		19.6	%		26.1	%
Cargo		3,553		4,988		11,973		13,446		-28.8	%		-11.0	%
Protection & Indemnity		4,097		3,838		10,248		10,454		6.7	%		-2.0	%
Inland Marine		4,503		9,404		9,384		21,242		-52.1	%		-55.8	%
Bluewater Hull		3,155		4,701		5,755		8,260		-32.9	%		-30.3	%
Other Marine		3,642		4,403		6,852		9,310		-17.3	%		-26.4	%
Total Marine	$	43,077	$	49,896	$	93,924	$	111,761		-13.7	%		-16.0	%

The Insurance Companies Marine gross written premiums for the three and six months ended June 30, 2013 decreased 13.7% and 16.0% compared to the same periods during 2012 primarily due to the re-underwriting of our Inland Marine business, as well as a reduction in the Bluewater Hull business due to lower than anticipated new business production resulting from a stricter underwriting approach on certain accounts and vessel types. In addition, the decrease in Cargo was related to non renewed business that did not meet the current underwriting criteria.

The Insurance Companies Marine business achieved a 5.0% and 4.9% increase on renewal rates for the three and six months ended June 30, 2013, respectively. The increase in renewal rates on Inland Marine business was 15.2% and 8.0% for the three and six months ended June 30, 2013.

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Property Casualty Premiums. The gross written premiums for our Property Casualty business for the three and six months ended June 30, 2013 and 2012 consisted of the following:

	Three Months Ended June  30,				Six Months Ended June  30,				Percentage Change
In thousands	2013		2012		2013		2012		QTD			YTD
Excess Casualty	$	64,306	$	51,425	$	134,588	$	89,079		25.0	%		51.1	%
Assumed Reinsurance		15,436		20,375		107,572		93,796		-24.2	%		14.7	%
Primary Casualty		35,034		26,225		61,469		50,115		33.6	%		22.7	%
Energy & Engineering		21,828		20,192		41,892		33,393		8.1	%		25.5	%
Environmental Liability		7,539		6,310		13,075		11,520		19.5	%		13.5	%
Other Property & Casualty		7,952		6,100		12,463		8,643		30.4	%		44.2	%
Total Property Casualty	$	152,095	$	130,627	$	371,059	$	286,546		16.4	%		29.5	%

The Insurance Companies Property Casualty gross written premiums for the three months ended June 30, 2013 increased 16.4% compared to the same period in 2012, driven by growth from our Excess Casualty and Primary Casualty divisions as a result of strong production attributable to an expansion of our underwriting teams and continued dislocation among certain competitors, partially offset a decrease in our Assumed Reinsurance business attributable to the timing of policy renewals on our A&H business relative to the quarter.

The Insurance Companies Property Casualty gross written premiums for the six months ended June 30, 2013 increased 29.5% compared to the same period in 2012, driven by growth from our Excess Casualty and Primary Casualty divisions as a result of strong production attributable to an expansion of our underwriting teams and continued dislocation among certain competitors, as well as continued growth from our Assumed Reinsurance business.

For the three months ended June 30, 2013, our Insurance Companies Property Casualty business realized a 4.6% increase in rates for the Excess Casualty division and a 3.5% increase in the Primary Casualty division, partially offset by a 2.1% decrease from our Energy & Engineering division.

For the six months ended June 30, 2013, our Insurance Companies Property Casualty business realized a 3.3% increase in rates for the Excess Casualty division and a 3.4% increase in the Primary Casualty division, partially offset by a 1.6% decrease from our Energy & Engineering division.

Professional Liability Premiums. The gross written premiums for the Professional Liability business for the three and six months ended June 30, 2013 and 2012 consisted of the following:

	Three Months Ended June  30,				Six Months Ended June  30,				Percentage Change
In thousands	2013		2012		2013		2012		QTD			YTD
Errors & Omissions	$	21,474	$	22,229	$	44,127	$	44,161		-3.4	%		-0.1	%
Management Liability		11,919		11,312		21,083		19,934		5.4	%		5.8	%
Total Professional Liability	$	33,393	$	33,541	$	65,210	$	64,095		-0.4	%		1.7	%

For the three months ended June 30, 2013, our Insurance Companies Professional Liability business has experienced an overall increase in its renewal rates of 2.8%, consisting of 2.5% and 2.9% for the D&O and E&O divisions, respectively.

For the six months ended June 30, 2013, our Insurance Companies Professional Liability business has experienced an overall increase in its renewal rates of 4.4%, consisting of 6.9% and 3.4% for the D&O and E&O divisions, respectively.

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Insurance Companies Commission Expenses

The commission expense ratios for the three and six months ended June 30, 2013, were 13.1% and 12.6%, respectively, compared to 14.9% and 14.8% for the same periods in 2012. The decrease in the commission expense ratio is attributable to changes in the mix of business, mostly driven by an increase in the ceding commission received on the new quota share program for our offshore energy business. The decrease for the six months ended June 30, 2013 in comparison to 2012 is further attributable to more RRPs recorded in 2012 in connection with several losses from our Marine business.

Insurance Companies Other Operating Expenses

Insurance Companies other operating expenses were $29.8 million and $59.2 million for the three and six months ended June 30, 2013 compared to $28.9 million and $54.3 million for the same periods in 2012. The increase in operating expenses is due to an increase in overall headcount due to continued investments in new underwriting teams and related support staff, closely aligned with business growth.

Lloyd’s Operations

Our Lloyd’s Operations primarily underwrite marine and related lines of business along with offshore energy, construction coverages for onshore energy business and professional liability insurance at Lloyd’s through Syndicate 1221. Our Lloyd’s Operations segment includes NUAL, a Lloyd’s underwriting agency which manages Syndicate 1221.

The following table sets forth the results of operations for the Lloyd’s Operations for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30,						Six Months Ended June 30,						Percentage Change
In thousands	2013			2012			2013			2012			QTD			YTD
Gross written premiums	$	103,563		$	108,923		$	195,157		$	203,734			-4.9	%		-4.2	%
Net written premiums		55,089			56,187			108,222			117,982			-2.0	%		-8.3	%
Net earned premiums		49,267			54,440			97,264			106,011			-9.5	%		-8.3	%
Net losses and loss adjustment expenses		(24,480	)		(23,404	)		(48,837	)		(50,212	)		4.6	%		-2.7	%
Commission expenses		(8,335	)		(8,938	)		(16,956	)		(19,824	)		-6.7	%		-14.5	%
Other operating expenses		(10,849	)		(10,905	)		(22,380	)		(21,867	)		-0.5	%		2.3	%
Other income (expense)		(1,087	)		60			(545	)		66			NM			NM
Underwriting profit (loss)	$	4,516		$	11,253		$	8,546		$	14,174			-59.9	%		-39.7	%
Net investment income		1,728			2,454			3,430			4,737			-29.6	%		-27.6	%
Net realized gains (losses)		242			1,396			222			1,209			-82.7	%		-81.6	%
Income (loss) before income taxes	$	6,486		$	15,103		$	12,198		$	20,120			-57.1	%		-39.4	%
Income tax expense (benefit)		2,206			5,207			4,242			6,933			-57.6	%		-38.8	%
Net income (loss)	$	4,280		$	9,896		$	7,956		$	13,187			-56.7	%		-39.7	%
Losses and loss adjustment expenses ratio		49.7	%		43.0	%		50.2	%		47.4	%
Commission expense ratio		16.9	%		16.4	%		17.4	%		18.7	%
Other operating expense ratio (1)		24.2	%		19.9	%		23.6	%		20.5	%
Combined ratio		90.8	%		79.3	%		91.2	%		86.6	%

(1)  -  Includes Other operating expenses & Other income (expense)

NM  -  Percentage change not meaningful.

Our Lloyd’s Operations reported net income of $4.3 million for the three months ended June 30, 2013 compared to $9.9 million for the same period in 2012. The decrease in net income for the three months ended June 30, 2013 as compared to the same period in 2012 was largely attributable to a reduction in underwriting profit, and to a lesser extent, a reduction in net investment income due to lower investment yields.

Our Lloyd’s Operations combined ratio for the three months ended June 30, 2013 was 90.8% compared to 79.3% for the same period in 2012. Our Lloyd’s Operations pre-tax underwriting profit decreased $6.8 million to $4.5 million for the three months ended June 30, 2013 compared to $11.3 million for the same period in 2012.

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Our Lloyd’s Operations pre-tax underwriting profit for the three months ended June 30, 2013 included $5.8 million of net prior period reserve redundancies in connection with continued favorable emergence from our Lloyd’s D&O business and to a lesser extent the favorable settlement of specific claims from our Lloyd’s Marine business, partially offset by a $1.2 million foreign exchange loss on the remeasurement of certain deposits required by Lloyd’s.

Our Lloyd’s Operations pre-tax underwriting profit for the three months ended June 30, 2012 included net prior period reserve redundancies of $6.0 million from our Lloyd’s Property Casualty and Lloyd’s Marine businesses.

Our Lloyd’s Operations reported net income of $8.0 million for the six months ended June 30, 2013 compared to $13.2 million for the same period in 2012. The decreases in net income for the six months ended June 30, 2013 as compared to the same period in 2012 was largely attributable to a reduction in underwriting profit, and to a lesser extent, a reduction in net investment income due to lower investment yields.

Our Lloyd’s Operations combined ratio for the six months ended June 30, 2013 was 91.2% compared to 86.6% for the same period in 2012. Our Lloyd’s Operations pre-tax underwriting profit decreased $5.7 million to $8.5 million for the three months ended June 30, 2013 compared to $14.2 million for the same period in 2012.

Our Lloyd’s Operations pre-tax underwriting profit for the six months ended June 30, 2013 included $9.5 million of net prior period reserve redundancies in connection with continued favorable emergence from our Lloyd’s D&O business and the favorable settlement of specific claims from our Lloyd’s Marine business, partially offset by a $1.2 million foreign exchange loss on the remeasurement of certain deposits required by Lloyd’s.

Our Lloyd’s Operations pre-tax underwriting profit for the six months ended June 30, 2012 included net prior period reserve redundancies of $10.1 million as a result of favorable emergence from all businesses.

Lloyd’s Operations Gross Written Premiums

We have controlled 100% of Syndicate 1221’s stamp capacity since 2006. Stamp capacity is a measure of the amount of premium a Lloyd’s syndicate is authorized to write based on a business plan approved by the Council of Lloyd’s. Syndicate 1221’s stamp capacity is £195 million ($296 million) in 2013 compared to £184 million ($300 million) in 2012.

Marine Premiums. The gross written premiums for our Marine business for the three and six months ended June 30, 2013 and 2012 consisted of the following:

	Three Months Ended June  30,				Six Months Ended June 30,				Percentage Change
In thousands	2013		2012		2013		2012		QTD			YTD
Marine Liability	$	8,842	$	9,875	$	26,657	$	28,819		-10.5	%		-7.5	%
Cargo		13,720		11,740		23,724		25,419		16.9	%		-6.7	%
Specie		4,876		5,265		11,331		11,561		-7.4	%		-2.0	%
Marine Excess-of-Loss Reinsurance		4,826		4,066		10,564		11,139		18.7	%		-5.2	%
Energy Liability		4,301		5,826		10,157		11,927		-26.2	%		-14.8	%
Transport		6,088		6,046		9,979		9,934		0.7	%		0.5	%
War		1,482		2,687		3,964		5,973		-44.8	%		-33.6	%
Bluewater Hull		1,758		1,532		3,161		4,040		14.8	%		-21.8	%
Total Marine	$	45,893	$	47,037	$	99,537	$	108,812		-2.4	%		-8.5	%

The Lloyd’s Operations Marine gross written premiums decreased 2.4% and 8.5% for the three and six months ended June 30, 2013 compared to the same periods in 2012. The decrease is driven by reduction in renewals on War, Marine Liability and Energy Liability in connection with, and partially offset by an increase in average renewal rates of 4.0% and 4.6% for the three and six months ended June 30, 2013.

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Property Casualty Premiums. The gross written premiums for our Property Casualty business for the three and six months ended June 30, 2013 and 2012 consisted of the following:

	Three Months Ended June 30,				Six Months Ended June 30,				Percentage Change
In thousands	2013		2012		2013		2012		QTD			YTD
Energy & Engineering:
Offshore Energy	$	15,266	$	20,411	$	28,534	$	31,731		-25.2	%		-10.1	%
Onshore Energy		11,485		14,694		16,754		18,920		-21.8	%		-11.4	%
Engineering and Construction		9,665		12,402		14,673		20,597		-22.1	%		-28.8	%
U.S. Direct and Facultative Property		3,846		—		5,374		—		NM			NM
Energy & Engineering	$	40,262	$	47,507	$	65,335	$	71,248		-15.2	%		-8.3	%
Other Property Casualty		955		1,471		940		2,026		-35.1	%		-53.6	%
Total Property Casualty	$	41,217	$	48,978	$	66,275	$	73,274		-15.8	%		-9.6	%

NM  -  Percentage change not meanigful

The Lloyd’s Operations Property Casualty gross written premiums decreased 15.8% and 9.6% for the three and six months ended June 30, 2013 compared to the same periods in 2012. The decreases are primarily due to reductions in new business growth across all lines, partially offset by new business from our U.S. direct and facultative property lines that we began writing in 2013.

The Lloyd’s Operations Property Casualty business achieved a 2.0% and 1.9% increase on renewal rates for the three and six months ended June 30, 2013.

Professional Liability Premiums. The gross written premiums for the Professional Liability business for the three and six months ended June 30, 2013 and 2012 consisted of the following:

	Three Months Ended June 30,				Six Months Ended June 30,				Percentage Change
In thousands	2013		2012		2013		2012		QTD			YTD
Management Liability	$	11,257	$	9,309	$	21,498	$	15,739		20.9	%		36.6	%
Errors & Omissions		5,196		3,599		7,847		5,909		44.4	%		32.8	%
Total Professional Liability	$	16,453	$	12,908	$	29,345	$	21,648		27.5	%		35.6	%

The Lloyd’s Operations Professional Liability gross written premiums increased 27.5% and 35.6% for the three and six months ended June 30, 2013 compared to the same periods in 2012, as a result of new business growth, partially offset by decreases in renewal rates of 0.5% and 1.9% for the three and six months ended, respectively.

Capital Resources

We monitor our capital adequacy to support our business on a regular basis. The future capital requirements of our business will depend on many factors, including our ability to write new business successfully and to establish premium rates and reserves at levels sufficient to cover losses. Our ability to underwrite is largely dependent upon the quality of our claims paying and financial strength ratings as evaluated by independent rating agencies. In particular, we require (1) sufficient capital to maintain our financial strength ratings, as issued by various ratings agencies, at a level considered necessary by management to enable our Insurance Companies to compete, (2) sufficient capital to enable our Insurance Companies to meet the capital adequacy tests performed by statutory agencies in the United States and the United Kingdom and (3) letters of credit and other forms of collateral that are necessary to support the business plan of our Lloyd’s Operations.

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Our capital resources consist of funds deployed or available to be deployed to support our business operations. As of June 30, 2013 and December 31, 2012, our capital resources were as follows:

	June 30,			December 31,
In thousands	2013			2012
Senior Notes	$	114,502		$	114,424
Stockholders’ equity		873,952			879,485
Total capitalization	$	988,454		$	993,909
Ratio of debt to total capitalization		11.6	%		11.5	%

As part of our capital management program, we may seek to raise additional capital or may seek to return capital to our stockholders through share repurchases, cash dividends or other methods (or a combination of such methods). Any such determination will be at the discretion of the Parent Company’s Board of Directors and will be dependent upon our profits, financial requirements and other factors, including legal restrictions, rating agency requirements, credit facility limitations and such other factors as our Board of Directors deems relevant.

In July 2012, we filed a universal shelf registration statement with the SEC. This registration statement, which expires in July 2015, allows for the future possible offer and sale by the Company of up to $500 million in the aggregate of various types of securities including common stock, preferred stock, debt securities, depositary shares, warrants, units or stock purchase contracts and stock purchase units. The shelf registration statement enables us to efficiently access the public equity or debt markets in order to meet future capital needs, if necessary. This report is not an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state.

We primarily rely upon dividends from our subsidiaries to meet our Parent Company’s obligations. Since the issuance of the senior debt in April 2006, the Parent Company’s cash obligations primarily consist of semi-annual interest payments on the senior debt, which are currently $4.0 million. Going forward, the interest payments may be made from funds currently at the Parent Company or dividends from its subsidiaries.

Navigators Insurance Company may pay dividends to the Parent Company out of its statutory earned surplus pursuant to statutory restrictions imposed under the New York insurance law. As of June 30, 2013, the maximum amount available for the payment of dividends by Navigators Insurance Company in 2013 without prior regulatory approval is $70.7 million. During the preceding 12 month period Navigators Insurance Company declared and paid $5.0 million in dividends to the Parent Company, none of which were declared and paid in the second quarter of 2013.

Navigators Corporate Underwriters Ltd. (“NCUL”) may pay dividends to the Parent Company up to the extent of available profits that have been distributed from Syndicate 1221 and as of June 30, 2013 that amount was $8.0 million (£5.3 million).

50

Condensed Parent Company balance sheets as of June 30, 2013 (unaudited) and December 31, 2012 are shown in the table below:

	June 30,		December 31,
In thousands	2013		2012
Cash and investments	$	9,758	$	15,026
Investments in subsidiaries		948,621		955,024
Goodwill and other intangible assets		2,533		2,534
Other assets		29,405		23,219
Total assets	$	990,317	$	995,803
Senior Notes	$	114,502	$	114,424
Accounts payable and other liabilities		521		552
Accrued interest payable		1,342		1,342
Total liabilities	$	116,365	$	116,318
Stockholders’ equity	$	873,952	$	879,485
Total liabilities and stockholders’ equity	$	990,317	$	995,803

On November 22, 2012, we entered into a $165 million credit facility agreement with ING Bank N.V., London Branch, individually and as Administrative Agent, and a syndicate of lenders. The new credit facility amended and restated a $165 million letter of credit facility entered into by the parties on March 28, 2011. The credit facility, which is denominated in U.S. dollars, is utilized to fund our participation in Syndicate 1221 through letters of credit for the 2013 and 2014 underwriting years, as well as open prior years. The letters of credit issued under the facility are denominated in British pounds and their aggregate face amount will fluctuate based on exchange rates. If any letters of credit remain outstanding under the facility after December 31, 2014, we would be required to post additional collateral to secure the remaining letters of credit. As of June 30, 2013, letters of credit with an aggregate face amount of $142.6 million were outstanding under the credit facility and we have $0.8 million of cash collateral posted.

This credit facility contains customary covenants for facilities of this type, including restrictions on indebtedness and liens, limitations on mergers, dividends and the sale of assets, and requirements as to maintaining certain consolidated tangible net worth, statutory surplus and other financial ratios. The credit facility also provides for customary events of default, including failure to pay principal, interest or fees when due, failure to comply with covenants, any representation or warranty made by the Company being false in any material respect, default under certain other indebtedness, certain insolvency or receivership events affecting the Company and its subsidiaries, the occurrence of certain material judgments, or a change in control of the Company. The letter of credit facility is secured by a pledge of the stock of certain insurance subsidiaries of the Company. To the extent the aggregate face amount issued under the credit facility exceeds the commitment amount, we are required to post collateral with the lead bank of the consortium. We were in compliance with all covenants under the credit facility as of June 30, 2013.

The applicable margin and applicable fee rate payable under the credit facility are based on a tiered schedule that is based on the Company’s then-current ratings issued by S&P and Moody’s with respect to the Company’s Senior Notes without third-party credit enhancement, and the amount of the Company’s own collateral utilized to fund its participation in Syndicate 1221.

Time lags do occur in the normal course of business between the time gross loss reserves are paid by the Company and the time such gross paid losses are billed and collected from reinsurers. Reinsurance recoverable amounts related to gross loss reserves as of June 30, 2013 are anticipated to be billed and collected over the next several years as the gross loss reserves are paid by the Company.

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Generally, for pro rata or quota share reinsurers, we issue quarterly settlement statements for premiums less commissions and paid loss activity, which are expected to be settled within 30-45 days. We have the ability to issue “cash calls” requiring such reinsurers to pay losses whenever paid loss activity for a claim ceded to a particular reinsurance treaty exceeds a predetermined amount (generally $0.5 million to $1.0 million) as set forth in the pro rata treaty. For the Insurance Companies, cash calls must generally be paid within 30 calendar days. There is generally no specific settlement period for the Lloyd’s Operations cash call provisions, but such billings have historically on average been paid within 45 calendar days.

Generally, for excess-of-loss reinsurers we pay quarterly deposit premiums based on the estimated subject premiums over the contract period (usually one year) that are subsequently adjusted based on actual premiums determined after the expiration of the applicable reinsurance treaty. Paid losses subject to excess-of-loss recoveries are generally billed as they occur and are usually settled by reinsurers within 30 calendar days for the Insurance Companies and 30 business days for the Lloyd’s Operations.

We sometimes withhold funds from reinsurers and may apply ceded loss billings against such funds in accordance with the applicable reinsurance agreements.

Liquidity

Consolidated Cash Flows

Cash flow provided by operations was $48.5 million for the six months ended June 30, 2013 compared to $15.0 million for the comparable period in 2012. The increase in cash flow from operations was due to improved collection on premium receivables partially offset by the timing of payments to our reinsurers in connection with the increased use of proportional reinsurance to support our offshore energy business in 2013.

Net cash provided by investing activities was $6.6 million for the six months ended June 30, 2013 compared to net cash used in investing activities of $97.0 million for the same period in 2012. The increase in cash provided by investing activities is driven by the on-going management of our investment portfolio.

Net cash provided by financing activities was $1.5 million for the six months ended June 30, 2013 compared to $0.4 million for the comparable period in 2012. The increase in cash provided by financing activities relates to the exercise of employee stock options.

We believe that the cash flow generated by the operating activities of our subsidiaries will provide sufficient funds for us to meet our liquidity needs over the next twelve months. Beyond the next twelve months, cash flow available to us may be influenced by a variety of factors, including general economic conditions and conditions in the insurance and reinsurance markets, as well as fluctuations from year to year in claims experience.

We believe that we have adequately managed our cash flow requirements related to reinsurance recoveries from their positive cash flows and the use of available short-term funds when applicable. However, there can be no assurances that we will be able to continue to adequately manage such recoveries in the future or that collection disputes or reinsurer insolvencies will not arise that could materially increase the collection time lags or result in recoverable write-offs causing additional incurred losses and liquidity constraints to the Company. The payment of gross claims and related collections from reinsurers with respect to large losses could significantly impact our liquidity needs. However, we expect to collect our paid reinsurance recoverables generally under the terms described above.

52

Investments

As of June 30, 2013, the weighted average rating of our fixed maturity investments was “AA” by S&P and “Aa” by Moody’s. The entire fixed maturity investment portfolio, except for investments with a fair value of $18.7 million, consists of investment grade bonds. As of June 30, 2013, our portfolio had a duration of 4.0 years. Management periodically projects cash flow of the investment portfolio and other sources in order to maintain the appropriate levels of liquidity in an effort to ensure our ability to satisfy claims. As of June 30, 2013 and December 31, 2012, all fixed maturity securities and equity securities held by us were classified as available-for-sale.

The following tables set forth the Company’s cash and investments as of June 30, 2013 and December 31, 2012. The tables below include OTTI securities recognized within OCI.

	June 30, 2013
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
In thousands	Value		Gains		(Losses)			Cost
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	464,167	$	3,538	$	(7,492	)	$	468,121
States, municipalities and political subdivisions		452,084		10,281		(13,114	)		454,917
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		320,150		7,782		(4,645	)		317,013
Residential mortgage obligations		37,335		1,196		(221	)		36,360
Asset-backed securities		75,311		747		(113	)		74,677
Commercial mortgage-backed securities		173,388		8,731		(514	)		165,171
Subtotal	$	606,184	$	18,456	$	(5,493	)	$	593,221
Corporate bonds		485,371		16,285		(3,162	)		472,248
Total fixed maturities	$	2,007,806	$	48,560	$	(29,261	)	$	1,988,507
Equity securities—common stocks		138,549		25,238		(1,910	)		115,221
Short-term investments		124,726		—		—			124,726
Cash		101,960		—		—			101,960
Total	$	2,373,041	$	73,798	$	(31,171	)	$	2,330,414

	December 31, 2012
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
In thousands	Value		Gains		(Losses)			Cost
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	649,692	$	8,654	$	(36	)	$	641,074
States, municipalities and political subdivisions		322,947		18,712		(380	)		304,615
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		384,445		13,652		(204	)		370,997
Residential mortgage obligations		38,692		1,053		(549	)		38,188
Asset-backed securities		50,382		1,133		(49	)		49,298
Commercial mortgage-backed securities		204,821		17,996		(18	)		186,843
Subtotal	$	678,340	$	33,834	$	(820	)	$	645,326
Corporate bonds		470,854		27,129		(25	)		443,750
Total fixed maturities	$	2,121,833	$	88,329	$	(1,261	)	$	2,034,765
Equity securities—common stocks		101,297		16,919		(626	)		85,004
Short-term investments		153,788		—		—			153,788
Cash		45,336		—		—			45,336
Total	$	2,422,254	$	105,248	$	(1,887	)	$	2,318,893

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As of June 30, 2013 and December 31, 2012, debt securities for which non-credit OTTI was previously recognized and included in other comprehensive income are now in an unrealized gains position of $0.5 million and $20 thousand, respectively.

The fair value of our investment portfolio may fluctuate significantly in response to various factors such as changes in interest rates, investment quality ratings, equity prices, foreign exchange rates and credit spreads. We do not have the intent to sell nor is it more likely than not that we will have to sell debt securities in unrealized loss positions that are not other-than-temporarily impaired before recovery. For structured securities, default probability and severity assumptions differ based on property type, vintage and the stress of the collateral. We do not intend to sell any of these securities and it is more likely than not that we will not be required to sell these securities before the recovery of the amortized cost basis. For equity securities, the Company also considers its intent to hold securities as part of the process of evaluating whether a decline in fair value represents an other-than-temporary decline in value. We may realize investment losses to the extent our liquidity needs require the disposition of fixed maturity securities in unfavorable interest rate, liquidity or credit spread environments. Significant changes in the factors we consider when evaluating investments for impairment losses could result in a significant change in impairment losses reported in the consolidated financial statements.

Invested assets increased from the prior comparable periods in 2012 primarily due to cash flow from operations. The annualized pre-tax investment yields, excluding net realized gains and losses and net OTTI losses recognized in earnings, were 2.4% for the three and six months ended June 30, 2013 compared to 2.8% and 2.4% for the three and six months ended June 30, 2012.

The tax equivalent yields for the three and six months ended June 30, 2013 on a consolidated basis were 2.5% and 2.6%, respectively, compared to 3.0% and 2.6% for the same periods during 2012. The portfolio duration was 4.0 years and 3.9 years for the six months ended June 30, 2013 and 2012, respectively. Since the beginning of 2013, the tax-exempt portion of our investment portfolio has increased by $118.1 million to approximately 19.8% of the fixed maturities investment portfolio as of June 30, 2013 compared to approximately 13.2% as of December 31, 2012.

We are a specialty insurance company and periods of moderate economic recession or inflation tend not to have a significant direct effect on our underwriting operations. They do, however, impact our investment portfolio. A decrease in interest rates will tend to decrease our yield and have a positive effect on the fair value of our invested assets. An increase in interest rates will tend to increase our yield and have a negative effect on the fair value of our invested assets.

The contractual maturity dates for fixed maturity securities categorized by the number of years until maturity as of June 30, 2013 are shown in the following table:

	June 30, 2013
	Fair		Amortized
In thousands	Value		Cost
Due in one year or less	$	117,677	$	116,999
Due after one year through five years		576,742		566,164
Due after five years through ten years		462,171		461,911
Due after ten years		245,032		250,212
Mortgage- and asset-backed securities		606,184		593,221
Total	$	2,007,806	$	1,988,507

Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Due to the periodic repayment of principal, the aggregate amount of mortgage-backed and asset-backed securities is estimated to have an effective maturity of approximately 4.6 years.

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The following table sets forth the amount and percentage of our fixed maturities as of June 30, 2013 by S&P credit rating or, if an S&P rating is not available, the equivalent Moody’s rating. The table includes fixed maturities at fair value, and the total rating is the weighted average quality rating.

	June 30, 2013
		Fair		Percent
In thousands	Rating	Value		of Total
Rating description:
Extremely strong	AAA	$	293,952		15	%
Very strong	AA		1,088,098		53	%
Strong	A		454,692		23	%
Adequate	BBB		152,317		8	%
Speculative	BB & Below		15,073		1	%
Not rated	NR		3,674		0	%
Total	AA	$	2,007,806		100	%

The following table sets forth our U.S. Treasury bonds, agency bonds, and foreign government bonds as of June 30, 2013 and December 31, 2012:

	June 30, 2013
			Gross		Gross
	Fair		Unrealized		Unrealized			Amortized
In thousands	Value		Gains		(Losses)			Cost
U.S. Treasury bonds	$	412,503	$	2,298	$	(7,247	)	$	417,452
Agency bonds		48,378		1,240		(179	)		47,317
Foreign government bonds		3,286		—		(66	)		3,352
Total	$	464,167	$	3,538	$	(7,492	)	$	468,121
	December 31, 2012
			Gross		Gross
	Fair		Unrealized		Unrealized			Amortized
In thousands	Value		Gains		(Losses)			Cost
U.S. Treasury bonds	$	414,503	$	4,441	$	(10	)	$	410,072
Agency bonds		155,465		3,331		(11	)		152,145
Foreign government bonds		79,724		882		(15	)		78,857
Total	$	649,692	$	8,654	$	(36	)	$	641,074

The following table sets forth the composition of the investments categorized as states, municipalities and political subdivisions in our portfolio by generally equivalent S&P and Moody’s ratings (not all securities in our portfolio are rated by both S&P and Moody’s) as of June 30, 2013. The securities that are not rated in the table below are primarily state bonds.

In thousands		June 30, 2013
Equivalent	Equivalent					Net
S&P	Moody’s	Fair		Amortized		Unrealized
Rating	Rating	Value		Cost		Gain (Loss)
AAA/AA/A	Aaa/Aa/A	$	427,035	$	430,039	$	(3,004	)
BBB	Baa		21,375		21,299		76
BB	Ba		—		—		—
B	B		—		—		—
CCC or lower	Caa or lower		—		—		—
NR	NR		3,674		3,579		95
Total		$	452,084	$	454,917	$	(2,833	)

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The following table sets forth the municipal bond holdings by sectors as of June 30, 2013 and December 31, 2012:

	June 30, 2013					December 31, 2012
	Fair		Percent			Fair		Percent
In thousands	Value		of Total			Value		of Total
Municipal Sector:
General obligation	$	117,154		26	%	$	73,642		23	%
Prerefunded		23,478		5	%		22,692		7	%
Revenue		256,914		57	%		183,096		57	%
Taxable		54,538		12	%		43,517		13	%
Total	$	452,084		100	%	$	322,947		100	%

We own $106.5 million of municipal securities which are credit enhanced by various financial guarantors. As of June 30, 2013, the average underlying credit rating for these securities is A+. There has been no material adverse impact to our investment portfolio or results of operations as a result of downgrades of the credit ratings for several of the financial guarantors.

We analyze our mortgage-backed and asset-backed securities by credit quality of the underlying collateral distinguishing between the securities issued by the Federal National Mortgage Association (“FNMA”), the Federal Home Loan Mortgage Corporation (“FHLMC”) and the Government National Mortgage Association (“GNMA”) which are Federal government sponsored entities, and the non-FNMA and non-FHLMC securities broken out by prime, Alternative A-paper (“Alt-A”) and subprime collateral. The securities issued by FNMA and FHLMC are the obligations of each respective entity. Legislation has provided for guarantees by the U.S. Government of up to $100 billion each for FNMA and FHLMC.

Prime collateral consists of mortgages or other collateral from the most creditworthy borrowers. Alt-A collateral consists of mortgages or other collateral from borrowers which have a risk potential that is greater than prime but less than subprime. The subprime collateral consists of mortgages or other collateral from borrowers with low credit ratings. Such subprime and Alt-A categories are as defined by S&P.

The following table sets forth our agency mortgage-backed securities and residential mortgage-backed securities (“RMBS”) by those issued by GNMA, FNMA, and FHLMC, and the quality category (prime, Alt-A and subprime) for all other such investments as of June 30, 2013:

	June 30, 2013
			Gross		Gross
	Fair		Unrealized		Unrealized			Amortized
In thousands	Value		Gains		Losses			Cost
Agency mortgage-backed securities:
GNMA	$	120,673	$	2,892	$	(2,759	)	$	120,540
FNMA		154,398		4,115		(1,634	)		151,917
FHLMC		45,079		775		(252	)		44,556
Total agency mortgage-backed securities	$	320,150	$	7,782	$	(4,645	)	$	317,013
Residential mortgage-backed securities:
Prime	$	11,872	$	423	$	(183	)	$	11,632
Alt-A		2,111		110		(38	)		2,039
Subprime		630		27		—			603
Non-U.S. RMBS		22,722		636		—			22,086
Total residential mortgage-backed securities	$	37,335	$	1,196	$	(221	)	$	36,360

56

The following table sets forth the composition of the investments categorized as RMBS in our portfolio by generally equivalent S&P and Moody’s ratings (not all securities in our portfolio are rated by both S&P and Moody’s) as of June 30, 2013:

In thousands		June 30, 2013
Equivalent	Equivalent					Net
S&P	Moody’s	Fair		Amortized		Unrealized
Rating	Rating	Value		Cost		Gain (Loss)
AAA/AA/A	Aaa/Aa/A	$	23,632	$	22,944	$	688
BBB	Baa		2,155		2,195		(40	)
BB	Ba		1,566		1,624		(58	)
B	B		2,345		2,324		21
CCC or lower	Caa or lower		7,637		7,273		364
NR	NR		—		—		—
Total		$	37,335	$	36,360	$	975

Details of the collateral of our asset-backed securities portfolio as of June 30, 2013 are presented below:

													Fair		Amortized		Unrealized
In thousands	AAA		AA		A		BBB		BB		CCC		Value		Cost		Gain (Loss)
Auto loans	$	9,763	$	3,522	$	8,974	$	—	$	—	$	—	$	22,259	$	22,140	$	119
Credit cards		13,792		—		—		—		—		—		13,792		13,465		327
Collateralized Debt Obligations		18,000		—		—		—		—		—		18,000		18,000		—
Time Share		—		—		13,097		—		—		—		13,097		12,870		227
Student Loans		4,803		2,987		—		—		—		—		7,790		7,833		(43	)
Miscellaneous		373		—		—		—		—		—		373		369		4
Total	$	46,731	$	6,509	$	22,071	$	—	$	—	$	—	$	75,311	$	74,677	$	634

The following table sets forth the composition of the investments categorized as commercial mortgage-backed securities in our portfolio by generally equivalent S&P and Moody’s ratings (not all securities in our portfolio are rated by both S&P and Moody’s) as of June 30, 2013:

In thousands		June 30, 2013
Equivalent	Equivalent					Net
S&P	Moody’s	Fair		Amortized		Unrealized
Rating	Rating	Value		Cost		Gain (Loss)
AAA/AA/A	Aaa/Aa/A	$	173,388	$	165,171	$	8,217
BBB	Baa		—		—		—
BB	Ba		—		—		—
B	B		—		—		—
CCC or lower	Caa or lower		—		—		—
NR	NR		—		—		—
Total		$	173,388	$	165,171	$	8,217

57

The following table sets forth the composition of the investments categorized as corporate bonds in our portfolio by generally equivalent S&P and Moody’s ratings (not all securities in our portfolio are rated by both S&P and Moody’s) as of June 30, 2013:

In thousands		June 30, 2013
Equivalent	Equivalent					Net
S&P	Moody’s	Fair		Amortized		Unrealized
Rating	Rating	Value		Cost		Gain (Loss)
AAA/AA/A	Aaa/Aa/A	$	353,059	$	343,373	$	9,686
BBB	Baa		128,787		125,475		3,312
BB	Ba		3,525		3,400		125
B	B		—		—		—
CCC or lower	Caa or lower		—		—		—
NR	NR		—		—		—
Total		$	485,371	$	472,248	$	13,123

The company holds non-sovereign European securities of $67.7 million at fair value and $67.4 million at amortized cost, primarily in the investment portfolio. This represents 3.2% of our total fixed income and equity portfolio. Our largest exposure is in France with a total of $31.8 million followed by the Netherlands with a total of $22.1 million. We have no direct material exposure to Greece, Portugal, Italy or Spain as of June 30, 2013.

58

The following table summarizes all securities in a gross unrealized loss position as of June 30, 2013 and December 31, 2012, showing the aggregate fair value and gross unrealized loss by the length of time those securities had continuously been in a gross unrealized loss position as well as the number of securities:

	June 30, 2013						December 31, 2012
					Gross						Gross
	Number of		Fair		Unrealized		Number of		Fair		Unrealized
In thousands, except # of securities	Securities		Value		Loss		Securities		Value		Loss
Fixed maturities:
U.S. Treasury bonds, agency bonds, and foreign government bonds
0-6 months		60	$	278,158	$	7,492		8	$	23,760	$	22
7-12 months		—		—		—		3		14,118		11
> 12 months		—		—		—		1		4,652		3
Subtotal		60	$	278,158	$	7,492		12	$	42,530	$	36
States, municipalities and political subdivisions
0-6 months		110	$	223,186	$	11,556		10	$	21,299	$	325
7-12 months		7		17,168		1,546		—		—		—
> 12 months		3		1,970		12		4		2,908		55
Subtotal		120	$	242,324	$	13,114		14	$	24,207	$	380
Agency mortgage-backed securities
0-6 months		89	$	104,138	$	3,096		10	$	62,516	$	174
7-12 months		9		24,070		1,431		2		1,671		30
> 12 months		2		1,559		118		—		—		—
Subtotal		100	$	129,767	$	4,645		12	$	64,187	$	204
Residential mortgage obligations
0-6 months		12	$	2,953	$	47		6	$	1,825	$	22
7-12 months		—		—		—		—		—		—
> 12 months		17		3,140		174		35		7,252		527
Subtotal		29	$	6,093	$	221		41	$	9,077	$	549
Asset-backed securities
0-6 months		4	$	16,905	$	29		—	$	—	$	—
7-12 months		—		—		—		—		—		—
> 12 months		1		1,634		84		2		2,369		49
Subtotal		5	$	18,539	$	113		2	$	2,369	$	49
Commercial mortgage-backed securities
0-6 months		5	$	15,143	$	488		7	$	2,639	$	7
7-12 months		2		651		10		—		—		—
> 12 months		3		559		16		5		845		11
Subtotal		10	$	16,353	$	514		12	$	3,484	$	18
Corporate bonds
0-6 months		43	$	121,470	$	3,162		2	$	3,528	$	6
7-12 months		—		—		—		—		—		—
> 12 months		—		—		—		4		6,689		19
Subtotal		43	$	121,470	$	3,162		6	$	10,217	$	25
Total fixed maturities		367	$	812,704	$	29,261		99	$	156,071	$	1,261
Equity securities—common stocks
0-6 months		6	$	33,817	$	1,910		13	$	23,345	$	522
7-12 months		—		—		—		1		1,943		104
> 12 months		—		—		—		—		—		—
Total equity securities		6	$	33,817	$	1,910		14	$	25,288	$	626

59

We analyze the unrealized losses quarterly to determine if any are other-than-temporary. The above unrealized losses have been determined to be temporary based on our policies.

In the above table the gross unrealized loss for the greater than 12 months category consists primarily of residential mortgage-backed securities. Residential mortgage-backed securities are a type of fixed income security in which residential mortgage loans are sold into a trust or special purpose vehicle, thereby securitizing the cash flows of the mortgage loans.

To determine whether the unrealized loss on structured securities is other-than-temporary, we analyze the projections provided by our investment managers with respect to an expected principal loss under a range of scenarios and utilize the most likely outcomes. The analysis relies on actual collateral performance measures such as default rate, prepayment rate and loss severity. These assumptions are applied throughout the remaining term of the deal, incorporating the transaction structure and priority of payments, to generate loss adjusted cash flows. Results of the analysis will indicate whether the security is expected ultimately to incur a loss or whether there is a material impact on yield due to either a projected loss or a change in cash flow timing. A break even default rate is also calculated. A comparison of the break even default rate to the actual default rate provides an indication of the level of cushion or coverage to the first dollar principal loss. The analysis applies the stated assumptions throughout the remaining term of the transaction to forecast cash flows, which are then applied through the transaction structure to determine whether there is a loss to the security. For securities in which a tranche loss is present, and the net present value of loss adjusted cash flows is less than book value, an impairment is recognized. The output data also includes a number of additional metrics such as average life remaining, original and current credit support, over 60 day delinquency and security rating.

Prepayment assumptions associated with the mortgage-backed and asset-backed securities are reviewed on a periodic basis. When changes in prepayment assumptions are deemed necessary as the result of actual prepayments differing from anticipated prepayments, securities are revalued based upon the new prepayment assumptions utilizing the retrospective accounting method.

As of June 30, 2013 and December 31, 2012, the largest single unrealized loss by issuer in the investment portfolio was $1.4 million and $0.2 million.

The following table sets forth the composition of the investments categorized as fixed maturity securities in our investment portfolio with gross unrealized losses by generally equivalent S&P and Moody’s ratings (not all of the securities are rated by S&P and Moody’s) as of June 30, 2013:

		June 30, 2013
In thousands		Gross Unrealized Loss					Fair Value
Equivalent	Equivalent
S&P	Moody’s			Percent					Percent
Rating	Rating	Amount		of Total			Amount		of Total
AAA/AA/A	Aaa/Aa/A	$	27,918		95	%	$	764,310		94	%
BBB	Baa		1,178		5	%		43,854		6	%
BB	Ba		69		0	%		1,318		0	%
B	B		29		0	%		1,574		0	%
CCC or lower	Caa or lower		67		0	%		1,648		0	%
NR	NR		—		0	%		—		0	%
Total		$	29,261		100	%	$	812,704		100	%

As of June 30, 2013, the gross unrealized losses in the table above were related to fixed maturity securities that are rated investment grade, which is defined as a security having an S&P rating of “BBB–” or higher, or a Moody’s rating of “Baa3” or higher, except for $0.2 million which is rated below investment grade or not rated. Unrealized losses on investment grade securities principally relate to changes in interest rates or changes in sector-related credit spreads since the securities were acquired.

60

The contractual maturity for fixed maturity securities categorized by the number of years until maturity, with a gross unrealized loss as of June 30, 2013 is presented in the following table:

	June 30, 2013
	Gross Unrealized Losses					Fair Value
			Percent					Percent
In thousands	Amount		of Total			Amount		of Total
Due in one year or less	$	12		0	%	$	11,813		1	%
Due after one year through five years		2,442		8	%		192,689		24	%
Due after five years through ten years		11,394		39	%		267,617		33	%
Due after ten years		9,920		34	%		169,833		21	%
Mortgage- and asset-backed securities		5,493		19	%		170,752		21	%
Total	$	29,261		100	%	$	812,704		100	%

As of June 30, 2013, there were no investments with a fair value that was less than 80% of amortized cost.

The table below summarizes our activity related to OTTI losses for the periods indicated:

	Three Months Ended June 30,								Six Months Ended June 30,
	2013				2012				2013				2012
	Number of				Number of				Number of				Number of
In thousands, except # of securities	Securities		Amount		Securities		Amount		Securities		Amount		Securities		Amount
Total OTTI losses:
Corporate and other bonds		—	$	—		—	$	—		—	$	—		—	$	—
Commercial mortgage-backed securities		—		—		—		—		—		—		—		—
Residential mortgage-backed securities		—		—		—		—		—		—		1		54
Asset-backed securities		—		—		—		—		—		—		—		—
Equities		—		—		2		496		2		42		3		639
Total		—	$	—		2	$	496		2	$	42		4	$	693
Less: Portion of loss in accumulated other comprehensive income (loss):
Corporate and other bonds			$	—			$	—			$	—			$	—
Commercial mortgage-backed securities				—				—				—				—
Residential mortgage-backed securities				—				—				—				43
Asset-backed securities				—				—				—				—
Equities				—				—				—				—
Total			$	—			$	—			$	—			$	43
Impairment losses recognized in earnings:
Corporate and other bonds			$	—			$	—			$	—			$	—
Commercial mortgage-backed securities				—				—				—				—
Residential mortgage-backed securities				—				—				—				11
Asset-backed securities				—				—				—				—
Equities				—				496				42				639
Total			$	—			$	496			$	42			$	650

During the three months ended June 30, 2012, we recognized OTTI losses of $0.5 million related to two equity securities. During the six months ended June 30, 2012, we recognized OTTI losses of $0.7 million related to one non-agency mortgage-backed security and three equity securities.

61

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The following updates our disclosure regarding foreign currency exchange rate risk as previously stated in the Company’s 2012 Annual Report on Form 10-K.

Foreign Currency Exchange Rate Risk

Our Lloyd’s Operations are exposed to foreign currency exchange rate risk primarily related to foreign-denominated cash, cash equivalents and marketable securities (“foreign funds”), premiums receivable, reinsurance recoverables on paid and unpaid losses and loss adjustment expenses as well as reserves for losses and loss adjustment expenses. The principal currencies creating foreign currency exchange risk for the Lloyd’s Operations are the British pound, the Euro and the Canadian dollar. The Lloyd’s Operations manages its foreign currency exchange rate risk primarily through asset-liability matching.

Based on the primary foreign-denominated balances within the Lloyd’s Operations as of June 30, 2013, an assumed 5%, 10% and 15% negative currency movement would result in changes as follows:

	June 30, 2013
			Negative Currency Movement of
In millions	USD Equivalent		5%			10%			15%
Cash, cash equivalents and marketable securities at fair value	$	95.5	$	(4.8	)	$	(9.6	)	$	(14.3	)
Premiums receivable	$	34.7	$	(1.7	)	$	(3.5	)	$	(5.2	)
Reinsurance recoverables on paid, unpaid losses and LAE	$	41.8	$	(2.1	)	$	(4.2	)	$	(6.3	)
Reserves for losses and loss adjustment expenses	$	125.1	$	6.3		$	12.5		$	18.8

Item 4. Controls and Procedures

(a) The Chief Executive Officer and Chief Financial Officer of the Company have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this quarterly report. Based on such evaluation, such officers have concluded that as of the end of such period the Company’s disclosure controls and procedures are effective in identifying, on a timely basis, material information required to be disclosed in our reports filed or submitted under the Exchange Act.

(b) There have been no changes during our second fiscal quarter in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

62

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

In the ordinary course of conducting business, our subsidiaries are involved in various legal proceedings, either indirectly as insurers for parties or directly as defendants. Most of the these proceedings consist of claims litigation involving our subsidiaries as either (a) liability insurers defending or providing indemnity for third party claims brought against insureds or (b) insurers defending first party coverage claims brought against them. We account for such activity through the establishment of unpaid loss and loss adjustment reserves. Our management believes that the ultimate liability, if any, with respect to such ordinary-course claims litigation, after consideration of provisions made for potential losses and cost of defense, will not be material to our consolidated financial condition, results of operations, or cash flows.

Our subsidiaries are also from time to time involved with other legal actions, some of which assert claims for substantial amounts. These actions include claims asserting extra contractual obligations, such as claims involving allegations of bad faith in the handling of claims or the underwriting of policies. In general, we believe we have valid defenses to these cases. Our management expects that the ultimate liability, if any, with respect to such extra-contractual matters will not be material to our consolidated financial position. Nonetheless, given the large or indeterminate amounts sought in certain of these matters, and the inherent unpredictability of litigation, an adverse outcome in such matters could, from time to time, have a material adverse outcome on our consolidated results of operations or cash flows in a particular fiscal quarter or year.

Item 1A. Risk Factors

There have been no material changes from the risk factors as previously disclosed in the Company’s 2012 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

None

63

Item 6. Exhibits

Exhibit No.	Description of Exhibit
11-1	Computation of Per Share Earnings	*
31-1	Certification of CEO per Section 302 of the Sarbanes-Oxley Act	*
31-2	Certification of CFO per Section 302 of the Sarbanes-Oxley Act	*
32-1	Certification of CEO per Section 906 of the Sarbanes-Oxley Act (This exhibit is intended to be furnished in accordance with Regulation S-K item 601(b)(32)(ii) and shall not be deemed to be filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference).	*
32-2	Certification of CFO per Section 906 of the Sarbanes-Oxley Act (This exhibit is intended to be furnished in accordance with Regulation S-K item 601(b)(32)(ii) and shall not be deemed to be filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference).	*
101.INS	XBRL Instance Document	*
101.SCH	XBRL Taxonomy Extension Scheme	*
101.CAL	XBRL Taxonomy Extension Calculation Database	*
101.LAB	XBRL Taxonomy Extension Label Linkbase	*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase	*
101.DEF	XBRL Taxonomy Extension Definition Linkbase	*

* Included herein

64

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	The Navigators Group, Inc.
	(Registrant)
Date: August 9, 2013	/s/ Ciro M. DeFalco
	Ciro M. DeFalco
	Senior Vice President and Chief Financial Officer

65

INDEX TO EXHIBITS

Exhibit No.	Description of Exhibit
11-1	Computation of Per Share Earnings	*
31-1	Certification of CEO per Section 302 of the Sarbanes-Oxley Act	*
31-2	Certification of CFO per Section 302 of the Sarbanes-Oxley Act	*
32-1	Certification of CEO per Section 906 of the Sarbanes-Oxley Act (This exhibit is intended to be furnished in accordance with Regulation S-K item 601(b)(32)(ii) and shall not be deemed to be filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference).	*
32-2	Certification of CFO per Section 906 of the Sarbanes-Oxley Act (This exhibit is intended to be furnished in accordance with Regulation S-K item 601(b)(32)(ii) and shall not be deemed to be filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference).	*
101.INS	XBRL Instance Document	*
101.SCH	XBRL Taxonomy Extension Scheme	*
101.CAL	XBRL Taxonomy Extension Calculation Database	*
101.LAB	XBRL Taxonomy Extension Label Linkbase	*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase	*
101.DEF	XBRL Taxonomy Extension Definition Linkbase	*

* Included herein

66

EX-11.1

Exhibit 11-1

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Computation of Per Share Earnings

The following table presents the computation of basic and diluted earnings per share for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands, except share and per share amounts	2013		2012		2013		2012
Net income (loss)	$	13,937	$	14,899	$	27,847	$	22,803
Basic weighted average shares		14,131,422		14,006,361		14,108,747		13,992,901
Effect of common stock equivalents:
Assumed exercise of stock options and vesting of stock grants		296,695		202,398		325,485		253,046
Diluted weighted average shares		14,428,117		14,208,759		14,434,232		14,245,947
Net income (loss) per common share:
Basic	$	0.99	$	1.06	$	1.97	$	1.63
Diluted	$	0.97	$	1.05	$	1.93	$	1.60

EX-31.1

Exhibit 31-1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PER

SECTION 302 OF THE SARBANES-OXLEY ACT

I, Stanley A. Galanski, certify that:

1. I have reviewed this report on Form 10-Q of The Navigators Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I, are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2013	/s/ Stanley A. Galanski
	Name:	Stanley A. Galanski
	Title:	President and Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31-2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PER

SECTION 302 OF THE SARBANES-OXLEY ACT

I, Ciro M. DeFalco, certify that:

1. I have reviewed this report on Form 10-Q of The Navigators Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2013	/s/ Ciro M. DeFalco
	Name:	Ciro M. DeFalco
	Title:	Senior Vice President and Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32-1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Navigators Group, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stanley A. Galanski, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Stanley A. Galanski

Stanley A. Galanski

President and Chief Executive Officer

August 9, 2013

A signed original of this written statement required by Section 906 has been provided to The Navigators Group, Inc. and will be retained by The Navigators Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32-2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Navigators Group, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ciro M. DeFalco, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Ciro M. DeFalco

Ciro M. DeFalco

Senior Vice President and Chief Financial Officer

August 9, 2013

A signed original of this written statement required by Section 906 has been provided to The Navigators Group, Inc. and will be retained by The Navigators Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies

Note 9. Commitments and Contingencies

In the ordinary course of conducting business, the Company’s subsidiaries are involved in various legal proceedings, either indirectly as insurers for parties or directly as defendants. Most of these proceedings consist of claims litigation involving the Company’s subsidiaries as either (a) liability insurers defending or providing indemnity for third party claims brought against insureds or (b) insurers defending first party coverage claims brought against them. The Company accounts for such activity through the establishment of unpaid loss and loss adjustment reserves. The Company’s management believes that the ultimate liability, if any, with respect to such ordinary-course claims litigation, after consideration of provisions made for potential losses and cost of defense, will not be material to the Company’s consolidated financial condition, results of operations, or cash flows.

The Company’s subsidiaries are also from time to time involved with other legal actions, some of which assert claims for substantial amounts. These actions include claims asserting extra contractual obligations, such as claims involving allegations of bad faith in the handling of claims or the underwriting of policies. In general, the Company believes it has valid defenses to these cases. The Company’s management expects that the ultimate liability, if any, with respect to future extra-contractual matters will not be material to its consolidated financial position. Nonetheless, given the large or indeterminate amounts sought in certain of these matters, and the inherent unpredictability of litigation, an adverse outcome in such matters could, from time to time, have a material adverse outcome on the Company’s consolidated results of operations or cash flows in a particular fiscal quarter or year.

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Consolidated Statements of Income (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Gross written premiums	$ 332,128	$ 322,987	$ 725,350	$ 666,136
Revenues:
Net written premiums	198,469	190,252	467,921	433,297
Change in unearned premiums	7,345	5,765	(59,779)	(54,161)
Net earned premiums	205,814	196,017	408,142	379,136
Net investment income	14,246	15,777	27,903	27,035
Total other-than-temporary impairment losses		(496)	(42)	(693)
Portion of loss recognized in other comprehensive income (before tax)				43
Net other-than-temporary impairment losses recognized in earnings		(496)	(42)	(650)
Net realized gains (losses)	3,345	4,217	8,159	6,059
Other income (expense)	(915)	387	(297)	1,298
Total revenues	222,490	215,902	443,865	412,878
Expenses:
Net losses and loss adjustment expenses	131,148	123,407	262,490	241,392
Commission expenses	28,391	29,503	54,946	58,953
Other operating expenses	40,678	39,819	81,552	76,126
Interest expense	2,052	2,049	4,103	4,098
Total expenses	202,269	194,778	403,091	380,569
Income (loss) before income taxes	20,221	21,124	40,774	32,309
Income tax expense (benefit)	6,284	6,225	12,927	9,506
Net income (loss)	$ 13,937	$ 14,899	$ 27,847	$ 22,803
Net income per common share:
Basic	$ 0.99	$ 1.06	$ 1.97	$ 1.63
Diluted	$ 0.97	$ 1.05	$ 1.93	$ 1.60
Average common shares outstanding:
Basic	14,131,422	14,006,361	14,108,747	13,992,901
Diluted	14,428,117	14,208,759	14,434,232	14,245,947

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2013

Recent Accounting Pronouncements

Note 2. Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013 -02 amending Codification topic 220 – Comprehensive Income. The amendments do not change the current requirements for reporting net income or other comprehensive income in the financial statements. The guidance requires an entity to present information about significant items reclassified out of Accumulated Other Comprehensive Income (“AOCI”) by component and for items reclassified out of AOCI and into net income, the entity must disclose the effect of such items on the affected net income line item. The Company adopted this standard effective January 1, 2013, and presents this information on the consolidated statements of comprehensive income. Adoption of this standard did not have any impact on the Company’s consolidated balance sheets, results of operations or cash flows.

In July 2012, the FASB issued ASU 2012-02 amending Codification topic 350 – Intangibles – Goodwill and Other. The amendment is intended to reduce cost and complexity, in addition to enhancing consistency of impairment testing guidance among long-lived asset categories by permitting entities to assess qualitative factors to determine whether it is necessary to calculate an asset’s fair value when testing an indefinite-lived asset for impairment. The amendment is effective for fiscal years beginning after September 15, 2012. The Company adopted this standard effective January 1, 2013. Adoption of this standard did not have any impact on the Company’s consolidated financial position, results of operating or cash flows.

XML

Segment Information - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013 Segment	Jun. 30, 2012
Segment Reporting Information [Line Items]
Number of business segments			2
Combined ratio indicating underwriting profit			100.00%
Combined ratio indicating underwriting loss			100.00%
Net earned premiums	$ 205,814	$ 196,017	$ 408,142	$ 379,136
Navigators Insurance Company
Segment Reporting Information [Line Items]
Percentage of Navigators Specialty Insurance Company reinsured by Navigators Insurance Company	100.00%		100.00%
Lloyd's
Segment Reporting Information [Line Items]
Net earned premiums	49,267	54,440	97,264	106,011
Lloyd's | Syndicate 1221
Segment Reporting Information [Line Items]
Percentage control of stamp capacity	100.00%	100.00%	100.00%	100.00%
Insurance
Segment Reporting Information [Line Items]
Net earned premiums	156,547	141,577	310,878	273,125
Insurance | UK Branch
Segment Reporting Information [Line Items]
Net earned premiums	$ 12,700	$ 18,200	$ 22,800	$ 39,100

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Investments

6 Months Ended

Jun. 30, 2013

Investments

Note 10. Investments

The following tables set forth the Company’s cash and investments as of June 30, 2013 and December 31, 2012. The table below includes other-than-temporarily impaired (“OTTI”) securities recognized within other comprehensive income (“OCI”).

	June 30, 2013
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
In thousands	Value		Gains		(Losses)			Cost
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	464,167	$	3,538	$	(7,492	)	$	468,121
States, municipalities and political subdivisions		452,084		10,281		(13,114	)		454,917
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		320,150		7,782		(4,645	)		317,013
Residential mortgage obligations		37,335		1,196		(221	)		36,360
Asset-backed securities		75,311		747		(113	)		74,677
Commercial mortgage-backed securities		173,388		8,731		(514	)		165,171
Subtotal	$	606,184	$	18,456	$	(5,493	)	$	593,221
Corporate bonds		485,371		16,285		(3,162	)		472,248
Total fixed maturities	$	2,007,806	$	48,560	$	(29,261	)	$	1,988,507
Equity securities—common stocks		138,549		25,238		(1,910	)		115,221
Short-term investments		124,726		—		—			124,726
Cash		101,960		—		—			101,960
Total	$	2,373,041	$	73,798	$	(31,171	)	$	2,330,414

	December 31, 2012
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
In thousands	Value		Gains		(Losses)			Cost
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	649,692	$	8,654	$	(36	)	$	641,074
States, municipalities and political subdivisions		322,947		18,712		(380	)		304,615
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		384,445		13,652		(204	)		370,997
Residential mortgage obligations		38,692		1,053		(549	)		38,188
Asset-backed securities		50,382		1,133		(49	)		49,298
Commercial mortgage-backed securities		204,821		17,996		(18	)		186,843
Subtotal	$	678,340	$	33,834	$	(820	)	$	645,326
Corporate bonds		470,854		27,129		(25	)		443,750
Total fixed maturities	$	2,121,833	$	88,329	$	(1,261	)	$	2,034,765
Equity securities—common stocks		101,297		16,919		(626	)		85,004
Short-term investments		153,788		—		—			153,788
Cash		45,336		—		—			45,336
Total	$	2,422,254	$	105,248	$	(1,887	)	$	2,318,893

As of June 30, 2013 and December 31, 2012, debt securities for which non-credit OTTI was previously recognized and included in other comprehensive income are now in an unrealized gains position of $0.5 million and $20 thousand, respectively.

The fair value of the Company’s investment portfolio may fluctuate significantly in response to various factors such as changes in interest rates, investment quality ratings, equity prices, foreign exchange rates and credit spreads. The Company does not have the intent to sell nor is it more likely than not that it will have to sell debt securities in unrealized loss positions that are not other-than-temporarily impaired before recovery. For structured securities, default probability and severity assumptions differ based on property type, vintage and the stress of the collateral. We do not intend to sell any of these securities and it is more likely than not that we will not be required to sell these securities before the recovery of the amortized cost basis. For equity securities, the Company also considers its intent to hold securities as part of the process of evaluating whether a decline in fair value represents an other-than-temporary decline in value. The Company may realize investment losses to the extent its liquidity needs require the disposition of fixed maturity securities in unfavorable interest rate, liquidity or credit spread environments. Significant changes in the factors the Company considers when evaluating investments for impairment losses could result in a significant change in impairment losses reported in the consolidated financial statements.

The contractual maturity dates for fixed maturity securities categorized by the number of years until maturity as of June 30, 2013 are shown in the following table:

	June 30, 2013
	Fair		Amortized
In thousands	Value		Cost
Due in one year or less	$	117,677	$	116,999
Due after one year through five years		576,742		566,164
Due after five years through ten years		462,171		461,911
Due after ten years		245,032		250,212
Mortgage- and asset-backed securities		606,184		593,221
Total	$	2,007,806	$	1,988,507

Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Due to the periodic repayment of principal, the mortgage-backed and asset-backed securities are estimated to have an effective maturity of approximately 4.6 years.

The following table shows the amount and percentage of the Company’s fixed maturities as of June 30, 2013 by S&P credit rating or, if an S&P rating is not available, the equivalent Moody’s Investor Services (“Moody’s”) rating. The table includes fixed maturities at fair value, and the total rating is the weighted average quality rating.

	June 30, 2013
		Fair		Percent
In thousands	Rating	Value		of Total
Rating description:
Extremely strong	AAA	$	293,952		15	%
Very strong	AA		1,088,098		53	%
Strong	A		454,692		23	%
Adequate	BBB		152,317		8	%
Speculative	BB & Below		15,073		1	%
Not rated	NR		3,674		0	%
Total	AA	$	2,007,806		100	%

The following table summarizes all securities in a gross unrealized loss position as of June 30, 2013 and December 31, 2012, showing the aggregate fair value and gross unrealized loss by the length of time those securities had continuously been in a gross unrealized loss position as well as the relevant number of securities.

	June 30, 2013						December 31, 2012
	Number of		Fair		Gross Unrealized		Number of		Fair		Gross Unrealized
In thousands, except # of securities	Securities		Value		Loss		Securities		Value		Loss
Fixed maturities:
U.S. Treasury bonds, agency bonds, and foreign government bonds
0-6 months		60	$	278,158	$	7,492		8	$	23,760	$	22
7-12 months		—		—		—		3		14,118		11
> 12 months		—		—		—		1		4,652		3
Subtotal		60	$	278,158	$	7,492		12	$	42,530	$	36
States, municipalities and political subdivisions
0-6 months		110	$	223,186	$	11,556		10	$	21,299	$	325
7-12 months		7		17,168		1,546		—		—		—
> 12 months		3		1,970		12		4		2,908		55
Subtotal		120	$	242,324	$	13,114		14	$	24,207	$	380
Agency mortgage-backed securities
0-6 months		89	$	104,138	$	3,096		10	$	62,516	$	174
7-12 months		9		24,070		1,431		2		1,671		30
> 12 months		2		1,559		118		—		—		—
Subtotal		100	$	129,767	$	4,645		12	$	64,187	$	204
Residential mortgage obligations
0-6 months		12	$	2,953	$	47		6	$	1,825	$	22
7-12 months		—		—		—		—		—		—
> 12 months		17		3,140		174		35		7,252		527
Subtotal		29	$	6,093	$	221		41	$	9,077	$	549
Asset-backed securities
0-6 months		4	$	16,905	$	29		—	$	—	$	—
7-12 months		—		—		—		—		—		—
> 12 months		1		1,634		84		2		2,369		49
Subtotal		5	$	18,539	$	113		2	$	2,369	$	49
Commercial mortgage-backed securities
0-6 months		5	$	15,143	$	488		7	$	2,639	$	7
7-12 months		2		651		10		—		—		—
> 12 months		3		559		16		5		845		11
Subtotal		10	$	16,353	$	514		12	$	3,484	$	18
Corporate bonds
0-6 months		43	$	121,470	$	3,162		2	$	3,528	$	6
7-12 months		—		—		—		—		—		—
> 12 months		—		—		—		4		6,689		19
Subtotal		43	$	121,470	$	3,162		6	$	10,217	$	25
Total fixed maturities		367	$	812,704	$	29,261		99	$	156,071	$	1,261
Equity securities—common stocks
0-6 months		6	$	33,817	$	1,910		13	$	23,345	$	522
7-12 months		—		—		—		1		1,943		104
> 12 months		—		—		—		—		—		—
Total equity securities		6	$	33,817	$	1,910		14	$	25,288	$	626

As of June 30, 2013 and December 31, 2012, the largest single unrealized loss by a non-government backed issuer in the investment portfolio was $1.4 million and $0.2 million, respectively.

The Company analyzes the unrealized losses quarterly to determine if any are other-than-temporary. The above unrealized losses have been determined to be temporary based on our policies.

For debt securities, when assessing whether the amortized cost basis of the security will be recovered, the Company compares the present value of cash flows expected to be collected in relation to the current book value. Any shortfalls of the present value of the cash flows expected to be collected to the amortized cost basis is considered the credit loss portion of OTTI losses and is recognized in earnings. All non-credit losses are recognized as changes in OTTI losses within OCI.

To determine whether the unrealized loss on structured securities is other-than-temporary, the Company analyzes the projections provided by its investment managers with respect to an expected principal loss under a range of scenarios and utilizes the most likely outcomes. The analysis relies on actual collateral performance measures such as default rate, prepayment rate and loss severity. These assumptions are applied throughout the remaining term of the deal, incorporating the transaction structure and priority of payments, to generate loss adjusted cash flows. Results of the analysis will indicate whether the security is expected ultimately to incur a loss or whether there is a material impact on yield due to either a projected loss or a change in cash flow timing. A break even default rate is also calculated. A comparison of the break even default rate to the actual default rate provides an indication of the level of cushion or coverage to the first dollar principal loss. The analysis applies the stated assumptions throughout the remaining term of the transaction to forecast cash flows, which are then applied through the transaction structure to determine whether there is a loss to the security. For securities in which a tranche loss is present, and the net present value of loss adjusted cash flows is less than book value, impairment is recognized. The output data also includes a number of additional metrics such as average life remaining, original and current credit support, over 60 day delinquency and security rating.

The significant inputs used to measure the amount of credit loss recognized in earnings were actual delinquency rates, default probability assumptions, severity assumptions and prepayment assumptions. Projected losses are a function of both loss severity and probability of default. Default probability and severity assumptions differ based on property type, vintage and the stress of the collateral. The Company does not intend to sell any of these securities and it is more likely than not that it will not be required to sell these securities before the recovery of the amortized cost basis.

For equity securities, in general, the Company focuses its attention on those securities with a fair value less than 80% of their cost for six or more consecutive months. If warranted as the result of conditions relating to a particular security, the Company will focus on a significant decline in fair value regardless of the time period involved. Factors considered in evaluating potential impairment include, but are not limited to, the current fair value as compared to cost of the security, the length of time the investment has been below cost and by how much the investment is below cost. If an equity security is deemed to be other-than-temporarily impaired, the cost is written down to fair value with the loss recognized in earnings.

For equity securities, the Company also considers its intent to hold securities as part of the process of evaluating whether a decline in fair value represents an other-than-temporary decline in value. For fixed maturity securities, the Company considers its intent to sell a security and whether it is more likely than not that the Company will be required to sell a security before the anticipated recovery as part of the process of evaluating whether a security’s unrealized loss represents an other-than-temporary decline. The Company’s ability to hold such securities is supported by sufficient cash flow from its operations and from maturities within its investment portfolio in order to meet its claims payment and other disbursement obligations arising from its underwriting operations without selling such investments. With respect to securities where the decline in value is determined to be temporary and the security’s value is not written down, a subsequent decision may be made to sell that security and realize a loss. Subsequent decisions on security sales are made within the context of overall risk monitoring, changing information and market conditions.

As of June 30, 2013, there were no investments with a fair value that was less than 80% of amortized cost.

The table below summarizes the Company’s activity related to OTTI losses for the periods indicated:

	Three Months Ended June 30,								Six Months Ended June 30,
	2013				2012				2013				2012
	Number of				Number of				Number of				Number of
In thousands, except # of securities	Securities		Amount		Securities		Amount		Securities		Amount		Securities		Amount
Total OTTI losses:
Corporate and other bonds		—	$	—		—	$	—		—	$	—		—	$	—
Commercial mortgage-backed securities		—		—		—		—		—		—		—		—
Residential mortgage-backed securities		—		—		—		—		—		—		1		54
Asset-backed securities		—		—		—		—		—		—		—		—
Equities		—		—		2		496		2		42		3		639
Total		—	$	—		2	$	496		2	$	42		4	$	693
Less: Portion of loss in accumulated other comprehensive income (loss):
Corporate and other bonds			$	—			$	—			$	—			$	—
Commercial mortgage-backed securities				—				—				—				—
Residential mortgage-backed securities				—				—				—				43
Asset-backed securities				—				—				—				—
Equities				—				—				—				—
Total			$	—			$	—			$	—			$	43
Impairment losses recognized in earnings:
Corporate and other bonds			$	—			$	—			$	—			$	—
Commercial mortgage-backed securities				—				—				—				—
Residential mortgage-backed securities				—				—				—				11
Asset-backed securities				—				—				—				—
Equities				—				496				42				639
Total			$	—			$	496			$	42			$	650

The following table summarizes the cumulative amounts related to the Company’s credit loss portion of the OTTI losses on debt securities for the three and six months ended June 30, 2013 and 2012. The Company does not intend to sell and it is more likely than not that it will not be required to sell the securities prior to recovery of the amortized cost basis and for which the non-credit loss portion is included in OCI.

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2013		2012		2013		2012
Beginning balance	$	3,332	$	3,322	$	3,332	$	3,321
Additions for credit loss impairments recognized in the current period on securities not previously impaired		—		—		—		—
Additions for credit loss impairments recognized in the current period on securities previously impaired		—		—		—		11
Reductions for credit loss impairments previously recognized on securities sold during the period		—		—		—		—
Ending balance	$	3,332	$	3,332	$	3,332	$	3,332

The contractual maturity dates for fixed maturity securities categorized by the number of years until maturity, with a gross unrealized loss as of June 30, 2013 is presented in the following table:

	June 30, 2013
	Gross Unrealized Losses					Fair Value
			Percent					Percent
In thousands	Amount		of Total			Amount		of Total
Due in one year or less	$	12		0	%	$	11,813		1	%
Due after one year through five years		2,442		8	%		192,689		24	%
Due after five years through ten years		11,394		39	%		267,617		33	%
Due after ten years		9,920		34	%		169,833		21	%
Mortgage- and asset-backed securities		5,493		19	%		170,752		21	%
Total	$	29,261		100	%	$	812,704		100	%

The Company’s net investment income was derived from the following sources:

	Three Months Ended June 30,						Six Months Ended June 30,
In thousands	2013			2012			2013			2012
Fixed maturities	$	13,578		$	15,006		$	26,743		$	30,416
Equity securities		1,257			994			2,288			1,941
Short-term investments		198			701			388			1,014
Total investment income	$	15,033		$	16,701		$	29,419		$	33,371
Investment expenses		(787	)		(924	)		(1,516	)		(6,336	)
Net investment income	$	14,246		$	15,777		$	27,903		$	27,035

Interest expense for the six months ended June 30, 2012 included $4.5 million of interest expense related to a total $9.2 million settlement of a dispute with Equitas over foregone interest on amounts that were due on certain reinsurance contracts.

The portfolio duration was 4.0 years and 3.9 years for the six months ended June 30, 2013 and 2012, respectively.

The change in net unrealized gains and losses, inclusive of the change in the non credit portion of other-than-temporary impairment losses, consisted of:

	Six Months Ended June 30,
In thousands	2013			2012
Fixed maturities	$	(67,769	)	$	17,439
Equity securities		7,035			6,910
Gross unrealized gains (losses)	$	(60,734	)	$	24,349
Deferred income tax		(21,264	)		7,796
Change in net unrealized gains (losses), net	$	(39,470	)	$	16,553

Realized gains and losses, excluding net OTTI losses recognized in earnings, for the periods indicated were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
In thousands	2013			2012			2013			2012
Fixed maturities:
Gains	$	1,730		$	4,717		$	4,936		$	7,858
Losses		(73	)		(231	)		(383	)		(1,530	)
Fixed maturities, net	$	1,657		$	4,486		$	4,553		$	6,328
Equity securities:
Gains	$	1,815		$	204		$	3,733		$	204
Losses		(127	)		(473	)		(127	)		(473	)
Equity securities, net	$	1,688		$	(269	)	$	3,606		$	(269	)
Net realized gains (losses)	$	3,345		$	4,217		$	8,159		$	6,059

Net realized gains and losses are generated as part of the normal ongoing management of our investment portfolio. Net realized gains of $3.3 million and $8.2 million for the three and six months ended June 30, 2013 are primarily due to the sale of commercial mortgage-backed securities, municipal bonds and equity securities. Net realized gains of $4.2 million and $6.1 million for the three and six months ended June 30, 2012 were due to the sale of corporate bonds and Treasury bonds.

The following tables present, for each of the fair value hierarchy levels as defined by the accounting guidance for fair value measurements, the Company’s fixed maturities and equity securities by asset class that are measured at fair value on a recurring basis as of June 30, 2013 and December 31, 2012:

	June 30, 2013
In thousands	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	276,111	$	188,056	$	—	$	464,167
States, municipalities and political subdivisions		—		452,084		—		452,084
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		—		320,150		—		320,150
Residential mortgage obligations		—		37,335		—		37,335
Asset-backed securities		—		75,311		—		75,311
Commercial mortgage-backed securities		—		173,388		—		173,388
Subtotal	$	—	$	606,184	$	—	$	606,184
Corporate bonds		—		485,371		—		485,371
Total fixed maturities	$	276,111	$	1,731,695	$	—	$	2,007,806
Equity securities—common stocks		138,549		—		—		138,549
Total	$	414,660	$	1,731,695	$	—	$	2,146,355

	December 31, 2012
In thousands	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	414,502	$	235,190	$	—	$	649,692
States, municipalities and political subdivisions		—		322,947		—		322,947
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		—		384,445		—		384,445
Residential mortgage obligations		—		38,692		—		38,692
Asset-backed securities		—		50,382		—		50,382
Commercial mortgage-backed securities		—		204,821		—		204,821
Subtotal	$	—	$	678,340	$	—	$	678,340
Corporate bonds		—		470,854		—		470,854
Total fixed maturities	$	414,502	$	1,707,331	$	—	$	2,121,833
Equity securities—common stocks		101,297		—		—		101,297
Total	$	515,799	$	1,707,331	$	—	$	2,223,130

The fair value of financial instruments is determined based on the following fair value hierarchy:

Level 1 – Quoted prices for identical instruments in active markets. Examples are listed equity and fixed income securities traded on an exchange. U.S. Treasury securities are reported as level 1 and are valued based on unadjusted quoted prices for identical assets in active markets that the Company can access.

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Examples are asset-backed and mortgage-backed securities that are similar to other asset-backed or mortgage-backed securities observed in the market. U.S. government agency securities are reported as level 2 and are valued using yields and spreads that are observable in active markets.

Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. An example would be a private placement with minimal liquidity.

The Company did not have any significant transfers between Level 1 and 2 as of June 30, 2013 and December 31, 2012.

As of June 30, 2013 and 2012, the Company did not have any Level 3 assets.

As of June 30, 2013 and December 31, 2012, the Company did not have a concentration of greater than 5% of invested assets in a single non-U.S. government-backed issuer.

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Amount and Percentage of Fixed Maturities by Rating (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Investment Securities [Line Items]
Rating	AA
Fair Value	$ 2,007,806	$ 2,121,833
Percent of Total	100.00%
Extremely strong
Investment Securities [Line Items]
Rating	AAA
Fair Value	293,952
Percent of Total	15.00%
Very strong
Investment Securities [Line Items]
Rating	AA
Fair Value	1,088,098
Percent of Total	53.00%
Strong
Investment Securities [Line Items]
Rating	A
Fair Value	454,692
Percent of Total	23.00%
Adequate
Investment Securities [Line Items]
Rating	BBB
Fair Value	152,317
Percent of Total	8.00%
Speculative
Investment Securities [Line Items]
Rating	BB & Below
Fair Value	15,073
Percent of Total	1.00%
Not rated
Investment Securities [Line Items]
Rating	NR
Fair Value	$ 3,674
Percent of Total	0.00%

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Reinsurance Ceded - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013 Entity	Jun. 30, 2012	Jun. 30, 2013 Entity	Jun. 30, 2012
Effects of Reinsurance [Line Items]
Ceded premiums earned	$ 115.3	$ 120.7	$ 226.3	$ 185.8
Ceded losses incurred	$ 77.6	$ 61.7	$ 131.1	$ 123.2
Percentage of reinsurance recoverable of 20 largest reinsurers			73.40%
Number of largest reinsurers	20		20

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Additional Financial Data by Segment (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Segment Reporting Information [Line Items]
Gross written premiums	$ 332,128	$ 322,987	$ 725,350	$ 666,136
Net written premiums	198,469	190,252	467,921	433,297
Net earned premiums	205,814	196,017	408,142	379,136
Marine
Segment Reporting Information [Line Items]
Gross written premiums	88,970	96,933	193,461	220,573
Net written premiums	61,426	65,278	142,125	156,201
Net earned premiums	66,421	69,807	137,191	138,346
Property Casualty
Segment Reporting Information [Line Items]
Gross written premiums	193,312	179,605	437,334	359,820
Net written premiums	102,892	92,547	260,155	216,434
Net earned premiums	108,039	97,447	208,636	186,317
Professional Liability
Segment Reporting Information [Line Items]
Gross written premiums	49,846	46,449	94,555	85,743
Net written premiums	34,151	32,427	65,641	60,662
Net earned premiums	31,354	28,763	62,315	54,473
Insurance
Segment Reporting Information [Line Items]
Gross written premiums	228,565	214,064	530,193	462,402
Net written premiums	143,380	134,065	359,699	315,315
Net earned premiums	156,547	141,577	310,878	273,125
Insurance | Marine
Segment Reporting Information [Line Items]
Gross written premiums	43,077	49,896	93,924	111,761
Net written premiums	27,366	31,786	68,507	74,651
Net earned premiums	31,798	35,535	68,523	70,810
Insurance | Property Casualty
Segment Reporting Information [Line Items]
Gross written premiums	152,095	130,627	371,059	286,546
Net written premiums	90,711	76,842	240,662	191,374
Net earned premiums	99,477	82,175	192,195	156,543
Insurance | Professional Liability
Segment Reporting Information [Line Items]
Gross written premiums	33,393	33,541	65,210	64,095
Net written premiums	25,303	25,437	50,530	49,290
Net earned premiums	25,272	23,867	50,160	45,772
Lloyd's
Segment Reporting Information [Line Items]
Gross written premiums	103,563	108,923	195,157	203,734
Net written premiums	55,089	56,187	108,222	117,982
Net earned premiums	49,267	54,440	97,264	106,011
Lloyd's | Marine
Segment Reporting Information [Line Items]
Gross written premiums	45,893	47,037	99,537	108,812
Net written premiums	34,060	33,492	73,618	81,550
Net earned premiums	34,623	34,272	68,668	67,536
Lloyd's | Property Casualty
Segment Reporting Information [Line Items]
Gross written premiums	41,217	48,978	66,275	73,274
Net written premiums	12,181	15,705	19,493	25,060
Net earned premiums	8,562	15,272	16,441	29,774
Lloyd's | Professional Liability
Segment Reporting Information [Line Items]
Gross written premiums	16,453	12,908	29,345	21,648
Net written premiums	8,848	6,990	15,111	11,372
Net earned premiums	$ 6,082	$ 4,896	$ 12,155	$ 8,701

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Fixed Maturities and Equity Securities by Asset Class that are Measured at Fair Value (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	$ 2,146,355	$ 2,223,130
Fixed maturities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	2,007,806	2,121,833
Fixed maturities | U.S. Treasury bonds, agency bonds, and foreign
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	464,167	649,692
Fixed maturities | States, municipalities and political subdivisions
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	452,084	322,947
Fixed maturities | Agency mortgage-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	320,150	384,445
Fixed maturities | Residential Mortgage Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	37,335	38,692
Fixed maturities | Asset-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	75,311	50,382
Fixed maturities | Commercial mortgage-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	173,388	204,821
Fixed maturities | Mortgage-backed and asset-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	606,184	678,340
Fixed maturities | Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	485,371	470,854
Equity Securities | Common Stock
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	138,549	101,297
Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	414,660	515,799
Level 1 | Fixed maturities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	276,111	414,502
Level 1 | Fixed maturities | U.S. Treasury bonds, agency bonds, and foreign
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	276,111	414,502
Level 1 | Equity Securities | Common Stock
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	138,549	101,297
Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	1,731,695	1,707,331
Level 2 | Fixed maturities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	1,731,695	1,707,331
Level 2 | Fixed maturities | U.S. Treasury bonds, agency bonds, and foreign
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	188,056	235,190
Level 2 | Fixed maturities | States, municipalities and political subdivisions
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	452,084	322,947
Level 2 | Fixed maturities | Agency mortgage-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	320,150	384,445
Level 2 | Fixed maturities | Residential Mortgage Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	37,335	38,692
Level 2 | Fixed maturities | Asset-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	75,311	50,382
Level 2 | Fixed maturities | Commercial mortgage-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	173,388	204,821
Level 2 | Fixed maturities | Mortgage-backed and asset-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	606,184	678,340
Level 2 | Fixed maturities | Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities and equity securities, at fair Value	$ 485,371	$ 470,854

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Senior Note Due May 1, 2016 - Additional Information (Detail) (USD $)	1 Months Ended		3 Months Ended		6 Months Ended
	Apr. 30, 2009	Apr. 17, 2006	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Debt Instrument [Line Items]
Senior Notes			$ 114,502,000		$ 114,502,000		$ 114,424,000
Senior Notes due May 1, 2016
Debt Instrument [Line Items]
Principal amount of senior notes		125,000,000
Interest rate stated on senior notes		7.00%
Senior notes due date		May 01, 2016
Net proceeds from issuance of senior notes		123,500,000
Aggregate principal amount of senior notes repurchased from unaffiliated note holder	10,000,000
Repurchased senior notes	7,000,000
Pretax gain from repurchase of senior notes	3,000,000
Outstanding principal amount of senior notes			114,500,000		114,500,000
Unamortized discount			500,000		500,000
Senior Notes			115,000,000		115,000,000
Fair value of senior notes			125,800,000		125,800,000		123,200,000
Interest expense on senior notes			$ 2,100,000	$ 2,100,000	$ 4,100,000	$ 4,100,000
Effective interest rate related to senior notes			7.17%		7.17%
Debt instrument, covenant compliance					As of June 30, 2013, the Company was in compliance with all such covenants.
Senior Notes due May 1, 2016 | Semi Annual Payment, First Payment
Debt Instrument [Line Items]
Interest payment date on senior notes			--05-01		--05-01
Senior Notes due May 1, 2016 | Semi Annual Payment, Second Payment
Debt Instrument [Line Items]
Interest payment date on senior notes			--11-01		--11-01

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Summary of Activity Related to Other-Than-Temporary Impairment Losses (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2012 Investment	Jun. 30, 2013 Investment	Jun. 30, 2012 Investment
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Number of Securities	2	2	4
Total other-than-temporary impairment losses	$ 496	$ 42	$ 693
Portion of loss recognized in other comprehensive income			43
Net other-than-temporary impairment losses recognized in earnings	496	42	650
Residential Mortgage Backed Securities
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Number of Securities			1
Total other-than-temporary impairment losses			54
Portion of loss recognized in other comprehensive income			43
Net other-than-temporary impairment losses recognized in earnings			11
Equity Securities
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Number of Securities	2	2	3
Total other-than-temporary impairment losses	496	42	639
Net other-than-temporary impairment losses recognized in earnings	$ 496	$ 42	$ 639

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Amounts Charged to Expense for Stock-based Compensation (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Jun. 30, 2013		Jun. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	$ 2,260		$ 2,075		$ 3,727		$ 3,321
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	2,116		1,974		3,474		3,186
Directors restricted stock grants
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	106	[1]	60	[1]	206	[1]	120	[1]
Employee stock purchase plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	$ 38		$ 41		$ 47		$ 15

[1] Relates to non-employee directors serving on the Parent Company's Board of Directors, all of whom have been elected by the Company's stockholders, as well as non-employee directors serving on NUAL's Board of Directors.

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Net Investment Income (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Net Investment Income [Line Items]
Investment Income	$ 15,033	$ 16,701	$ 29,419	$ 33,371
Investment expenses	(787)	(924)	(1,516)	(6,336)
Net investment income	14,246	15,777	27,903	27,035
Fixed maturities
Net Investment Income [Line Items]
Investment Income	13,578	15,006	26,743	30,416
Equity Securities
Net Investment Income [Line Items]
Investment Income	1,257	994	2,288	1,941
Short-term investments
Net Investment Income [Line Items]
Investment Income	$ 198	$ 701	$ 388	$ 1,014

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Financial Data by Segment (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Jun. 30, 2013		Jun. 30, 2012		Dec. 31, 2012
Segment Reporting Information [Line Items]
Gross written premiums	$ 332,128		$ 322,987		$ 725,350		$ 666,136
Net written premiums	198,469		190,252		467,921		433,297
Net earned premiums	205,814		196,017		408,142		379,136
Net losses and loss adjustment expenses	(131,148)		(123,407)		(262,490)		(241,392)
Commission expenses	(28,391)		(29,503)		(54,946)		(58,953)
Other operating expenses	(40,678)		(39,819)		(81,552)		(76,126)
Other income (expense)	(915)		387		(297)		1,298
Underwriting profit (loss)	4,682		3,675		8,857		3,963
Net investment income	14,246		15,777		27,903		27,035
Net realized gains (losses)	3,345		3,721		8,117		5,409
Interest expense	(2,052)		(2,049)		(4,103)		(4,098)
Income (loss) before income taxes	20,221		21,124		40,774		32,309
Income tax expense (benefit)	6,284		6,225		12,927		9,506
Net income (loss)	13,937		14,899		27,847		22,803
Identifiable assets	4,096,510		3,939,066		4,096,510		3,939,066		4,007,670
Losses and loss adjustment expenses ratio	63.70%		63.00%		64.30%		63.70%
Commission expense ratio	13.80%		15.10%		13.50%		15.50%
Other operating expense ratio	20.20%	[1]	20.00%	[1]	20.00%	[1]	19.80%	[1]
Combined ratio	97.70%		98.10%		97.80%		99.00%
Insurance
Segment Reporting Information [Line Items]
Gross written premiums	228,565		214,064		530,193		462,402
Net written premiums	143,380		134,065		359,699		315,315
Net earned premiums	156,547		141,577		310,878		273,125
Net losses and loss adjustment expenses	(106,668)		(100,003)		(213,653)		(191,180)
Commission expenses	(20,573)		(21,117)		(39,090)		(40,418)
Other operating expenses	(29,829)		(28,914)		(59,172)		(54,259)
Other income (expense)	689		879		1,348		2,521
Underwriting profit (loss)	166		(7,578)		311		(10,211)
Net investment income	12,515		13,286		24,466		22,221
Net realized gains (losses)	3,099		2,325		7,891		4,200
Income (loss) before income taxes	15,780		8,033		32,668		16,210
Income tax expense (benefit)	4,785		2,101		10,199		3,980
Net income (loss)	10,995		5,932		22,469		12,230
Identifiable assets	3,097,754		2,933,334		3,097,754		2,933,334
Losses and loss adjustment expenses ratio	68.10%		70.60%		68.70%		70.00%
Commission expense ratio	13.10%		14.90%		12.60%		14.80%
Other operating expense ratio	18.70%	[1]	19.90%	[1]	18.60%	[1]	18.90%	[1]
Combined ratio	99.90%		105.40%		99.90%		103.70%
Lloyd's
Segment Reporting Information [Line Items]
Gross written premiums	103,563		108,923		195,157		203,734
Net written premiums	55,089		56,187		108,222		117,982
Net earned premiums	49,267		54,440		97,264		106,011
Net losses and loss adjustment expenses	(24,480)		(23,404)		(48,837)		(50,212)
Commission expenses	(8,335)		(8,938)		(16,956)		(19,824)
Other operating expenses	(10,849)		(10,905)		(22,380)		(21,867)
Other income (expense)	(1,087)		60		(545)		66
Underwriting profit (loss)	4,516		11,253		8,546		14,174
Net investment income	1,728		2,454		3,430		4,737
Net realized gains (losses)	242		1,396		222		1,209
Income (loss) before income taxes	6,486		15,103		12,198		20,120
Income tax expense (benefit)	2,206		5,207		4,242		6,933
Net income (loss)	4,280		9,896		7,956		13,187
Identifiable assets	947,736		967,862		947,736		967,862
Losses and loss adjustment expenses ratio	49.70%		43.00%		50.20%		47.40%
Commission expense ratio	16.90%		16.40%		17.40%		18.70%
Other operating expense ratio	24.20%	[1]	19.90%	[1]	23.60%	[1]	20.50%	[1]
Combined ratio	90.80%		79.30%		91.20%		86.60%
Corporate
Segment Reporting Information [Line Items]
Commission expenses	517	[2]	552	[2]	1,100	[2]	1,289	[2]
Other income (expense)	(517)	[2]	(552)	[2]	(1,100)	[2]	(1,289)	[2]
Net investment income	3	[2]	37	[2]	7	[2]	77	[2]
Net realized gains (losses)	4	[2]			4	[2]
Interest expense	(2,052)	[2]	(2,049)	[2]	(4,103)	[2]	(4,098)	[2]
Income (loss) before income taxes	(2,045)	[2]	(2,012)	[2]	(4,092)	[2]	(4,021)	[2]
Income tax expense (benefit)	(707)	[2]	(1,083)	[2]	(1,514)	[2]	(1,407)	[2]
Net income (loss)	(1,338)	[2]	(929)	[2]	(2,578)	[2]	(2,614)	[2]
Identifiable assets	$ 51,020	[2]	$ 37,870	[2]	$ 51,020	[2]	$ 37,870	[2]

[1] Includes Other operating expenses and Other income.

[2] Includes Corporate segment intercompany eliminations.

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Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Unrealized gains (losses) on investments arising during the period, deferred tax	$ 19,404	$ 3,790	$ 19,037	$ 8,237
Reclassification adjustment for net realized (gains) losses included in net income, deferred tax	870	865	2,390	719
Non credit other-than-temporary impairments arising during the period, deferred tax	13	53	163	263
Reclassification adjustment for non-credit other-than-temporary impairment losses recognized in net income, deferred tax				15
Change in foreign currency translation gains (losses), deferred tax	$ 566	$ 452	$ 975	$ 1,851

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Operating activities:
Net income (loss)	$ 27,847	$ 22,803
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation & amortization	1,953	2,040
Deferred income taxes	(2,457)	(9,800)
Net realized (gains) losses	(8,159)	(6,059)
Net other-than-temporary losses recognized in earnings	42	650
Changes in assets and liabilities:
Reinsurance recoverable on paid and unpaid losses and loss adjustment expenses	(5,110)	3,741
Reserves for losses and loss adjustment expenses	19,336	5,845
Prepaid reinsurance premiums	(30,031)	(46,927)
Unearned premiums	87,161	101,292
Premiums receivable	(74,213)	(119,834)
Deferred policy acquisition costs	(4,104)	(525)
Accrued investment income	(1,104)	413
Reinsurance balances payable	17,870	35,379
Current income tax payable, net	4,191	1,497
Other	15,263	24,513
Net cash provided by (used in) operating activities	48,485	15,028
Fixed maturities
Redemptions and maturities	121,340	97,345
Sales	411,634	526,753
Purchases	(491,255)	(747,421)
Equity securities
Sales	11,439	1,600
Purchases	(38,094)	(3,397)
Change in payable for securities	(32,632)	70,265
Net change in short-term investments	29,062	(39,763)
Purchase of property and equipment	(4,855)	(2,353)
Net cash provided by (used in) investing activities	6,639	(96,971)
Financing activities:
Proceeds of stock issued from employee stock purchase plan	374	313
Proceeds of stock issued from exercise of stock options	1,126	112
Net cash provided by (used in) financing activities	1,500	425
Increase (decrease) in cash	56,624	(81,518)
Cash at beginning of year	45,336	127,360
Cash at end of period	101,960	45,842
Supplemental cash information:
Income taxes paid, net	9,223	14,188
Interest paid	4,025	4,025
Issuance of stock to directors	$ 400	$ 242

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Segment Information

6 Months Ended

Jun. 30, 2013

Segment Information

Note 3. Segment Information

The Company classifies its business into two underwriting segments consisting of the Insurance Companies segment (“Insurance Companies”) and the Lloyd’s Operations segment (“Lloyd’s Operations”), which are separately managed, and a Corporate segment (“Corporate”). Segment data for each of the two underwriting segments include allocations of the operating expenses of the wholly-owned underwriting management companies and the Parent Company’s operating expenses and related income tax amounts. The Corporate segment consists of the Parent Company’s investment income, interest expense and the related tax effect.

The Company evaluates the performance of each underwriting segment based on its underwriting and GAAP results. The Insurance Companies and the Lloyd’s Operations results are measured by taking into account net earned premiums, net losses and loss adjustment expenses (“LAE”), commission expenses, other operating expenses and other income (expense). Each segment maintains its own investments on which it earns income and realizes capital gains or losses. The Company’s underwriting performance is evaluated separately from the performance of its investment portfolios.

The Insurance Companies segment consists of Navigators Insurance Company, which includes a United Kingdom Branch (the “U.K. Branch”), and Navigators Specialty Insurance Company, which underwrites specialty and professional liability insurance on an excess and surplus lines basis. All of the insurance business written by Navigators Specialty Insurance Company is fully reinsured by Navigators Insurance Company pursuant to a 100% quota share reinsurance agreement. The insurance and reinsurance business written by our Insurance Companies is underwritten through our wholly-owned underwriting management Companies, Navigators Management Company, Inc. (“NMC”) and Navigators Management (UK) Ltd. (“NMUK”).

Our Lloyd’s Operations segment includes Navigators Underwriting Agency Ltd. (“NUAL”), a Lloyd’s of London (“Lloyd’s”) underwriting agency which manages Lloyd’s Syndicate 1221 (“Syndicate 1221”). Our Lloyd’s Operations primarily underwrite marine and related lines of business along with offshore energy, construction coverages for onshore energy business and professional liability insurance at Lloyd’s through Syndicate 1221. We control 100% of Syndicate 1221’s stamp capacity through our wholly-owned subsidiary, Navigators Corporate Underwriters Ltd. (“NCUL”), which is referred to as a corporate name in the Lloyd’s market.

The Insurance Companies and the Lloyd’s Operations underwriting results are measured based on underwriting profit or loss and the related combined ratio, which are both non-GAAP measures of underwriting profitability. Underwriting profit or loss is calculated from net earned premiums, less the sum of net losses and LAE, commission expenses, other operating expenses and other income (expense). The combined ratio is derived by dividing the sum of net losses and LAE, commission expenses, other operating expenses and other income (expense) by net earned premiums. A combined ratio of less than 100% indicates an underwriting profit and greater than 100% indicates an underwriting loss.

Financial data by segment for the three and six months ended June 30, 2013 and 2012 were as follows:

	Three Month Ended June 30, 2013
In thousands	Insurance Companies			Lloyd’s Operations			Corporate(1)			Total
Gross written premiums	$	228,565		$	103,563		$	—		$	332,128
Net written premiums		143,380			55,089			—			198,469
Net earned premiums		156,547			49,267			—			205,814
Net losses and loss adjustment expenses		(106,668	)		(24,480	)		—			(131,148	)
Commission expenses		(20,573	)		(8,335	)		517			(28,391	)
Other operating expenses		(29,829	)		(10,849	)		—			(40,678	)
Other income (expense)		689			(1,087	)		(517	)		(915	)
Underwriting profit (loss)	$	166		$	4,516		$	—		$	4,682
Net investment income		12,515			1,728			3			14,246
Net realized gains (losses)		3,099			242			4			3,345
Interest expense		—			—			(2,052	)		(2,052	)
Income (loss) before income taxes	$	15,780		$	6,486		$	(2,045	)	$	20,221
Income tax expense (benefit)		4,785			2,206			(707	)		6,284
Net income (loss)	$	10,995		$	4,280		$	(1,338	)	$	13,937
Identifiable assets	$	3,097,754		$	947,736		$	51,020		$	4,096,510
Losses and loss adjustment expenses ratio		68.1	%		49.7	%					63.7	%
Commission expense ratio		13.1	%		16.9	%					13.8	%
Other operating expense ratio (2)		18.7	%		24.2	%					20.2	%
Combined ratio		99.9	%		90.8	%					97.7	%

(1)  -  Includes Corporate segment intercompany eliminations.

(2)  -  Includes Other operating expenses and Other income.

	Three Month Ended June 30, 2012
	Insurance			Lloyd’s
In thousands	Companies			Operations			Corporate(1)			Total
Gross written premiums	$	214,064		$	108,923		$	—		$	322,987
Net written premiums		134,065			56,187			—			190,252
Net earned premiums		141,577			54,440			—			196,017
Net losses and loss adjustment expenses		(100,003	)		(23,404	)		—			(123,407	)
Commission expenses		(21,117	)		(8,938	)		552			(29,503	)
Other operating expenses		(28,914	)		(10,905	)		—			(39,819	)
Other income (expense)		879			60			(552	)		387
Underwriting profit (loss)	$	(7,578	)	$	11,253		$	—		$	3,675
Net investment income		13,286			2,454			37			15,777
Net realized gains (losses)		2,325			1,396			—			3,721
Interest expense		—			—			(2,049	)		(2,049	)
Income (loss) before income taxes	$	8,033		$	15,103		$	(2,012	)	$	21,124
Income tax expense (benefit)		2,101			5,207			(1,083	)		6,225
Net income (loss)	$	5,932		$	9,896		$	(929	)	$	14,899
Identifiable assets	$	2,933,334		$	967,862		$	37,870		$	3,939,066
Losses and loss adjustment expenses ratio		70.6	%		43.0	%					63.0	%
Commission expense ratio		14.9	%		16.4	%					15.1	%
Other operating expense ratio (2)		19.9	%		19.9	%					20.0	%
Combined ratio		105.4	%		79.3	%					98.1	%

(1)  -  Includes Corporate segment intercompany eliminations.

(2)  -  Includes Other operating expenses and Other income.

	Six Month Ended June 30, 2013
	Insurance			Lloyd’s
In thousands	Companies			Operations			Corporate(1)			Total
Gross written premiums	$	530,193		$	195,157		$	—		$	725,350
Net written premiums		359,699			108,222			—			467,921
Net earned premiums		310,878			97,264			—			408,142
Net losses and loss adjustment expenses		(213,653	)		(48,837	)		—			(262,490	)
Commission expenses		(39,090	)		(16,956	)		1,100			(54,946	)
Other operating expenses		(59,172	)		(22,380	)		—			(81,552	)
Other income (expense)		1,348			(545	)		(1,100	)		(297	)
Underwriting profit (loss)	$	311		$	8,546		$	—		$	8,857
Net investment income		24,466			3,430			7			27,903
Net realized gains (losses)		7,891			222			4			8,117
Interest expense		—			—			(4,103	)		(4,103	)
Income (loss) before income taxes	$	32,668		$	12,198		$	(4,092	)	$	40,774
Income tax expense (benefit)		10,199			4,242			(1,514	)		12,927
Net income (loss)	$	22,469		$	7,956		$	(2,578	)	$	27,847
Identifiable assets	$	3,097,754		$	947,736		$	51,020		$	4,096,510
Losses and loss adjustment expenses ratio		68.7	%		50.2	%					64.3	%
Commission expense ratio		12.6	%		17.4	%					13.5	%
Other operating expense ratio (2)		18.6	%		23.6	%					20.0	%
Combined ratio		99.9	%		91.2	%					97.8	%

(1)  -  Includes Corporate segment intercompany eliminations.

(2)  -  Includes Other operating expenses and Other income.

	Six Month Ended June 30, 2012
	Insurance			Lloyd’s
In thousands	Companies			Operations			Corporate(1)			Total
Gross written premiums	$	462,402		$	203,734		$	—		$	666,136
Net written premiums		315,315			117,982			—			433,297
Net earned premiums		273,125			106,011			—			379,136
Net losses and loss adjustment expenses		(191,180	)		(50,212	)		—			(241,392	)
Commission expenses		(40,418	)		(19,824	)		1,289			(58,953	)
Other operating expenses		(54,259	)		(21,867	)		—			(76,126	)
Other income (expense)		2,521			66			(1,289	)		1,298
Underwriting profit (loss)	$	(10,211	)	$	14,174		$	—		$	3,963
Net investment income		22,221			4,737			77			27,035
Net realized gains (losses)		4,200			1,209			—			5,409
Interest expense		—			—			(4,098	)		(4,098	)
Income (loss) before income taxes	$	16,210		$	20,120		$	(4,021	)	$	32,309
Income tax expense (benefit)		3,980			6,933			(1,407	)		9,506
Net income (loss)	$	12,230		$	13,187		$	(2,614	)	$	22,803
Identifiable assets	$	2,933,334		$	967,862		$	37,870		$	3,939,066
Losses and loss adjustment expenses ratio		70.0	%		47.4	%					63.7	%
Commission expense ratio		14.8	%		18.7	%					15.5	%
Other operating expense ratio (2)		18.9	%		20.5	%					19.8	%
Combined ratio		103.7	%		86.6	%					99.0	%

(1)  -  Includes Corporate segment intercompany eliminations.

(2)  -  Includes Other operating expenses and Other income.

The following tables provide additional financial data by segment for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30, 2013
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	43,077	$	45,893	$	88,970
Property casualty		152,095		41,217		193,312
Professional liability		33,393		16,453		49,846
Total	$	228,565	$	103,563	$	332,128
Net written premiums:
Marine	$	27,366	$	34,060	$	61,426
Property casualty		90,711		12,181		102,892
Professional liability		25,303		8,848		34,151
Total	$	143,380	$	55,089	$	198,469
Net earned premiums:
Marine	$	31,798	$	34,623	$	66,421
Property casualty		99,477		8,562		108,039
Professional liability		25,272		6,082		31,354
Total	$	156,547	$	49,267	$	205,814

	Three Months Ended June 30, 2012
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	49,896	$	47,037	$	96,933
Property casualty		130,627		48,978		179,605
Professional liability		33,541		12,908		46,449
Total	$	214,064	$	108,923	$	322,987
Net written premiums:
Marine	$	31,786	$	33,492	$	65,278
Property casualty		76,842		15,705		92,547
Professional liability		25,437		6,990		32,427
Total	$	134,065	$	56,187	$	190,252
Net earned premiums:
Marine	$	35,535	$	34,272	$	69,807
Property casualty		82,175		15,272		97,447
Professional liability		23,867		4,896		28,763
Total	$	141,577	$	54,440	$	196,017

	Six Months Ended June 30, 2013
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	93,924	$	99,537	$	193,461
Property casualty		371,059		66,275		437,334
Professional liability		65,210		29,345		94,555
Total	$	530,193	$	195,157	$	725,350
Net written premiums:
Marine	$	68,507	$	73,618	$	142,125
Property casualty		240,662		19,493		260,155
Professional liability		50,530		15,111		65,641
Total	$	359,699	$	108,222	$	467,921
Net earned premiums:
Marine	$	68,523	$	68,668	$	137,191
Property casualty		192,195		16,441		208,636
Professional liability		50,160		12,155		62,315
Total	$	310,878	$	97,264	$	408,142

	Six Months Ended June 30, 2012
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	111,761	$	108,812	$	220,573
Property casualty		286,546		73,274		359,820
Professional liability		64,095		21,648		85,743
Total	$	462,402	$	203,734	$	666,136
Net written premiums:
Marine	$	74,651	$	81,550	$	156,201
Property casualty		191,374		25,060		216,434
Professional liability		49,290		11,372		60,662
Total	$	315,315	$	117,982	$	433,297
Net earned premiums:
Marine	$	70,810	$	67,536	$	138,346
Property casualty		156,543		29,774		186,317
Professional liability		45,772		8,701		54,473
Total	$	273,125	$	106,011	$	379,136

The Insurance Companies net earned premiums include $12.7 million and $18.2 million of net earned premiums from the U.K. Branch for the three months ended June 30, 2013 and 2012, respectively, and $22.8 million and $39.1 million of net earned premiums from the U.K. Branch for the six months ended June 30, 2013 and 2012, respectively.

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Accounting Policies

6 Months Ended

Jun. 30, 2013

Accounting Policies

Note 1. Accounting Policies

The accompanying interim consolidated financial statements are unaudited and reflect all adjustments which, in the opinion of management, are necessary to fairly present the results of The Navigators Group, Inc. and its subsidiaries for the interim periods presented on the basis of United States generally accepted accounting principles (“GAAP” or “U.S. GAAP”). All such adjustments are of a normal recurring nature. All significant intercompany transactions and balances have been eliminated. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting periods. The results of operations for any interim period are not necessarily indicative of results for the full year. The term “the Company” as used herein is used to mean The Navigators Group, Inc. and its subsidiaries, unless the context otherwise requires. The terms “Parent” or “Parent Company” are used to mean The Navigators Group, Inc. without its subsidiaries. These financial statements should be read in conjunction with the consolidated financial statements and notes contained in the Company’s 2012 Annual Report on Form 10-K.

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Summary of Cumulative Amounts Related to Credit Loss Portion of Other-Than-Temporary Impairment Losses on Debt Securities (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Beginning balance	$ 3,332	$ 3,322	$ 3,332	$ 3,321
Additions for credit loss impairments recognized in the current period on securities not previously impaired
Additions for credit loss impairments recognized in the current period on securities previously impaired				11
Reductions for credit loss impairments previously recognized on securities sold during the period
Ending balance	$ 3,332	$ 3,332	$ 3,332	$ 3,332

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Lists of 20 Largest Reinsurers Measured by Reinsurance Recoverable (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended					6 Months Ended				6 Months Ended				6 Months Ended				6 Months Ended				6 Months Ended				6 Months Ended				6 Months Ended				6 Months Ended				6 Months Ended				6 Months Ended				6 Months Ended				6 Months Ended				6 Months Ended				6 Months Ended				6 Months Ended				6 Months Ended				6 Months Ended				6 Months Ended				6 Months Ended				6 Months Ended
	Jun. 30, 2013		Dec. 31, 2012	Jun. 30, 2013 National Indemnity Company		Jun. 30, 2013 National Indemnity Company AMB	Jun. 30, 2013 National Indemnity Company S&P	Jun. 30, 2013 Swiss Reinsurance America Corporation		Jun. 30, 2013 Swiss Reinsurance America Corporation AMB	Jun. 30, 2013 Swiss Reinsurance America Corporation S&P	Jun. 30, 2013 Transatlantic Reinsurance Company		Jun. 30, 2013 Transatlantic Reinsurance Company AMB	Jun. 30, 2013 Transatlantic Reinsurance Company S&P	Jun. 30, 2013 Everest Reinsurance Company		Jun. 30, 2013 Everest Reinsurance Company AMB	Jun. 30, 2013 Everest Reinsurance Company S&P	Jun. 30, 2013 Munich Reinsurance America Inc.		Jun. 30, 2013 Munich Reinsurance America Inc. AMB	Jun. 30, 2013 Munich Reinsurance America Inc. S&P	Jun. 30, 2013 Lloyd Syndicate #2003		Jun. 30, 2013 Lloyd Syndicate #2003 AMB	Jun. 30, 2013 Lloyd Syndicate #2003 S&P	Jun. 30, 2013 Partner Reinsurance Europe		Jun. 30, 2013 Partner Reinsurance Europe AMB	Jun. 30, 2013 Partner Reinsurance Europe S&P	Jun. 30, 2013 Scor Global P&C SE		Jun. 30, 2013 Scor Global P&C SE AMB	Jun. 30, 2013 Scor Global P&C SE S&P	Jun. 30, 2013 Allied World Reinsurance		Jun. 30, 2013 Allied World Reinsurance AMB	Jun. 30, 2013 Allied World Reinsurance S&P	Jun. 30, 2013 Tower Insurance Company		Jun. 30, 2013 Tower Insurance Company AMB	Jun. 30, 2013 Tower Insurance Company S&P	Jun. 30, 2013 General Reinsurance Corporation		Jun. 30, 2013 General Reinsurance Corporation AMB	Jun. 30, 2013 General Reinsurance Corporation S&P	Jun. 30, 2013 Validus Reinsurance Ltd		Jun. 30, 2013 Validus Reinsurance Ltd AMB	Jun. 30, 2013 Validus Reinsurance Ltd S&P	Jun. 30, 2013 Berkley Insurance Company		Jun. 30, 2013 Berkley Insurance Company AMB	Jun. 30, 2013 Berkley Insurance Company S&P	Jun. 30, 2013 Scor Holding (Switzerland) AG		Jun. 30, 2013 Scor Holding (Switzerland) AG AMB	Jun. 30, 2013 Scor Holding (Switzerland) AG S&P	Jun. 30, 2013 AXIS Re Europe		Jun. 30, 2013 AXIS Re Europe AMB	Jun. 30, 2013 AXIS Re Europe S&P	Jun. 30, 2013 Atlantic Specialty Insurance		Jun. 30, 2013 Atlantic Specialty Insurance AMB	Jun. 30, 2013 Atlantic Specialty Insurance S&P	Jun. 30, 2013 Employers Mutual Casualty Company		Jun. 30, 2013 Employers Mutual Casualty Company AMB	Jun. 30, 2013 Employers Mutual Casualty Company S&P	Jun. 30, 2013 Platinum Underwriters Re		Jun. 30, 2013 Platinum Underwriters Re AMB	Jun. 30, 2013 Platinum Underwriters Re S&P	Jun. 30, 2013 Ace Property and Casualty Insurance Company		Jun. 30, 2013 Ace Property and Casualty Insurance Company AMB	Jun. 30, 2013 Ace Property and Casualty Insurance Company S&P	Jun. 30, 2013 QBE Reinsurance Corp		Jun. 30, 2013 QBE Reinsurance Corp AMB	Jun. 30, 2013 QBE Reinsurance Corp S&P	Jun. 30, 2013 Insurance		Jun. 30, 2013 All Other
Ceded Credit Risk [Line Items]
Reinsurance Recoverables Unearned Premium	$ 251,046		$ 221,015	$ 53,397				$ 5,949				$ 20,597				$ 21,219				$ 7,923				$ 10,938				$ 10,485				$ 11,642				$ 12,803				$ 13,397				$ 194				$ 2,695				$ 1,653				$ 691				$ 4,182				$ 8,658				$ 10,867				$ 304				$ 730				$ 6,362				$ 204,686		$ 46,360
Reinsurance Recoverables Paid/Unpaid Losses	934,531			64,605				86,684				70,872				69,516				80,115				39,381				37,600				27,768				26,519				16,537				25,967				22,860				19,389				18,159				13,102				7,550				5,317				13,899				13,297				6,950				666,087		268,444
Reinsurance Recoverables Total	1,185,577	[1]		118,002	[1]			92,633	[1]			91,469	[1]			90,735	[1]			88,038	[1]			50,319	[1]			48,085	[1]			39,410	[1]			39,322	[1]			29,934	[1]			26,161	[1]			25,555	[1]			21,042	[1]			18,850	[1]			17,284	[1]			16,208	[1]			16,184	[1]			14,203	[1]			14,027	[1]			13,312	[1]			870,773	[1]	314,804	[1]
Collateral Held	$ 243,872	[2]		$ 35,018	[2]			$ 7,685	[2]			$ 8,971	[2]			$ 8,025	[2]			$ 4,133	[2]			$ 12,490	[2]			$ 20,108	[2]			$ 10,455	[2]			$ 3,872	[2]			$ 8,462	[2]			$ 1,092	[2]			$ 12,884	[2]			$ 405	[2]			$ 8,681	[2]			$ 4,718	[2]			$ 3,102	[2]			$ 10,557	[2]			$ 1,696	[2]							$ 2,094	[2]			$ 164,448	[2]	$ 79,424	[2]
Rating	AA					A++	AA+			A+	AA-			A	A+			A+	A+			A+	AA-			A	A+			A+	A+			A	A+			A	A			A-	NR			A++	AA+			A	A			A+	A+			A	A+			A	A+			A	A-			A	NR			A	A-			A+	AA-			A	A+

[1] Net of reserve for uncollectible reinsurance of approximately $10.8 million.

[2] Collateral of $243.9 million consists of $183.7 million in ceded balances payable, $57.2 million in letters of credit, and $3.0 million of other balances held by the Company's Insurance Companies and Lloyd's Operations.

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Lloyd's Syndicate 1221 - Additional Information (Detail) (Lloyd's, Syndicate 1221) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2013 USD ($)	Jun. 30, 2013 GBP (£)	Jun. 30, 2012 USD ($)	Jun. 30, 2012 GBP (£)
Supplementary Insurance Information, by Segment [Line Items]
Syndicate 1221's stamp capacity	$ 296	£ 195	$ 300	£ 184
Percentage control of stamp capacity	100.00%	100.00%	100.00%	100.00%
Letters of credit	142.6
Cash collateral posted	$ 0.8

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Scheduled Maturity Dates for Fixed Maturity Securities by Number of Years Until Maturity (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fair Value
Due in one year or less	$ 117,677
Due after one year through five years	576,742
Due after five years through ten years	462,171
Due after ten years	245,032
Mortgage- and asset-backed securities	606,184
Total	2,007,806	2,121,833
Amortized Cost
Due in one year or less	116,999
Due after one year through five years	566,164
Due after five years through ten years	461,911
Due after ten years	250,212
Mortgage- and asset-backed securities	593,221
Total	$ 1,988,507	$ 2,034,765

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Realized Gains and Losses Excluding Net Other-Than-Temporary Impairment Losses Recognized in Earnings (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Gain (Loss) on Investments [Line Items]
Net realized gains (losses)	$ 3,345	$ 4,217	$ 8,159	$ 6,059
Fixed maturities
Gain (Loss) on Investments [Line Items]
Gains	1,730	4,717	4,936	7,858
Losses	(73)	(231)	(383)	(1,530)
Net realized gains (losses)	1,657	4,486	4,553	6,328
Equity Securities
Gain (Loss) on Investments [Line Items]
Gains	1,815	204	3,733	204
Losses	(127)	(473)	(127)	(473)
Net realized gains (losses)	$ 1,688	$ (269)	$ 3,606	$ (269)

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fixed maturities, available-for-sale, amortized cost	$ 1,988,507	$ 2,034,765
Equity securities, available-for-sale, cost	$ 115,221	$ 85,004
Preferred stock, par value	$ 0.10	$ 0.10
Preferred stock, authorized shares	1,000,000	1,000,000
Preferred stock, issued shares
Common stock, par value	$ 0.10	$ 0.10
Common stock, authorized shares	50,000,000	50,000,000
Common stock, issued shares	17,645,043	17,558,046
Treasury stock, shares	3,511,380	3,511,380

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Lloyd's Syndicate 1221

6 Months Ended

Jun. 30, 2013

Lloyd's Syndicate 1221

Note 6. Lloyd’s Syndicate 1221

The Company’s Lloyd’s Operations included in the consolidated financial statements represents its participation in Syndicate 1221. Syndicate 1221’s stamp capacity is £195 million ($296 million) for the 2013 underwriting year compared to £184 million ($300 million) for the 2012 underwriting year. Stamp capacity is a measure of the amount of premiums a Lloyd’s syndicate is authorized to write based on a business plan approved by the Council of Lloyd’s. Syndicate 1221’s stamp capacity is expressed net of commission (as is standard at Lloyd’s). The Syndicate 1221 premiums recorded in the Company’s financial statements are gross of commission. The Company controlled 100% of Syndicate 1221’s stamp capacity for the 2013 and 2012 underwriting years through its wholly-owned Lloyd’s corporate member.

The Company provides letters of credit and posts cash to Lloyd’s to support its participation in Syndicate 1221’s stamp capacity. As of June 30, 2013, the Company had provided letters of credit of $142.6 million and has $0.8 million of cash collateral posted. If Syndicate 1221 increases its stamp capacity and the Company participates in the additional stamp capacity, or if Lloyd’s changes the capital requirements, the Company may be required to supply additional collateral acceptable to Lloyd’s. If the Company is unwilling or unable to provide additional acceptable collateral, the Company will be required to reduce its participation in the stamp capacity of Syndicate 1221. The letters of credit are provided through a credit facility with a consortium of banks which provides the Company with the ability to have letters of credit issued to support Syndicate 1221’s stamp capacity at Lloyd’s for the 2013 and 2014 underwriting years, as well as open prior years. If any letters of credit remain outstanding under the facility after December 31, 2014, we would be required to post additional collateral to secure the remaining letters of credit. If the credit facility is not renewed prior to December 31, 2014, the Company will need to find internal and/or external sources to provide either letters of credit or other collateral in order to continue to participate in Syndicate 1221. The credit facility is collateralized by all of the common stock of Navigators Insurance Company. Refer to Note 11, Credit Facility, for additional information.

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Net income (loss)	$ 13,937	$ 14,899	$ 27,847	$ 22,803
Change in net unrealized gains (losses) on investments:
Unrealized gains (losses) on investments arising during the period, net of deferred tax of $19,404 and $3,790 for 3 months ended June 30, 2013 and June 30, 2012 and $19,037 and $8,237 for 6 months ended June 30, 2013 and June 30, 2012, respectively	(36,123)	9,113	(35,335)	17,371
Reclassification adjustment for net realized (gains) losses included in net income net of deferred tax of $870 and $865 for 3 months ended June 30, 2013 and June 30, $2,390 and $719 for 6 months ended June 30, 2013 and June 30, 2012, respectively	(1,616)	(1,607)	(4,438)	(1,335)
Change in net unrealized gains (losses) on investments	(37,739)	7,506	(39,773)	16,036
Change in other-than-temporary impairments:
Non-credit other-than-temporary impairments arising during the period, net of deferred tax of $13 and $53 for 3 months ended June 30, 2013 and June 30, 2012 and $163 and $263 for 6 months ended June 30, 2013 and June 30, 2012, respectively	24	98	303	489
Reclassification adjustment for non-credit other-than-temporary impairment losses recognized in net income				28
Change in other-than-temporary impairments	24	98	303	517
Change in foreign currency translation gains (losses), net of deferred tax of $566 and $452 for 3 months ended June 30, 2013 and June 30, 2012,and $975 and $1,851 for 6 months ended June 30, 2013 and June 30, 2012, respectively	(1,051)	(840)	1,579	(3,812)
Other comprehensive income (loss)	(38,766)	6,764	(37,891)	12,741
Comprehensive income (loss)	$ (24,829)	$ 21,663	$ (10,044)	$ 35,544

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Investments and cash:
Fixed maturities, available-for-sale, at fair value (amortized cost: 2013, $1,988,507; 2012, $2,034,765)	$ 2,007,806	$ 2,121,833
Equity securities, available-for-sale, at fair value (cost: 2013, $115,221; 2012, $85,004)	138,549	101,297
Short-term investments, at cost which approximates fair value	124,726	153,788
Cash	101,960	45,336
Total investments and cash	2,373,041	2,422,254
Premiums receivable	394,395	320,182
Prepaid reinsurance premiums	251,046	221,015
Reinsurance recoverable on paid losses	52,569	49,282
Reinsurance recoverable on unpaid losses and loss adjustment expenses	881,962	880,139
Deferred policy acquisition costs	65,109	61,005
Accrued investment income	13,691	12,587
Goodwill and other intangible assets	6,785	7,093
Deferred income tax, net	25,882	3,216
Receivable for investments sold	25	4,310
Other assets	32,005	26,587
Total assets	4,096,510	4,007,670
Liabilities:
Reserves for losses and loss adjustment expenses	2,116,384	2,097,048
Unearned premiums	729,568	642,407
Reinsurance balances payable	183,683	165,813
Senior Notes	114,502	114,424
Current income tax payable, net	6,324	2,133
Payable for investments purchased	21,428	58,345
Accounts payable and other liabilities	50,669	48,015
Total liabilities	3,222,558	3,128,185
Stockholders' equity:
Preferred stock, $.10 par value, authorized 1,000,000 shares, none issued
Common stock, $.10 par value, authorized 50,000,000 shares, issued 17,645,043 shares for 2013 and 17,558,046 shares for 2012	1,764	1,755
Additional paid-in capital	333,954	329,452
Treasury stock, at cost (3,511,380 shares for 2013 and 2012)	(155,801)	(155,801)
Retained earnings	656,718	628,871
Accumulated other comprehensive income	37,317	75,208
Total stockholders' equity	873,952	879,485
Total liabilities and stockholders' equity	$ 4,096,510	$ 4,007,670

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Lists of 20 Largest Reinsurers Measured by Reinsurance Recoverable (Parenthetical) (Detail) (USD $)	Jun. 30, 2013
Ceded Credit Risk [Line Items]
Reserve for uncollectible reinsurance amount	$ 10,800,000
Collateral Held	243,872,000	[1]
Ceded Balances Payable
Ceded Credit Risk [Line Items]
Collateral Held	183,700,000
Letter of Credit
Ceded Credit Risk [Line Items]
Collateral Held	57,200,000
All Other
Ceded Credit Risk [Line Items]
Collateral Held	$ 3,000,000

[1] Collateral of $243.9 million consists of $183.7 million in ceded balances payable, $57.2 million in letters of credit, and $3.0 million of other balances held by the Company's Insurance Companies and Lloyd's Operations.

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Investments (Tables)

6 Months Ended

Jun. 30, 2013

Cash and Investments Including Other-Than-Temporarily Impaired Securities Recognized within Other Comprehensive Income

The following tables set forth the Company’s cash and investments as of June 30, 2013 and December 31, 2012. The table below includes other-than-temporarily impaired (“OTTI”) securities recognized within other comprehensive income (“OCI”).

	June 30, 2013
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
In thousands	Value		Gains		(Losses)			Cost
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	464,167	$	3,538	$	(7,492	)	$	468,121
States, municipalities and political subdivisions		452,084		10,281		(13,114	)		454,917
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		320,150		7,782		(4,645	)		317,013
Residential mortgage obligations		37,335		1,196		(221	)		36,360
Asset-backed securities		75,311		747		(113	)		74,677
Commercial mortgage-backed securities		173,388		8,731		(514	)		165,171
Subtotal	$	606,184	$	18,456	$	(5,493	)	$	593,221
Corporate bonds		485,371		16,285		(3,162	)		472,248
Total fixed maturities	$	2,007,806	$	48,560	$	(29,261	)	$	1,988,507
Equity securities—common stocks		138,549		25,238		(1,910	)		115,221
Short-term investments		124,726		—		—			124,726
Cash		101,960		—		—			101,960
Total	$	2,373,041	$	73,798	$	(31,171	)	$	2,330,414

	December 31, 2012
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
In thousands	Value		Gains		(Losses)			Cost
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	649,692	$	8,654	$	(36	)	$	641,074
States, municipalities and political subdivisions		322,947		18,712		(380	)		304,615
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		384,445		13,652		(204	)		370,997
Residential mortgage obligations		38,692		1,053		(549	)		38,188
Asset-backed securities		50,382		1,133		(49	)		49,298
Commercial mortgage-backed securities		204,821		17,996		(18	)		186,843
Subtotal	$	678,340	$	33,834	$	(820	)	$	645,326
Corporate bonds		470,854		27,129		(25	)		443,750
Total fixed maturities	$	2,121,833	$	88,329	$	(1,261	)	$	2,034,765
Equity securities—common stocks		101,297		16,919		(626	)		85,004
Short-term investments		153,788		—		—			153,788
Cash		45,336		—		—			45,336
Total	$	2,422,254	$	105,248	$	(1,887	)	$	2,318,893

Scheduled Maturity Dates for Fixed Maturity Securities by Number of Years Until Maturity

The contractual maturity dates for fixed maturity securities categorized by the number of years until maturity as of June 30, 2013 are shown in the following table:

	June 30, 2013
	Fair		Amortized
In thousands	Value		Cost
Due in one year or less	$	117,677	$	116,999
Due after one year through five years		576,742		566,164
Due after five years through ten years		462,171		461,911
Due after ten years		245,032		250,212
Mortgage- and asset-backed securities		606,184		593,221
Total	$	2,007,806	$	1,988,507

Amount and Percentage of Fixed Maturities by Rating

The following table shows the amount and percentage of the Company’s fixed maturities as of June 30, 2013 by S&P credit rating or, if an S&P rating is not available, the equivalent Moody’s Investor Services (“Moody’s”) rating. The table includes fixed maturities at fair value, and the total rating is the weighted average quality rating.

	June 30, 2013
		Fair		Percent
In thousands	Rating	Value		of Total
Rating description:
Extremely strong	AAA	$	293,952		15	%
Very strong	AA		1,088,098		53	%
Strong	A		454,692		23	%
Adequate	BBB		152,317		8	%
Speculative	BB & Below		15,073		1	%
Not rated	NR		3,674		0	%
Total	AA	$	2,007,806		100	%

Summary of Aggregate Fair Value and Gross Unrealized Loss by Length of Time Securities had Continuously been in Gross Unrealized Loss Position as Well as Number of Securities

The following table summarizes all securities in a gross unrealized loss position as of June 30, 2013 and December 31, 2012, showing the aggregate fair value and gross unrealized loss by the length of time those securities had continuously been in a gross unrealized loss position as well as the relevant number of securities.

	June 30, 2013						December 31, 2012
	Number of		Fair		Gross Unrealized		Number of		Fair		Gross Unrealized
In thousands, except # of securities	Securities		Value		Loss		Securities		Value		Loss
Fixed maturities:
U.S. Treasury bonds, agency bonds, and foreign government bonds
0-6 months		60	$	278,158	$	7,492		8	$	23,760	$	22
7-12 months		—		—		—		3		14,118		11
> 12 months		—		—		—		1		4,652		3
Subtotal		60	$	278,158	$	7,492		12	$	42,530	$	36
States, municipalities and political subdivisions
0-6 months		110	$	223,186	$	11,556		10	$	21,299	$	325
7-12 months		7		17,168		1,546		—		—		—
> 12 months		3		1,970		12		4		2,908		55
Subtotal		120	$	242,324	$	13,114		14	$	24,207	$	380
Agency mortgage-backed securities
0-6 months		89	$	104,138	$	3,096		10	$	62,516	$	174
7-12 months		9		24,070		1,431		2		1,671		30
> 12 months		2		1,559		118		—		—		—
Subtotal		100	$	129,767	$	4,645		12	$	64,187	$	204
Residential mortgage obligations
0-6 months		12	$	2,953	$	47		6	$	1,825	$	22
7-12 months		—		—		—		—		—		—
> 12 months		17		3,140		174		35		7,252		527
Subtotal		29	$	6,093	$	221		41	$	9,077	$	549
Asset-backed securities
0-6 months		4	$	16,905	$	29		—	$	—	$	—
7-12 months		—		—		—		—		—		—
> 12 months		1		1,634		84		2		2,369		49
Subtotal		5	$	18,539	$	113		2	$	2,369	$	49
Commercial mortgage-backed securities
0-6 months		5	$	15,143	$	488		7	$	2,639	$	7
7-12 months		2		651		10		—		—		—
> 12 months		3		559		16		5		845		11
Subtotal		10	$	16,353	$	514		12	$	3,484	$	18
Corporate bonds
0-6 months		43	$	121,470	$	3,162		2	$	3,528	$	6
7-12 months		—		—		—		—		—		—
> 12 months		—		—		—		4		6,689		19
Subtotal		43	$	121,470	$	3,162		6	$	10,217	$	25
Total fixed maturities		367	$	812,704	$	29,261		99	$	156,071	$	1,261
Equity securities—common stocks
0-6 months		6	$	33,817	$	1,910		13	$	23,345	$	522
7-12 months		—		—		—		1		1,943		104
> 12 months		—		—		—		—		—		—
Total equity securities		6	$	33,817	$	1,910		14	$	25,288	$	626

Summary of Activity Related to Other-Than-Temporary Impairment Losses

The table below summarizes the Company’s activity related to OTTI losses for the periods indicated:

	Three Months Ended June 30,								Six Months Ended June 30,
	2013				2012				2013				2012
	Number of				Number of				Number of				Number of
In thousands, except # of securities	Securities		Amount		Securities		Amount		Securities		Amount		Securities		Amount
Total OTTI losses:
Corporate and other bonds		—	$	—		—	$	—		—	$	—		—	$	—
Commercial mortgage-backed securities		—		—		—		—		—		—		—		—
Residential mortgage-backed securities		—		—		—		—		—		—		1		54
Asset-backed securities		—		—		—		—		—		—		—		—
Equities		—		—		2		496		2		42		3		639
Total		—	$	—		2	$	496		2	$	42		4	$	693
Less: Portion of loss in accumulated other comprehensive income (loss):
Corporate and other bonds			$	—			$	—			$	—			$	—
Commercial mortgage-backed securities				—				—				—				—
Residential mortgage-backed securities				—				—				—				43
Asset-backed securities				—				—				—				—
Equities				—				—				—				—
Total			$	—			$	—			$	—			$	43
Impairment losses recognized in earnings:
Corporate and other bonds			$	—			$	—			$	—			$	—
Commercial mortgage-backed securities				—				—				—				—
Residential mortgage-backed securities				—				—				—				11
Asset-backed securities				—				—				—				—
Equities				—				496				42				639
Total			$	—			$	496			$	42			$	650

Summary of Cumulative Amounts Related to Credit Loss Portion of Other-Than-Temporary Impairment Losses on Debt Securities

The following table summarizes the cumulative amounts related to the Company’s credit loss portion of the OTTI losses on debt securities for the three and six months ended June 30, 2013 and 2012. The Company does not intend to sell and it is more likely than not that it will not be required to sell the securities prior to recovery of the amortized cost basis and for which the non-credit loss portion is included in OCI.

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2013		2012		2013		2012
Beginning balance	$	3,332	$	3,322	$	3,332	$	3,321
Additions for credit loss impairments recognized in the current period on securities not previously impaired		—		—		—		—
Additions for credit loss impairments recognized in the current period on securities previously impaired		—		—		—		11
Reductions for credit loss impairments previously recognized on securities sold during the period		—		—		—		—
Ending balance	$	3,332	$	3,332	$	3,332	$	3,332

Contractual Maturity by Number of Years Until Maturity for Fixed Maturity Securities with a Gross Unrealized Loss

The contractual maturity dates for fixed maturity securities categorized by the number of years until maturity, with a gross unrealized loss as of June 30, 2013 is presented in the following table:

	June 30, 2013
	Gross Unrealized Losses					Fair Value
			Percent					Percent
In thousands	Amount		of Total			Amount		of Total
Due in one year or less	$	12		0	%	$	11,813		1	%
Due after one year through five years		2,442		8	%		192,689		24	%
Due after five years through ten years		11,394		39	%		267,617		33	%
Due after ten years		9,920		34	%		169,833		21	%
Mortgage- and asset-backed securities		5,493		19	%		170,752		21	%
Total	$	29,261		100	%	$	812,704		100	%

Net Investment Income

The Company’s net investment income was derived from the following sources:

	Three Months Ended June 30,						Six Months Ended June 30,
In thousands	2013			2012			2013			2012
Fixed maturities	$	13,578		$	15,006		$	26,743		$	30,416
Equity securities		1,257			994			2,288			1,941
Short-term investments		198			701			388			1,014
Total investment income	$	15,033		$	16,701		$	29,419		$	33,371
Investment expenses		(787	)		(924	)		(1,516	)		(6,336	)
Net investment income	$	14,246		$	15,777		$	27,903		$	27,035

Change in Net Unrealized Gains/(Losses)

The change in net unrealized gains and losses, inclusive of the change in the non credit portion of other-than-temporary impairment losses, consisted of:

	Six Months Ended June 30,
In thousands	2013			2012
Fixed maturities	$	(67,769	)	$	17,439
Equity securities		7,035			6,910
Gross unrealized gains (losses)	$	(60,734	)	$	24,349
Deferred income tax		(21,264	)		7,796
Change in net unrealized gains (losses), net	$	(39,470	)	$	16,553

Realized Gains and Losses Excluding Net Other-Than-Temporary Impairment Losses Recognized in Earnings

Realized gains and losses, excluding net OTTI losses recognized in earnings, for the periods indicated were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
In thousands	2013			2012			2013			2012
Fixed maturities:
Gains	$	1,730		$	4,717		$	4,936		$	7,858
Losses		(73	)		(231	)		(383	)		(1,530	)
Fixed maturities, net	$	1,657		$	4,486		$	4,553		$	6,328
Equity securities:
Gains	$	1,815		$	204		$	3,733		$	204
Losses		(127	)		(473	)		(127	)		(473	)
Equity securities, net	$	1,688		$	(269	)	$	3,606		$	(269	)
Net realized gains (losses)	$	3,345		$	4,217		$	8,159		$	6,059

Fixed Maturities and Equity Securities by Asset Class that are Measured at Fair Value

The following tables present, for each of the fair value hierarchy levels as defined by the accounting guidance for fair value measurements, the Company’s fixed maturities and equity securities by asset class that are measured at fair value on a recurring basis as of June 30, 2013 and December 31, 2012:

	June 30, 2013
In thousands	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	276,111	$	188,056	$	—	$	464,167
States, municipalities and political subdivisions		—		452,084		—		452,084
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		—		320,150		—		320,150
Residential mortgage obligations		—		37,335		—		37,335
Asset-backed securities		—		75,311		—		75,311
Commercial mortgage-backed securities		—		173,388		—		173,388
Subtotal	$	—	$	606,184	$	—	$	606,184
Corporate bonds		—		485,371		—		485,371
Total fixed maturities	$	276,111	$	1,731,695	$	—	$	2,007,806
Equity securities—common stocks		138,549		—		—		138,549
Total	$	414,660	$	1,731,695	$	—	$	2,146,355

	December 31, 2012
In thousands	Level 1		Level 2		Level 3		Total
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	414,502	$	235,190	$	—	$	649,692
States, municipalities and political subdivisions		—		322,947		—		322,947
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		—		384,445		—		384,445
Residential mortgage obligations		—		38,692		—		38,692
Asset-backed securities		—		50,382		—		50,382
Commercial mortgage-backed securities		—		204,821		—		204,821
Subtotal	$	—	$	678,340	$	—	$	678,340
Corporate bonds		—		470,854		—		470,854
Total fixed maturities	$	414,502	$	1,707,331	$	—	$	2,121,833
Equity securities—common stocks		101,297		—		—		101,297
Total	$	515,799	$	1,707,331	$	—	$	2,223,130

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Change in Net Unrealized Gains and Losses (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Gross unrealized gains (losses)	$ (60,734)	$ 24,349
Deferred income tax	(21,264)	7,796
Change in net unrealized gains (losses), net	(39,470)	16,553
Fixed maturities
Gross unrealized gains (losses)	(67,769)	17,439
Equity Securities
Gross unrealized gains (losses)	$ 7,035	$ 6,910

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Summary of Aggregate Fair Value and Gross Unrealized Loss by Length of Time Securities had Continuously been in Gross Unrealized Loss Position as Well as Number of Securities (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013 Investment	Dec. 31, 2012 Investment
Fixed maturities
Gain (Loss) on Investments [Line Items]
Number of Securities	367	99
Fair Value	$ 812,704	$ 156,071
Gross Unrealized Loss	29,261	1,261
Fixed maturities | U.S. Treasury bonds, agency bonds, and foreign
Gain (Loss) on Investments [Line Items]
Number of Securities	60	12
Fair Value	278,158	42,530
Gross Unrealized Loss	7,492	36
Fixed maturities | U.S. Treasury bonds, agency bonds, and foreign | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	60	8
Fair Value	278,158	23,760
Gross Unrealized Loss	7,492	22
Fixed maturities | U.S. Treasury bonds, agency bonds, and foreign | 7-12 months
Gain (Loss) on Investments [Line Items]
Number of Securities		3
Fair Value		14,118
Gross Unrealized Loss		11
Fixed maturities | U.S. Treasury bonds, agency bonds, and foreign | > 12 months
Gain (Loss) on Investments [Line Items]
Number of Securities		1
Fair Value		4,652
Gross Unrealized Loss		3
Fixed maturities | States, municipalities and political subdivisions
Gain (Loss) on Investments [Line Items]
Number of Securities	120	14
Fair Value	242,324	24,207
Gross Unrealized Loss	13,114	380
Fixed maturities | States, municipalities and political subdivisions | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	110	10
Fair Value	223,186	21,299
Gross Unrealized Loss	11,556	325
Fixed maturities | States, municipalities and political subdivisions | 7-12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	7
Fair Value	17,168
Gross Unrealized Loss	1,546
Fixed maturities | States, municipalities and political subdivisions | > 12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	3	4
Fair Value	1,970	2,908
Gross Unrealized Loss	12	55
Fixed maturities | Agency mortgage-backed securities
Gain (Loss) on Investments [Line Items]
Number of Securities	100	12
Fair Value	129,767	64,187
Gross Unrealized Loss	4,645	204
Fixed maturities | Agency mortgage-backed securities | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	89	10
Fair Value	104,138	62,516
Gross Unrealized Loss	3,096	174
Fixed maturities | Agency mortgage-backed securities | 7-12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	9	2
Fair Value	24,070	1,671
Gross Unrealized Loss	1,431	30
Fixed maturities | Agency mortgage-backed securities | > 12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	2
Fair Value	1,559
Gross Unrealized Loss	118
Fixed maturities | Residential Mortgage Backed Securities
Gain (Loss) on Investments [Line Items]
Number of Securities	29	41
Fair Value	6,093	9,077
Gross Unrealized Loss	221	549
Fixed maturities | Residential Mortgage Backed Securities | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	12	6
Fair Value	2,953	1,825
Gross Unrealized Loss	47	22
Fixed maturities | Residential Mortgage Backed Securities | > 12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	17	35
Fair Value	3,140	7,252
Gross Unrealized Loss	174	527
Fixed maturities | Asset-backed securities
Gain (Loss) on Investments [Line Items]
Number of Securities	5	2
Fair Value	18,539	2,369
Gross Unrealized Loss	113	49
Fixed maturities | Asset-backed securities | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	4
Fair Value	16,905
Gross Unrealized Loss	29
Fixed maturities | Asset-backed securities | > 12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	1	2
Fair Value	1,634	2,369
Gross Unrealized Loss	84	49
Fixed maturities | Commercial mortgage-backed securities
Gain (Loss) on Investments [Line Items]
Number of Securities	10	12
Fair Value	16,353	3,484
Gross Unrealized Loss	514	18
Fixed maturities | Commercial mortgage-backed securities | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	5	7
Fair Value	15,143	2,639
Gross Unrealized Loss	488	7
Fixed maturities | Commercial mortgage-backed securities | 7-12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	2
Fair Value	651
Gross Unrealized Loss	10
Fixed maturities | Commercial mortgage-backed securities | > 12 months
Gain (Loss) on Investments [Line Items]
Number of Securities	3	5
Fair Value	559	845
Gross Unrealized Loss	16	11
Fixed maturities | Corporate bonds
Gain (Loss) on Investments [Line Items]
Number of Securities	43	6
Fair Value	121,470	10,217
Gross Unrealized Loss	3,162	25
Fixed maturities | Corporate bonds | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	43	2
Fair Value	121,470	3,528
Gross Unrealized Loss	3,162	6
Fixed maturities | Corporate bonds | > 12 months
Gain (Loss) on Investments [Line Items]
Number of Securities		4
Fair Value		6,689
Gross Unrealized Loss		19
Common Stock
Gain (Loss) on Investments [Line Items]
Number of Securities	6	14
Fair Value	33,817	25,288
Gross Unrealized Loss	1,910	626
Common Stock | 0-6 months
Gain (Loss) on Investments [Line Items]
Number of Securities	6	13
Fair Value	33,817	23,345
Gross Unrealized Loss	1,910	522
Common Stock | 7-12 months
Gain (Loss) on Investments [Line Items]
Number of Securities		1
Fair Value		1,943
Gross Unrealized Loss		$ 104

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Cash and Investments Including Other-Than-Temporarily Impaired Securities Recognized within Other Comprehensive Income (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Gain (Loss) on Investments [Line Items]
Total investments and cash	$ 2,146,355	$ 2,223,130
Total investments and cash	2,373,041	2,422,254
Gross Unrealized Gains	73,798	105,248
Gross Unrealized Losses	(31,171)	(1,887)
Amortized Cost	2,330,414	2,318,893
Fixed maturities
Gain (Loss) on Investments [Line Items]
Total investments and cash	2,007,806	2,121,833
Gross Unrealized Gains	48,560	88,329
Gross Unrealized Losses	(29,261)	(1,261)
Amortized Cost	1,988,507	2,034,765
Fixed maturities | U.S. Treasury bonds, agency bonds, and foreign
Gain (Loss) on Investments [Line Items]
Total investments and cash	464,167	649,692
Gross Unrealized Gains	3,538	8,654
Gross Unrealized Losses	(7,492)	(36)
Amortized Cost	468,121	641,074
Fixed maturities | States, municipalities and political subdivisions
Gain (Loss) on Investments [Line Items]
Total investments and cash	452,084	322,947
Gross Unrealized Gains	10,281	18,712
Gross Unrealized Losses	(13,114)	(380)
Amortized Cost	454,917	304,615
Fixed maturities | Agency mortgage-backed securities
Gain (Loss) on Investments [Line Items]
Total investments and cash	320,150	384,445
Gross Unrealized Gains	7,782	13,652
Gross Unrealized Losses	(4,645)	(204)
Amortized Cost	317,013	370,997
Fixed maturities | Residential Mortgage Backed Securities
Gain (Loss) on Investments [Line Items]
Total investments and cash	37,335	38,692
Gross Unrealized Gains	1,196	1,053
Gross Unrealized Losses	(221)	(549)
Amortized Cost	36,360	38,188
Fixed maturities | Asset-backed securities
Gain (Loss) on Investments [Line Items]
Total investments and cash	75,311	50,382
Gross Unrealized Gains	747	1,133
Gross Unrealized Losses	(113)	(49)
Amortized Cost	74,677	49,298
Fixed maturities | Commercial mortgage-backed securities
Gain (Loss) on Investments [Line Items]
Total investments and cash	173,388	204,821
Gross Unrealized Gains	8,731	17,996
Gross Unrealized Losses	(514)	(18)
Amortized Cost	165,171	186,843
Fixed maturities | Mortgage-backed and asset-backed securities
Gain (Loss) on Investments [Line Items]
Total investments and cash	606,184	678,340
Gross Unrealized Gains	18,456	33,834
Gross Unrealized Losses	(5,493)	(820)
Amortized Cost	593,221	645,326
Fixed maturities | Corporate bonds
Gain (Loss) on Investments [Line Items]
Total investments and cash	485,371	470,854
Gross Unrealized Gains	16,285	27,129
Gross Unrealized Losses	(3,162)	(25)
Amortized Cost	472,248	443,750
Equity Securities | Common Stock
Gain (Loss) on Investments [Line Items]
Total investments and cash	138,549	101,297
Gross Unrealized Gains	25,238	16,919
Gross Unrealized Losses	(1,910)	(626)
Amortized Cost	115,221	85,004
Short-term investments
Gain (Loss) on Investments [Line Items]
Total investments and cash	124,726	153,788
Amortized Cost	124,726	153,788
Cash
Gain (Loss) on Investments [Line Items]
Total investments and cash	101,960	45,336
Amortized Cost	$ 101,960	$ 45,336

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Investments - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Schedule of Investments [Line Items]
Non-credit OTTI on debt securities in an unrealized gain position			$ 500,000		$ 20,000
Investment Expenses	787,000	924,000	1,516,000	6,336,000
Portfolio duration of investments			4 years	3 years 10 months 24 days
Net realized gains from sale of investments	3,345,000	4,217,000	8,159,000	6,059,000
Settlement Agreement
Schedule of Investments [Line Items]
Investment Expenses			9,200,000	4,500,000
Mortgage-backed and asset-backed securities
Schedule of Investments [Line Items]
Securities, effective maturities	4.6		4.6
Non-government backed securities | Maximum
Schedule of Investments [Line Items]
Percentage of investment	5.00%		5.00%		5.00%
Non-government backed securities | Investments
Schedule of Investments [Line Items]
Gross Unrealized Loss			$ 1,400,000		$ 200,000
Equity Securities | Maximum
Schedule of Investments [Line Items]
Percentage of fair value over cost	80.00%		80.00%

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2013

Stock-Based Compensation

Note 5. Stock-Based Compensation

Stock-based compensation granted under the Company’s stock plans is expensed in tranches over the vesting period. Options and non-performance based grants generally vest equally over a three or four year period and the options have a maximum term of ten years. Certain non-performance based grants vest over five years with one-third vesting in each of the third, fourth and fifth years. The Company’s performance based share grants generally consist of two types of awards. The restricted stock units issued in 2011 and after will cliff vest on the third anniversary of the date of grant, with 50% vesting in full, and 50% dependent on the rate of compound annual growth in book value per share for the three years immediately prior to the vesting date, with actual shares that vest ranging between 150% to 0% of that portion of the original award. Those performance based restricted stock units issued prior to 2011 generally vest over five years with one-third vesting in each of the third, fourth and fifth years, dependent on the rolling three-year average return on equity based on the three years prior to the year in which the vesting occurs, with actual shares that vest ranging between 150% to 0% of the original award.

The amounts charged to expense for stock-based compensation for the three and six months ended June 30, 2013 and 2012 are presented in the following table:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2013		2012		2013		2012
Restricted stock units	$	2,116	$	1,974	$	3,474	$	3,186
Directors restricted stock grants(1)		106		60		206		120
Employee stock purchase plan		38		41		47		15
Total stock based compensation	$	2,260	$	2,075	$	3,727	$	3,321

(1)  -  Relates to non-employee directors serving on the Parent Company’s Board of Directors, all of whom have been elected by     the Company’s stockholders, as well as non-employee directors serving on NUAL’s Board of Directors.

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Stock-Based Compensation - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2013
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options expiration term (in years)	10 years
Options and Non Performance Based Grants | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based payment award, award vesting period	3 years
Options and Non Performance Based Grants | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based payment award, award vesting period	4 years
Non Performance Based Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based payment award, award vesting period	5 years
Vesting Percentage of share in year three	33.33%
Vesting Percentage of share in year four	33.33%
Vesting Percentage of share in year five	33.33%
Performance Based Shares Issued in 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based payment award, award vesting period	3 years
Percentage of shares vesting over the period	50.00%
Percentage of remaining shares vesting over the period dependent on compound annual growth book value per share immediately prior to vesting date	50.00%
Performance Based Shares Issued in 2011 | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vesting range	0.00%
Performance Based Shares Issued in 2011 | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vesting range	150.00%
Performance Based Shares Issued Prior to 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based payment award, award vesting period	5 years
Vesting Percentage of share in year three	33.33%
Vesting Percentage of share in year four	33.33%
Vesting Percentage of share in year five	33.33%
Performance Based Shares Issued Prior to 2011 | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vesting range	0.00%
Performance Based Shares Issued Prior to 2011 | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vesting range	150.00%

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Contractual Maturity by Number of Years Until Maturity for Fixed Maturity Securities with Gross Unrealized Loss (Detail) (Fixed maturities, USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Loss Amount	$ 29,261	$ 1,261
Percent of Total Gross Unrealized Loss	100.00%
Fair Value Amount	812,704	156,071
Percent of Total Fair Value	100.00%
Due in one year or less
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Loss Amount	12
Percent of Total Gross Unrealized Loss	0.00%
Fair Value Amount	11,813
Percent of Total Fair Value	1.00%
Due After One Year Through Five Years
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Loss Amount	2,442
Percent of Total Gross Unrealized Loss	8.00%
Fair Value Amount	192,689
Percent of Total Fair Value	24.00%
Due After Five Years Through Ten Years
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Loss Amount	11,394
Percent of Total Gross Unrealized Loss	39.00%
Fair Value Amount	267,617
Percent of Total Fair Value	33.00%
Due After Ten Years
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Loss Amount	9,920
Percent of Total Gross Unrealized Loss	34.00%
Fair Value Amount	169,833
Percent of Total Fair Value	21.00%
Mortgage- and asset-backed securities
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Loss Amount	5,493
Percent of Total Gross Unrealized Loss	19.00%
Fair Value Amount	$ 170,752
Percent of Total Fair Value	21.00%

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Senior Notes due May 1, 2016

6 Months Ended

Jun. 30, 2013

Senior Notes due May 1, 2016

Note 8. Senior Notes due May 1, 2016

On April 17, 2006, we completed a public debt offering of $125 million principal amount of 7% senior unsecured notes (the “Senior Notes”) and received net proceeds of $123.5 million. The principal amount of the Senior Notes is payable in a single installment on May 1, 2016. In April 2009, the Company repurchased $10.0 million aggregate principal amount of the Senior Notes from an unaffiliated note holder on the open market for $7.0 million, which generated a $3.0 million pre-tax gain that was reflected in Other income. The Senior Notes liability as of June 30, 2013 was $114.5 million. The unamortized discount at June 30, 2013 was $0.5 million. The aggregate principal amount of the Senior Notes that will be repaid on May 1, 2016, as a result of these transactions, is $115.0 million.

The fair value of the Senior Notes was $125.8 million and $123.2 million as of June 30, 2013 and December 31, 2012, respectively. The fair value was determined using quoted prices for similar instruments in active markets and is classified as Level 2 within the fair value hierarchy as defined by the accounting guidance for fair value measurements.

Interest is payable on the Senior Notes each May 1 and November 1. The effective interest rate related to the Senior Notes, based on the proceeds net of discount and all issuance costs, approximates 7.17%. Interest expense on the Senior Notes for the three and six months ended each of June 30, 2013 and 2012 was approximately $2.1 million and $4.1 million, respectively.

The Senior Notes, the Company’s only senior unsecured obligation, will rank equally with any future senior unsecured indebtedness. The Company may redeem the Senior Notes at any time and from time to time, in whole or in part, at a “make-whole” redemption price. The terms of the Senior Notes contain various restrictive business and financial covenants typical for debt obligations of this type, including limitations on mergers, liens and dispositions of the common stock of certain subsidiaries. As of June 30, 2013, the Company was in compliance with all such covenants.

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Reinsurance Ceded

6 Months Ended

Jun. 30, 2013

Reinsurance Ceded

Note 4. Reinsurance Ceded

The Company’s ceded earned premiums were $115.3 million and $120.7 million for the three months ended June 30, 2013 and 2012 and $226.3 million and $185.8 million for the six months ended June 30, 2013 and 2012, respectively.

The Company’s ceded incurred losses were $77.6 million and $61.7 million for the three months ended June 30, 2013 and 2012 and $131.1 million and $123.2 million for the six months ended June 30, 2013 and 2012, respectively.

The following table lists the Company’s 20 largest reinsurers measured by the amount of reinsurance recoverable for ceded losses and loss adjustment expenses (“LAE”) and ceded unearned premium (constituting 73.4% of the total recoverable), together with the reinsurance recoverable and collateral as of June 30, 2013, and the reinsurers’ ratings from A.M. Best Company (“A.M. Best”) and Standard & Poor’s (“S&P”):

	Reinsurance Recoverables
In thousands	Unearned Premium		Paid/ Unpaid Losses		Total (1)		Collateral Held (2)		A.M. Best		S&P
National Indemnity Company	$	53,397	$	64,605	$	118,002	$	35,018		A++		AA+
Swiss Reinsurance America Corporation		5,949		86,684		92,633		7,685		A+		AA-
Transatlantic Reinsurance Company		20,597		70,872		91,469		8,971		A		A+
Everest Reinsurance Company		21,219		69,516		90,735		8,025		A+		A+
Munich Reinsurance America Inc.		7,923		80,115		88,038		4,133		A+		AA-
Lloyd’s Syndicate #2003		10,938		39,381		50,319		12,490		A		A+
Partner Reinsurance Europe		10,485		37,600		48,085		20,108		A+		A+
Scor Global P&C SE		11,642		27,768		39,410		10,455		A		A+
Allied World Reinsurance		12,803		26,519		39,322		3,872		A		A
Tower Insurance Company		13,397		16,537		29,934		8,462		A-		NR
General Reinsurance Corporation		194		25,967		26,161		1,092		A++		AA+
Validus Reinsurance Ltd.		2,695		22,860		25,555		12,884		A		A
Berkley Insurance Company		1,653		19,389		21,042		405		A+		A+
Scor Holding (Switzerland) AG		691		18,159		18,850		8,681		A		A+
AXIS Re Europe		4,182		13,102		17,284		4,718		A		A+
Atlantic Specialty Insurance		8,658		7,550		16,208		3,102		A		A-
Employers Mutual Casualty Company		10,867		5,317		16,184		10,557		A		NR
Platinum Underwriters Re		304		13,899		14,203		1,696		A		A-
Ace Property and Casualty Insurance Company		730		13,297		14,027		—		A+		AA-
QBE Reinsurance Corp		6,362		6,950		13,312		2,094		A		A+
Top 20 Reinsurers	$	204,686	$	666,087	$	870,773	$	164,448
Others		46,360		268,444		314,804		79,424
Total	$	251,046	$	934,531	$	1,185,577	$	243,872

(1)  -  Net of reserve for uncollectible reinsurance of approximately $10.8 million.

(2)  -  Collateral of $243.9 million consists of $183.7 million in ceded balances payable, $57.2 million in letters of credit, and $3.0     million of other balances held by the Company’s Insurance Companies and Lloyd’s Operations.

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Consolidated Statements of Stockholders' Equity (USD $) In Thousands, except Share data, unless otherwise specified	Total	Common Stock	Additional Paid-in Capital	Treasury Stock	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Balance at Dec. 31, 2012	$ 879,485	$ 1,755	$ 329,452	$ (155,801)	$ 628,871	$ 75,208
Balance (in shares) at Dec. 31, 2012		17,558,046		3,511,380
Net income	27,847				27,847
Changes in other comprehensive income:
Change in net unrealized gain (loss) on investments	(39,773)					(39,773)
Change in net non-credit other-than-temporary impairment losses	303					303
Change in foreign currency translation gain (loss)	1,579					1,579
Other comprehensive income (loss)	(37,891)					(37,891)
Shares issued under stock plan (in shares)		86,997
Shares issued under stock plan	1,037	9	1,028
Share-based compensation	3,474		3,474
Balance at Jun. 30, 2013	$ 873,952	$ 1,764	$ 333,954	$ (155,801)	$ 656,718	$ 37,317
Balance (in shares) at Jun. 30, 2013		17,645,043		3,511,380

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Credit Facility - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	6 Months Ended			1 Months Ended
	Jun. 30, 2013	Mar. 28, 2011	Jun. 30, 2013 Lloyd's Syndicate 1221	Nov. 22, 2012 Amended and Restated Credit Agreement
Line of Credit Facility [Line Items]
Line of credit facility		$ 165		$ 165
Issuance of new letters of credit, expiry date				Dec. 31, 2014
Aggregate face amount of letters of credit outstanding			142.6
Cash collateral posted			$ 0.8
Line of credit facility, covenant terms	This credit facility contains customary covenants for facilities of this type, including restrictions on indebtedness and liens, limitations on mergers, dividends and the sale of assets, and requirements as to maintaining certain consolidated tangible net worth, statutory surplus and other financial ratios. The credit facility also provides for customary events of default, including failure to pay principal, interest or fees when due, failure to comply with covenants, any representation or warranty made by the Company being false in any material respect, default under certain other indebtedness, certain insolvency or receivership events affecting the Company and its subsidiaries, the occurrence of certain material judgments, or a change in control of the Company.
Line of credit facility, covenant compliance	The Company was in compliance with all covenants under the credit facility as of June 30, 2013.

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Income Taxes - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended			1 Months Ended		3 Months Ended	6 Months Ended			6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Apr. 30, 2013 United Kingdom	Apr. 30, 2012 United Kingdom	Mar. 31, 2012 United Kingdom	Jun. 30, 2013 United Kingdom	Jun. 30, 2013 United Kingdom Syndicate 1221 Minimum	Jun. 30, 2013 United Kingdom Syndicate 1221 Maximum	Jun. 30, 2013 State and Local Jurisdiction Minimum	Jun. 30, 2013 State and Local Jurisdiction Maximum
Income Taxes [Line Items]
Foreign effective income tax rate									35.00%	35.00%
Percentage of premiums											50.00%
Corporate tax rate						23.00%	24.00%	26.00%
Undistributed earnings of non-U.S. subsidiaries	$ 17,200,000		$ 17,200,000
Taxes payable on undistributed earnings	1,800,000		1,800,000
Income tax (benefit) expense	6,284,000	6,225,000	12,927,000	9,506,000
Effective income tax rate	31.10%	29.50%	31.70%	29.40%
Deferred Tax Assets: State and Local	500,000		500,000		500,000
State and local net operating loss carry-forwards	$ 200,000		$ 200,000		$ 200,000
State and local tax carry-forwards expiration year												2023	2031

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Credit Facility

6 Months Ended

Jun. 30, 2013

Credit Facility

Note 11. Credit Facility

On November 22, 2012, we entered into a $165 million credit facility agreement with ING Bank N.V., London Branch, individually and as Administrative Agent, and a syndicate of lenders. The new credit facility amended and restated a $165 million letter of credit facility entered into by the parties on March 28, 2011. The credit facility, which is denominated in U.S. dollars, is utilized to fund our participation in Syndicate 1221 through letters of credit for the 2013 and 2014 underwriting years, as well as open prior years. The letters of credit issued under the facility are denominated in British pounds and their aggregate face amount will fluctuate based on exchange rates. If any letters of credit remain outstanding under the facility after December 31, 2014, we would be required to post additional collateral to secure the remaining letters of credit. As of June 30, 2013, letters of credit with an aggregate face amount of $142.6 million were outstanding under the credit facility and we have $0.8 million of cash collateral posted.

This credit facility contains customary covenants for facilities of this type, including restrictions on indebtedness and liens, limitations on mergers, dividends and the sale of assets, and requirements as to maintaining certain consolidated tangible net worth, statutory surplus and other financial ratios. The credit facility also provides for customary events of default, including failure to pay principal, interest or fees when due, failure to comply with covenants, any representation or warranty made by the Company being false in any material respect, default under certain other indebtedness, certain insolvency or receivership events affecting the Company and its subsidiaries, the occurrence of certain material judgments, or a change in control of the Company. The letter of credit facility is secured by a pledge of the stock of certain insurance subsidiaries of the Company. To the extent the aggregate face amount issued under the credit facility exceeds the commitment amount, the Company is required to post collateral with the lead bank of the consortium. The Company was in compliance with all covenants under the credit facility as of June 30, 2013.

The applicable margin and applicable fee rate payable under the credit facility are based on a tiered schedule that is based on the Company’s then-current ratings issued by S&P and Moody’s with respect to the Company’s Senior Notes without third-party credit enhancement, and the amount of the Company’s own collateral utilized to fund its participation in Syndicate 1221.

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Income Taxes

6 Months Ended

Jun. 30, 2013

Income Taxes

Note 7. Income Taxes

The Company is subject to the tax laws and regulations of the United States (“U.S.”) and the foreign countries in which it operates. The Company files a consolidated U.S. Federal tax return, which includes all domestic subsidiaries and the U.K. Branch. The income from the foreign operations is designated as either U.S. connected income or non-U.S. connected income. Lloyd’s is required to pay U.S. income tax on U.S. connected income written by Lloyd’s syndicates. Lloyd’s and the U.S. Internal Revenue Service (“IRS”) have entered into an agreement whereby the amount of tax due on U.S. connected income is calculated by Lloyd’s and remitted directly to the IRS. These amounts are then charged to the corporate member in proportion to its participation in the relevant syndicates. The Company’s corporate member is subject to this agreement and will receive United Kingdom (“U.K.”) tax credits in the U.K. for any U.S. income tax incurred up to the U.K. income tax charged on the U.S. connected income. The non-U.S. connected insurance income would generally constitute taxable income under the Subpart F income section of the U.S. Internal Revenue Code (“Subpart F”) since less than 50% of Syndicate 1221’s premiums are derived within the U.K. and would therefore be subject to U.S. taxation when the Lloyd’s year of account closes. Taxes are accrued at a 35% rate on the Company’s foreign source insurance income and foreign tax credits, where available, are utilized to offset U.S. tax as permitted. The Company’s effective tax rate for Syndicate 1221 taxable income could substantially exceed 35% to the extent the Company is unable to offset U.S. taxes paid under Subpart F tax regulations with U.K. tax credits on future underwriting year distributions. U.S. taxes are not accrued on the earnings of the Company’s foreign agencies as these earnings are not includable as Subpart F income in the current year. These earnings were subject to taxes under U.K. tax regulations at a 26% rate through March 31, 2012. A finance bill was enacted in the U.K. that reduced the U.K. corporate tax rate from 26% to 24% effective April 2012 and from 24% to 23% effective April 2013. The effect of such tax rate change was not material.

The Company has not provided for U.S. income taxes on approximately $17.2 million of undistributed earnings of its non-U.S. subsidiaries since it is intended that those earnings will be reinvested indefinitely in those subsidiaries. If a future determination is made that those earnings no longer are intended to be reinvested indefinitely in those subsidiaries, U.S. income taxes of approximately $1.8 million, assuming all foreign tax credits are realized, would be included in the tax provision at that time and would be payable if those earnings were distributed to the Company.

Unrecognized tax benefits are differences between tax positions taken in the tax returns and benefits recognized in the financial statements. The Company has no unrecognized tax benefits as of June 30, 2013 and 2012. The Company did not incur any interest or penalties related to unrecognized tax benefits for the three and six months ended June 30, 2013 and 2012. The Company currently is under examination by the Internal Revenue Service for taxable years 2010 and 2011, and generally is subject to U.S. Federal, state or local, or foreign tax examinations by tax authorities for 2009 and subsequent years.

The Company recorded income tax expense of $6.3 million and $12.9 million for the three and six months ended June 30, 2013 compared to $6.2 million and $9.5 million for the same period in 2012, resulting in an effective tax rate of 31.1% and 31.7% for the three and six months ended June 30, 2013 and 29.5% and 29.4% for the comparable period in 2012.

The Company had state and local deferred tax assets amounting to potential future tax benefits of $0.5 million as of both June 30, 2013 and December 31, 2012, respectively. Included in the deferred tax assets are state and local net operating loss carry-forwards of $0.2 million for both June 30, 2013 and December 31, 2012. A valuation allowance was established for the full amount of these potential future tax benefits due to the uncertainty associated with their realization. The Company’s state and local tax carry-forwards as of June 30, 2013 expire from 2023 to 2031.

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2013

Amounts Charged to Expense for Stock-based Compensation

The amounts charged to expense for stock-based compensation for the three and six months ended June 30, 2013 and 2012 are presented in the following table:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2013		2012		2013		2012
Restricted stock units	$	2,116	$	1,974	$	3,474	$	3,186
Directors restricted stock grants(1)		106		60		206		120
Employee stock purchase plan		38		41		47		15
Total stock based compensation	$	2,260	$	2,075	$	3,727	$	3,321

(1)  -  Relates to non-employee directors serving on the Parent Company’s Board of Directors, all of whom have been elected by     the Company’s stockholders, as well as non-employee directors serving on NUAL’s Board of Directors.

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2013

Financial Data by Segment

Financial data by segment for the three and six months ended June 30, 2013 and 2012 were as follows:

	Three Month Ended June 30, 2013
In thousands	Insurance Companies			Lloyd’s Operations			Corporate(1)			Total
Gross written premiums	$	228,565		$	103,563		$	—		$	332,128
Net written premiums		143,380			55,089			—			198,469
Net earned premiums		156,547			49,267			—			205,814
Net losses and loss adjustment expenses		(106,668	)		(24,480	)		—			(131,148	)
Commission expenses		(20,573	)		(8,335	)		517			(28,391	)
Other operating expenses		(29,829	)		(10,849	)		—			(40,678	)
Other income (expense)		689			(1,087	)		(517	)		(915	)
Underwriting profit (loss)	$	166		$	4,516		$	—		$	4,682
Net investment income		12,515			1,728			3			14,246
Net realized gains (losses)		3,099			242			4			3,345
Interest expense		—			—			(2,052	)		(2,052	)
Income (loss) before income taxes	$	15,780		$	6,486		$	(2,045	)	$	20,221
Income tax expense (benefit)		4,785			2,206			(707	)		6,284
Net income (loss)	$	10,995		$	4,280		$	(1,338	)	$	13,937
Identifiable assets	$	3,097,754		$	947,736		$	51,020		$	4,096,510
Losses and loss adjustment expenses ratio		68.1	%		49.7	%					63.7	%
Commission expense ratio		13.1	%		16.9	%					13.8	%
Other operating expense ratio (2)		18.7	%		24.2	%					20.2	%
Combined ratio		99.9	%		90.8	%					97.7	%

(1)  -  Includes Corporate segment intercompany eliminations.

(2)  -  Includes Other operating expenses and Other income.

	Three Month Ended June 30, 2012
	Insurance			Lloyd’s
In thousands	Companies			Operations			Corporate(1)			Total
Gross written premiums	$	214,064		$	108,923		$	—		$	322,987
Net written premiums		134,065			56,187			—			190,252
Net earned premiums		141,577			54,440			—			196,017
Net losses and loss adjustment expenses		(100,003	)		(23,404	)		—			(123,407	)
Commission expenses		(21,117	)		(8,938	)		552			(29,503	)
Other operating expenses		(28,914	)		(10,905	)		—			(39,819	)
Other income (expense)		879			60			(552	)		387
Underwriting profit (loss)	$	(7,578	)	$	11,253		$	—		$	3,675
Net investment income		13,286			2,454			37			15,777
Net realized gains (losses)		2,325			1,396			—			3,721
Interest expense		—			—			(2,049	)		(2,049	)
Income (loss) before income taxes	$	8,033		$	15,103		$	(2,012	)	$	21,124
Income tax expense (benefit)		2,101			5,207			(1,083	)		6,225
Net income (loss)	$	5,932		$	9,896		$	(929	)	$	14,899
Identifiable assets	$	2,933,334		$	967,862		$	37,870		$	3,939,066
Losses and loss adjustment expenses ratio		70.6	%		43.0	%					63.0	%
Commission expense ratio		14.9	%		16.4	%					15.1	%
Other operating expense ratio (2)		19.9	%		19.9	%					20.0	%
Combined ratio		105.4	%		79.3	%					98.1	%

(1)  -  Includes Corporate segment intercompany eliminations.

(2)  -  Includes Other operating expenses and Other income.

	Six Month Ended June 30, 2013
	Insurance			Lloyd’s
In thousands	Companies			Operations			Corporate(1)			Total
Gross written premiums	$	530,193		$	195,157		$	—		$	725,350
Net written premiums		359,699			108,222			—			467,921
Net earned premiums		310,878			97,264			—			408,142
Net losses and loss adjustment expenses		(213,653	)		(48,837	)		—			(262,490	)
Commission expenses		(39,090	)		(16,956	)		1,100			(54,946	)
Other operating expenses		(59,172	)		(22,380	)		—			(81,552	)
Other income (expense)		1,348			(545	)		(1,100	)		(297	)
Underwriting profit (loss)	$	311		$	8,546		$	—		$	8,857
Net investment income		24,466			3,430			7			27,903
Net realized gains (losses)		7,891			222			4			8,117
Interest expense		—			—			(4,103	)		(4,103	)
Income (loss) before income taxes	$	32,668		$	12,198		$	(4,092	)	$	40,774
Income tax expense (benefit)		10,199			4,242			(1,514	)		12,927
Net income (loss)	$	22,469		$	7,956		$	(2,578	)	$	27,847
Identifiable assets	$	3,097,754		$	947,736		$	51,020		$	4,096,510
Losses and loss adjustment expenses ratio		68.7	%		50.2	%					64.3	%
Commission expense ratio		12.6	%		17.4	%					13.5	%
Other operating expense ratio (2)		18.6	%		23.6	%					20.0	%
Combined ratio		99.9	%		91.2	%					97.8	%

(1)  -  Includes Corporate segment intercompany eliminations.

(2)  -  Includes Other operating expenses and Other income.

	Six Month Ended June 30, 2012
	Insurance			Lloyd’s
In thousands	Companies			Operations			Corporate(1)			Total
Gross written premiums	$	462,402		$	203,734		$	—		$	666,136
Net written premiums		315,315			117,982			—			433,297
Net earned premiums		273,125			106,011			—			379,136
Net losses and loss adjustment expenses		(191,180	)		(50,212	)		—			(241,392	)
Commission expenses		(40,418	)		(19,824	)		1,289			(58,953	)
Other operating expenses		(54,259	)		(21,867	)		—			(76,126	)
Other income (expense)		2,521			66			(1,289	)		1,298
Underwriting profit (loss)	$	(10,211	)	$	14,174		$	—		$	3,963
Net investment income		22,221			4,737			77			27,035
Net realized gains (losses)		4,200			1,209			—			5,409
Interest expense		—			—			(4,098	)		(4,098	)
Income (loss) before income taxes	$	16,210		$	20,120		$	(4,021	)	$	32,309
Income tax expense (benefit)		3,980			6,933			(1,407	)		9,506
Net income (loss)	$	12,230		$	13,187		$	(2,614	)	$	22,803
Identifiable assets	$	2,933,334		$	967,862		$	37,870		$	3,939,066
Losses and loss adjustment expenses ratio		70.0	%		47.4	%					63.7	%
Commission expense ratio		14.8	%		18.7	%					15.5	%
Other operating expense ratio (2)		18.9	%		20.5	%					19.8	%
Combined ratio		103.7	%		86.6	%					99.0	%

(1)  -  Includes Corporate segment intercompany eliminations.

(2)  -  Includes Other operating expenses and Other income.

Additional Financial Data by Segment

The following tables provide additional financial data by segment for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30, 2013
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	43,077	$	45,893	$	88,970
Property casualty		152,095		41,217		193,312
Professional liability		33,393		16,453		49,846
Total	$	228,565	$	103,563	$	332,128
Net written premiums:
Marine	$	27,366	$	34,060	$	61,426
Property casualty		90,711		12,181		102,892
Professional liability		25,303		8,848		34,151
Total	$	143,380	$	55,089	$	198,469
Net earned premiums:
Marine	$	31,798	$	34,623	$	66,421
Property casualty		99,477		8,562		108,039
Professional liability		25,272		6,082		31,354
Total	$	156,547	$	49,267	$	205,814

	Three Months Ended June 30, 2012
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	49,896	$	47,037	$	96,933
Property casualty		130,627		48,978		179,605
Professional liability		33,541		12,908		46,449
Total	$	214,064	$	108,923	$	322,987
Net written premiums:
Marine	$	31,786	$	33,492	$	65,278
Property casualty		76,842		15,705		92,547
Professional liability		25,437		6,990		32,427
Total	$	134,065	$	56,187	$	190,252
Net earned premiums:
Marine	$	35,535	$	34,272	$	69,807
Property casualty		82,175		15,272		97,447
Professional liability		23,867		4,896		28,763
Total	$	141,577	$	54,440	$	196,017

	Six Months Ended June 30, 2013
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	93,924	$	99,537	$	193,461
Property casualty		371,059		66,275		437,334
Professional liability		65,210		29,345		94,555
Total	$	530,193	$	195,157	$	725,350
Net written premiums:
Marine	$	68,507	$	73,618	$	142,125
Property casualty		240,662		19,493		260,155
Professional liability		50,530		15,111		65,641
Total	$	359,699	$	108,222	$	467,921
Net earned premiums:
Marine	$	68,523	$	68,668	$	137,191
Property casualty		192,195		16,441		208,636
Professional liability		50,160		12,155		62,315
Total	$	310,878	$	97,264	$	408,142

	Six Months Ended June 30, 2012
	Insurance		Lloyd’s
In thousands	Companies		Operations		Total
Gross written premiums:
Marine	$	111,761	$	108,812	$	220,573
Property casualty		286,546		73,274		359,820
Professional liability		64,095		21,648		85,743
Total	$	462,402	$	203,734	$	666,136
Net written premiums:
Marine	$	74,651	$	81,550	$	156,201
Property casualty		191,374		25,060		216,434
Professional liability		49,290		11,372		60,662
Total	$	315,315	$	117,982	$	433,297
Net earned premiums:
Marine	$	70,810	$	67,536	$	138,346
Property casualty		156,543		29,774		186,317
Professional liability		45,772		8,701		54,473
Total	$	273,125	$	106,011	$	379,136

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Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Jul. 25, 2013
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Trading Symbol	NAVG
Entity Registrant Name	NAVIGATORS GROUP INC
Entity Central Index Key	0000793547
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		14,133,953

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Reinsurance Ceded (Tables)

6 Months Ended

Jun. 30, 2013

Lists of 20 Largest Reinsurers Measured by Reinsurance Recoverable

The following table lists the Company’s 20 largest reinsurers measured by the amount of reinsurance recoverable for ceded losses and loss adjustment expenses (“LAE”) and ceded unearned premium (constituting 73.4% of the total recoverable), together with the reinsurance recoverable and collateral as of June 30, 2013, and the reinsurers’ ratings from A.M. Best Company (“A.M. Best”) and Standard & Poor’s (“S&P”):

	Reinsurance Recoverables
In thousands	Unearned Premium		Paid/ Unpaid Losses		Total (1)		Collateral Held (2)		A.M. Best		S&P
National Indemnity Company	$	53,397	$	64,605	$	118,002	$	35,018		A++		AA+
Swiss Reinsurance America Corporation		5,949		86,684		92,633		7,685		A+		AA-
Transatlantic Reinsurance Company		20,597		70,872		91,469		8,971		A		A+
Everest Reinsurance Company		21,219		69,516		90,735		8,025		A+		A+
Munich Reinsurance America Inc.		7,923		80,115		88,038		4,133		A+		AA-
Lloyd’s Syndicate #2003		10,938		39,381		50,319		12,490		A		A+
Partner Reinsurance Europe		10,485		37,600		48,085		20,108		A+		A+
Scor Global P&C SE		11,642		27,768		39,410		10,455		A		A+
Allied World Reinsurance		12,803		26,519		39,322		3,872		A		A
Tower Insurance Company		13,397		16,537		29,934		8,462		A-		NR
General Reinsurance Corporation		194		25,967		26,161		1,092		A++		AA+
Validus Reinsurance Ltd.		2,695		22,860		25,555		12,884		A		A
Berkley Insurance Company		1,653		19,389		21,042		405		A+		A+
Scor Holding (Switzerland) AG		691		18,159		18,850		8,681		A		A+
AXIS Re Europe		4,182		13,102		17,284		4,718		A		A+
Atlantic Specialty Insurance		8,658		7,550		16,208		3,102		A		A-
Employers Mutual Casualty Company		10,867		5,317		16,184		10,557		A		NR
Platinum Underwriters Re		304		13,899		14,203		1,696		A		A-
Ace Property and Casualty Insurance Company		730		13,297		14,027		—		A+		AA-
QBE Reinsurance Corp		6,362		6,950		13,312		2,094		A		A+
Top 20 Reinsurers	$	204,686	$	666,087	$	870,773	$	164,448
Others		46,360		268,444		314,804		79,424
Total	$	251,046	$	934,531	$	1,185,577	$	243,872

(1)  -  Net of reserve for uncollectible reinsurance of approximately $10.8 million.

(2)  -  Collateral of $243.9 million consists of $183.7 million in ceded balances payable, $57.2 million in letters of credit, and $3.0     million of other balances held by the Company’s Insurance Companies and Lloyd’s Operations.